Embraer SA (ADR)(NYSE: ERJ) has reported the adjusted earnings per share of $1.06 in the fourth quarter 2016, beating the analysts’ estimates for the adjusted earnings per share of $0.21. As a result, the stock rose over 4% this morning (as of 9:56 AM EST on March 9th, 2017; Source: Google finance)
The company had reported the adjusted revenue fell 2.2 percent to $2.03 billion in the fourth quarter 2016, beating the analysts’ estimates for revenue of $1.9 billion. The consolidated gross margin has increased from 16.9% in 4Q15 to 20.1% in 4Q16. This is largely due to a combination of improved profitability in the Executive Jets segment on production efficiencies and a slightly more favorable delivery mix in the quarter, as well as better gross margin in the Defense & Security segment, which did not have negative cost base revisions from foreign exchange variation in 4Q16.
During the fourth quarter, Embraer has delivered 32 commercial and 43 executive aircraft (25 light jets and 18 large jets), for a total of 108 commercial and 117 executive aircraft (73 light jets and 44 large jets) delivered in 2016. This is compared with a total of 33 commercial and 45 executive aircraft (25 light jets and 20 large jets) delivered in 4Q15 and 101 commercial and 120 executive aircraft (82 light jets and 38 large jets) delivered in 2015.
Embraer order backlog has decreased US$ 2.9 billion during 2016 to end the year at US$ 19.6 billion.
Embraer is on track to fly its next-generation E195-E2 commercial jet by June after an earlier-than-expected rollout of its first prototype. Embraer’s original timeline for the aircraft had projected a rollout in the first half of 2017 and first flight in the second half of the year. The improved capacity, range, maintenance costs and fuel efficiency for the new E195 had drawn interest both from current European operators and from low-cost carriers around the world, especially in Southeast Asia. This could boost the firm order backlog for the new jet, which is currently composed of two leasing companies and two airlines, that includes Brazil’s Azul Linhas Aereas Brasileiras SA and Indian low-cost carrier Air Costa Aviation Pvt Ltd. There are a lot of sales activity expected in the second half of 2017 as airlines look to upgrade their fleets.
Embraer expects the full-year revenue in the range of $5.7 billion to $6.1 billion due to the expected deliveries of 97 to 102 jets in Commercial Aviation and 105 to 125 total jet deliveries in Executive Jets. The consolidated EBIT margin is expected to be within a range of 8.0% to 9.0%, and the projection for Free Cash Flow is for a usage of US$ (150) million or better for 2017.