Embraer’s first-quarter 2022 earnings have reaffirmed the company’s guidance and show a clear narrowing of its net loss. The Brazilian planemaker delivered 14 jets in the first quarter, of which six were commercial aircraft and eight executive jets (six light and two mid-size). The firm order backlog ended 1Q22 at US$17.3 billion (+US$0.3 billion versus 4Q21), the highest quarter backlog since 2Q18, driven by solid order activity.
Revenues reached US$600.9 million in the quarter, down 26% compared to 1Q21, with almost one month of production shut down due to system and legal reintegration of Commercial Aviation in January. In contrast, the reported consolidated gross margin of 20.1% was higher than the 9.5% reported in 1Q21 due to better performance in all segments. Adjusted EBIT and EBITDA were US$(27.0) million and US$13.2 million, respectively, yielding Adjusted EBIT margin of -4.5% and Adjusted EBITDA margin of 2.2%. This includes nonrecurring expenses of US$17 million for the quarter.
Free cash flow (FCF) in 1Q22 was a usage of US$ (67.8) million, representing a significant improvement compared to the US$(226.6) million in FCF in 1Q21, and best FCF for 1Q since 1Q10, consistent with working capital optimization measures and enterprise efficiency.
Commercial Aviation reported revenue reduction of 38% y-o-y to US$169.2 million due to expected lower aircraft deliveries in the quarter. Reported 1Q22 consolidated gross margin from Commercial Aviation of 11.3% higher than -1.5% reported in 1Q21. Executive Aviation 1Q22 revenues were US$ 89.9 million, which is 41% lower y-o-y, driven by expected decrease of 38% in deliveries compared to 1Q21. Reported 1Q22 gross margin from Executive Aviation of 18.7% higher than 6.2% reported in 1Q21.
Defense & Security reported revenue fall of 47% to US$68.3 million, mainly impacted by no KC-390 deliveries in the quarter. Reported 1Q22 gross margin from Defense & Security of 14.4% higher than 10.4% reported in 1Q21. Services & Support reported revenues of US$271.2 million, representing y-o-y growth of 8%. It continues to show solid recovery as airlines flight activities are recovering from the pandemic peak in 2020. Reported 1Q22 gross margin from Service & Support of 26.5% higher than 24.6% reported in 1Q21. The Company finished the quarter with total debt of US$3.6 billion, or US$0.5 billion less in line with the strategy to improve our capital structure. (£1.00 = US$1.25 at time of publication).