Embraer S.A. (EMBJ) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights a 21% YoY increase in deliveries, strong partnerships, and a positive cash flow. Despite some uncertainties in timelines and impacts, the Q&A section reveals improved supply chains, tariff exemptions, and optimistic growth projections. The positive factors, such as potential billion-dollar deals in India and strong margins, outweigh the uncertainties, leading to a positive rating.
Key Financial Performance
Executive Aviation Revenue $750 million in Q4 2025, a 25% year-over-year increase. The increase was driven by higher volumes, pricing, and operating leverage, which offset the negative impact of U.S. tariffs.
Commercial Aviation Revenue 7% year-over-year increase in 2025, driven by higher volumes. Adjusted EBITDA margin improved from 2.5% to 2.7% due to lower expenses.
Defense & Security Revenue 36% year-over-year increase in 2025, driven by higher KC-390 and A-29 Super Tucano volumes. Adjusted EBITDA margin improved from 6.2% to 7.9% due to operating leverage and client mix.
Service and Support Revenue 18% year-over-year increase in 2025, driven by higher volumes and the ramp-up of the OGMA GTF engine shop. Adjusted EBITDA margin decreased from 16.5% to 15.5% due to the ramp-up of new operations.
Adjusted Free Cash Flow $491 million in 2025, compared to $676 million in 2024. The decrease was due to a one-off $150 million inflow in 2024 related to the Boeing agreement. Exceeded guidance of $200 million or higher due to reduced working capital requirements.
Adjusted Net Income $253 million in 2025, compared to $461 million in 2024. The decline was mainly due to a one-time $150 million impact from the Boeing agreement, less favorable net results, and U.S. import tariffs.
Backlog $31.6 billion in Q4 2025, a 20% year-over-year increase. Commercial Aviation backlog increased by 42%, Defense & Security by 10%, Service and Support by 7%, and Executive Aviation by 3%.
Revenue $7.6 billion in 2025, an 18% year-over-year increase. Q4 2025 revenue was nearly $3 billion, a 15% year-over-year increase. Growth was driven by diversified business segments.
Adjusted EBITDA $889 million in 2025 with an 11.7% margin, compared to 12.1% in 2024. The decrease was due to U.S. import tariffs and infrastructure-related costs.
Aircraft Deliveries 91 aircraft in Q4 2025 (32 commercial jets, 53 executive jets, 6 defense-related), a 21% year-over-year increase. Full-year deliveries included 78 commercial jets (7% increase) and 155 executive jets (20% increase).
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
E2 Program: Strong sales across all continents, consolidating the E2 platform as a benchmark in the small narrow-body segment.
Executive Aviation: Revenues reached an all-time high of $750 million in Q4 2025, with 53 business jets delivered, the highest number ever in a single quarter.
eVTOL Prototype: First flight in December 2025, with 28 missions completed and certification expected in 2027.
Next Generation Praetor 500E and 600E: Announced as part of the Executive Aviation portfolio.
Global Partnerships: Strategic partnerships under discussion with Mahindra and Adani Group in India and Northrop Group in the U.S., supporting growth in Commercial Aviation and Defense segments.
Defense & Security Orders: Sweden ordered 4 KC-390s with 90 options, and Portugal signed a 6-aircraft order with 10 options for NATO countries.
Production Chain Improvements: Closer collaboration with suppliers, process digitalization, and investments in AI tools extended across all platforms to support production stability in 2026 and beyond.
Revenue Growth: Achieved double-digit revenue growth over the past three years despite supply chain challenges.
Backlog Growth: Company-wide backlog reached $31.6 billion, up 20%, with significant increases in Commercial Aviation (+42%) and Defense & Security (+10%).
Book-to-Bill Ratio: Consolidated ratio of 1.7:1 in 2025, indicating strong sales momentum across all business units.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Supply Chain Challenges: Despite achieving revenue growth, the company faced ongoing supply chain challenges, which could impact production stability and delivery timelines.
