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Embraer (ERJ) Misses on Q1 Earnings, Revenues Decline Y/Y
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Embraer SA (ERJ - Free Report) reported first-quarter 2017 adjusted earnings of 13 cents per American Depository Share (ADS) that missed the Zacks Consensus Estimate of 17 cents by 23.5%. In the year-ago quarter, the company reported a loss of 1 cent.
Revenues
In the first quarter, Embraer posted total revenues of $1,026.3 million that surpassed the Zacks Consensus Estimate of $1,013 million by 1.3%. However, reported revenues declined 21.6% year over year owing to lower deliveries at the Commercial Aviation and Executive Jets segments.
During the reported quarter, revenues at Embraer’s Commercial Aviation segment declined 10.5%, while the Executive Jets segment saw a drop of 43.8%. Again, revenues from the Defense & Security segment fell 17.7% year over year.
Order and Delivery
The company delivered a total of 33 jets in the quarter, down 25% year over year. The company delivered 32 commercial and 43 executive jets to each of the commercial aviation and business aviation markets.
Embraer delivered 18 and 15 jets in the commercial and business aviation markets respectively, in the first quarter of 2017 compared with 21 and 23 jets in the year-ago period. Deliveries to the executive aviation market included 11 light and four large executive jets.
The company exited the first quarter with an order backlog of $19.2 billion, lower than the fourth-quarter level of $19.6 billion. Embraer’s backlog was pegged at 432 aircraft, which comprised 100 E175-E2s, 90 E195-E2s, 88 E175s, 85 E190-E2s, 56 E190s, 10 E195s and three E170s jets.
During the quarter, Embraer and Azul Brazilian Airlines announced a contract of up to 50 aircraft, including firm order for 30 E195-E2 jets and purchase rights for 20 jets. These planes are scheduled for delivery in 2019.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $871.8 million, down from $1,047.7 million a year ago.
As a result, the company’s gross profit improved 69.1% to $154.5 million in the first quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $103.4 million compared with $159.5 million in the prior-year quarter.
Embraer-Empresa Brasileira de Aeronautica Price, Consensus and EPS Surprise
As of Mar 31, 2017, cash and cash equivalents were $1,030.9 million, compared with $1,241.5 million as of Dec 31, 2016.
At the end of the first quarter, the company had non-recourse and recourse debt of $349.5 million compared with $351 million at 2016-end.
In the first quarter, net cash outflow from operating activities was $568.5 million compared with cash outflow of $160 million a year ago.
During the quarter, the company’s free cash outflow was $199.3 million compared with outflow of $201.5 in the first quarter of 2016.
Guidance
Embraer reiterated its 2017 revenue guidance in the range of $5.7–$6.1 billion. Defense & Security revenues are still expected in the $0.80–$0.90 billion band, while Commercial Aviation revenues are projected in the range of $3.25–$3.40 billion. For Executive Jets segments, the company still anticipates revenues in the band of $1.60-$1.75 billion.
The company reaffirmed its expectation to deliver 97–102 jets in Commercial Aviation segment along with 70–80 large jets and 35–45 light jets in Executive Jets segment in 2017.
It still expects EBIT margin in the range of 8–9% and EBITDA margin of in 13.5–14.5% band.
For 2017, the company reiterated its plans to invest $650 million, including capital expenditure of $200 million.
Peer Releases
Rockwell Collins Inc. reported financial results for second-quarter fiscal 2017 (ended Mar 31, 2017). The company’s adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.31 by 2.3%. Reported earnings also grew 3.1% from $1.30 per share earned a year ago.
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2017 earnings from continuing operations of $3 per share, beating the Zacks Consensus Estimate of $2.76 by 8.7%. Earnings came in line with the year-ago period’s bottom line figure.
Textron Inc. (TXT - Free Report) reported first-quarter 2017 adjusted earnings from continuing operations of 46 cents per share in line with the Zacks Consensus Estimate.
