Embraer reported its 1Q 2025 results, reiterated full-year guidance, and hosted a conference call with senior management today to discuss those results. The first quarter had record revenues, with continuing improvements in margins. Top-line revenues grew 23% year over year to $1.103 billion. EBITDA came in at $109 million, growing 131% year over year for the quarter. Financial results and the conference call transcript are in the links above.
While the commercial aircraft division is still losing money, EBIT margins continued to improve for commercial, business, and military aircraft, with only service and support falling below expectations. Full-year guidance was reiterated despite the prospect of tariffs in the US market, which is the key market for the E175. Â
The company delivered seven commercial aircraft during the quarter, with guidance of 77-85 for the full year. Executive Aviation delivered 23 aircraft vs. guidance of 145-155 for the year. The backlog at the end of the quarter was a record $26.4 billion. The company approved a dividend and issued $650M in 10-year bonds. This seasonally low quarter has often been dwarfed by strong fourth quarters historically.
With net income of $73.4 million, the company has remained positive in its seasonally worst quarter. The company reiterated its guidance for 2025, even with an impact from tariffs of 90 bp on EBIT margin, which has been matched by internal cost reduction and heavy US content in its aircraft.
Record Backlog and Continuing Campaigns
A potential deal for 40-80 C-390 aircraft in India is moving forward, but will likely take 1-2 years to finalize. A potential C-390 opportunity exists with the USAF as a tanker and multi-mission aircraft. 60% of the plane is US content, and with a large order, a final assembly facility would be considered in the US.
The company also indicated that several campaigns for the E2 this year should bear fruit. There was no news on LATAM and Gol conversations. The first E2 for Mexicana is expected in July. A new JV in Turkey may open that market for the E2.
The company continues to examine a larger aircraft, but no decision has yet been reached. Embraer is limited by not having a growth offering for airlines. The regional segment is constrained by scope clause limitations in the US, likely extending E175 replacement timing, as the only alternative is a newer (and 7% more efficient) E175.
Supply chain constraints in 2025 are for fuselages and engines. The strike at Pratt & Whitney is currently being evaluated, but overall, engine availability has been better than in the past. The product mix is expected to be similar to 2024, even with a higher proportion of E175s in commercial and a higher proportion of Super Tucano sales in defense.Â
The Bottom Line
Embraer remains positive and has reiterated its outlook, despite the impact of tariffs. Margins remain strong, and the company has several products that could land major orders, including the E2 Jets and the C-390. The company currently has strong momentum and should continue to improve on its record backlog in 2025.
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