Business Context and Reporting Period
Company: Embraer S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter 2009 (ended September 30, 2009)
Date Filed: October 9, 2009
Business Overview: Embraer is the world's largest manufacturer of commercial jets up to 120 seats, operating in commercial aviation, executive aviation, and defense segments. As of September 30, 2009, the company employed 16,986 people (excluding subsidiaries OGMA and HEAI).
Key Financial and Operational Metrics
Deliveries (3Q09): 57 total jets (29 Commercial, 27 Executive, 1 Defense).
Deliveries (YTD 2009): 153 total jets.
Firm Order Backlog (as of Sept 30, 2009): US$ 18.6 billion.
Backlog Composition: 306 aircraft remaining in the backlog (11 ERJ 145 Family, 295 E-Jets Family).
Revenue, Profit, Cash Flow, Margins, Debt: The filing text does not provide specific values for revenue, net income, operating margins, cash flow, or debt levels.
Material Changes vs. Prior Period
- Total Deliveries: Increased 18.8% year-over-year, rising from 48 jets in 3Q08 to 57 jets in 3Q09.
- Commercial Aviation: Deliveries decreased from 37 in 3Q08 to 29 in 3Q09. The ERJ 145 family saw a decline, while the E-Jets family (170/190) remained relatively stable with slight variations by model.
- Executive Aviation: Deliveries tripled from 9 in 3Q08 to 27 in 3Q09, driven primarily by the Phenom 100 (22 deliveries in 3Q09 vs. 0 in 3Q08).
- Defense: Deliveries decreased from 2 in 3Q08 to 1 in 3Q09.
- Backlog Value: Decreased 6% from US$ 19.8 billion (June 30, 2009) to US$ 18.6 billion (September 30, 2009).
Outlook, Commentary, and Risks
Management Commentary:
- Executive Growth: The Phenom 100 jet achieved record deliveries for the third consecutive quarter (22 units in 3Q09). The aircraft received certification for Australia and entered service in Brazil.
- Commercial Milestones: The 600th E-Jet (170/190 family) was delivered to Lot Polish Airlines. New operators include British Airways (E170), Mozambique Airlines (E190), and Lufthansa CityLine (E195).
- Defense: Delivered the first E190 configured for the Brazilian Presidency to the Brazilian Air Force.
Risks and Contingencies:
- The document contains forward-looking statements subject to risks including general economic, political, and trade conditions in Brazil and global markets.
- Uncertainties regarding industry trends, investment plans, product delivery schedules, and governmental regulations.
- Actual results may differ substantially from expectations due to these inherent risks.
Investor Verification Checklist
- Verify the impact of the 6% decline in backlog value on future revenue recognition.
- Confirm the sustainability of the Phenom 100 delivery growth rate (22 units in 3Q09) given the small total backlog for executive jets.
- Review the full Q3 2009 financial statements (Form 20-F or 10-Q equivalent) for revenue, profit, and cash flow data not included in this 6-K.
- Assess the financial health of key customers with significant backlogs, such as JetBlue (60 E190s) and Hainan (34 E190s).
- Monitor the status of the 11 remaining ERJ 145 family aircraft in the backlog, as this older family has seen declining deliveries.