Empresa Brasileira de Aeronautica S.A. – Embraer
(ERJ) has reported results for the first quarter of fiscal 2010 with an EPADS of 20 cents versus a loss of 13 cents in the year-ago quarter. Reported EPADS was exactly half of 40 cents, the Zacks Consensus Estimate.
During the quarter, net income was $35.3 million compared with a loss of $23.4 million in the first quarter of 2009. Net revenues were $990.1 million, down from $1,154.1 million based on lower aircraft delivery.
Revenue from the Commercial Aviation segment dropped 40% to $523.4 million while revenue from the Defense segment more than doubled to reach $189.0 million. Executive Aviation and Aviation Services segmental revenue shot up 65.2% and 10.9% to reach $116.0 million and $142.1 million, respectively. 
Earnings before interest and taxes (EBIT) almost doubled to $57.4 million from $27.3 million in the same period of 2009. The EBIT margin also grew 340 basis points. First quarter EBITDA margin boosted 400 basis points.
Embraer’s firm order backlog, including the Commercial Aviation, the Executive Aviation and the Defense and Government segments totaled $16.0 billion was virtually flat compared with $16.6 billion in the previous quarter. This is attributable to the economic downturn.
At the end of first quarter, the company’s net cash position was $458.6 million, down from $503.3 million at the end of the previous quarter.
The international economic environment remains an issue for the aircraft manufacturer Embraer, considering the company’s exposure to the U.S. and European market. Moreover, the company’s high concentration for some models, with a primary focus on American airline companies, exposes it to considerable risks. However, the support of the Brazilian government and the strength in the company’s aircraft family are encouraging.
We maintain our Neutral recommendation on the ADR.

Read the full analyst report on “ERJ”
Zacks Investment Research