What Embraer-Empresa Brasileira de Aeronautica (EMBJ) Said on Its Q3 Earnings Call

Key Points

• Embraer raised its 2026 revenue outlook to $8.4 billion–$8.6 billion and expects adjusted free cash flow of at least $700 million, while maintaining its margin and aircraft-delivery targets.
• Third-quarter revenue rose 17% to $2.35 billion and adjusted EBIT margin expanded to 10.9%; backlog reached a record $35.7 billion, with about $23 billion in additional options.
• Growth spanned all four businesses, led by 30% revenue growth in Services and Support; Executive Aviation and Defense and Security also posted strong margins, while Commercial Aviation continued to work toward improved profitability.

Embraer-Empresa Brasileira de Aeronautica NYSE: EMBJ raised its 2026 revenue and free cash flow forecasts after reporting record third-quarter revenue and an all-time high backlog, as growth across its four businesses lifted operating margins.

The aircraft maker reported revenue of $2.35 billion, up 17% from a year earlier, while adjusted earnings before interest and taxes rose to $255 million. The adjusted EBIT margin expanded to 10.9% from 8.6%, or 9.4% excluding U.S. import tariffs in the prior-year period, Chief Financial Officer Felipe Santana said.

Embraer now expects full-year revenue of $8.4 billion to $8.6 billion and adjusted free cash flow of at least $700 million. It maintained its adjusted EBIT margin forecast of 10% to 10.6% and its delivery targets of 80 to 85 commercial aircraft and 160 to 170 executive aircraft.

Adjusted free cash flow, excluding Eve, was $628 million in the quarter, supported by customer pre-delivery payments and stronger operating results. Adjusted net income was $74 million, with a 3.1% margin, down from 4.2% a year earlier. Santana attributed the decline in margin mainly to higher financial expenses related to the mark-to-market of the company’s long-term incentive plan and higher taxes.

Backlog and deliveries rise

The company’s backlog climbed 14% year over year to a record $35.7 billion, marking its eighth consecutive quarterly record, President and CEO Francisco Gomes Neto said. Defense and Security led the increase with 56% growth, while Executive Aviation’s backlog rose 12% to a record $8.2 billion.

Embraer also holds approximately $23 billion in options that could bring the backlog to almost $60 billion if exercised, Gomes Neto said.

During the quarter, the company delivered 22 commercial jets and 41 executive jets. Total deliveries increased 6% from a year earlier. Through the first nine months, it delivered 52 commercial aircraft and 115 executive aircraft, representing 63% and 70%, respectively, of the midpoints of their full-year delivery targets.

Gomes Neto said the year-to-date delivery figures showed progress in leveling production across the year, although further improvement was possible. The company also reported 28 firm E2 orders associated with Farnborough, an order for eight additional aircraft from ANA and an order from Colombia for two KC-390 military transport aircraft.

Margins expand across businesses

Commercial Aviation revenue rose 13% to $696 million, with a 2.4% adjusted EBIT margin. Santana said supplier compensation helped the year-over-year improvement. Embraer expects a better customer mix in the fourth quarter and full-year margins roughly in line with the prior-year average. Gomes Neto said the company expects to reach a 5% EBIT margin in the business by 2028.

Executive Aviation revenue increased 12% to $655 million, while its adjusted EBIT margin reached 16%, supported by pricing and product mix. Defense and Security revenue rose 22% to $341 million, with a 15.7% adjusted EBIT margin. Santana cautioned that defense margins were not expected to remain at their strong second- and third-quarter levels in the fourth quarter, though the division remained on track for a record year with profitability around double-digit levels.

Service and Support revenue grew 30% to $638 million, and its adjusted EBIT margin reached 17%. Gomes Neto identified services as a major growth opportunity, citing expanding aircraft fleets and investments in maintenance, customer support and training. He said Portuguese subsidiary OGMA, which performs engine maintenance, was expected to reach $600 million in revenue by 2030.

Investment plans and new products

Embraer is targeting 200 executive aircraft deliveries in 2028. Gui Paiva, head of investor relations, M&A and venture capital, said capital expenditure was expected to temporarily rise to $500 million to $550 million in 2027 and 2028 before returning to a prior regular level of about $400 million.

Gomes Neto said new aircraft versions, higher production and efficiency improvements could support further gains in Executive Aviation profitability. Paiva said there was a roughly two- to three-year lag in pricing for the division’s aircraft.

Embraer has not decided whether its next major product will be a commercial jet, executive aircraft or defense product, Gomes Neto said. The company is studying markets, customer demand, funding and potential partners. Paiva said Embraer did not consider it prudent to pursue two major capital-spending programs simultaneously and wanted to materially reduce the risks associated with Eve before taking the next step.

Gomes Neto said Eve’s flight-test campaign had completed 73 flights and more than three hours of flight time. Full transition flight is expected before year-end. Paiva said the company plans to build six prototypes through the first half of 2027 and begin the certification flight campaign around mid-2027.

About Embraer-Empresa Brasileira de Aeronautica (NYSE:EMBJ)

Embraer, formerly Empresa Brasileira de Aeronáutica, is a Brazilian aerospace company founded in 1969. Headquartered in São José dos Campos, Brazil, it develops, manufactures and supports aircraft and related aviation products and services. The company's businesses include commercial aviation, executive aviation, and defense and security. Its offerings include E-Jets and E-Jets E2 commercial aircraft, Phenom and Praetor business jets, and defense aircraft such as the C-390 Millennium transport aircraft and A-29 Super Tucano.

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