Embraer Earnings Results: 3rd Quarter 2020

 EMBRAER S.A. (NYSE: ERJ; B3: EMBR3) releases its Third Quarter 2020 Earnings Results.

HIGHLIGHTS

  • Embraer delivered 7 commercial jets and 21 executive jets (19 light / 2 large) in 3Q20, and the Company’s firm order backlog at the end of the quarter was US$ 15.1 billion;
  • Excluding special items, adjusted EBIT and EBITDA were US$ (45.3) million and US$ (0.6) million, respectively, negatively impacted by weak Commercial Aviation results, yielding adjusted EBIT margin of -6.0% and adjusted EBITDA margin of -0.1%;
  • The 3Q20 results include total net positive special items of US$ 7.6 million: 1) restructuring expenses of US$ 54.0 million related to the voluntary and non-voluntary dismissal programs announced in September, 2) negative provisions for expected credit losses during the Covid-19 pandemic of US$ 13.0 million, 3) reversal of previous impairment in the Executive Jets business which positively impacted results by US$ 15.9 million, and 4) reversal of previous impairment in the Commercial Aviation business which positively impacted results by US$ 58.7 million;
  • Adjusted net loss (excluding special items and deferred income tax and social contribution) in 3Q20 was US$ (148.3) million, with Adjusted loss per ADS of US$ (0.81);
  • Embraer reported Free cash flow of US$ (566.5) million in 3Q20, still affected by working capital increases (particularly higher inventories) largely in Commercial Aviation;
  • Embraer’s liquidity remains solid as the Company finished the quarter with total cash of US$ 2.2 billion, higher than the US$ 2.0 billion in cash at the end of 2Q20 despite the negative free cash flow in 3Q20. The Company successfully issued US$ 750 million in bonds with maturity in 2028, using US$ 250 million of the proceeds to prepay portions of its 2022 and 2023 bonds, while adding US$ 500 million in liquidity. Embraer’s liability management during 3Q20 resulted in the average debt maturity increasing from 3.8 to 4.5 years;
  • 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

2Q20

3Q19

3Q20

YTD20

Revenue

537.2

1,175.6

758.7

1,929.7

EBIT

(342.4)

(20.8)

(37.7)

(427.1)

EBIT margin %

-63.7%

-1.8%

-5.0%

-22.1%

Adjusted EBIT

(140.5)

(20.8)

(45.3)

(177.2)

Adjusted EBIT margin %

-26.2%

-1.8%

-6.0%

-9.2%

EBITDA

(221.1)

18.2

(0.6)

(212.4)

EBITDA margin %

-41.2%

1.5%

-0.1%

-11.0%

Adjusted EBITDA

(120.4)

18.2

(8.2)

(63.7)

Adjusted EBITDA margin %

-22.4%

1.5%

-1.1%

-3.3%

Adjusted net income (Loss) 2

(198.8)

(48.4)

(148.3)

(451.1)

Adjusted earnings (losses) per share – ADS basic

(1.0801)

(0.2631)

(0.8058)

(2.4510)

Net income (loss) attributable to Embraer Shareholders

(315.3)

(77.2)

(121.2)

(728.6)

Earnings (losses) per share – ADS basic (US$)

(1.7131)

(0.4197)

(0.6585)

(3.9587)

Adjusted free cash flow

(472.2)

(257.4)

(566.5)

(1,715.2)

Net debt

(1,800.7)

(1,347.2)

(2,365.1)

(2,365.1)