Embraer recorded $4.5bn revenue in 2022, growing 8% from its 2021 revenue of $4.2bn.
Despite this, the Brazilian firm ended the year with a net loss of $185.5m – over 400% more than its $44.7m losses in 2021.
Embraer delivered 159 jets In 2022, at a split of 57 commercial aircraft – a 19% increase from 2021, and 102 executive jets – up 10% from last year. Overall this is a 12.7% increase compared to 2021, a healthy growth considering significant what Embraer calls “significant supply chain constraints” over the last year.
There were an additional 4 commercial jets in the 2022 projected total production figure, which had their deliveries put on hold until January 2023, meaning the company was just shy of its 2022 guidance of 61 commercial jets.
“The Phenom 300 became the world’s best-selling light jet for the eleventh consecutive year,” Embraer CEO Francisco Gomes Neto boasted on an earnings call today.
“We’re very Bullish about the Chinese Market”
The Brazilian firm also outlined the success of the E195-E2’s development this year, with Neto nodding to events in June 2022, when the jet successfully completes tests using 100% sustainable aviation fuel (SAF).
“The delivery of the first E195-E2 jets to Canadian Porter Airlines marked the beginning of E2 operations in North America. Porter has also placed a new order for 20 jets in addition to the existing 30 firm orders. Another important sale was the 20 E2 jets to US leasing company Azura.”
Neto also highlighted the importance of the Civil Aviation Administration of China granting certification to the E190-E2 in November of last year, which has “opened doors” for Embraer in the Chinese market.
“We’re in the process of adding the E195-E2 to that,” Arjan Meijer, CEO of Embraer commercial aviation added.
“We strongly believe that the E190-E2 and E195-E2 combination in China is a very strong addition to the local portfolio. There’s a gap with no Chinese products [that Embraer can fill]. We’re very Bullish about the Chinese market.”
Production slots up to 2024 are “practically filled”
Firm order backlog in 2022 grew to pre-pandemic levels, ending at $17.5bn, a year-on-year growth of $500m.
“This is one of the highest backlogs since the start of the pandemic, $800m higher compared to Q4 2019,” Embraer CFO Antonio Carlos Garcia told investors today, explaining the growth was driven by solid sales in the executive aviation and service and support sectors.
Embraer says the book-to-bill in executive aviation and services & support was also higher than in 2021.
“The aircraft slots on the production line for deliveries in 2023 and 2024 are practically filled for commercial aviation and executive jets,” Neto said.
Embraer reported its adjusted EBIT of $270m and EBITDA of $459m in 2022, yielding adjusted margins of 6.0% and 10.1% respectively. This surpasses guidance for 2022, driven by volume/mix, enterprise and tax efficiencies, and partially offset by provision and SG&A.
Embraer invested a total of $242m into its business in 2022, comprising $176m in R&D, including its E2 family, executive aviation, and turboprop projects. The remaining $66m investment was in capital expenditure, which Garcia confirms was allocated “mainly to service and support expansion”.
Reprofiling and reducing debt
Adjusted free cash flow, not including Embraer’s Eve Air Mobility subsidiary amounted to $540m in 2022, surpassing guidance for the year. This was, according to Garcia, to “outstanding” executive aviation sales performance and “very strict” control over working capital.
On debt, Garcia says: “it’s important to highlight our net debt EBITDA ratio decreased from 3.9 in 2021 to 2.1 in 2022; this is a 1.8 decline in just one year. We reprofiled $300m of debt from 2024 to 2027, and the maturities of our debts give us a comfortable situation on amortisation until 2024.”
Embraer’s guidance for 2023 looks positive. Despite Garcia saying are Embraer is “still limited by supply chain constraints”, the firm predicts commercial jet deliveries of 65-70 commercial jet deliveries or a minimum increase of 14% compared to 2022. Executive jet deliveries are projected at 120-130 aircraft, at least an 18% increase from 2022.
Revenues are expected to be in the range of $5.2bn-$5.7bn, with an adjusted EBIT margin of 6.4%-7.4% and adjusted EBITDA margins of 10.0%-11.0%.
“The focus will be on growth from 2023 [onwards]. The business turnaround was completed in 2022 and we are ready to start a new growth phase capturing the company’s full potential in the coming years,” Neto told investors.
“We still face supply chain challenges, but we are optimistic about the company’s future in terms of revenue growth and profitability.