Q2 2025 Embraer SA Earnings Call
These events and may not be reproduced or retransmitted without the express authorization of Embraer.
This conference call will be conducted in English, but please let me say a short announcements for Portuguese speakers.
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Gui Paiva: Good morning, ladies and gentlemen, and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of these events and may not be reproduced or retransmitted without the express authorization of EMBRAER. This conference call will be conducted in English. Please let me say a short announcement for Portuguese speakers. Esta conferência será realizada originalmente em inglês, para ouvir a tradução em português, pressione o botão de interpretação da plataforma e selecione o idioma desejado. Para melhorar a qualidade da transmissão em português, clique também em desativar o áudio original na plataforma Zoom. My name is Gui Paiva, and I'm the Head of Investor Relations and M&A for EMBRAER. I want to welcome you to our second quarter earnings conference call.
But I mean, there are a lot of quite a bad thing if you're selling in Portuguese pick domains is actually a lot of volatility as you know about our partners.
My name is and keep either and I'm, the head of Investor Relations and M&A frame rare I want to welcome you to our second quarter earnings Conference call.
Good morning, ladies and gentlemen and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of these events and may not be reproduced or retransmitted without the express authorization of Embraer.
This presentation contains non-GAAP financial information to help investors reconcile <unk> financial information in GAAP standards.
This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers.
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I'll remind you <unk> results will be discuss it at the company's conference call.
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It is important to mention there our numbers are presented in U S. Dollar as it is our functional currency.
This conference call May include statements about future events based on the Embraer 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.
Gui Paiva: The numbers in this presentation contain non-GAAP financial information to help investors reconcile EMBRAER's financial information and GAAP standards to EMBRAER's IFRS. We remind you, EMBRAER's results will be discussed at the company's conference call. It is important to mention that our numbers are presented in the U.S. dollar, as it is our functional currency. 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. 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.
My name is and I'm the head of investor relations and Mna frame breaker, I want to welcome you to our second quarter earnings conference call.
Except in accordance with the applicable rules the company assumes no obligation to publicly update any forward looking statements.
The numbers in this presentation, contain non-gaap financial information to help investors reconcile. Ease financial information in gaap standards to iners IFRS.
Remind you if results will be discussed at the company's conference call.
For a detailed financial information the company encourages reviewing publications filed by the company with the Brazilian Army someone who already has more of a reality or C. V. M M.
It is important to mention. There are numbers are presented in the US dollar, as it is our functional currency.
At this time all participants are in a listen only mode.
We will give instructions later on for participation in the two question and answer sessions.
Participants on today's conference call or Francisco, Gomes, Neto, President and CEO of Embraer.
This conference call may include statements about future events based on an inbre, expectations and financial market trends, such statements are subject to uncertainties that may cause actual results to differ, from those Express or implied in this conference call.
Antonio Carlos Garcia, Chief Financial Officer.
Except in accordance with the applicable rules, the company assumes, no obligation to pry updates, any forward-looking statements.
Ruiz Harrison corporate communications director and myself.
Conference call, we'll have three parks in the first part top management will present, the company's Q2 results in the second part we will host a Q&A session only for investors and last but definitely not least in the third part will wholesale dedicated Q&A session only for the press.
For detail of financial information. The company encourages reviewing Publications filed by the company with the Brazilian commission or CVM
Gui Paiva: We'll give instructions later on for participation in the two question and answer sessions. Participants on today's conference call are Francisco Gomes Neto, President and CEO of EMBRAER; Antonio Carlos Garcia, Chief Financial Officer; Luiz Harrison, Corporate Communications Director; and myself. This conference call will have three parts. In the first part, top management will present the company's Q2 results. In the second part, we'll 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.
At this time, all participants are in a listen-only mode will give instructions later on for participation in the 2 question and answer sessions.
It is my pleasure to now turn the conference call to our President and CEO Francisco Gomes. Please go ahead since high school.
Participants on today's conference call are Francisco, Gomez NATO, president and CEO of Embraer.
Morning, everyone. It is a pleasure to be here with you to share our second quarter 'twenty 'twenty five year results.
Antonio Carlos Garcia Chief Financial Officer. Luis Harrison, corporate communications director and myself.
We had another strong quarter reinforcing the consistency in our sustainable growth journey.
Embraer delivering the highest second quarter revenue in its history totaling 1.28 billion.
This conference call will have three parts. In the first part, top management will present the company's key results. In the second part, we will host a Q&A session only for investors. Last, but definitely not least, the third part will host a dedicated Q&A session only for the press.
Our adjusted EBIT margin was 10, 5% the highest level for a second quarter over the past decades.
It is my pleasure to now, turn the conference call to our president and CEO Francisco Gomez.
Francisco Gomes Neto: Good morning, everyone. It is a pleasure to be here with you to share our Q2 2025 results. We had another strong quarter, reinforcing the consistency in our sustainable growth journey. EMBRAER delivered the highest Q2 revenue in its history, totaling $1.8 billion. Our adjusted EBIT margin was 10.5%, the highest level for a Q2 over the past decade. The backlog recorded a new $29.7 billion, all-time high, driven by strong demand across all business units. Deliveries were up 30% year over year, a result of our focus on operational efficiency and on our production leveling initiative. The book-to-book ratio was closer to 2:1 in the last 12 months across all business units. U.S. tariffs continue to be a major concern to our business, but with an important step forward last week, highlighting the importance of our industry not only for Brazil but also for the U.S.
Please go ahead Francisco.
The backlog recorded a new $29 7 billion, all time high driven by stronger demand across all business units.
Good morning, everyone. It is a pleasure to be here with you to share our second quarter 2025 results.
Deliveries were up 30% year over year result of our focus on operational efficiency and on our production leveling initiatives.
We had another strong quarter reinforcing the consistency in our sustainable growth Journey.
The book to Bill ratio was closer to two to one in the last 12 months across all business units.
28 billion.
U S tariffs continue to be a major concern to our business, but with an important step forward last week, highlighting the importance of our industry not only for Brazil, but also for the U S.
Our adjusted ebit margin was 10.5%, the highest level for a second quarter over the past decades.
The backlog recorded a new 29.7. Billion, all-time high written by strong demand across all business units.
We are confident about further progress in negotiations in line with other recent agreements in our sector that had set a positive precedent.
Deliveries were up 30% year-over-year result of our focus on operational efficiency and on our production leveling initiatives.
Now they may highlights for the company during the quarter.
Commercial aviation performed very well across both your one and E. Two plots of forms S. A S or they're at 45 U N 95 E twos with 10 additional options at the same time Skywest purchased 60, you want 70 fives with 50 additional options.
The book to be ratio was closer to 2, to 1 in the last 12 months across all business units.
Francisco Gomes Neto: We are confident about further progress in negotiations, in line with other recent agreements in our sector that have set a positive precedent. Now, the main highlights for the company during the quarter. Commercial aviation performed very well across both E1 and E2 platforms. SAS ordered 45 E195-E2s with 10 additional options. At the same time, SkyWest purchased 60 E175s with 50 additional options. The division's backlog reached $13.1 billion, with a strong 1.8 to 1 book-to-book over the last 12 months. Executive Aviation delivered another strong quarter, with a record Q2 revenue of circa $550 million in a robust $7.4 billion backlog, supported by a 2.4 to 1 book-to-book over the past 12 months. In defense and security, Portugal confirmed its six KC-390 Millennium purchases, including 10 additional options that may be used by other European countries to facilitate future acquisitions.
Us therapists continue to be a major concern to our business. But with an important step forward last week, highlighting the importance of our industry, not only for Brazil, but also for the US
The division's backlog, Richard 13.1 billion with a strong one eight to one book to Bill over the last 12 months.
We are confident about further progress in negotiations in line with other recent agreements in our sector that have set a positive precedence.
Exactly abbreviation delivered another strong quarter with record second quarter revenue of circa 550 million in their robust seven 4 billion backlog supported by two four to one book to Bill over the past 12 months.
now, the main highlights for the company during the quarter,
Commercial Aviation performed very well across. Both you 1 and E2 platforms. SAS order. It 459582 with 10 additional options.
Defense and security, Portugal confirm it it's six KC three nights purchase including 10 additional options that may be use it by other European Congress to facilitate future acquisitions.
At the same time, Sky West purchased 60175 with 50 additional options.
The divisions backlog reached 13.1 billion with a strong 1.8 to 1 book to bill over the last 12 months.
To Anya also became the seventh NATO countries to selected the aircrafts. The division ended the quarter with a $4 3 billion backlog in the trailing three six to one book to Bill in the last 12 months.
Exactly Aviation delivered. Another strong quarter with record second quarter, revenue of Circa, 550 million in the robust. 7.4 billion, backlog supported by 2.4 to 1, book to view over the past 12 months.
Simpson's supports continued its global expansion signing eight new contracts, increasing its MRO capabilities with computer error in launching full flight simulator partnership with CAE in Montreal, Canada in Madrid, Spain.
Francisco Gomes Neto: Lithuania also became the seventh NATO country to select the aircraft. The division ended the quarter with a $4.3 billion backlog and a trailing 3.6 to 1 book-to-book in the last 12 months. Service and Support continued its global expansion, signing eight new pool contracts, increasing its MRO capabilities with Commuter Air in launching a full-flight simulator partnership with CAE in Montreal, Canada, and Madrid, Spain. The division closed the quarter with a $4.9 billion backlog and a 2:1 book-to-book. That means top of sales versus revenue in the last 12 months. We continue to work in our production leveling initiative to increase efficiency, productivity, output, and improve cash flow. In the previous quarter, we shared with the market the improvements in our Predator production line. This quarter, we highlight the KC-390 Millennium line in the defense segment, where we have also seen significant operational gains over the past year.
The division closed the quarter with a $4 9 billion backlog in a two to one book to Bill that means carve off sales versus revenue in the last 12 months.
We continue to work in our production of 11 initiatives to increase efficiency productivity output and improve cash flow.
In Defence and security. Portugal confirm it is 6 KC to 9 purchase including 10 additional options that may be used by other European countries to facilitate future Acquisitions. This 1 also became the seventh NATO country to select the aircraft. The division ended the quarter with a 4.3 billion backlog in the trailing 3.6 to 1 book to bill in the last 12 months.
In the previous quarter, we shared with the market the improvements in our paper production line.
This quarter, we highlight the KC 399 in the defense segment, where we have also seen significant operational gangs over the past year.
Service and support continued. Its Global expansion, signing 8, new pool contracts, increasing its mro capabilities with commuter are in launching full flight simulator, partnership with C in Montreal, Canada, and Madrid, Spain.
These improvements include double digit increases in aircrafts production operational efficiency reduction in production cycle time, and decreasing cost of poor quality as you can see in the presentation is light.
The vision, closest the quarter with a 4.9 billion backlog in a 2 to 1 book to Bill. That means top of sales versus Revenue in the last 12 months.
We continue to work on our production leveling initiatives to increase efficiency, productivity, output, and improve cash flow.
About tariffs, let me share with you what we had been doing to manage the situation.
In the previous quarter we shared with the market, the improvements in our Predator production line.
Whether it be very active with high level of authorities in Brazil and in the U S to demonstrate the relevance of our company in terms of job creation investments services to passengers and to support the development of a negotiated solution as we have seen with other countries.
Francisco Gomes Neto: These improvements include double-digit increases in aircraft production, operational efficiency, reduction in production cycle time, and decreasing cost of pool quality, as you can see in the presentation slides. About tariffs, let me share with you what we have been doing to manage this situation. We have been very active with high-level authorities in Brazil and in the U.S. to demonstrate the relevance of our company in terms of job creation, investments, services to passengers, and to support the development of a negotiated solution, as we have seen with other countries. As you can see in this slide, our company plays a key role in the U.S. regional aviation market, as our aircraft transport approximately 100 million passengers every year. Our business currently supports 13,000 jobs in the country and should create another 5,500 jobs by 2030, with an impressive trade balance of $8 billion in favor of the U.S.
This quarter, we highlight the Case 39 line in the defense segment, where we have also seen significant operational gains over the past year.
As you can see in this slide our company plays a key role in the U S. Original aviation markets is our aircrafts transports approximately 100 million passengers every year.
This improvements include double digit increases in aircraft's production, operational efficiency reduction in production cycle time and decreasing cost of poor quality. As you can see, in the presentation is light
about tariffs.
Let me share with you what we have been doing to manage this situation.
Our business currently supports 13000 jobs in the country.
Sure the create another 5500 jobs by 'twenty three with an impressive 380 balance of 8 billion in favor of the U S.
Embraer was also willing to invest another 500 million in the U S, which should create roughly another 2500 jobs in the country with a combination of our organic growth in the country and the potential adoption of our KC three ninth proper form by the U S Air Force before the end of the decade.
Have you been very active with high level of authorities in Brazil, and in the US, to demonstrate the relevance of our company in terms of job, creation, Investments services to passengers, and to support the development of a negotiated solution as we have seen with other countries.
As you can see in this slide, our company pays a key role in the US original Aviation markets as our aircraft transport approximately 100 million passengers every year.
We are excited to say we are in advanced conversations with their relevant U S partner for this project.
We continue to believe in and out of Bill gates firmly for it return it to the zero tariff a rule for the global aerospace industry, which was the status quo over the previous 45 plus years.
Francisco Gomes Neto: EMBRAER is also willing to invest another $500 million in the U.S., which should create roughly another 2,500 jobs in the country, with a combination of our organic growth in the country and the potential adoption of our KC-390 Millennium platform by the U.S. Air Force before the end of the decade. We are excited to say we are in advanced conversations with a relevant U.S. partner for this project. We continue to believe in and advocate firmly for a return to the zero-tariff rule for the global aerospace industry, which was the status quo over the previous 45-plus years. We also continue to encourage a constructive dialogue between the Brazilian and the U.S. government to reach an amicable resolution. In the short term, as you know, we have taken measures to preserve this year's results.
Our business currently supports 13,000 jobs in the country and aims to create another 5,500 jobs by 2030, with an impressive trade balance of $8 billion in favor of the U.S.
We also continue to encourage a constructive dialogue between the Brazilian and the U S governments to reach an amicable resolution.
The short term as you know we have taken measures to preserve this year's results the impact of the current 10% tariff is he's already considered in our forecast for the year.
We are excited to say we are in advanced the conversations with the relevant us partner for this project.
This means upsides, if tariffs return to zero soon I hope.
Now move on to operational results by segment over the next few slides.
We continue to believe in and Advocate freely for a returning to the zero. Tariff rule for the global space industry which was the state of school over the previous 45 plus years.
Oh figures are basically on year on year comparisons in.
In commercial aviation revenues increased 4% because of product and customer mix and the adjusted EBIT margin remaining flat at four 3%.
We also continue to encourage a constructive dialogue between the Brazilian and the US governments to reach an amicable resolution.
Francisco Gomes Neto: The impact of the current 10% tariffs is already considered in our forecast for the year. This means upside if tariffs return to zero soon. I will now move on to operational results by segment over the next few slides. All figures are based on year-on-year comparisons. In commercial aviation, revenues increased 4% because of product and customer mix, and the adjusted EBIT margin remained flat at 4.3%. In executive aviation, the top line soared 64%, supported by higher volumes and product mix. The adjusted EBIT margin increased to 14.5% because of operating leverage and cost containment initiatives. Moving to defense and security, revenues grew 18% because of A-29 Super Tucano production. The improvement of almost 10 percentage points in the adjusted EBIT margin to 9.2% reflects higher A-29 volumes and better KC-390 customer mix.
Active aviation the topline sore at 64% supported by higher volumes and product mix.
The short term, as, you know, we have taken measures to preserve these ears results. The impact of the current 10% tariffs is already considered in our forecast for the year.
The adjusted EBIT margin increased to 14.5% because of operating leverage and cost containment initiatives.
This means upside if tariffs return to zero soon. I will now move on to operational results by segments over the next few slides.
Moving to defense and security revenues grew 18% because of 890 Super Tucano production improve.
All figures are based on year, on year comparisons.
Movement of almost 10 percentage points in the adjusted EBIT margin to nine 2% reflects higher eight 2019 volumes in better Casey to 90 customer mix.
In commercial Aviation revenues increased 4% because of product and customer mix and that just it margin remained flat at 4.3% in this active Aviation the Top Line, saw it 64% supported by higher volumes and product mix.
In service and support revenues rose, 13% driven by the ramp up of augments GTS engine shop there.
Adjusted EBIT margin declined slightly to 15.5%, mainly due to higher past due credits provisions.
Now, just at e marginal cost of operating leverage and Cost Containment initiatives.
We've achieved an important milestone in the second quarter with the announcement of its first by the order with revel, putting vehicles in 40 options, including after market services, Let me pass it over to Antonio So he can highlight the main financial points over the quarter.
Moving to defense and security, revenues grew 18%, because of $829 million in production.
Francisco Gomes Neto: In Service and Support, revenues rose 13%, driven by the ramp-up of the OGMA Portugal GTF engine shop. The adjusted EBIT margin declined slightly to 15.5%, mainly due to higher past-due credit provisions. EVE achieved an important milestone in the second quarter with the announcement of its first binding order with REVO for 10 vehicles and 40 options, including aftermarket services. Let me pass it over to Antonio so he can highlight the main financial points of the quarter.
Improvement of almost 10% points in the adjusted ebit margin to 9.2% reflects higher, 829 volumes in better cases to 90 customer mix.
