Embraer Q3 2026 Earnings Call Transcript

Embraer (NYSE:EMBJ) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Embraer reported record Q3 2026 revenue of $2.3 billion and a backlog of $35.7 billion, marking the eighth consecutive quarter of increase.

The company revised its 2026 revenue and free cash flow guidance upwards, citing strong performance across all business units.

In Commercial Aviation, Embraer secured 28 firm E2 orders, while Executive Aviation saw a record backlog of $8.2 billion with the launch of the Phenom 300EV.

Defense & Security segment revenues increased 22% to $341 million, bolstered by higher KC-390 volumes and a strong 2.9 book-to-bill ratio.

Adjusted net income was $74 million, with a 3.1% margin, reflecting higher financial expenses and taxes.

The company ended the quarter with a net cash position, with improved net cash to adjusted EBITDA ratio, and declared 154 million reais in interest on equity.

Future strategy includes investments in new technologies and maintaining strong financial health without risking the company’s financial position.

Embraer maintained its commitment to deliver 80-85 aircraft in Commercial Aviation and 160-170 in Executive Aviation for the year.

CEO Francisco Gomes Neto highlighted ongoing investments in production capability expansions and new technologies, including eVTOL development.

Full Transcript

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Good morning, ladies and gentlemen, and thanks for standing by. My name is Gui Paiva and I’m the Head of Investor Relations, M&A and Venture Capital for Embraer. Welcome to Embraer’s third quarter 2026 earnings conference call. Participants on today’s conference call are Francisco Gomes Neto, President and CEO of Embraer, Felipe Santana, Chief Financial Officer, Tais Morais, Corporate Communications Director, and me. As a reminder, this conference is being recorded.

This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. The agenda includes the presentation of third quarter 2026 results, followed by an investor-only Q&A session and subsequently a session exclusively for the press. Participation instructions will be provided later. We remind participants EVE’s results were discussed at the company’s conference call last week. Before we begin, a legal notice: this presentation may contain forward-looking statements, which involve risks and uncertainties, as detailed in the disclaimer available in the slides and in the documents filed with the Brazilian Securities Commission and the U.S. Securities and Exchange Commission.

It is a great pleasure to hand the floor to our President and CEO, Francisco Gomes Neto, who will begin the presentation of the company’s results. Please, Francisco, go ahead.

Francisco Gomes Neto (Chief Executive Officer)

Thank you, Gui. Good morning and good afternoon, everyone. It is a pleasure to be with you today to discuss Embraer’s third quarter 2026 results. We delivered record third quarter revenue of $2.3 billion, with revenue and margin expansion across all our businesses. Our backlog reached a new all-time high of $35.7 billion for the eighth consecutive quarter. Based on these results, we are revising up our 2026 revenue and free cash flow guidance. Let me now turn to the key highlights of the quarter. In Commercial Aviation, Farnborough drove 28 firm E2 orders, and ANA ordered eight additional aircraft. In Executive Aviation, we reached a record backlog of $8.2 billion and launched the new Phenom 300EV. In Defense, Colombia ordered two KC-390s while we advanced our partnership with Mahindra, including plans for a local assembly line in India. And in Services & Support, we continued expanding our customer agreements.

During the quarter, we delivered 22 commercial jets and 41 executive jets. Total company deliveries increased 6% year over year, with Commercial Aviation growing 10% and Executive Aviation stable. In Commercial Aviation, we delivered 52 aircraft year to date, representing 63% of the midpoint of our full-year guidance, 5 percentage points above the five-year average. In Executive Aviation, we delivered 115 aircraft year to date, representing 70% of the midpoint of our full-year guidance and a material 10 percentage points above the five-year average.

These numbers are evidence of our progress in our production leveling initiative, although we still have room for additional improvement. Our company-wide backlog reached $35.7 billion, up 14% year over year, another all-time record for Embraer. All four business units increased their backlog year over year, led by Defense & Security, up 56% with a strong 2.9 book-to-bill ratio. The Executive Aviation backlog grew 12% year over year, supported by a 1.4 book-to-bill ratio. Commercial Aviation backlog grew 4% year over year, while Services & Support increased 14%, with both maintaining book-to-bill ratios above 1.

In addition, we hold approximately $23 billion in options, which could re-expand our backlog to almost $60 billion if exercised. With that, I will now hand the call over to Felipe, who will walk you through our financial results. Felipe, the floor is yours.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Thank you, Francisco. Good morning and good afternoon, everyone. I will now talk you through our results by business unit. All comparisons are year over year unless otherwise noted. Starting with Commercial Aviation, revenues increased 13% to $696 million driven by higher volumes and prices. Adjusted EBIT totaled $17 million, with a positive 2.4% margin. The year-over-year improvement was supported by supplier compensation. For the fourth quarter, we expect a better customer mix, with full-year margins broadly in line with last year’s average. Looking ahead, our ambition is to continue improving Commercial Aviation profitability to the mid–single-digit level over the next few years.

