Q4 2024 Embraer SA Earnings Call

February 27, 2025

You have joined the meeting as an attendee and will be muted throughout the meeting.

Guilherme Paiva: Good morning, ladies and gentlemen, and thanks for standing by. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. My name is Guilherme Paiva, and I'm the Head of Investor Relations and M&A for Embraer. I want to welcome you to our Q4 and 2024 full year earnings conference call. The numbers in this presentation contain non-GAAP financial information to help investors reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you Eve's results will be discussed at the company's conference call in March. It is important to mention that all numbers are presented in US dollars as it is our functional currency. This conference call may include statements about future events based on Embraer's expectations and financial market trends.

Good morning, ladies and gentlemen, and thanks for standing by. This conference call will be conducted in English.

Speaker Change: But please, let me say a short announcement for Portuguese speakers. This conference will be originally in English. To listen to the translation in Portuguese, press the Interpretation button on the platform and select the desired language. To improve the quality of the broadcast in Portuguese, click also on Disable Original Audio on the Zoom platform.

Guilherme Paiva: My name is Guilherme Paiva and I'm the head of investor relations and M&A for Embraer. I want to welcome you to our fourth quarter and 2024 full year earnings conference call.

Guilherme Paiva: The numbers in this presentation contain non-GAAP financial information to help investors reconcile Yves' financial information in GAAP standards to Embraer's IFRS. We remind you Yves' results will be discussed at the company's conference call in March.

Guilherme Paiva: It is important to mention that all numbers are presented in U.S. dollars as it is our functional currency.

Guilherme Paiva: This conference call may include statements about future events based on Embraer's expectations and financial market trends. Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call.

Guilherme Paiva: Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call. Except in accordance with the applicable rules, the company assumes no obligation to publicly update any forward-looking statements. For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissão de Valores Mobiliários or CVM. At this time, all participants are in a listen-only mode. We'll give instructions later on for participation in the two Q&A sessions. As a reminder, this conference is being recorded. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Luis Harrison, Corporate Communications Director, and myself. This conference call will have three parts. In the first part, top management will present the company's Q4 and 2024 full year results.

Guilherme Paiva: accept in accordance with the applicable rules. The company assumes no obligation to publicly update any forwarded statements.

Guilherme Paiva: For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissão de Valores Imobiliários, or CVM.

Guilherme Paiva: At this time, all participants are in a listen-only mode. We will give instructions later on for participation in the two Q&A sessions.

Speaker Change: As a reminder, this conference is being recorded. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Luis Harrison, Corporate Communications Director, and myself.

This conference call will have three parts.

Speaker Change: In the first part, top manager will present the company's Q4 and 2024 four-year results. In the second part, we'll host a Q&A session only for investors. And last but definitely not least, in the third part, we'll host a dedicated Q&A session only for the press.

Guilherme Paiva: In the second part, we will host a Q&A session only for investors. Last but definitely not least, in the third part, we'll host a dedicated Q&A session only for the press. It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco.

Speaker Change: It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomez. Please go ahead, Francisco.

Francisco Gomes Neto: Thank you, Gui, and good morning and good afternoon to all. Welcome to Embraer's Q4 2024 Results Conference Call. Before I start my presentation about 2024, I'm pleased to share with you that ANA All Nippon Airlines purchased 15 E190-E2 jets this week, plus options for additional 5 aircraft. This is the first sale of our E2 family in Japan, and this E190-E2 aircraft will join the other 47 E1 jets which have been successfully operating in the country since 2009. Now come back to 2024. 2024 was a historic year for Embraer, with remarkable results that show the company's successful growth path. We reached or exceeded our modified and original 2024 guidance for both financial and operational indicators, showing our capacity to face the challenges still present in the supply chain.

Speaker Change: Thank you, Guy, and good morning and good afternoon to all. Welcome to the Embraer Q4 2024 Results Conference Call.

Speaker Change: Before I start my presentation about 2024, I am pleased to share with you that ANA All Nippon Airlines purchased 15 E190-E2 jets this week, plus options for additional 5 aircrafts.

Speaker Change: This is the first sale of our E2 family in Japan, and this E190-E2 aircraft will join the other 47 E1 jets which have been successfully operating in the country since 2009.

Speaker Change: Now come back to 2024. 2024 was a historic year for Embraer with remarkable results that show the company's successful growth path.

Speaker Change: We reached or exceeded our modified and original 2024 guidance for both financial and operational indicators, showing our capacity to face the challenges still present in the supply chain.

Francisco Gomes Neto: We achieved record revenue of $6.4 billion, our highest level in our history. Our focus on sales resulted in all-time backlog record of $26.3 billion. We have made further progress in financial deleveraging, and our net debt is now close to zero. Embraer now has the accounting conditions to start paying dividends subject to approval by its shareholders. For this year, we are committed to sustainable growth, and our 2025 guidance reflects the same successful formula of the past few years, double-digit growth. Talking about sales, we had a remarkable year with positive highlights in all areas and an impressive company-wide 2.2 book-to-bill ratio. We announced our largest order in executive aviation, a $7 billion contract with 182 firm orders and 30 options from Flexjet.

Speaker Change: We achieved record revenue of $6.4 billion, our highest level in our history.

Speaker Change: Our focus on sales resulted in an all-time backlog record of $26.3 billion. We have made further progress in financial deleveraging, and our net debt is now close to zero.

Speaker Change: Embraer now has the accounting conditions to start paying dividends, subject to approval by its shareholders.

Speaker Change: For this year, we are committed to sustainable growth, and our 2025 guidance reflects the same successful formula of the past few years, double-digit growth.

Speaker Change: Talking about sales, we had a remarkable year with positive highlights in all areas and an impressive company-wide 2.2 book-to-bill ratio.

Speaker Change: We announced our largest order in Executive Aviation, a $7 billion contract with 182 firm orders and 30 options from FlexJet.

Francisco Gomes Neto: The Phenom 300 remains the most delivered light jet for the 13th consecutive year and the most delivered twin-engine jet for the 5th consecutive year. The division finished 2024 with a record $7.4 billion backlog and an industry-leading 2.7 book-to-bill ratio. Defense and Security ended the year with the best sales performance in its history. In 2024, Austria, Czech Republic, the Netherlands, and an undisclosed client acquired 13 KC-390s. Sweden and Slovakia also selected the aircraft. The A-29 Super Tucano also did very well and received 29 new orders from Paraguay, Portugal, Uruguay, and two undisclosed clients. The backlog rose to $4.2 billion, with a record share more than 60% from global clients. The business unit recorded a superb 3.3 book-to-bill ratio.

Speaker Change: The Phenom 300 remains the most delivered light jet for the 13th consecutive year, and the most delivered twin-engine jet for the 5th consecutive year.

Speaker Change: The division finished 2024 with a record $7.4 billion backlog in an industry-leading $2.7 book-to-bill ratio.

Speaker Change: Defense and security ended the year with the best sales performance in its history. In 2024, Austria, Czech Republic, the Netherlands and undisclosed clients acquired 13 KC390s.

Sweden and Slovakia also selected the aircraft.

Speaker Change: The A290 Super Tucano also did very well and received 29 new orders from Paraguay, Portugal, Uruguay and two undisclosed clients.

Speaker Change: The backlog rose to $4.2 billion, with a record share, more than 60%, from global clients. The business unit recorded a superb 3.3 book-to-bill ratio.

Francisco Gomes Neto: In commercial aviation, we announced a firm contract with American Airlines for 90 E-one-seventy-five aircraft plus 43 options. Now E2 jet family, we signed contracts with Luxair, Mexicana, and Virgin Australia 30 aircraft and welcomed LOT Polish with three aircraft via lessors. The division finished the year with a $10.2 billion backlog and a strong 1.6 book-to-bill ratio. Service and support also showed solid growth, expanding its own MRO centers in the US and announcing new long-term contracts with Flexjet and several commercial airlines. The division backlog rose to $4.6 billion, a new all-time high, supported by long-term contracts, and the business unit finished the period with a solid 1.9 book-to-bill ratio. The business unit also started inducting engines for repair in our new Pratt & Whitney GTF engines operation at OGMA, Portugal.

Speaker Change: In Commercial Aviation, we announced a firm contract with American Airlines for 90 U-175 aircraft plus 43 options.

Speaker Change: Now, E2Jet family, we signed a contract with Luxair Mexicana in Village, Australia, 30 aircraft and welcomed lot polish with three aircraft via lessors.

Speaker Change: The division finished the year with a 10.2 billion backlog in a strong 1.6 book-to-bill ratio.

Speaker Change: Service and support also showed solid growth, expanding its own MRO centers in the U.S. and announcing new long-term contracts with FlexJet and several commercial airlines.

Speaker Change: The division backlog rose to $4.6 billion, a new all-time high, supported by long-term contracts, and the business unit finished the period with a solid 1.9 book-to-bill ratio.

Speaker Change: The business unit also started inducting engines for repair in our new Pratt & Whitney GTF engines operation at Ogima Portugal.

Francisco Gomes Neto: Supply chain is still an important issue, but we are working very hard to address its related challenges. In 2024, we focused on strategic initiatives to better balance production in 2025 and over the coming years, ensuring more linearity. We have also improved collaboration with our suppliers, reinforced the supply chain, every structure, digitized processes, and invested in AI tools to anticipate potential issues to monitor and manage activities in real time. I will now move on the operational results by segment over the next few slides. In commercial aviation, revenues increased 20% in 2024. The adjusted EBIT for the full year was $55 million, or 182% higher than in 2023, supported by a 2.5% EBIT margin, driven by customer mix and operating leverage. In executive aviation, revenues expanded 25% in 2024.

Speaker Change: Supply chain is still an important issue, but we are working very hard to address its related challenges.

Speaker Change: In 2024, we focused on strategic initiatives to better balance production in 2025 and over the coming years, ensuring more linearity.

Speaker Change: We have also improved collaboration with our suppliers, reinforced the supply chain infrastructure, digitized processes, and invested in AI tools to anticipate potential issues to monitor and manage activities in real time.

Speaker Change: I will now move on the operational results by segment over the next few slides.

Speaker Change: In commercial aviation, revenues increased 20% in 2024. The adjusted EBIT for the full year was $55 million, or 182% higher than in 2023.

Speaker Change: Supported by a 2.5% EBITDA margin, driven by customer mix and operating leverage.

In Executive Aviation, revenues expanded 25% in 2024.

Francisco Gomes Neto: The division adjusted EBIT reached $205 million or 62% higher than in 2023, helped by an 11.7% EBIT margin because of operating leverage. In defense and security, top line grew 40% in 2024. The adjusted EBIT was $45 million or 57% higher than in 2023, supported by a 6.2% EBIT margin because of KC-390 customer mix and higher A-29 volumes. Moving now to service and support. Revenues increased 15% in 2024. The adjusted EBIT reached $270 million or 25% higher than in 2023, driven by a 16.5% EBIT margin, supported by higher volumes in the division. Finally, E2 continues to make progress with its E2 development and testing phase.

Speaker Change: The Division Adjusted EBIT reached $205 million, or 62% higher than in 2023, helped by an 11.7% EBIT margin because of operating leverage.

In defense and security, top line grew 40% in 2024.

Speaker Change: that just EBIT was 45 million or 57% higher than in 2023, supported by a 6.2% EBIT margin because of KC39 customer mix in higher 829 volumes.

Moving now to Service and Support.

Revenues increased 15% in 2024.

Speaker Change: that just EBIT reaches $270 million or 25% higher than in 2023.

Francisco Gomes Neto: In 2024, it achieved important program milestones as the final assembly of its first full-scale prototype, which is currently being evaluated during the ground testing campaign and is scheduled to make the first flight in 2025. I will now hand it over to Antonio to give you further details about the financial results, and then I will be back with closing remarks.

Speaker Change: In 2024, it achieved important program milestones as the final assembly of its first full-scale prototype, which is currently being evaluated during the ground testing campaign and is scheduled to make the first flight in 2025.

Speaker Change: I will now hand it over to Antonio to give you further details about the financial results and then I will be back with closing remarks.

Speaker 4: Thank you. Good morning and good afternoon to everyone. The remarkable results Francisco just presented are also reflected in our financial numbers, which show sustainable and solid growth in all key Q4 indicators. Let's now move it to slide 11 and start with deliveries. Embraer delivered 75 aircraft in the last quarter, equal to the number in the same period of the previous year. Meanwhile, the company delivered a total of 206 aircraft in 2024, including 3 KC-390 Millennium, a 14% increase compared to 181 aircraft in 2023. Executive aviation delivered 44 jets in Q4 and a total of 130 for the year, at the midpoint of the regional guidance for 2024, and a 14-year high.

Antonio Carlos Garcia: Thank you. Good morning and good afternoon to everyone. The remarkable results Francisco just presented are also reflected in our financial numbers, which show sustainable and solid growth in all key Q4 indicators. Let's now move it to slide 11 and start with deliveries. Embraer delivered 75 aircraft in the last quarter, equal to the number in the same period of the previous year. Meanwhile, the company delivered a total of 206 aircraft in 2024, including 3 KC-390 Millennium, a 14% increase compared to 181 aircraft in 2023. Executive aviation delivered 44 jets in Q4 and a total of 130 for the year, at the midpoint of the regional guidance for 2024, and a 14-year high.

Thank you. Good morning and good afternoon to everyone.

The remarkable results Francisco just presented.

Speaker Change: are also reflected in our financial numbers, which show sustainable and solid growth in all key Q4 indicators. Let's now move it to slide 11 and start with deliveries. Embraer delivered 75 requests in the last quarter.

Speaker Change: equal to the number in the same period of the previous year. Meanwhile, the company delivered a total of 206 aircrafts in 2024, including three KC 390 Millennium.

Speaker Change: 14% increase compared to 181 aircraft in 2023. Executive Aviation delivered 44 jets in Q4 and a total of 130 for the year.

at the midpoint of the Regional Guidance for 2024.

Speaker Change: and a 14-year high. The meat and supermeat category represent half of the segment delivered during the quarter.

Speaker 4: The mid and super mid category represent half of the segment deliveries during the quarter, supported by the solid trust forward of our operator family. It is important to highlight the progress observed in the company's production leveling initiatives. We managed to reduce the share of Q4 deliveries in the year by 10 percentage points 2024 versus 2023. Meanwhile, commercial aviation delivered 31 aircraft in the last quarter of 2024 and 73 in the year. At the ceiling of our revised estimates of 70 to 73, and is still within the original estimates of 72 to 80 for the period. For the year, our E2 family represented 65% of deliveries and E1 the balance of 35%. In slide 12, as already mentioned by Francisco, our backlog expanded more than 40% year-over-year in Q4.