Thank you Francisco.
Morning, and good afternoon, everyone.
In service and support revenues Rose, 13% driven by the ramp up of August gtf engine shop.
Yeah, a lot of moving parts around the woods, but let me present to you what we really control.
Our operational and financial results.
Our per pharmacy in Q2 was brilliant and consistent.
As you see shortly.
First and foremost, let me hate their eight or 2025 guidance.
Antonio Carlos Garcia: Thank you, Francisco. Good morning and good afternoon to everyone. There are a lot of moving parts around the world, but let me present to you what we really control: our operational and financial results. Our performance in Q2 was brilliant and consistent, as you will see shortly. First and foremost, let me reiterate our 2025 guidance. We are confident we will achieve between $7 billion to $7.5 billion in revenues, 7.5% and 8.3% in adjusted EBIT margin, and more than $200 million in adjusted free cash flow from a financial perspective. Meanwhile, we expect to deliver between 77 and 85 aircraft in commercial aviation and 145 and 155 in executive aviation from an operational point of view. Turning to the quarter, all my comments will be based on year-over-year comparison unless noted. Let me move to slide 12, beginning with deliveries.
The adjusted EBITDA margin declined slightly to 15.5% in the second quarter due to higher past due credit provisions. We achieved an important milestone in Q2 with the announcement of our first binding order with Revo for 10 vehicles, with 40 options, including aftermarket services. Let me pass it over to Antonio so he can highlight the main financial points of the quarter.
We are confident we'll achieve.
Between seven to seven and a half your revenues.
Thank you Francisco. Good morning and good afternoon to everyone.
Seven and a half and the Ada and 3% in adjusted a bit Marty and more than 200 million and adjusted free cash flow.
Yeah, a lot of moving parts around the world but let me present to you what we really control.
From a financial perspective.
Our operational and financial results.
Meanwhile, we expect that should deliver between 77 and 85 aircrafts in commercial aviation.
Our Pharmacy in Q2 was brilliant and consistent as you see shortly.
And under 45.
And on the 55 executive aviation from an operational point of view.
First and foremost, let me address our 2025 guidance.
We are confident with your chief.
Turning to the quieter all my comments you'd be based on year over year comparisons unless noted.
Between 7 to 7 and a half billion in revenues.
Let me move to slide 12 begins with believers.
7 and a half and 8 and 3% in adjusted a bit margin and more than 200 million in adjusted free, cash flow.
From Financial perspective.
Amaranth delivered 61 aircrafts across all business units for a 30% increase.
In commercial aviation deliveries totaled 19 aircrafts in line.
Meanwhile, we expected to deliver between 707 and 85 aircrafts in commercial Aviation.
And 145.
With the same period of last year.
In the first half of the year, we delivered.
And 155 years, active Aviation from an operational point of view.
<unk> six commercial aircrafts, which represents 32% of the mid point of our full year guidance of 81 aircrafts marginally below the five years' average of 35, 8% for the first semester.
Turn it to the quarter. All my comments, you'll be based on year-over-year comparison and let's notice
Antonio Carlos Garcia: EMBRAER delivered 61 aircraft across all business units for a 30% increase. In commercial aviation, deliveries totaled 19 aircraft, in line with the same period of last year. In the first half of the year, we delivered 26 commercial aircraft, which represents 32% of the midpoint of our full-year guidance of 81 aircraft, marginally below the five-year average of 35% for the first semester. In executive aviation, we delivered 38 jets, of which 21 were in the light segment and 17 in the mid-size, for an increase of 41%. More importantly, in the first half of the year, we delivered 61 business jets, which accounts for a 41% of the midpoint of our full-year guidance of 150 jets, well above the five-year average of 32% for the first semester. In slide 13, our company-wide backlog recorded a new all-time high of $29.7 billion, up a significant 40%.
Let me move to slide 12. Begin with believers.
In his active aviation, we delivered 38 units of which 21 were in the light segment and 17 to mid size for an increase of 41%.
Delivered 61 aircrafts across all business units for a 30% increase.
In commercialization, deliveries totaled 19 aircraft, in line with the same period of last year.
More importantly in the first half of the year, we delivered seeks to EM business Jets, which accounts for a 41% of the midpoint of our full year guidance of 150 Jets.
Well I'll go over the five years average of 32% for the first semester.
the first half of the year we delivered 26 commercial aircrafts, which represents 32% of the midpoint of our full year, guidance of 81, aircrafts marginally below the 5 years, average of 35% for the first semester,
He was like 13.
Our company wide backlog of recorded a new all time high of $29 $7 billion up are.
A significant 40%.
Inactivation, we delivered 38 jets, of which 21 were in the light segment and 17 in the midsize, for an increase of 41%.
Looking at each division the backlog for Commission the Asia grew 16% Y O for executive Aviation was.
62%, reflecting the growing demand for our act, where I've seen both segments.
More importantly, in the first half of the year, we delivered 6 to 1 Business Jet which accounts for a 41% of the midpoint of our Feehan guidance of 150 Jets.
In defense and security the backlog the double supported by strong momentum KC 390, and a 29 Super Tucano sales.
Well, above the five-year average of 32% for the first semester.
Is light 1 3.
Why is service and support their backlog increased 55% highlighting the continued and consistent growth in this segment.
Antonio Carlos Garcia: Looking at each division, the backlog for commercial aviation grew 16%, while for executive aviation it was 62%, reflecting the growing demand for our aircraft in both segments. In defense and security, the backlog doubled, supported by strong momentum in KC-390 Millennium and A-29 Super Tucano sales. While in Service and Support, the backlog increased 55%, highlighting continued and consistent growth in the segment. Moving to revenue, our top line was $1.8 billion, the best second quarter in our history, and 22% higher. In our breakdown by business, we can see commercial and executive aviation were responsible for more than 60% of the revenue, followed by Service and Support with 25% and defense and security with 12%. Moving to the next slide, slide 14, we generated $246 million in adjusted EBITDA in the second quarter with a 13.5% margin.
.7 billion up a significant 40%.
Moving to revenue our topline was one point to 80 billion the best second quieting, our history and 22% higher.
Looking at individual, the backlog for commission view 16% while for executive Aviation was 62% reflected the growing demand for our equity in both segments.
In our breakdown by business.
We can see commercial and executive aviation were responsible for more than 60% of their revenue followed by servicing support there's 25 in defense and security with 12%.
In Defence and security, the backlog double supported by strong momentum in case C 390 and 829 super to cancel sales.
Moving to the next slide slide 14.
Why is service and support the backlog? Increased 55% highlighting continued and consistent growth in the segment.
We generated 246 million in adjusted EBITDA in the second quarter with a 13, 5% margin.
Now adjusted EBIT for the quarter for us.
Moisture Revenue our Top Line was 1.80 billion the best second quality in our history and 22% higher.
And that 92 million with 13, 5% Mark the best second acquired the margin over the past 10 years.
In our breakdown, by business.
I'd like to highlight a key milestone in the first half of the year, we achieved adjusted EBITDA margin of eight 7% a remarkable with step up from one point to 1% average over the past five years.
We can see commercial and executive Aviation were responsible for more than 60% of their revenue, followed by service and support of 25 and Defence and security with 12%.
Move to the next Slide. The light 14.
Why is this is a significant achievement we are aware that the second half of the year, you'll bring important changes driven mainly by inflationary pressures.
Antonio Carlos Garcia: Adjusted EBIT for the quarter was $192 million, with a 10.5% margin, the best second quarter margin of the past 10 years. I would like to highlight a key milestone. In the first half of the year, we achieved an adjusted EBIT margin of 80.7%, a remarkable step up from 1.1% average over the past five years. While this is a significant achievement, we are aware that the second half of the year will bring important challenges, driven mainly by inflationary pressures, foreign exchange rate volatility, and ongoing tariffs discussed with the U.S. Let us move to the next slide, slide 15. In the second quarter, we consumed $162 million in adjusted free cash flow, mainly because of a $312 million increase in working capital in preparation for higher numbers of aircraft delivered in the next two quarters.
Foreign exchange rate volatility and ongoing Tories discussion U S. Now, let's move to the next slide slide 15.
We generate a 246 million in adjusted debit in the second quarter that we have a 13.5% margin. Now, I just edit for the quest was 192 million with a 10.5% margin. The best second required, the margin of the past 10 years,
In second quarter, we consume 162 million in adjusted free cash flow, mainly because I was going to end up 12, and really increasing your working capital in preparation for higher numbers of aircraft delivered in the next two quarters. For example, we have a handful.
I'd like to highlight a key milestone, in the first half of the year, we achieved adjusted bit. Margin of 80.7%, a remarkable step up from 1.1%, the average of the past 5 years,
After aircrafts to be there every late June that moved to the right.
While this is a significant achievement, we are aware that Deb's. Second house of the year, you bring important changes. Do it in mainly by inflationary pressures.
Broken out our investments.
In the second quarter exclude the eve, we allocated a total of $97 million or 10% lower at Syncrude is 53 million Capex 28 million. In addition to intangibles 9 million research and 90 million the pool program to support new contracts.
For an exchange rate, volatility and ongoing charges of discussion of us. Now let's move to the next slide. Your slide 15.
Antonio Carlos Garcia: For example, we have a handful of aircraft to be delivered in late June that moved to the right. Looking now to our investments in the second quarter, excluding EVE, we allocated a total of $97 million, or 10% lower. It includes $53 million in CAPEX, $28 million in addition to intangibles, $9 million in research, and $80 million in the pool program to support new contracts. It is important to highlight our capital allocation remains focused on executive aviation, Service and Support, the segments with highest return rates, especially in the U.S. market. To complete this slide, there are two important points here. First, our reported net income was $79 million during the quarter, with a 4.3% margin, which was roughly $100 million lower than our reported EBIT because of the negative non-cash impact of mark-to-mark of EV warrants and the losses associated with the Azul restructuring.
It is important to highlight.
Our capital allocation remains focused and there's active aviation services and support the segments with the highest rate of return rates, especially in U S markets.
In second quarter, we consumed 162 million in adjusted free, cash flow mainly because of the 12 million increase in working capital in preparation, for a higher numbers of aircrafts delivered. And the next 2 quarters. For example, we have a handful
Of aircrafts to be delivered late June, that move to the right.
To complete these lives there are two important points here first.
Our reported net income was $79 million during the quarter with a four 3% margin.
Which was roughly 100 million lower in our hip part that David because over there and they've got the noncash impact of Mark to Mark of EV warrants and the losses associated with Yahoo, a structuring.
Looking out to our investments in the second quarter, excluding if we allocated a total of 97 million or 10% lower, its includes 53 million capex, 28 million. In addition to intangibles, 9 million research and 90 million the pool program to support new contracts,
It is important to highlight.
Second our adjusted net income and <unk> 5 million in the Reds.
Our Capital location remains focused and executive deviation service and support the segments with highest return rates, especially in US market.
My golf minus 0.3%.
They're almost 85 million shortfall to our reported net income.
Because of negative 163 million in deferred taxes, driven by stronger Brazilian foreign exchange rates and positive 79 million adjustment for me the results.
To complete this large. There are 2 important points here. First. Our reported net income was 79 million during the quarter with a 4.3% margin.
Let's move to slide 16.
Antonio Carlos Garcia: Second, our adjusted net income ended $5 million in the red, with a margin of minus 0.3%. The almost $85 million shortfall to our reported net income was because of negative $163 million in deferred taxes, driven by a stronger Brazilian foreign exchange rate, and positive $79 million adjustment from EVE results. Let us move to slide 16. I would like to start by drawing your attention to the top right corner. Over the past 12 months, EMBRAER, excluding EVE, has significantly reduced both its gross and net debt position by approximately $560 million and $720 million, respectively. We closed the second quarter with a net debt to EBITDA, excluding EVE ratio, of 0.7 times, a substantial improvement from 2 times a year ago.
Which was roughly 100 million lower than our reported debit because of the negative. Non-cash impact of March to March of Eve rewards, and the losses associated with Yazoo. A structuring
I'd like to start by drawing your attention to the upper right corner.
Over the past 12 months Embraer exclude eve has significantly reducing both gross and net debt position by approximately <unk> <unk>.
second, our adjusted net income ended at 5 million in the Reds with a mark of minus 0.3%.
$560 million and 720 million respectively.
We closed the second acquired we send that to debt EBITDA, excluding <unk> ratio of 0.7 times.
The almost 85 million shortfall to our report and net income was because of negative 163 million in the first taxes driven by stronger, Brazilian foreign exchange rates and positive, 79 million adjustment for any results.
Finishing improvements from two times a year ago that said the negative free cash flow of 547 million for named Brad Standalone in the first half of the year.
Let's move to July 16th.
I'd like to start by drawing your attention to the top right corner.
Because of businesses and that has contributed to a temporary increase in leverage compared to end of 2024.
As part of our liability management strategy, we remain focused on extending that to duration and lower our cost of capital.
Over the past 12 months in rare exclude both its growth and not that position by approximately 560,720 million respectively.
Results, our average debt maturity without even has increased to six one years up from three seven years.
Antonio Carlos Garcia: That said, the negative free cash flow of $547 million for EMBRAER standalone in the first half of the year, because of businesses invalidated, has contributed to a temporary increase in leverage compared to the end of 2024. As part of our liability management strategy, we remain focused on extending debt duration and lowering our cost of capital. As a result, our average debt material without EVE has increased to 6.1 years, up from 3.7 years at the end of last year. In slide 17, to conclude my presentation, I would like to talk briefly about shareholders and shareholder remuneration. Firstly, I would like to thank you all for your support and say that I am proud to mention our company celebrated in July our 25-year listing anniversary at the New York Stock Exchange.
We close the second quarter with a net adaptive, btda excluding if ratio of 0.7 times a substantial improvement from 2 times a year ago.
At the end of last year.
That said, the negative free cash flow of 547 million. For Ember Standalone is the first half of the year.
Slide 17.
To conclude my presentation I'd like to talk briefly about shareholders and shareholder remuneration, Firstly I would like to thank you all for your support he's saying that I'm proud to mention our company celebrated in July our 25 years leasing University and the new year.
Because of businesses analytics has contributed to a temporary increase in leverage compared to end of 2024.
Billet management strategy. We remain focused on extending debt to duration in lower our cost of capital.
Our stock exchange <unk>.
<unk> declared nearly 100, that's 43 million Brazilian reais.
As results are averaged debt material without has increased to 6.21 years. But from 3.7 years,
And if there is some equity during the quarter, which translates to 19 Brazilian cents per share.
At the end of last year.
July 1 7.
Amount to me be complemented by a top up dividend if needed to meet the minimum 25% net income distributions required by Brazilian corporate law.
For amount to be paid in a single installment after our 'twenty to 'twenty six annual shareholders' meeting.
Antonio Carlos Garcia: Second, EMBRAER declared nearly 143 million Brazilian reais in interest on equity during the quarter, which translates to 19 Brazilian cents per share. This amount may be complemented by a top-up dividend if needed to meet the minimum 25% net income distribution required by Brazilian corporate law. The full amount will be paid in a single installment after our 2026 annual shareholders' meeting. With that, I hand back to Francisco for his final remark, and thank you very much.
To conclude my presentation. I'd like to talk briefly about shareholders and shareholders remuneration. Firstly, I would like to thank you all for your support, it say that I'm proud that you mentioned. Our company celebrated in July. Our 25 years listing University at the New York Stock Exchange,
With that I hand back to Francisco for his final remarks, and thank you very much.
second in our declared nearly 143 million, Brazilian eyes.
Thank you Antonio.
Summary, our defense business brought good news from Europe, with Portugal's Newport's easy and Lithuanians selection of the KC 10, 19 Skywest order.
Our you want 75 aircrafts consolidates, our dominant position in the U S. Regional markets that you would take the opportunity to say thank you to S. A S. A longstanding partner of Embraer air through that you want a blocker form and now has a new operator of the into family.
In iteration on wet teeth during the quarter, which translates to 19, Brazilian cents per share. This amount may be complemented by a top up dividend if needed to meet the minimum 25%, net income, distribution required by Brazilian corporate law.
the full amount will be paid in a single installment after our 2026, annual shareholders meeting,
Francisco Gomes Neto: Thank you, Antonio. In summary, our defense business brought good news from Europe, with Portugal's new purchases and Lithuania's selection of the KC-390. SkyWest's order of our E175 aircraft consolidates our dominant position in the U.S. regional market. I will take the opportunity to say thank you to SAS, a long-standing partner of EMBRAER through the E1 platform and now as a new operator of the E2 family. Our executive aviation maintains its strong performance in sales and deliveries. The second quarter of 2025 was another milestone for EMBRAER. We delivered record revenues, the highest second quarter adjusted EBIT margin in a decade, enriched a new all-time high backlog with back-to-back significant orders year to date. We continue to work hard to generate value for our customers and our shareholders, and we are optimistic about a likely positive outcome for the current U.S. tariff overhang.
With that, I hand back to Francisco for his final remark and thank you very much.
Our executive aviation maintained its strong performance in sales and deliveries the second quarter of 2025. It was another milestone for Embraer, we delivered a record the revenues the highest second quarter. Adjusted EBIT margin, you know decades, enriches, a new all time high backlog with back to back significant.
Orders year to date.
We continue to work hard to generate value for our customers and our shareholders and we are optimistic about a likely positive outcome for the current U S. Tariff overhang I will also thank all of the support we received from our U S customers and suppliers like <unk>.