In Executive Aviation, revenues increased 12% to $655 million, supported by higher prices and product mix. Adjusted EBIT reached $105 million, with a positive 16.0% margin, circa 130 bps up year on year versus a comparison excluding U.S. tariffs. In Defense & Security, revenues increased 22% to $341 million. Adjusted EBIT was $54 million, with a positive 15.7% margin, driven by higher KC-390 volumes, customer mix, and product stage. For the fourth quarter, we do not expect Defense EBIT margins to remain at the strong level seen in the second and third quarters. Still, the division remains on track for another record year, now with profitability around double-digit levels.

Services & Support revenues increased 30% to $638 million, driven by higher volumes. Adjusted EBIT totaled $108 million, with a positive 17% margin, supported by operating leverage, circa 330 bps above year over year. At the consolidated level, net revenues increased 17% to $2,350,000,000 in the third quarter. Revenues were well balanced across our business, with Commercial Aviation representing 30%, Executive Aviation and Services more than 25% each, and Defense 15%. In the first nine months, revenues reached $6 billion, representing more than 70% of the midpoint of our full-year guidance.

Adjusted EBITDA was $370 million in the quarter, with a positive 13.5% margin. Adjusted EBIT reached $255 million, with a positive 10.9% margin, compared to 8.6% a year ago, or 9.4% if we exclude U.S. import tariffs. The year-over-year improvement was driven by strong operating performance across all the business. In the first nine months, adjusted EBIT margin reached 10.7%, or 4.2 points above the five-year historical average. Adjusted free cash flow, excluding EVE, was $628 million in the quarter, reflecting sales-related pre-delivery payments and stronger operating results. Investment totaled $150 million during the quarter, as we continue to invest in new technology and support our current projects and future programs.

Adjusted net income was $74 million in the quarter, with a 3.1% margin, compared to 4.2% a year ago. The year-over-year decrease mainly reflects higher financial expenses from the mark-to-market of our long-term incentive plan and higher taxes. Earnings per ADS now stand at $2.20 on a last-12-month basis. We ended the third quarter with a net cash position. Net cash to adjusted EBITDA, excluding EVE, improved to a positive 0.4 times from a negative 0.5 times a year ago. Our average debt maturity ended the quarter at 8.7 years, while the average cost remained at 5.1%.

During the quarter, we declared 154 million reais in interest on equity. This corresponds to 0.22 reais per share, or circa $0.17 per ADS. In 2026, we declared 354 million reais in interest on equity, representing a dividend yield of around 0.52% based on the share price at the quarter end. Also for our shareholders, in November we will change our ADS ratio from four common shares per ADS to one common share per ADS. This change has no impact on our underlying equity value.

Last but not least, a quick word about our guidance. From an operational standpoint, we stand by our commitment to deliver 80 to 85 aircraft in Commercial Aviation and 160 to 170 aircraft in Executive Aviation. From the financial side, we are happy to increase our revenue guidance to between $8.4 to $8.6 billion because of the strong performance of our business. The adjusted EBIT margin remains unchanged at between 10% and 10.6%. However, we raised our adjusted free cash flow guidance once again, now to $700 million or higher, supported by better operating performance and cash generation.

With that, I will hand it back to Francisco for his closing remarks. Thank you.

Francisco Gomes Neto (Chief Executive Officer)

Thank you, Felipe. I would like to provide a brief update on EVE’s continued progress. The flight test campaign continues to advance with 73 flights completed and more than three hours of flight time. Following the completion of hover flights, EVE is now advancing through transition flights, with full transition expected before year end. In summary, we continue to see strong demand across our businesses and portfolio, and positive momentum in our global markets. We would like to welcome Japan Airlines to our E2 family, the second operator of our small narrow-body jet in the country, and the Hellenic Air Force to our KC-390 family, the seventh operator of our next-generation military aircraft in Europe. We remain focused on sales efficiency and execution while continuing to invest in new technologies for the future.

Our progress is driven by the trust of our clients, the support of our suppliers, and the commitment, discipline, and energy of our people, and we are proud to be certified once again as a Great Place to Work. Together, we remain guided by the pillars of our culture and our safety first, quality always. With that, we are now ready to take your questions.

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

We will now start the question and answer session. We remind you again that this conference is being recorded. This broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. We also highlight that this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. We request participants interested in asking questions to press the Raise Hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. To give everyone a chance to participate, we request you ask just one question per time. If you need assistance, please use the Q&A button on the platform. We will also answer questions sent via the platform chat. The first part of the Q&A session will be exclusively for equity research analysts and investors.

The second part of the Q&A will be only for the press. The first question comes from Marcelo Motta with J.P. Morgan. Please go ahead.