Antonio Carlos Garcia: The mid and super mid category represent half of the segment deliveries during the quarter, supported by the solid trust forward of our operator family. It is important to highlight the progress observed in the company's production leveling initiatives. We managed to reduce the share of Q4 deliveries in the year by 10 percentage points 2024 versus 2023. Meanwhile, commercial aviation delivered 31 aircraft in the last quarter of 2024 and 73 in the year. At the ceiling of our revised estimates of 70 to 73, and is still within the original estimates of 72 to 80 for the period. For the year, our E2 family represented 65% of deliveries and E1 the balance of 35%. In slide 12, as already mentioned by Francisco, our backlog expanded more than 40% year-over-year in Q4.

Speaker Change: supported by the Solid Trust Forward of our operator family. It is important to highlight the progress observed in the company's production level initiatives.

Speaker Change: We managed to reduce the share of Q4 deliveries in the year by 10% points.

Speaker Change: 2024 versus 2023. Meanwhile, commercial aviation delivered 31 aircrafts in the last quarter of 2024 and 73 in the year.

Speaker Change: at the ceiling of our revised estimates of 70 to 73 and still with him, the original estimates of 72 to 80 for the period. For the year, our H2O family represented 65% of deliveries and he won the balance of 35%.

He's like the 12th

Speaker Change: As already mentioned by Francisco, our backlog expanded more than 40% year-on-year in Q4. Giving more details, the backlog for Executive Aviation increased 70% year-on-year, supported by the contract with FlexJet.

Speaker 4: Giving more details, the backlog for executive aviation increased 70% year-over-year, supported by the contract with Flexjet. The backlog for service and support soared more than 65%, while for defense and security increased 50%, supported by new orders from KC-390 Millennium and A-29 Super Tucano. The backlog for commercial aviation increased a solidly 15% year-over-year. Move on to revenues. We had a 17% increase year-over-year in Q4 to more than $2.3 billion. Our top line of $6.4 billion in 2024 rated the high end of our guidance and an increase more than 20% when compared to 2023. All business performed well throughout the year, especially defense and security and executive aviation, whose revenues increased 40% and 25% year-over-year respectively.

Antonio Carlos Garcia: Giving more details, the backlog for executive aviation increased 70% year-over-year, supported by the contract with Flexjet. The backlog for service and support soared more than 65%, while for defense and security increased 50%, supported by new orders from KC-390 Millennium and A-29 Super Tucano. The backlog for commercial aviation increased a solidly 15% year-over-year. Move on to revenues. We had a 17% increase year-over-year in Q4 to more than $2.3 billion. Our top line of $6.4 billion in 2024 rated the high end of our guidance and an increase more than 20% when compared to 2023. All business performed well throughout the year, especially defense and security and executive aviation, whose revenues increased 40% and 25% year-over-year respectively.

Speaker Change: The backlog for service and support soared to more than 65%, while for defense and security increased 50%.

Speaker Change: supported by new orders from KC 290 Millennium and A29 Super Tucano. The backlog for commercial aviation increased a solid 15% year-on-year. Move on to revenues.

Speaker Change: who had a 17% increase year-on-year in Q4 to more than $2.3 billion, our top line of $6.4 billion in 2024 reached the high end of our guidance.

and an increase more than 20% when compared.

Speaker Change: to 2023. All business performed well throughout the year, especially defense and security and executive aviation, whose revenues increased 40% and 25% year-on-year respectively.

Speaker 4: Together, these two segments represent more than 40% of the company's total revenue in 2024. Next slide, please. We generated $328 million in adjusted EBIT in Q4 with a 14% margin and $922 million in the year. I remind you, there is the Boeing arbitration impact of $150 million in the results of the year. That increase. The margins are around 230 basis points from 12.1 to 14.4. Moving to the next slide. Adjusted EBIT for the quarter was $265 million, with an 11.5% margin. For the year, we generated $780 million with an 11.1% margin, surpassing the upper end of our previous revised up 10% guidance for 2024.

Antonio Carlos Garcia: Together, these two segments represent more than 40% of the company's total revenue in 2024. Next slide, please. We generated $328 million in adjusted EBIT in Q4 with a 14% margin and $922 million in the year. I remind you, there is the Boeing arbitration impact of $150 million in the results of the year. That increase. The margins are around 230 basis points from 12.1 to 14.4. Moving to the next slide. Adjusted EBIT for the quarter was $265 million, with an 11.5% margin. For the year, we generated $780 million with an 11.1% margin, surpassing the upper end of our previous revised up 10% guidance for 2024.

Speaker Change: Together, these two segments represent more than 40% of the company's total revenue in 2024.

Speaker Change: Next slide please. We generated $328 million in adjusted EBITDA in Q4 with a 14% margin.

and 922 million in the year.

Speaker Change: I remind you there is the Boeing arbitration impact of $150 million in the result of the year. That increased the margins around 230 basis points from 12.1 to 14.4.

Speaker Change: Moving to the next slide, adjusted EBIT for the quarter was $265 million with an 11.5% margin.

Speaker Change: For the year, we generated $780 million with an 11.1% margin.

Speaker Change: surpassing the upper end of our previously revised 10% guidance for 2024. If you look at the results for the year X-Boing agreement,

Speaker 4: If you look at the results for the year ex Boeing agreement, the EBIT margin improved to 210 basis points year-on-year from 6.6% to 8.7%, supported by higher profitability in all business units, driven by efficiency and operating leverage. On to slide 15 now, please. In Q4, we generated $996 million in adjusted free cash flow because of higher numbers of aircraft deliveries and strong performance in sales, including significant advance in customer payments in defense, which is going to negatively impact 2025. For 2024, we generated $676 million in adjusted free cash flow, and a still strong $540 million without Boeing, helped by significant defense prepayments compared to $318 million in 2023.

Antonio Carlos Garcia: If you look at the results for the year ex Boeing agreement, the EBIT margin improved to 210 basis points year-on-year from 6.6% to 8.7%, supported by higher profitability in all business units, driven by efficiency and operating leverage. On to slide 15 now, please. In Q4, we generated $996 million in adjusted free cash flow because of higher numbers of aircraft deliveries and strong performance in sales, including significant advance in customer payments in defense, which is going to negatively impact 2025. For 2024, we generated $676 million in adjusted free cash flow, and a still strong $540 million without Boeing, helped by significant defense prepayments compared to $318 million in 2023.

Speaker Change: David March improved 210 basis points year-on-year from 6.6 to 80.7%, supported by high profitability in all business units, driven by efficiency and operating leverage. On to slide 15 now, please.

Speaker Change: In Q4, we generated $996 million in adjusted pre-cash flow because of higher numbers of aircraft deliveries and strong performance in sales.

Speaker Change: Including significant advance in customer payments in the sense, which is going to negatively impact 2025. For 2024, we generated $676 million in adjusted free cash flow, and a still strong $540 million without borrowing.

Speaker Change: helped by significant defense repayments compared to $318 million in 2023.

Speaker 4: We did better than our $300 million or more guidance because of the improvement in our working capital. Moving to investments. Without Eve, we spent $64 million in research and development during the quarter, $56 million CapEx, and a net of $10 million in the pool program, for a total of $130 million in Q4 compared to $142 million a year ago. On a yearly basis, Embraer standalone invested a total of $428 million in 2024 compared to $440 million in 2023. Our capital allocation continues to be geared towards segments with higher returns, such as executive aviation service and support, mainly in US. We continue to see our CapEx run rate at close to $400 million per year in the near future. Slide 16.

Antonio Carlos Garcia: We did better than our $300 million or more guidance because of the improvement in our working capital. Moving to investments. Without Eve, we spent $64 million in research and development during the quarter, $56 million CapEx, and a net of $10 million in the pool program, for a total of $130 million in Q4 compared to $142 million a year ago. On a yearly basis, Embraer standalone invested a total of $428 million in 2024 compared to $440 million in 2023. Our capital allocation continues to be geared towards segments with higher returns, such as executive aviation service and support, mainly in US. We continue to see our CapEx run rate at close to $400 million per year in the near future. Slide 16.

We did better than our 300 million or more guidance.

Speaker Change: because of the improvement in our working capital. Moving to investments without ease.

Speaker Change: We spent $64 million in research and development during the quarter, $56 million in CAPEX, and a net of $10 million in the pool program.

Speaker Change: for a total of $130 million in Q4, compared to $142 million a year ago. On a yearly basis, Embraer Standalone invested a total of

428 million in 2024 compared to 440 million in 2023.

or capital location continues to be geared towards.

Speaker Change: segments with higher returns, such as Executive Aviation Services and Support, mainly in the U.S.

Speaker Change: We continue to see our CAPEX run rate at close to 400 million per year in the near future.

Speaker 4: Our adjusted net income was positive $173 million for the quarter, supported by a 7.5% adjusted margin. Meanwhile, we ended the year with $462 million in adjusted net income for an adjusted margin of 7.2%. If we exclude Boeing agreement, our adjusted net income was $363 million for a 5.7% margin compared to $80 million and 1.5% margin a year ago. Slide 17, please. I'd like to start highlighting the top right corner of the slide. Embraer finished 2024 with a net debt position without Eve of only $111 million, and 0.1x net debt to EBITDA ratio, compared to $781 million and 1.4x at the end of 2023, for a significant year-on-year decrease.

Antonio Carlos Garcia: Our adjusted net income was positive $173 million for the quarter, supported by a 7.5% adjusted margin. Meanwhile, we ended the year with $462 million in adjusted net income for an adjusted margin of 7.2%. If we exclude Boeing agreement, our adjusted net income was $363 million for a 5.7% margin compared to $80 million and 1.5% margin a year ago. Slide 17, please. I'd like to start highlighting the top right corner of the slide. Embraer finished 2024 with a net debt position without Eve of only $111 million, and 0.1x net debt to EBITDA ratio, compared to $781 million and 1.4x at the end of 2023, for a significant year-on-year decrease.

Speaker Change: Our adjusted net income was positive $173 million for the quarter, supported by a 7.5% adjusted margin. Meanwhile, we ended the year with $462 million in adjusted net income for an adjusted margin of 7.2%.

Speaker Change: If you exclude the Boeing agreement, our adjusted net income was $363 million, for a 5.7% margin, compared to $80 million and 1.5% margin a year ago.

Speaker Change: I'd like to start highlighting the top right corner of the slide. Embraer finished 2024 with a net debit position without ETH of only $111 million.

and 0.1 times net debt to EBITDA ratio.

Speaker Change: compared to 781 million and 1.4 times at the end of 2023 for a significant year-on-year decrease.

Speaker 4: Last year, I mentioned we were taking all necessary steps to recover investment-grade status. I'm happy to announce in 2024 we became investment-grade by all three main rating agencies, and we see room for additional potential improvements in our ratings in 2025 and 2026. As part of our liability management plan, we are focused on generating cash, extending the duration, and reduce the cost of our debt. Last month, we successfully issued a new bond of $650 million set to mature in 2035. This issuance is intended to be leverage neutral, as we plan to retire $522 million in debt set to mature in 2027 and $150 million in 2028.

Antonio Carlos Garcia: Last year, I mentioned we were taking all necessary steps to recover investment-grade status. I'm happy to announce in 2024 we became investment-grade by all three main rating agencies, and we see room for additional potential improvements in our ratings in 2025 and 2026. As part of our liability management plan, we are focused on generating cash, extending the duration, and reduce the cost of our debt. Last month, we successfully issued a new bond of $650 million set to mature in 2035. This issuance is intended to be leverage neutral, as we plan to retire $522 million in debt set to mature in 2027 and $150 million in 2028.

Speaker Change: Last year, I mentioned we were taking all necessary steps to recover investment-grade status. I'm happy to announce in 2024, we became investment-grade by all three main rating agencies.

Speaker Change: And we see room for additional potential improvements in our ratings in 2025 and 2026. As part of our liability management plan, we are focused on generating cash, extending the duration, and reducing the cost of our debt.

Speaker Change: Last month, we successfully issued a new bond of $650 million set to mature in 2035.

This issuance is intended to be leveraged neutral.

Speaker Change: as we plan to retire 522 million in debt set to mature in 2027 and 150 million in 2028.

Speaker 4: As a result of this transaction, our debt duration for 2024 has increased from 3.8 years to over 6.5 years, which it will be effective in Q1 2025. To conclude my presentation, let me go over the details of our 2025 guidance. In terms of operation, we forecast commercial aviation should deliver between 77 and 85 aircraft, for an increase of 10% year-over-year, use the midpoint of the range. Meanwhile, for executive aviation, we forecast 145 to 155 jets for an increase of 15% year-over-year. If we move to financials, we estimate top line to settle between $7 to 7.5 billion, with the midpoint of the range 13% higher than what we generated last year.

Antonio Carlos Garcia: As a result of this transaction, our debt duration for 2024 has increased from 3.8 years to over 6.5 years, which it will be effective in Q1 2025. To conclude my presentation, let me go over the details of our 2025 guidance. In terms of operation, we forecast commercial aviation should deliver between 77 and 85 aircraft, for an increase of 10% year-over-year, use the midpoint of the range. Meanwhile, for executive aviation, we forecast 145 to 155 jets for an increase of 15% year-over-year. If we move to financials, we estimate top line to settle between $7 to 7.5 billion, with the midpoint of the range 13% higher than what we generated last year.

Speaker Change: As a result of this transaction, our debt duration for 2024 has increased from 3.8 years to over 6.5 years, which will be effective in the first quarter of 2025.

Speaker Change: And to conclude my presentation, let me go over the details of our 2025 guidance.

Speaker Change: In terms of operation, we forecast commercial aviation should deliver between 77 and 85 aircrafts.

Speaker Change: For an increase of 10% year-on-year, use the midpoint of the range.

Speaker Change: Meanwhile, for Executive Aviation, we forecast 145 to 155 jets for an increase of 15% year-on-year.

If we move to financials.

We estimate

top line to settle between 7 to 7.5 billion dollars.

with the midpoint of the range.

13% higher than what we generated last year.

Speaker 4: We forecast EBIT margin between 7.5% and 8.3% for the year, which would imply around $575 million at the midpoint of the range, and 10% higher than adjusted $520 million EBIT ex Boeing and ex positive items generated in 2024. Finally, if you move to free cash flow generation, we estimate $200 million or higher for the year. Remember, our goal is to convert 50% of our EBITDA in free cash flow. It is important to highlight it's difficult to predict the dynamic and timing of prepayments, mainly in the defense business. For instance, we received a sizable prepayment in Q4, which had originally expected for 2025.

Antonio Carlos Garcia: We forecast EBIT margin between 7.5% and 8.3% for the year, which would imply around $575 million at the midpoint of the range, and 10% higher than adjusted $520 million EBIT ex Boeing and ex positive items generated in 2024. Finally, if you move to free cash flow generation, we estimate $200 million or higher for the year. Remember, our goal is to convert 50% of our EBITDA in free cash flow. It is important to highlight it's difficult to predict the dynamic and timing of prepayments, mainly in the defense business. For instance, we received a sizable prepayment in Q4, which had originally expected for 2025.

Speaker Change: We forecast a bit margin between 7.5% and 8.3% for the year, which would imply around $575 million.

Speaker Change: at the midpoint of the range, and 10% higher than adjusted 520 million EBIT xBoin and xCosTV items generated in 2024.

