Core Insights - Embraer has successfully delivered its 2000th business jet, marking a significant milestone in its business aviation segment [2][4] - The milestone aircraft is the Praetor 500, delivered to an unnamed corporate flight department at the company's global customer center in Melbourne, Florida [2] Product Evolution - Embraer's journey in the business aviation sector began in 2002 with the delivery of its first executive jet, the Legacy 600, derived from the ERJ-135 regional jet [2] - The company has expanded its product line through various upgrades, including the Legacy 650, and has introduced new models such as the Lineage 1000 targeting the high-end market [3] - The Phenom 100 and Phenom 300 series, featuring a clean-sheet design, significantly enhanced performance and passenger experience, solidifying Embraer's market position [3] - The introduction of the Legacy 450 and Legacy 500, utilizing advanced fly-by-wire technology, brought top-tier aircraft technology to the mid-size market [3] - The launch of the Praetor 500 and Praetor 600 in 2018 further strengthened Embraer's leadership in the mid-size and super mid-size business jet markets [3] Market Performance - Since the delivery of its first business jet, Embraer's business aviation segment has achieved a remarkable 14% compound annual growth rate over the past 23 years [4] - This growth rate is notable in the capital-intensive and technologically challenging aerospace manufacturing industry, indicating strong market recognition of Embraer's products [4] - The delivery of the 2000th business jet not only signifies a quantitative achievement but also represents a qualitative leap in the company's strategic, innovative, and product excellence [4]

Core Insights - Embraer S.A. (ERJ) has signed a contract with Panama for the delivery of four A-29 Super Tucano aircraft, marking Panama as the eighth Latin American country to adopt this aircraft model [1][9]. Group 1: Embraer's A-29 Super Tucano - The A-29 Super Tucano is recognized for its multi-mission capabilities, cost-effectiveness, modern technology, and reliable performance, making it suitable for nations enhancing their air defense [2]. - The aircraft is widely used for border surveillance, reconnaissance, air escort, and advanced pilot training, currently operated by 22 air forces, with more nations showing interest due to its reliability and low operating costs [3]. Group 2: Market Growth Potential - The military aviation market is projected to grow at a CAGR of 4.7% from 2025 to 2030, driven by increasing military conflicts and advancements in combat jet technology [4]. - Embraer's Defense & Security segment reported revenues of $221 million in Q2 2025, reflecting an 18% year-over-year increase, with a backlog of $4.3 billion [5][9]. Group 3: Opportunities for Other Aerospace-Defense Stocks - Northrop Grumman Corp. (NOC) has a long-term earnings growth rate of 3.9% and a Zacks Consensus Estimate for 2025 sales indicating a 2.7% year-over-year growth [6][7]. - Lockheed Martin Corp. (LMT) boasts a long-term earnings growth rate of 10.3%, with a Zacks Consensus Estimate for 2025 sales suggesting a 4.6% improvement [8]. - Boeing Company (BA) has a long-term earnings growth rate of 17.9%, with a Zacks Consensus Estimate for 2025 sales indicating a 28.7% increase [10]. Group 4: Stock Performance - In the past month, shares of Embraer have increased by 3.1%, outperforming the industry's growth of 1.9% [11].

Core Insights - Morocco is set to sign an agreement with Embraer to purchase four to five KC-390 Millennium military transport aircraft, with an expected procurement cost exceeding $600 million [1] - This procurement plan is part of the Royal Moroccan Air Force's modernization strategy, aimed at gradually replacing the current fleet of 14 C-130H Hercules transport aircraft and KC-130H tankers [1] - The KC-390 Millennium is known for its multifunctional design, high speed, and low operating costs, capable of carrying up to 26 tons of cargo, with a maximum speed of 987.8 km/h and a standard range of 2,590 km [1] - The aircraft can perform various missions, including troop or equipment airdrops, aerial refueling, and firefighting [1] - Countries that have already procured the KC-390 include Portugal, Hungary, the Netherlands, Austria, the Czech Republic, Sweden, and Slovakia [1] Economic Impact - A memorandum of understanding will be signed between the Moroccan government and Embraer during the Marrakech Air Show on October 30, 2024, covering multiple cooperation projects in commercial aviation, defense, and urban air mobility [1] - This agreement is expected to generate $300 million in economic benefits and create 300 jobs in Morocco by 2030, and $1 billion in economic benefits and 1,000 jobs by 2035 [1]

