Q3 2025 Embraer SA Earnings Call

November 4, 2025

Operator: Good morning, ladies and gentlemen, thanks for standing by. As a reminder, 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. This conference call will be conducted in English, please let me say a short announcement for Portuguese speakers.

Guilherme Paiva: My name is Gui Paiva, and I'm the Head of Investor Relations, M&A, and the Venture Capital for Embraer. I want to welcome you to our Q3 Earnings Conference Call. The numbers in this presentation contain non-GAAP financial information to help investors reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you Eve's results will be discussed at the company's conference call. It is important to mention that all numbers are presented in US dollars as it is our functional currency. This conference call may include statements about future events based on Embraer 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.

Guilherme Paiva: For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissão de Valores Mobiliários or CVM. At this time, all participants are in a listen-only mode. We'll give instructions later on for participation in the two Q&A sessions. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Valtésio Souza, Corporate Communications Manager, and myself. This conference call will have three parts. In the first part, top management will present the company's Q3 results. In the second part, we will host a Q&A session only for investors. Last but definitely not least, in the third part, we will 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.

Corporate Communications manager and myself.

This conference call will have 3 Parts in the first part of management will present the company's Q3 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, we will host a dedicated Q&A session only for the Press.

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

Francisco Gomes Neto: Thank you, Gui, and good morning, everyone. It's a pleasure to be here with you to share Embraer's Q3 2025 results. Embraer is currently experiencing a highly positive phase. A strong indication that our strategy, driven by efficiency and innovation, is delivering solid results and effectively supporting our sustainable growth. In commercial aviation, highlights include new orders for Avelo for 50 E195-E2s plus 50 options, and LATAM for 24 E195-E2s plus 50 options. These achievements have increased the division's backlog to $15.2 billion with an impressive 2.7 to 1 book-to-bill ratio. In executive aviation, we achieved an all-time high for Q3 revenues, reaching approximately $580 million. We also celebrated a historic milestone, the delivery of our 2,000th business jet, marking a record for year-to-date deliveries.

Thank you, UGI, and good morning, everyone.

It's a pleasure to be here with you to share embroiderers third quarter 2025 results.

Below for 50 un 95 e2s plus 50 options and lessons for 2495 e2s plus 50 options.

This achievements have increased the divisions backlog to 15.2 billion with an impressive 2.721 book to view ratio.

In active aviation, we achieved an all-time high for third-quarter revenues, reaching approximately $580 million.

we also celebrated,

Francisco Gomes Neto: Our backlog in executive aviation now stands at $7.3 billion, supported by a robust 2.4 to 1 book-to-bill ratio, reflecting continued strong demand for our aircraft. In defense and security, we continue to reinforce our global presence. Portugal confirmed the purchase of its 6th KC-390, including additional technical options to support future European acquisitions. We also signed new agreements for the A-29 Super Tucano with Panama and Sierra Nevada in the US, reinforcing the aircraft's relevance and versatility. The division closed the quarter with a $3.9 billion backlog and 1.3 to 1 book-to-bill ratio. Our service and support business maintained its accelerated growth path with expanding capabilities. We signed a new maintenance agreement with CommuteAir and launched Starlink's connectivity solutions for Praetor and Legacy operators.

A historic Milestone, the delivery of our 20000 business Jets marking a record for year to date. Deliveries

Our backlog in Aviation now stands at $7.3 billion, supported by a robust 2.4 to 1 book-to-bill ratio, reflecting continuous stronger demand for our aircraft.

In Defence and security, we continue to reinforce our Global presence.

Portugal confirmed, the purchasing of its 6 case c290, including additional dentinal, options to support future European Acquisitions. We also signed a new agreement for the 829 super tukano with Panama and Sierra Nevada. In the US we enforcing the aircraft's relevance and versatility, the division closest the quarter with a

3.0 billion backlog in 1.3 to 1, book to view ratio.

Our service and support business maintained, its accelerated growth path with expanding capabilities.

Francisco Gomes Neto: As a result, the business unit finished the quarter with a $4.9 billion backlog and an 1.8 to 1 book-to-bill ratio. At Embraer, continuous improvement is more than a process, it is a mindset. We successfully completed more than 800 Kaizen projects over the past 12 months. Now, by combining our lean culture with AI tools, we are moving forward more rapidly in achieving productivity gains. Our production level initiatives and the implementation of our Perfect Station concept led to a 16% increase in aircraft deliveries this year. From 2026 onwards, we expect even greater production stability in all product lines. The implementation of our zero defect methodology reduced our cost of poor quality by 12%. Another initiative that has been delivering significant results is the production lead time reduction.