Thank you, Antonio in summary. Our defense business. Brought good news from Europe with Portugal's, new purchasing and Lithuania selection of the kc2 19. Skye West order of our e175 aircraft consolidates, our dominant position in the US regional market that you take the opportunity to say thank you to SAS a long-standing partner of Ember through the eu1 platform and now has a new operator of the EU family.
Erika lines, Skywest, Alaska, United Air Camp General Electric Honeywell, RPX, Parker, Hannifin and eat them among others in the tariff this negotiation process.
Our aviation segment is active. Aviation maintenance showed strong performance in sales and deliveries. The second quarter of 2025 was another milestone for Embraer, as we delivered record revenues and achieved the highest second quarter adjusted EBIT margin in a decade, resulting in an all-time high backlog with back-to-back significant orders year to date.
And I conclude this presentation by reaffirming the foundation of our culture safety first and quality all of us.
Francisco Gomes Neto: I will also thank all the support we received from our U.S. customers and suppliers like American Airlines, SkyWest, Alaska, United, AirCap, General Electric, Honeywell, RTX, Park Hennigsen, and Eton, among others, in the tariffs negotiation process. I conclude this presentation by reaffirming the foundation of our culture: safety first and quality always. Thanks for your trust in our company, and let's now start the Q&A session.
Thanks for all the thrust in our company and let's now start the Q&A session.
Well now start the question and answer session well remind you again that this conference is being recorded.
Broadcast.
Exclusively for the participants at this event and may not be reproduced or retransmitted without the express authorization of Embraer.
We continue to work hard to generate value for our customers, in our shareholders and we are optimistic about a likely positive outcome for the current US star. Overhang I will also think all the support you received from our us customers and suppliers like American Alliance Sky. West Alaska. United are Camp General, Electric General RTX, parking. Anything in on among others, in the tariffs, negotiation process.
We also highlight this conference call is being conducted in English with translation to Portuguese. Please let me say.
And I concluded this presentation by reaffirming the foundation of our culture, Safety First and quality always.
Thanks for your trust in our company and let's now start the Q&A session.
A short announcements for Portuguese speakers.
Unidentified Moderator: We will now start the question and answer session. We remind you again that this conference is being recorded. Its broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of EMBRAER. We also highlight this conference call is being conducted in English with translation to Portuguese. Please, let me say a short announcement for Portuguese speakers. Esta conferência está sendo realizada originalmente em inglês. Para ouvir a tradução em português, pressione o botão de interpretação da plataforma Zoom e selecione o idioma português. Após selecionar o idioma no botão de interpretação, clique também em desativar o áudio original na plataforma para melhorar a qualidade da transmissão em português. We request participants interested in asking questions to press the raise your hand button on the platform.
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That's a selling point to guests, but also in Nevada.
That's not our philosophy isn't maisano.
Part of this.
Our first priority.
But <unk> looked at them they own such a biologic rationale that a farmer.
We will now start the question and answer session. We remind you again that this conference is being recorded, its broadcast, as intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of umbrella.
I have pointed out to that sounds my cell phone.
Yes.
We request participants interested in asking questions to pass the racer hand pattern on the platform. When your name is an analyst. Please make sure your microphone is on Eric's question.
We also highlight this conference call is being conducted in English with translation to Portuguese.
Please let me say a short, a short announcement for Portuguese speakers.
To give everyone a chance to participate we request to ask just one question first time, if you need assistance. Please use the Q&A button on the platform well also asked a question sent via the platform chat.
Part of the Q&A session will be exclusively for equity research analysts and investors.
Part of the Q&A will be only for enterprise.
Unidentified Moderator: When your name is announced, please make sure your microphone is on and start your question. To give everyone a chance to participate, we request to ask just one question per time. If you need assistance, please use the Q&A button on the platform. We will also answer questions sent via the platform chat. 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. The first question comes from Marcelo Motta with JPMorgan. Please, go ahead.
We request participants interested in asking questions to press the 'raise hand' button on the platform when your name is announced.
The first question comes from Marcello Motta with J P. Morgan please.
Please make sure your microphone is on and start your question.
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Hi, everyone. Thank you for taking the question is regarding the outlook for the second half and during the conference call and panel mentioned on both general FX volatility potential terrorists inflationary pressure. So just wondering how big could this challenge to beat because when we look at the historical EBIT margin for the second half.
To give everyone a chance to participate. We request to ask just 1 question per time.
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to first, part of the Q&A session will be exclusively for equity, research analysts and investors
Usually it is much stronger than what we see in the first half given the seasonality, but just wondering if there is a you know what are the are the risk and opportunities to revise the guidance upwards. During the second half given that the first half was very strong. Thank you.
The second part of the Q&A, will be only for the Press.
The first question comes from Marcelo Ma with JP Morgan.
Please go ahead.
Gui Paiva: Hi, everyone. Thank you for taking the question. It is regarding the outlook for the second half. During the conference call, Antonio mentioned about effects, volatility, potential tariffs, inflationary pressure. Just wondering how big could this challenge be? Because when we look at the historical EBIT margin for the second half, usually it is much stronger than what we see in the first half, given the seasonality. Just wondering what are the risks and opportunities to revise the guidance upward during the second half, given that the first half was very strong? Thank you.
Good morning, Marcel and thanks for the nice Quest I was expecting in the first place.
You're right year to date, we are at eight 7% and we all know our margins that the $8 three but.
Some comments here, we only have I would say, 20% year to date impact then.
The big amount of there is still in our inventory to be Invoiced second half of the year that store. It sounds like that was not in our plan.
Uh, thank you for taking the question, uh, is regarding the outlook for the second half during the conference call. Antonio mentioned about, you know, effects volatility, potential terrorists, inflationary pressure. Uh, so just wondering how big could this challenge be because when we look at the Historical a bit margin for the second half, usually, it is much stronger than what we see in the first half, even the the seasonality. So just wondering if there is, uh, you know, what are the, uh, the risks and opportunities to revise the guidance upward during the the second half, given that the first half was very strong, thank you.
Antonio Carlos Garcia: Good morning, Marcelo, and thanks for the nice question. I was expecting the first place. You are right. Year to date, we are at 8.7%, and we all know our margin is at 8.3%. Some comments here, we only have, I would say, 20% year to date tariff impact. The big amount of tariffs due in our inventory to be invoiced the second half of the year, that is already something that was not in our plan. The dollars get weaker, reais get stronger. That is why when you do the translation, the cost in reais, we have also a negative impact. Also the PCA in Brazil, the inflation that we put our forecast, it seems a little bit stronger than what is planned, more or less 1.3%. If you put in a nutshell, I would say be on the safe side.
<unk>.
The dollar $1 get weaker we always get stronger that's why.
When you do the translation there were clustered <unk> we have also.
A negative impact and also.
The PCA in Brazil, the inflation that we put our forecast it seems.
A little bit stronger than it was planted more or less one 3%.
In a nutshell I would say be on the safe side.
We are keeping the guidance says.
As long as the next months and quarters. It will then we could revise but we are not in position to do it and nobody knows what's going to happen is to in this tariff issue that's why let's say.
The guidance seems to be safe today, but we do prefer to be more.
Uh, good morning Marcel and thanks for the nice Quest. I was expecting the first place. Uh are you all right here? Today we are at the 8.7% and we all know our m is at 8.3 but uh, some comments here we only have I would say, 20% year to date. There is impact, then the big amount of terrorists you in our adventure to be invoiced, second half of the year, that's already something that was not in our plan. Um, uh, the dollar dollars get weaker, we always get stronger. That's why, uh, when you do the translation, there are costing real eyes. We have also, uh, a negative impact. And also, uh, the PCA in Brazil, the inflation that we put our forecast, it seems um,
Waiting months Yada yada.
Mark a different story right now.
Perfect very clear thank you.
Antonio Carlos Garcia: We are keeping the guidance as long as the next months and quarters evolve, then we could revise, but we are not in a position to do it. Nobody knows what can happen during this tariff session. That is why I would say the guidance seems to be safe today, but we do prefer to be waiting more months in order to tell the market a different story right now.
Thank you Marcello.
A little bit stronger than was planned, and more or less 1.3%. If you put it in a nutshell, I would say, to be on the safe side, we are keeping the guidelines.
The next question comes from Kristine Iraq with Morgan Stanley. Please go ahead.
Yeah, Good morning, everyone Francisco Antonio and Gere Wow, what a what a really strong operating quarter. I guess, you know with U S customers facing the prospect that they would've had to pay 50% tariff on Embraer E Jets if.
As as long the the the next months and quarters evolved, then we could revise but we are not in position to do it and nobody knows what can happen is still in the star station and that's why I would say. I would say the guidance seems to be safe today, but we do prefer to to be more uh
Waiting more months in order to tell the marked a different story right now.
Gui Paiva: Perfect. Very clear. Thank you.
Antonio Carlos Garcia: Thank you, Marcelo.
We are the aerospace exemption wasn't added how's your conversations with those customers because now that for now these tariffs are gone and they're looking at their fleet is it increasing the urgency for them to re fleet and could you see potentially more orders out of the U S E. One seven.
Perfect right here. Thank you.
Thank you Marcelo.
Unidentified Moderator: The next question comes from Christine Dewag with Morgan Stanley. Please go ahead.
The next question comes from, Christine diwag with Morgan Stanley. Please go ahead.
Christine Dewag: Yeah. Good morning, everyone. Francisco, Antonio, and Gui, what a really strong operating quarter. I guess, with U.S. customers facing the prospect that they would have had to pay a 50% tariff on EMBRAER E-Jets if the aerospace exemption wasn't added, how are your conversations with those customers? Because now that for now these tariffs are gone and they're looking at their fleet, is it increasing the urgency for them to refleet? Could you see potentially more orders out of the U.S. on E175s as they evaluate their fleet needs?
Five that they evaluate are there their fleet needs.
Hey, Christine in Francisco here. Thanks for the question actually Kristina seems to the implementation of the first round of tariffs.
April have been working to.
To mitigate the impact for us and for the customers and for our customers, especially the 175 customers.
The final tariffs.
Lower than 10%.
Because of the U S content that we have in our aircrafts.
Good morning, everyone. Uh, Francisco, Antonio and ghee. Wow! Like what a, what a really strong operating quarter. Um, I I guess, you know, with us customers facing the prospect that they would have had to pay 50% tariff on. Uh, Ember are ejects if, uh, the the uh, the Aerospace exemption wasn't added. Um, how is your conversations with those customers? Because now that, uh, for now, these tariffs are gone and they're looking at their Fleet, is it increasing the urgency for them to reflect and could you see potentially more orders out of the US? And
Sure Dan This is their time and who have been working with them and we.
175 does the evaluate, uh, their their Fleet needs.
Antonio Carlos Garcia: Hi, Christine. Francisco here. Thanks for the question. Actually, Christine, since the implementation of the first round of tariffs last April, we have been working to mitigate the impact for us and for the customers. For our customers, especially the E175 customers, the final tariff is lower than 10% because of the U.S. content that we have in our aircraft. Since that time, we have been working with them, and we were able to deliver a few aircraft since that month. Our focus is really to restore the zero tariff. We are happy that we were able to come from 50% to 10%, but we need to reduce a lot of the impact for our customers. We are working with them to deliver the aircraft. In parallel, we are working hard to restore the zero tariff, and we see some precedents in the market.
Hi, crostini Francisco here.
We're able to delivery a few aircrafts since that that month.
Thanks for the question.
actually, Christina since the
You know our focus is really to restore the zero tariff.
First round of service. Last April, we have been working to
So we are happy that we were able to come from 50% to 10%, but which will reduce our loss of impact for our customers and we are working with them to deliver the aircraft.
to, to mitigate the impact for us, and for the customers and for for our customers, especially the e175 customers.
The, the final therapist is lower than 10%.
But in parallel we are working hard to restore the zero tariff and we see some precedent in the market. So about the new orders well I mean, we're happy with the orders we have it for you in 75 of this year and.
Because of the US content that we have in our aircraft.
So then the since that time we have been working with them and we we were able to deliver it a few aircraft since that uh that month.
We do not expect a new BD orders for you on 75, along with this year.
But, uh, you know, our focus is really to restore the zero tariff.
Okay, great. Thank you I'll keep it to one.
Yes.
Thank you.
So we are happy that we are able to to come from 50 to 10 percent, but uh, would you reduce a loss of the impact for our customers? And, uh, we are working with them to deliver the aircraft.
[laughter] [laughter].
Next question comes from Myles Walton with Wolfe Research. Please go ahead.
Antonio Carlos Garcia: About the new orders, we are happy with the orders we have for E175 this year. We do not expect new big orders for E175 along this year.
Thanks, Good morning.
Maybe maybe for Antonio within Defense, obviously, great performance.
But in parallel, we are working hard to restore the zero tariffs, and we see some, uh, presidents in the market. So about new orders, well, I mean, we are happy with the orders we have for Q2 2025 this year. And, uh,
In the in the commentary you talked about POC completion, driving a lot of the margin accretion. So I guess based on that why wouldn't this level of performance continue if it's POC driven and not a 29 Super Tucano.
We do not expect new big orders for the UN75 along this year.
Christine Dewag: Great. Thank you. I'll keep it to one.
They'll keep it to 1.
Antonio Carlos Garcia: Yes.
Christine Dewag: Thanks.
Antonio Carlos Garcia: Thank you, Christine.
Unidentified Moderator: Next question comes from Myles Walton with Wolfe Research. Please go ahead.
Thanks, thank you.
Louis.
Thanks, Mike.
For the question effect that we are as you could see that we are improving the performance and for sure the Super Tucano helps a lot.
Next question comes from Mi Walton with wolf research, please go ahead.
Ronald Epstein: Thanks. Good morning. Maybe for Antonio, within defense, obviously great performance. In the commentary, you talked about POC completion driving a lot of the margin accretion. So, I guess based on that, why wouldn't this level of performance continue if it's POC driven and not A-29 Super Tucano unit of deliveries?
I would say for me defense and security as a straight line to move.
Moving to the higher <unk> in the coming quarters I don't know if it was going to happen this year, but we are going there because.
The majority of our POC customary right now with shifting from Morocco contracts to export contracts include the Super Tucano by doing that.
Um, driving a lot of the margin accretion. So I guess based on that, why wouldn't this level of performance continue if it's PC driven and not 829 super Tucano, uh, unit of deliveries
Antonio Carlos Garcia: Thanks, Myles, for the question. In fact, we are, as you could see, improving the performance, and for sure, the A-29 Super Tucano helps a lot. I would say for me, defense and security is a straight line to move it to the higher single digit in the coming quarters. I do not know if it is going to happen this year, but we are going there because the majority of our POC customer right now is shifting from local contracts to export contracts, including the A-29 Super Tucanos. By doing that, I would say it is accurate even for a higher single digit, even double digit margin, but not yet. I would say let us wait probably next year. But you could see the progression. He is crystal clear about our margin wave for defense. I would say in everything we are doing, he is on the POC.
I would say.
Exactly see before our highest single to even double digit Marty but did not yet I would say, let's wait probably next year, but.
Thanks, Maya, for the question. In fact, we are. Uh, as you could see, we are improving the performance, and for sure, the super kind of helps a lot.
Could see the progression is clear crystal clear about our margin way for defense.
I would say and everything we are doing he is under POC and when you revised the baseline assuming the prediction literally in the efficiency, we're showing here I would say, we have let's say more chances and risks.
Okay.
Just again here just to be clear the 8 million lines also follow the POC method yep.
Does that make sense, both the 29th in the KC 390, yes. Thank you.
Okay, and then just a clarification those deliveries that moved to the right where those moved to the right because of tariffs for the move to the right because of supply chain any color on that.
Antonio Carlos Garcia: When we revise the baseline, assuming the production level and the efficiency we are showing here, I would say we have more chances than risk.
No. We are we are talking about just for commercial aviation when theyre miles and I would say.
Gui Paiva: Okay. Myles, just to be clear, the A-29s also follow the POC method.
The body knows about it there is a situation then we eat.
We are awaiting the lessor to trough.
Uh, I would say for me the defense and security is a straight line to move it to the higher higher single digit in the coming quarters. I don't know if it's going to happen this year, but we are going there because uh, the majority of our PC uh customer right now is shifting from local contracts to export contracts, including the super tokens by doing that. Uh, I would say is accurate even for a higher single digit, even double digit margin but not yet, I would say, let's wait, probably, uh, next year. But, uh, you could see the progression. He is clear. Crystal clear about our margin way for defense and I would say and everything we are doing here is on the PC and when you revise the Baseline, assuming the production level and the deficiency. We are showing here, I would say we have a, I would say more chances than this. Okay. Just to get here, just to be clear the, the 829
Antonio Carlos Garcia: Yeah.
Gui Paiva: So, it's a mix of both the A-29s and the KC-390.
Uh huh.
To to give us the authorization to issue the jewelry wise, the aircrafts and Youll have to end of the June some commercially official or other customer, but I would say nothing that is going to compromise. The guys of subsidies is really that I would say the paperwork was not finished doing wise the aircrafts, but he got a superb.
Antonio Carlos Garcia: I agree.
Gui Paiva: Okay. Then just a clarification, those deliveries that moved to the right, were those moved to the right because of tariffs? Were they moved to the right because of supply chain? Any color on that?
Also follow the uh, PC method. Yeah. It's a mix of both the A 29's and the KC 390. Yeah, thank you.
