Embraer (EMBR3) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues rose over 15% year-over-year, with strong growth in defense and security (up over 100%), commercial aviation, and service and support (both up around 20%).

• Backlog reached $21.1 billion, the highest in seven years and over 20% higher year-over-year, with a book-to-bill ratio above 2.2-to-1.

• Delivered 47 jets in Q2 2024, up 88% sequentially, with strong growth in commercial and executive aviation.

• 2024 guidance reiterated for commercial (72–80 aircraft) and executive aviation (125–135 aircraft), as well as financial targets.

• Major order: Mexicana de Aviación placed a firm order for 20 E2 jets, with deliveries starting Q2 2025.

Financial highlights

• Q2 2024 revenues were nearly $1.5 billion, up 16% year-over-year and 67% sequentially.

• Adjusted EBITDA for Q2 was $190 million (12.7% margin), up from $149 million a year ago.

• Adjusted EBIT was $139 million (9.3% margin), with one-time items boosting margin by 250 basis points; reported EBIT was $128 million (8.6% margin).

• Adjusted net income was $80 million (5.4% margin), up from $57.9 million in 2Q23.

• Adjusted free cash flow (excluding Eve) was negative $215 million in Q2, mainly due to working capital needs for higher deliveries in the second half.

Outlook and guidance

• 2024 operational and financial guidance reiterated, with expectations for double-digit growth in aircraft deliveries, revenue, and EBIT for 2024 and 2025.

• Revenue guidance maintained at $6.0–6.4 billion, with adjusted EBIT margin guidance at 6.5%–7.5%.

• Margins are expected to be at the high end of guidance, with potential for upside if all aircraft are delivered as planned.

• Adjusted free cash flow guidance of $220 million or higher for the year, with improvement expected in 2025.

• Defense revenues projected around $600 million for 2024, with margin improvement expected as export contracts increase.