UPDATE – Embraer expects to increase its commercial aircraft deliveries this year to between 60 and 70, up from 48 in 2021. While higher, its guidance is still well below deliveries in previous years. The Brazilian airframer reduced its losses last year and reported a tiny profit for the final quarter during its 2021 results presentation on March 10. Embraer expects to grow airliner deliveries to 60-70.
The guidance for commercial aircraft deliveries of 60-70 compares to actual deliveries of 48 in 2021, 44 in 2020, 89 in 2019, 90 in 2018, and 101 in 2017. Embraer expects to deliver between 100-110 executive jets this year compared to 93 last year, 86 in 2020, 109 in 2019, 91 in 2018, and 109 in 2017. As Chief Financial Officer Antonio Carlos Garcia stressed during the results press conference, deliveries were more even last year compared to 2020, which saw a spike in Q4.
Embraer reported a $44.7 million net loss for its group activities compared to $-731.9 million in 2020. Adjusted EBITDA was a positive $362.5 million, up from $82.1 million, EBIT $201.3 million versus $-323.4 million. Total revenues increased to $4.197 billion from $3.771 billion.
Adjusted free cash flow turned positive again to $292.4 million, up from $-990.2 million in 2020, thanks to strong working capital discipline on inventory and customer payments.Â
In the fourth quarter, the group produced a tiny $2.1 million profit compared to $-3.3 million in Q4 2020. The Q4 results include $8.9 million in re-integration costs of Commercial Aviation following the termination of the Boeing-Embraer joint venture. CA has now been fully re-integrated again. Also included is $172 million from the sale of the Evora plant to Aernnova. CEO Francisco Gomes Neto was satisfied with the results, which confirm that “the strategic planning of Embraer is yielding positive results to the company.” With a total backlog at $17 billion, it is the highest since 2018.
Higher deliveries push revenues up
By segment, Commercial Aviation reported $1.316 billion in revenues for the full year, up from $1.114 billion in 2020. Q4 revenues were $413.7 million, down from $689.4 million in the same period of the previous year that was caused by the Q4 spike mentioned earlier. The increase in full-year revenues was driven by higher E195-E2 deliveries (nineteen versus seven in 2020) at higher prices. E2-deliveries accounted for 44 percent of all E-jets last year, up from 25 percent in the previous year, with the E175 taking a 56 percent share. As reported earlier, Embraer’s backlog of 325 aircraft is leaning heavily on the E195-E2 (170) and E175 (147), with just five E190-E2s and three E190s remaining. In 2021, the airframer recorded 92 new sales, of which fifty for the E2-family. The book-to-bill ratio for commercial aircraft was 2 to 1.Â
The same 2 to 1 ratio was also seen with Executive Jets, which produced full-year revenues of $1.130 billion, up from $1.071 billion in 2020. In Q4, they were $455.4 million versus $580 million in the previous year. Seven more deliveries at higher prices per aircraft contributed to the higher revenues. The most popular business jet was the Phenom 300, of which 56 were delivered last year.
Embraer Services & Support grew its revenues to $1.132 billion from $920 million in 2020, of which $307 million in Q4. As flight activities recovered, the segment saw a quarter-by-quarter increase in demand for its servicing programs. It signed new pool programs with KLM Cityhopper and Air Montenegro and renewed contracts with TAP Express.
Defense & Security produced lower revenues at $594.4 million from $653.3 million in 2020, which reflects the impact of the decision of the Brazilian Air Force to reduce its order for the KC-390 by six aircraft to 22. This impacted the backlog of the multirole transporter by $526 million.
Embraer ended the year with $2.6 billion in liquidity, total debt $4.0 billion, and net debt of $1.4 billion, down from $1.7 billion in 2020. In its guidance for 2022, it expects consolidated revenues to grow to between $4.5 and $5.0 billion. The Adjusted EBIT margin should be between 3.5 and 4.5 percent compared to 4.8 percent last year. Adjusted free cash flow of $50 million or better should help Embraer grow its business.
Asked about the impact of the war in Ukraine and sanctions on Russia, Gomes Neto and Garcia said that they expect no immediate effects. Embraer has an inventory of titanium that is sufficient for the next 1.5 to two years and it can source the metal from other suppliers outside Russia if it needs to. Technical support to some sixty (leased) aircraft that fly in Russia has been suspended.
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