By Brazil Stock Guide – During Embraer’s third-quarter 2025 earnings call, analysts pressed management on dividends, costs, and trade tariffs. While investors sought clarity on shareholder payouts after a robust quarter, executives underscored financial discipline — and highlighted the company’s record-high backlog, signaling long-term visibility and renewed confidence.
Chief Financial Officer Antonio Carlos Garcia acknowledged that share buybacks are under consideration but ruled out immediate action. “We are evaluating our capital structure. Buyback is on the table, but no decision yet. We’re already paying 25% of net income, which is significant for a capital-intensive business,” he said in response to Kristine Liwag of Morgan Stanley, who praised Embraer’s balance sheet strength and fast deleveraging after the pandemic.
Record backlog and “most positive phase of the decade”
Garcia announced that Embraer’s company-wide backlog reached $31.3 billion, up 38% year over year and above the company’s previous all-time record. The strongest growth came from executive aviation (+65%) and service & support (+40%), followed by commercial aviation (+37%) and defense (+80%). He also emphasized that customers currently hold about $20 billion in purchase options, which could lift the total portfolio toward $50 billion in the coming years.
In the press Q&A, CEO Francisco Gomes Neto described the current moment as “the most positive phase of the decade,” pointing to the backlog as evidence of Embraer’s strategic stability and product strength. “We have a modern, competitive, and well-positioned portfolio,” he said, adding that the company’s order book provides a solid growth runway for the next five years, supported by defense contracts, service expansion, and new E-Jet orders from Avelo and LATAM.
Beyond a financial metric, the record backlog reflects Embraer’s structural turnaround after a decade marked by the failed Boeing merger and the COVID-19 crisis. The company now operates with net debt at just 0.5x EBITDA, stronger production stability, and ongoing investments in new hangars and final assembly lines in Gavião Peixoto and the U.S. — all pillars of a more resilient growth cycle.
Tariffs and margins under scrutiny
Analysts also zeroed in on the U.S. import tariffs that have affected Embraer’s executive-jet exports. “Negotiations between the two governments are progressing well,” Gomes Neto said, citing President Lula’s recent meeting with the U.S. president. The CEO stressed that the 10% tariffs “hurt both margins and competitiveness for future deliveries.”
Marcelo Motta of J.P. Morgan questioned the drop in executive-jet margins. The CFO attributed it to cost inflation and import duties, which shaved off roughly 2.5 percentage points of EBIT margin. Garcia added that tariffs totaled $27 million through September, out of $60–65 million projected for the full year.
Conservative guidance and delivery focus
Asked why Embraer maintained its full-year guidance despite above-target margins, Gomes Neto responded that the company preferred caution: “The supply-chain risk is over, but we have a heavy delivery schedule in the next two months. We decided to keep guidance until all aircraft are out the door.” Garcia added that, if all deliveries proceed as planned, Embraer could even surpass the upper end of its EBIT range — currently between 7.5% and 8.3%.
Services and support: Embraer’s new profit engine
Lucas Laghi of XP Investments focused on the evolving margin profile of the services division, now expanding with “agnostic” maintenance contracts and GTF engine programs. Garcia admitted to “delays and penalties” that hit Q3 profitability but expects margins to rebound to around 15% in Q4. Gomes Neto added: “Service and support is one of our main growth drivers. We doubled our MRO capacity in the U.S. and are doing the same for commercial jets in Dallas.”
Technology and long-term outlook
Closing the press session, Gomes Neto reaffirmed Embraer’s ambition to prepare for “a more ambitious expansion phase.” The company continues to invest in hybrid, electric, and eVTOL propulsion, while the turboprop project has been canceled, and the E175-E2 remains on hold pending revisions to the U.S. scope clause.
Read more: Embraer profit drops 76% to R$289 million, but posts record revenue in 3Q25