Embraer Earnings Results 2nd Quarter 2020

Rhea-AI Summary

EMBRAER S.A. (NYSE: ERJ) reported its 2Q20 results, delivering four commercial and 13 executive jets, with a backlog of US$ 15.4 billion. Adjusted EBIT and EBITDA were US$ (140.5) million and US$ (120.4) million, reflecting a decline in commercial aviation. The adjusted net loss was US$ (198.8) million, or US$ (1.08) per ADS. Despite a US$ (476.2) million free cash flow, liquidity remains strong with US$ 2.0 billion in cash. Guidance remains suspended due to COVID-19 uncertainty.

Positive

• Firm order backlog at US$ 15.4 billion.
• Improvement in free cash flow usage from US$ (676.5) million in 1Q20 to US$ (476.2) million in 2Q20.
• Total cash position at US$ 2.0 billion, ensuring liquidity.

Negative

• Adjusted EBIT of US$ (140.5) million and EBITDA of US$ (120.4) million reflect performance issues.
• Adjusted net loss of US$ (198.8) million indicates significant financial strain.
• Guidance for 2020 results remains suspended due to ongoing COVID-19 impact.

SÃO PAULO, Aug. 5, 2020 /PRNewswire/ -- EMBRAER S.A. (NYSE: ERJ; B3: EMBR3) releases its Second Quarter 2020 Earnings Results.

HIGHLIGHTS

• Embraer delivered four commercial jets and 13 executive jets (nine light / four large) in 2Q20, and the Company's firm order backlog at the end of 2Q20 was US$ 15.4 billion;
  
• Excluding special items, adjusted EBIT and EBITDA were US$ (140.5) million and US$ (120.4) million, respectively, negatively impacted by weak Commercial Aviation results, yielding adjusted EBIT margin of -26.2%% and adjusted EBITDA margin of -22.4%;
  
• The 2Q20 results include total net negative non-cash special items of US$ 202 million: 1) additional negative provisions for expected credit losses during the Covid-19 pandemic of US$ 16.1 million, 2) an impairment loss on the Commercial Aviation business unit of US$ 91.1 million, 3) recognition of previous period depreciation and amortization expense in the Commercial Aviation business of US$ 101.2 million, and 4) a positive valuation mark to market of US$ 6.5 million on the Company's stake in Republic Airways shares;
  
• 2Q20 adjusted net loss (excluding special items and deferred income tax and social contribution) was US$ (198.8) million, with Adjusted loss per ADS of US$ (1.08);
  
• Embraer reported Free cash flow of US$ (476.2) million in 2Q20, still affected by working capital needs in Commercial Aviation, but an improvement versus the US$ (676.5) million usage of free cash flow reported in 1Q20, due to several initiatives to reduce investments, control working capital, and minimize fixed costs;
  
• Embraer's liquidity remains solid as the Company finished the quarter with total cash of US$ 2.0 billion and major debt maturities starting in 2022 onwards. The Company also finalized the terms of contracts for working capital and export financing with export credit agencies in Brazil and the United States and private and public banks, adding a total of up to US$ 700 million to its total liquidity. Disbursements of these new financing lines are expected to be completed in the third quarter of 2020 reinforcing Embraer's cash position in the second half of 2020 and into 2021;
  
• Due to continued uncertainty related to the COVID-19 pandemic, financial and deliveries guidance for the Company's 2020 results remains suspended at this point.

MAIN FINANCIAL INDICATORS

in millions of U.S dollars, except % and earnings per share data
	1Q20	2Q19	2Q20	YTD20
Revenue	633.8	1,378.7	537.2	1,171.0
EBIT	(46.9)	26.6	(342.4)	(389.3)
EBIT margin %	-7.4%	1.9%	-63.7%	-33.2%
Adjusted EBIT	8.7	26.6	(140.5)	(131.8)
Adjusted EBIT margin %	1.4%	1.9%	-26.2%	-11.3%
EBITDA	9.3	67.0	(221.1)	(211.7)
EBITDA margin %	1.5%	4.9%	-41.2%	-18.1%
Adjusted EBITDA	64.9	67.0	(120.4)	(55.4)
Adjusted EBITDA margin %	10.2%	4.9%	-22.4%	-4.7%
Adjusted net income (Loss)	(104.0)	(13.9)	(198.8)	(302.8)
Adjusted earnings (losses) per share - ADS basic	(0.5651)	(0.0756)	(1.0801)	(1.645)
Net income (loss) attributable to Embraer Shareholders	(292.0)	7.2	(315.3)	(607.3)
Earnings (losses) per share - ADS basic (US$)	(1.5867)	0.0391	(1.7131)	(3.2996)
Adjusted free cash flow	(676.5)	1.5	(476.2)	(1,152.6)
Net debt	(1,331.6)	(1,090.3)	(1,800.7)	(1,800.7)

For additional information, please check the full document on our website ri.embraer.com.br

INVESTOR RELATIONS

Eduardo Couto, Chris Thornsberry, Caio Pinez, Nádia Santos, and Viviane Pinheiro.
(+55 11) 3040-6874
investor.relations@embraer.com.br
ri.embraer.com.br

CONFERENCE CALL INFORMATION

Embraer will host a conference call to present its 2Q20 Results on Wednesday, August 5, 2020 at 10:30 AM (SP) / 9:30 AM (NY). The conference call will also be broadcast live over the web at ri.embraer.com.br

Conference ID: EMBRAER

Telephones USA / Canada: +1 (412) 717-9627 / +1 (844) 204-8942
Telephones U.K.: +44 20 3795-9972
Telephones Brazil: +55 (11) 4210-1803 / +55 (11) 3181-8565

View original content:http://www.prnewswire.com/news-releases/embraer-earnings-results-2nd-quarter-2020-301106177.html

SOURCE Embraer S.A.

FAQ

What were EMBRAER's earnings results for 2Q20?

EMBRAER reported an adjusted net loss of US$ (198.8) million and adjusted EBIT loss of US$ (140.5) million for 2Q20.

What is EMBRAER's current order backlog?

As of the end of 2Q20, EMBRAER's firm order backlog stood at US$ 15.4 billion.

How has COVID-19 impacted EMBRAER's financial guidance?

EMBRAER has suspended its financial and delivery guidance for 2020 due to uncertainty from the COVID-19 pandemic.

What was EMBRAER's free cash flow in 2Q20?

EMBRAER reported a free cash flow of US$ (476.2) million in 2Q20, an improvement from US$ (676.5) million in the previous quarter.

How much cash does EMBRAER have on hand?

At the end of 2Q20, EMBRAER had total cash of US$ 2.0 billion, ensuring solid liquidity.