Marcelo Motta (Analyst at J.P. Morgan)

Hi, everyone. Thanks for taking my question. It’s regarding the guidance. If you could comment a little bit about the EBIT margin expected for the fourth quarter. If our math is correct here, we are talking about maybe a 10.3% margin, which would be a decline of 60 basis points compared to the third quarter. And usually in the fourth quarter we see higher operational leverage. Felipe commented that the margins on Defense might not remain at the level that we are seeing, like the 16% EBIT.

So maybe if you can comment about these and why we will not see an expansion of EBIT margin in the fourth quarter, given the high operational leverage that quarter. Thank you.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Hi Marcelo, Felipe here. Thank you for your question. It’s important to highlight the production leveling, especially in executive aviation, where it’s much more balanced throughout the year. So when you compare last year with this year, we already see fourth quarter not have so much concentration on deliveries in executive aviation. Also important to mention that we’re still behind on the production line in commercial aviation, given that we’ll have a concentration of deliveries in the fourth quarter.

Commercial aviation is where the EBIT margin is below the average of the company. And also on Defense, as I mentioned on the slides, we do have this year, in the fourth quarter, some annual contract adjustments related to costs, inflation, and FX on Brazilian real-denominated contracts. So given that, that’s the reason why we reiterate the guidance of 10 to 10.6% of EBIT margin for the full year of 2026.

Marcelo Motta (Analyst at J.P. Morgan)

Perfect. Thank you, Felipe.

OPERATOR

The next question comes from Christine Le Wack with Morgan Stanley. Please go.

Christine Le Wack (Analyst at Morgan Stanley)

Good morning, Francisco, Felipe and Gui. So just a quick follow-up on the Services business. You’re now at 17% margin, which is a record margin for the Services business. Going forward, is this the new level we should expect for Services? And how should we think about the contribution of the Dallas facility? Once you.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Christine, good morning. Felipe here. Thank you for your question. Services & Support continues to benefit from higher volumes, operating leverage, and the growth of Embraer’s installed base. Margins can vary between quarters depending on the mix, but we remain confident in the fundamentals of the business. And it’s important to highlight that we still have augmentation for the next year on the ramp-up of the GTF engines, and also we’re going to have the start of Dallas, as you mentioned. So we believe that margins in Services & Support can be better until the end of the decade, close to 17% to 18%.

Christine Le Wack (Analyst at Morgan Stanley)

Thank you.

OPERATOR

The next question comes from Miles Walton with Wolfe Research, please go ahead.

Miles Walton (Analyst at Wolfe Research)

Hey, good morning. Maybe you can just touch on the supplier compensation that was mentioned within Commercial. If you could just kind of ballpark how large that was and, more broadly on the supply chain, what are you guys seeing — any better, worse? Any commentary you could provide?

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Morning. Hey, Miles. Hey, Miles, good morning, and thanks for the question. This is Gui here. The suppliers’ compensation for the quarter in Commercial was in single-digit levels. We didn’t disclose the value because we think when we suffer from the supply chain we absorb the cost; when we benefit from the compensation, it’s part of the business. So we think it is a recurring event that we deal with on a daily basis and should be accompanying the results of the division.

In terms of the supply chain, we have made material progress in our Executive Aviation leveling of production, moving close to 10 points of production out of Q4. In Commercial Aviation we have made some progress but still have plenty to do. I think one of the recurring themes has been engine supplies that have impacted us and the industry, but we continue to work with our suppliers to improve the situation and we do expect Commercial Aviation, Executive Aviation and Defense volumes to continue increasing before the end of the decade.

OPERATOR

Thank you. The next question comes from Ronald Epstein with Bank of America. Please go ahead.

Andrew Steinhardt (Analyst at Bank of America)

Good morning, this is Andrew Steinhardt on for Ron. Thanks for taking my question. I just wanted to ask one on Phenom 300 EV triple certification — congrats on obtaining that during the quarter. Could you talk about the demand environment for that aircraft and its level of contribution to Executive Aviation’s record backlog in the quarter?

Francisco Gomes Neto (Chief Executive Officer)

Sure. Ron, thanks for the question. Well, the Phenom 300 continues to be our best seller, and we see this going forward. We are now investing to increase production of the Phenoms and the Praetors as well. We see the production increase in the next years as a way to cope with the sales demand that continues to be strong, even stronger now with the launch of the EV version.

Andrew Steinhardt (Analyst at Bank of America)

Gotcha, I appreciate the color there. And if I could just ask a follow-up: what’s driving your higher confidence in the free cash flow forecast for the year, given that much of the other guidance metrics are largely remaining the same?

Felipe Santana Santiago de Lima (Chief Financial Officer)

Felipe here. Thank you for your question. It’s important to mention that in the third quarter we had, especially with the prepayments with the increase of the backlog, especially on Defense and also Executive, more PDPs coming inside the cash for the company. Of course, when we look to the fourth quarter, we are preparing the company on the inventory side for deliveries next year. So that’s the reason why we feel comfortable with the $700 million or higher on the free cash flow for the full year of 2026.

