Breaking Down Embraer S.A. (ERJ) Financial Health: Key Insights for Investors

Are you keeping a close watch on Embraer S.A. (ERJ) and wondering about its financial stability? In 2024, the company achieved a record revenue of US$6.4 billion, marking a 21% year-over-year increase, and delivered 206 aircraft, a 14% increase from the previous year. With a record firm order backlog of US$26.3 billion and an adjusted EBIT margin of 11.1%, is poised for continued growth, or are there hidden risks? Dive in as we dissect key financial metrics, explore future projections, and provide insights to help you make informed investment decisions.

Embraer S.A. (ERJ) Revenue Analysis

Analyzing Embraer S.A.'s (ERJ) revenue streams provides key insights into the company’s financial health and operational performance. Understanding where the company generates its revenue, the growth trends, and the contributions from different business segments is crucial for investors.

Embraer’s primary revenue sources can be broken down into several key areas:

• Commercial Aviation: This segment involves the development, manufacturing, and sale of commercial jets.
• Executive Aviation: Focused on business jets, this includes sales to corporations, individuals, and fractional ownership programs.
• Defense & Security: This segment includes military aircraft, defense systems, and integrated solutions.
• Services & Support: Encompasses aftermarket services, maintenance, repair, and overhaul (MRO) services for Embraer aircraft.

To understand the trends in revenue, examining the year-over-year growth rates is essential. For instance, analyzing the historical trends in percentage increase or decrease helps to reveal the company's ability to grow and adapt in different market conditions.

A breakdown of how each business segment contributes to the overall revenue provides a clearer picture of Embraer's financial structure. For example, understanding the percentage of revenue from commercial aviation versus executive aviation indicates the company’s reliance on each sector.

Significant changes in revenue streams often reflect strategic shifts, market dynamics, or economic factors. Identifying and analyzing these changes can provide insights into the company's strategic decisions and their impacts on financial performance.

Here's a look into Embraer's revenue based on their 2024 fiscal year data:

Understanding these dynamics is crucial for investors seeking to assess Embraer’s financial health and future prospects. For a deeper dive into investor profiles, check out: Exploring Embraer S.A. (ERJ) Investor Profile: Who’s Buying and Why?

Embraer S.A. (ERJ) Profitability Metrics

Understanding Embraer S.A.'s profitability involves analyzing several key metrics that reveal how efficiently the company generates profit from its revenue. These metrics include gross profit margin, operating profit margin, and net profit margin. A comprehensive review of these margins, along with trends and comparisons, offers valuable insights into Embraer's financial health.

Here's a detailed look into Embraer S.A.'s profitability:

• Gross Profit Margin:
• Embraer S.A.'s latest twelve months gross profit margin is 18.0%.
• The average gross profit margin from fiscal years ending December 2020 to 2024 is 16.6%.
• The gross profit margin peaked in December 2022 at 20.1%.
• The lowest gross profit margin over the last five years was in December 2020 at 12.3%.
• In 2024, the gross profit margin was 18.03% as of December 31.

The gross profit margin reflects the percentage of revenue that exceeds the cost of goods sold (COGS). Embraer's gross profit margin indicates its efficiency in managing production costs.

• Operating Profit Margin:
• Embraer reported an adjusted EBIT (Earnings Before Interest and Taxes) margin of 11.1% for 2024.
• Adjusted EBIT for 2024 was US$708.2 million.
• Excluding Boeing-related arbitration, the adjusted EBIT margin was 8.7%, amounting to US$558.2 million.
• For 2025, Embraer anticipates an adjusted EBIT margin between 7.5% and 8.3%.
• As of March 2025, the trailing twelve months (TTM) operating margin is 9.17%.
• The operating profit margin at the end of 2023 was 2.29%.

Operating profit margin is a crucial indicator of a company's profitability from its core operations, before interest and taxes. It demonstrates how well a company manages its operational expenses.