Speaker Change: Finally, if you move to free cash flow generation, we estimate 200 million or higher for the year. Remember, our goal is to convert 50% of our EBITDA in free cash flow.

It is important to highlight.

Speaker Change: It's difficult to predict the dynamic and timing of prepayments, mainly in the defense business. For instance, we received a sizable pre-down payment in Q4, which had originally expected for 2025.

Speaker 4: Thus, if we look at 2024 and 2025 together, we should generate $875 million or more in free cash flow, which is 50% of circa $1.75 billion implied EBITDA by our 2024 actuals and our 2025 guidance. We will update or reiterate our 2025 guidance on a quarterly basis as the years go by. With that, I conclude my presentation. Hand it back to Francisco for his final remarks. Thank you very much.

Antonio Carlos Garcia: Thus, if we look at 2024 and 2025 together, we should generate $875 million or more in free cash flow, which is 50% of circa $1.75 billion implied EBITDA by our 2024 actuals and our 2025 guidance. We will update or reiterate our 2025 guidance on a quarterly basis as the years go by. With that, I conclude my presentation. Hand it back to Francisco for his final remarks. Thank you very much.

and many others.

If we look 2024 and 2025 together,

Speaker Change: We should generate $1,875 million or more in free cash flow.

which is 50% of circa 1.75 billion.

imply emitted by our 2024 ECTOS and our 2025 DIDOTS.

Speaker Change: We will update or reiterate our 2025 guidance on a quarterly basis as the year goes by.

Speaker Change: With that, I conclude my presentation and hand it back to Francisco for his final remarks. Thank you very much.

Francisco Gomes Neto: Thank you, Antonio. First, I'd like to express my sincere appreciation and thank you to our partners, suppliers, and our more than 20,000 people that are part of our Embraer family for your trust last year. Your continued support is a critical part of our success and growth. For 2025, we remain committed to our ongoing effort to manage our business with efficiency, financial discipline, innovation in all areas of the company, and strengthening our supply chain management. Of course, we will maintain our steady focus on sales to achieve even better results in all business units in 2025 and years ahead. To finish, we expect 2025 to be even better than 2024. Embraer has shown it is stronger than ever, well-positioned for sustainable growth, and ready to capture its full potential in the coming years.

Thank you, Antonio.

Speaker Change: First, I'd like to express my sincere appreciation and thank you to our partners, suppliers and our more than 20,000 people that are part of our Embraer family for your trust last year.

Speaker Change: Your continued support is a critical part of our success and growth.

Speaker Change: For 2025, we remain committed to our ongoing effort to manage our business with efficiency, financial discipline, innovation in all areas of the company, and strengthening our supply chain management.

Speaker Change: And of course, we will maintain our steady focus on sales to achieve even better results in all business units in 2025 and years ahead.

Speaker Change: To finish, we expect 2025 to be even better than 2024. Embraer has shown it is stronger than ever, well-positioned for sustainable growth, and ready to capture its full potential in the coming years.

Francisco Gomes Neto: We continue to work hard, always embracing the foundation of our culture, safety first and quality always. Let's now move to the Q&A section of the call.

Speaker Change: We continue to work hard, always embracing the foundation of our culture, safety first and quality always.

Let's now move to the Q&A section of the call.

Speaker 5: Thank you. We will now start the question and answer session. Please hold a minute while we poll for questions. The first part of the Q&A session will be exclusively for equity research analysts and investors. The second part of the Q&A will be only for the press. We highlight again this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. We request participants interested in asking questions to press star then nine in the phone at any time, or press the raise a hand button on the platform. When your name is announced, press star then six on the phone, or make sure your microphone is on and start your question. We will also answer questions sent via the platform chat. If you need assistance, please use the Q&A button on the platform.

Operator: Thank you. We will now start the question and answer session. Please hold a minute while we poll for questions. The first part of the Q&A session will be exclusively for equity research analysts and investors. The second part of the Q&A will be only for the press. We highlight again this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. We request participants interested in asking questions to press star then nine in the phone at any time, or press the raise a hand button on the platform. When your name is announced, press star then six on the phone, or make sure your microphone is on and start your question. We will also answer questions sent via the platform chat. If you need assistance, please use the Q&A button on the platform.

Speaker Change: Thank you. We will now start the question-and-answer session. Please hold a minute while we poll for questions.

Speaker Change: The first part of the Q&A session will be exclusively for equity research analysts and investors.

Speaker Change: The second part of the Q&A will be only for the press.

Speaker Change: We highlight again this conference call is being conducted in English with translation to Portuguese.

Speaker Change: This conference is being held originally in English. To listen to the translation in Portuguese, press the Interpretation button on the Zoom platform and select the Portuguese language.

Speaker Change: After selecting the language in the Interpretation button, click also to disable the original audio on the platform to improve the quality of the broadcast in Portuguese.

Speaker Change: We request participants interested in asking questions to press star, the nine in the phone at any time or press the raise a hand button on the platform.

Speaker Change: When your name is announced press star then six on the phone or make sure your microphone is on and start your question

We will also answer questions sent via the platform chat.

Speaker Change: If you need assistance, please use the Q&A button on the platform. To give everyone a chance to participate, we request to ask just one question per call.

Speaker 5: To give everyone a chance to participate, we request to ask just one question per call. The first question comes from Victor Mizusaki with Bradesco BBI. Please go ahead.

Operator: To give everyone a chance to participate, we request to ask just one question per call. The first question comes from Victor Mizusaki with Bradesco BBI. Please go ahead.

Speaker Change: The first question comes from Vitor Misuzaki with Bradesco BBI. Please go ahead.

Volunteers.

Victor Mizusaki: Hi. Good morning and congrats for the quarter. I have a quick question here about the guidance for 2025. This EBIT margin guidance of 7.5 to 8.3%. If you think about this 8.3%, is this mean, let's say, kind of conservative or maybe here we are talking about the company assume that the commercial delivers, maybe if you think about, I mean, the clients that will get the planes this year, maybe they put some pressure on margins in 2025, but then this means that by 2026 you see a big margin improvement. Any color you can give on EBIT margin guidance would be very helpful. Thank you.

Vitor Misuzaki: Good morning and congrats for the quarter. I have a quick question here about the guidance for 2025. This EBIT margin guidance of 7.5% to 8.3%

Here we are talking about the company that delivers.

Vitor Misuzaki: Commercial Deliverers. Maybe if you think about, I mean, the clients that will get the planes this year, maybe they put some pressure on margins in 2025, but then this means that by 2026 you see a big margin improvement.

Speaker Change: So any caller can give a little bit more guidance, it would be very helpful. Thank you.

Antonio Carlos Garcia: We know better than I know here a lot of volatility regards to exchange rate, regards to inflation, this and this and this. In our math internally here, our recurring EBIT without Boeing, without tax credit and other good guys we have in 2024 is $7.6. That's why the guidance between $7.5 to 8.3. In our view, it's showing already the midpoint, the 10% increase in value. If you reach the top line, probably is going to be better. At least today we are not. The guidance we have, it follows the operational side. Please do not forget we have defense, we have services support that we do not show the guidance. I would say is a combination of facts. Okay?

Speaker Change: We know better than I know here a lot of volatility.

Speaker Change: You got to check exchange rate, you got to inflation, this and this and this.

in our map internally here, our recurring ABIT.

without

Speaker Change: Boeing without tax credit and other good guys we have in 2020, 47.6.

Speaker Change: That's why the guidance between 7.5% to 8.3% in our view is showing already that the midpoint 10% increase in value.

Speaker Change: And if you reach the top line, probably it's going to be better, but...

At the end of the day, we...

Speaker Change: We are not, the guidance we have, it follows the operational side. Please do not forget to have the defense, to have the services and support that we do not show the guidance. I would say it is a combination of facts.

Antonio Carlos Garcia: What is important, we were able to compensate the positive help we have from arbitration, this and this, and this in our numbers. I would say mixed feeling for the time being. Guilherme, you want to comment anything?

Okay, what is important, we were able to compensate

Speaker Change: The positive help we have from arbitration, this and this and this in our numbers.

Speaker Change: and I would say I would say mixed feeling for the time being.

Guilherme, why don't you compliment anything?

Francisco Gomes Neto: No, Antonio, I think you highlighted the main points.

Guilherme Paiva: No, Antonio, I think you highlighted the main points.

Antonio: Now Antonio, thank you, you have the right to make points.

Thank you.

Victor Mizusaki: Thank you.

Operator 2: The next question comes from Daniel Gasparete with Itaú BBA. Please go ahead.

Operator: The next question comes from Daniel Gasparete with Itaú BBA. Please go ahead.

Antonio: and Antonio Garcia, Guilherme Paiva, Unknown Executive, Antonio Garcia, Guilherme Paiva,

Speaker Change: The next question comes from Daniel Gasparetti with Itaú BBA. Please go ahead.

Daniel Gasparete: Hey, thank you very much. Good morning. Apologize for the issues here with the microphone. So my question, I would firstly like to confirm what Antonio just said. He said that the recurring EBIT margin of 2024 when adjusted for Boeing advance for the credits was 7.6%. That was the first question, just to confirm that. The second one would be regarding commercial aviation, just to get a view of how you guys are seeing the evolution of the backlog in terms of pricing. If we are seeing a better pricing environment for the market right now and what is your expectation for 2025, please?

Daniel Gasparetti: Hey, thank you very much. Good morning. I apologize for the issues here with the microphone.

Daniel Gasparetti: So my question, I would firstly would just like to confirm what Antonio just said, he said that the recurring EBIT margin of 2024, when it is for BA and also for other credits was 7.6, that was the first question, just to confirm that.

Daniel Gasparetti: And the second one would be regarding commercial aviation, just to get a view of how you guys are seeing the evolution of the backlog in terms of pricing. We are seeing a better pricing environment for the market right now. And what is your expectation for 2025, please?

Francisco Gomes Neto: Hey, Daniel, good morning and thanks for the question. Just to clarify, there were some extraordinary items in 2024, right? The Boeing settlement was one of them. We have tax credits, and we also had some sort of extraordinary suppliers credits that helped us in the results in 2024. As Antonio mentioned, if you look at what we believe to be the recurring EBIT for 2024, the margin was at 7.6%. Let me pass it to Antonio so he can comment on the second part of the question.

Speaker Change: Hey Daniel, good morning, and thanks for the question. Just to clarify then, there were some extraordinary items in 24, right? The Boeing settlement was one of them.

Speaker Change: We have tax credits and we also have some extraordinary suppliers credits that helped us in the results in 2024. So as Antonio mentioned, if you look at what we believe to be the recurring EBIT for 2024, the margin was at 7.6.

Speaker Change: and let me pass it to Antonio so he can comment on the second part of the question. Daniel, good morning. Thanks for your question. So, first of all, we are happy and you guys talked to us more or less.

Antonio Carlos Garcia: Daniel, good morning. Thanks for your question. First of all, we are happy, and you guys talk to us more or less every month about the famous margin of commercial aviation. We always said we are on the way to mid-single digit and moving forward to the 5% to 6% in midterm. I would say having already 2.5% is a nice improvement compared with previous year. That's one point. That show already that our backlog is somehow improving and we are, I would say we were able to capture some operational leverage. I would say the new orders we are getting is accretive for a mid-single digit in midterm. I would say we have some tough campaigns, yes, but I would say on average our new backlog is accretive for a mid-single digit.

Speaker Change: Moving forward to the 5% to 6% in mid-term, I would say.

Speaker Change: Having already two and a half is a nice improvement compared to previous year. That's one point.

Speaker Change: That show already that our backlog is somehow improving and we are, I would say, we were able to capture some operational leverage. I would say the new order we are getting is accurate for a mid-single-digit mid-term.

Speaker Change: I would say we have some tough campaigns, yes, but I would say on average our new backlog is accurate for a mid-single date.

Antonio Carlos Garcia: I don't know, Francisco, if you want to comment about the momentum you are facing in commercial aviation right now. It is important for the audience here.

Speaker Change: and I don't know, Francisco, if you want to comment about the moment you are facing commercial aviation right now. It is important for the audience here. Absolutely. Thank you. Thanks for the question, Daniel.

Francisco Gomes Neto: Oh, absolutely. Thank you. Thanks for the question, Daniel. We had a good year in terms of sales, as I said before, in commercial aviation. E1, you know, the big order from American Airlines, 99 + 43 jets. Also E2, I think considering the market in 2024, we did it very well. We sold 30 new E2s, opening new customers and placed another 3 E195 at LOT Polish. We have several campaigns ongoing. Daniel, we are, I'd say, this year we just announced ANA decision for 15 + 5 E190-E2. We are very optimistic with the commercial aviation sales in 2025.

Speaker Change: We had a good year in terms of sales, as I said before, in commercial aviation.

E1, no, the big order.

Speaker Change: from American Airlines, 99 plus 43 jets, and also E2. I think considering the market in 2024, we did it very well. We sold 30 new E2s.

opening new customers and places.

and other three UNIT5 at Lod Polish.

and we have several campaigns ongoing.

And then here we are.

Speaker Change: I'd say, and this year we just announced it, ANA decision for 15 plus five UNITZ2. So we are very optimistic with the commercial vision sales in 2025.

Daniel Gasparete: Okay. Thank you, guys. Thank you very much for the call. Congratulations for the result.

Speaker Change: Okay, thank you guys. Thank you very much for the call. Congratulations for the result.

Antonio Carlos Garcia: Thank you, Daniel.

Francisco Gomes Neto: You are welcome, Daniel. Thank you.

Thank you. Thank you.

Operator 2: The next question comes from Lucas Marquiori with BTG Pactual. Please go ahead.

Operator: The next question comes from Lucas Marquiori with BTG Pactual. Please go ahead.

Speaker Change: The next question comes from Lucas Machiodi with PTG Pactual. Please go ahead.

Lucas Marquiori: Hey, guys. Good morning. Thank you for the call. Let me just go back to this EBIT margin topic because I think this is kind of important, right? When we think about, I mean, the mix for 2025, we are assuming probably commercial aviation still running below historical averages and most likely diluting somehow the growth from executive and services and support. Maybe this somehow implicit on your margin for 2025. It would be nice at least to have some color on

Speaker Change: and Antonio Garcia, Guilherme Paiva, Unknown Executive, Antonio Garcia, Guilherme Paiva,

Lucas Machiodi: Hey guys, good morning. Thank you for the call. Yeah, let me just go back to this a bit more on the topic, because I think this is kind of important, right?

Lucas Machiodi: We are assuming probably commercial aviation is still running below historical averages.

and most likely diluting somehow the growth.

Lucas Marquiori: What are your maybe best thoughts on margins for each segment, if you guys could, of course, right? That would be helpful, guys. Thanks. Thanks a lot.

Lucas Machiodi: What are your maybe best thoughts on margins for each segment, if you guys could, of course, right? That would be helpful guys. Thanks. Thanks a lot.