Okay. And then just a clarification of those deliveries that move to the right where those move to the right because of tariffs where they move to the right because of supply chain, any color on that.
Antonio Carlos Garcia: No. We are talking about just for commercial aviation. Myles, I would say everybody knows about the Azul situation. We are waiting the lessor to give us the authorization to invoice the aircraft. We have to end of June some commercial issues or other customers. I would say nothing that is going to compromise the guidance of this year. It is really that I would say the paperwork was not finished to invoice the aircraft. In regards to production output, we produce much more of what we deliver for commercial aviation. We would say it continues to see effects of production leveling, but not invoicing those aircraft, at least for commercial.
Sure output, we produce much more of what we deliver for commercial aviation, where let's say continuous juicy effects of reduction laterally, but not in voice and those aircrafts.
No, we, uh, we we are talk about just for commercial Aviation miles. And I would say, uh, everybody knows about the Azu situation and we we are waiting the, the, the, the the left or to to, uh,
At least for a commission.
Okay. Okay. Thanks, so much.
Thank you.
The next question comes from Ronald Epstein with Bank of America. Please go ahead.
That's a little bit out of whack.
Hey, Good morning, guys can you hear me.
Yes.
Great.
So I'm not sure if you can answer this but I'm going to ask it anyway.
If you look at the relative valuation November compared to say Tobey Tobey 16 billion today.
To, to give us the authorization to issue the to, revise the aircraft. And we have to end off the June of some commercial if, if you are other customer but I would say nothing that is going to compromise, the guidance of this year, is really that I would say. The paperwork was not finished to invoice the aircraft, but in regards to your production output, we produce much more. What we deliver for commission Aviation let's say continuous to see effects of production level, but not invoicing those aircraft.
Gui Paiva: Okay. Thanks so much.
Antonio Carlos Garcia: Thank you.
At least for commission. Okay, thanks so much.
You guys market cap in the U S is 10 billion <unk> market cap of $6 billion.
Thank you.
Unidentified Moderator: The next question comes from Ronald Epstein with Bank of America. Please go ahead.
Where do you considered cutting loose.
Ronald Epstein: I followed that, everybody.
The next question comes from Ronald Epstein with Bank of America. Please go ahead.
Because it seems like maybe there would be more value there.
Alberto Valério: Hey. Good morning, guys. Can you hear me?
As a separate company that is part of.
Antonio Carlos Garcia: Yes, Ronald.
Hey, good morning, Dad, can you hear me?
Alberto Valério: Great. Cool. I am not sure if you can answer this, but I am going to ask it anyway. If you look at the relative valuation of EMBRAER compared to, say, Joby, Joby is $16 billion today, you guys' market cap in the U.S. is $10 billion. Archer's market cap is $6 billion. Would you consider cutting EVE loose? Because it seems like maybe there would be more value there as a separate company than as part of EMBRAER, given that Joby and Archer are in that same market and other considerations.
Remember given that Derby and Archer are in that same market.
Yes, Rome great. Um, I'm not sure if you can answer this but I'm gonna ask it anyway. Um,
And other considerations.
Ron Thanks for the.
The question and difficult to be answered I would say oh evaluated our evaluation of pick up a lot in the last years for one side.
if you look at the relative valuation of Ember compared to say Joby job's 16 billion today,
You guys market cap in the US is 10 billion. Archers market cap is 6 billion.
Um,
And we do see a lot of value.
would you consider cutting Eve loose?
Premium for being together when we talk about synergies when they talk about efficiency. When you talk about product development that's why.
Because it seems like maybe there would be more value there.
Uh huh.
as a separate company than, as part of member given that Joby and Archer or in that same Market,
We didnt change our strategy to be one conglomerate of four business unit, then I would say senior also job in there we have EV EV is still.
Um, and other considerations.
Antonio Carlos Garcia: Ronald, thanks for the question. It is difficult to be answered. I would say our valuation picked up a lot in the last years from one side, and we do see a lot of value, a premium for being together when we talk about synergies, when we talk about efficiency, when you talk about product development. That is why we did not change our strategy to be one conglomerate of our business unit. I would say seeing also Joby, and we have Eve. Eve still needs more liquidity in order to pick up as well. I would say let us see how Eve is developed, but we do not have any thoughts to change the way we are structured today as a full corporation with all units and really enjoy the premium for being together.
It needs more liquidity order to pick up as I would say, let's see how we've developed but we don't have any thoughts to changing the way we are structured today as a full corporate Asia with all units and really enjoying the premium for being together and.
Yeah, wrong. Thanks for the the the question is difficult to be answered. I would say uh our evaluator, our evaluation pick up a lot in the last years from 1 side.
And we do see a lot of value.
And remember Erica Mann.
A premium for being together. When we talk about synergies, when we talk about efficiency, when you talk about product product development, that's why, uh,
As a separate company though.
That's why I, let's see at longer heavy Martin accreted for either we were going to see those effects the room, but I would say for the overall IBRA there, let's say legacy umbrella. We are so happy what we are doing right now.
we we didn't uh, change our strategy to be 1 congruent of our business unit. And I would say seeing also job and we have Eve Eve still
Got it got it and if I may as a follow on along that same line of questioning.
Do you guys have any update on that.
The thoughts on product development.
Going on or is there anything you can share with the market regarding their potential new aircraft.
Francisco Gomes Neto: Remember this, EVE is a separate company, right?
Needs more liquidity or that you pick up as our say. Let's see. How is developed but we we don't have any thoughts to change the the way we are structured today as a full Corporation, with all units and really enjoy the premium for being together.
All right. Thank you you always come with a question.
Antonio Carlos Garcia: That's right. As long as we have more liquidity for EVE, we are going to see those effects, Ronald. But I would say for the overall EMBRAER, I would say legacy EMBRAER, we are so happy with what we are doing right now.
And remember that Eve is a separate company.
We keep investing in new technologies.
As we mentioned before we don't have any other new within that to share with the.
Alberto Valério: Got it. Got it. If I may, as a follow-on along that same line of questioning, do you guys have any update on the thoughts on product development, on what's going on there? Is there anything you can share with the market regarding potential new aircraft?
That's why let's see as long as we have a more liquidity for every we we are going to see those affect wrong. But let's say for the overall Ember there, I'll say Legacy, and where we are, so happy what we are doing right now.
With the market at this point of time.
Got it thank you very much.
You're welcome Carlos.
The next question comes from Anthrax Herrera with Bradesco BBA, sorry, [laughter]. Please go ahead.
Product development. Um, you know what's going on there? Is there anything you can share with the market regarding, you know, potential new aircraft?
Antonio Carlos Garcia: Ronald, thank you. You always come with the questions. We keep investing in new technologies, as we mentioned before. We do not have any other news than that to share with the market at this point of time.
Good morning, Thanks for the space here and congrats on the results.
I have one question you mentioned in the second quarter service segments. There were higher credit provisions just wanted to check if those are related to the nine.
All right, thank you. You always come with a question. We, we, we, we we we keep investing in new technologies, as we mentioned before, we don't have any other news in that to share with, with, with the market at this point of time.
Alberto Valério: Got it. Thank you very much.
Antonio Carlos Garcia: are very welcome, always.
Got it. Thank you very much.
And the income statement and if not if you could please explain what do they mean and the impact they had on the service EBIT margin. Thank you.
You're welcome, always.
Unidentified Moderator: The next question comes from Andre Ferreira with Bradesco BBI. Sorry. Please go ahead.
The next question comes from Andre Ferreira with bradesco v, v v. Sorry.
Hi, Thanks, Thanks for the question is easier.
Please go ahead.
Ronald Epstein: Good morning. Thanks for the space here and congrats on the results. I have one question. You mentioned in the Q2 service segments there were higher credit provisions. I just wanted to check if those are related to the $9 million in the income statement. If not, if you could please explain what do they mean and the impacts they had on the service EBIT margin. Thank you.
We know that there is a customer going through us.
Our restructuring process. So the charges are related to the process.
Yes, just to complement we had I would say.
From Q2 onwards, we have almost zero effect from this.
Good morning. Uh, thanks for the space here and, and congrats on the results. Uh, I have 1 question, you mentioned in the second quarter service segments that were higher credit Provisions. Uh, just wanted to check if those are related to the 9.
Restrict as well every fee we booked already in Q2.
Okay. Thank you and.
Gui Paiva: Hi, Andrew. Thanks for the question. It's Gui here. We know that there is a customer going through a restructuring process, so the charges are related to the process.
Million dollars in in, in the income statement. And if if not if you could, please explain, what do they mean? And and the impacts they had on the service a bit margin. Thank you.
The specifics and the specific impact on service.
That to us.
Specific effect on services on David sides.
When we booked the less.
Hi, and thanks. Uh thanks for the question is G here. Um, we know that there is a customer going through a and our restructuring process. So, uh, the charges are related to, uh, to the process.
With that debt.
Antonio Carlos Garcia: It is just to complement, we have, I would say, from Q2 onwards, we have almost zero effect from this restrict as well. Everything we booked already in Q2.
Visual for a bad debt that was the main impact on services.
Turning to a structure standpoint.
And just to be clear.
I mean clients by aircraft, but they also buy services and parts, so thats related to that.
Yes. Just to compliment we have I would say uh from Q2 onwards, we have almost your effect from this uh restrict as well. Everything we booked already in Q2
Ronald Epstein: Great. Thank you. What is the specific impact on Service and Support?
What's the latest lesser right off with it.
Okay, thank you. And uh the specific, and the specific impact on service.
Antonio Carlos Garcia: That was a specific effect on services on the EBIT side when we booked the last debt provision for bad debt. That was the main impact on services from the restructuring standpoint.
Very clear thank you.
Yeah.
The next question comes from Luca <unk> with Santander. Please go ahead.
Good morning, guys. Thanks for the opportunity here and congratulations for the results.
That was uh specific effect on services on the Abit side when we we booked the last uh that uh provision for bed, that was the main impact on services.
For the health director in, uh, standpoint.
Gui Paiva: Just to be clear, Andrew, clients buy aircraft, but they also buy services and parts. So that is related to that.
A question as Ron said I don't know if you can answer but I'll ask anyway.
The Polish potential water for the first for the Citron 90, do you have any updates and also on that would it make sense for you to build the.
Antonio Carlos Garcia: Yeah. It was the latest left and right path we did.
And just quickly. And I mean clients, buy aircraft, but they also buy services and parts, so that's related to that.
Was the latest left right off with it.
Ronald Epstein: Very clear. Thank you.
Very clear. Thank you.
Our new line of Oh, New Assembly line for the COVID-19, Poland, even if you don't get the order from them to build the aircraft for NATO countries.
Gui Paiva: Sure.
Unidentified Moderator: The next question comes from Lucas Esteves with Santander. Please go ahead.
You.
The next question comes from lukus. Davis with s. Please go ahead.
Lucas Esteves: Good morning, guys. Thanks for the opportunity here, and congratulations for the results. I have a question, as Ron said. I do not know if you can answer, but I will ask anyway. On the Polish potential order for defense for the KC-390 Millennium, do you have any updates? Also on that, would it make sense for you to build a new assembly line for the KC-390 Millennium in Poland, even if you do not get the order from them to build the aircraft for NATO countries?
Hello, Lucas. Thank you for your question Francisco speaking, we will continue working.
With problems.
And that campaign, we have as an order campaign we have.
A positive review about our opportunities to them and well.
Good morning, guys. Thanks for the opportunity, here, and congratulations for the results. I have a question as Ron said, I don't know if you can answer, but I'll ask anyway on the Polish potential order for the fast for the c390. Do you have any updates and also on that? Would it make sense for you to build a, um,
Well I mean, we have a plan to increase production of KC Tonight from now through 2031, one per year. This year, we should produce five and we are on our path to achieve 10 units per year by 22030.
a new line of new assembly line for the c29 in Poland, even if you don't get the order from them to build the aircraft for NATO countries,
Antonio Carlos Garcia: Lucas, thank you for your question. Francisco speaking. We continue working with Poland in that campaign. As in other campaigns, we have a positive view about our opportunities to win. We have a plan to increase the production of KC-390 from now to 2030, one per year. This year, we should produce five, and we are in our path to achieve 10 units per year by 2030. At this point of time, we are working with big campaigns as India and the U.S. Those campaigns, for sure, would require localization of the production of the aircraft. In case of Poland, this will depend on other deals in the region for us to use Poland as a hub. We had this plan with them, combined with commercial jets, but unfortunately, they decided to go to the competition.
Okay, thank you for your question, Francisco speaking.
At this point of time I mean, we are working with big campaigns as India and the U S. Those campaigns for sure.
We we continue working with uh, with Poland.
uh, in that campaign we have, uh, as in other campaign we have, uh,
The required localization of the production of the aircraft in case of Poland is really dependent on Oh. There are other deals in the region for us to use importantly, as a hub we had at this plant or with them I mean, combined with the commercial jets, but unfortunately they decide.
uh, uh, a positive view about our opportunities to in and uh,
Go to the competition. So this change it's a little of our.
Total <unk> for the for the country, but we still have plans for the KC three nine.
Well, I mean we have a plan to increase production of KC tonight from now to to 2031 1 per year. This year we we should produce 5 and uh we are in our path to achieve 10 units per year by 2020 3030. And uh at this point of time I mean we are working with big campaigns as India in the US.
Do some local more localization if wheeling.
The order.
Thanks for Cisco, if I may make a follow up on tariffs just a quick one reading how old the U S trade representative rights on their website about the world Trade organization agreement on the CVV aircraft. They said the agreement requires signatories to eliminate tariffs.
Antonio Carlos Garcia: This changed a little our total plans for the country, but we still have plans for the KC-390 to do some more localization if we win the order.
On a non discriminatory basis to other signatories when what do you understand about the need for the U S to sign out of this agreement if they keep the 10% tariff so for Brazil, one aircraft.
Those campaigns for sure. What do we require localization of the production of the aircraft? In case of Poland, this will depend on, uh, other other deals in the region for us to use the Poland as a help. We had this plan with them. I mean combined with, uh, commercial Jets, but unfortunately, they decide to go to the competition. So this changes a little, our total plans for the, for the country, but we still have plans for the kc3 9th.
uh, to do some local more localization if we will the the order
Francisco Gomes Neto: Thanks, Francisco. If I may make a follow-up on tariffs, just a quick one. Reading how the U.S. Trade Representative writes on their website about the World Trade Organization Agreement on Civil Aircraft, they say the agreement requires signatories to eliminate tariffs on a non-discriminatory basis to other signatories. What do you understand about the need for the U.S. to sign out of this agreement if they keep the 10% tariffs for Brazil on aircraft?
Although this question it's difficult to me to answer you should answer the.
The officials in the U S. But we are we are working hard without aggregating their installation of their zero terrace.
And we see this as part of other agreements, you'll see agreement between U S and U K and more recently the U S and in Europe and Yeah. We believe we we we can be the next.
In a bilateral negotiation between Brazil, and the U S or even U S are recognizing the importance of our industry two to generate jobs.
We keep the 10% tariffs on for Brazil on aircraft.
Antonio Carlos Garcia: This question is difficult for me to answer. You should answer the officials in the U.S. We are working hard. We are advocating the restoration of the zero tariff. We see this as part of other agreements. You see agreements between U.S. and U.K., and more recently, U.S. and Europe. We believe we can be the next in a bilateral negotiation between Brazil and the U.S., or even U.S. recognizing the importance of our industry to generate jobs and make investments in the country.
This crash is difficult to me to answer. You should answer the
And and making investments in the country.
That's very clear Francisco, thanks for that and good luck.
You're welcome thank you.
Yeah.
The next question comes from.
The the officials in in the us but we are, we are working hard. We are advocating the restoration of the zero tariff. And, uh, we see this as part of other agreements, you see agreement between us and UK and more recently us and Europe. And, uh, yeah. We believe we we, we, we can be the next.
One second place.
Yeah.
Oh.
And then lastly, with Citi. Please go ahead.
Yes, Thanks, Francisco Antonio and <unk>. So you mentioned in the prepared remarks that the U S capital allocation.
Uh in a bilateral negotiation between Brazil and the in the US or even us recognizing the importance of our industry to you know to generate jobs and uh and making investments in the country.
Francisco Gomes Neto: That's very clear, Francisco. Thanks for that and good luck.
Antonio Carlos Garcia: are very welcome. Thank you.
That's pretty clear Francisco. Thanks for that and good luck.
You are welcome. Thank you.
There's going to be focused on executive aviation. So wanted to confirm if there will be no commercial aviation in the expansion of the Melbourne, Florida facility. You guys have you guys put out there and in or if we on the contrary if you could see semi family jets coming out of there.
Unidentified Moderator: The next question comes from one second, please. Andrea Mazzini with Citi. Please go ahead.
The next question comes from.
1 second please. Um,
And mazini with City, please go ahead.
It really as the <unk> hundred 20 does have an assembly line in mobile, Alabama, right. They have a U S production. So how how you were thinking about that and then Melbourne, Florida facility. Thank you.
Andrea Mazzini: Yes. Thanks, Francisco, Antonio, and Gui. You mentioned in the prepared remarks that the U.S. capital allocation is going to be focused on executive aviation. Why do you not confirm if there will be no commercial aviation in the expansion of the Melbourne, Florida facility you guys put out there? Or if you could, on the contrary, if you could see some E-family jets coming out of there, particularly as the A220 does have an assembly line in Mobile, Alabama, right? They have U.S. production. How are you thinking about the Melbourne, Florida facility? Thank you.