It started a new maintenance agreement with commute are in launched starlinks connectivity solutions for operator and Legacy operators.

As a result, the business unit diminished the quarter with a 4.9 billion backlog in and 1.8 to 1 book, to view ratio. Continuous Improvement is more than a process. It is a mindset.

We successfully completed more than 800 kaisen projects over the past 12 months and now by combining our link culture with AI tools, we are moving forward more rapidly in achieving productivity, gains our production level initiatives and the implementation of our perfect station concept led to an 16% increase in aircraft deliveries this year.

Francisco Gomes Neto: We have achieved important improvements, such as reducing the production time of Praetors by 40%, KC-390 by 33%, and E-Jets by 27% compared to 2021 levels. More production with lower work in progress. We made significant progress with new and expanded facilities at key locations in the US and Brazil, including new hangars, painting booths, and final assembly areas. These investments are designed to enable higher production volumes and faster deliveries, fully aligned with our growth strategy. At the same time, we are transforming our supply chain through Supply Chain Management 2.0, a comprehensive initiative that integrates digital technologies, proactive risk management, and the deployment of artificial intelligence for smarter planning and forecasting. These efforts have already started to pay off. Aircraft deliveries increased by 16% and average shortage decreased by 25% compared to last year.

From 2026 onwards, we expect even greater production stability in all product lines. The implementation of our zero defective methodology, reducing our cost of poor quality by 12%. Another initiative that has been delivering significant results is the production lead time reduction.

We have achieved important improvements, such as reducing the production time of PTO by 40%, K City 90 by 33%, and EJS by 27% compared to 2021 levels.

More production. With lower work in progress, we made significant progress with new and expanded facilities.

At key locations in the United States and Brazil, including new hangers painting boost and final assembly areas.

This Investments are designed to enable higher production volumes and faster. Deliveries.

Fully aligned with our growth strategy. At the same time we are transforming our supply chain through Supply Chain management. 2.0 a comprehensive initiative that integrates digital Technologies, proactive risk management and the deployment of artificial intelligence for a smarter planning and forecasting. This is the fourth have already started to pay off.

Francisco Gomes Neto: I will now move on to operational results by segment. All figures are based on year-on-year comparisons. In commercial aviation, revenues increased a significant 31% because of better product mix and higher volumes and prices. Adjusted EBIT margin improved from -4.8% to +1.3%, supported by operating leverage and lower other operating expenses. In executive aviation, revenues increased 4%, helped by higher prices. Adjusted EBIT margin decreased 4.2 percentage points because of product mix, US import and tariffs, 2.6 percentage points and higher costs. Moving to defense and security, revenues grew 27% because of higher KC-390 volumes and a one-off positive contract related adjustment. Adjusted EBIT margin improved from 7.2% to 12.9% as a consequence of operating leverage and client mix.

Aircraft deliveries increased by 16%. And average shortage is decreased by 25% compared to last year. I will now move on to operational results by segment.

All figures are based on year on year comparisons in commercial Aviation revenues increased, a significant 31% because of better product mix and higher volumes and prices adjusted ebit margin improved from minus 4.8% to Plus 1.3%.

Supported by operating leverage and lower other operating expenses.

In as active Aviation revenues increased 4% helped by higher prices.

2.6 percentage points and higher costs.

Moving to defense and security, revenues grew to 7% because of a higher case, C290 volumes, and one-off positive contract-related adjustments.

Francisco Gomes Neto: In service and support, revenues rose 16%, driven by higher volumes and the ramp-up of the OGMA GTF engine shop. Adjusted EBIT margin decreased five percentage points because of services and materials delays. Before I conclude, I'd like to share a brief update on Eve's steady progress. The first full-scale engineering prototype test flight is planned for late 2025, early 2026. With that, I will now hand it over to Antonio to walk us through the key financial highlights of the quarter.

Adjust the EBIT margin from 7.2% to 12.9% as a consequence of operating leverage and client mix in service and support revenues rose 16%, driven by higher volume in the ramp-up of the Oghma GTF engine shop.

Antonio Carlos Garcia: Thank you, Francisco. Good morning, and good afternoon to everyone. Turning to the quarter, all my comments will be based on year-over-year comparisons unless noted. Before we dive into our financial results for Q3 2025, I'd like to start reiterating our 2025 guidance. We expect to deliver between 77 and 85 aircraft in commercial aviation and 145 and 155 in executive aviation from operational point of view. Meanwhile, we expect to achieve between $7 and $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. This forecast may appear as conservative at the first glance, but they reflect the supply chain risks we still face in Q4.