Antonio Carlos Garcia: Lucas, thanks for your question. Good morning. Now we know why you're not taking part in your conference. I hope you like that we were not taking part by seeing the results. I'd say the margin profile for next year, you have our release there. It's more or less in the same line for 2025. You have the release, you could read. We were even a tick better in service and support in 2024. That's normalized a little bit for this year, for 2025. Commercial, the same. Defense is more growth, and then Executive in the same level. It really reflects quantities without what you just said to Daniel here from Itaú, the recurring margin without the good guys we have last year.

Unknown Speaker 0

Speaker Change: Lucas, thanks for your question. Good morning. Now we know why you're not taking part in our conference.

Speaker Change: and I hope you like that we were not taking part by seeing the results. I'd say the margin profile for...

Speaker Change: for next year. You have our release there. It's more or less in the same line.

Speaker Change: for the for 2025 you have the release you could read

Speaker Change: We were even a tick better in service and support in 2024. That's normalized a little bit for this year, for 2025. Commercial, the same. Defensive is more growth and then executive in the same level. It really reflects...

Speaker Change: quantities without what he just said to Daniel here from Vitaoo, the recurring margin without the good guys we have last year, I would say

Antonio Carlos Garcia: I would say Executive with our backlog, with our operations, it can look a little bit, I would say modest for you guys, but let's wait the year goes by. We do have a lot of volatility in the market. That's why we prefer to not disappoint you at the end of the year.

Speaker Change: I'd say is accurate with our backlog for operations. It can look a little bit, I'd say, modest for you guys, but let's...

Speaker Change: way to the year goes by that we do have a lot of volatility in the market. That's why we prefer to to not disappoint you at the end of the year.

Lucas Marquiori: Okay. Thank you, Antonio. Thank you, guys. Have a nice day.

Speaker Change: Okay. Thank you, Antonio. Thank you, guys. Have a nice day.

Antonio Carlos Garcia: Thank you.

Speaker 5: The next question comes from Noah Poponak with Goldman Sachs. Please go ahead.

Hey, can you hear me?

Noah Poponak: Hey, can you hear me?

Antonio Carlos Garcia: Yes. Noah, how are you?

Yes, Noah, how are you?

Noah Poponak: I'm great. Thanks so much for taking the questions. I wanted to ask about the Flexjet order, and if you could help me better understand how much of that is incremental to existing deliveries versus how much of that is, you know, sort of already in your delivery stream in Executive?

Speaker Change: I'm great. Thanks so much for taking the questions. I wanted to ask about the FlexJet order and if you could help me better understand how much of that is incremental to existing deliveries versus how much of that is

Antonio Carlos Garcia: Oh, Noah, thanks for the question. I mean, all the order is incremental. It's a fresh order for us that went to our backlog and show how sustainable has been our Executive business. Again, 100% of the order is incremental.

Speaker Change: So, Noah, thanks for the question. I mean, all the order is incremental.

Speaker Change: It's a fresh order for us that went to our backlog.

and show how sustainable.

Speaker Change: has been our executive business. So again, 100 percent of the order is incremental.

Noah Poponak: Okay.

Antonio Carlos Garcia: It's from 2026, 2000 in the deliveries. It's more or less, Guilherme, between 30 to 40 aircraft in a year.

Guilherme Paiva: It's from 2026-2013, the deliveries. It's more or less, Guilherme, between 30 to 40 aircrafts a year.

Noah Poponak: Okay. That's helpful. Appreciate that. I just also wanted to ask about cash flow guidance. Can you maybe just walk through why free cash flow would be down a good bit from the last few years where your conversion from net income or EBITDA has been pretty strong.

Speaker Change: Okay, that's helpful, appreciate that. And then I just wanted to ask you about cashflow guidance.

Speaker Change: Can you maybe just walk through why free cash flow would be down a good bit from the last few years where where your conversion from from net income or EBITDA has has been has been pretty strong? Unknown Executive, Antonio Garcia

Antonio Carlos Garcia: Yeah. Thanks for the question. I was prepared to answer you. By the way, my comment in the, when in the speech was direct to you because we always discuss about 60% EBITDA conversion. If you sum up 2024 with 2025, we are there. 50% of the implied EBITDA we are turning into cash. What we are facing is a lot of seasonality, especially that we are growing all business units, but mainly Defense is really hard to predict when you get a new order, the dynamic of the deal, if you get a nice PDP or not. I would say on average, we are there in the 50%, but we have ups and downs. You saw 2024 are around $700 million.

Speaker Change: Thanks for the question I was prepared to answer you and by the way my comment in the when in the speech was direct to you because we always discuss about 50 percent a BTDA conversion and

Speaker Change: If you sum up 2024-2025, we are there. 50% of the implied EBITDA we are turning to cash.

Speaker Change: What we are facing is a lot of seasonality, especially that we are growing all business units, but mainly defense is really hard to predict.

Speaker Change: When you get a new order, the dynamic of the deal is to get a nice PDP or not, I would say.

Speaker Change: On average, we are there in the 50%, but we have ups and downs. You saw 2020 for around $700 million.

Antonio Carlos Garcia: I would say when we do the math here for this year, calculating progress payment more or less at the same level, we need more working capital to deliver more than $1 billion revenue. That's why I would say it sounds modest, but beginning of the year, let's see how the sales campaign evolved during this year. Probably we have, as always, upside. That's why we always guide 200+. By the way, last year we changed the guidance in Q3 also going up. That's more or less the dynamic we have in the cash flow today.

Speaker Change: Okay, when we do the math here for this year, calculating progress payment more or less at the same level, we need more...

working capital for

Deliver more, a billion revenue, that's why I would say.

Speaker Change: sounds modest, but beginning of the year, let's see how the sales campaign evolved during this year.

Speaker Change: Probably we have, as always, upside. That's why you always guide 200 plus. And by the way, last year, we changed the CQ3 also going up.

Speaker Change: and that's more or less the dynamic we have in the cash flow today.

Noah Poponak: Okay, great. Super helpful. Thank you.

Speaker Change: and Antonio Garcia, Guilherme Paiva, Unknown Executive, Antonio Garcia, Guilherme Paiva,

Okay, great, super helpful, thank you.

Antonio Carlos Garcia: Thank you, Noah.

Thank you very much.

Speaker 5: The next question comes from the telephone number ending 6840. Please go ahead.

Speaker Change: The next question comes from the telephone number ending 6840. Please go ahead.

Good morning, it's Myles Walton from Wolf Research.

Lucas Marquiori: Good morning. It's Myles Walton from Wolfe Research.

Myles Walton: Good morning. It's Myles Walton from Wolfe Research.

Antonio Carlos Garcia: Hello, Myles.

Francisco Gomes Neto: Hello, Myles.

and Hello Myles

Lucas Marquiori: Francisco, could you speak to some of the supply chain constraints that are still governing how quickly you can grow, perhaps by segment, if you could. Then also just to clarify that Precision Castparts supplier for fasteners, just want to make sure that you don't have any idiosyncratic exposure to them.

Myles Walton: Francisco, could you speak to some of the supply chain constraints that are still governing how quickly you can grow, perhaps by segment, if you could. Then also just to clarify that Precision Castparts supplier for fasteners, just want to make sure that you don't have any idiosyncratic exposure to them.

Speaker Change: Hello, Francisco, could you speak to some of the supply chain constraints that are still governing how quickly you can grow, perhaps by segment, if you could, and then also just to clarify that PrecisionCats

Speaker Change: precision cast parts fire for fasteners. Just want to make sure that you don't have any idiosyncratic exposure to them.

Antonio Carlos Garcia: Oh, thanks. Thanks for the question, Myles. It is true that supply chain has been one of the big issues we have had in the past years, but we have done a lot to improve our internal process and our relationship, the way we support, we identify, we anticipate critical issues in the way we support.

Francisco Gomes Neto: Oh, thanks. Thanks for the question, Myles. It is true that supply chain has been one of the big issues we have had in the past years, but we have done a lot to improve our internal process and our relationship, the way we support, we identify, we anticipate critical issues in the way we support.

Speaker Change: Thanks. Thanks for the question, Miles. And it is true that supply chain has been.

Speaker Change: One of the big issues we have had in the past years

Speaker Change: but we have done a lot to improve our internal process and our relationship, the way we support, we identify, we anticipate critical issues in the way we support our suppliers to.

Francisco Gomes Neto: Our suppliers to come with us and deliver the parts we need. First, what we did was, you know, to prepare a production plan that in our view is very realistic considering all the limitations and risks we have. Honestly speaking, we could deliver even more aircraft, commercial, executives and air defense in 2025. We decide to be, you know, a little more conservative, take into consideration the limitation in the supply chain. The bottlenecks, you know, it's interesting. The bottlenecks moves from one critical supplier to another. We believe we are very well prepared in 2025 to bring the parts we need.

Speaker Change: to come with us and deliver the parts we need. The first, what we did was to prepare a production plan that in our view is very realistic considering all the limitations and risks we have.

Speaker Change: Honestly speaking, we could deliver even more aircraft, commercial, executive, and air defense in 2025. But we decided to be, you know, a little more conservative, taking into consideration

Speaker Change: the limitation in the supply chain. And the bottlenecks, no, it's interesting, the bottlenecks moves.

Speaker Change: from one critical supplier to another. But we believe we are very well prepared.

in 2025.

Speaker Change: to bring the parts we need. And this is in combination with this initiative we put in place already back in 2023 that we call production leveling or production linearity. The idea is to better distribute

Francisco Gomes Neto: This is in combination with these initiatives we put in place already back in 2023 that we call production leveling or production linearity. The idea is to better distribute the production and deliveries throughout the year, which will be healthier for our efficiency, productivity, and cash generation. This is actually what we are doing. I mean, we are even closer to our suppliers. We are applying, I mean, digital in the AI tools to monitor the risks of our supply chain and put in place, you know, initiatives as rescue teams, lean teams to help our suppliers, you know, to eliminate the bottlenecks in machine or quality or efficiency.

the production and deliveries throughout the year.

Speaker Change: which will be healthier for our efficiency, productivity and cash generation. This is exactly what we are doing. We are even closer to our suppliers. We are applying digital and

IA2s to monitor.

the risks.

Speaker Change: to help our suppliers to eliminate the bottlenecks in machine quality or efficiency. This is what we are doing, and we expect another difficult year, but we are prepared to face the challenges, Myles.

Francisco Gomes Neto: Is that what we are doing, and we expect another difficult year, but we are prepared to face the challenges, Myles.

Lucas Marquiori: Just to clarify, anything specific on Precision Castparts, fasteners? Francisco, is it fair to think then that the success you've had in the quarterly seasonality of deliveries you can do as good or even better going forward?

Myles Walton: Just to clarify, anything specific on Precision Castparts, fasteners? Francisco, is it fair to think then that the success you've had in the quarterly seasonality of deliveries you can do as good or even better going forward?

Speaker Change: And just to clarify, anything specific on precision cast parts, fasteners and then Francisco, is it fair to think then that the success you've had in the quarterly seasonality of deliveries you can do as good or even better going forward?

Francisco Gomes Neto: Yeah, exactly. We have, as I said, the bottleneck moves from one supplier or one sub-supplier to another every year. This is one of the risks we are managing. We do believe that our production and delivery plan for this year is realistic.

Speaker Change: Yeah, exactly. We have, as I said, the bottleneck movies from one supplier or one sub supplier to another every year. And this is one of the risks we are managing. But we do believe that our production and delivery plan for this year is realistic.

Lucas Marquiori: Okay. All right. Thank you.

Myles Walton: Okay. All right. Thank you.

Okay. All right. Thank you.

Francisco Gomes Neto: Thanks, Myles.

Unknown Speaker 05.

Thanks, Mayo.

Speaker 5: The next question comes from Marcelo Motta with JPMorgan. Please go ahead.

Marcelo Motta: Hey. Hi, everyone. Good morning. It's a question regarding the top line. I mean, we know the numbers from executives and also the commercial based on the deliveries. Just want to see if you guys can comment about, you know, what is the outlook for service and defense. Defense, given that that is the percentage of completion on the KC. You know, can you tell us how many aircraft you will have in production this year, if this number could accelerate, if some orders are confirmed or not, just to understand what are the upside risks in terms of defense, especially on services and on defense. Thank you.

Speaker Change: Hey, hi, everyone. Good morning. There's a question regarding the top line. I mean, we know the numbers from executives and also the commercial based on the delivery. So just want to to see if you guys can comment about you know, what is the outlook for service and defense, defense given that that is the percentage of completion on the KC, you know, can you tell us how many aircraft you will have in production this year, if this number could accelerate if

Speaker Change: confirm or not just to to understand what are the upside risks in terms of the sense especially on on services and on defense. Thank you.

Guilherme Paiva: Hi. Good morning and thanks for the question. I mean, in defense, we delivered 3 C-390s last year, and we have 5 of them running through our line, and accounted at the POC methodology. Our objective is to be close to 10 aircraft by 2030. We're gonna see a gradual increase in the next few years towards that level. I think that's, you know, if you just forecast a linear increase towards the 10 birds by the end of the decade, I think you're gonna be spot on.

Francisco Gomes Neto: Hi. Good morning and thanks for the question. I mean, in defense, we delivered 3 C-390s last year, and we have 5 of them running through our line, and accounted at the POC methodology. Our objective is to be close to 10 aircraft by 2030. We're gonna see a gradual increase in the next few years towards that level. I think that's, you know, if you just forecast a linear increase towards the 10 birds by the end of the decade, I think you're gonna be spot on.

Unknown Speaker 00.00.00

Speaker Change: Hi, good morning, and thanks for the question. I mean, in difference, we delivered three C390s last year, and we had five of them running through our lines, and I counted at the POC.

Speaker Change: methodology. And our objective is to be at close to 10 aircraft by 2030. So we're going to see a gradual increase in the next few years towards that level.

Speaker Change: I think that's, you know, if you're just forecastedly a linear increase towards the 10 birds by the end of the decade, I think you're going to be right on spot.

Marcelo Motta: Thank you. On service and support, you know, OGMA ramp up, you know, anything different than that double-digit growth that the company has been commenting?

Speaker Change: Thank you. And on service and support, you know, Augma, Ramp-Up, you know, anything different than that double-digit growth that the company has been commenting?

Guilherme Paiva: No. I mean, we continue to see the GTF engine shop ramping up to about $250 million in 2026, and the full ramp of $500 million top line in 2028. We continue to kind of try to get more high value added work to the shop in the next few years, so there is some upside there if we're able to kind of obtain those contracts. You know, the rest of the business continues to do well with the Embraer-related business growing close to double digits and the agnostic part more towards low to mid-single digits.

Francisco Gomes Neto: No. I mean, we continue to see the GTF engine shop ramping up to about $250 million in 2026, and the full ramp of $500 million top line in 2028. We continue to kind of try to get more high value added work to the shop in the next few years, so there is some upside there if we're able to kind of obtain those contracts. You know, the rest of the business continues to do well with the Embraer-related business growing close to double digits and the agnostic part more towards low to mid-single digits.

Speaker Change: Now, I mean, we continue to see the the GTF shop ramping up to about 250 million in 2026.