Yeah.
Thank you for the question.
Welcome.
By the way.
Yes, uh, thanks, Francisco, Antonio and ghee. So you mentioned in the prepared remarks that the US cap to allocation is going to be focused on Executive Aviation. So why don't you confirm if there will be no commercial aviation in the, in the expansion of the Melbourne.
Uh huh.
Through our investments we are doing right now in U S. We have two big initiatives.
Firstly is to set up.
Capacity in our Melbourne facility for the business aviation.
We have talked about a $90 million or less.
Almost <unk> in our lives and those investments and segments.
Florida facility. Uh you guys um you guys put out there and um and or if you we on the contrary, if you could see some family Jets coming out of there particularly as the a220 does have an assembly line in Mobile Alabama, right? They have uh us production. So how how you're thinking about? The male male, Barn floor, the facility. Thank you.
Antonio Carlos Garcia: Andrew, thank you for the question.
We are also investing more than 70 meter in Texas to extend our.
Andrea Mazzini: Welcome.
Antonio Carlos Garcia: By the way, for investments we are doing right now in the U.S., we have two big initiatives. Firstly, it is to set up capacity in our Melbourne facility for the business aviation. We are talking about $90 million. We are more or less almost finalized those investments. Second, we are also investing more than $70 million in Texas to expand our Service and Support facility. Those are the two big investments we are doing right now. About new relocation of production, I am going to pass to Francisco for any remark here.
Thank you for the question and welcome.
By the way.
Service and support facilities Thats are the two big investments, we are doing right now and about new relocation of production.
uh,
for our investments, we are doing right now in us, we have 2 big initiatives.
Production going to best practices for annual remark here.
For your question.
Again for commercial Jets, we have a hybrid line and so as you said this campus, where we have same DSA, but the nuance and the E Jets. The same line. So I mean, it's very very efficient aligned for the volume we intend to make every year.
firstly is to set up, uh, capacity in our Melbourne facility for the business Aviation
Uh, we are talk about 90 million dollars. We are more or less.
uh, almost finished finalizing those Investments and second
And you.
No.
We believe that our business plan for the U S.
Also very attractive for both sides.
Francisco Gomes Neto: Thanks for the question. Again, for commercial jets, we have a hybrid line in San José dos Campos where we assemble the E1s and the E2 jets, the same line. It is a very, very efficient line for the volume we intend to make every year. We believe that our business plan for the U.S. is also very attractive for both sides. Almost 40% of our aircraft is already aided by U.S. equipment, U.S. parts. If you look at the next five years, according to our production planning, in the next five years, we expect to buy $21 billion in U.S. equipment and parts, and we will export only $13 billion. In five years, we will generate an impressive $8 billion surplus for the U.S. So we have a very good business model already for both countries. That is why we are advocating for the restoration of the zero tariffs.
I mean, almost 40% of our aircraft is already.
Aided by U S equipment use pumps.
And if you look at the next five years. According to our production planning in the next five years, we expect to buy $21 billion in U S. A.
Greetings and parts and.
And we will export only 13 billion.
We we are also investing more than 70 million in Texas to expand our uh service and support facilities. That's are the 2 big Investments we are doing right now and about uh, new relocation of about uh, production. Going to pass for any remark here, Andrea. Thanks for your question. Uh, again for for commercial Jets, we have a hybrid line in San Jose's campus where we we are same. We assemble the new ones and the E2 Jets the same line. So, I mean, it's very, very efficient line for the volume. We, we, we intend to make every year and, uh, you know,
In five years, we will generate.
Impressive $80 billion surplus or the U S. So we have a very good business model already.
We believe that our business plan for us, is also very attractive for both sides.
So I mean almost 40% of our aircraft is already.
You know for both countries. That's why we are.
Paid by us equipment, us parts.
Advocating for the restoration of the zero touch and in all other.
Or are there other changes in their footprint, yes, we are making steady with again, we believe that we have a very robust.
And and if you look at the next 5 years, May according to our production planning in the next 5 years. We expect to buy 21 billion dollars in US.
Equipments and parts.
Economic proposal economic.
Value for the U S with a footprint that we have today.
And we will export only 13 billion. So, in 5 years, we will generate
Okay.
Very clear thanks, Francisco Antonio good to be here.
Impressive 8 billion dollar Surplus for the us. So we have a, a very good business model already.
Thank you.
The next question comes from Danielle <unk> with <unk> BBA. Please go ahead.
Francisco Gomes Neto: Other changes in the footprint, yes, we are making studies, but again, we believe that we have a very robust economic proposal, economic value for the U.S. with the footprint we have today.
Hey, Thank you very much part of opportunity are the first question with electrical information about something that's I'm trying to set and the first question.
You know for both countries. That's why we are uh advocating for the restoration of the zero tax and uh you know other other changes in the footprint. Yes we are making strategies but again we believe that we have a a very robust
Yeah.
I'm not sure if I understood correctly, but he said that a 20% of the tariff impact expected for the year happened in this quarter I'm not sure if I caught that correctly I would like him to triple farm if possible. Please.
I mean economic proposal economically. Uh, value for the US with the footprint we have today.
Ronald Epstein: Very clear. Thanks, Francisco Antonio. Good to be here.
Antonio Carlos Garcia: Thank you.
Very clear. Thanks Francisco. Good to be here.
Thank you.
Unidentified Moderator: The next question comes from Daniel Gasparete with Itau BBA. Please go ahead.
And the second question would be if you guys could provide us some a timetable on the test flight of Eve, it's expected that right now for the second half of this year.
The next question comes from Danielle. Gaspari with BBA, please. Go ahead.
Gui Paiva: Hey, thank you very much for the opportunity. The first question, I would like confirmation about something that Antonio said in the first question. I am not sure if I understood correctly, but he said that 20% of the tariff impact expected for the year happened on this quarter. I am not sure if I got that correctly. I would like him to confirm if possible, please. The second question would be if you guys could provide us some timetable on the test flight of EVE that is expected now, right now for the second half of this year. When you guys are expecting that to happen, if you could provide us with some outlook for that. Thank you very much.
When you guys expect that to happen it could provide us with some some outlook for that thank you very much.
But I think for a question firstly about the tariffs year to date to have around it.
Around 20% of the tariff impact already.
In our prostate laws and cash flow and Thats why we do expect a bigger hit in the second half of Q3 and Q4, that's why we are a little bit.
Say moderate by January a fair amount of guidance for sure.
Better, but that's why it's going to hit tomorrow, our profit and loss in the second half, 80%. We said 90 bps, let's say you could calculate we had 20% right now year to date.
Correctly. But he said that, uh, 20% of the Tariff impact, expected for the year happened on this quarter. I'm not sure if I got that correctly. Uh, I would like him to to confirm if possible. Please. Uh, and the second question, uh, would be if you guys could provide us some, uh, timetable on the test flight of Eve is expected. Now, right now for the second half of this year, uh, when you guys are expected that to happen, it could provide us with some um, some outlook for that. Thank you very much.
Antonio Carlos Garcia: Gasparete, thanks for your question. Firstly, about the tariffs, year to date, we have around 20% of the tariff impact already in our profit and loss and cash flow. That is why we do expect a bigger hit in the second half of Q3 and Q4. That is why we are a little bit, I would say, moderate by just reaffirming our guidance. For sure, we are performing better, but that is why it is going to hit more our profit and loss in the second half. 80%, we said 90 bps. I would say you could calculate we have 20% right now, year to date, and the remaining 80% is going to flow Q3 and Q4. For EVE, I am going to pass to Francisco here.
Uh, yes, but I think for a question firstly about the tariffs year to date to have around
The remaining 80% is going to flow through in Q4 and for Eva going to Pester Francisco <unk>, who we are.
We're not working on the final assembly of parts in the prototypes and the plan for the first flight is for December this year.
Oh, sorry, if December is that correct December yes, correct.
Thank you very much. Thank you very much guys have a nice day.
Alright, well thank you.
Our next question comes from Lucas locking with XP investments. Please go ahead.
Francisco Gomes Neto: For EVE, we are now working on the final assembling of parts in the prototype. The plan for the first flight is for December this year.
Hello, Good morning, everyone from CS controlling and again congratulations on the strong results I have one question regarding working capital I mean, we're seeing a lot of.
This around 20% of the terrorist impact already uh in our profit and loss and cash flow. And that's why we do expect a bigger hit in the second half of this, Q3 and Q4. That's why we are a little bit. I would say moderate by just reaffirming our guidance, for sure, we are performing better but that's why it's going to hit more our profit and loss in the second half 80%, we said 90 beeps. Let's say you could calculate we have 20% right now here today and the remaining 80% is going to flow to 38 Q4. And for, if I going to Pastor Francisco. Yeah, for if we are now working in the final assembly of parts in the Prototype and the, the plan for the first flight is for December this year.
Gui Paiva: Francisco, sorry, December. Is that correct?
Production leveling initiatives on the executive division already bearing fruits regarding to the delivery pace that we're seeing on the defense Francisco are shown on the presentation from terminations of bearing fruit as well in terms of efficiency gains for the KC 390.
Francisco Gomes Neto: December, yes, correct.
Gui Paiva: Okay. Thank you very much. Thank you very much, guys. Have a nice day.
Francisco Gomes Neto: are very welcome.
This is good. Sorry December. Is that correct December? Yes, correct. Okay. Thank you very much. Thank you very much, guys. Have a nice day.
Antonio Carlos Garcia: Thank you.
Thank you.
Unidentified Moderator: The next question comes from Lucas Laghi with XP Investimentos. Please go ahead.
Next question comes from, Lucas, Lackey with XP Investments. Please go ahead.
Ronald Epstein: Hello. Good morning, everyone. Francisco, Antonio, Gui, congratulations on the strong results. I have one question regarding working capital. We are seeing a lot of production leveling initiatives on the executive division already bearing fruits regarding the delivery pace that we are seeing on the defense. Francisco showed on the presentation some initiatives bearing fruit as well in terms of efficiency gains for the KC-390 Millennium. My question is regarding the potential room that you guys see for working capital optimization following all of your production level initiatives going forward. How is the space that you see for some free cash flow improvement regarding these initiatives going through the working capital in the upcoming quarters? Some free cash flow discussion on your working capital would be very insightful as well. Thank you, guys.
My question is regarding the potential room that you guys see for working capital optimization fallen all of your production 11 initiatives going forward a.
Hello. Good morning everyone. Uh, congratulations on the strong results. Uh I have 1 1 question regarding working capital. I mean we're seeing a lot of
How is the space that you see or some free cash flow improvement regarding these initiatives going going through that had a working capital AR and.
In the upcoming quarters total some some free cash flow discussion on your working capital it would be very insightful. Thank you guys.
Thanks Lucas.
Thanks for the Great question I would say short term we are continuous to go fight if our cash flow history with this we are not happy because we accumulate negative cash flow Q1 Q3, then.
Balanced a little bit in Q3 of them are more.
Paul highly positive in Q4, we are not there yet.
But we I would say we are reiterating our guidance. That's one of the indicators that were priced at most.
Uh production leveling initiatives on the executive division already bearing fruits regarding the the the delivery pace that we're seeing on the defense, um, Francisco showed on the presentation, some some initiative bearing fruit as well, in terms of um, efficiency gains for for the Casey 390. Uh, my question is regarding the potential room that you guys see for working capital optimization following all of your production, level initiatives, going forward. Uh, how is the space that you see for some free cash flow Improvement regarding this initiative, going going through the, the working capital, uh, in the upcoming quarters. So, um, some some free cash flow discussion on your working capital, it would be very insightful as well. Thank you guys.
Antonio Carlos Garcia: Thanks, Lucas. Thanks for the great question. I would say short term, we are continuing to fight for cash flow steering. We are not happy because we accumulate negative cash flow Q1, Q3, then balance a little bit in Q3, then move highly positive in Q4. We are not there yet. I would say we are reiterating our guidance. That is one of the indicators that we are fighting at most because the highest portion of the revenue is going to happen in Q3 and Q4. For the long term, I will pass to Francisco to give some ideas about what we could monetize and the working capital, especially inventories.
Still.
The highest portion of the revenue is going to happen in Q3 Q4, but for the long term our best Geofence history will give some ideas about what we could one adviser and then working capital, especially inventories. So Luca. Thanks for your question actually we have.
Uh, let's look at uh, and thanks for the great question. I would say a short-term, uh, we we are continues to to fight you for cash. Flow is steering, which is, we are not happy because we accumulate negative cash flow, q1. Q3 then, uh, balance a little bit in Q3 then move. Uh,
Uh huh.
A lot of good initiatives to reduce inventory and to increase the inventory turn.
Highly positive Q4. We are not there yet.
Well for the next few years it is true that in the past years, we have a separate.
Inventory levels because we.
Planets for a certain amount of aircraft a range, but because of the supply chain issues, we are not able to deliver oh.
Francisco Gomes Neto: Now, Lucas, thanks for your question. Actually, we have a lot of good initiatives to reduce inventory and to increase the inventory return for the next years. It is true that in the past years, we have suffered with the inventory levels because we planned for a certain amount of aircraft, a range, but because of the supply chain issues, we are not able to deliver all the aircraft we planned, we put in the production process. We are now, year after year, improving this process, and we want to improve it further in 2026 onwards. So the combination of a more accurate production planning with these production leveling initiatives and other initiatives we have in place, we expect to increase our inventory return from currently 1.6 to close to three times a year. This will release almost $1 billion from our inventory in three years.
Aircrafts.
And we've put in the production process, but we are now year after year, improving this process and we want to improve further in 'twenty 'twenty six one months. So the combination of anymore accurate production planning with this.
But we, I would say we are reiterating our guidance that's 1 of the indicators that we are fighting at most because of still the highest portion of the, the, the revenue is going to happen in Q3 and Q4, but for the long term, I will pass to Francis to give some ideas about what we could monetize them. And then working capital, especially inventors. Oh okay, thanks for your question. Actually we have uh,
A lot of good initiatives to reduce the inventory and to increase the inventory return.
For for, for the next years.
it is true that uh, in the past years, we have suffered
Production of leveling initiatives and other initiatives, we have in place we expect to increase our inventory turn it for Garanti 1.6 to close to three times a year.
We released our know how.
Most of $1 billion from our inventory in three years.
Perfect very clear. Thank you Francisco Antonio will have a nice day.
Thank you.
The next question comes from Ronald Epstein with Bank of America. Please go ahead.
Uh, with the inventory levels because, uh, we we plan it for a certain amount of aircraft, a range, but because of the supply chain issues, we are not able to deliver all the aircraft. We planted, we put in the production process, but we are now year after year, improving this process and we want to improve further in 2026 onwards. So the combination of a more accurate production planning with this uh,
Hey, guys I'm back.
Maybe one more question and this was asked sort of but maybe peel back the onion a little bit more.
When you think about the production footprint why wouldn't it make sense to move more executive aviation production to the U S. Given that so much of the market's here anyway.
Production, leveling initiatives and other initiatives. We have in place, we expect to increase our inventory return for currently 1.62 close to 3 times a year. This we release know almost 1 billion dollars from our inventory in 3 years.
Ronald Epstein: Perfect. Very clear. Thank you, Francisco. Antonio, have a nice day.
Antonio Carlos Garcia: Thanks, Lucas. Thank you.
Perfect, is very clear. Thank you. Francis. Antonio have a nice day.
Francisco Gomes Neto: You too.
Unidentified Moderator: The next question comes from Ronald Epstein with Bank of America. Please go ahead.
Well Rome, we have.
Important part of our production activities in the U S already.
The next question comes from Ronald Epstein with Bank of America, please go ahead.
Ronald Epstein: Hey, guys. I am back. Just maybe one more question. This was asked sort of, but I just want to maybe peel back the onion a little bit more. When you think about the production footprint, why wouldn't it make sense to move more executive aviation production to the U.S., given that so much of the market is here anyway?
Now on top as I said before I mean, our aircrafts.
Hey guys, I'm back. Um,
They had they have a content offer.
It was up to 40% of our U S equipment.
Just maybe 1 more question and this was asked sort of but just want to maybe peel back the onion a little bit on it more.
So we believe we have a good combination today I mean, two to allow us to be very competitive. Yes. We are we are always making studies what else we can do.
When you think about the production of footprint, why wouldn't it make sense to move more executive, Aviation production to the US? Given that
So much of the markets here. Anyway.
Francisco Gomes Neto: Well, Ronald, again, we have an important part of our production of executive jets in the U.S. already. On top, as I said before, our aircraft, you know, they have a content of close to 40% of U.S. equipment. So we believe we have a good combination today to allow us to be very competitive. Yeah, we are always making studies what else we can do in terms of footprint, but trying to be as lean as possible to offer good and competitive products to our customers.
In terms of our footprint, but trying to be you know ethylene as possible to offer.
well uh, Rome again, we have a
Good and competitive products to our customers.
An important part of our production of exactly reject in the US already.
Got it and then and then the one question that nobody has asked yet surprising is our sales campaigns going on for the for the big airplanes.
Therefore, the ones and twos.
You guys do have a market outside the U S right. So.
What's going on there and alright, thank you different color.
Oh, absolutely very good question.
Yes, we will.
They're good started this year with the two important wins I mean E N E in Japan.
