Embraer(US:ERJ)2025-11-04 13:00Financial 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]