Embraer S.A.'s
(
ERJ
) second quarter of 2012 earnings per ADS (diluted) came in at 30
cents, missing the Zacks Consensus Estimate of 58 cents. This also
compared unfavorably with earnings of 53 cents in the year-ago
quarter.
The tapered earnings primarily resulted from deferred income
taxes generated by the appreciation of the US Dollar, which
negatively impacted net income.
Revenue
Net revenue in the quarter was $1717.3 million, up 26.4% year
over year, driven by the delivery of 35 jets to the commercial
aviation market and 20 to the executive aviation market (17 light
jets and 3 large jets). Revenue surpassed the Zacks Consensus
Estimate of $1487.0 million.
Commercial Aviation revenue accounted for 68.5% of total
revenue, Defense and Security Business contributed around 15.5%,
Executive Aviation 15.2%, and Others 0.8%.
Embraer's firm order backlog at the end of the second quarter of
2012 totaled $12.9 billion, down from $15.8 billion at the end of
second quarter of 2011.
Margins
EBIT margin in the quarter was 11.5% compared with 7.8% in the
year-ago quarter and 7.4% in the previous quarter. EBITDA in the
quarter was recorded at $265.2 million, up 73.1% year over year,
while EBITDA margin stood at 15.4%, rising from 11.3% in the
year-ago quarter.
Balance Sheet
The company's net cash position was $290.2 million at the end of
the reported quarter, down from $301.8 million at the end of the
previous quarter. The drop in net cash position is an outcome of an
increase in the company's Trade accounts receivable and PP&E,
as well as decrease in Advances from customers. The impacts were
partially offset by increase in Trade accounts payable and a
decrease in Inventories.
Cash and cash equivalents were $1685.5 million compared with
$1436.6 million at the end of the prior quarter.
The company's total debt increased to $2155.8 million, up 8.4%
year over year.
Cash Flow
Exiting the second quarter, Embraer's net cash generated by
operating activities was $189.1 million compared with $78.3 million
in the previous year quarter.
Additions to property, plant and equipment came in at $75.5
million in the quarter compared with $92.9 million in the year-ago
quarter and $39.6 million in the previous quarter. Free cash flow
was recorded at 24.7 million versus negative $37.7 million in the
year-ago quarter and negative $173.9 million in the previous
quarter.
Brazil-based Embraer's product portfolio supports strong
customer orders worldwide. The company's diversified global
footprint offers tough competition to industry players of the likes
of
Boeing Co.
(
BA
),
Lockheed Martin Corporation
(
LMT
), and
Northrop Grumman Corporation
(
NOC
).
We currently maintain a long-term 'Neutral' recommendation on
the stock. Furthermore, Embraer has a Zacks # 3 Rank, which
translates into a short-term (1-3 months) 'Hold' rating.
BOEING CO (BA): Free Stock Analysis Report
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
Report
LOCKHEED MARTIN (LMT): Free Stock Analysis
Report
NORTHROP GRUMMN (NOC): Free Stock Analysis
Report
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