Core Insights - Embraer S.A. reported a second-quarter 2025 adjusted loss of 2 cents per American Depository Share (ADS), missing the Zacks Consensus Estimate of 47 cents and deteriorating from earnings of 44 cents per ADS in the same quarter last year [1][9] - Total revenues for the quarter reached $1.82 billion, reflecting a year-over-year increase of 21.8% and surpassing the Zacks Consensus Estimate of $1.67 billion by 8.9% [3][9] - The company's backlog increased to $29.7 billion from $26.4 billion in the previous quarter, indicating strong demand [4][9] Financial Performance - GAAP earnings were reported at 43 cents per ADS, down from 54 cents in the second quarter of 2024 [2] - Operating income rose to $179.5 million compared to $127.9 million in the same quarter last year [7] - Adjusted EBITDA increased to $245.5 million from $190.4 million year-over-year [7] Revenue Breakdown - Executive Aviation segment revenues reached $549 million, up 64% year-over-year, driven by price discipline and higher volumes [5] - Defense & Security segment generated $221 million in revenues, an 18% increase year-over-year, attributed to the A-29 Super Tucano jet program [5] - Commercial Aviation segment revenues were $577 million, reflecting a 4% year-over-year growth [5] - Services & Support segment revenues totaled $456 million, up 13% year-over-year [6] Order and Delivery - Embraer delivered 61 jets in the quarter, including 19 commercial and 38 executive jets, compared to 19 commercial and 27 executive jets in the prior-year quarter [4][9] Cash Flow and Guidance - As of June 30, 2025, cash and cash equivalents amounted to $1.31 billion, down from $2.23 billion at the end of 2024 [10] - Adjusted free cash outflow for the second quarter was $161.6 million, an improvement from $215.1 million in the prior-year period [10] - The company 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 [11]

Core Viewpoint - Embraer reported record revenue of 10.3 billion Brazilian Reais (approximately 1.97 billion USD) for Q2 2025, marking a 31% year-over-year increase [1] Group 1: Financial Performance - The business aviation segment generated revenue of 3.1 billion Brazilian Reais (approximately 594 million USD), a significant increase of 74% year-over-year, driving overall growth [1] - Defense and security business revenue grew by 28%, while service and support revenue increased by 23%, and commercial aviation revenue rose by 11% [1] - The total order backlog reached a historic high of 29.7 billion USD, representing a 40% increase compared to the same period in 2024 [1] Group 2: Aircraft Deliveries - The company delivered a total of 61 aircraft in Q2, reflecting a 30% year-over-year increase [1] - Business jet deliveries amounted to 38 units, up 41%, while commercial aircraft deliveries remained stable at 19 units, and defense deliveries totaled 4 units [1] Group 3: Market Impact and Outlook - Recent U.S. tariffs on Brazilian goods did not significantly impact the Q2 financial results, and Embraer was not included in the upcoming 50% tariff list effective August 6 [1] - For the full year, Embraer maintains its delivery targets, expecting to deliver between 77 to 85 commercial aircraft and up to 155 business jets [1]

Investment & Strategy - Embraer SA committed to invest $1 billion in the US [1] - The investment aims to mitigate potential negative impacts from possible tariffs [1] Company Focus - Embraer is a Brazilian aircraft manufacturer [1]

