embraer releases 2017 results and 2018 outlook
March 8, 2018
Embraer has released its fourth quarter and fiscal year 2017 results and outlook for 2018. The operating and financial information is presented, except where otherwise stated, on a consolidated basis in United States dollars (US$) in accordance with IFRS. The financial data presented in this document as of and for the quarters ended December 31, 2017 (4Q17), September 30, 2017 (3Q17) and December 31, 2016 (4Q16), are derived from the unaudited financial statements, except annual financial data and where otherwise stated.
During 4Q17, Embraer delivered 23 commercial and 50 executive aircraft (32 light jets and 18 large jets), for a total of 101 commercial and 109 executive aircraft (72 light and 37 large) delivered in 2017, meeting the Company’s 2017 Guidance for aircraft deliveries. This compares with a total of 32 commercial jets and 43 executive jets (25 light and 18 large) in 4Q16 and total 2016 deliveries of 108 commercial jets and 117 executive jets (73 light and 44 large). Consolidated revenues of US$ 1,733.0 million in 4Q17 represented a 14.5% year-over-year decline, driven primarily by the lower deliveries in the Commercial Aviation segment as well as a 15.0% decrease in Defense & Security segment revenues as compared to 4Q16. For fiscal year 2017, the Company’s consolidated revenues of US$ 5,839.3 million were down 6.1% compared to the US$ 6,217.5 million reported in 2016, driven largely by declines in commercial and executive jet deliveries, while Defense & Security segment revenues increased 1.9% in 2017. Embraer’s consolidated revenues met the Company’s 2017 Guidance range of US$ 5.7 – 6.1 billion in revenues.
The Company’s gross margin of 20.0% in 4Q17 was stable compared to the 20.1% reported in 4Q16 despite the aforementioned decline in revenues in the quarter. For the full year, Embraer’s gross margin was 18.3% in 2017 vs. the 19.9% reported in 2016, reflecting lower executive and commercial jet deliveries and negative cost base revisions on certain Defense & Security contracts.
Net income attributable to Embraer shareholders and Earnings per ADS for 4Q17 were US$ 35.2 million and US$ 0.19 per share, respectively, bringing total 2017 net income attributable to Embraer shareholders and earnings per ADS to US$ 246.8 million and US$ 1.34 per share, respectively.
Considering all deliveries as well as firm orders obtained during the period, the Company’s firm order backlog decreased US$ 0.5 billion during 4Q17 to end the year at US$ 18.3 billion.
• Embraer delivered 23 commercial jets and 50 executive jets (32 light / 18 large) in 4Q17, and in 2017 delivered 101 commercial jets and 109 executive (72 light / 37 large) jets, meeting Guidance for 2017;
• Revenues in 4Q17 reached US$ 1,733.0 million and in 2017 were US$ 5,839.3 million, within the Company’s Guidance range of US$ 5.7 to US$ 6.1 billion;
• Adjusted EBIT and adjusted EBITDA1 excluding special items were US$ 132.7 million and US$ 220.3 million, respectively, in 4Q17, yielding margins of 7.7% and 12.7%. Adjusted EBIT and adjusted EBITDA exclude US$ 66.0 million in net non-recurring charges in 4Q17, mostly related to impairments in the Executive Jets and Defense & Security segments;
• For the full year, adjusted EBIT and adjusted EBITDA were US$ 397.1 million and US$ 712.5 million, respectively, excluding US$ 67.8 million in net non-recurring charges. For 2017, adjusted EBIT margin was 6.8% and adjusted EBITDA margin was 12.2%, which were below the Company’s guidance;
• Embraer closed 2017 with adjusted free cash flow generation of US$ 406.7 million in 4Q17, resulting in positive 2017 free cash flow of US$ 404.8 million, significantly above the Company’s initial expectations for the year of free cash flow consumption of US$(150) million or better. Embraer finished 2017 with net debt of US$ 310.8 million, an improved position versus net debt of US$ 574.7 million at the end of 2016;
• 4Q17 Net income attributable to Embraer shareholders and Earnings per ADS were US$ 35.2 million and US$ 0.19, respectively. Adjusted net income (excluding the impact of FX-related non-cash deferred income tax and social contribution and non-recurring items) for the quarter was US$ 58.3 million, representing adjusted earnings per ADS of US$ 0.32 in 4Q17. Adjusted net income for 2017 was US$ 279.7 million, representing adjusted earnings per ADS of US$ 1.52 for the year;
• The Company reaffirms its 2018 guidance first published in the 3Q17 earnings release on October 27, 2017. See further details on the guidance on page 10.