Embraer (NYSE: ERJ) reported Q3 EPS of ($0.81), $0.36 worse than the analyst estimate of ($0.45). Revenue for the quarter came in at $537.2 million versus the consensus estimate of $816.74 million.

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.

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