Speaker Change: and the full ramp of 500 million top line in 2028.

Speaker Change: We continue to kind of try to get more high value added work to the shop in the next few years. So there is some upside there, if we're able to kind of obtain those contracts, but

Speaker Change: You know the rest of the business continues to do well with the Embraer related business growing close to double digits and the agnostic part more towards low to mid single digits

Francisco Gomes Neto: Marcelo, just to complement, we reached the high end in 2024, and I guess the high end for our guidance in 2025 we know is, I think better than what you guys are thinking. Assuming what Francisco said, and then we could even deliver more than what we put in the guidance there. I would say we are, at least today, very committed and also positive to reach also the high end of our top line. Let's see how the year evolves. A lot of volatility, but I would say we are equipped to the high end.

Antonio Carlos Garcia: Marcelo, just to complement, we reached the high end in 2024, and I guess the high end for our guidance in 2025 we know is, I think better than what you guys are thinking. Assuming what Francisco said, and then we could even deliver more than what we put in the guidance there. I would say we are, at least today, very committed and also positive to reach also the high end of our top line. Let's see how the year evolves. A lot of volatility, but I would say we are equipped to the high end.

And Marcelo, just to complement, and we...

We reached the

and I end in 2024 and I guess the

High-end for our guys since 2025, we know it's a...

I think better than what you guys are thinking.

Speaker Change: assuming what Francisco said and that we could even could deliver more than what we put in the guidance there. I would say we are I'd say at least today very committed and and also

Speaker Change: positive to reach also the high end of our top line. Let's see how the year evolves.

A lot of volatility, but so to say.

Marcelo Motta: Super clear. Thank you very much.

Super clear. Thank you very much.

Guilherme Paiva: Thanks, Marcelo.

Francisco Gomes Neto: Thanks, Marcelo.

Thanks, Marcelo.

Speaker 5: The next question comes from the telephone number ending 7519. Please go ahead.

Operator: The next question comes from the telephone number ending 7519. Please go ahead.

Speaker Change: The next question comes from the telephone number ending 7519. Please go ahead.

Speaker 17: I mean, excuse me, I'm sorry. Good morning. Can you hear me okay?

Steve Trent: I mean, excuse me, I'm sorry. Good morning. Can you hear me okay?

Speaker Change: Good morning. Excuse me. I'm sorry. Good morning. Can you hear me okay?

Antonio Carlos Garcia: Yeah, we can hear you, Steve.

Yeah, the coherency.

Speaker 17: Oh, great. Thank you very much, Antonio, and good morning. Stephen Trent from Citi. Most of my questions have been answered, and I will stick to your request for just one question. I was curious, kind of a follow-up on Myles' question earlier, when you look at supply chain, you know, you guys have done great job with doing a lot of the stuff in-house, but is there any sort of pain point, specific pain point of the supply chain that you think is really gonna take a while to clean up for the whole industry, you know? Is this maybe the engine side or is there something else that's specific area that's really stubborn in terms of the sector trying to fix? Thank you.

Steve Trent: Oh, great. Thank you very much, Antonio, and good morning. Stephen Trent from Citi. Most of my questions have been answered, and I will stick to your request for just one question. I was curious, kind of a follow-up on Myles' question earlier, when you look at supply chain, you know, you guys have done great job with doing a lot of the stuff in-house, but is there any sort of pain point, specific pain point of the supply chain that you think is really gonna take a while to clean up for the whole industry, you know? Is this maybe the engine side or is there something else that's specific area that's really stubborn in terms of the sector trying to fix? Thank you.

Speaker Change: Oh, great. Thank you very much, Antonio. And good morning, Steve Trent from Citi. Most of my questions have been answered, and I will stick to your request for just one question. I was curious when kind of a follow up on Myles question earlier, when you look at supply chain, you know, you guys have done

Speaker Change: Great job with doing a lot of this stuff in-house. But is there any sort of...

Speaker Change: pain point, specific pain point of the supply chain that you think is really gonna take a while to clean up for the whole industry, you know, and is this maybe the engine side or is there something else that's...

Speaker Change: Specific area that that that's really stubborn in terms of the sector trying to fix. Thank you

Francisco Gomes Neto: Oh, absolutely. Francisco speaking. Well, even with engines we have seen some improvements, but still have specific engines that are hurting our production schedule. But also structural suppliers and fasteners are becoming a big challenge for us in 2025 as the OEMs continues to ramping up their production, you know, pressuring the supply chain. But again, we have some, as I said before, some bottlenecks we are working on, but we made our production plan and guidance based on the limitation we see from the market.

Speaker Change: Absolutely, Francisco speaking. Well, even with engines, we have seen some improvements, but still have specific engines that are hurting our production schedule. But also, structural suppliers and fasteners are becoming a big challenge for us.

Speaker Change: in 2025, as the OEMs continues to ramping up their production, you know, pressuring this supply chain. But again, we have some, as I said before, some...

Speaker Change: bottlenecks we are working on but we made our production plan and guidance based on the limitation we see from the market.

Unknown Speaker 05.

Speaker 17: Very helpful. Thank you very much, Francisco.

Steve Trent: Very helpful. Thank you very much, Francisco.

Very helpful. Thank you very much, Francisco.

Francisco Gomes Neto: You are very welcome. Thank you.

You are very welcome. Thank you for the question.

Antonio Carlos Garcia: Thanks, Steve.

Francisco Gomes Neto: for the question.

Speaker 17: You bet.

Steve Trent: You bet.

Operator 2: The next question comes from Lucas Esteves. Please go ahead.

Operator: The next question comes from Lucas Esteves. Please go ahead.

The next question comes from Lucas Esteves. Please go ahead.

Speaker 18: Morning, guys. Well, congratulations again for outstanding result. Just a quick question here. Does your guided volumes for 2025 imply any change in product mix to justify those margins?

[Analyst]: Morning, guys. Well, congratulations again for outstanding result. Just a quick question here. Does your guided volumes for 2025 imply any change in product mix to justify those margins?

Yeah, okay, Lucas, thanks for the question. I think the

Francisco Gomes Neto: Yeah. Okay, Lucas, thanks for the question. I think the product mix is not changing too much for 2025. We are seeing a growth in all the products we have. You know, either business jets, commercial jets, and defense. Defense, we have more Super Tucanos, that's true, which will help us in terms of results. The other products we see growth in, almost all of them in 2025.

is not changing too much for 2025.

Speaker Change: We are we are seeing a growth in all the products we we have no either business yet

Speaker Change: Commercial Agents, and Defense. Defense, we have more Super Tucanos, that's true, which will help us in terms of results. But the other products, we see growth in

Speaker Change: almost all of them in 2025. For commercial aviation, do you foresee any change in E2s and E1 mix?

Speaker 18: For commercial aviation.

[Analyst]: For commercial aviation.

Francisco Gomes Neto: Yeah.

Speaker 18: Do you foresee any change in E2s and E1 mix?

[Analyst]: Do you foresee any change in E2s and E1 mix?

Francisco Gomes Neto: We see a little more E1s in 2025 because of the new contracts we closed last year. I think this is the change we see with more E1s in 2025.

We see a little more you want.

in 2025.

because of the new contracts.

Speaker Change: we closed last year. I think this is the change we see with more U1s in 2025.

Speaker 18: That's great, Francisco. Thanks.

[Analyst]: That's great, Francisco. Thanks.

Antonio Carlos Garcia: Lucas, just be careful. Our old contracts and new contracts, not only new contracts, okay?

Speaker Change: Look, just be careful. Old contracts and new contracts, not only new contracts, okay? That means you have to deliver the ones. And I would say the main change is the Supertocano, in my opinion.

Speaker 18: Okay.

[Analyst]: Okay.

Antonio Carlos Garcia: That we still have to deliver the E1s. Again, I would say, the main change is the Super Tucano in my opinion. That we have almost nothing the last two years, I'd say, that's going to change a bit, a little bit the profile for defense.

Speaker Change: that we have almost not enough in the last two years, I'd say. That's going to change a little bit the profile for defense. The Tucumans should boost profitability, right, Antonio? That's more or less what we hope, Lucas.

Speaker 18: The Tucanos should boost profitability, right, Antonio?

[Analyst]: The Tucanos should boost profitability, right, Antonio?

Francisco Gomes Neto: That's more or less what we hope, Lucas.

Speaker 18: Let's see. Thanks, guys.

[Analyst]: Let's see. Thanks, guys.

Let's see. Thanks, guys. Thanks for the question.

Antonio Carlos Garcia: Thanks. Thanks for the question.

Operator 2: The next question comes from Lucas Laghi with XP Investimentos. Please go ahead.

Operator: The next question comes from Lucas Laghi with XP Investimentos. Please go ahead.

Lucas Lackey: The next question comes from Lucas Lackey with XP Investments. Please go ahead.

Speaker 17: Good morning, everyone. Thank you for the question, and congratulations on the results. I have some follow-up questions on profitability. Just getting some more color on the Executive division and Defense division. On the Executive division, we saw profitability of 10% EBIT margin. Just wanted to know if you could give us more details if it already reflects the structural mix profile following the strong order activity with fleet operators that we saw throughout 2024. In the Defense division, I mean, on the other hand, we saw a very strong profitability level in Q4. Just trying to understand what was the main driver for this profitability improvement and how much of it should be recurring considering your profitability guidance for 2025. Thank you, guys.

Lucas Laghi: Good morning, everyone. Thank you for the question, and congratulations on the results. I have some follow-up questions on profitability. Just getting some more color on the Executive division and Defense division. On the Executive division, we saw profitability of 10% EBIT margin. Just wanted to know if you could give us more details if it already reflects the structural mix profile following the strong order activity with fleet operators that we saw throughout 2024. In the Defense division, I mean, on the other hand, we saw a very strong profitability level in Q4. Just trying to understand what was the main driver for this profitability improvement and how much of it should be recurring considering your profitability guidance for 2025. Thank you, guys.

Lucas Lackey: Good morning, everyone. Thank you for the question and congratulations on the results. I have some follow up questions on profitability.

Speaker Change: Getting some more color on the executive division and defense division on the executive division with we saw profitability of 10% a bit margin

Speaker Change: just wanted to know, and if you could give us more details, it already reflects the structural mix profile following the strong order activity with plate operators that we saw throughout 2024. And in the defense division, I mean, on the other hand, we saw a very strong profitability level in fourth Q.

Speaker Change: just trying to understand what was the main driver for this profitability improvement and how much of it should be recurring considering your profitability guidance for 2025. Thank you guys.

Antonio Carlos Garcia: Lucas, nice to talk to you. By the way, we start to talk today. I going to answer in regards to the Executive Aviation and for sure. You see Q3, Q4 2023, we report 16%, and the Q4, 10%. Even that the division itself has performed, I would say, much better in regards to the year. It's basically very simple. In Q3 have a huge concentration of deliveries in Q4 that this year we were able to soften a little bit, especially Executive Aviation because of the production level. It means we are going to see, even this year, much more balanced results for Executive Aviation because of it.

Speaker Change: Lucas, nice to talk to you. By the way, we start to talk to their, I am going to answer in regards to the executive aviation and for sure in NUC Q3, Q4 23, we report 16%.

Speaker Change: and the Q410. Even that the division itself has performed, I would say, much better in regards to the year.

Speaker Change: It's basically very simple, in Q3 we have a huge concentration

of Delivered in Q4.

that this year we were able.

Speaker Change: to soften a little bit, especially Executive Aviation because of the production leveling means we are going to see, even this year, much more balanced results for Executive Aviation because of it. That's, I would say, the main difference on Executive Aviation.

Francisco Gomes Neto: That's what I would say, the main difference on executive aviation. We have also some positive guidance also in Q4 2023 that also helped this equation here. The same for defense. Now we assuming that we have the backlog, we closed some contracts in Q4 that we were able to, I would say, monetize or somehow we have in the inventory. That's also, I would say, push the results positive in Q3, but I would say I would prefer to see defense on a yearly basis. We just went from 5.5 in 2023 up to 6.2 in 2024. It's more or less what we are telling to the street, and you know this. Defense is moving for mid-single digits on the way to higher single digits or lower teens.

Antonio Carlos Garcia: That's what I would say, the main difference on executive aviation. We have also some positive guidance also in Q4 2023 that also helped this equation here. The same for defense. Now we assuming that we have the backlog, we closed some contracts in Q4 that we were able to, I would say, monetize or somehow we have in the inventory. That's also, I would say, push the results positive in Q3, but I would say I would prefer to see defense on a yearly basis. We just went from 5.5 in 2023 up to 6.2 in 2024. It's more or less what we are telling to the street, and you know this. Defense is moving for mid-single digits on the way to higher single digits or lower teens.

Speaker Change: Also, we have also some positive guys also in Q423 that also helped.

This equation here.

Unknown Speaker 00.00.00.00

Speaker Change: and the same for defense. Now we assume that we have the poke and we close some countries in Q4 that we were able to...

Speaker Change: I would say monetize some words you have in the inventory. That's also, I'd say, push the results.

positive in Q3 but

Speaker Change: I would say I would prefer to see defense on a yearly basis.

Speaker Change: We just went from 5.5 in 2023 up to 6.2 in 2024. It's more or less what we are telling the street and you know this.

Speaker Change: Defense is moving for mid-single-digit on the way to higher single-digit or lower teams. But it's more or less the process we are today, and we are going to see it in 2025 as well.

Francisco Gomes Neto: More or less the process we are today, and we are going to see it in 2025 as well.

Antonio Carlos Garcia: More or less the process we are today, and we are going to see it in 2025 as well.

Guilherme Paiva: Perfect. Very clear. Thank you, Antonio.

Perfect. Very clear. Thank you, Antonio.

Francisco Gomes Neto: Thank you.

Antonio Carlos Garcia: Thank you.

Thank you.

Operator 2: The next question comes from Alberto Valerio with UBS. Please go ahead.

Operator: The next question comes from Alberto Valerio with UBS. Please go ahead.

Speaker 19: Good morning, Gui, Antonio, Francisco, and congrats for the outstanding 2024 results. My question is regarding 2025. I have two on my side. To estimate the free cash flow on the guidance, do you guys consider how much book-to-bill it's close to one? My second one, it's about maximum capacity on your planes. I was having in mind that executive jets was about 144, 150. I would like to know if this maximum capacity is correct or if you already have this capacity that you delivered for this year or if you need to do any additional CapEx to increase the capacity for the business jet this year.

Alberto Valerio: Good morning, Gui, Antonio, Francisco, and congrats for the outstanding 2024 results. My question is regarding 2025. I have two on my side. To estimate the free cash flow on the guidance, do you guys consider how much book-to-bill it's close to one? My second one, it's about maximum capacity on your planes. I was having in mind that executive jets was about 144, 150. I would like to know if this maximum capacity is correct or if you already have this capacity that you delivered for this year or if you need to do any additional CapEx to increase the capacity for the business jet this year.

Good morning, Gui, Antonio, Francisco, and congrats for the.

Outstanding 2024 results.

