Embraer S.A. releases Q1 2021 earnings results

Embraer Press Release | April 29, 2021

Estimated reading time 5 minutes, 50 seconds.

The Company’s operating and financial information is presented, except where otherwise stated, on a consolidated basis in United States dollars (US$) in accordance with IFRS. The financial data presented in this document as of and for the quarters ended March 31, 2021 (1Q21), December 31, 2020 (4Q20) and March 31, 2020 (1Q20), are derived from the unaudited financial statements, except annual financial data and where otherwise stated.

REVENUES AND GROSS MARGIN
In 1Q21 Embraer delivered 9 commercial jets and 13 executive jets (10 light jets and 3 large jets), for a total of 22 aircraft delivered in the quarter. This compares to the 5 commercial jets and 9 executive jets (5 light jets and 4 large jets) that were delivered in 1Q20, which was negatively impacted by the steps taken to effect the separation of
Embraer’s Commercial Aviation division in connection with the now-terminated strategic partnership with The Boeing Company in January 2020, a month in which no deliveries took place. Historically, Embraer seasonally has fewer deliveries during the first quarter of the year, and with some regions of the world, particularly the United States, starting to show better vaccination rollout and improved traffic in the commercial aviation and business aviation markets, the Company is cautiously optimistic for a more evenly balanced quarterly cadence of deliveries in 2021 as compared to 2020.

The Company’s consolidated revenues in 1Q21 were US$ 807.3 million, representing a year-over-year increase of 27.4% compared to 1Q20, driven by revenue growth in the Commercial Aviation (+95.8% YoY), Executive Aviation (+17.5% YoY), and Defense & Security (+25.6%) segments. This growth was only partially offset by a 4.3% year-over-year decline in Services & Support revenues in 1Q21, though on a sequential basis, this segment’s first quarter revenues were roughly in line with that of 4Q20.

Embraer’s 1Q21 consolidated gross margin was 9.5% as compared to 29.0% in 1Q20. Some of this decline is explained by the fact that the Company placed most of its Brazil-based employees on paid leave during the month of January 2020 to complete the internal separation of the Commercial Aviation business, and again on paid leave at the end of March 2020 as Brazilian operations were closed due to the COVID-19 pandemic. The salary expenses for employees on paid leave were treated as abnormal costs and booked in other operating expenses during those periods rather than in cost of goods sold. Further, higher than expected retrofit and non-quality costs in 1Q21 impacted gross margin in the Executive Aviation segment, and delivery mix and the devaluation of the Brazilian real
vs. the U.S. dollar negatively affected gross margin in the Defense & Security segment as compared to 1Q20.

HIGHLIGHTS

Embraer delivered 9 commercial jets and 13 executive jets (10 light / 3 large) in 1Q21. Total company firm order backlog at the end of 1Q21 was US$ 14.2 billion;
Revenues in 1Q21 reached US$ 807.3 million, representing year-over-year growth of 27.4% compared to 1Q20, with growth in the Commercial Aviation, Defense & Security, and Executive Aviation segments;
On April 23, the Company signed a firm order for 30 E195-E2 jets with an undisclosed customer, with deliveries starting in 2022. The 30 firm orders will be included in Embraer’s second quarter backlog;
Excluding special items, adjusted EBIT and EBITDA were US$ (29.6) million and US$ 18.0 million, respectively, yielding adjusted EBIT margin of -3.7% and adjusted EBITDA margin of 2.2%;
Adjusted net loss (excluding special items and deferred income tax and social contribution) in 1Q21 was US$ (95.9) million, with adjusted loss per ADS of US$ (0.52);
Embraer free cash flow in 1Q21 was a usage of US$ (226.6) million, which is consistent with normal quarterly seasonality of free cash flow usage in the first quarter. The free cash flow usage represented a significant improvement compared to the US$ (676.6) million in free cash flow consumption in 1Q20 on considerably better inventory levels given steps taken to stabilize production and operations in the midst of the COVID-19 pandemic;
The Company finished the quarter with total cash of US$ 2.5 billion and net debt of US$ 1.9 billion;
Due to continued uncertainty related to the COVID-19 pandemic and its impacts on the industry, Embraer has decided to not publish 2021 financial and delivery guidance at this point.

MAIN FINANCIAL INDICATORS