Andrew Steinhardt (Analyst at Bank of America)

Gotcha. Thanks, guys.

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Thank you, Ron.

OPERATOR

The next question comes from Andrea Fejera with Bradesco BBI. Please go ahead.

Andrea Fejera (Analyst at Bradesco BBI)

Hi, good morning. Thanks for the space here, and congrats on the results. I wanted to go to the guidance topic. So the midpoint would imply a 7% year-over-year decline in revenues for the fourth quarter. Of course there’s production leveling, which kind of lowers the amount of deliveries for the fourth quarter, but I wanted to know if this reflects concerns about supply chain at the margin, a worsening compared to the third quarter, or does it reflect, I don’t know, like mix, defense POC timing, or maybe some conservatism?

And just a follow-up here on the free cash flow — kind of on the opposite end of the last question — if the $700 million floor also looks conservative, because the nine months was almost $600 already, and your call on that. Thank you.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Hi Andrea, Felipe here. Thank you for your question. So, regarding the guidance, it’s important to mention that you’re right regarding the POC of Defense, but it’s important to highlight that for Defense we’ll be at one of the highest levels of margins — in the double digits for the year in Defense. Of course, as I mentioned earlier, we do have the impact in Commercial Aviation, where the EBIT is lower when you compare, and we do have a concentration of deliveries there and also in Defense.

So given that, that’s the reason why we see — and are very comfortable with — the guidance that we gave, 10% to 10.6% of margin. On the free cash flow, as I mentioned earlier, we are also preparing the company for 2027 and we’re already working on inventory for the deliveries that we’re going to have. And also, connected with the production leveling, we want to see more deliveries in the first quarter in Executive and also Commercial. So this gives pressure on the cash from the fourth quarter. That’s the reason why we maintain the $700 million floor for the free cash flow as guidance.

Andrea Fejera (Analyst at Bradesco BBI)

All right, perfect. Just one point about the revenues — if that also reflects mix of maybe more E1s and more light executive jets, because it also implies a 7% drop at the midpoint.

Felipe Santana Santiago de Lima (Chief Financial Officer)

No, on revenues the mix is fully in line with what we planned, so nothing different on the mix of deliveries in Commercial and Executive.

Andrea Fejera (Analyst at Bradesco BBI)

Okay, thank you.

OPERATOR

The next question comes from Andre Mazini with Citi. Please go ahead.

Andre Mazini (Analyst at Citi)

Yes, good morning, Francisco, Felipe and Gui. Two quick ones. The first one on the Embraer and Northrop Grumman collaboration for the KC-390 that you guys are developing for an aerial refueling tanker for the U.S. Air Force with the boom technology and all that. So now, with the Democrats controlling both houses — Congress and Senate — can we expect the chance of that going forward maybe increasing? Your thoughts on that and that program in particular.

Of course the boom refueling is developed, which is great. So that’s the first one. And the second one — of course results are pretty strong, congrats — but it was a miss to our net income mostly on the financial results, and particularly inside the financial results the stock compensation line item was a little bit greater than what we had. So if you could talk a little bit about that line item and how investors should model that going forward. Thank you so much.

Francisco Gomes Neto (Chief Executive Officer)

Thanks, Andre, for the question. I’ll take the first one. We don’t see any changes in our plans because of this result of the midterm elections in the U.S. We really believe we have a great solution for the U.S. Air Force with the KC-390, and we continue to work very closely with Northrop to develop the boom project with them to make the KC-390 a good option for the U.S. Air Force. So no change for us because of the elections.

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Andre, Gui here on the second part of your question. As you noticed, our financial expenses were a little bit higher than normal. That was because of the mark-to-market of our long-term incentive program in the company. That is obviously a non-cash expense. And from an economic perspective, it is very important to highlight that we do own 28.6 million shares in treasury to hedge our position. So at the end of the day that’s just how accounting works, but from an economic perspective the company is fully protected from any variation of share price, up or down.

Andre Mazini (Analyst at Citi)

Thank you, Francisco.

OPERATOR

The next question comes from Alberto Valerio with UBS. Please go ahead.

Alberto Valerio (Analyst at UBS)

Morning, Francisco, Felipe, thank you for taking my questions. I have two here. The first one, follow-up on the cash flow generation — you used to see 50% of EBITDA as free cash flow, and this year, even excluding the tax refund around $80 million, we should see above that. Could you see that for the future — could this cash flow keep with a ratio higher than 50% of EBITDA? And another one: what to do with this cash? The company is very strong at this moment. We know that the EVE project is de-risked next year, and we should have some announcement of a new program for Embraer in 2027 or something for 2028. Thank you very much.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Alberto, Felipe here. Thank you for your question. Regarding the ratio of free cash flow to EBITDA, in the last five years on average we are at 50%. This year, especially with the deals that we had in Defense, we had some money coming that was next year, so probably next year we’re going to see a bit less in this ratio. Going forward, we expect to maintain this level of 50% — so next year probably below that, but 2028 onwards around this average, mainly because of Defense and the down payments from the customers.

