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Embraer (ERJ) Misses Q1 Earnings Estimates, Keeps '18 View

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Embraer SA (ERJ - Free Report) incurred a loss of 13 cents per share in first-quarter 2018 results, wider than the Zacks Consensus Estimate of a loss of a penny. The company delivered earnings of 13 cents in the year-ago quarter.

Barring one-time items, the company posted GAAP loss of 7 cents per share compared with the loss of 29 cents in the prior-year quarter.

Revenues

Embraer’s first-quarter revenues came in at $992 million, missing the Zacks Consensus Estimate of $1,121 million by 11.5%. The top line also declined 4.8% year over year primarily on account of lower revenues in the Commercial Aviation and Executive Jets segments.

Embraer-Empresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

 

While revenues in the Commercial Aviation segment were down 20.9%, the Executive Jets segment witnessed a decline of 27.1%. In the Defense & Security segment, revenues increased 62.9% year over year, while the same in Services & Support segment grew 4%.

Order and Delivery

Embraer delivered a total of 25 jets in the quarter, down 24.2% year over year. Of these, deliveries to the commercial aviation market and the business aviation market included 14 and 11 jets, respectively.

In first-quarter 2017, the company had delivered 18 jets to the commercial aviation market and 15 jets to the business aviation market.

In the first quarter of 2018, Embraer’s Commercial Aviation unit supplied 11 E175s and three E190s jets. The rest were delivered by Business Aviation, which included eight light and three large jets.

Embraer’s backlog at the end of the quarter under review was $19.5 billion, up from $18.3 billion in the year-ago quarter.

Operational Highlights

In the first quarter, Embraer’s cost of sales and services was $810.2 million, down from $868.7 million in the prior-year quarter.

Additionally, the company’s gross profit increased 4.7% to $181.8 million.

Embraer posted quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $89.5 million compared with $113 million in the prior-year quarter.

Financial Update

As of Mar 31, 2018, the company’s cash and cash equivalents were $1,287.5 million compared with $1,270.8 million as of Dec 31, 2017.

Embraer had net debt of $758.6 million as of Mar 31, 2018, up from $310.8 million as of Dec 31, 2017.

Net cash outflow from operating activities was $311 million compared with cash outflow of $64.8 million in the year-ago period.

The company’s adjusted free cash outflow was $403.9 million as of Mar 31, 2018 against outflow of $199.2 million in the previous year.

Guidance

For 2018, the company affirms guidance for the Services & Support segment in the range of $900 million to $1 billion.

For 2018, the company reaffirms delivering 85-95 jets in the Commercial Aviation segment along with 70-80 light jets and 35-45 large jets in the Executive Jets segment.

Zacks Rank

Embraer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

The Boeing Company (BA - Free Report) reported adjusted earnings of $3.64 per share for first-quarter 2018, beating the Zacks Consensus Estimate of $2.59 by 40.5%.

Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2018 earnings from continuing operations of $4.02 per share, which surpassed the Zacks Consensus Estimate of $3.35 by 20%

Northrop Grumman Corporation (NOC - Free Report) reported first-quarter 2018 earnings of $4.21 per share, beating the Zacks Consensus Estimate of $3.63 by 16%.
 

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