Company Strategy - Embraer will not be rushed into deciding on launching a new aircraft [1] Competitive Landscape - The new aircraft would compete with Airbus and Boeing [1]

Core Points - The Netherlands has officially commenced the production of its first C-390 "Millennium" medium transport aircraft, marking a significant milestone in international cooperation with Embraer [1][2] - A total of 13 C-390 aircraft will be received by the Netherlands, Austria, and Sweden, with the Netherlands ordering 5 units [2][5] - The production cycle for the C-390 aircraft is approximately eight months, with overall production expected to take two years [3] Group 1 - The Netherlands and Austria have begun production of their initial C-390 aircraft, which will include system integrations such as flight management and self-defense systems [3] - The Netherlands signed an order with Austria for 4 aircraft on July 22, 2024, and Sweden joined the joint procurement on October 6, 2023, ordering 4 aircraft with an option for 7 additional units [5] - The C-390 is designed to replace the aging C-130H fleet of the Netherlands, which is expected to retire by 2025 due to accelerated wear [7][9] Group 2 - Embraer has received additional orders for the C-390 from Brazil (19 units), Portugal (6 units), Hungary (2 units), South Korea (3 units), Czech Republic (2 units), and Morocco (2 units), with Slovakia and Lithuania also planning to order 3 units each [11] - The C-390 offers superior payload capacity, speed, and range compared to similar medium transport aircraft, capable of performing various missions including troop transport, medical evacuation, search and rescue, aerial refueling, firefighting, and humanitarian aid [13] - The C-390 specifications include a length of 33.5 meters, wingspan of 33.9 meters, height of 11.4 meters, maximum takeoff weight of 87 tons, and a maximum payload of 26 tons, powered by two IAE V2500-E5 turbofan engines [15]

Core Insights - Embraer (EMBJ) stock has increased by 48% since the last buy-rated report, significantly outperforming the S&P 500's 26.7% gain [1] - Since the upgrade to Buy in September 2022, Embraer shares have surged by 517%, compared to a 68% return for the S&P 500 index [1] Company Analysis - The analyst, Dhierin-Perkash Bechai, specializes in aerospace, defense, and airline sectors, providing insights into investment opportunities within these industries [1] - The analysis is data-driven, leveraging in-house developed data analytics platforms to inform investment ideas [1] Industry Context - The aerospace, defense, and airline industries are characterized by significant growth prospects, which are analyzed in the context of ongoing developments [1]

Core Points - Embraer S.A. has approved the execution of derivative agreements of "Equity Swap" with Banco Itaú Unibanco S.A. to mitigate fluctuations in its share prices [1][2][3] - The maximum exposure for the Equity Swap is set at up to 10,932,998 common shares, adhering to the limits established in CVM Resolution No. 77/22 [2] - The purpose of the Equity Swap is to manage future payments related to the company's long-term incentive plans, specifically phantom shares [3]

Core Points - Embraer S.A. has approved a share buyback program for its own issued shares, aimed at acquiring up to 10,800,000 ordinary shares, which is approximately 1.5% of the total outstanding shares [1][2] - The program will be effective from November 7, 2025, and will last for 12 months, concluding on November 6, 2026 [3] - The acquisitions will be conducted on the stock exchange at market prices, with the financial institution BTG Pactual Serviços Financeiros S/A DTVM facilitating the transactions [3] - The funding for the share buyback will come from the Company's Investment and Working Capital Reserve, amounting to R$ 2,511,611,561.56 (approximately 2.51 billion reais) [4] - The Company believes that the share buyback will not affect its shareholder composition or administrative structure and is compatible with its current financial situation [5]

