Embraer Earnings Results 3Q25

HIGHLIGHTS

• 2025 Guidance reiterated. From an operations point of view, the company estimates Commercial Aviation deliveries between 77 and 85 aircraft, and Executive Aviation deliveries between 145 and 155 aircraft. From a financial point of view, revenues in the US$7.0 to US$7.5 billion range, adjusted EBIT margin between 7.5 per cent and 8.3 per cent, and adjusted free cash flow of US$200 million or higher for the year.
• S&P upgraded our credit rating from "BBB-" to "BBB" (2 notches above IG threshold) and, in addition, Fitch Ratings and Moody's revised their outlook for the company from stable to positive ("BBB-" and "Baa3" ratings or 1 notch above IG threshold).
• Revenues totaled US$2,004 million in 3Q25 – all-time high 3rd quarter – +18 per cent yoy. Highlights for Commercial Aviation and Defense & Security revenues with +31 per cent and +27 per cent yoy growth.
• Adjusted EBIT reached US$172.0 million with an +8.6 per cent margin in 3Q25 (+17.6 per cent in 3Q24; +8.7 per cent ex Boeing agreement). U.S. import tariffs totaled US$17 million during the quarter (85bp); US$27 million year-to-date.
• Adjusted free cash flow w/o Eve was US$300.3 million during the period because of higher number of aircraft delivered and lower accounts receivables.
• Embraer delivered 62 aircraft in 3Q25, of which 20 were commercial jets (13 E2s and 7 E1s), 41 were executive jets (23 light and 18 medium) while 1 was defense (KC-390 Millennium); +5 per cent versus 59 aircraft delivered yoy.
• Firm order backlog of US$31.3 billion in 3Q25 – an all-time high.

2025 Guidance reiterated. From an operations point of view, the company estimates Commercial Aviation deliveries between 77 and 85 aircraft, and Executive Aviation deliveries between 145 and 155 aircraft. From a financial point of view, revenues in the US$7.0 to US$7.5 billion range, adjusted EBIT margin between 7.5 per cent and 8.3 per cent, and adjusted free cash flow of US$200 million or higher for the year.

Embraer delivered 62 aircraft in 3Q25, of which 20 were commercial jets (13 E2s and 7 E1s), 41 were executive jets (23 light and 18 medium) and 1 was defense related (KC-390 Millennium). The result is +5 per cent versus 59 aircraft delivered year-over-year (yoy). The number of deliveries for Commercial Aviation was +25 per cent higher compared to 3Q24, while Executive Aviation was flat.

The company's backlog reached US$31.3 billion in 3Q25, +5 per cent qoq, surpassing the previous historical all-time high. Compared to a year ago, the company wide backlog increased +38 per cent with highlights across all business units. For instance, the backlog for Executive Aviation and Services & Support increased +65 per cent and +40 per cent yoy, respectively; for Commercial Aviation +37 per cent yoy while for Defense & Security +8 per cent yoy.

Consolidated revenue of US$2,004 million in 3Q25 represented an +18 per cent increase yoy. Commercial Aviation and Defense & Security, whose revenues increased +31 per cent and +27 per cent when compared to last year, were the highlight of the quarter. Meanwhile, Services & Support and Executive Aviation also performed well with revenues +16 per cent and +4 per cent yoy, respectively.

Commercial Aviation

Revenues were US$618 million, +31 per cent higher yoy underpinned by better product mix and higher volumes and prices. Gross margin increased from +4.3 per cent to +7.1 per cent yoy while Adjusted EBIT increased from -4.8 per cent to +1.3 per cent yoy, supported by operating leverage and lower Other operating expenses (i.e. tax credits during the current period and negative one-time items a year ago).

Executive Aviation

Revenues totaled US$583 million, +4 per cent yoy propped by higher prices. However, the gross margin decreased from +23.4 per cent versus +18.7 per cent a year ago because of product mix, U.S. import tariffs (US$15 million; 260bp) and higher costs (i.e. logistics). Consequently, Adjusted EBIT margin decreased from +16.3 per cent to +12.1 per cent yoy and reflected gross margin variance.

Defense & Security

Revenues reached US$278 million, +27 per cent yoy because of higher KC-390 volumes and a one-off positive contract-related adjustment. Gross margin increased from +16.8 per cent to +20.3 per cent yoy impacted by operating leverage and client mix (i.e. more exports), in accordance with the percentage of completion calculation method. Consequently, the adjusted EBIT margin improved from +7.2 per cent to +12.9 per cent yoy.

Services & Support

Revenues totaled US$493 million, +16 per cent yoy driven by higher volumes across all segments, particularly in Commercial Aviation, Executive Aviation and the rampup of the OGMA GTF engine shop. The gross margin decreased from +29.2 per cent to +24.9 per cent yoy primarily due to service and materials delays. U.S. import tariffs for the division were US$2 million (40bp) during the quarter. Consequently, the Adjusted EBIT margin decreased from +18.7 per cent to +13.7 per cent yoy.

Others

Include Agricultural Aviation (i.e. crop duster), the cyber division Tempest, the recently included landing gear division, and other businesses. Revenues for the segment rose +150 per cent from US$13 million to US$32 million yoy because of the inclusion of the reclassified landing gear division in early 2025.