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Embraer (ERJ) Beats on Q3 Earnings, Sales; Retains '16 View
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Embraer SA (ERJ - Free Report) reported third-quarter 2016 adjusted earnings of 43 cents per American Depository Share (ADS) that beat the Zacks Consensus Estimate of 27 cents by 59.3%. Adjusted earnings were also up 10.3% from 39 cents per ADS in the year-ago quarter.
Revenues
In the third quarter, Embraer posted total revenue of $1,514.3 million that surpassed the Zacks Consensus Estimate of $1,381 million by 9.6%. Reported revenues also improved 17.9% year over year on the back of higher revenues in the Commercial Aviation and Defense & Security segments.
Revenues at Commercial Aviation segment improved 34.7%, while Defense & Security segment registered an increase of 18.6% in revenues. However, revenues from the Executive Jets segment declined 8.8% year over year.
The company delivered a total of 54 jets in the quarter, up 5.9% year over year.
The company delivered 29 commercial and 25 executive jets to each of the commercial aviation and business aviation markets.
The company had delivered 21 jets to the commercial aviation market and 30 jets to the business aviation market in third-quarter 2015. In total, the company had delivered of 51 jets a year ago.
In the third quarter, Embraer’s Commercial Aviation unit supplied 24 E175s, four E190s and one E195 jets. The rest were delivered to Business Aviation, which included 13 light and 12 large jets.
Embraer reported an order backlog of $21.4 billion as of Sep 30, 2016 compared with $21.9 billion in the prior quarter. The third-quarter figure indicates a 6.1% decline from $22.8 billion recorded a year ago.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $1,229.8 million, up from $1,060 million a year ago.
The company’s gross profit declined 21.1% to $224.6 million in the third quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $63.7 million compared with $158 million in the prior-year quarter.
Financial Update
As of Sep 30, 2016, cash and cash equivalents were $1,455.5 million compared with $1,954.5 million as of Sep 30, 2015.
At the end of third quarter, the company had net debt of $652.7 million.
In the reported quarter, net cash generated from operating activities was $218.3 million as against cash inflow of $70.2 million a year ago.
In the third quarter, the company’s capital expenditure was around $73.6 million, while free cash outflow was $37.5 million. Free cash outflow in third-quarter 2015 was $115.3 million.
Guidance
Embraer reiterated its 2016 revenue guidance in the range of $5.8–$6.2 billion. Defense & Security revenues are still expected in the $700–$750 million band.
The company expects to deliver 105–110 jets in Commercial Aviation along with 35–45 large jets and 70–80 light jets in Executive Jets.
It still expects EBIT margin to be in the range of 7–8% and EBITDA margin of 12.7–13.7%.
For 2016, the company reaffirmed its plans to invest $650 million, including capital expenditure of $275 million.
Other Releases in the Sector
The Boeing Company's (BA - Free Report) third-quarter 2016 adjusted earnings of $3.51 per share beat the Zacks Consensus Estimate of $2.62 by 34%. Reported earnings were also up 39.3% from the year-ago figure of $2.52 per share.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.02 per share that beat the Zacks Consensus Estimate of $2.81 by 7.5%. Reported earnings were also up 25.3% from $2.41 recorded in the year-ago quarter.
Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, which surpassed the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level.
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Embraer (ERJ) Beats on Q3 Earnings, Sales; Retains '16 View
Embraer SA (ERJ - Free Report) reported third-quarter 2016 adjusted earnings of 43 cents per American Depository Share (ADS) that beat the Zacks Consensus Estimate of 27 cents by 59.3%. Adjusted earnings were also up 10.3% from 39 cents per ADS in the year-ago quarter.
Revenues
In the third quarter, Embraer posted total revenue of $1,514.3 million that surpassed the Zacks Consensus Estimate of $1,381 million by 9.6%. Reported revenues also improved 17.9% year over year on the back of higher revenues in the Commercial Aviation and Defense & Security segments.
Revenues at Commercial Aviation segment improved 34.7%, while Defense & Security segment registered an increase of 18.6% in revenues. However, revenues from the Executive Jets segment declined 8.8% year over year.
EMBRAER AIR-ADR Price, Consensus and EPS Surprise
EMBRAER AIR-ADR Price, Consensus and EPS Surprise | EMBRAER AIR-ADR Quote
Order and Delivery
The company delivered a total of 54 jets in the quarter, up 5.9% year over year.
The company delivered 29 commercial and 25 executive jets to each of the commercial aviation and business aviation markets.
The company had delivered 21 jets to the commercial aviation market and 30 jets to the business aviation market in third-quarter 2015. In total, the company had delivered of 51 jets a year ago.
In the third quarter, Embraer’s Commercial Aviation unit supplied 24 E175s, four E190s and one E195 jets. The rest were delivered to Business Aviation, which included 13 light and 12 large jets.
Embraer reported an order backlog of $21.4 billion as of Sep 30, 2016 compared with $21.9 billion in the prior quarter. The third-quarter figure indicates a 6.1% decline from $22.8 billion recorded a year ago.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $1,229.8 million, up from $1,060 million a year ago.
The company’s gross profit declined 21.1% to $224.6 million in the third quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $63.7 million compared with $158 million in the prior-year quarter.
Financial Update
As of Sep 30, 2016, cash and cash equivalents were $1,455.5 million compared with $1,954.5 million as of Sep 30, 2015.
At the end of third quarter, the company had net debt of $652.7 million.
In the reported quarter, net cash generated from operating activities was $218.3 million as against cash inflow of $70.2 million a year ago.
In the third quarter, the company’s capital expenditure was around $73.6 million, while free cash outflow was $37.5 million. Free cash outflow in third-quarter 2015 was $115.3 million.
Guidance
Embraer reiterated its 2016 revenue guidance in the range of $5.8–$6.2 billion. Defense & Security revenues are still expected in the $700–$750 million band.
The company expects to deliver 105–110 jets in Commercial Aviation along with 35–45 large jets and 70–80 light jets in Executive Jets.
It still expects EBIT margin to be in the range of 7–8% and EBITDA margin of 12.7–13.7%.
For 2016, the company reaffirmed its plans to invest $650 million, including capital expenditure of $275 million.
Other Releases in the Sector
The Boeing Company's (BA - Free Report) third-quarter 2016 adjusted earnings of $3.51 per share beat the Zacks Consensus Estimate of $2.62 by 34%. Reported earnings were also up 39.3% from the year-ago figure of $2.52 per share.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.02 per share that beat the Zacks Consensus Estimate of $2.81 by 7.5%. Reported earnings were also up 25.3% from $2.41 recorded in the year-ago quarter.
Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, which surpassed the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level.
Zacks Rank
Embraer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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