EMBRAER EARNINGS RESULTS 4th QUARTER 2023 and FISCAL YEAR 2023

Rhea-AI Summary

Embraer S.A. releases its Q4 2023 and FY 2023 earnings results, showcasing increased deliveries, record order backlog, revenue growth, and improved credit ratings. Despite supply chain delays impacting results, the company achieved strong financial performance and provided optimistic guidance for 2024.

Positive

• Embraer delivered 75 jets in Q4 2023 and 181 jets in 2023, marking a 13% yoy increase.
• The firm order backlog reached US$18.7 billion in Q4 2023, the highest in 6 years.
• Revenues totaled US$1,975 million in Q4 2023 and US$5,269 million in 2023, with double-digit growth across all business units.
• Adjusted EBIT reached US$181.7 million in Q4 2023, with margins of 9.2% and 12.8% for EBIT and EBITDA, respectively.
• Adjusted free cash flow in Q4 2023 was US$684.0 million, driving full-year FCF to US$318.3 million, surpassing guidance.
• Credit rating agencies upgraded Embraer, with S&P raising it to investment grade and Moody's to Ba1.
• Guidance for 2024 includes Commercial Aviation deliveries between 72 and 80 aircraft, revenues in the US$6.0 to US$6.4 billion range, and adjusted EBIT margin between 6.5% and 7.5%.
• The company will host a conference call on March 18, 2024, to discuss the results.

Negative

• The company faced supply chain delays impacting 2023 results.
• Adjusted EBIT and EBITDA margins in 2023 were 6.6% and 10.7%, respectively, which may be considered relatively lower.
• The adjusted free cash flow in 2023 was driven by strong sales pre-down payments, indicating a potential dependency on such payments for cash flow generation.

Financial Analyst

Embraer's latest earnings report indicates a positive trajectory in the aerospace sector, particularly for investors interested in the company's stock. The reported 13% year-on-year increase in jet deliveries suggests a robust demand for Embraer's products, despite ongoing supply chain challenges. Notably, the highest backlog in six years at $18.7 billion provides a clear signal of sustained future revenues, which is a critical factor for long-term investment considerations.

The upgrades by S&P and Moody's, along with Fitch's positive outlook revision, are likely to increase investor confidence, as they reflect an improved credit profile and suggest a lower risk of investment. The company's revenue growth and adjusted EBIT and EBITDA margins meeting guidance demonstrate operational efficiency and could be seen as an indicator of strong management performance.

Looking ahead, the 2024 guidance with projected increases in both commercial and executive aviation deliveries, along with higher revenue forecasts, positions Embraer as a potentially attractive option for investors seeking growth in the industrials sector. However, it's important to monitor how the company manages supply chain issues and whether it can sustain its operational efficiencies to meet these targets.

Market Research Analyst

The commercial and executive aviation sectors are witnessing a resurgence post-pandemic, as evidenced by Embraer's performance. The company's ability to secure a book-to-bill ratio over 1:1 is a testament to the strong market demand and Embraer's competitive positioning. The Defense unit's 25% growth is particularly noteworthy, highlighting the diversification of Embraer's revenue streams and its resilience in different market conditions.

With the Services & Support backlog reaching an all-time high, Embraer is well-positioned to capitalize on the aftermarket services, which typically offer higher margins and stable revenue streams. This aspect of the business is increasingly important as the aviation industry continues to focus on cost efficiency and aircraft longevity.

Investors should also consider the broader industry trends, such as the global push for sustainable aviation, where Embraer's investment in innovation, like the development of the Eve urban air mobility platform, could potentially unlock new revenue sources and market opportunities.

Aerospace Industry Analyst

Embraer's report underscores the strategic importance of the executive jet market for the company, with a significant portion of deliveries in this segment. The differentiation in product offerings, with a mix of light and medium jets, allows Embraer to cater to a wide range of customer needs, which is important in a market that values customization and flexibility.

The military C-390 delivery, although a small part of the total, is significant for Embraer's defense portfolio, showcasing the company's capability in the military aviation space. This could lead to further opportunities in international defense markets.

