Embraer Cuts 2018 Revenues Outlook

(RTTNews) - Embraer S.A. (ERJ) said that it expects consolidated revenues for 2018 to be about US$5.1 billion, a reduction from the previous range of US$5.4 billion - US$5.9 billion.

As a result of reduction in executive jet deliveries, the company now expects revenues in the executive jets segment to be about US$1.1 billion compared to the prior outlook of US$1.35 billion - US$1.50 billion.

Embraer delivered 91 total executive jets in 2018 compared to guidance of 105-125 jets previously.

Guidance for consolidated and adjusted EBIT, consolidated and adjusted EBIT margin, consolidated and adjusted EBITDA, and consolidated and adjusted EBITDA margin for 2018 were lowered due largely to lower fixed cost dilution of the Company as a function of lower executive jet volumes and a decline in Defense & Security revenues.

Embraer also estimates that its spending on investments for 2018 will be roughly US$300 million, below its previous expectation for a total of US$550 million.

As a result of the lower executive jet deliveries, partially offset by the lower spending on investments in 2018, the Company expects that 2018 Free cash flow will be a use of cash of roughly US$200 million versus a use of no more than US$ 100 million in its previous guidance.

For 2019, Embraer expects to deliver between 85 and 95 commercial jets, 90 to 110 executive jets, including light and large jets, 10 Super Tucano aircraft and two KC-390 cargo aircraft. Total consolidated revenues should be between US$5.3 billion and US$5.7 billion.

With the finalization and closure of the partnership operation, tentatively expected to occur by the end of 2019, Embraer anticipates a capital structure without leverage, with a net cash position of approximately US$1.0 billion after the payment of a special dividend to shareholders of roughly US$1.6 billion.

Embraer expects to have net revenues of between US$2.5 billion and US$2.8 billion, EBIT margin of between 2% and 5% and roughly breakeven free cash flow for the year 2020.