Embraer Reports Second Quarter Net Loss of $315.3 Million or $1.71 per Diluted Share
Embraer announced on Wednesday a second quarter net loss of $315.3 million or $(1.71) per diluted share and an adjusted net loss of $198.8 million or $(1.08) per share. The company closed the quarter with $2 billion in cash and no major debt maturities until 2022.
On Wednesday (August 5, 2020) Embraer announced their second quarter 2020 financial results with a net loss of $315.3 or $(1.71) per share and an adjusted net loss (excluding special items, deferred income tax and social contribution) of $198.8 million or $(1.08) per diluted share. Embraer’s second quarter revenues declined 61 percent to $537.2 million largely attributable to reduced deliveries. During the second quarter, the company delivered four commercial jets and 13 executive jets and closed the quarter with a firm order backlog valued at $15.4 billion. Due to the global COVID-19 pandemic, Embraer has delayed the start of operations for their next generation E175-E2 jet until 2023.
As of June 30, 2020, Embraer had $2.0 billion in cash and no major debt maturities due prior to 2022. The company also finalized contracts for working capital and export financing with U.S. and Brazilian export credit agencies and public banks, adding $700 million in liquidity which is expected to be disbursed during the second half of 2020 into 2021. Embraer’s second quarter administrative expenses declined to $33.7 million compared to $46.2 million in Q2 2019 due to furloughs, workweek reductions and salary cuts. Second quarter selling expenses fell year-over year to $47.6 million versus $76.2 million last year, while research expenses declined to $6.4 million compared to $11.8 million in Q2 2019. For the first half of the year, separation costs related to the terminated strategic partnership with Boeing totaled $44 million, compared to $31.8 million in H1 2019 related to the partnership.
Embraer ended the second quarter with a net debt position of $1.8 billion, up from $1.3 billion at the close of the first quarter primarily attributable to second quarter free cash flow usage. As previously mentioned, the company closed the quarter with around $2.0 billion in cash and financial investments. Embraer’s total debt decreased $33 million from Q1 to approximately $3.8 billion with an increase in long-term loans offset by a decline in short-term loans. The company closed the second quarter with $471.2 million in short-term debt and $3.382 billion in long-term debt, with an average maturity date of 3.8 years.
Embraer is the leading manufacturer of aircraft with 70-150 seats and has more than 100 customers worldwide. The company has logged over 1,900 orders for their E-Jets and have already delivered 1,600 to 80 customers in 50 countries. Since the company’s founding in 1969, Embraer has delivered over 8,000 aircraft. Prior to the pandemic, an Embraer aircraft took off on average every ten seconds, carrying over 145 million passengers annually.