Embraer Reports Third Quarter Adjusted Net Loss of $34 Million on 26% Increase in Revenue to $958 M
Embraer has reported a third quarter 2021 adjusted net loss of $33.9 million or (0.18) per ADS share on a 26.3 percent year-over-year increase in revenue to $958.1 million. At September 30, 2021, the company had total cash of $2.5 billion and net debt of $1.8 billion.
On Friday (November 5, 2021), Embraer reported their third quarter 2021 financial results for the period ending September 30, 2021. The company reported a Q3 adjusted net loss of $33.9 million or (0.18) per ADS share on a year-over-year increase in revenue of26.3 percent to $958.1 million. At the end of the third quarter, Embraer had a firm order backlog valued at $16.8 billion, total cash of $2.5 billion and net debt of $1.8 billion. During the third quarter, Embraer delivered nine commercial and 23 executive jets (14 light/7 large), bringing YTD deliveries to 32 commercial and 54 executive jets. The company generated free cash flow $21.3 million in Q3 2021, the first time the company generated cash in the seasonally weak third quarter in over 10 years.
Embraer has reiterated their 2021 deliveries guidance for 40-45 commercial jets and 90-95 executive jets, with increased deliveries in the fourth quarter. For the first nine months of 2021, the company’s consolidate revenues increased year-over-year by 50.1 percent to $2.9 billion, with lower 2020 revenue attributable to the impact of the global COVID-19 pandemic. Embraer expects to finish the year with consolidated revenues of $4.0 to $4.5 billion. The company’s third quarter administrative expenses were $35.7 million, in line with Q3 2020 expenses of $35 million. For the first nine months of 2021, the company’s administrative expenses totaled $110.9 million, up from $101.3 million in Q3 2020, attributable to higher provisions for short-term incentive compensation and profit sharing on better than expected results, combined with consolidation expenses from the Q3 2020 acquisition of the cybersecurity firm Tempest.
Embraer’s Q3 2021 selling expenses totaled $59.7 million versus $45.4 million during the same period last year, explained by abnormally low expenses last year due to pandemic restrictions. For the first nine months of the year, selling expenses totaled $155.7 million compared to $140.1 million for 9M 2020. Research expenses for the third quarter increased to $10.3 million from $7.1 million in Q3 2020, while 9M 2021 research expenses increased to $28 million compared to $19.3 million during the first nine months of 2020. Other operating expenses for Q3 2021 increased to $49.1 million versus $9.1 million in the same period last year, largely attributable to a combination of higher expenses related to the ongoing arbitration case against The Boeing Company, higher IT project spending, and higher re-integration expenses of the Commercial Aviation business under the One Embraer program.
As a result of positive free cash flow generated during the third quarter, Embraer closed the quarter with a net debt position of $1.8 billion, an improvement from $1.84 billion from the end of Q2 2021, and $2.37 billion at September 30, 2020. The company ended Q3 2021 with $2.5 billion in cash, slightly better than Q3 2020, and total loans of $4.4 billion, a $24.5 million decline versus Q2 2021. Embraer’s adjusted net cash used by operating activities, net of adjustments for financial investments, was $93.5 million during Q3 and the company’s adjusted free cash flow was $21.3 million, compared to adjusted free cash flow of ($576) million in the third quarter of 2020.
As previously mentioned, Embraer ended the third quarter of 2021 with a firm order backlog valued at $16.8 billion, the highest quarter-end backlog since the end of 2019, driven by higher order activity, particularly in the Executive Aviation segment. The company’s Commercial aviation segment’s revenue grew 36.6 percent year-over-year to $242 million, attributable to higher deliveries, as well as a more favorable mix of deliveries including more E195-E2s delivered during the period.
During Q3 2021, SkyWest Airlines ordered 16 new E175s, with deliveries starting in mid-2022, which will be operated on behalf of the Delta Connection, Delta Air Lines’ regional brand. SkyWest’s new 76-seat E175s will have a three-class configuration. In addition to Delta, the carrier operates the E175 on behalf of United Airlines, American Airlines and Alaska Airlines. SkyWest currently has 193 E175s in their fleet and another 29 on order. Once the additional aircraft are delivered, the carrier will have nearly 240 E175s in their fleet, more than any other airline in the world. Embraer also announced during the third quarter that their E2 jets can now serve the strategically-located London City Airport (LCY). Three months after EASA certified the E190-E2 for Steep Approach operations at LCY in May, Helvetic Airways started E190-E2 operations at London City Airport.
Headquartered in Brazil, Embraer is a global aerospace company and the leading manufacturer of aircraft with 70-150 seats, with more than 100 customers worldwide. The company maintains industrial units, offices and service/parts distribution centers across the Americas, Africa, Asia and Europe. Embraer has logged over 1,900 orders for their E-Jets and the company has already delivered over 1,600 of the jets to 80 customers in 50 countries. Since the company’s founding in 1969, Embraer has delivered over 8,000 aircraft. Today, an Embraer aircraft takes off on average every ten seconds, carrying over 145 million passengers annually.