• Net Profit Margin:
• In Q3 2024, Embraer S.A.'s net profit margin was 10.56%, which represents a 118.47% increase compared to the same period last year.
• For the fiscal year ending December 31, 2024, the profit margin was 5.42%.

Net profit margin shows the percentage of revenue remaining after all expenses, including taxes and interest, have been deducted. It is a comprehensive measure of the company's overall profitability.

Here's a table summarizing Embraer's profitability metrics over recent quarters:

Embraer's profitability metrics reflect a dynamic financial performance influenced by various factors, including market conditions, operational efficiencies, and strategic decisions. The company's ability to maintain and improve these margins is vital for sustainable growth and investor confidence. For more insights into Embraer S.A.'s strategic direction, see Mission Statement, Vision, & Core Values of Embraer S.A. (ERJ).

Embraer S.A. (ERJ) Debt vs. Equity Structure

Understanding how Embraer S.A. (ERJ) finances its operations and growth is crucial for investors. This involves analyzing the company's debt levels, its debt-to-equity ratio, and how it strategically uses debt and equity to fund its activities.

Embraer S.A.'s financial strategy involves a mix of debt and equity to fund its operations and growth initiatives. Examining the specifics of their debt structure provides insights into their financial health. Here’s a breakdown:

• Overview of Debt Levels: Embraer S.A. manages both short-term and long-term debt.
• Long-term debt: As of December 31, 2024, Embraer’s long-term debt was reported at $1.698 billion.
• Short-term debt: The company's short-term debt stood at $448.7 million at the end of 2024.

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. It indicates the proportion of equity and debt a company is using to finance its assets. Here’s how Embraer’s ratio stacks up:

• Debt-to-equity ratio: Embraer’s debt-to-equity ratio at the close of 2024 was 2.32.

Recent financial activities, such as debt issuances and credit ratings, provide additional context to Embraer S.A.'s financial strategy. For instance, in February 2024, S&P Global Ratings upgraded Embraer's long-term corporate credit rating to 'BB+' from 'BB', with a stable outlook, reflecting the company's improved credit metrics and robust performance. This upgrade indicates a positive assessment of Embraer's ability to manage its debt and meet its financial obligations.

Balancing debt and equity is vital for sustainable growth. Embraer strategically uses both to optimize its capital structure. While debt can provide leverage and potentially enhance returns, it also introduces financial risk. Equity, on the other hand, provides a stable capital base without the obligation of fixed payments.

• Embraer S.A. actively manages its debt profile through refinancing activities. For example, in March 2024, Embraer successfully concluded a liability management transaction, repurchasing $500 million of its 5.050% notes due in 2025 and issuing $750 million of new 6.950% notes due in 2034. This move extends the maturity profile of the company’s debt and reduces near-term financial pressures.

Here is a summary of Embraer S.A.'s key financial data as of 2024:

Understanding these elements helps stakeholders assess Embraer’s financial stability and its capacity for future growth. For more insights into Embraer S.A.'s strategic direction, explore Mission Statement, Vision, & Core Values of Embraer S.A. (ERJ).

Embraer S.A. (ERJ) Liquidity and Solvency

Understanding Embraer S.A.'s (ERJ) financial health requires a close look at its liquidity and solvency. Liquidity refers to the company's ability to meet its short-term obligations, while solvency assesses its ability to meet long-term obligations.

Assessing Embraer S.A.'s Liquidity:

Analyzing Embraer S.A.'s liquidity involves examining key ratios and trends:

• Current and Quick Ratios: These ratios provide insights into Embraer S.A.'s ability to cover its current liabilities with its current assets.
• Working Capital Trends: Monitoring the trend of Embraer S.A.'s working capital (current assets minus current liabilities) helps assess its operational efficiency and short-term financial health.
• Cash Flow Statements Overview: Examining the cash flow statement reveals the trends in operating, investing, and financing cash flows, offering a comprehensive view of Embraer S.A.'s cash management.
• Potential Liquidity Concerns or Strengths: Identifying any potential issues or positive indicators in Embraer S.A.'s liquidity position is crucial for investors.

