Embraer Publishes Q4/FY2023 Earning Results

DALLAS — According to Embraer's latest earnings report, the Brazilian manufacturer delivered 75 jets in 4Q23, of which 25 were commercial aircraft. In 2023, the company delivered 181 jets, of which 64 were commercial aircraft.

Embraer’s deliveries increased 13% year-on-year (yoy) compared to the 160 aircraft in 2022. However, the company continues facing supply chain delays, negatively impacting 2023 results. As for 2024, Embraer shared the following guidance (does not consider EVE):

• Commercial Aviation deliveries: 72 - 80
• Executive Aviation deliveries: 125 - 135
• Consolidated revenues (US$ billion): 6.0 - 6.4
• Adjusted EBIT margin: 6.5% - 7.5%
• Free cash flow (US$ million): 220 or higher

Revenue, Gross Margin, Net Income (Loss)

In 2023, the company reported consolidated revenue of US$5,269 million, representing a 16% year-on-year increase. This growth was driven by Defense & Security (25%), Commercial Aviation (20%), Executive Aviation (13%), and Services & Support (12%).

Commercial Aviation revenues in 2023 totaled US$1,847 million, a 20% increase compared to the previous year. This growth was attributed to higher deliveries and product mix. However, the reported gross margin decreased from 10.5% in 2022 to 8.0% in 2023 due to product mix, higher freight, and one-time tax benefits.

Services & Support revenues in 2023 equaled US$1,418 million, a 12% increase compared to the previous year. This growth was driven by market growth. However, the reported gross margin declined from 28.0% in 2022 to 26.7% in 2023 due to services mix and one-time tax benefits.

In the fourth quarter of 2023 (4Q23), the net income attributable to Embraer shareholders was US$192.6 million, compared to US$22.9 million in 4Q22. Adjusted net income for the quarter was US$77.6 million, representing an 80% increase compared to the previous year.

Embraer's net debt without EVE (Embraer's electric vertical takeoff and landing vehicle program) declined to US$781 million in 4Q23, compared to US$1,357 million in the previous quarter and US$1,033 million year-on-year. The significant positive free cash flow generated in the quarter contributed to the sequential improvement in the company's net debt position.

Adjusted free cash flow totaled US$318 million during 2023, surpassing the guidance for the year due to strong sales pre-down payments (PDPs) in 4Q23.

Focus on Commercial Aviation

In 2023, Embraer delivered 25 commercial jets in the fourth quarter and 64 aircraft throughout the year, representing a 12% increase compared to the previous year.

In North America, Porter Airlines (PD) exercised its purchase rights to place a firm order for 25 Embraer E195-E2 passenger jets, adding to its existing firm orders. The deal, valued at US$2.1 billion at list price, increased Porter Airlines' firm orders with Embraer to 75 aircraft.

In Asia, Embraer's E190-E2 and E195-E2 received type certification from the Civil Aviation Authority of Singapore (CAAS). Scoot, the low-cost subsidiary of Singapore Airlines, is expected to begin operating the E190-E2 in 2024.

In Europe, the E195-E2 received certification for 'Steep Approach into London City Airport' from the European Aviation Safety Agency (EASA). This allows airlines to operate the E195-E2 at London City Airport, known for its challenging approach and short runway.

Embraer's backlog increased by US$1.2 billion year-on-year and reached US$18.7 billion in 2023, the highest number recorded in the past six years. Services & Support had a backlog of US$3.1 billion, the highest level ever recorded, while Commercial Aviation ended the year with a book-to-bill ratio over 1.1:1.