U.S. Import Tariffs: The company faced a $27 million impact from U.S. import tariffs in Q4 2025, which negatively affected margins and profitability.
Infrastructure Costs: Nonrecurring infrastructure-related costs of $20 million in Q4 2025 weighed on margins, highlighting potential risks in managing operational expenses.
Economic Volatility: The company acknowledged challenges and volatility in the broader economic environment, which could impact financial performance and operational stability.
Certification Delays: The eVTOL program's certification is targeted for 2027, and any delays in this timeline could hinder the company's strategic objectives in the urban air mobility market.
Debt Management: Although the company improved its debt maturity profile, the average cost of debt remains a factor to monitor, especially in volatile financial markets.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Production Stability: Production level initiatives have been extended across all platforms to support production stability in 2026 and onwards.
Strategic Partnerships: Partnerships under discussion with global players in India (Mahindra and Adani Group) and the U.S. (Northrop Group) are expected to reinforce strategic positions and support long-term growth potential in Commercial Aviation and Defense segments.
eVTOL Certification: The eVTOL program is advancing through flight tests towards certification in 2027.
2026 Guidance - Aircraft Deliveries: Commercial Aviation is forecasted to deliver between 80 and 85 aircraft, and Executive Aviation is forecasted to deliver 160 to 170 jets, representing a year-over-year increase of approximately 6% in both segments.
2026 Guidance - Revenue: Revenue is estimated to settle between $8.2 billion and $8.5 billion, with the midpoint of the range 10% higher than 2025.
2026 Guidance - EBIT Margin: EBIT margin is forecasted between 8.7% and 9.3%, implying around $750 million at the midpoint of the range, approximately 15% higher than the adjusted $657 million EBIT generated in 2025.
2026 Guidance - Free Cash Flow: Adjusted free cash flow without Eve is estimated at $200 million or higher for 2026.
Midterm Free Cash Flow Goal: The midterm goal is to convert 50% of EBITDA into free cash flow, with an expected generation of approximately $1.4 billion or more from 2024 to 2026.
Market Position and Backlog: The backlog reached $31.6 billion, with approximately $20 billion in customer options, representing potential for significant expansion over the coming years.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Shareholder remuneration: Declared a total of BRL 568 million in 2025 in shareholder remuneration, combining interest in equity and dividend. This amount corresponded to BRL 0.78 per share and represents a dividend yield of approximately 0.9%. An additional dividend will be paid to ensure compliance with the minimum 25% net income distribution required under Brazilian corporate law. The full amount will be paid in a single installment following the 2026 Annual Shareholders Meeting.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the status of Embraer's strategic partnerships in India and the U.S.?
A:In India, Embraer is working on two fronts: the MTA (mid transportation aircraft) with the Indian Air Force, expecting an RFP this year, and a partnership with Mahindra for executive civil aviation, aiming for jet rollouts by 2028. In the U.S., Embraer partnered with Northrop Grumman to develop boom capability for the KC-390, with no defined timeline yet.
Q:Can you provide more details on the Northrop Grumman partnership for the KC-390?
A:The partnership focuses on integrating an autonomous boom refueling system and agile combat employment solutions for the KC-390 Millennium. It aims to complement the U.S. Air Force's tanker fleet without competing with the KC-46. If sizable orders are received, the aircraft will be assembled in the U.S. No clear timeline or size of opportunity has been defined yet.
Q:What is the current state of the supply chain for commercial and executive aviation?
A:The supply chain has improved compared to last year but still faces bottlenecks. Embraer is proactively addressing issues and anticipates a better year in 2026 compared to 2025.
Q:What is the margin outlook by segment, and how are tariffs affecting it?
A:Last year, Embraer paid $54 million in tariffs, with $25 million carried over into 2026. Adjusting for tariffs, margins could improve by 75 to 100 basis points over time. Executive Aviation and Service segments are already in double-digit margins, with Defense moving towards double digits and Commercial Aviation aiming for mid-single digits. Consolidated EBIT margin is approaching double digits.