Speaker Change: My question is regarding 2025. I have two on my side. To estimate the pre-cash flow on the guidance...

Speaker Change: Do you guys consider how much book to be exposed to one?

Speaker 19: Just as a recap, I have here maximum capacity of 120 commercials, 144, 150 business jets, and 10 cases for one year. Thank you very much, and congrats again for the year.

Alberto Valerio: Just as a recap, I have here maximum capacity of 120 commercials, 144, 150 business jets, and 10 cases for one year. Thank you very much, and congrats again for the year.

Speaker Change: cases for one year. Thank you very much and congrats again for the year.

Francisco Gomes Neto: Hey Alberto, thanks for the question. Let's split it. Francisco will address the capacity with the company, then we start with the free cash flow. Just to recap what Antonio mentioned before, I mean, our goal is to convert about 50% of EBITDA into free cash flow in the medium to long run. We have a very strong PDPs in defense, in Q4 2024 that help us generate more than $600 million in free cash flow, last year. Obviously, there will be a payback in 2025 because of that. When we kind of look at the two years combined, you know, what we delivered last year with the implied IR guidance, you know, we think we are very close to that 50% conversion of EBITDA.

Guilherme Paiva: Hey Alberto, thanks for the question. Let's split it. Francisco will address the capacity with the company, then we start with the free cash flow. Just to recap what Antonio mentioned before, I mean, our goal is to convert about 50% of EBITDA into free cash flow in the medium to long run. We have a very strong PDPs in defense, in Q4 2024 that help us generate more than $600 million in free cash flow, last year. Obviously, there will be a payback in 2025 because of that. When we kind of look at the two years combined, you know, what we delivered last year with the implied IR guidance, you know, we think we are very close to that 50% conversion of EBITDA.

Thank you.

Speaker Change: for the question. So let's split it. Francisco will address the capacity of the company. Then we start with the free cash flow. Just to recap what Antonio mentioned before, I mean, we, our goal is to convert about 50% of EBITDA into free cash flow in the medium to long run.

We have very strong PDPs in defense.

Speaker Change: in the fourth quarter of 24 that help us generate more than $600 million in free cash flow last year and obviously there will be a payback in 25 because of that.

Speaker Change: So when we kind of look at the two years combined, you know, what we delivered last year was implied by our guidance. You know, we think we are very close to that 50% conversion of the deductible.

Francisco Gomes Neto: Let me pass it to Francisco, so he can go over the operational side.

Guilherme Paiva: Let me pass it to Francisco, so he can go over the operational side.

Speaker Change: and let me pass it to Francisco so he can go over the operational side. That's a complete gift. First, Alberto, it's a pleasure to talk to you.

Antonio Carlos Garcia: Just to complete, Gui. First, Alberto, it's a pleasure to talk to you. You are realizing our backlog is moving up. There is always a point that we should be careful. Our premises for 2025 is a book-to-bill one to one in order to keep the substance we have in our closing 2024. Does not mean that you're not continue to grow. You see here, again, a nice growth for 2025, and we could also foresee the same for 2026. Capacity, I'm going to pass to Francisco.

Francisco Gómez: And you are realizing our backlog is moving up, up, up.

Speaker Change: We should be careful and our, I would say, our premises for 2025 is a book to be one-to-one in order to keep, I would say, the substance we have.

Speaker Change: In our closing 2024 does not mean that you're not continue to grow. You see here Again a nice growth for 2025 and we could also foresee the same for 2026

and Capacia is going to Pasto Francisco.

Francisco Gomes Neto: Thank you, Gui. Thank you, Antonio, and thank you, Alberto for the question. Actually, Alberto, we are ramping up production in all the divisions, right? I mean, business, commercial, and defense, and also support and service as well. We are increasing our capacity, so production capacity year after year in line with our backlog. As I said before, we are very diligent about our financial discipline to approve investments. Before we approve investments to increase the capacity, we look carefully at the opportunities we have to increase the productivity, to work with suppliers in order to make sure that the investments will have a good return for us in the following years. Yes, we still have the capacity to grow in all the units.

Speaker Change: Thank you, Guilherme, thank you, Antonio, and thank you, Alberto, for the question. Actually, Alberto, we are ramping up production in all the divisions.

Speaker Change: I mean, business, commercial, and defense, and also support and service as well. And we are

Speaker Change: increasing our capacity, so production capacity year after year in line with our backlog, our backlog.

Speaker Change: But as I said before, we are very diligent, diligent about our financial discipline to approve investments. So before we approve investments.

Speaker Change: to increase the capacity, we look carefully at the opportunities we have to increase the productivity, to work with suppliers in order to make sure that the investments will have a good return for us in the following years.

Speaker Change: But yes, we still have the capacity to grow in all the units.

Francisco Gomes Neto: In commercial aviation, this year, the guidance goes up to 85 for jets. We expect to go to be at a three digits in the next 2 or 3 years and increase, you know, up to 120 or even more if the investments justify the return. The same is valid for business jets. We are growing this year. We are investing in new painting booth, in new flight preparation area, production area to increase the production 25 in the years ahead. But always one eye on the fish and other eye on the cat, right? I mean, the investment has to prove its return. The same for defense and service and support.

Speaker Change: and Commercial Aviation. This year the guidance goes up to 85 jets.

Speaker Change: We expect to be at three digits in the next two or three years.

Speaker Change: and increase, you know, up to 120 or even more, if...

The investment.

Speaker Change: justify their return. The same is valid for business jets. We are growing this year, we have plans to invest in new painting booths.

Speaker Change: in new flight preparation area, production area to increase the production 25 in the years ahead, but always one eye on the fish and other eye on the cat, right? I mean, the investment has to prove its return. And the same for defense and service and support.

Francisco Gomes Neto: Again, we announced last year $77 million investments in expanding our MRO service in Dallas because we see a very good return in that project. That's why we are doing.

Speaker Change: So again, we announced in the last year 77 million investments in expanding our MRO service in Dallas because we see a very good return on that project. So that's why we are doing.

Antonio Carlos Garcia: Thank you very much, Gui, Antonio, and Francisco. Congrats again.

Alberto Valerio: Thank you very much, Gui, Antonio, and Francisco. Congrats again.

Speaker Change: Thank you very much, Guilherme, Antonio, and Francisco, and congrats again.

Francisco Gomes Neto: You are welcome.

You're very welcome.

Speaker 5: Next question comes from Ronald Epstein. Please go ahead.

Operator: Next question comes from Ronald Epstein. Please go ahead.

Next question comes from Ronald Epstein. Please go ahead.

Speaker 20: Hey, guys. Can you hear me okay?

[Analyst]: Hey, guys. Can you hear me okay?

Hey guys, can you hear me okay?

Francisco Gomes Neto: Yes, we can hear you. We're missing you, Ron.

Speaker Change: Yes, we can hear you. We are missing you, Ron. Hey, good morning. So, just a couple of questions.

Speaker 20: Hey, good morning. Just a couple questions. Maybe turn one of the questions around a little bit. How long do you think you can harvest for before you need to make an investment in a new platform, either in business aviation or commercial?

[Analyst]: Hey, good morning. Just a couple questions. Maybe turn one of the questions around a little bit. How long do you think you can harvest for before you need to make an investment in a new platform, either in business aviation or commercial?

Speaker Change: Maybe turn one of the questions around a little bit. How long do you think you can harvest for before you need to make an investment in a new platform, either in business aviation or commercial?

Francisco Gomes Neto: Well, Ron, I was expecting your question, honestly. It actually is a very good one, Ron. I mean, the answer remains the same. We are making a lot of studies in those fronts, you know, commercial and executive. Besides that, what we are doing, we are focused on delivering the results in our plan from now to 2030 to make sure we will have a very healthy cash generation to support a potential next move. Also, we are investing a lot in new technologies. I think this year is one of the highest investments we are making in new technologies to guarantee our technology readiness, in case we decide to go in a new program.

Speaker Change: Well, Rome, I was expecting your question, honestly. It is actually a very good one. Rome, I mean, the answer remains the same. We are making...

A lot of studies.

Speaker Change: Besides that, what we are doing, we are focused on delivering the results in our plan from now to 2030 to make sure we will have a very healthy cash generation to support a potential next move and also we are investing a lot in new technologies.

Speaker Change: I think this year is one of the highest investments we are making in new technologies to guarantee our technology readiness.

for in case we decide to go.

Francisco Gomes Neto: Until 2030, we have, we'll focus a lot on the products we have, and we have a great plan. You saw great results 2024. We are growing now almost to 20%, 18% in 2025, and we have a plan to grow, you know, to be, you know, a company beyond $10 billion at the end of this decade, without Eve. We are investing a lot in Eve, right? To develop this new aircraft. With Eve, we'll be even higher. Again, this is our plan, considering the existing and potential new products, Ron.

Speaker Change: in a new program. But until 2030, we will focus a lot on the products we have and we have a great plan. You saw great results in 2024. We are growing now almost to 20%, 18% in 2025, and we have a plan to grow, you know,

Speaker Change: to be, you know, a company beyond $10 billion at the end of this decade without EVE, and we are investing a lot in EVE.

Speaker Change: right, to develop this new aircraft. So with EVE, we'll be even higher. So again, this is our plan considering the existing and potential new products around.

Antonio Carlos Garcia: I just want to add to your comments, Francisco. Ron, I would say we like the harvest that's becoming a sustainable growth view in this case. If you see, let's say E2 is very brand new. KC is brand new. Now we are continuing to have the Super Tucano that's nothing new, right? Also we are even, I would say, putting ourselves to make some improvements in our E1 platform in order to extend the lifetime of the aircraft. We are doing that and also running some improvements in the executive aviation platform. I would say combination of everything and let's see what the future reserves for us. Even with the current portfolio, we are doing improvements as well.

Francisco Gómez: I just to complete to add it to your comments Francisco, we are I would say

Speaker Change: We like the harvest that's becoming a sustainable growth view in this case.

Speaker Change: If you see, we are, let's say, DE2 is brand new, KC is brand new.

Speaker Change: Now we continue to have the Super Tucano that's nothing new. And also we are even, I would say, put ourselves to make some improvements in our U1 platform in order to extend the lifetime of the aircraft.

Speaker Change: and we are doing that and also run some improvements in the Executive Aviation Platform. I would say a combination of everything and let's see what the future reserves to us, but even with the current portfolio, we are doing improvements as well.

Speaker 20: Antonio, if we think about the outlook for 2025, if you can answer this, you might not be able to, which is okay. How much conservatism is built into it?

[Analyst]: Antonio, if we think about the outlook for 2025, if you can answer this, you might not be able to, which is okay. How much conservatism is built into it?

And then, Antonio, if we think about the outlook for.

Speaker Change: 2025. If you can answer this, you might not be able to, which is okay. How much conservatism is built into it?

Francisco Gomes Neto: It's a great question. I would say, if you ask me today, I like the high end of our guidance for revenue, right? I like that. I would say let's wait a little bit how the year evolve around, because it's a lot of volatility. We never know about tax impact, this and this and this. It's quite volatile. I would say we know each other already for a long time, and we always try to hit the guidance, and that's our commitment here. We hope that we continue to, I would say, surprise you in a positive way.

Antonio Carlos Garcia: It's a great question. I would say, if you ask me today, I like the high end of our guidance for revenue, right? I like that. I would say let's wait a little bit how the year evolve around, because it's a lot of volatility. We never know about tax impact, this and this and this. It's quite volatile. I would say we know each other already for a long time, and we always try to hit the guidance, and that's our commitment here. We hope that we continue to, I would say, surprise you in a positive way.

Antonio Garcia: It's a great question, I would say. If you ask me today, I like the high end of our guidance for AVID. I like that.

Antonio Garcia: But I would say let's wait a little bit how the years evolve.

Antonio Garcia: wrong because it's a lot of volatility. We never know about.

Antonio Garcia: Attacks impacted this and this and this, it's quite volatile but I'd say we know each other already for a long time and we always try to hit the guidance and that's our commitment here and we hope

Antonio Garcia: that will continue to, I would say, surprise you in a positive way.

Speaker 20: Gotcha.

[Analyst]: Gotcha.

Antonio Garcia: Antonio, if you allow me to complement this, Ron, I do not say conservative, but I would say realistic.

Francisco Gomes Neto: Antonio, if you allow me to complement this. Ron, I will not say conservative, but I would say realistic. You know, in the past year, since 2021, we have been delivering on our promise to the market. We have been able to eliminate the hockey stick effect from our lives. I mean, the hockey stick effect, you know, right? The first years are bad, but the future will be bright. We have been delivering our promise year after year, and this is what we want to do. We want to show again to the market that we will deliver our promise. Our promise has been ambitious year after year. We see double-digit growth year after year, from $6.4 billion last year to almost between $7 to $7.5 billion this year.

Antonio Garcia: You know, in the past year, since 2021, we have been delivering on our promise to the market.

who have been able to eliminate.

Antonio Garcia: So, I mean, the Hoxiek effect, you know, right? The first years are bad, but the future will be bright. So we have been delivering our promise year after year, and this is what we want to do. We want to show again to the market that we will deliver our promise, and our promise has been ambitious year after year.

Antonio Garcia: We see double-digit growth year after year, from $6.4 billion last year to almost between $7 to $7.5 billion this year. And as I said, have a plan to be beyond $10 billion until the end of the decade. So again, we see this win-win situation for us.

Francisco Gomes Neto: I said, have a plan to be beyond $10 billion until the end of the decade. Again, we see this as a win-win situation for us and for our investors as well. Again, not conservative, but realistic.

Antonio Garcia: and for our investors as well. So again, not the conservative, but realistic.

Speaker 20: Gotcha. Maybe one last one, if I can. On the KC-390, given the changing transatlantic relationship with the US, have you seen any pickup in demand for the airplane out of NATO?

Carlos Martins: Gotcha. Maybe one last one, if I can. On the KC-390, given the changing transatlantic relationship with the US, have you seen any pickup in demand for the airplane out of NATO?

Speaker Change: changing transatlantic relationship with the US. Have you seen any pickup and demand for the airplane out of NATO?

Francisco Gomes Neto: Well, I mean, KC-390, you know, it's a great product developed at the right time, right? For that platform up to 26 tons, we believe we have the best product in the market. We have seen this. 60% of our orders now is coming from global clients. We are working in a lot of new campaigns. You know, campaigns in Europe, campaigns in Asia, campaigns in South America. Of course, North America is our maybe masterpiece. I mean, it's the biggest defense budget in the world, and we do believe the KC-390 will help users to increase substantially the productivity with this kind of aircraft. With the volume, the potential volume, this is going to be a product made in US.

Well, I mean, Casey, you know, it's a

Speaker Change: It's a great product, developed on the right time, right, for that platform up to 26 tons. We believe we have the best product in the market, and we have seen this, 60% of our

orders now. It's coming from global clients.

Speaker Change: And we are working in a lot of new campaigns, you know, campaigns in Europe, campaigns in Asia, campaigns in South America. And, of course, North America is our, maybe, masterpiece.

