Story ID: 121
Embraer's Backlog Jumps but Revenues Drop
By: Kerry Lynch
Caption: Despite a 26 percent dip in Q1 revenues, Embraer is maintaining its guidance as backlog reached highest point since the second quarter of 2018, 
Word Count: 448
Embraer saw revenues drop 26 percent in the first quarter as deliveries of its executive jets dipped and the company encountered almost a month of production shutdown while it reintegrated its commercial aviation business. However, continued strong sales helped push up backlog by $300 million in the quarter, to $17.3 billion, marking the Brazilian airframer’s strongest order book since the second quarter of 2018, Embraer reported on Thursday. Backlog further is up from $14.2 billion a year ago.

Embraer delivered 14 airplanes in the quarter—eight business jets (six light and two midsize jets) and six commercial aircraft. Business jet deliveries were off by a total of five units from the 13 delivered in first-quarter 2021. Even so, Embraer’s book-to-bill ratio for its executive jets came in at an industry high of 2.5:1, and the manufacturer reported continued growth in the light and midsize business jet segments.

Commercial deliveries were down from nine a year ago, but Embraer said this decrease was planned as the factory remained largely closed as it reintegrated commercial aviation following the failed joint venture with Boeing. Embraer president and CEO Francisco Gomes Neto said this shutdown was closely coordinated with its customers and the slip in deliveries was planned.

As a result, though, first-quarter revenues dropped to $600.9 million, compared with $807.3 million in the first three months of 2021. Revenues at Embraer’s executive jets business were down by more than $60 million, to $89.9 million, while commercial aviation revenues plummeted by more than $100 million, to $169.2 million. But services and support fared better, with revenues up from $250.6 million in first-quarter 2021 to $271.2 million in the most recent quarter.

Embraer posted a $36.3 million operating loss for the quarter, slightly more than the $33.1 million loss a year earlier.

Despite the down quarter, Embraer officials said they are optimistic about sales growth, including a 12.3 percent gain in backlog for its executive jet business alone in the first quarter, and are maintaining its guidance for the year. Embraer expects to deliver between 100 and 110 business jets and between 60 and 70 commercial aircraft this year, yielding net revenues of up to $5 billion.

Company executives said they believe this is achievable despite the uncertainties surrounding supply chain and in light of the Russia-Ukraine war. While that conflict is not directly impacting Embraer, the company is keeping a close eye on its supply base with a team of 20 working directly with its network all the way to its Tier 3 suppliers, Neto said.

Meanwhile, Embraer remains optimistic about its Eve eVTOL business, saying it is on track to close on its merger with Zanite Acquisition Corp. and subsequent IPO in May with anticipated investments of about $500 million Neto said.