Embraer's supply chain delays mirror industry-wide challenges and its ability to navigate these while still delivering growth is commendable. Investors should watch how the company continues to mitigate these risks, as further disruptions could impact future earnings and order fulfillment.

SÃO PAULO, March 18, 2024 /PRNewswire/ -- EMBRAER S.A. (NYSE: ERJ; B3: EMBR3) releases its FOURTH Quarter 2023 AND FISCAL YEAR 2023 Earnings Results.

HIGHLIGHTS

• Embraer delivered 75 jets in 4Q23, of which 25 were commercial aircraft, 49 were executive jets (30 light and 19 medium) and 1 was a military C-390. In 2023, the company delivered a total of 181 jets, of which 64 were commercial aircraft, 115 were executive jets (74 light and 41 medium) and 2 were military C-390. Embraer's deliveries increased 13% year-on-year (yoy) when compared to the 160 jets in 2022. The company continues to face supply chain delays which have negatively impacted 2023 results.
• Firm order backlog ended 4Q23 at US$18.7 billion, the highest number recorded over the past 6 years. Executive and Commercial Aviation registered book-to-bill in excess of 1:1. Meanwhile, Services & Support backlog reached US$3.1 billion - the highest ever registered.
• Revenues totaled US$1,975 million in 4Q23 and US$5,269 million in 2023, in line with company guidance and 16% higher than in 2022. All business units had double digit revenues and volumes growth yoy; Defense which posted 25% growth was the highlight, followed closely by Commercial Aviation with 20%.
• Adjusted EBIT reached US$181.7 million in 4Q23, with adjusted EBIT and EBITDA margins of 9.2% and 12.8%, respectively. In 2023, the company reported adjusted EBIT of US$350.0 million, with adjusted EBIT and EBITDA margins of 6.6% and 10.7%, meeting guidance for the year driven by volume, enterprise and tax efficiencies.
• Adjusted free cash flow w/o EVE (FCF) in 4Q23 was US$684.0 million, and propped full year FCF to US$318.3 million, which surpassed guidance driven by strong sales pre-down payments (PDPs).
• S&P Global Ratings raised Embraer to investment grade (IG) while Moody's upgraded to Ba1 (one notch below IG). Meanwhile, Fitch, which rates the company BB+ (one notch below IG), revised the company´s outlook to positive.
• Guidance for 2024: Commercial Aviation deliveries between 72 and 80 aircraft, and Executive Aviation deliveries between 125 and 135 aircraft. Total company revenues in a US$6.0 to US$6.4 billion range, adjusted EBIT margin between 6.5% and 7.5%, and adjusted free cash flow of US$220 million or higher for the year.

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 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 4Q23 Results on:
Monday, Mar 18, 2024

ENGLISH: 08:00 AM (NY Time) / 9:00 AM (SP Time).   
Click here to access the webcast link https://us02web.zoom.us/webinar/register/WN_vXB9c8HeTWymXwYCcMfSpA#/registration  
To participate by phone call:
U.S.: Dial in +1 689 278 1000 or +1 719 359 4580 or +1 929 205 6099 
Brazil: +55 11 4632 2236 or +55 11 4632 2237 or +55 21 3958 7888 
English call id: 873 8323 1534

View original content:https://www.prnewswire.com/news-releases/embraer-earnings-results-4th-quarter-2023-and-fiscal-year-2023-302091450.html

SOURCE Embraer S.A.

How many jets did Embraer deliver in Q4 2023?

Embraer delivered 75 jets in Q4 2023.

What was the total revenue in 2023 for Embraer?

Embraer's total revenue in 2023 was US$5,269 million.

What was the adjusted EBIT margin in Q4 2023?

The adjusted EBIT margin in Q4 2023 was 9.2%.

What is Embraer's firm order backlog in Q4 2023?

Embraer's firm order backlog in Q4 2023 reached US$18.7 billion.

What is Embraer's guidance for 2024?

Embraer's guidance for 2024 includes Commercial Aviation deliveries between 72 and 80 aircraft, revenues in the US$6.0 to US$6.4 billion range, and adjusted EBIT margin between 6.5% and 7.5%.