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Embraer Misses Q4 Earnings Estimates, Gives 2015 Outlook - Analyst Blog

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Embraer SAERJ reported fourth-quarter 2014 adjusted earnings of 71 cents per American Depository Share (ADS), missing the Zacks Consensus Estimate of $1.06 by 33%. Quarterly earnings plunged 65.4% from $2.05 per ADS a year ago. Adjusted figure excluded deferred income tax and social contribution.

On a GAAP basis, earnings per ADS were around 50 cents compared with $1.45 a year ago.

The company's 2014 earnings of $2.26 per ADS were 22.9% lower than the prior-year figure.

Annual GAAP earnings stood at $1.82 per ADS versus $1.88 per ADS in 2013.

Total Revenue

In the fourth quarter, Embraer posted total revenue of $2.05 billion, missing the Zacks Consensus Estimate by 7.5%. Reported top line also decreased 11.2% year over year due to lower sales at the company's Others (30.9%), Commercial Aviation (12.9%), Executive Jets (12%) and Defense & Security (2.8%) segments.

The company's revenues in 2014 stood at $6.29 billion, up 0.9% year over year primarily on the back of higher contribution from Defense & Security.

Order and Delivery

Embraer delivered a total of 208 jets in 2014, including 82 jets in the reported quarter. Annual delivery was down from 209 jets a year ago. The company delivered 92 commercial and 116 executive jets 2014. It provided 62 E-175s, 19 E-190s, 10 E-195s and one E-170 to the commercial aviation market, while the rest were delivered to the executive aviation market, which included both the light and large jets.

The company however reported order backlog of $20.9 billion at 2014-end, up 14.8% year over year.

Operational Highlights

In the quarter under review, Embraer's cost of sales and services came in at $1.69 billion, down 2.6% year over year.

The company's gross margin decreased to 17.3% in the fourth quarter versus 24.6% a year ago.

Earnings before interest and taxes ("EBIT") came in at $196.3 million, down 57.6% year over year primarily due to a decline in revenues, and higher administrative and research expenses.

The company reported quarterly earnings before interest, taxes, depreciation and amortization ("EBITDA") of $281.3 million versus $543.6 million in the prior year quarter.

Financial Update

Cash and cash equivalents were $1,713 million as of Dec 31, 2014, compared with $1,683.7 million as of Dec 31, 2013.

As of Dec 31, 2014, the company's non-current loans and financing were $2,418.4 million, up from $2,115 million as of Dec 31, 2013.

In the fourth quarter, net cash from operating activities was $620.8 million, up from $321.2 million a year ago.

In 2014, the company invested around $227.5 million as capital expenditure.

Guidance

Embraer provided its guidance for 2015 net revenues, EBIT and EBITDA in the ranges of $6.1-$6.6 billion, $0.49-$0.56 billion and $73-$86 billion, respectively.

In 2015, the company plans to invest $0.65 billion, including capital expenditures of $0.3 billion.

The company expected to deliver 95-100 jets and 115-130 jets in the commercial aviation and executive jets segments, respectively.

Other Releases in the Sector

The Boeing Company BA reported adjusted fourth-quarter 2014 earnings of $2.31 per share, beating the Zacks Consensus Estimate of $2.07 by 11.6%.

Lockheed Martin Corp. LMT reported adjusted fourth-quarter 2014 earnings of $3.01 per share, surpassing the Zacks Consensus Estimate of $2.81 by 7.1%.

Northrop Grumman Corporation NOC reported fourth-quarter 2014 adjusted earnings of $2.26 per share, beating the Zacks Consensus Estimate of $2.22 by 1.8%.

Zacks Rank

Embraer currently has a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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