Regarding the cash, we continue to strengthen the balance sheet of the company. The company was historically net cash, so we’re just getting back to where we were pre-pandemic and also pre the investments that we had also on EVE and the KCs. On a new program, we don’t have anything planned. We continue to study something in Executive, Commercial, even Defense. We don’t have anything planned for announcement for next year.

Alberto Valerio (Analyst at UBS)

Thank you, Felipe.

OPERATOR

The next question comes from Lucas Lagi with XP. Please go ahead.

Lucas Lagi (Analyst at XP)

Hi everyone, good morning. I have a follow-up on the Executive Aviation division. Profitability was a highlight, but we’re seeing a very strong momentum for net new orders. We had slightly above a billion dollars of net new orders this quarter for the division. We understand that there’s a lag — right — from the moment that you place the orders until it becomes revenue and EBITDA, but considering the tightness in the market, profitability is already at high levels, and then new orders continue at a strong level.

So how should we think of the profitability of the division going forward? Can it get better than that? It’s already at very strong levels, but considering the strong momentum on orders, I mean… Could we still see some room for profitability to further improve? Consider the list prices that you’re selling the aircraft nowadays, and just to follow up on that. But considering your plans to reach 200 units per year over the upcoming years, and considering this very strong demand as we speak, should you expect it anytime sooner? I mean, could you anticipate this expansion of deliveries on the executive division in the short term? Thank you.

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Hi Lucas, good morning. Thanks for the questions. Gui here. I think not only for business aviation, but if you look across the board for the company, I think we are in a very special position because when you look at the products that we manufacture and that engineering has helped us produce, we believe we have a very strong product portfolio across all divisions, and that it’s generating value for our customers and ultimately for our shareholders.

So in terms of profitability, the company always continues to strive for being more efficient. That’s part of the DNA that we have, that we are always going to try to improve our margins and our results in terms of volume. We continue to work with a target of reaching 200 units in executive aviation in 2028. And part of that effort, you know, we’re investing in our facilities. We do expect our CapEx in 2027–28 to temporarily increase towards $500–$550 million before coming back to the regular level of $400 that we have had in previous years.

Felipe Santana Santiago de Lima (Chief Financial Officer)

So if you allow me to complement or to summarize this, I mean yes, we do see opportunity to improve profitability of executive aviation going forward, combining the launch of new versions that will help us to sustain or even increase the sales price with higher production levels that, as Gui said, we are investing to increase production, and we continue to invest in improving and increasing efficiency. So we have been able to reduce the lead time of production of our executive jets year after year.

So the combination of all these three fronts we believe will help us to see improvements in the profitability of our executive aviation unit.

Lucas Lagi (Analyst at XP)

Perfect. Thank you very much. Very helpful.

OPERATOR

The next question comes from Daniel Gasparechi with Itaú BBA. Please go ahead.

Daniel Gasparechi (Analyst at Itaú BBA)

Hey, good morning. Thank you very much for the opportunity. Most of my questions were already answered, so I would like to explore more about the strategy side, if I may. The company has been doing great and looks like it’s going to continue doing so over the next few years. So I’d just like to get the ideas from Francisco: what is his planning, what he’s thinking about for the company for the next few years in terms of strategy, how he’s spending his time thinking about bringing the company to the next level, how he thinks about the strategic position of the company, what the company needs to be, needs to do.

And also, if I may, also ask Felipe. It has been a few months already in his post as the CFO — congrats on that. The company has been doing fantastically well. So just to get his view on what he sees as opportunities here to collect in terms of improving working capital dynamics, perhaps SG&A, how you’re seeing efficiencies that could be captured for the company. Thank you very much.

Francisco Gomes Neto (Chief Executive Officer)

Daniel, thanks for the question. I’ll take the first part. I mean, we see the continuity of our medium-term sustainable growth based on the current backlog of 35.7 billion now — thank you, 35.7 billion — and the market is still supporting us. This fuel crisis is helping us with commercial aviation as we have the most efficient E-Jets in the market. As executive jets, we see the demand continue to be robust with our new launches of the Phenom and the Praetor, and the KC also we are selling very well.

So we see the company continue to grow sustainably in the next four or five years as we are investing in increasing production as well for the three lines, right? I mean we want to increase the production of E-Jets, executive jet, and the KC-390 and Super Tucano. So in part, we are working on two big programs that can help us boost this growth in India — I mean with two fronts: civil aviation and KC-390 as well. And we have this big opportunity in the U.S., if we succeed to introduce the KC-390 as an agile tanker in the U.S. Air Force. And in parallel, we are investing in new technologies, preparing the company for a new cycle of products that can be either a new commercial jet family or executive jet family or even defense aircraft that will support a more ambitious growth in the long term for Embraer.