Core Insights - Embraer reported $1.82 billion in revenue for Q2 2025, a year-over-year increase of 21.8% and an 8.88% surprise over the Zacks Consensus Estimate of $1.67 billion [1] - The EPS for the quarter was -$0.02, a significant decline from $0.44 a year ago, resulting in a -104.26% surprise compared to the consensus estimate of $0.47 [1] Revenue Breakdown - Commercial Aviation revenue was $577 million, exceeding the average estimate of $551.44 million, reflecting a 4.2% year-over-year increase [4] - Executive Aviation revenue reached $549 million, significantly higher than the estimated $421.97 million, marking a 63.4% increase compared to the previous year [4] - Other revenue amounted to $16 million, surpassing the average estimate of $14.82 million, with a year-over-year change of 14.3% [4] - Services & Support revenue was $456 million, slightly below the estimated $460.57 million, but still showing a 12.9% increase year-over-year [4] - Defense & Security revenue totaled $221 million, close to the average estimate of $222.04 million, with an 18.2% year-over-year increase [4] Stock Performance - Over the past month, Embraer shares have returned -3.5%, contrasting with the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Embraer reported the highest second quarter revenue in its history, totaling $1.8 billion, with an adjusted EBIT margin of 10.5%, the highest level for the second quarter over the past decade [6][23][24] - The backlog reached a new all-time high of BRL 29.7 billion, driven by strong demand across all business units, reflecting a 40% increase year-over-year [6][22] Business Line Data and Key Metrics Changes - In Commercial Aviation, revenues increased by 4%, with an adjusted EBIT margin remaining flat at 4.3% [17] - Executive Aviation saw a revenue surge of 64%, with an adjusted EBITDA margin increasing to 14.5% due to higher volumes and cost containment initiatives [17] - Defense and Security revenues grew by 18%, with an adjusted EBIT margin improving to 9.2% due to higher production volumes [18] - Service and Support revenues rose by 13%, although the adjusted EBIT margin declined slightly to 15.5% due to higher past due credit provisions [18] Market Data and Key Metrics Changes - The backlog for Commercial Aviation grew by 16%, while Executive Aviation backlog increased by 62% [22] - The Defense and Security backlog doubled, supported by strong sales momentum in KC-390 and A-29 Super Tucano [22] Company Strategy and Development Direction - The company is focused on production leveling initiatives to increase efficiency and improve cash flow, with significant operational gains noted in the KC-390 line [11][12] - Embraer is advocating for the restoration of zero tariffs for the global aerospace industry, emphasizing its importance in job creation and economic contributions in the U.S. [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 guidance of $7 billion to $7.5 billion in revenues and an adjusted EBIT margin of 7.5% to 8.3% [20] - The management acknowledged challenges in the second half of the year due to inflationary pressures, foreign exchange rate volatility, and ongoing tariff discussions with the U.S. [25] Other Important Information - The company declared nearly BRL 143 million in interest on equity during the quarter, translating to BRL 0.19 per share, with potential for a top-up dividend [29] - Embraer has significantly reduced its gross and net debt positions over the past year, closing the second quarter with a net debt to EBITDA ratio of 0.7 times [28] Q&A Session Summary Question: Outlook for the second half considering FX volatility and tariffs - Management indicated that while the first half was strong, they are cautious about the second half due to potential tariff impacts and inflation, maintaining current guidance for now [36][38] Question: Conversations with U.S. customers regarding fleet needs - Management noted that the reduction of tariffs from 50% to 10% has lessened the impact on customers, but they do not expect significant new orders for the E175 this year [42][45] Question: Performance in Defense and Security - Management expressed optimism about improving margins in Defense and Security, driven by a shift to export contracts and increased production efficiency [49][51] Question: Update on tariffs and pricing strategies - Management confirmed that they do not plan to increase prices due to tariffs, as the impact is already factored into projections, and they are maintaining competitive pricing [127][128] Question: Working capital optimization and free cash flow - Management highlighted ongoing initiatives to improve inventory turnover, aiming to release approximately $1 billion from inventory over the next three years [108][109] Question: Production footprint and executive aviation - Management stated that a significant portion of executive jet production is already in the U.S., and they are continuously evaluating their production footprint for efficiency [115][116] Question: Updates on potential orders and negotiations - Management confirmed ongoing negotiations with Azul and emphasized the importance of maintaining strong relationships with key customers [140][141]

Financial Highlights - All-time high 2Q revenue of $1.8 billion[6] - Highest 2Q Adjusted EBIT margin of +10.5% over the last 10 years[6] - Backlog reached a new record of $29.7 billion[6] - Adjusted Net Results excludes Eve is -$5 million[49] - Shareholder remuneration: Dividends of R$51.4 million and Interest on Equity of R$142.8 million[53] Operational Performance - 2Q deliveries were 30% higher year-over-year[6] - Book-to-bill ratio is around 2x across all business units[6] - Commercial Aviation revenue increased by 4% year-over-year with an EBIT of $25 million[18] - Executive Aviation revenue increased significantly by 64% year-over-year with an EBIT of $80 million[21] - Defense & Security revenue increased by 18% year-over-year with an EBIT of $20 million[25] - Services & Support revenue increased by 13% year-over-year with an EBIT of $71 million[27] Strategic Developments - SAS ordered 45 E195-E2 aircraft, with 10 optional units[7] - SkyWest purchased 60 E175 aircraft, with 50 additional options[7] - Portugal made its 6th KC-390 purchase, along with 10 new options, and Lithuania selected the KC-390[7] US Market Focus - Embraer forecasts $21 billion in US imports and $13 billion in exports by 2030, resulting in an $8 billion trade surplus for the US[15]

Core Insights - Embraer S.A. reported its second quarter 2025 earnings results, achieving record revenues and significant growth in various segments [1]. Financial Performance - Total revenues for 2Q25 reached US$1,819 million, marking a 22% year-over-year increase, the highest ever for a second quarter [4]. - Adjusted EBIT for the quarter was US$191.8 million, with a margin of 10.5%, up from 9.3% in 2Q24 [4]. - Adjusted free cash flow, excluding Eve, was negative at US$(161.6) million, as the company prepared for increased aircraft deliveries in upcoming quarters [4]. Aircraft Deliveries - Embraer delivered a total of 61 aircraft in 2Q25, which included 19 commercial jets (10 E2s and 9 E1s), 38 executive jets (21 light and 17 medium), and 4 defense-related aircraft, representing a 30% increase compared to the 47 aircraft delivered in the same quarter last year [4]. Order Backlog and Guidance - The firm order backlog reached an all-time high of US$29.7 billion in 2Q25 [4]. - The company reiterated its 2025 guidance, expecting commercial aviation deliveries between 77 and 85 aircraft and executive aviation deliveries between 145 and 155 aircraft, with total revenues projected in the US$7.0 to US$7.5 billion range [4].