On top as I said before, I mean our aircrafts, you know, they have they have a content of positive to 40% of us equipment. So we we believe we have a good combination today. I mean to to allow us to be very competitive. Yeah, we are, we are always making studies. What else we we we can do in terms of footprint but trying to be you know, essling as possible to offer.
Ronald Epstein: Got it. The one question that nobody has asked yet, surprisingly, is how are sales campaigns going on for the big airplanes? For the E1s and the E2s? You guys do have a market outside the U.S., right? What is going on there? If you can give some color around that.
Uh, good and competitive products to our customers.
How important is that the airline.
Globally, and our SaaS. So both orders we you know <unk> is up to 2015 per se in the SaaS or 45%.
Good important toward this end we are working in any of other campaigns.
Got it. And then and then the 1 question that nobody has asked yet surprisingly is our sales campaigns going on for the for the big airplanes, you know, in, you know, for the e1s and the e2s, um, you guys do have a market outside the US, right? So um, you know what's going on there and um, if you can get some color around that,
Francisco Gomes Neto: Oh, absolutely. Very good question, Ronald. Yes, we had a good start this year with the two important wings. I mean, ENA in Japan, you know how important that airline is, globally in our SAS. So both orders, ENA is up to 20, 15 plus 5, and the SAS is 45 plus 10. Very good, important orders. We are working in many other campaigns that we expect to see the results in the next month. We are optimistic that we announce new orders for E2s, especially. E1s, we got the 60 plus 50 from SkyWest, a big order. We do not expect more orders for E1s for the U.S.
We expected to see their results I mean.
No, absolutely. It's a good question. I mean yes. We
And the next month. So we are optimistic that we are announcing new orders for.
For <unk>, especially.
You want to we got to the $60 $60 50 from our Skywest ignore them, we don't want to expect.
Our orders for you once for the U S or the U S.
Okay.
Thank you very much.
And around <unk>, where he also some movement outside U S as well for our campaigns not big numbers, but some interest from other customers.
We had a good start this year with the 2 important uh wins. I mean e n a in Japan you know how important is that the airline? I mean globally and now SAS, so both orders we you know, CNA is up to 2015 plus 5 and the SAS 45 plus 10, uh, very good important orders. And we are working in in, in many other campaigns.
On the new <unk> four outside the U S.
That, uh, we expected to see the results. I mean, in the next month. So we, we, we, we are optimistic. That we are announcing new orders for
Got it.
Thanks.
for E2, especially
Thank you.
The next question comes from.
<unk> <unk> with UBS. Please go ahead.
Hi, good morning, Transfused, sometimes Keith Thank you for taking my questions and intellectual congrats on guys for the forces that are indeed fall mitigate these tighter with sweet smell targets Brazilian glass and also the American companies.
you once we go to the 60, 60% 50 from uh, Sky West big water. So we do not expect, uh, more orders for you, once for the US for the US.
Ronald Epstein: Got it. Thank you very much.
Antonio Carlos Garcia: Ronald, for the E1, we are seeing also some movement outside the U.S. as well for campaigns. Not big numbers, but some interest from other customers on the new E1s for outside the U.S.
Go ahead. Thank you very much.
My questions are regarding tariffs.
Ronald Epstein: Got it. Thanks.
And around. 4. Do you want? We are here. Also some movement outside us as well for campaigns, not big numbers, but some interest from other customers on the New Year ones for outside the US,
I would like to know if for the new business Jets orders you guys are able to put these higher price already to mitigate these tariffs and also.
Got it.
Francisco Gomes Neto: Thank you.
Thanks.
Unidentified Moderator: The next question comes from Alberto Valerio with UBS. Please go ahead.
Thank you.
The next question comes from, Alberto Valerio with UPS. Please go ahead.
Ronald Epstein: Hi. Good morning, Francisco, Antonio, Gui. Thank you for taking my questions. I would like to congratulate you guys for the effort that we did to mitigate these tariffs with the authorities, Brazil, U.S., and also the American companies. My question is regarding tariffs. I would like to know if for the new business jet orders you guys are able to put this higher price already to mitigate these tariffs. Also, negotiations between the current book backlog that you guys have in place, if there are any negotiations between the clients on business jets that you guys are paying for this tax. Also, if the airlines, they ask you about some support from Embraer because if I understand, they are the importers, they are paying those tax. Thank you very much.
Negotiations between the current book a backlog that you guys have in place. If there is any negotiations between the clients on using it uses jets that you guys are paying for this tax.
And also if the airlines D. I ask you about some support point, Brad because he thought I understand I think boxers they are paying those stocks. Thank you very much.
Albert Thanks for question.
Tariffs in general.
We are.
Let's say we are positive.
It will come to a good resolution for the for the for this issue.
Because of our we believe who we have a robust very robust economic it does this with the U S. As I said before $8 million in surplus in the next five years I mean 13000 jobs currently the U S plus 5000 to be creating the next five years.
Hi, good morning, uh, Francisco. Thank you for taking my questions. And I would like to congratulate you guys for the force that we did for mitigating these tires with the authorities, Brazil us, and also the American companies. My question is, uh, regarding tariffs. Uh, I would like to know if for the new busy jet orders, you guys are able to put this higher price already to mitigate this tariffs and also, uh, negotiations between the current book, uh, uh, uh, backlog that you, you guys, uh, have, uh, in place if there is any, uh, negotiations between the clients on business, uh, business jets that you guys are paying for this tax. And also, if the airlines the, I ask you some support from because if I understand, they adding Porters, they are paying those taxes. Thank you very much.
Francisco Gomes Neto: Hey, Alberto. Thank you for your question. About tariffs in general, I would say we are positive that we will come to a good resolution for this issue because we believe we have a robust, very robust economic status with the U.S. As I said before, $8 billion in surplus in the next five years. 13,000 jobs currently in the U.S. plus 5,000 to be created in the next five years. You know, half a billion dollars of new investments in the U.S. And this was also based on the zero tariff. So that is why we believe we have a robust economic status to restore the zero tariff as we have seen with other countries. Commercial jets, we do not have any plans to increase price because of tariffs, because the tariffs will be paid by the customers. Business jets, we will keep our price competitive in the U.S.
Hilbert, thank you for your question.
Half a billion dollars of new investments in the U S. And this was also busy on the zero tariffs. So that's why we believe.
I mean about therapists in general, we we are
We have a robust economic at Tasiast to restore a zero tariff S. We have seen with the.
Other countries.
Uh huh.
Commercial jets, we don't have any plans to increase the price because of tax because of tax will be paid by the customers and business Jets, we will keep our price competitive in the U S to support our continued to continued growth in the market. So again my Oh the impact that this year is already included.
The projections and we are maintaining.
Maintain maintaining our guidance for this year with an upside if the tariffs are removed soon.
Let's say we are positive that, uh, we come to a good resolution for the for the, for this issue because of our, we believe we have a robust, very robust, economic status, with the us, as I said before, 8 billion dollars in Surplus in the next 5 years. I mean, 13,000 jobs currently in the US, plus 5,000 to be created in the next 5 years, you know, half a billion dollars of new investments in the US. And this was also based on the Zero tariffs. So that's why we believe. I mean, uh, we have a robust economic status to restore the zero. T s we have seen with other countries. I mean uh,
Thank you very much very clear.
And nowhere to sorry for not core operative pure sell recommendation to our share we continuously improve our farmers here. Thank you [laughter]. Okay. Thank you Antonio.
Francisco Gomes Neto: to support our continued growth in the market. Again, all the impact this year is already included in the projection. We are maintaining our guidance for this year with an upside if the tariffs are removed soon.
Thank you. This concludes the question and answer session for equity research analysts and investors now.
Now well I'll start the Q&A session dedicated to the press first well answer questions in English and then well answer questions in Portuguese well also asked a question sent via the platform Shack.
Right, because of terms because the terms will be paid by the customers in business. Yet, we keep our price competitive in the US to support our continued continued growth in the market. So again May, uh, and all the impacted this year is already including the projections. And we are, uh, I mean maintain maintaining our guidance for this year with an upside. If the start of is are removed soon,
Ronald Epstein: Thank you very much, Francisco. Very clear.
Antonio Carlos Garcia: Alberto, sorry for not corroborating your recommendation to our share. We continue to improve our performance here. Thank you.
Thank you very much, Francisco. Very clear.
Yeah.
Please hold while we collect questions.
Ronald Epstein: Okay. Thank you, Antonio.
And Alberto. Sorry for not corroborating. If you are so recommendation to our share we continue to improve our performance here. Thank you. Okay, thank you. Antonio
Unidentified Moderator: Thank you. 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 will also answer questions sent via the platform chat. Please hold while we collect questions. The first question comes from John Hammerdinger. Please go ahead.
The first question comes from John <unk>. Please go ahead.
Thank you. This concludes the question and answer session for equity, research analysts and investors.
Now, we'll start the Q&A session dedicated to the Press.
Well hi, everyone. Thanks for doing this.
I guess I'd want to touch on the tariff issue again, you mentioned that you think you have a good case to remove the 10% I'm wondering if you could give us any guidance onto what else you might be willing to do.
First, we'll answer questions in English and then we'll answer questions in Portuguese.
We'll also answer questions sent via the platform chat.
Please hold while we collect questions.
They get rid of that 10%.
More.
But again any more operations in the USA any commercial operations in the USA would be possible or anything else.
Any collaboration with the U S.
The first question comes from John Hammer, please go ahead.
John Hammerdinger: Hi, everyone. Thanks for doing this. I guess I want to touch on the tariff issue again. You mentioned that you think you have a good case to remove the 10%. I am wondering if you could give us any guidance on what else you might be willing to do to get rid of that 10%. More touch again on any more operations in the U.S.A., any commercial operations in the U.S.A. would be possible. Anything else? Any collaboration with a U.S. aerospace company? Also, are you negotiating on this issue right now because the 40% was already removed? What is next?
Aerospace company.
And also any.
Well, hi everyone, thanks for doing this. Um,
Are you negotiating on this issue right now because it would be the the.
40% was already removed so what what what's next.
Hello, John Thanks for your question I mean, just make sure that the impact for our customers.
As for our commercial jets and the bonds, we send it to the U S.
Lower than 10%, but because of the.
U S. The high U S content, we have in our products.
Uh, I I guess I'd want to touch on the the Tariff issue. Again, you mentioned that, you think you have a good case to remove the 10%. I'm wondering if you could give us any guidance on to what else, you might be willing to do to get rid of that. 10%, um, more touch again on any more operations in the USA, any commercial operations in the USA would be possible anything else. Um, any collaboration with the US, um, Aerospace company? Uh,
Given that we have been working to mitigate the impacts I mean, optimizing logistics are put in place a free trade zones temporary imports are doing a lot of things that has helped us to reduce the impact.
and also, any are you negotiating on this issue right now? Because the, the, the, uh, 40% was already removed. So, what? What? What's next?
Francisco Gomes Neto: Well, John, thanks for the question. I mean, just make sure that the impact for our customers in the U.S. for commercial jets and the parts we send to the U.S. is lower than 10%, right? Because of the U.S., the high U.S. content we have in our products. So even then, we have been working to mitigate the impacts, optimizing logistics, putting in place free trade zones, temporary imports, doing a lot of things that have helped us to reduce the impact. We will continue making studies, John, to do that. I mean, footprint, more collaboration with the U.S. companies. The U.S. is a very important market for EMBRAER and we do the best we can to ensure that we will continue having a strong presence in that market. What else? That is it. Okay.
Uh huh.
And we will continue making steady strong to do that I mean footprint more collaboration with U S companies I mean U S is a very important mark 20, Brea and do their best to weekend to in order to ensure that we will have we will continue having a stronger presence in that market.
Well, John, thanks for your question. I mean, just make sure that uh the impact for our customers, in the US for commercial jets in the parts we send to the US. I mean is lower than 10%, right? Because of the
Us, the high us content, we have in our products.
What else.
That's it okay.
Also what what would be what are your next steps are you are you are you at all.
So even then we have been working to to mitigate the impacts. I mean, optimizing Logistics. I mean put in place a free trade zones, temporary Imports. Doing a lot of things that uh has helped us to reduce the impact.
A discussion right now.
I mean, uh,
Thank you our next step.
Fourth Antoine.
Would be the localization of the KC Tonight.
We have been working hard in the in the country with the U S Air Force.
We have reinforced with our team in the U S.
We advance it.
and we will continue making studies strong to do that. I mean, footprint more collaboration with us companies. I mean, we us is a very important marked for embrya and do the best we can to, you know, to ensure that we have we continue having a strong presence in that market.
What else?
In conversation with a relevant partner.
John Hammerdinger: What would be, what are your next steps? Are you involved in any discussions right now?
To localize the production of the KC Tonight, Wassa, we succeed selling introducing vacancy Tonight.
Francisco Gomes Neto: Thank you. Thank you. Next step, an important one, would be the localization of the KC-390. We have been working hard in the country with the U.S. Air Force. We have reinforced our team in the U.S. We are advancing in conversation with a relevant partner to localize the production of the KC-390 once we succeed selling, introducing the KC-390 in the U.S. Air Force.
That's it. Okay? So what we also, what? What would be what are your next steps? Are you are you, are you involved in any discussion right now?
Thank you next step.
Yeah.
Important 1.
The U S Air Force.
Would be the localization of the kc3 night.
Thanks for taking my question.
We we have been working hard.
Welcome John.
Thank you. The next question comes from the live chat.
As some julianna, Russia for them that could.
In the, in the, in the country with the, the US Air Force. We have reinforced our team in the US. We, we, uh, Advanced it.
As you give more details on absolute impact on our results in future results.
How many aircraft are willing to deliver to muscle that is frankly to be voice.
Katz also is pretending to lessors with half well sorry.
In conversation with a relevant partner, you know, to localize the production of the key City 9, once we succeed selling introducing, the KC tonight uh in in the US Air Force.
John Hammerdinger: Thank you for taking my question.
Francisco Gomes Neto: are welcome, John.
Thank you for taking my question.
The Emperor chats as well as returning to lessors will have an impact on Empire results.
You're welcome, John.
Unidentified Moderator: Thank you. The next question comes from the live chat. It is from Juliana Rocha from RED. Could you give more details on Azul's impact on the results and future results? How many aircraft will you deliver to Azul that is waiting to be invoiced? The EMBRAER jets Azul is returning to lessers will have any impact on EMBRAER results?
Yeah.
Thank you Liana. Thanks for the question first of all I'd like to.
Thank you. The next question comes from the live chat. Um, is from Juliana Rocha from rat.
To highlight the debt who is a very important customer for embraer for our <unk> platform and we know that it was very important for <unk>.
Could you give more details on Azul impact on the results and future results?
How many are correct will you deliver to Azul? That is waiting to be invoiced.
<unk> continues to support discuss mature structuring process.
So our impact from the strike that has been already.
Bookings into our second quarter results I'll write offs has been made okay.
The Empire Jets. A zoo is returning to lesser with have well. Sorry, um, the emperor Jets Azul is returning to lesser will have any impact on Emperor results.
Antonio Carlos Garcia: Juliana, thanks for the question. First of all, I would like to highlight that Azul is a very important customer for EMBRAER and for our E2 platform, and we know that.
We needed to wait the procedures above the chapter 11 and from a from the <unk>.
Juliana. Thanks for the question. First of all, I'd like to
<unk> to having our backlog we are currently on a renegotiation with denim.
Unidentified Moderator: was very important for Azul, and Embraer continues to support this customer through the restructuring process. All impacts on the restructure have been already booked into Q2 results. All write-offs have been made, okay? Now we need to wait the procedures about the Chapter 11. From the experts we have in our backlog, we are currently in renegotiation with Denen. We cannot anticipate any change right now. Good discussions are ongoing, and we are going to find a solution.
We need we cannot anticipate any change right now and the good discussions won't go and we're going to find a solution.
Anywhere for the our E2 platform. And we know that it is very important for a zoo and we are continues to support this customer to the restructuring process.
Thank you. The next question comes from the live chat as well from chat.
<unk> can you please address tariffs on executive Jets.
Okay.
Well I mean I think.
Again as active as <unk>. So we have a part important part of our production already in the U S.
And finally in Brazil, the aircraft and components that we send to the U S. We have.
All uh impacts on. The historic has been read book and into second quarter results. All right. Offs has been made okay? And now we initiate the procedures about the chapter 11 and from from the aircraft to having our backlog. We are currently on renegotiation, then, uh we need. We cannot anticipate any changes right now and good discussions. Don't go and we are going to find a solution.
Have a good balance.
Gui Paiva: Thank you. The next question comes from the live chat as well, from Chad Trotveter. Can you please address tariffs on executive jets?
And again, we for US the impact is less than 10% because of the U S content that we have in our aircraft.
Thank you.
Question comes.
So we are trying to find a way to reduce it even further.
Um, from chat truck Trot better, can you please address tariffs on Executive Jets?
And.
Unidentified Moderator: Well, I mean, I think, again, executive jets, we have an important part of our production already in the U.S. and part in Brazil with the aircraft and components that we send to the U.S. We have a good balance. Again, for us, the impact is less than 10% because of the U.S. content we have in our aircraft. So we are trying to find a way to reduce this even further by optimizing the process and also making studies about further collaboration with the U.S. aerospace industry.
Optimizing the process and also making studies about.
Further collaboration with the U S a.
Well, I mean, uh, I think, uh, again as active Jets, we have a part important part of our production already in the US.
