Embraer(US:ERJ)2022-03-10 20:14Financial Data and Key Metrics Changes - The total sales for the company reached $6.6 billion in 2021, contributing to cash generation with advanced payments from clients [8] - Fourth quarter net revenue was $1.3 billion, down 41% year-on-year, while net revenue for 2021 was $4.2 billion, up 11% from the previous year [23][24] - Adjusted EBIT improved to $167 million compared to a loss of $111 million in 2020, and adjusted EBITDA was $363 million compared to $82 million in 2020 [26] - The company ended the year with $2.6 billion in cash and cash equivalents, and total debt was $4 billion, with a net debt reduction of $300 million in 2021 [31] Business Line Data and Key Metrics Changes - In Commercial Aviation, 16 jets were delivered in Q4 and 48 jets in 2021, marking a 9% year-on-year increase [15] - Executive Aviation delivered 39 jets in Q4, totaling 92 jets for the year, with a book-to-bill ratio exceeding 2:1 [16] - The Defense & Security unit saw a backlog reduction of $526 million due to an agreement with the Brazilian Air Force, impacting operational results [17] - Services & Support reached pre-pandemic levels with a backlog increase of over 20% year-on-year, and an adjusted EBIT margin of 16.7% in Q4 [19] Market Data and Key Metrics Changes - The company reported that 92% of total revenue comes from exports, indicating strong global outreach [24] - The backlog reached $17 billion, an 18% increase year-on-year, marking the highest value since Q2 2018 [22] Company Strategy and Development Direction - The company focuses on four strategic pillars: growth, enterprise efficiency, innovation, and ESG initiatives [6][12] - The company aims for carbon neutrality by 2040 and net zero by 2050, with specific targets for diversity and governance [13] - The company is optimistic about the urban air mobility sector, with plans for a listing on the New York Stock Exchange [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic planning, noting that cash generation exceeded expectations [6] - The company anticipates a positive net result for 2022, driven by revenue growth and improved fixed cost leverage [30] - Management acknowledged challenges from the Russia-Ukraine conflict but indicated that supply disruptions are not expected in the midterm [36] Other Important Information - The adjusted free cash flow in 2021 was $292 million, significantly above the $100 million outlook [29] - The company is targeting a delivery range of 60 to 70 aircraft for Commercial Aviation and 100 to 110 jets for Executive Aviation in 2022 [33] Q&A Session Summary Question: Guidance for 2022 by segment - Management indicated that Commercial Aviation is expected to reach breakeven EBIT margin, while Executive Aviation will maintain high single-digit margins [39][40] Question: Free cash flow assumptions - The free cash flow guidance includes stable working capital and contributions from divestitures, with a target of $50 million or better [44] Question: Impact of higher commodity prices - Management is closely monitoring price movements and has established escalation clauses in contracts to mitigate risks [60] Question: Order visibility and campaigning activity - The company is actively engaged in sales campaigns and expects domestic markets to be less affected by external pressures [64] Question: Future adjusted EBITDA margins - Management aims for mid-single-digit margins in the mid-term, with potential for higher margins when including services [65][66]