Felipe Santana Santiago de Lima (Chief Financial Officer)

And Daniel — Felipe here — thank you for your question. Yeah, I see a lot of opportunities on the working capital, right? When we look to the inventory turn, where we can reach three times, right, we are below that. We’re around 2.1–2.2 times this year. So on the working capital. And I also look to efficiency, right, as a whole for the company, where we have been more efficient on costs and the way that also we are allocating capital as well. So we see a lot of opportunities really to improve the margins of the company in the coming years. And also the finance area has been supporting the execution of this backlog, as Francisco mentioned, and also the strategic initiatives, as he already mentioned as well.

Francisco Gomes Neto (Chief Executive Officer)

And another point I forgot to mention, Daniel, is our eVTOL. We continue investing in the development and the certification process of our eVTOL. That will be also an important contributor to Embraer revenues and profitability after 2029.

Daniel Gasparechi (Analyst at Itaú BBA)

Great. Thank you very much, sir. Thank you very much. Have a nice day.

Francisco Gomes Neto (Chief Executive Officer)

You too. Thank you.

OPERATOR

Thank you. The next question comes from Ronald Epstein with Bank of America. Please go ahead.

Ronald Epstein (Analyst at Bank of America)

Hey, good morning guys. Maybe a quick financial question. Year over year, it looks like the contract liabilities went up by 450 million. What is that?

Felipe Santana Santiago de Lima (Chief Financial Officer)

It’s basically the PDPs. Felipe here. Thank you for your question. Basically PDPs, right? You see this increase in the backlog that we’re seeing, right? It’s a reflection also on this account on the balance sheet with the PDPs that we’re receiving from the customers.

Ronald Epstein (Analyst at Bank of America)

Okay, so that’s just all pre-delivery payments. Okay, good. Yes. And then, and then what is the quarterly spend on Eve?

Felipe Santana Santiago de Lima (Chief Financial Officer)

So Ron, their guidance is about 225, if I remember correctly. So the run rate that you’re doing, something close to 50–55 per quarter. Per quarter.

Ronald Epstein (Analyst at Bank of America)

Gotcha, gotcha, gotcha, gotcha, gotcha.

Felipe Santana Santiago de Lima (Chief Financial Officer)

And just as milestones, right, the company expects to achieve full transition for the prototype before year-end. We’re going to be building six prototypes through 1H27. And we intend to start the flight campaign for the certification in the middle of 27 and finish in 28.

Ronald Epstein (Analyst at Bank of America)

Got it, got it, got it. And then has there been any more discussion internally or thinking about what the next move is for you all in commercial aviation?

Francisco Gomes Neto (Chief Executive Officer)

Actually we don’t have any important news on that front, Ron. We continually are making studies which way we should go, I mean, as a next cycle of products. We have the engineering team, the marketing teams making a lot of studies and combining with funding strategy and customers’ conversations. We don’t have any decision yet which way we will go, but we keep investing in new technologies to be prepared for a new cycle of products.

Ronald Epstein (Analyst at Bank of America)

Got it. Okay, thank you guys.

OPERATOR

Next question comes from Christine Le Wack with Morgan Stanley. Please go ahead.

Christine Le Wack (Analyst at Morgan Stanley)

Hey, good morning guys. Thank you for taking my follow-up. So, you know, with Ron’s question about the potential of aircraft and the studies that you’re doing, I mean it sounds like with the full transition for Eve happening by year-end this year, you’re really de-risking that program. And so the opportunity for the next big project could come pretty soon. It seems like you’ve got capacity opening up maybe for engineers second half of 27, maybe into 28.

So that seems to be more on the horizon. So I wanted to ask, you know, Francisco, when you think about the opportunities either in a potentially larger narrowbody or a larger business jet or something in military or all the other investments that you have, what are the key priorities that you’re looking at? What are the variables that you’re weighing? And when you think about some of these endeavors, what’s your appetite to go do it alone in terms of a project that has a high ROI but is not too expensive versus going for challenging a duopoly which might take more company resources?

How do you balance those opportunities?

Francisco Gomes Neto (Chief Executive Officer)

Christine, thank you very much. This is really a great question, but just for you to know, our engineering has been very busy and will be very busy with not only Eve — it is one of the projects we are working on — but they have been busy, I mean, doing updates on the existing products. Like for example, we are now in the certification process of the E2 — that is a unique feature that we offer to the market — this autonomous takeoff of a commercial jet.