I mean, it's the biggest defense budget in the world.

and we do believe that KC will help use us.

to increase substantially the productivity with this kind of aircraft.

Speaker Change: and with the potential volume, this is going to be a product made in the U.S. So we see this as a great opportunity for us, in line with the U.S. expectation of the new government, right?

Francisco Gomes Neto: We see this as a great opportunity for us, in line with the US expectation of the new government, right?

Speaker 20: Gotcha. All right. Thanks, guys. Yeah, have a good day.

[Analyst]: Gotcha. All right. Thanks, guys. Yeah, have a good day.

Gotcha. All right. Thanks, guys. Have a good day.

Francisco Gomes Neto: Thank you.

Operator 2: Thank you, Ram.

Operator: Thank you, Ram.

Thank you all.

Speaker 5: The next question comes from Victor Mizusaki with Bradesco BBI. Please go ahead.

Speaker Change: The next question comes from Victor Mizuzaki with Bradesco BPI. Please go ahead.

Victor Mizusaki: Hi. Thanks for taking my question again. Just a quick one here. I mean, the company reported very good quarter, right, with robust cash flow generation. We're talking about net debt of only $111 million. When you take a look at your audited financial statements in BR GAAP, Embraer could zero the accumulated net losses, and then now we are talking about earnings reserve. My question here is, and I'll follow up on this question about the harvest period. When Embraer expects to start or resume the dividend distribution, and if there is any kind of plan to set a kind of dividend policy? Thank you.

Speaker Change: Hi, thanks for taking my question again. Just a quick one here. I mean, the company reports a very good water rights with a robust cash flow generation. We're talking about net debt of only $111 million.

Speaker Change: and when you take a look on your audit financial statements in BRGF, in BRGF you could see the net losses and now we're talking about earnings reserve.

Speaker Change: So my question here is, and I'll follow up on this question about the Harvard spirit.

Speaker Change: So when Embraer expects to start or resume the dividend distribution and if is there any kind of plan to set a kind of dividend policy? Thank you.

Francisco Gomes Neto: Thanks for the question, Victor. We exhausted the accumulated losses accounting-wise in Q3, means we are qualified to start to pay in Q4. For sure, it has to be approved by the board and has to be approved by the shareholders meeting. That's going to happen end of April, okay? We have already our dividend policy, which says we pay at least IRPJ, 25% on net profit of the year, and the rest to converting investment and working capital reserves. That's more or less what is our institute. There is, at least today, no big move on this front again. The only issue that the market does not know how we pay dividend because the last one was in 2018.

Antonio Carlos Garcia: Thanks for the question, Victor. We exhausted the accumulated losses accounting-wise in Q3, means we are qualified to start to pay in Q4. For sure, it has to be approved by the board and has to be approved by the shareholders meeting. That's going to happen end of April, okay? We have already our dividend policy, which says we pay at least IRPJ, 25% on net profit of the year, and the rest to converting investment and working capital reserves. That's more or less what is our institute. There is, at least today, no big move on this front again. The only issue that the market does not know how we pay dividend because the last one was in 2018.

Thanks for the question, Victor. We.

We exhausted the accumulated losses, accounting-wise, in Q3 means.

Speaker Change: we are qualified to start to paying Q4 for sure has to be approved by the board and has to be approved by the shareholders meeting that's going to happen end of April okay and we have already

Speaker Change: Dividend Policy, which says we pay the latest S.E.A.S. 25% net profit of the year and the rest will convert to investment and working capital reserves. That's more or less what is our institute and there is at least today no

Speaker Change: big move in this corner here. The only issue that the market does not know how we pay dividends because the last one was in 2018. And now we are, I would say, getting familiar even ourselves to come back to this.

Francisco Gomes Neto: Now we are, I would say, getting familiar even ourselves years out to come back to this activity. This is the only reason. We have in our institute this policy, and we pay the, what is basically said by the latest IRPJ.

Antonio Carlos Garcia: Now we are, I would say, getting familiar even ourselves years out to come back to this activity. This is the only reason. We have in our institute this policy, and we pay the, what is basically said by the latest IRPJ.

Speaker Change: activity. It's the only reason, but we have in our institute this policy and we pay what is basically said by the laid-as-as-yet.

Victor Mizusaki: Okay. Thank you.

Okay, thank you.

Francisco Gomes Neto: Thanks, Victor.

Thank you, Guilherme.

Speaker 5: This concludes the question-and-answer session for equity research analysts and investors. Now we will start the Q&A session dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese. We'll also answer questions sent via the platform chat. Please let me say a short announcement for Portuguese speakers. We ask participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. If you need assistance, please use the Q&A button on the platform. To give everyone a chance to participate, we request to ask just one question. Please hold while we poll for questions. The first question comes from Charles Alcock with AIN Media Group.

Operator: This concludes the question-and-answer session for equity research analysts and investors. Now we will start the Q&A session dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese. We'll also answer questions sent via the platform chat. Please let me say a short announcement for Portuguese speakers. We ask participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. If you need assistance, please use the Q&A button on the platform. To give everyone a chance to participate, we request to ask just one question. Please hold while we poll for questions. The first question comes from Charles Alcock with AIN Media Group.

Speaker Change: This concludes the question-and-answer session for Equity Research Analysts and Investors.

Speaker Change: Now we will start the Q&A session dedicated to the press.

Speaker Change: First, we will answer questions in English and then we will answer questions in Portuguese.

We will also answer questions sent via the platform chat.

Please let me say a short announcement for Portuguese speakers.

Speaker Change: This conference is being made in English. To listen to the translation in Portuguese, press the Interpretation button on the platform and select the Portuguese language.

Speaker Change: We ask participants interested in asking questions to press the raise hand button on the platform. When your name is announced, please make sure your microphone is on and start your question.

Speaker Change: If you need assistance, please use the Q&A button on the platform.

Speaker Change: To give everyone a chance to participate, we request to ask just one question.

The first question comes from.

Charles Alcock with AIN Media Group

Speaker 5: Which regions of the world do you expect to see the strongest growth in demand for executive jets? Are you concerned about access to the US market if tariffs are introduced?

Operator: Which regions of the world do you expect to see the strongest growth in demand for executive jets? Are you concerned about access to the US market if tariffs are introduced?

Speaker Change: Which regions of the world do you expect to see the strongest growth in demand for executive jets?

Speaker Change: Are you concerned about access to the U.S. market if tariffs are introduced?

Francisco Gomes Neto: Well, Charles, thanks for the question. The first part, I mean, US represents more than 60% of our market for business jets. It's natural that we expect this market to continuing growing. We are also selling business jets in other markets as well. South America was a great market in terms of sales last year. Europe and even sales we had to other regions like Middle East and Asia. I do believe that the main market will continue to be for many years US. The second part, I didn't get the second part of your question. Could you repeat, please?

Well, Charles, thanks for the question. The first part.

I mean,

The U.S. represents more than 60% of our market for

Busy Jet. So...

Speaker Change: in Asia. But I do believe that the main market will continue to be, for many years, the U.S. The second part, I didn't get the second part of her question. Could you repeat, please?

Speaker 5: Sure. Just one second. Are you concerned about the access to the US market if tariffs are introduced?

Operator: Sure. Just one second. Are you concerned about the access to the US market if tariffs are introduced?

Sure, just a second.

Francisco Gomes Neto: Well, I mean, we cannot anticipate movements or decisions made by the US government. At this point of time, we do not anticipate any big issue. As Embraer, as a very well-balanced trade with the US. We have a production plant in the US. We have more than 2,500 employees in the US. We have been in the US for 45 years. Our aircraft, you know, carry a lot of very high US content in terms of equipment. Our E175-E1 is basically the only option for regional aviation in the US. Anyway, because of this long-term collaboration of the US, we see that this is a win-win business, and we believe that, you know, the situation should not change. Anyway, if something changes, we'll see what we'll do.

Well, I mean, we cannot anticipate

Speaker Change: movements or decisions made by the U.S. government. But at this point of time, we do not anticipate any big issue. As Embraer, as a

Very well balanced.

Threads.

with the U.S.

Speaker Change: We have a production plant in the U.S., we have more than 2,500 employees in the U.S., we have been in the U.S. for 45 years. Our aircraft, you know, carry a lot of very high U.S. content in terms of equipment. Our E-175E1, is it...

Speaker Change: basically the only option for regional aviation in the U.S. So, anyway, because of this,

Long-Term Collaboration

of the U.S., we see that

Speaker Change: This is a win-win business and we believe that you know

Speaker Change: The situation should not change. But anyway, if something changes, we'll see what we do. But at this point of time, we don't anticipate any issue or difficulties to introduce our products in the U.S. That's because we have a good basis there. And as I said before, the KC-390 is a potential product to be assembled in the country.

Francisco Gomes Neto: At this point of time, we don't anticipate any issue or difficulties to introduce our products in the US, that's because we have a good basis there. As I said before, the KC-390 is a potential product to be assembled in the country.

Speaker 5: Thank you. The second question is also from Charles Alcock, and he's asking: How much has Embraer invested in EVE? Does EVE need to raise further funding to complete development of the eVTOL aircraft?

Operator: Thank you. The second question is also from Charles Alcock, and he's asking: How much has Embraer invested in EVE? Does EVE need to raise further funding to complete development of the eVTOL aircraft?

Speaker Change: Thank you. The second question is also from Charles Alcock and he's asking how much has Embraer invested in EVE? Does EVE need to raise further funding to complete development of the ETO aircraft?

Francisco Gomes Neto: Thanks for the question. We already invested something like $300 million, if I'm not wrong, at Eve. I would say we have equity and debt or credit lines with the bankers to go to the certification, at least today. If you see any possibility for a new investor, we have new investor coming, want to also to take part. I would say maybe it can happen. We are not closing our eyes for that. I would say I do not see a risk for the project today. There's much more interest from the streets today than even before. It's more or less the momentum we are seeing for Eve right now.

Antonio Carlos Garcia: Thanks for the question. We already invested something like $300 million, if I'm not wrong, at Eve. I would say we have equity and debt or credit lines with the bankers to go to the certification, at least today. If you see any possibility for a new investor, we have new investor coming, want to also to take part. I would say maybe it can happen. We are not closing our eyes for that. I would say I do not see a risk for the project today. There's much more interest from the streets today than even before. It's more or less the momentum we are seeing for Eve right now.

Thanks for the question, Luis.

Speaker Change: debt or credit lines with the bankers to go to the.

Speaker Change: Certification, at least today, but if you see any possibility for a new investor, we have a new investor coming who wants to also take part, I would say, maybe it can happen.

Speaker Change: It's not, we are not closing our eyes for that. Let's say, I do not see a risk for the project today. There's much more interest from the streets today than even before.

Speaker Change: It's more or less the momentum we are seeing for EVE right now.

Speaker 5: Thank you. The next question comes from Andreas Spaeth with Reuters, he's an aviation journalist. Why E175-E2s are not reaching cruise level in the markets? The issue of E175-E2s remains closely associated with the ongoing US mainline scope clause discussion with the pilot unions. Are there no other international markets around to place the aircraft for the smaller 76-seater segment?

Operator: Thank you. The next question comes from Andreas Spaeth with Reuters, he's an aviation journalist. Why E175-E2s are not reaching cruise level in the markets? The issue of E175-E2s remains closely associated with the ongoing US mainline scope clause discussion with the pilot unions. Are there no other international markets around to place the aircraft for the smaller 76-seater segment?

Thank you.

Speaker Change: The next question comes from Andreas Schulz, he's an aviation journalist.

Andreas Schulz: Why E-175, E-2s are not reaching cruise level in the markets?

Speaker Change: The issue of E-175, E-2s remains close associated with the ongoing U.S. Mainline Scope Clause discussion with the pilot unions. Are there no other international

Speaker Change: markets around to place the aircraft for the smaller 76-seater segment.

Francisco Gomes Neto: Andreas, thanks for the question. The answer for the question number one is your question number two. The E175 is very simple. We are postponing because we don't see signs of changing in the scope clause and the E175-E2. Despite being much more efficient than the first generation, his weight is not compliant with the scope clause. That's why we decide to postpone another four years. On the other hand, we are investing in improving our E175-E1s with new seats, with new luggage bins, with new connectivity. We are occupying that market for regional aviation with the E175 E1s.

Speaker Change: Andres, thanks for the question, but the answer for the question number one is your question number two.

Speaker Change: The E-175 is very simple. We are postponing because we don't see signs of changing in the scope clause in the E-175E2, despite being much more efficient than the first generation.

Speaker Change: His weight is not compliant with the scope clause. That's why we decided to postpone another four years. But on the other hand, we are investing in improving our E175U1s.

Speaker Change: with new seats, with new luggage bins, with new connectivity, and we are occupying that market for regional aviation with the E-175 E-1s.

Guilherme Paiva: Not only US, huh, Francisco?

Speaker Change: Not only in the U.S., in the Middle East. We could have opportunities to sell E-175, E-2s in other markets, but the main market, the main target market for that aircraft.

Francisco Gomes Neto: Not only US, yeah. We could have opportunities to sell E175-E2s in other markets, but the main market, the main target market for that aircraft is US. It does not make sense for us to develop a product for a small volume market and leaving behind the high volume market. As Antonio said, yes, we are selling E1s in a much more volume, but in other markets as well.

is U.S., so it does not make sense for us.

to develop a product.

for Small Volumes Market.

Speaker 5: Thank you. The next question comes from Richard Schuurman, as a freelance aviation reporter. Can you specify where your priorities are in your R&D spending? What specific technologies/aircraft technologies are you studying right now?

Operator: Thank you. The next question comes from Richard Schuurman, as a freelance aviation reporter. Can you specify where your priorities are in your R&D spending? What specific technologies/aircraft technologies are you studying right now?

Thank you.

Richard Sherman: The next question comes from Richard Sherman as a freelance aviation reporter

Richard Sherman: Can you specify where your priorities are in your R&D spending? What specific technologies slash aircraft technologies are you studying right now?

Francisco Gomes Neto: Oh, Richard, thank you for your question. You know, in order to optimize our investments in new technologies, we have defined seven innovation verticals. We call seven innovation verticals. Among them, I can say, I can tell you, for example, autonomous flights. I can tell you alternative propulsion system. I can tell you passenger experience. I mean, and many others. I mean, Industry 4.0, artificial intelligence, cybersecurity. With those seven verticals, we are concentrating our investments to be prepared to develop new products. Some of them are being applied already in existing products, like the eVTOL, for example, right? eVTOL is 100% electric vehicle. It's a good example of alternative propulsion systems that can be used in new products as well.

Richard Sherman: Richard, thank you for your question. You know, in order to optimize our investments in new technologies, we have defined seven, we call seven, innovation verticals.

Richard Sherman: and among them I can say, I can tell you for example autonomous flight, I can tell you alternative propulsion system, I can tell you airframe competitiveness.

I can tell you, a passenger experience, I mean...

