) reported first-quarter earnings of 17 cents per American
Depository Shares (ADS), down drastically by more than 98% from
the year-ago profit of 58 cents per ADS. The reported figure also
missed the Zacks Consensus Estimate of 43 cents by 60.5%. The
decrease was mainly due to the lower number of aircraft
deliveries and product mix.
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
TRIUMPH GRP INC (TGI): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
WESCO AIRCRAFT (WAIR): Free Stock Analysis
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Embraer delivered 29 jets in the first quarter of 2013 ending Mar
31, 2013, which fell short of the 34 deliveries made in the same
period last year.
Net revenue in the quarter was $1,085.9 million, down from
$1,152.1 million in the year-ago quarter due to lower commercial
and executive aircrafts deliveries. Reported revenue also missed
the Zacks Consensus Estimate of $1,196.0 million.
The company's new reporting segments, effective from the first
quarter 2013, include Commercial Aviation, Executive Aviation,
Defense & Security and Others.
revenues, comprising 58.9% of total revenue, declined 15.8% year
over year to $639.6 million. The lower numbers were due to
deliveries of 17 jets to the commercial aviation market compared
with 21 made in the year-ago period.
, representing 16.1% of total quarterly revenue, delivered 12
jets (8 light jets and 4 large jets) during the reported quarter
compared with 13 deliveries in the first quarter of 2012.
However, segment revenues grew 15.6% in the reported quarter on a
Defense & Security
market with a series of campaigns already underway for various
applications is looking good. At revenues of $251.7 million, the
segment accounted for 23.2% of total first-quarter sales and
increased 10.4% from the year-ago period.
category accounted for 1.8% of total first quarter revenue
climbing almost 52% from the first quarter of 2012.
Embraer − the largest among Brazil's aircraft manufacturers and
the world's third-largest commercial planemaker − had an order
backlog of approximately $13.3 billion at the end of the quarter,
which represented an $800 million increase from the year-end 2012
level. The sequential improvement was mainly attributable to
higher Commercial Aviation orders as well as a continued stream
of orders in the Defense & Security segment.
In terms of aircraft breakdown, this includes 97 E-190, 80 E-175,
25 E-195 and 9 E-170 jets. The first-quarter backlog includes the
contract from Republic Airways Holdings Inc. for deliveries of 47
E175 jets. It also includes an order from Embraer Defense and
Security for the supply of 20 A-29 Super Tucano aircraft.
Meanwhile, Embraer received an order from United Airlines, a
United Continental Holdings, Inc.
) for 30 E-175 jets, with deliveries scheduled for next year and
the year after. The order is worth a combined $2.9 billion at
list prices and includes options for 40 additional E-175 jets.
Although the company's quarterly earnings were hurt by rising
labor costs and a fall in commercial aircraft deliveries, this
latest contract will likely provide Embraer impetus for future
Gross margin in the quarter was 22.2%, down 90 basis points from
23.1% in the same period last year. During the reported quarter,
product mix and the boost in wages led to a lower gross margin.
The EBIT margin came to 3.6% in the quarter versus 7.4% in the
first quarter of 2012. Rise in wages was the primary factor for
the margin decline.
Cash and cash equivalents were $1,684.3 million at the end of the
first quarter compared with $1,797.0 million at 2012 end.
At the end of the first quarter, the company's total debt
increased to $2,462.5 million from $2,066.5 million at the end of
Exiting the first quarter 2013, Embraer's net cash used in
operating activities was $369.6 million versus $128.6 million in
the first quarter 2012. Capital spending increased to $50.4
million in the quarter from $39.6 million in the year-ago
The company maintained its 2013 revenues as well as margin
assumptions. Embraer, in February, had projected total revenue in
the range of $5.9 billion to $6.4 billion for 2013. It also
expects to deliver 90 to 95 commercial jets, 80 to 90 light
executive jets and 25 to 30 large executive jets this year.
The company also expects to realize an EBIT margin between 9.0%
and 9.5% for the year.
Embraer currently has a Zacks Rank #3 (Hold). We would advise
investors to accumulate its Zacks Rank #2 (Buy) peers
Wesco Aircraft Holdings, Inc.
Triumph Group, Inc.