Also we have hundreds of engineers busy with updates on the specification of the KC-390 that we sign now. Each deal requires a different specification. Also we are now working to update our Super Tucano. So we have a lot of engineers working on this update of the cockpit of the Super Tucano with this new feature as a drone. So again our engineering is very busy, but we have some of them working, making studies, as I said, about new opportunities for Embraer either in commercial aviation or executive. But Christine, yes, we are taking into consideration all the aspects. One thing we will not do is to put at risk the financial health of our company. So the next movement will be based on a very robust decision in terms of customer acceptance, in terms of funding, in terms of product and especially, you know, the chances we will have to succeed with the new product without putting at risk what we have built in terms of financial health in the company.

Felipe Santana Santiago de Lima (Chief Financial Officer)

Christine, just to complement what Francisco said, we don’t think it would be prudent to have two big CapEx fronts happening at the same time. So we have to materially de-risk Eve as a project before we take the next step. And part of that de-risking process, I would highlight first the full transition flight at year-end and second, the first manned flight for the prototype that we expect to happen in 2H27.

Christine Le Wack (Analyst at Morgan Stanley)

Great, great. Super helpful. Then also, you know, back to Services and Support. You know, I think this is one of your sleeper segments because I think investors don’t realize how large of an after-market business you now have as a proportion for total EBITDA in terms of that Services and Support business. Can you give us an understanding regarding backwards looking? What did you change in your strategy to be able to grow this business more? Was it really more of a function of the larger installed base or did you do something different to increase your capture rate?

I mean, you’re clearly making investments there as we’ve seen with OGMA and Dallas. How do we think about your overall strategy in this business and could this continue to be a faster grower for EBIT for the company? I mean, the margin upside here in the quarter was just a significant standout. Right. So just wanted to understand the sustainability of that.

Francisco Gomes Neto (Chief Executive Officer)

Thank you. Christine, this is another great question. Yes, I mean you are totally right. I mean we are growing a lot in Commercial, Executive and Defense. We see our Services & Support area as one of the most important growth avenues for Embraer. So we are investing to grow, to expand our capabilities to do more service for commercial jets as the commercial jet fleet is growing. Same in the executive jets. We are now reviewing the structure to be even more focused on sales and customer support.

We are now implementing a lot of AI tools to help us to be more efficient and more customer-friendly. So we are doing a lot of investments in that area because we do believe that the area can contribute a lot with the profitable growth of Embraer within the following years.

Felipe Santana Santiago de Lima (Chief Financial Officer)

If I can add here, also investment in simulators and training. That is also margins. And with this increase, especially the increase of sales of E2s, we’re investing now in new bases of simulators around the world to support our customers as well.

Christine Le Wack (Analyst at Morgan Stanley)

Well, great. Well, thank you very much.

OPERATOR

Next question comes from Marcelo Motta with J.P. Morgan. Please go ahead.

Marcelo Motta (Analyst at J.P. Morgan)

Hi. Thanks for the opportunity. Again, if you can comment on commercial campaigns. No one has asked about it, but there are news about KLM, Brussels, IndiGo. I know that you don’t comment about specific campaigns, but if you can just remind us how positive you are about the future of the E2, let’s say for the next six months, what you expect on new orders or book-to-bill, that would be great. Thank you.

Francisco Gomes Neto (Chief Executive Officer)

Oh, thank you, Marcelo. Yes, we are very happy now with the development of our commercial aviation in terms of sales and also EBT recovery plan as we expect to be at a 5% EBIT until 2028. And, you know, since 2024 we have seen the sales of E2 getting traction with a great year in 2025, another great year in 2026. We are now very pleased with KLM plans to expand the E2 fleet operated by KLM Cityhopper. We see the customers, airlines, recognizing more and more the benefits of having our small narrowbody complementing the operation of the larger narrowbodies. We see this in Europe, we see this in South America, in North America, Asia-Pacific. And we are still working in other campaigns. So yes, we are very optimistic now with the development of our commercial aviation, not only in revenues but also in EBT recovery.

Marcelo Motta (Analyst at J.P. Morgan)

Super clear. Thank you. Thank you, Francisco.

OPERATOR

The next question comes from Andre Mazini with Citi. Please go ahead.

Andre Mazini (Analyst at Citi)

Guys, thanks so much for the additional question. So my additional question is around executive aviation pricing, of course, great margins on that business. And you also comment on proof pricing, right? I mean the jets delivered currently are having very good prices. That’s why margins are so good, of course, on top of the production level and whatnot. However, if you look at some industry data sets, it seems that on the margin prices are not as high as they were probably 12 or 18 months ago.

So I think the question is, is the pricing of what’s being delivered today, which is making these margins be so high, kind of older prices, if you will, and at the very margin jets that are sold today are not having the buoyant prices we saw 12–18 months ago, or is the margin growing? Right. So what’s the picture of the margin of these jets that are being sold right now? Thank you.

Gui Paiva (Head of Investor Relations, M&A and Venture Capital)

Hi, thanks for the question. Gui here. So, at the end of the day we do believe that we have one of the best products in executive aviation, the segments that we play in, and that’s the value that it drives to our customers and eventually to our shareholders. We’re very pleased with the results the division has had in this decade. There is a lag in pricing, as you mentioned, of roughly two to three years given the success of our products and the demand that we have seen for our products.