Richard Sherman: and many others. I mean, Industry 4.0, Artificial Intelligence, Cybersecurity, so

and then we are

With those seven verticals, we are constant.

Richard Sherman: On those seven verticals, we are concentrating our investments to be prepared to develop a new product, and some of them are being applied already in existing products.

Richard Sherman: like the eVTOL, for example, right? eVTOL is 100% electric vehicle. So it's a good example of alternative propulsion systems that can be used in new products as well. So again, this is why, where we are.

Francisco Gomes Neto: Again, this is why, where we are putting our money in terms of new technologies.

putting our money in terms of new technologies.

Richard Sherman: and Antonio Garcia, and I'm going to be talking about the the the the the the the the the the the the the

Speaker 21: Thank you. The second question is also from Richard Schuurman, and he's asking, Airbus said it is delaying the launch of its hydrogen aircraft by 5 to 10 years because of delays in the hydrogen ecosystem. What's your view on this?

Operator: Thank you. The second question is also from Richard Schuurman, and he's asking, Airbus said it is delaying the launch of its hydrogen aircraft by 5 to 10 years because of delays in the hydrogen ecosystem. What's your view on this?

Speaker Change: Thank you. The second question is also from Richard Schrumann and he's asking Airbus said it is delaying the launch of its hydrogen aircraft by five to ten years because of delays in the hydrogen ecosystem. What's your view on this?

Francisco Gomes Neto: Well, in Embraer, I mean, in line with this investment in new technologies, Embraer has developed or has been working in two new aircraft concepts we call Energia family. One is a hybrid electric, a small one, up to 19 seats. Another one is a hydrogen hybrid. But we also see these technologies being mature in 15 years, 10 to 15 years from now. The hydrogen is even more complex because it's not just the aircraft, but the infrastructure in the airports as well. We see this. We are working that to acquiring knowledge, technology, but we don't see entering to service in the short term. This should be also 10, 15 years or more from now.

Speaker Change: Well, Embraer, I mean, in line with this investment in new technologies, Embraer has been working in two new aircraft concepts we call Energia family.

Speaker Change: One is a hybrid electric. No, it's a small one, up to 19 seats. And the other one is a hydrogen hybrid. But we also see these technologies, you know, being mature.

Speaker Change: you know, in 15 years, 10 to 15 years from now.

Speaker Change: So, and the hydrogen is even more complex because it's not just the aircraft, but the infrastructure in the airports as well.

So, again, we see this.

Speaker Change: We are working on that to acquiring knowledge, technology, but we don't see entry into service in the short term. This should be also known.

than 50 years or more from now.

Thank you.

Speaker 21: Thank you. The next question is from Cai von Rumohr. How much more money is needed for E2 certification in the US?

Operator: Thank you. The next question is from Cai von Rumohr. How much more money is needed for E2 certification in the US?

Thank you. The next question is from Cora Schwartz.

Francisco Gomes Neto: Yeah, thanks for the question. The way to go is around $400 million for certification, including also industrialization.

Antonio Carlos Garcia: Yeah, thanks for the question. The way to go is around $400 million for certification, including also industrialization.

Speaker Change: Thanks for the question. The way to go is around 400 million around certification.

including also industrialization.

Speaker 21: Thank you so much. Please hold while we poll for questions. Once again, please hold while we collect the questions. This concludes the question and answer session in English for the press. This Q&A section is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English. Agora, nós vamos iniciar a sessão de perguntas e respostas em português. Pedimos aos jornalistas interessados em fazer perguntas que pressionem a qualquer momento o botão "Levantar a Mão" e quando tiverem seu nome anunciado, ativem seu microfone e façam sua pergunta. Responderemos também perguntas escritas enviadas através do chat da plataforma. Se houver necessidade de assistência, por favor, solicite via botão Q&A, Q&A, na plataforma. Para que todos tenham a chance de participar, pedimos que façam apenas uma pergunta por vez. Por favor, aguardem enquanto coletamos as perguntas.

Operator: Thank you so much. Please hold while we poll for questions. Once again, please hold while we collect the questions. This concludes the question and answer session in English for the press. This Q&A section is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English. Agora, nós vamos iniciar a sessão de perguntas e respostas em português. Pedimos aos jornalistas interessados em fazer perguntas que pressionem a qualquer momento o botão "Levantar a Mão" e quando tiverem seu nome anunciado, ativem seu microfone e façam sua pergunta. Responderemos também perguntas escritas enviadas através do chat da plataforma. Se houver necessidade de assistência, por favor, solicite via botão Q&A, Q&A, na plataforma. Para que todos tenham a chance de participar, pedimos que façam apenas uma pergunta por vez. Por favor, aguardem enquanto coletamos as perguntas.

Speaker Change: This concludes the question and answer session in English for the press.

Speaker Change: This Q&A section is now being conducted in Portuguese. To switch to English, please press the Interpretation button on the platform and then select English.

Now, we will start the Q&A session in Portuguese.

Speaker Change: We ask journalists interested in asking questions to press the raise hand button at any time and when the name is announced, activate your microphone and ask your question.

Speaker Change: We will also answer written questions sent through the platform chat.

Speaker Change: If you need assistance, please ask via the Q&A button on the platform.

Speaker Change: So that everyone has a chance to participate, we ask that you ask only one question at a time.

Please wait while we collect the questions.

Speaker 21: A primeira pergunta é de Nelson During, de DefesaNet. Qual a meta de percentual de vendas para a defesa e segurança no total da Embraer? A meta histórica era 20%.

Operator: A primeira pergunta é de Nelson During, de DefesaNet. Qual a meta de percentual de vendas para a defesa e segurança no total da Embraer? A meta histórica era 20%.

The first question is from Nelson Durin from...

Thank you.

Speaker Change: What is the percentage of sales for defense and security in the total of Embraer?

The historical goal was 20%.

Francisco Gomes Neto: Oi, Nelson. Bom dia, obrigado pela pergunta. Na verdade, a meta histórica no passado, se a gente pegar vários anos, a defesa representou da ordem de 15% da Embraer, né? Mas agora a nossa projeção pros próximos anos é crescer bastante. A defesa também vai acompanhar esse crescimento, né? A gente tá vendo as várias vendas de KC, as várias vendas de Super Tucano e outros produtos que a gente faz na defesa também. Nós não temos uma meta de percentual da participação de cada um, mas eu acho que a tendência é ficar nessa faixa aí de 15%, que foi a participação histórica da defesa. Ela vai crescer juntamente com as demais áreas da companhia.

Speaker Change: Hi Nelson, good morning, thank you for the question. Actually, the historical goal, in the past, if we look at several years, the earthquake represented about 15% of Embraer.

Speaker Change: and Embraer, but now our plan for the next few years is to grow a lot.

and the defense as well.

Speaker Change: will follow this growth. So we are seeing the various sales of Cacê, the various sales of Super Tucano and other products that we make in defense as well. We don't have a percentage goal of each one's participation, but I think the tendency is to stay

Speaker Change: and stay in this 15% range, which was the historical participation of the defense. It will grow along with the other areas of the company.

Speaker 21: Obrigada. A próxima pergunta também é de Nelson During. Ele diz: Quais as perspectivas para a empresa Atech, subsidiária da divisão de defesa? Atualmente fabricando radares e contratista naval do submarino nuclear e fragata Tamandaré.

Operator: Obrigada. A próxima pergunta também é de Nelson During. Ele diz: Quais as perspectivas para a empresa Atech, subsidiária da divisão de defesa? Atualmente fabricando radares e contratista naval do submarino nuclear e fragata Tamandaré.

Francisco Gomes Neto: Bom, Nelson, cê tá bem informado na defesa. Muito bom, hein? Boa pergunta. Bom, Nelson, assim, esse foco nosso em eficiência, em disciplina financeira, em inovação, ele é válido pra as nossas subsidiárias também, como a Atech, que é 100% Embraer. Atech vem demonstrando uma melhora importante na sua performance, tanto em crescimento quanto em receita. O ano passado, a Atech que entregou um EBIT da ordem de 18%, né? Uma performance muito bom. Vem crescendo. Temos muitas expectativas aí de novos negócios, inclusive o Vector, que é o novo produto da Atech para apoiar a operação dos eVTOLs.

Speaker Change: an important improvement in their performance, both in growth and in revenue. Last year, they delivered an EBIT of 18%.

Speaker Change: a very good performance. We have high expectations of new business, including Vector, which is a new product from TEC to support Ziv Talks' operation.

Speaker 21: Obrigada. A próxima pergunta é de Pablo Dias: há algum avanço na LOI E195-E2 da Aerolíneas Argentinas? Você prevê que isso se tornará uma ordem firme após a mudança de governo?

Operator: Obrigada. A próxima pergunta é de Pablo Dias: há algum avanço na LOI E195-E2 da Aerolíneas Argentinas? Você prevê que isso se tornará uma ordem firme após a mudança de governo?

Speaker Change: Thank you. The next question is from Pablo Dias. Is there any progress on the E195E2 flight of the Argentine Airlines? Do you foresee that this will become a firm order after the change of government?

Francisco Gomes Neto: Muito obrigado pela pergunta. A gente, antes da mudança do governo, a gente tava bem avançado em negociações pra substituir os antigos E1 por novos E2 na Aerolíneas Argentinas. Com a mudança de governo, esse processo foi suspenso e nós estamos aguardando por novos desdobramentos. Nós achamos que o E2 é a melhor solução pra substituir os E1, como em outros mercados, pra Argentina também. Nós tamo em compasso de espera nesse momento.

Speaker Change: Thank you very much for the question. Before the change of government, we were well advanced in negotiations to replace the old E1s with new E2s in Argentine Airlines. With the change of government, this process was suspended and we are waiting for new developments. We believe that the E2 is the best solution.

Speaker Change: to substitute the E1s, as in other markets, and for Argentina as well. So, we are waiting impatiently at this moment.

Speaker 21: Obrigada. Aguarde enquanto coletamos a próxima pergunta. A próxima pergunta é de Carlos Martins, com a AeroIN. Por favor, pode prosseguir.

Operator: Obrigada. Aguarde enquanto coletamos a próxima pergunta. A próxima pergunta é de Carlos Martins, com a AeroIN. Por favor, pode prosseguir.

Obrigada

Aguarde enquanto coletamos a próxima pergunta.

Carlos Martins: Olá, pessoal. Primeiramente, parabéns pelos resultados da Embraer. Eu queria fazer uma pergunta relacionado ao E175-E2. Vocês me ouvem?

Speaker Change: Hello everyone. First of all, congratulations for the results of Embraer. I would like to ask a question related to the 1.6.2. Can you hear me?

Francisco Gomes Neto: Sim, pode falar, Carlos. Te ouvimos, sim.

Yes, go ahead, Carlos. I'm listening.

Carlos Martins: Beleza, ótimo. Vocês soltaram um fato relevante sobre a questão do congelamento da aeronave, do projeto E2, e eu queria saber a respeito da certificação da aeronave, se considerando que daqui 4 anos o projeto seja retomado, se a Embraer já tem alguma data, alguma previsão pra questão de certificação dela. Aproveitando essa questão dos Estados Unidos citada antes, se vocês têm perspectiva da venda do 190 e do 195-E2 também nesse mercado.

Speaker Change: Good, great. You released a relevant fact about the issue of the frozen aircraft of the E2 project and I would like to know about the certification of the aircraft, considering that in 4 years the project will be resumed, if Embraer already has any date, any forecast for its certification,

Speaker Change: and taking advantage of the United States issue mentioned earlier, do you have a perspective on the sale of the 190 and 195A2 in this market?

Francisco Gomes Neto: Bom, Carlos, sobre o E175-E2, esse avião já voou até, né? Já teve um teste de voo com ele. A gente só tá postergando a conclusão do desenvolvimento, porque o mercado americano ainda tá fechado pra esse produto, né? O E175-E2 não atende a scope clause. Só por isso. Uma vez que a gente perceber que a scope clause vai mudar ou flexibilizar, aí nós vamos discutir internamente a retomada desse projeto, e eu acho que a certificação pode ocorrer num tempo relativamente curto aí, de alguns poucos anos, porque o avião já tá praticamente pronto, né? Tem que finalizar alguns desenvolvimentos.

Well Carlos

About the E1752, this plane has already flown, hasn't it?

Speaker Change: There was a flight test with him. So, we are just postponing the conclusion of the development.

Speaker Change: because the American market is still closed for this product, right? The scope clause, E1752, does not meet this scope clause.

That's all.

and Unknown Speaker 0.0.0.

and once again...

Speaker Change: that we realize that the scope clause will change or make it more flexible.

We will discuss internally the resumption of this project.

Speaker Change: and I think the certification can take place in a relatively short time, in a few years.

Speaker Change: because the meeting is practically ready. So, we have to finalize some developments, some are important.

Francisco Gomes Neto: Alguns são importantes, na verdade, mas a gente não tem esse prazo exato pra te dizer quanto tempo depois de retomado o avião, ele vai tá certificado. Tem uma outra parte aí que eu acho que o nosso pessoal pode ajudar também aqui, na pergunta. Qual que é?

I'll go to that.

Speaker Change: But we don't have an exact date to tell you how long after the return of the plane it will be certified. There is another part that I think our staff can also help with the question.

Cool, yeah.

Carlos Martins: Eu cheguei a perguntar sobre a perspectiva de alguma venda do E190-E2, do E195-E2, que já estão certificados, né? De venda deles.

Speaker Change: I came to ask about the perspective of some sales of the E2 190 and E2 195, which are already certified, of their sales in the United States.

Francisco Gomes Neto: Tá bom.

Carlos Martins: Algum trabalho nos Estados Unidos, específico.

Francisco Gomes Neto: A perspectiva é muito boa, Carlos. A gente já tá trabalhando aí, não, a gente não pode divulgar ainda, mas a gente tá trabalhando com algumas linhas aéreas americanas, né, mostrando pra eles o benefício de ter um avião do tamanho do E195, principalmente E2, né, pra fechar o gap entre os aviões regionais e os grandes, que se chama narrow bodies. É um processo de convencimento que a gente tá avançando. Então a gente espera nos próximos dois anos ter alguma notícia boa também da América do Norte, em termos de E2.

A perspectiva é muito boa.

Speaker Change: Carlos, we are already working on it, we can't disclose it yet, but we are working on it, with some American airlines, showing them...

the benefit of having an airplane.

Speaker Change: of the E-195 size, mainly E-2, to close the gap between the regional aircrafts and the big ones called narrowbodies.

Unknown Speaker 05.00.00.00.

Speaker Change: and it is a process of convincing that we are moving forward. We hope that in the next two years there will be some good news from North America in terms of E2.

Speaker 21: Muito obrigada. Concluímos as sessões de perguntas e respostas e a conferência de resultados da Embraer. Muito obrigada pela sua participação. Tenham todos um bom dia.

Operator: Muito obrigada. Concluímos as sessões de perguntas e respostas e a conferência de resultados da Embraer. Muito obrigada pela sua participação. Tenham todos um bom dia.

Operator 2: Goodbye

Operator: Goodbye

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