Q:What drove the strong cash flow performance in Q4?
A:The strong cash flow was driven by over 90 aircraft deliveries in Q4, advanced payments from defense customers, and a successful sales campaign in Executive Aviation in December.
Q:What are the delivery projections for commercial and executive aviation?
A:Embraer aims to reach 100 commercial aircraft deliveries by 2027, with preparations underway. For Executive Aviation, capacity is being expanded, and production efficiency has improved significantly since 2021. Orders are in place to support these targets.
Q:What is the growth outlook for the Service and Support segment?
A:Service and Support is expected to grow at a double-digit rate, outpacing the aircraft division over the next 2-3 years.
Q:What is the status of tariffs on Embraer aircraft, and how does it affect competitiveness?
A:As of February 2024, Embraer aircraft, engines, and parts are exempt from the 10% tariffs. This benefits U.S. customers and levels the playing field, as Embraer was previously the only manufacturer paying tariffs. The exemption is expected to be long-term, but the geopolitical situation remains volatile.
Q:What is the book-to-bill ratio expectation for 2026?
A:Embraer expects a book-to-bill ratio above 1:1 for 2026, supported by strong sales campaigns and preparations to increase production output for E-Jets in the coming years.
Q:What is Embraer's perspective on the RFP for 60 military aircraft in India?
A:Embraer is optimistic about the opportunity, believing the KC-390 offers the best value proposition for India. The original plan was for 40-80 aircraft, with 60 being the midpoint. The deal could generate billions in revenue.
Q:What are the main drivers of the strong margin performance in the Services division?
A:The strong Q4 margin of 20% was due to compensations from suppliers and other factors. For future assumptions, a 15-16% margin is more realistic, with gradual improvements expected.
Q:What is the impact of tariffs on Embraer's Executive Aviation division?
A:Out of the $54 million paid in tariffs in 2025, 80-85% impacted the Executive Aviation division. The total tariff impact for the year was $60-70 million, but tariffs are now at 0% as of February 2024.
Q:What is the status of the joint venture with Adani in India?
A:Embraer has signed an MOU with Adani to explore opportunities in civil aviation, focusing on the E175 E1. No joint venture has been established yet.
Q:How is Embraer addressing the geopolitical situation in the Middle East?
A:Embraer is closely monitoring the situation, prioritizing the safety of its people and suppliers in the region. No critical issues have been identified that could compromise deliveries or short-term sales.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines or sizes of opportunities for the Northrop Grumman partnership and the KC-390 boom capability. They also did not clarify the exact impact of tariffs on future margins or provide detailed competitive dynamics for the India RFP for military aircraft.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Boeing
Commercial Aviation
Defense Security
EBIT
Executive Aviation
Investor Relations
Service Support
Slide
addition
aircraft
backlog
bill ratio
book bill
cash flow
conference
debt
end
income
increase
jet
line
margin
market
number
option
order
period
position
profile
program
result
revenue
sale
segment
tariff
year
EMBJ Transcript
Embraer S.A. (EMBJ) Q1 2026 Earnings Call Transcript
Positive5-8
The earnings call highlights strong financial performance, strategic partnerships, and optimistic guidance, with a focus on production stability and market expansion. The Q&A section reveals continued demand and interest across regions, despite some uncertainties. A $25 million defense contract boost and strategic investments further support positive sentiment. Challenges like tariffs and logistics costs are addressed, and margins are expected to improve. Overall, the positive outlook and strategic initiatives suggest a likely stock price increase in the near term.
Embraer S.A. (EMBJ) Q4 2025 Earnings Call Transcript
Positive3-6
The earnings call summary highlights a 21% YoY increase in deliveries, strong partnerships, and a positive cash flow. Despite some uncertainties in timelines and impacts, the Q&A section reveals improved supply chains, tariff exemptions, and optimistic growth projections. The positive factors, such as potential billion-dollar deals in India and strong margins, outweigh the uncertainties, leading to a positive rating.
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