Core Insights - Embraer S.A. (EMBJ) reported a 4.1% increase in share price to $64.58 following its Q3 2025 results, despite a significant decline in adjusted earnings per American Depository Share (ADS) to 30 cents from $1.20 year-over-year [1] - Total revenues for Q3 2025 reached $2 billion, marking an 18.4% year-over-year increase, driven by growth across all business segments, particularly Executive Aviation [2][8] - The company delivered 62 jets in the quarter, increasing its backlog to $31.3 billion from $29.7 billion in the previous quarter [3][8] Financial Performance - Adjusted earnings for Q3 2025 were 30 cents per ADS, down from $1.20 in the same quarter last year, while GAAP earnings were 64 cents per ADS compared to 97 cents in Q3 2024 [1] - Operating income was reported at $159.6 million, a decrease from $285.2 million in Q2 2024, and adjusted EBITDA was $236.3 million, down from $356.6 million year-over-year [7][8] - Cash and cash equivalents as of September 30, 2025, were $1.67 billion, down from $2.23 billion at the end of 2024, with an adjusted free cash outflow of $300.3 million compared to $241.1 million in the prior-year period [9] Segment Performance - Executive Aviation revenues were $583 million, up 4% year-over-year, but gross margin decreased from 23.4% to 18.7% due to product mix and higher costs [4] - Defense & Security segment revenues improved by 27% year-over-year to $278 million, driven by higher KC-390 volumes and a positive contract-related adjustment [4] - Commercial Aviation revenues increased by 31% year-over-year to $618 million, attributed to better product mix and higher volumes and prices [5] - Services & Support segment revenues rose 16% year-over-year to $493 million, supported by increased volumes across all segments [5] - Other segments, including Agricultural Aviation and cyber division Tempest, saw revenues of $32 million, a 150% increase year-over-year, due to the inclusion of the reclassified landing gear division [6] Guidance and Outlook - Embraer reiterated its 2025 guidance, expecting to deliver 77-85 commercial jets and 145-155 Executive Aviation jets, with projected revenues between $7.0 billion and $7.5 billion [10] - The Zacks Consensus Estimate for revenues is $7.44 billion, above the midpoint of the company's guidance range, with an expected adjusted EBIT margin between 7.5% and 8.3% [10]

Core Viewpoint - Embraer is exploring new products to stimulate long-term growth, but any new initiatives must be evaluated against the company's financial situation as stated by CEO Francisco Gomes Neto [1] Group 1 - The company is focused on studying new products that could enhance its growth trajectory [1] - Financial considerations are crucial in the decision-making process for new product development [1]

Financial Data and Key Metrics Changes - The company reported a significant increase in backlog, reaching $31.3 billion, up 38% year-over-year, marking a new historical record [14] - Total revenues for the quarter were close to $2 billion, reflecting an 18% increase compared to the previous year [14] - Adjusted EBIT for the quarter was $236 million, with an 11.8% margin, compared to $172 million and an 8.6% margin in the same quarter last year [15][17] - The standalone net debt position decreased by $646 million to $439 million, with a net debt/EBIT ratio of only 0.5 times [18] Business Line Data and Key Metrics Changes - In commercial aviation, revenues increased by 31% due to a better product mix and higher volumes and prices, with a backlog of $15.2 billion [9][14] - Executive aviation achieved record revenues of approximately $580 million, with a backlog of $7.3 billion and a 2.4-1 book-to-bill ratio [6][14] - Defense and security revenues grew by 27%, with a backlog of $3.9 billion and a 1.3-1 book-to-bill ratio [7][14] - Service & Support revenues rose by 16%, with a backlog of $4.9 billion and a 1.8-1 book-to-bill ratio [7][14] Market Data and Key Metrics Changes - The company noted strong demand in executive aviation, reflecting robust customer relationships and product strength [22] - The defense segment is gaining traction in key global campaigns, including orders from Portugal and Panama [7][22] Company Strategy and Development Direction - The company is focused on efficiency and innovation to support sustainable growth, with significant investments in new technologies [5][9] - Continuous improvement initiatives, including over 800 Kaizen projects, have led to a 16% increase in aircraft deliveries this year [8] - The company is transforming its supply chain through Supply Chain Management 2.0, integrating digital technologies and AI for better planning [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the 2025 guidance, expecting to deliver between 77 and 85 aircraft in commercial aviation and 145-155 in executive aviation [12] - The company anticipates substantial mid-term growth while strategically investing in new technologies for future expansion [23] - Management acknowledged supply chain risks but indicated that they have all necessary parts for assembly, focusing on production stability for 2026 [61] Other Important Information - The company declared nearly BRL 210 million in interest on equity over the past two quarters, translating to a 0.35% dividend yield [21] - A new liability management initiative was announced, including a $1 billion long-term bond issuance [20] Q&A Session Summary Question: Future return to shareholders considering the net cash position - Management is evaluating capital structure and potential for share buybacks or increased dividends but currently does not foresee additional dividends [29][30] Question: Expansion of work scope for American Airlines' E-Jets fleet retrofit - The company is involved in a program with American Airlines for a complete interior refresh, which includes new seats and better connectivity [31][32] Question: Impact of higher costs on executive aviation EBIT margin - Cost inflation is a trend in the industry, and U.S. import tariffs have negatively impacted margins [36][38] Question: Clarification on tax credits and one-off adjustments - Tax credits in commercial aviation relate to import parts, while a one-off adjustment in defense was due to reassigning a plane in production [41][42] Question: Status of Pratt GTF engines and Amazon surveillance program - The PW1900G engine is performing well, and there are no current projects related to the Amazon surveillance system [46][48] Question: Expected U.S. tariff impact on coming quarters - The company expects to recognize about $35 million in tariffs in Q4, working to reduce exposure [78][79]

