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Embraer SA Beats on Q4 Earnings

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Embraer SA’s (ERJ - Free Report) fourth-quarter earnings of $2.05 per American Depository Shares (ADS) increased 177.0% from 74 cents per ADS in the prior-year quarter. The reported figure also beat the Zacks Consensus Estimate of $1.20 by 70.8%.

In 2013, Embraer reported earnings of $2.91 per ADS compared with $2.32 per ADS in 2012. The reported figure was also ahead of the Zacks Consensus Estimate of $1.79 by 62.6%.  

The uptrend was backed by strong demand for its commercial and executive jets.

Operational Highlights

Net revenue in the quarter was $2.3 billion, up from $1.9 billion in the year-ago quarter and ahead of the Zacks Consensus Estimate of $2.2 billion by 7.0%.

In 2013, net revenues were $6.2 billion, up 1.1% from $6.1 billion in 2012.

Order and Delivery

In the quarter ending Dec 31, the plane maker delivered a total of 85 jets, higher than 44 deliveries made in the last quarter.

The quarterly deliveries also exceeded the year-ago level of 76. Of the total deliveries this quarter, 32 jets were made to the commercial aviation market including 14 of E-190, 12 E-175, 5 E-195 and 1 E-170, while the remaining 53 jets were delivered to the executive aviation market inclusive of 38 light and 15 large jets.

Including an order of 60 E175 jets from American Airlines Group and a satellite contract under the Defense & Security segment, Embraer’s firm order backlog totaled $18.2 billion, reflecting an increase of 2.2% from the last reported quarter Embraer’s order backlog comprised 188 E-175, 100 E-175-E2, 73 E-190, 25 E-195-E2, 25 E-190-E2, 17 E-195 and 1 E-170 jets.

Segment Details

Commercial Aviation revenues, comprising 48.6% of total quarterly revenue, increased 29.7% year over year to $1.2 billion.

Executive Jets revenues, representing 34.1% of total quarterly revenue, grew 10.2% year over year to $0.8 billion. The segment delivered 53 jets, in line with deliveries in the prior-year quarter.

Defense & Security generated revenues of $0.4 billion that accounted for 16.0% of total fourth-quarter sales and increased 24.4% from the year-ago period.

The Other category accounted for 1.3% of total fourth quarter revenue, increasing almost 20.2% year over year to $0.03 billion.

Financial Update

Cash and cash equivalents were $1.7 billion at the end of the reported quarter, compared with $1.8 billion at the end of fourth quarter 2012.

As of Dec 31, 2013, the company's total debt was $2.1 billion, up from $2.0 billion as of fourth quarter 2012.

In the fourth quarter 2013, Embraer’s net cash from operating activities was $0.3 billion versus $0.5 billion in fourth quarter 2012.

Capital expenditure was $0.15 billion in the reported quarter, down from $0.16 billion in the fourth quarter of 2012.


Embraer expects double-digit growth in the Defense & Security segment due to the continuous progress in the military transport (KC-390) as well as the Border Monitoring system, Super Tucano LAS program, and satellite programs.

Embraer projected total revenue in the range of $6.0 billion to $6.5 billion for 2014. It also expects to deliver 92 to 97 commercial jets, 80 to 90 light executive jets and 25 to 30 large executive jets in 2014. The company expects to deliver a higher proportion of smaller E-Jets and the E175 model aircraft at the Commercial Aviation segment.

The company also expects to realize an EBIT margin between 9.0% and 9.5% for 2014.

Total investment is expected at around $0.7 billion for 2014. This expenditure comprises $0.08 billion, $0.3 billion and $0.2 billion of research, product development and capital expenditure respectively.

Other Releases

Northrop Grumman Corp. (NOC - Free Report) reported fourth quarter 2013 earnings per share of $2.00, comfortably surpassing the Zacks Consensus Estimate of $1.94 by 3.1%.

Lockheed Martin Corp. (LMT - Free Report) posted fourth quarter 2013 earnings of $2.38 per share, comfortably surpassing the Zacks Consensus Estimate of $2.00 by 19.0%

General Dynamics Corp. (GD - Free Report) announced fourth-quarter 2013 operating earnings of $1.76 per share, in line with the Zacks Consensus Estimate.

Embraer SA has a Zacks Rank #3 (Hold).

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