Here is an overview of Embraer S.A.'s cash flow trends based on the 2024 fiscal year data:

This table illustrates that Embraer S.A. generated $250 million from its operations, invested $150 million in its business, and spent $50 million on financing activities.

For further insights into Embraer S.A.'s (ERJ) financial health, you can explore: Breaking Down Embraer S.A. (ERJ) Financial Health: Key Insights for Investors

Embraer S.A. (ERJ) Valuation Analysis

Determining whether Embraer S.A. (ERJ) is overvalued or undervalued requires analyzing several key financial metrics and market indicators.

Here's a breakdown:

• Price-to-Earnings (P/E) Ratio: As of April 2025, Embraer's P/E ratio varies across different sources. One source indicates a P/E ratio of 23.53, while another shows 21.72. Yet another source indicates a negative P/E ratio of -1675.38. These differences may be due to different calculation methods or data sources. A more recent P/E ratio as of April 11, 2025, is 21.54. Additionally, the forward P/E ratio is estimated at 24.10.
• Price-to-Book (P/B) Ratio: The P/B ratio as of April 2025 is approximately 2.39. Another source indicates a P/B ratio of 2.98.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: Embraer's EV/EBITDA ratio is reported as 7.48. However, another source states the latest twelve months EV/EBITDA as 21.4x.

These ratios provide insights into how the market values Embraer relative to its earnings, book value, and operational cash flow.

Embraer's stock price has shown significant volatility over the past year. As of April 14, 2025, the stock closed at $43.09, reflecting a 78.43% increase over the past 12 months but a 21.11% decrease over the past 30 days.

Embraer does not currently pay a dividend. The last dividend payment was $0.0108 per share, paid on January 18, 2019.

Analyst consensus on Embraer's stock valuation is generally positive. The consensus rating is a 'Moderate Buy'. The average 12-month price target from analysts is $52.50, which represents a 20.52% increase from the current price of $43.56.

Here’s a summary of analyst ratings:

• Consensus Rating: Buy
• Average Price Target: $52.50
• Upside Potential: 20.52%

For additional insights into Embraer's financials, you can review their Mission Statement, Vision, & Core Values of Embraer S.A. (ERJ).

Here is a table summarizing key valuation measures for Embraer S.A. (ERJ):

These metrics, combined with stock performance and analyst ratings, offer a comprehensive view of Embraer's valuation.

Embraer reported strong financial results for 2024, with record-breaking annual revenues of $6.395 billion, a 21% year-over-year increase. The company delivered 206 aircraft in 2024, a 14% increase from 2023. The firm order backlog reached a historic high of $26.3 billion.

Guidance for 2025 includes:

• Commercial Aviation deliveries between 77 and 85 aircraft
• Executive Aviation deliveries between 145 and 155 aircraft
• Total company revenues in the US$7.0 to US$7.5 billion range
• Adjusted EBIT margin between 7.5% and 8.3%
• Adjusted free cash flow of US$200 million or higher

Embraer ended 2024 with a 0.1x net debt-to-EBITDA ratio, down from 1.4x in 2023. All three main U.S. rating agencies classify the company as Investment Grade (IG).

Embraer S.A. (ERJ) Risk Factors

Embraer S.A. (ERJ) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, and volatile market conditions. Understanding these factors is crucial for investors assessing the company's stability and growth potential. For further insights, you might find this resource helpful: Breaking Down Embraer S.A. (ERJ) Financial Health: Key Insights for Investors.

Here's a detailed overview of the key risks:

• Industry Competition: The aerospace industry is highly competitive. Embraer faces strong competition from established players like Boeing and Airbus, as well as emerging competitors in the regional jet and business aviation markets. Intense competition can pressure pricing and reduce market share.
• Regulatory Changes: The aviation industry is heavily regulated. Changes in environmental regulations, safety standards, or trade policies can increase compliance costs and affect demand for Embraer's products. For instance, new emissions standards may require significant investments in research and development.
• Market Conditions: Economic downturns and geopolitical instability can significantly impact the demand for commercial and executive jets. Fluctuations in currency exchange rates, particularly the Brazilian Real against the US dollar, can also affect Embraer's profitability, as a significant portion of its revenues are denominated in US dollars while a portion of its costs are in Brazilian Real.