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Embraer (ERJ) Misses on Q1 Earnings, Revenues Decline Y/Y
Embraer SA (ERJ - Free Report) reported first-quarter 2017 adjusted earnings of 13 cents per American Depository Share (ADS) that missed the Zacks Consensus Estimate of 17 cents by 23.5%. In the year-ago quarter, the company reported a loss of 1 cent.
Revenues
In the first quarter, Embraer posted total revenues of $1,026.3 million that surpassed the Zacks Consensus Estimate of $1,013 million by 1.3%. However, reported revenues declined 21.6% year over year owing to lower deliveries at the Commercial Aviation and Executive Jets segments.
During the reported quarter, revenues at Embraer’s Commercial Aviation segment declined 10.5%, while the Executive Jets segment saw a drop of 43.8%. Again, revenues from the Defense & Security segment fell 17.7% year over year.
Order and Delivery
The company delivered a total of 33 jets in the quarter, down 25% year over year. The company delivered 32 commercial and 43 executive jets to each of the commercial aviation and business aviation markets.
Embraer delivered 18 and 15 jets in the commercial and business aviation markets respectively, in the first quarter of 2017 compared with 21 and 23 jets in the year-ago period. Deliveries to the executive aviation market included 11 light and four large executive jets.
The company exited the first quarter with an order backlog of $19.2 billion, lower than the fourth-quarter level of $19.6 billion. Embraer’s backlog was pegged at 432 aircraft, which comprised 100 E175-E2s, 90 E195-E2s, 88 E175s, 85 E190-E2s, 56 E190s, 10 E195s and three E170s jets.
During the quarter, Embraer and Azul Brazilian Airlines announced a contract of up to 50 aircraft, including firm order for 30 E195-E2 jets and purchase rights for 20 jets. These planes are scheduled for delivery in 2019.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $871.8 million, down from $1,047.7 million a year ago.
As a result, the company’s gross profit improved 69.1% to $154.5 million in the first quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $103.4 million compared with $159.5 million in the prior-year quarter.
Embraer-Empresa Brasileira de Aeronautica Price, Consensus and EPS Surprise
Embraer-Empresa Brasileira de Aeronautica Price, Consensus and EPS Surprise | Embraer-Empresa Brasileira de Aeronautica Quote
Financial Update
As of Mar 31, 2017, cash and cash equivalents were $1,030.9 million, compared with $1,241.5 million as of Dec 31, 2016.
At the end of the first quarter, the company had non-recourse and recourse debt of $349.5 million compared with $351 million at 2016-end.
In the first quarter, net cash outflow from operating activities was $568.5 million compared with cash outflow of $160 million a year ago.
During the quarter, the company’s free cash outflow was $199.3 million compared with outflow of $201.5 in the first quarter of 2016.
Guidance
Embraer reiterated its 2017 revenue guidance in the range of $5.7–$6.1 billion. Defense & Security revenues are still expected in the $0.80–$0.90 billion band, while Commercial Aviation revenues are projected in the range of $3.25–$3.40 billion. For Executive Jets segments, the company still anticipates revenues in the band of $1.60-$1.75 billion.
The company reaffirmed its expectation to deliver 97–102 jets in Commercial Aviation segment along with 70–80 large jets and 35–45 light jets in Executive Jets segment in 2017.
It still expects EBIT margin in the range of 8–9% and EBITDA margin of in 13.5–14.5% band.
For 2017, the company reiterated its plans to invest $650 million, including capital expenditure of $200 million.
Peer Releases
Rockwell Collins Inc. reported financial results for second-quarter fiscal 2017 (ended Mar 31, 2017). The company’s adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.31 by 2.3%. Reported earnings also grew 3.1% from $1.30 per share earned a year ago.
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2017 earnings from continuing operations of $3 per share, beating the Zacks Consensus Estimate of $2.76 by 8.7%. Earnings came in line with the year-ago period’s bottom line figure.
Textron Inc. (TXT - Free Report) reported first-quarter 2017 adjusted earnings from continuing operations of 46 cents per share in line with the Zacks Consensus Estimate.
Zacks Rank
Embraer presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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