Embraer has reported positive third-quarter results, reaffirming its guidance for the full year despite a substantial drop in quarterly profit.
The Brazilian aerospace manufacturer delivered $2bn in total revenue – an 18% increase year over year and a new third-quarter record.
Revenue growth was strong across Commercial Aviation and Defense & Security, which posted 31% and 27% gains respectively. Executive Aviation revenue grew 4%, “propped up” by higher prices, the company said.
Adjusted EBIT came in at $172 million for the quarter, down from almost $300 million during the same period last year. Adjusted EBIT margin fell from 17.6% to 8.6% year over year.
Adjusted net income skidded to $54.4 million for the third quarter. This was a 54% drop sequentially and a 75% drop year over year.
Adjusted free cash flow, excluding Eve, Embraer’s electric aircraft business, was $300 million, driven by a higher number of deliveries and lower accounts receivables.
Embraer delivered 62 aircraft during the third quarter, a 5% increase over the 59 aircraft it delivered during the same period last year.
This year’s third-quarter deliveries included 20 commercial jets (13 E2s and seven E1s), 41 executive jets (23 light and 18 medium), and one defence aircraft (KC-390 Millennium).
Commercial Aviation deliveries were 25% higher compared to last year’s third quarter, while Executive Aviation deliveries were marginally higher.
Nonetheless, Executive Aviation’s total revenue of $583 million was a new third-quarter record, and the company hit the “historic milestone” of delivering its 2,000th executive jet, in the words of CEO Francisco Gomes Neto.
Embraer finished up the quarter with a firm order backlog of $31.3bn – a new all-time high.
Based on these results, the company reiterated its full-year 2025 guidance, with total revenue expected to land between $7bn and $7.5bn.
Embraer expects to deliver between 77 and 86 commercial aircraft during the full year, and between 145 and 155 executive aircraft.
Adjusted EBIT margin is expected to be between 7.5% and 8.3% for the year, with an adjusted free cash flow of $200 million or higher.
Antonio Carlos Garcia, chief financial officer of Embraer, said these forecasts “may appear conservative at first glance”, but they take into account the continued supply chain risks that Embraer faces in the fourth quarter.
“Having said that, I would like to reinforce that these forecasts reflect our confidence in our operational progress and the resilience of our business model,” he said.
“We remain comfortable with our outlook and feel confident that we are on track to meet our full-year guidance.”
Neto and Garcia pointed to several highlights for the quarter that they see as indicative of the health of the company’s Commercial Aviation order book.
Avelo, a US low-cost carrier, ordered 50 E195-E2 jets with 50 options, and LATAM ordered 24 E195-E2 jets with 50 options.
Neto also noted that new facilities in both the US and Brazil will drive higher production volume and faster deliveries, in line with the company’s growth strategy.
These investments are part of Supply Chain Management 2.0, a programme that is using digital technology, proactive risk management, and AI-powered planning and forecasting to drive production speed and efficiency.
Neto said the programme can be credited for the 16% increase in aircraft deliveries year to date, despite “ongoing macroeconomic challenges”.
“These investments are already showing results,” he said. “From 2026 onwards, we expect even greater production stability in all product lines.”
Over the past five years, Neto added, the production lead times across the Praertor, KC-390 and E-Jet families have fallen by 40%, 33% and 27% respectively.
Embraer’s Services business also continues to see “sustainable” growth, with revenue rising 16% and adjusted EBIT margin rising 13.7%.
Third-quarter highlights for the unit included a new maintenance agreement with US regional carrier CommuteAir, and a new Starlink connectivity solution for operators of legacy Praetor and Legacy aircraft.
In an investor call, Neto was asked about American Airlines’ retrofit of its E175 fleet, which was announced last month and which will be delivered by Embraer.
The CEO said the American Airlines retrofit is Embraer’s first venture into interior services, but it is part of a wider initiative to improve the E-175 E1 family of aircraft.
“This includes not only the overhead bins but new seats, new cabins, new lighting and better connectivity,” he said.
“So yes, we have a programme with American Airlines, but this same kit is available for other customers, and we can do it for them at our new MRO in Dallas.”
Guy Paiva, Embraer’s head of investor relations and M&A, was asked how the company plans to increase its return of value to shareholders, and whether this may include a dividend hike.
Paiva said the company “has no firm opinion” on raising returns to shareholders, but he “does not see” a dividend raise on the cards.
“We resumed dividends at the end of last year, and we are very happy that we are able to do it,” he said.
“We are evaluating our capital structure, so it’s a valid question, but we do not have a firm answer right now.
“Buybacks are on the table, but we are paying 25% of the net income for the year in dividends, which is a lot for a heavy, intensive business like ours.”
Management said the company’s liquidity position remains “strong”, with a cash position on a consolidated basis of $2bn at quarter-end, complemented by an undrawn $1bn revolving credit facility.
The company’s current consolidated cash position is $476 million higher than at the end of the previous quarter.