Embraer posts strong second quarter results

Embraer has posted a strong second quarter 2024 results. Revenues were $1.5bn, up from $1.3bn in the same period last year. Its adjusted EBITDA for the quarter was $190.4 million, up from $148.9 million last year. The Brazilian OEM reported a net profit of $99.4 million in the quarter, swinging from a loss last year of $18.8 million. Adjusting for Eve Air Mobility's results - its eVTOL subsidiary - and for deferred taxes, it recorded a net income of $80.4 million. It invested a total of $107.1 million in the second quarter, compared to $91 million last year. This was driven by growth in simulators, maintenance, and executive aviation growth. Eve had invested a total of $31.9 million during the quarter. In addition, the eVTOL subsidiary reported a net loss of $36.4 million, slightly above its net loss of $31.4 million in the second quarter last year. Eve is pre-revenue and does not expect meaningful revenues - if any - during the development phase of the aircraft. The financial results will largely reflect costs associated with the programme. Embraer had a negative free cash flow of $215.1 million, largely driven by working capital needs for higher second half aircraft deliveries. It had delivered 47 jets during the quarter, up from 25 in the preceding quarter. The deliveries consisted of 19 commercial jets, as well as 27 executive jets and one C-390 defence jet. The company said commercial aviation was the ""highlight for the quarter"" with an increase of 12% in deliveries in comparison to the same period a year prior. The company's firm order backlog during the period amounted to $21.1bn - up 20% over last year's second quarter. The company said: ""The biggest increase happened in commercial aviation"". Commercial aviation backlog was up $227 million over last year. Its defence and security backlog decreased $251 million. Embraer CEO Francisco Gomes Neto said in an earnings call: ""We made a good start this year with orders in commercial aviation with American Airlines and Mexicana [de Aviación]. We are working in a lot of sales campaigns in all regions of the world. We are confident that we'll bring the good news soon about the new orders. We have a good expectation for the third quarter and the rest of the year as well."" He added: ""We still see a strong interest in our business jet products portfolio. All four models were well in line with our expectations."" Embraer produces the Phenom 100EX, Phenom 300E, Praetor 500, and the Praetor 600 executive jets. Neto added: ""Now our challenge in the business jet is more to ramp up production levels and deliveries, rather than sales."" He added that sales ""continues to be strong"" and that the company is ""very optimistic"" for the overall growth of its executive jets arm. The company's net debt without Eve increased to $1.3bn, up from $1bn at the end of the previous quarter. Consolidating Embraer and Eve, the company's net debt at the end of the quarter was $1.15bn. It held $716.5 million in cash and cash equivalents at the end of the quarter. Total liabilities and shareholders' equity was $10.9bn at the quarter's end. The results report also reaffirmed its 2024 guidance, expecting around 72-80 commercial aircraft deliveries. Executive aviation is marked to be around 125-135 deliveries. Consolidated revenues (not including Eve) is forecast to be $6-$6.4bn and anticipates an adjusted EBIT margin of 6.5%-7.5%. Furthermore, it said it expects an adjusted free cash flow of $220 million or higher. The company is also continuing to pursue ""all appropriate remedies against Boeing for damages suffered by Embraer"" after American OEM had terminated the joint master transaction agreement and contribution agreement in 2020. The company said it expects arbitration proceedings initiated by both sides related to the termination will conclude in the next quarter. Embraer said it is ""unable to predict the outcome"" of the proceedings.