Operational, financial, and strategic risks are consistently highlighted in Embraer's earnings reports and filings. These include:

• Operational Risks: Production delays, supply chain disruptions, and quality control issues can impact Embraer's ability to deliver aircraft on time and within budget. The global supply chain disruptions experienced in recent years have underscored this risk.
• Financial Risks: High levels of debt, fluctuations in interest rates, and the availability of financing for customers can affect Embraer's financial stability. Access to capital markets and the ability to manage debt are crucial for funding ongoing operations and new projects.
• Strategic Risks: The success of new product development programs, such as the E-Jets E2 family, is critical for Embraer's long-term growth. Failure to innovate or adapt to changing market demands can lead to a loss of competitiveness.

Embraer employs several mitigation strategies to address these risks:

• Hedging Strategies: Embraer uses hedging instruments to mitigate the impact of currency fluctuations on its financial results. These strategies help to stabilize revenues and costs in the face of exchange rate volatility.
• Diversification: Embraer operates in multiple segments, including commercial aviation, executive aviation, defense and security, and agricultural aviation. This diversification helps to reduce the company's reliance on any single market or product.
• Cost Management: Embraer focuses on improving operational efficiency and reducing costs to enhance profitability. This includes initiatives to streamline production processes, optimize supply chain management, and control overhead expenses.
• Strategic Partnerships: Embraer collaborates with other companies to share risks and resources in developing new technologies and products. These partnerships can help to accelerate innovation and expand market reach.

The following table summarizes some potential financial impacts and mitigation strategies based on recent trends:

Embraer S.A. (ERJ) Growth Opportunities

Embraer S.A. (ERJ)'s future growth prospects are underpinned by several key drivers, including product innovations, strategic market expansions, and potential acquisitions. These elements collectively contribute to the company's anticipated revenue growth and earnings estimates.

Key growth drivers for Embraer S.A. (ERJ) include:

• Product Innovations: Continued investment in research and development to enhance existing products and introduce new offerings, particularly in sustainable aviation technologies.
• Market Expansions: Targeting growth in key markets such as North America, Asia-Pacific, and Europe, with a focus on both commercial and executive aviation segments.
• Acquisitions: Strategic acquisitions to expand capabilities and market presence, potentially including companies specializing in aerospace technology or services.

Future revenue growth projections and earnings estimates for Embraer S.A. (ERJ) are influenced by several factors. According to the latest information, Embraer S.A. (ERJ) is expected to show substantial revenue growth. For example, in 2024, the company's revenue reached $5.269 billion. Analysts predict continued growth, driven by increased demand for its aircraft and services.

Strategic initiatives and partnerships are crucial for Embraer S.A. (ERJ)'s future growth. These include:

• Partnerships in Urban Air Mobility: Collaborating with companies to develop and deploy electric vertical takeoff and landing (eVTOL) aircraft.
• Government Contracts: Securing defense contracts with various governments to provide military aircraft and related services.
• Technological Advancements: Investing in new technologies such as autonomous flight systems and sustainable aviation fuels to enhance product offerings and reduce environmental impact.

Embraer S.A. (ERJ) possesses several competitive advantages that position it for sustained growth:

• Established Market Position: Strong brand recognition and a significant market share in the regional jet and executive aviation segments.
• Technological Expertise: Advanced engineering capabilities and a history of innovation in aerospace technology.
• Global Presence: A well-established global network of sales, service, and support centers.

Here is a table summarizing Embraer S.A. (ERJ)'s recent financial performance and future growth estimates:

For more detailed insights into Embraer S.A. (ERJ)'s financial health, you can refer to: Breaking Down Embraer S.A. (ERJ) Financial Health: Key Insights for Investors.