And we don’t know exactly what data set you are referring to, but we are optimistic about the profitability and the growth that we have in the division for the next couple of years.

Andre Mazini (Analyst at Citi)

Thank you.

OPERATOR

Thank you very much. The next question comes from the chat with Lucas at Santander. Good morning and congratulations on the results. My question is regarding the risk of high oil prices and higher rate environment globally. Is the company seeing any requests from customers to postpone deliveries because of these factors, and does management expect any impact from them in upcoming years?

Francisco Gomes Neto (Chief Executive Officer)

Well, thanks for the question. First, we have not seen any impact in our business, either in terms of the delay of deliveries or delay of sales campaigns, because of the fuel price. What we have seen is that the market has been resilient, and actually it opens an opportunity for the E2s, as E2s are very fuel efficient compared to older aircraft, and it’s a great alternative for the airlines to add more frequency of flights or open new routes and improve their performance by adding a more efficient aircraft to their fleets.

So again, we have not seen any impact in our business either in terms of deliveries or new campaigns.

OPERATOR

Thank you very much, sir. This concludes the question and answer session for equity research analysts and investors. Now we will start the Q&A session dedicated to the press. First we’ll answer questions in English and then we will answer questions in Portuguese. We will also answer questions sent via the platform chat. Please hold while we poll for questions. The first question comes from Ioannis Rekas with Fly.com.gr. What are your plans for cooperation with Greece regarding the decision for three KC-390, with an additional option for three more, and the fact that the Hellenic Ministry wants 25% domestic production for every new procurement?

Francisco Gomes Neto (Chief Executive Officer)

Well, thanks for the question. We are very happy and welcome Greece to the KC-390 family with this order for three, with options for an additional three. We will work, as we do with other customers, with collaboration in terms of training, in terms of services and support, to make sure that the operation of the KC-390 in Greece will be very successful. So that’s what we are planning to do with that customer.

OPERATOR

Thank you. Once again, if you would like to pose a question, please click the raise hand button on the platform. Please hold while we poll for questions. The next question is also from the chat with Jonathan Merdinger. Hello. Thank you for answering questions. Embraer had previously hoped to have the E2TS system certificate by the end of 2025. Why has the process taken longer than expected? When do you expect certification will happen? Thank you again, John.

Francisco Gomes Neto (Chief Executive Officer)

So thank you, Jonathan, for your question. We continue working with the local authorities to certify the E2TS, and we expect the certification to happen soon, as we have already some customers very interested in having that function in their aircraft.

OPERATOR

Thank you very much, sir. Please hold while we are still polling for questions. The next question comes also from the chat with Jack Richardson. As a freelancer, could you provide an update on what, if any, progress you have made on the Eve for military applications?

Francisco Gomes Neto (Chief Executive Officer)

Oh, thank you for the question. At this point of time we are focusing on the original objective, the original purpose for Eve, that is urban air mobility. We are advancing the certification process and in parallel we are making some studies, but we don’t have any definition to launch a variant of Eve at this point of time.

OPERATOR

Thank you very much, sir. Once again, if you would like to pose a question, please click raise hand. The next question comes also from the chat, and it is from Molly McMillan from Aviation Week. You mentioned that you had not seen delays or cancellations because of higher fuel prices and mentioned commercial aviation specifically. What have you seen in executive aviation? Also, what are you planning for timing in new product upgrades and products in executive aviation?

Francisco Gomes Neto (Chief Executive Officer)

Oh, thank you. Thank you, Molly, for the question. Well, honestly, in executive, I think the demand depends more on wealth creation than on the fuel price. So that’s why we have not seen any impact in the demand of our executive jets because of the fuel price increase. And the other question was new products? Well, we have launched this year the new version of the Praetors, the Praetor 500E and 600E, and more recently the Phenom 300EV, both with new features that have been very well accepted and received by the market.

OPERATOR

Thank you. The next question comes also from the chat, and it’s from Carolyn Bruno. Can you please give us an update on your supply chain? Boeing and Airbus have problems with theirs, but yours seems more robust. Can you elaborate on this? Thank you.

Francisco Gomes Neto (Chief Executive Officer)

Yes, Carolyn, absolutely. We also have problems with the supply chain, but in general we have been able to manage to reduce the shortages of parts by approximately 25% when we compare 2026 versus 2025, despite the growth in the company’s delivery volume. But we still have some, I would say, pacers. We are still having issues with specific components such as engines, fuselage parts, windshields, and some other components. A few components have impacted our production process, but at the end we have been able to manage and be in line in delivering the production according to our guidance.

OPERATOR

Thank you very much, sir. This concludes the question and answer session in English for the press. This question and answer session is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.