Financial Data and Key Metrics Changes - The company reported a significant increase in backlog, reaching $31.3 billion, up 38% year-over-year, marking a new historical record [15] - Total revenues for the quarter were close to $2 billion, reflecting an 18% increase compared to the previous year [15] - Adjusted EBIT for the quarter was $236 million, with an 11.8% margin, compared to $172 million and an 8.6% margin in the same quarter last year [16][18] - Net income for the quarter was reported at $170 million, with an adjusted net income of $54 million, a decline from $167 million year-over-year [18] Business Line Data and Key Metrics Changes - In Commercial Aviation, revenues increased by 31% due to a better product mix and higher volumes and prices, with a backlog of $15.2 billion [9][10] - Executive Aviation achieved record revenues of approximately $580 million, with a backlog of $7.3 billion, supported by a 2.4-1 book-to-bill ratio [5][6] - Defense & Security revenues grew by 27%, with a backlog of $3.9 billion and a 1.3-1 book-to-bill ratio [7][10] - Service & Support revenues rose by 16%, with a backlog of $4.9 billion and a 1.8-1 book-to-bill ratio [7][10] Market Data and Key Metrics Changes - The company noted strong demand in the executive aviation sector, with the delivery of its 2,000th business jet [6] - The Defense & Security division is expanding its global presence, with new agreements signed for the A-29 Super Tucano [7] - The company is experiencing a positive phase in commercial aviation, with new orders contributing to a robust backlog [5][23] Company Strategy and Development Direction - The company is focused on efficiency and innovation to support sustainable growth, with significant investments in new technologies and facilities [5][9] - The strategy includes transforming the supply chain through digital technologies and AI for better planning and forecasting [9] - The company aims for substantial mid-term growth while preparing for long-term expansion through new product development [24][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting operational guidance despite supply chain risks, expecting to deliver between 77 and 85 commercial aircraft and 145 to 155 executive aircraft in 2025 [12] - The company anticipates a net cash position by year-end, reflecting strong financial health [19] - Management highlighted the importance of maintaining a focus on quality and safety while pursuing growth opportunities [24] Other Important Information - The company announced a new liability management initiative, issuing a $1 billion long bond and repurchasing $809 million of existing bonds [20] - The ticker symbol was updated to EMBJ to better reflect the company's strategy [21] - The company declared nearly BRL 210 million in interest on equity, translating to a dividend yield of 0.35% [22] Q&A Session Summary Question: Future returns to shareholders and potential buybacks - Management is evaluating capital structure and considering share buybacks, but no firm decisions have been made yet [31][32] Question: Expansion of work scope for American Airlines' E-Jets fleet - The company is involved in a program with American Airlines for a full interior refresh, which includes new seats and better connectivity [34] Question: Impact of higher costs on executive aviation EBIT margin - Cost inflation is a trend in the industry, and tariffs have also impacted margins, contributing to fluctuations [39][40] Question: Clarification on tax credits and one-off adjustments - Tax credits in commercial aviation relate to import parts, while defense margins were positively adjusted due to a contract reassignment [44] Question: Status of Pratt GTF engines and competition - The PW1900G engine used in E2 aircraft is performing well, with improvements expected, while competition remains strong in the market [49] Question: Expected U.S. tariff impact on coming quarters - The company anticipates a total of $60 million-$65 million in tariffs for the year, with efforts to reduce exposure [78]

