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Embraer (ERJ) Q2 Earnings Beat Estimates, Revenues Fall Y/Y

·4-min read

Shares of Embraer S.A. ERJ have improved 4.3% following the company’s second-quarter 2022 results, reflecting investors’ optimism about the outcome.

Embraer reportedsecond-quarter 2022 adjusted earnings of 21 cents per American Depository Share (“ADS”), beating the Zacks Consensus Estimate of a loss of 5 cents per ADS. However, the bottom line declined 13% from 23 cents per ADS reported in the prior-year quarter.

Total Revenues

Embraer’s second-quarter revenues were $1,018.9 million, down 9.9% year over year.

EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise
EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

EmbraerEmpresa Brasileira de Aeronautica price-consensus-eps-surprise-chart | EmbraerEmpresa Brasileira de Aeronautica Quote

Order & Delivery

Embraer delivered 32 jets in the reported quarter. ERJ delivered 11 commercial and 21 executive (12 light and nine large) jets compared with six commercial and eight executive (six light and two midsize) jets in the prior quarter.

The backlog at the end of the second quarter was $17.8 billion, representing an increase of 12% year over year, driven by solid order activity.

Operational Highlights

Embraer’s adjusted EBIT was $81.2 million in the second quarter of 2022 compared with the $104.7 million reported in the second quarter of 2021.

The company posted quarterly adjusted EBITDA of $124.6 million, declining 28.9% from the year-earlier quarter.

Financial Update

As of Jun 30, 2022, ERJ’s cash and cash equivalents amounted to $1.04 billion compared with $1.82 billion as of Dec 31, 2021.

The company had net debt of $1,197.9 million as of Jun 30, 2022, down from $1,392.2 million as of Dec 31, 2021.

Its adjusted free cash outflow in the second quarter was $91.2 million, improving massively from free cash flow of $45.1 million in the year-ago period. The improvement came primarily due to working capital optimization measures.

Guidance

Embraer reaffirmed its guidance for 2022. Its commercial jet deliveries are projected in the band of 60-70 jets, while the Executive Aviation deliveries are expected in the band of 100-110 aircraft.

The company expects to generate revenues in the range of $4.5 billion-$5 billion in 2022. The Zacks Consensus Estimate for sales, pegged at $4.74 billion, is on par with the midpoint of the guidance range.

Embraer anticipates the adjusted EBIT margin in the range of 3.5%-4.5% and the adjusted EBITDA margin in the band of 8%-9% in 2022. It anticipates free cash flow without mergers and acquisitions or divestitures of $50 million or more.

Zacks Rank

Embraer currently has a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Recent Defense Releases

Hexcel Corporation HXL reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.

The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.

AAR Corp. AIR reported fourth-quarter fiscal 2022 adjusted earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents by 5.9%. Earnings recorded a solid surge of 53.2% from the year-ago quarter.

In the quarter under review, AAR generated net sales worth $476.1 million. The reported figure surpassed the Zacks Consensus Estimate of $468 million by 1.7% and also improved 8.8% from the $437.6 million recorded in the year-ago quarter.

The Boeing Company BA incurred an adjusted loss of 37 cents per share for the second quarter of 2022, much wider than the Zacks Consensus Estimate of a loss of 8 cents. The bottom line also deteriorated from the year-ago quarter’s earnings of 40 cents.

In the quarter under review, Boeing’s revenues amounted to $16.68 billion, which missed the Zacks Consensus Estimate of $17.74 billion by 6%. BA’s top line also declined 2% from the year-ago quarter’s figure of $16.99 billion.


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