Aerospace industry.
Thank you another question from Mr. Trump Center with.
In part, in Brazil, with the aircraft in, in components that we sent to the us, we have a good balance.
L. A I N. Nordea also what is the specific purpose of the investment and the Melbourne exact Jack Jack production plant increased panel production expand to do finally assembly of printers, there or something else.
And, uh, again, we for us, the impact is less than 10% because of the US content we have in our aircraft.
So we are investing to.
So, we are trying to find a way to reduce this, even further. And, uh, by optimizing the process and also making studies about, uh, I mean, further collaboration with, uh, the US, uh, uh, Aerospace industry.
To expand our production capacity for fields also our hour hour flight preparation area to receive and do the.
Gui Paiva: Thank you. Another question from Myles Walton with Wolfe Research. Also, what is the specific purpose of the investment in the Melbourne executive jet production plant? Increase Phenom production, expand to do final assembly of Praetor there, or something else?
The final Bill.
Deliveries of the freighters and doing some are local activities as well.
And yes banking booth, we are.
We are implementing a new banking booth that can paint booth.
Aim freighters. So as you see we have already activities with the breakthroughs in the U S as well on top of the production line of the females.
Thank you. Another question from Mr. Toad feder with a a i n media. Also, what is the specific purpose of the investment and the Melbourne, exact jacket jet production plant increase Phantom production, expanded to do finally assembly of predators there or something else.
Unidentified Moderator: We are investing to expand our production capacity for Phenoms, also our flight preparation area to receive and do the final deliveries of the Phenoms and doing some local activities as well. Yes, painting booths. We are implementing a new painting booth that can paint both Phenoms and Phenoms. As you see, we have already activities with the Phenoms in the U.S. as well on top of the production line of the Phenoms.
so we we are investing to
Yeah.
Thank you very much. The next question comes from the live chat as well for small children.
Thank you for the presentation and congratulations on the great results I would like to ask what is the progress on the E 175, Kevin Kevin improvements and one is the first aircraft scheduled for delivery.
To expand our production capacity for for funerals also our our, our flight preparation area to receive and do the the the final, the deliveries of The Operators and do it some local activities as well and yes, painting booth.
Well good question Simon So yeah, we are very excited about this improvement.
We are implementing a new painting booth that can paint both fenos Emperors. So, as you see we have already activities with the pairs in the US as well, on top of the production line of the fenos
He will bring a more more going forward for the passenger and for sure. It will help us to sell <unk>.
Gui Paiva: Thank you very much. The next question comes from the live chat as well from Simone Cellini. Thank you for the presentation and congratulations on the great results. I would like to ask, what is the progress on the E175 cabin improvements? When is the first aircraft scheduled for delivery?
Selling U S 75, or two we are at this point of time, we're working with the suppliers and the new.
Luggage bins and.
And seats as well and lightning and we expect to deliver the first one by the end of 2026, beginning to anything he said.
Thank you very much. The next question comes from the live chat as well from Simone chelini. Thank you for the presentation and congratulations on the great results. I would like to ask what is the progress on the e175 cabin, cabin improvements. And 1 is the first aircraft scheduled for delivery.
Unidentified Moderator: Well, good question, Simon. We are very excited about this improvement. This will bring more comfort for the passenger. This will help us to continue selling the E175. We are, at this point of time, working with the suppliers in the new luggage bins and seats as well in lightning. We expect to deliver the first one by the end of 2026, beginning of 2027.
Well, good question, Simon. So yeah, we are very excited about this Improvement.
Thank you very much please hold while I collect further questions.
Is you bring more more comfort for the passenger and for sure this will help us to sell continue selling the un75 you too. We are this.
point of time, working with the suppliers in the new uh, luggage beings and uh
This concludes the question and answer session in English.
The press.
And seats as well and lightening. And uh we expect to deliver the first 1 by the end of 2026 beginning of 2027.
Now we'll start the question and answer session in Portuguese.
Gui Paiva: Thank you very much. Please hold while we collect further questions. This concludes the question and answer session in English for the press. Now we will start the question and answer session in Portuguese. This question and answer session is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English. Agora, vamos iniciar a sessão de perguntas e respostas em português. Por favor, aguarde enquanto a gente coleta as perguntas. A primeira pergunta vem do Marcelo Rocha com a Rádio CBN Vale. Por favor, pode prosseguir. Senhor Rocha, seu microfone está em mudo. Ok, segundo. A próxima pergunta vem de Rebeca Crepaldi com o Exame. Por favor, pode prosseguir. Senhora Crepaldi, o seu microfone está mudo. A gente não consegue te ouvir. Próxima pergunta vem de Rebeca Crepaldi com Exame. Por favor, pode prosseguir. Seu microfone continua mudo? Ok.
A question and answer session is now being conducted in Portuguese to switch to English. Please press the interpretation button on the platform and then select English.
Thank you very much. Please hold while we collect further questions.
Now we have a Q&A session in Portuguese.
Okay.
Please hold while we gather questions.
This concludes the question and answer session in English for the Press.
Okay.
Our first question is from Marcello, Russia with Hutches sitting in filing.
Now, we'll start the question and answer session in Portuguese.
Please go ahead.
This question and answer session is now being conducted in Portuguese to switch to English. Please press the interpretation button on the platform and then select English.
Mr Russia.
Okay.
Your line muted.
For.
Alright.
Our next question is from Rebecca <unk> from <unk>. Please go ahead Rebecca.
uh,
sing or harsher.
Microphone.
MS. <unk> you also on mute, we can't hear you.
Okay.
Our next question is from Rebecca <unk> with <unk>.
Please go ahead.
You were still muted showing now quicker.
And you move on to a question in the chat.
Our next question is from Brent Nomura.
Hi, My name is Brent Nomura I am a journalist at a G SIB, Brazil, a vehicle by Empresa place huge Communica, Sean. Thank you for taking my question. How are you tackling the negotiation to go back to zero tariffs is this negotiation performed through the Brazilian government or are you dealing directly with the American government.
For.
Gui Paiva: A gente vai para a pergunta do chat, então. A próxima pergunta é do Bruno Moura. Aqui, Bruno Moura, repórter da Agência Brasil, veículo da Empresa Brasil de Comunicação. Obrigado pelo espaço para a pergunta. Como está acontecendo a negociação da EMBRAER para tentar a volta da tarifa 0%? É por intermédio do governo brasileiro ou se trata diretamente com o governo americano?
Thank you for your question Bruno.
Yeah.
We are still working on both fronts.
Microphone. Okay.
We acknowledge the effort there is need and Lee.
Embraced the change that was mentioned by the American government last week.
We are still working with the Brazilian government and with the American government.
Talking about our economic hypothesis of how advantageous this is to that country.
Francisco Gomes Neto: Obrigado pela pergunta. As duas frentes. A gente está trabalhando, continua trabalhando com as duas frentes. Reconhecemos todo o esforço e agradecemos a mudança que foi anunciada na semana passada pelo governo americano. E a gente continua trabalhando através do governo brasileiro, dos negociadores do Brasil e dos governos americanos também, levando o nosso caso econômico de vantagem para aquele país, para que eles possam buscar uma saída para voltar à alíquota zero na aviação, como foi nos últimos mais de 45 anos.
We want them to find an option to go back to zero tariffs in aviation.
This is what we've seen for the past 45 years.
Thank you.
I see that Marcello Harsha synthesis that his question in the chat.
We now see announcements of tariffs unprecedented products by the U S government and people were worried about layoffs in Brazil in manufacturing like in sessions on this campus in the countryside of San Paolo.
In addition to leading aviation out of the terrorists trends.
Antonio Carlos Garcia: Muito obrigada. Vi aqui que o Marcelo Rocha enviou a pergunta dele escrita pelo chat. Com os anúncios das tarifas anunciadas aos produtos brasileiros pelo governo dos Estados Unidos, houve o medo de demissões nas fábricas do Brasil, como em São José dos Campos, no interior de São Paulo. Após o segmento de aviões ficar de fora do tarifasso, além da expectativa das projeções para 2025 anunciadas hoje pela Embraer, como fica agora essa questão da manutenção de empregos? Há possibilidade de demissões ou não?
What do you think about jobs is it possible that we're going to have layoffs in our industry.
For.
Right now we have a more a manageable situation.
Our tariffs the 10% or.
<unk> said the impact of these tariffs has been incorporated into our financial forecasts for keeping the guidance for this year and we're going to deliver every single aircraft that were planned to the liver. So right now we have no plans whatsoever to reduce our workforce because of a reduction in production.
Moving.
Francisco Gomes Neto: No momento, agora, nós voltamos para uma situação mais gerenciável, tanto é que nós já incluímos as tarifas, os 10% ou o impacto das tarifas nas nossas projeções financeiras e estamos mantendo o nosso gasto para o ano. Para atender o gasto do ano, nós temos que entregar todos os aviões que estão planejados. No momento, não está completamente fora dos nossos planos qualquer tipo de alteração, redução de quadro por causa de redução de produção.
Thank you.
Our next question is also in the chat.
<unk> <unk> from the <unk> Valley newspaper.
Francisco Gomes Neto, you laid a personal effort and negotiation with Nimbus FBS American government regarding tariffs.
Justice decisive to eliminate aircrafts from the list of these tariffs what is going to happen right now with an increasingly complicated situation with former president both scenario do you think the Trump could increase tariffs for Brazil and include aircrafts in that.
Back.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta também vem do chat e é com o Xandu Alves, do jornal Ovale. Francisco Gomes Neto, o senhor se empenhou pessoalmente na negociação com membros do governo americano sobre as tarifas. Quanto isso foi decisivo para a retirada das aeronaves da lista que sofrerá a sobretaxa? O que pode acontecer a partir de agora com a situação cada vez mais complicada do ex-presidente Bolsonaro? O senhor acha que o Trump possa aumentar a tarifa do Brasil ao Brasil e incluir os aviões?
Thank you very much for your question.
Embraer is about engineering, we focus on data and things that are under our control. This is what we've done from the get go.
For.
We did careful research on the contribution that we've had towards the United States.
So Richard the jobs that they created and we laid it out very clearly we have a good impact on jobs there not only for Embraer operations, but also for the American suppliers from which we buy lots of equipment with put that together we added information on investments we added information.
Trump.
Francisco Gomes Neto: Muito obrigado pela pergunta. A Embraer é uma empresa de engenharia, então a gente foca em dados e em coisas que a gente pode controlar. Foi isso que a gente fez desde o começo. Nós levantamos, com cuidado, toda a contribuição que a gente tem para os Estados Unidos. Nós levantamos a parte de empregos, aquilo que a gente colocou isso de uma forma simples de entender, né? O impacto que a gente gera de empregos lá, não só das operações da Embraer, mas de todos aqueles fornecedores americanos que nós compramos muitos equipamentos, estruturamos isso, incluímos os investimentos, incluímos a importância dos nossos aviões naquele país. Os aviões regionais da Embraer são os únicos que são aprovados naquele segmento de até 80 assentos. Estruturamos essas informações e levamos para as pessoas certas terem essa visibilidade.
On the importance of our aircrafts in their country.
Our regional aircrafts are the only ones that are approved for up to 80 seats.
So we compiled this information and we took it to the right people who had to see it.
As I said, we have a very very strong economic hypothesis here and we did the same with the Brazilian government.
We showed them, how we contribute to Brazil, and how risky it is for us to be subject to a 50% tariffs.
So we're keeping course, we see other deals with other countries and aviation is going back to a zero tariffs. So we have high hopes this is going to happen to us as well.
Francisco Gomes Neto: Como eu falei, eu acho que é caso econômico muito robusto que a gente oferece. Fizemos a mesma coisa do lado brasileiro. Do lado brasileiro, a gente mostrou também a contribuição para o Brasil e o risco de a Embraer ficar numa tarifa tipo 50%. Assim, a gente continua com a mesma tese e, com base nos outros acordos que a gente vem observando em outros países, que traz a aviação de volta para a alíquota zero, nós temos uma boa expectativa que isso venha a acontecer conosco também. Aí vai permitir a gente continuar com os mesmos planos de anteriormente. Com essa parte política, a gente não tem como comentar, porque a gente não entra nesse campo. A gente foca realmente no campo econômico e, como eu falei, a gente tem uma tese muito robusta para defender.
This will allow us for us to keep.
The journey that we had before.
For.
And we're not going to be discussing politics here, we're going to be focusing on the economy and as I said, we have is very very strong case to make here.
Thank you.
We have an audio question now from her Calvin down with invest in Arris.
Invest means I apologize please.
Please on mute so we can hear you.
Please go ahead.
Boys.
Okay.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta é via áudio e ela vem de Raquel Brandão com InvestNews. A gente pede que, por favor, vocês desmutem o próprio microfone aí do lado de vocês, para que a gente possa ouvir vocês aqui na plataforma, está bom? Pode prosseguir. Senhora Raquel Brandão, o seu microfone está mutado. Por favor, pode prosseguir. Próxima pergunta, Raquel Brandão com InvestNews. Pode prosseguir. O seu microfone segue mutado do seu lado. Por favor, abra para poder falar. Senhora Brandão, a gente ainda não te escuta.
Mr. Kalle burn now Jerry muted.
Please go ahead.
For.
Next question.
Children don't invest news.
Go ahead your still muted.
You have to on mute so they can hear you.
MS breakdown, we can't hear you.
News.
Heck out could you. Please ask your question in the chat.
I believe we have some kind of technical issue because apparently people are unable to on mute. So please ask your question in the chat.
Microphone.
Thank you.
Our next question is also coming from audio with Moody's shell Martinez from global and U S.
Mr. Martinez. Please on mute go ahead.
Francisco Gomes Neto: Raquel, faça pelo chat, então, a pergunta e a gente responde. Deve estar tendo algum problema, porque vocês não conseguem desmutar o microfone. Faça pelo chat.
Hi, Good morning can you hear me.
Microphone.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta também é via áudio e é do Maurício Martins com a GloboNews. Por favor, desmute seu microfone para que você possa fazer a sua pergunta. Por favor, pode prosseguir.
Yes, we can hear you.
Excellent good morning.
Okay.
I also have a question about tariffs.
I think this is the hot topic right now so my question is related to the supply chain.
What could be the impact here.
Alright, so regarding Brazilian exports they have lots of suppliers for embraer in the U S, but with the current 10% tariffs.
Gui Paiva: Oi, bom dia, me ouvem?
Francisco Gomes Neto: Agora sim.
Gui Paiva: Perfeito, perfeito. Bom dia a todos. A minha pergunta ainda na linha das tarifas, que eu acho que está dominando hoje as conversas, é pouco em relação também à cadeia de suprimentos, né? Qual pode ser o impacto, porque tudo bem, hoje o Brasil não está puxando as importações que a gente faça, por exemplo, dos Estados Unidos, e muitos fornecedores da Embraer estão lá. Mas eu queria entender pouco como é que vocês projetam o impacto das tarifas atuais de 10% e de possíveis novas guerras tarifárias em relação também à cadeia de suprimentos, e qual é hoje a dependência da Embraer em relação a fornecedores de peças e de insumos que estejam lá nos Estados Unidos.
And if we have other tariff wars, what could be the impact on the supply chain and how much. This embraer rely on suppliers of inputs and parts who are located in the U S.
How are you dealing with the suppliers. So that you have a harmonious relationship.
So that you don't run into issues regarding production.
Thank you for your question about Asia.
Please ask away regarding tariffs.
We were ready for it.
We knew that we'd have lots of questions on tariffs.
Gui Paiva: Como é que vocês estão também trabalhando em relação a eles, para que a relação siga harmônica e não haja nenhum prejuízo daqui para a frente, também em relação à produção, não somente à venda.
We're here for that.
So please feel comfortable to ask questions about this.
Even though we have uncertainty about it.
So at the beginning of this journey.
In your software.
Francisco Gomes Neto: Maurício, obrigado pela pergunta. Olhem, fiquem à vontade para perguntas sobre tarifa. A gente já estava preparado aqui hoje, que seria dia com bastante perguntas e dúvidas sobre tarifa. A gente está aqui à disposição para vocês poderem ficarem assim, ter o mesmo nível de conforto do que nós, nesse processo, apesar das incertezas. Muito bem. No início do processo, houve alguma reação de fornecedores pela falta de clareza no processo da tarifa. Mas a gente evoluiu bastante na relação com eles, para entender os impactos aqui e ali. Até o momento, a gente não tem registrado nenhum impacto de tarifa assim nos nossos custos de insumos. É isso. A gente compra muita peça nos Estados Unidos, como eu falei, mas compra peças também na Europa, compra peças na Ásia, compra peças no Brasil. Eu acho que esse processo está sendo bem administrado pelo nosso pessoal.
There was a lack of clarity on tariffs for suppliers. However, we've made progress in our relationship with them.
We're understanding this impact or that impact and so far we haven't seen big impacts from tariffs on the cost of inputs.
Process.
We buy lots of parts from the U S, but also from Europe, and Asia and Brazil.
I think we are managing this well.
So far we haven't seen any impact.
We still have a good relationship with them a harmonious relationship with our main suppliers.
To process.
Thank you.
Okay.
Our next question is from her Cauca Mirsky. Please go ahead.
Francisco Gomes Neto: Até o momento, a gente não tem nenhum impacto e a relação segue harmônica, usando a sua própria palavra, entre nós e os nossos fornecedores principais.
