EMBRAER EARNINGS RESULTS 1st QUARTER 2024

Rhea-AI Summary

Embraer S.A. released its first Quarter 2024 Earnings Results, reiterating 2024 guidance with Commercial Aviation deliveries between 72-80 aircraft, Executive Aviation deliveries between 125-135, total company revenues in the US$6.0-6.4 billion range, Adjusted EBIT margin between 6.5%-7.5%, and Adjusted free cash flow of US$220 million or higher. The firm order backlog reached US$21.1 billion, representing the highest level in 7 years. Revenues increased by +25% yoy, with Executive Aviation showing 2.75x growth. Adjusted EBIT margin improved to +0.8% in 1Q24. However, Adjusted free cash flow w/o Eve was negative US$(346) million due to preparation for higher deliveries in the future. Liability management reduced gross debt by US$276 million.

Positive

• Firm order backlog of US$21.1 billion in 1Q24 – the highest level in 7 years.

• Revenues increased by +25% yoy, with Executive Aviation showing 2.75x growth.

• Adjusted EBIT margin improved to +0.8% in 1Q24.

Negative

• Adjusted free cash flow w/o Eve in 1Q24 was negative US$(346) million due to preparation for higher number of deliveries in the coming quarters.

• Liability management with further US$276 million reduction in gross debt w/o Eve during the quarter.

Insights

Financial Analyst

Examining Embraer's performance in the first quarter of 2024, the pronounced increase in jet deliveries and consequently the revenue growth are optimistic indicators. The rise in commercial jet deliveries is particularly noteworthy as it signifies a robust demand in the aerospace sector, which may reflect the broader economic recovery in air travel post-pandemic. A substantial firm order backlog of $21.1 billion signals a stable and promising future demand, providing a degree of revenue visibility. However, the negative adjusted free cash flow of $(346) million speaks to significant capital expenditure and preparation for future deliveries, underscoring the cyclical nature of the aerospace industry. Investors should keep an eye on the company's liquidity and cash management strategies, as ongoing investments could strain finances if not managed prudently.

Aviation Industry Analyst

Embraer's reiteration of its 2024 guidance suggests a confidence in its operational forecast and risk assessment, which can reassure investors about the company's stability and management's grasp on market conditions. The most impressive aspect is the record seven-year high order backlog, a testament to Embraer's market positioning and technological competitiveness, especially in the commercial aviation sector. Additionally, the fact that executive aviation led the revenue increase with an unprecedented growth rate underscores the resilience and expansion of the luxury private travel market. However, investors should consider the volatility of the aviation sector, influenced by economic cycles, fuel prices and geopolitical events, which might impact the long-term fulfilment of the current backlog.

Debt and Risk Management Advisor

The strategic liability management highlighted by the $276 million reduction in gross debt (excluding operations with Eve) during the quarter indicates an aggressive approach to improving the balance sheet. In the face of a negative adjusted free cash flow, such actions serve to reassure stakeholders of the company's commitment to financial health and risk mitigation. Nevertheless, the juxtaposition of a high order backlog with a negative free cash flow requires a careful analysis of the company's cash burn rate and runway, as this will determine Embraer's ability to fund operations without additional debt or equity dilution, thus affecting stock performance.

SÃO PAULO, May 7, 2024 /PRNewswire/ -- EMBRAER S.A. (NYSE: ERJ; B3: EMBR3) releases its first Quarter 2024 Earnings Results.

HIGHLIGHTS

• 2024 Guidance reiterated: Management believes current estimates are still valid and represent evenly balanced risks and opportunities for full year operations. Commercial Aviation deliveries between 72 and 80 aircraft, and Executive Aviation deliveries between 125 and 135. Total company revenues in the US$6.0-6.4 billion range, Adjusted EBIT margin between 6.5% and 7.5%, and Adjusted free cash flow of US$220 million or higher.
• Embraer delivered 25 jets in 1Q24 of which 18 were executive jets (11 light and 7 medium) and 7 were commercial jets – an increase of +67% compared to the 15 aircraft delivered in 1Q23.
• Firm order backlog of US$21.1 billion in 1Q24 – the highest level over the past 7 years. Commercial Aviation registered an increase of US$2.3 billion (+26% qoq). For more information please see our 1Q24 Backlog and Deliveries release.
• Revenues totaled US$897 million in the quarter or an increase of +25% yoy. Executive Aviation stood out with 2.75x growth – the highest 1Q revenues and number of deliveries over the past 8 years.
• Adjusted EBIT reached US$6.8 million with an +0.8% margin in 1Q24 (-4.4% in 1Q23).
• Adjusted free cash flow w/o Eve in 1Q24 was negative US$(346) million because of the preparation for higher number of deliveries in the coming quarters.
• Liability management with further US$276 million reduction in gross debt w/o Eve during the quarter.

For additional information, please check the full document on our website ri.embraer.com.br

Investor Relations
Guilherme Paiva, CFA, Patrícia Mc Knight, Viviane Pinheiro, Eliane Fanis, Marilia Saback and Marcelo Cuperman.  
(+55 11) 3040-6874
investor.relations@embraer.com.br
ri.embraer.com.br

CONFERENCE CALL INFORMATION
Embraer will host a conference call to present its 1Q24 Results on:

Tuesday, May 7, 2024
ENGLISH: 8:00 AM (NY Time) / 9:00 AM (SP Time).
Simultaneous translation into Portuguese.

To access the webcast click here.

Zoom webinar: 818 3897 0765

Or alternatively to participate by phone call:
U.S.:        +1(305)224-1968, +1(309)205-3325, +1(646)931-3860
Brazil:      +55(11)4632-2236, +55(11)4632-2237, +55(21)3958-7888
Password: 818 3897 0765

We recommend you join 15 minutes in advance. 

 

View original content:https://www.prnewswire.com/news-releases/embraer-earnings-results-1st-quarter-2024-302138155.html

SOURCE Embraer S.A.

FAQ

What is the firm order backlog in 1Q24 for Embraer (ERJ)?

The firm order backlog in the first quarter of 2024 for Embraer was US$21.1 billion, marking the highest level in 7 years.

How much did revenues increase by in 1Q24 for Embraer (ERJ)?

Revenues increased by +25% year-over-year in the first quarter of 2024 for Embraer.

What was the Adjusted EBIT margin in 1Q24 for Embraer (ERJ)?

The Adjusted EBIT margin improved to +0.8% in the first quarter of 2024 for Embraer.