• Record Revenue: $6.4 billion, highest in company history.
• Backlog: $26.3 billion, an all-time high.
• Net Debt: Close to zero.
• Book-to-Bill Ratio: Company-wide 2.2; Executive Aviation 2.7; Defense & Security 3.3; Commercial Aviation 1.6; Service & Support 1.9.
• Commercial Aviation Revenue Growth: 20% increase in 2024.
• Executive Aviation Revenue Growth: 25% increase in 2024.
• Defense & Security Revenue Growth: 40% increase in 2024.
• Service & Support Revenue Growth: 15% increase in 2024.
• Adjusted EBIT: Commercial Aviation $55 million (2.5% margin); Executive Aviation $205 million (11.7% margin); Defense & Security $45 million (6.2% margin); Service & Support $270 million (16.5% margin).
• Aircraft Deliveries: 206 aircraft in 2024, a 14% increase from 2023.
• Adjusted EBITDA: $922 million for 2024, 14.4% margin.
• Adjusted Free Cash Flow: BRL676 million for 2024.
• Adjusted Net Income: BRL462 million for 2024, 7.2% margin.
• Net Debt Position: BRL111 million, 0.1 times net debt-to-EBITDA ratio.
• 2025 Guidance: Revenue between $7 billion to $7.5 billion; EBIT margin between 7.5% and 8.3%; Free cash flow of $200 million or higher.

• Warning! GuruFocus has detected 4 Warning Sign with ERJ.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Embraer SA (NYSE:ERJ) achieved record revenue of $6.4 billion in 2024, marking the highest level in the company's history.
• The company reported an all-time backlog record of $26.3 billion, indicating strong future demand.
• Embraer SA (NYSE:ERJ) has made significant progress in financial deleveraging, with net debt now close to zero.
• The Executive Aviation division finished 2024 with a record $7.4 billion backlog and an industry-leading 2.7 book-to-bill ratio.
• Defense & Security recorded its best sales performance in history, with a backlog rising to $4.2 billion and a superb 3.3 book-to-bill ratio.

Negative Points

• Supply chain challenges remain a significant issue, impacting production and delivery schedules.
• The E175 E2 aircraft development is delayed due to ongoing US mainline scope clause discussions, affecting potential sales.
• Free cash flow guidance for 2025 is lower than previous years, partly due to the timing of defense prepayments.
• There is uncertainty regarding the impact of potential tariffs on access to the US market for Executive Jets.
• The company faces volatility in exchange rates and inflation, which could impact financial performance.

Q & A Highlights

Q: Can you provide more details on the EBIT margin guidance for 2025, and whether it is conservative given the current market conditions? A: Antonio Carlos Garcia, Executive Vice President and CFO, explained that the EBIT margin guidance of 7.5% to 8.3% reflects a 10% increase in value at the midpoint. The guidance considers operational factors and market volatility, including exchange rates and inflation. The company aims to compensate for positive impacts from arbitration and other factors in 2024.

Q: How is the pricing environment for Commercial Aviation, and what are the expectations for 2025? A: Francisco Gomes Neto, CEO, noted that the company had a successful year in sales, particularly with major orders from American Airlines and new E2 customers. Antonio Carlos Garcia added that the backlog is improving, and the company is capturing potential leverage for mid-single-digit growth in the medium term.

Q: Regarding the Flexjet order, how much of it is incremental to existing deliveries? A: Antonio Carlos Garcia confirmed that the entire Flexjet order is incremental, adding to the backlog and demonstrating the sustainability of the Executive business. Deliveries are expected to occur between 2026 and 2030, with 30 to 40 aircraft per year.

Q: Can you explain the cash flow guidance for 2025, given the strong conversion from EBITDA in previous years? A: Antonio Carlos Garcia stated that the company aims for a 50% EBITDA conversion to free cash flow over the medium to long term. The guidance reflects seasonality and the need for working capital to support revenue growth. The company remains optimistic about potential upside as the year progresses.

Q: What are the current supply chain constraints, and how are they affecting growth plans? A: Francisco Gomes Neto acknowledged ongoing supply chain challenges but highlighted improvements in internal processes and supplier relationships. The company has prepared a realistic production plan, considering supply chain limitations, and is using digital tools to monitor and address bottlenecks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.