Good morning can you hear me.
Yes, we can.
Good morning Francisco.
So on tariffs do you have any other investments that you are planning or negotiating for the U S to get to a zero tariff space and the investments that we signed the presentation where are they in your plan or where you're negotiating them because of this exception list.
That.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta vai de Raquel Gamarski. Por favor, pode prosseguir.
The investments that we announced had already been previously announced.
Christine Dewag: Bom dia, vocês me ouvem?
Gui Paiva: Sim.
But please remember these are investments to expand our capacity in our operations in Melbourne.
Christine Dewag: Bom dia, Francisco. Seguindo em tarifa, queria entender se tem algum outro investimento nos Estados Unidos previsto ou em negociação para levar as tarifas a zero e se aqueles dois investimentos que estavam na apresentação já estavam no plano de vocês ou se foi uma coisa negociada para essa lista de exceção. Obrigada.
This includes production of aircrafts, the finishing of aircrafts in the U S.
Major investments in Dallas in Texas.
So that we're able to expand our capacity to work with.
Maintenance.
Francisco Gomes Neto: Bom, os investimentos que nós anunciamos já foram anunciados anteriormente. Mas, só lembrando, são investimentos para ampliar a nossa capacidade nas operações em Melbourne, que inclui atividades para a produção dos aviões ou acabamento dos aviões dos Estados Unidos. Investimento importante em Dallas, no Texas, para a gente ampliar a nossa capacidade de atender os nossos aviões comerciais. Esses investimentos, na verdade, eles são base para poder apoiar o retorno à tarifa zero. Porque eles foram definidos, eles foram aprovados, foram calculados com base num volume de negócios com os Estados Unidos. É isso que nós temos dividido com eles. Uma vez que eles põem uma tarifa que bloqueia a nossa venda de aviões ou diminui a nossa venda de aviões nos Estados Unidos, primeiro, nós vamos comprar menos equipamentos americanos, vamos produzir menos aviões.
Commercial jets.
And these investments are a foundation to support our thesis of Ace Euro tariffs for our industry we.
We did the math based on a certain volume of trade with the U S. This is what we've been sharing with them. If they have additional tariffs and we sell fewer aircraft in the U S. First we're going to buy fewer parts, we're gonna make fewer planes.
It is.
We're going to create fewer jobs.
And we're also going to have a limited ability to invest in the future and this is going to be damaging for the American market.
This is why I'm doubling down on the thesis of economic robustness. If you have tariffs for Embraer. This is going to harm the American market tier.
Now.
Okay.
Francisco Gomes Neto: Cada vez que a gente produz menos avião, a gente compra menos equipamento americano, gera menos emprego nos Estados Unidos e também limita a nossa capacidade de investimento no futuro, que também é detrimental para o mercado americano. Por isso que eu insisto na tese da robustez econômica, porque a tarifa para a Embraer, ela não prejudica só a Embraer, ela prejudica e muito o mercado americano também.
Are you negotiate a youre negotiating any additional investments in the U S to reach a zero tariff.
What's the do you have for the U S is the possibility of assembling KC 390 locally.
This is a big investment this is half a billion dollars.
With this investment we could create an additional 2000 jobs in the U S. So yes, we mentioned this as an opportunity of local investments if we have zero tariffs.
Christine Dewag: Só checando se tem algum outro investimento para os Estados Unidos em negociação para levar a tarifa para zero.
Francisco Gomes Neto: O que nós temos nos Estados Unidos sinalizado é a oportunidade de montar localmente o KC-390 Millennium. Esse é investimento muito grande, investimento aí da ordem de meio bilhão de dólares, e esse investimento poderia gerar 2,000 empregos adicionais nos Estados Unidos. Esse sim, nós sinalizamos como oportunidade de investimento local, com a tarifa retornando para zero.
Thank you.
Our next question is from Rebecca <unk> with <unk>. Please go ahead.
Hi can you hear me.
Yes, we can hear you now.
Hi, good morning, Congratulations on these results.
I'm still a bit confused I apologize I think you mentioned this over and over again, but if you could go over this once again I'd. Appreciate it could you. Please talk about the 20% impact because you just said that there there is no impact whatsoever on the cost of inputs.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta vai de Rebeca Crepaldi com Exame. Por favor, pode prosseguir.
For.
Christine Dewag: Oi, vocês me escutam?
Gui Paiva: Agora sim, Rebeca. Vamos em frente.
However at the same time, you said that 20% of impact coming from tariffs are felt in your cash flow and that you expect bigger impact and then the last second half of the year.
Christine Dewag: Tudo bom? Bom dia. Parabéns pelos resultados. Eu estou pouco confusa ainda e eu peço desculpas, porque acho que você retomou diversas vezes esse assunto, mas eu quero que você explique de novo, se puder, o impacto de 20%, porque você acabou de dar uma fala que não temos registrado nenhum impacto de tarifas no nosso custo de insumo. Ao mesmo tempo que você falou que até o momento 20% dos impactos das tarifas já são sentidos no fluxo de caixa e vocês esperam impacto maior no próximo semestre. Você pode retomar esse número de 20%? Porque no final eu quero saber, qual que é o número do impacto das tarifas nos resultados de vocês?
Could you. Please explain that what is the actual impact of tariffs on your results.
Hi, Rebecca this is Antonio good morning.
Let's go over this again.
In our last earnings release presentation.
We said that we had around nine.
9% of our revenue being impacted.
It's 65 million eight year, 20% of that happened in the first half of the year and the rest of that is going to happen in the second half of the year, if we have 10%.
For.
Gui Paiva: Bom, Rebeca, é o Antonio Garcia, bom dia. Só para relembrar, a gente falou no último call de resultados que a gente tinha impacto de algo em torno de 0.9% da nossa receita, que dá $65 million no ano. O que eu falei é o seguinte, de $65 million, 20% aconteceu até agora, no Q1 e Q2. O resto acontece no Q3 e Q4, baseado em 10%. A gente paga para a aviação executiva a tarifa, não paga para a aviação comercial. Também não teve ainda impacto de fornecedores. Então, assim, os 10% existem dentro da Embraer. A boa notícia é que a gente conseguiu fazer monte de medidas para mitigar esses efeitos com outras reduções de custos. É por isso que a gente manteve o guidance da companhia para esse ano aqui.
So far our business aviation with the tariffs will be dumped for commercial aviation and we havent seen impact with suppliers. So the 10% has been levied.
But the good news is that we have a number of initiatives to mitigate these effects with other cost reduction initiatives. This virus keeping our guidance for this year.
Rebecca let me make this sphere.
We have around $65 million and impacts. This year. This is what we expect we have realized 20% of that so far.
And this comes from what we pay when we export parts into the U S. Not from when we buy parts from suppliers is this clear now yes.
Yes, it is perfectly clear thank you.
Francisco Gomes Neto: Rebeca, just to be clear, the approximate expected impact for the year is $65 million, with 20% realized so far. This impact is from the tariffs we pay exporting components to the United States and not buying parts from suppliers. Is that clear now?
Of course.
Okay.
Our next question is in the chat, we have had Calvert and Don Firming fast news.
I'd like to confirm the guidance for margins.
Understood that you are being very cautious when it comes to the impact of the 10% tariffs inflation and the FX rate.
Yes, in fact, to add components,
Christine Dewag: Entendi, perfeito. Muito obrigada.
Should we see any changes here.
Francisco Gomes Neto: Nada, eu disponha.
Also I would like to understand the impact of this 10% tariff throughout the years.
Antonio Carlos Garcia: A próxima pergunta vem do chat, que é da Raquel Brandão com InvestNews. Gostaria de confirmar a questão do guidance para as margens, porque entendi que há uma perspectiva mais cautelosa em relação ao impacto de tarifas de 10%, inflação e desvalorização do dólar. Há alguma mudança? Também, gostaria de entender melhor a perspectiva do impacto dos 10% ao longo dos anos. Sei que, pelo conteúdo americano, esse impacto não é exatamente 10%. Mas quanto deve ser ao longo do segundo semestre?
Without American content. This is not going to be exactly 10% how much should we expect in the second half of the year.
Hi, Good morning. This is Antonio speaking.
Second question first we just told Rebecca that they have $65 million expected for this year, 20% already happened.
The rest is going to be realized in the third and fourth quarters.
If we see a continued 10% tariffs for US. This is the impact that we expect.
Gui Paiva: Bom dia, Antônio. A segunda pergunta, primeiro, a gente acabou de responder para a Rebeca aqui, do impacto de $65 million esse ano, dos quais 20% já aconteceram até o Q2, e o resto vai acontecer no Q3 e Q4, e mantendo-se os 10% de tarifa, isso é o que impacta a companhia para os próximos anos.
Regarding IR guidance, we're doing really well until Q2 were a bit above it our margins has been confirmed.
We think that our expenditure base is going to be a bit worse in the second half of the year because of the 80% that we are still going to have to absorb from the tariffs.
Also going to have higher inflation compared to our forecast and a worse in dollar.
Gui Paiva: Sobre o guidance, a gente está indo muito bem até Q2, pouquinho acima, as margens estão confirmadas, mas assim, a gente acha que a base de custos, ou estima que a base de custos, vai ser pouco pior no segundo semestre, pela questão dos 80% que faltam pagar, das tarifas que ainda não caíram no nosso resultado, a inflação maior do que a gente previa, e também a desvalorização do dólar, porque nós temos custos em reais, na hora que você faz a conversão para o dólar, acaba ficando custo maior na moeda funcional da companhia. Então, são esses dois pontos, eu diria, a gente, a Embraer sempre tenta ser consistente com os seus números do mercado, então seria pouco arriscado nesse momento, com tanta volatilidade, passar outro número para o mercado, mas a perspectiva, ela é boa, e mantendo-se as condições atuais.
We have costs in ralph's, so when we convert them into dollars, we have higher costs in our functional currency.
So what I would say is that we try to be consistent with our numbers.
It would be risky for embraer.
So much volatility to share different numbers with our industry, but we have a good forecast if we see sustained conditions.
Thank you. Our next question is from the chassis and SMA, two with Violet <unk> Zhang to sustain venues.
Hi, Good morning, Francisco Good morning Antonio.
Morning.
Francisco.
Let me change gears a bit.
We have been talking about tariffs.
Perspective twice.
Antonio Carlos Garcia: Muito obrigada. A próxima pergunta vem de Jessi Nascimento com Vale 360 News. Por favor, pode prosseguir.
But you have been announcing so many investments in the U S. Because of tariffs also and I was curious regarding the types of investments that we could see in sandwiches had this campus and tell about that Oliver area.
Ronald Epstein: Tudo bem, pessoal? Francisco, Antonio, bom dia.
Gui Paiva: Bom dia.
Or perhaps other cities in the <unk> Valley.
Ronald Epstein: Francisco, allow me to change the focus of the topic a little, which has been tariffs. I wanted to ask, given the announcements of so many investments in the United States, even because of this issue, what types of investments can be made here, in São José dos Campos, Taubaté, which is our focus here, our region, or another city here in Vale do Paraíba. I also take the opportunity to enter the topic of Eve and ask for more details, if you can detail a little more about this inaugural flight that should happen, it is scheduled to happen in December. Also, if this flight happens here in our region.
Let me also take this opportunity to talk about ease.
Could you please go into details.
Regarding the maiden flight.
That you should have in December should.
Should we see the maiden flight in our region too.
Thank you for your question Jesse.
None of our investments are made in Brazil, you might recall that a few months ago, we announced.
That embraer was going to invest 20 billion barrels by 2030, So 20 billion barrels if you divided by five and some it will be almost close to $4 billion and then you can compare this number with the number that we referred to one waiver when we talk about the U S. So most of the <unk>.
Yeah. Oh yeah.
Francisco Gomes Neto: Bom, Jessi, obrigado pela pergunta. A maioria dos nossos investimentos ainda são feitos no Brasil. Você lembra que alguns meses atrás nós anunciamos aí num evento que a Embraer ia investir R$ 20 billion de reais até 2030? Então, você vê, R$ 20 billion de reais, se você dividir por cinco e pouco, dá quase $4 billion. Então, você compara esse número com o número que a gente tem falado aí dos investimentos nos Estados Unidos. A grande maioria dos investimentos ainda acontece aqui. Então, são investimentos em Taubaté, para produzir o IVA, investimentos em Gavião Peixoto, investimentos em São José dos Campos, em várias melhorias, aumento de capacidade. Então, os investimentos estão distribuídos e a maioria deles é no Brasil, porque as nossas operações são maiores aqui no Brasil. O do IVA, a IVA é uma empresa separada, né?
Vestments I mean, our Intel but think of the Olympus show two investments. He soldiers at this campus in terms of many enhancements capacity expansion and most of the investments are localized in Brazil, because we the bulk of our operations.
Our in Brazil, So ive as a separate company.
Yes.
The plan is to have.
The initial flight in December but about eve.
I think you should.
Get further information during the conference call conducted by Ey. There is another investment that came to mind.
And that has to do with return to work, we're making robust investments to renovate the facilities and soldiers Androscoggin pool as it was in a gym mailer to get to welcome. Our people back is starting in January another important investment is imports of bell.
Francisco Gomes Neto: O plano é fazer esse voo do POC 2 em dezembro, mas mais detalhes sobre a IVA, eu recomendo que você obtenha na conferência com a IVA. Outros investimentos que eu posso, que me vêm à cabeça aqui agora, por exemplo, a parte de retorno ao trabalho. Nós estamos fazendo investimentos muito grandes para renovar os prédios em São José dos Campos, Eugênio de Melo, para receber o nosso pessoal de volta a partir de janeiro. Outro investimento relevante que nós estamos fazendo é na OGMA Portugal, para fazer a manutenção dos motores GTS, que vai contribuir para aumento substancial nas receitas da nossa área de serviço. Então, assim, os nossos investimentos, para você ter uma ideia geral, mas você vê que os Estados Unidos fazem parte disso.
Two for the maintenance of the GTS and use and this will pay.
Pay an important contribution to our service revenues.
Just to give you a general idea. These are the investments, but as you can see the U S. As part of that and this is also.
Value.
An important part.
That we are now.
Kelly those that have that decision made decision, making power regarding tariffs, but if you allow me I have another question in the beginning of the presentation and Portuguese you saw.
Sad that you do not anticipate any dismissals in Brazil, mainly because of the initial adjustments.
Francisco Gomes Neto: Fazem parte disso e é uma parte também relevante que nós estamos levando mais ao conhecimento das pessoas que têm o poder de decisão sobre as tarifas.
Referring the quotas are the terrorists is there any possibility going forward in case, there is no change in the world economic landscape.
Ronald Epstein: Eu sei que é cedo para falar, me permita, só mais uma questão. O senhor falou aí no começo da entrevista em português que não há perspectiva de demissão esse ano, né, nas fábricas aqui no Brasil, até por conta desse ajuste que foi feito inicialmente aí nas tarifas, a gente não sabe o que vai acontecer ainda. Existe a possibilidade para o futuro, caso não haja alteração no cenário econômico mundial, de que haja a contratação de mais pessoal aqui para as plantas no Vale, no Brasil?
For.
Do you think that you would hire more people.
For your Brazil operation our plan envisions growth in the coming years, we are growing at a rate of two two digits year on year and we are increasing production every year in the plan still stands.
I mean, unless there is any drastic change to the macroeconomic scenario.
Just like you know, 50% tariff in Embraer is biggest market, but now.
Perspective.
Francisco Gomes Neto: Jessi, nosso plano é de crescimento para os próximos anos. Nós estamos crescendo a uma taxa de dois dígitos cada ano, e aumentando a produção a cada ano. Esse plano, ele continua valendo, a menos que tenha uma mudança drástica no cenário econômico, como foi o 50% de tarifa no maior mercado da Embraer. Agora nós já voltamos para um patamar mais preocupante, mas mais razoável, mas que nós estamos mantendo o nosso plano de produção, a nossa receita para esse ano, e para isso nós precisamos de gente. Se você der uma olhada nos últimos anos, nos últimos anos, desde depois da pandemia, nós já contratamos mais de 5,000 pessoas, e a grande maioria no Brasil. A Embraer vem crescendo e o plano é de crescimento.
Okay.
We are back to a more reasonable level.
Oh yes, you not super.
And but our production plan and our our revenue this year remains unchanged and if you look.
At the years post pandemic, we hire more than 5000 people. The vast majority of them are were hired in Brazil. Therefore, embraer continues to grow and this is the plan going forward. Eventually if there is any drastic change in in the scenario is will not only apply to embraer, but all to all of the other.
Economic.
<unk>.
But you know we we.
We have a very positive outlook. Thank you and congrats on your results. Thank you Jesse.
Thank you with.
With that we conclude the Q&A session and also we conclude the conference call of Embraer. Thank you very much for joining us and we wish you all a very good day.
Francisco Gomes Neto: Evidentemente, se houver alguma mudança muito drástica no cenário, isso vale não só para a Embraer, vale para todas as empresas, no Brasil e no mundo. O nosso plano agora, a nossa visão agora é positiva.
Ronald Epstein: Obrigado e parabéns aí pelos resultados.
Francisco Gomes Neto: Muito obrigado, Jessi.
Antonio Carlos Garcia: Muito obrigada. Concluímos as sessões de perguntas e respostas e a conferência de resultados da Embraer. Muito obrigada pela sua participação e tenham todos bom dia.
Claims.
Christine Dewag: Goodbye.