Embraer S.A. (NYSE:EMBJ) gave investors a strong headline and a complicated earnings bridge. The aircraft manufacturer reported record second-quarter revenue of $2.24 billion, up 23% year over year in U.S.-dollar terms, and lifted its 2026 adjusted EBIT margin outlook to 10.0% to 10.6% from 8.7% to 9.3%. It also doubled the floor for adjusted free cash flow excluding Eve to at least $400 million from at least $200 million.
The market initially treated the report as a clean profitability inflection. EMBJ's New York-listed ADS rose as much as 9.2% on August 10, but the gain narrowed to 1.1% by the close, at $73.80. That reversal captured the central debate.
Embraer S.A. (NYSE:EMBJ)'s recovery is producing more revenue and cash, but investors still have to separate sustainable operating progress from tax benefits, tariff relief, customer advances, and favorable business mix. The underlying improvement is real. The headline adjusted margin simply includes benefits that will not all repeat.
All four of Embraer's core businesses increased revenue. Executive Aviation revenue rose 32% to $725 million, Defense & Security grew 38% to $304 million, Services & Support increased 24% to $565 million, and Commercial Aviation advanced 8% to $625 million. That breadth matters because Embraer S.A. (NYSE:EMBJ) is no longer relying only on a recovery in commercial aircraft deliveries.
Defense produced an adjusted EBIT margin of 11.9%, up from 9.2%, as KC-390 activity increased. Services reported an 18.7% adjusted EBIT margin. Even after stripping out tax and tariff effects, the Services margin was 17.6%, compared with 15.6% a year earlier.
This is one of the cleaner indications that scale, pool agreements and improvement at OGMA are creating repeatable earnings. The backlog also gives the company more room to manage mix. Total backlog reached a seventh consecutive record of $34.5 billion, up 16% from a year earlier.
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