Today, Embraer (ERJ, Financial) saw a slight dip of 2.4% in its stock price following the announcement of its fourth-quarter results. The Brazil-based aircraft manufacturer reported a notable increase in its adjusted earnings per ADS, reaching $0.422 from the previous year's $0.235. Despite this earnings growth, the company's revenue remained almost unchanged, with a slight decrease of 0.9% year-over-year, totaling $1.975 billion. While earnings fell short of analyst expectations, revenue met predictions.
Looking ahead, Embraer has set its revenue forecast for FY24 between $6.0 billion and $6.4 billion, aligning with market expectations and marking a significant rise from $5.27 billion in 2023. The company also highlighted a record firm order backlog at the end of Q4, reaching $18.7 billion, the highest in six years. Both the Executive and Commercial Aviation segments reported a book-to-bill ratio exceeding 1:1.
In the fourth quarter, Embraer delivered a total of 75 jets, comprising 25 commercial aircraft, 49 executive jets (30 light and 19 medium), and one military C-390. Throughout 2023, the company increased its total deliveries by 13% to 181 jets, compared to 160 jets in 2022. This includes 64 commercial aircraft, 115 executive jets, and 2 military C-390s.
Despite facing supply chain delays that impacted its 2023 performance, Embraer anticipates improvements in 2024. However, production may still be limited by bottlenecks in sourcing key components. The company has cautiously included conservative estimates from its suppliers in its 2024 guidance, expecting to deliver between 72-80 commercial aviation jets and 125-135 executive aviation jets.
Revenue growth was observed across all segments in 2023. Commercial Aviation, the largest segment, grew by 20% to $1.85 billion, driven by higher deliveries and a favorable product mix. The Executive Aviation segment saw a 13% increase in revenue to $1.41 billion, attributed to higher volumes. The Defense & Security segment experienced the highest growth rate at 25%, reaching $516 million, although it remains a smaller part of the business. The Services & Support segment, which includes maintenance, training, and spare parts, grew by 12% to $1.42 billion.
Investors seemed somewhat disappointed with Embraer's Q4 performance and future outlook, possibly due to high expectations set by the stock's 30% increase over the past month. Additionally, discussions about Boeing (BA, Financial) arose, highlighting competition in certain market segments. Embraer, specializing in small commercial jets and executive jets, noted the recovering market for regional jets in the US, despite ongoing pilot shortages. The company's performance may have been positively influenced by Boeing's recent safety issues, leading investors to anticipate more competitive advantages.