Financial Data and Key Metrics Changes - The company reported a significant increase in backlog, reaching $31.3 billion, up 38% year-over-year, marking a new historical record [13] - Revenues for the quarter were close to $2 billion, reflecting an 18% increase compared to the previous year [13] - Adjusted EBIT for Q3 2025 was $236 million, with an 11.8% margin, compared to $147 million or 8.7% margin in Q3 2024 [15] - The net debt position decreased by $646 million to $439 million, with a net debt/EBIT ratio of 0.5 times, a significant improvement from 1.3 times a year earlier [18] Business Line Data and Key Metrics Changes - In commercial aviation, revenues increased by 31% due to a better product mix and higher volumes and prices, with adjusted EBIT margin improving from -4.8% to +1.3% [8][9] - Executive aviation revenues rose by 4%, but adjusted EBIT margin decreased by 4.2 percentage points due to product mix and higher costs [9] - Defense and security revenues grew by 27%, with adjusted EBIT margin improving from 7.2% to 12.9% [9] - Service and support revenues increased by 16%, but adjusted EBIT margin decreased by 5 percentage points due to delays in services and materials [9] Market Data and Key Metrics Changes - The commercial aviation backlog increased to $15.2 billion, with a book-to-bill ratio of 2.7-1 [4] - Executive aviation backlog reached $7.3 billion, with a book-to-bill ratio of 2.4-1 [4] - The defense and security division closed the quarter with a backlog of $3.9 billion and a book-to-bill ratio of 1.3-1 [5] - The service and support business unit finished the quarter with a backlog of $4.9 billion and a book-to-bill ratio of 1.8-1 [5] Company Strategy and Development Direction - The company is focused on efficiency and innovation, with a strong emphasis on sustainable growth [4] - Investments in new technologies and facilities are aimed at enabling higher production volumes and faster deliveries [8] - The company is transforming its supply chain through digital technologies and AI for smarter planning and forecasting [8] - Future growth is expected to be driven by new products and technologies, including potential electric propulsion aircraft [85] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the 2025 guidance despite supply chain risks, expecting to deliver between 77 and 85 aircraft in commercial aviation [11] - The company anticipates a strong performance in Q4, with a focus on delivering a significant number of aircraft [60] - Management highlighted the importance of maintaining a strong balance sheet and evaluating future returns to shareholders [28] Other Important Information - The company declared nearly BRL 210 million in interest on equity over the past two quarters, translating to a 0.35% dividend yield [20] - A new liability management initiative was announced, including the issuance of a $1 billion long bond [19] - The company updated its ticker symbol to MBJ to better reflect its current strategy [20] Q&A Session Summary Question: Future Return to Shareholders - Management is evaluating capital structure and potential for share buybacks or increasing dividends, but no firm decisions have been made yet [28] Question: E-Jets Fleet Retrofit - The company is involved in a program with American Airlines for interior upgrades, which includes new seats and better connectivity [31] Question: EBIT Margin in Executive Segment - Cost inflation is impacting margins, and tariffs are expected to weigh on executive aviation margins [36][37] Question: Tax Credits and One-off Adjustments - Tax credits in commercial aviation relate to import parts, while defense margins benefited from a contract-related adjustment [42] Question: U.S. Tariff Impact - The company expects about $35 million in tariffs for Q4, with efforts to reduce exposure [76] Question: Future Expansion Plans - The company is investing in new technologies and preparing for future growth cycles, including potential new aircraft [85]