The adjusted EBIT margin decreased 5 percentage points because of services and materials delays. Before I conclude, I'd like to share a brief update on Eve's static progress. The first full-scale engineering prototype test flight is planned for late 2025, early 2026. With that, I will now hand it over to Antonio to walk us through the key financial highlights of the quarter. Thank you, Francisco. Good morning and good afternoon to everyone.

turning to the quarter, all my comments, we will be based on year-over-year comparisons, unless noted

But before we dive into our financial results, for the third quarter of 2025, I'd like to start hating our 2025 guidance.

we expect to deliver between 77 and 85 aircrafts in commercial Aviation

And 145 and 155 in is Aviation from operational point of view. Meanwhile, we expect to achieve between 7 and 7 and a half billion in revenues 7 and a half percent and 8.3% in adjusted ebit margin and more than 200 million in adjusted free cash flow from a financial perspective. This forecast may appear as conservative at the first glance but they reflect the supply chain risks.

Antonio Carlos Garcia: Having said that, I'd like to reinforce our estimates reflects our confidence in our operational progress and the resilience of our business model. We remain comfortable with our outlook and feel confident we are on track to meet our full year guidance. That said, let's take a look at our financial results for Q3. In slide 12, deliveries. Embraer delivered 62 aircraft in Q3 2025, 20 commercial jets, 41 executive jets, and 1 KC-390 military plane. This represents a 5% increase compared to the same period last year, with commercial aviation deliveries up 25% year-over-year and executive aviation stable. More importantly, for the first nine months, we have delivered 46 commercial jets, which is 57% of the midpoint of our guidance and 2 percentage points above our 5-year average for the periods.

We still face in Q4.

having said that, I'd like, to reinforce our estimates, reflect our confidence, in your operational progress, and the resilience of our business model,

We remain comfortable with our Outlook and feel confident. We are on track to meet our 4 year guidance.

That said, let's take a look at our financial results for the quarter.

You like the 12s?

Embraer delivered 62 aircraft in the third quarter.

20 commercial Jets and 41 executive Jets, and 1, KC 390, military plan. This represents a 5% increase compared to the same period last year.

We have commercial Aviation delivers up 25% year-over-year and executive. Aviation is stable, more importantly,

Antonio Carlos Garcia: In executive aviation, we have delivered 102 executive jets or 68% of the midpoint of our guidance and 11 solid percentage points higher than the 57% average from the past five years, which demonstrates our strong execution. In slide 13, backlog and revenue. Our company-wide backlog reached $31.3 billion during the quarter, up a significant 38% and higher than our previous historical record. Looking at each division, executive aviation and service and support led the pack with their backlogs up 65% and 40% respectively, followed by commercial aviation up 37% and defense and security up 80%. I'd like to highlight the significant volumes of purchase options currently held by our customer, which in total roughly $20 billion.

For the first 9 months we have delivered 46, commercial Jets, which is 57% of the midpoint of our guidance and 2 percentage points above our 5 years average for the periods. In aviation, we have delivered, 100 102, exactive, Jets or 68% of the midpoint of our guidance and 11 solid percentage points higher than the 57% average from the past 5 years, which demonstrates our strong execution is lighted 13 back row and Revenue.

Our company, white backlog reached at 31.33% and higher than our previous historical records. Looking at each division executive Aviation and service and support led the pack

Antonio Carlos Garcia: These are not firming orders yet, but they provide substantial upside potential for our backlog in the next few years, which could increase towards $50 billion. Moving to revenues, our top line was close to $2 billion for an increase of 18%. For a business perspective, the breakdown appears well balanced. Commercial and executive aviation each contributed circa of 30%, followed by service and support with 25%, and defense and security with 14%. Moving to the next slide. We generated $236 million in adjusted EBITDA in Q3 2025 with a 11.8% margin. Now, adjusted EBIT for the quarter was $172 million with an 8.6% margin. This compared to $147 million or 8.7% margin in Q3 2024.

With their backlogs up, 65% and 40%, respectively, followed by commercial aviation up 37% and defense and security up 80%. I'd like to highlight the significant volumes of purchase options currently held by our customers, which, in total, roughly amounts to $20 billion. These are not few orders, yet.

But they provide a substantial upside the potential for our backlog. In the next few years, which could increase towards 50 billion dollars. Move it to your revenues. Our Top Line was close to 2 billion dollars for an increase of 18% for a business perspective, the breakdown appears well, balanced for commercial and executive. Aviation, each contributed Circuit of 30%, followed by service and support with 25% and Defence and security with 14%.

3 236 million in adjusted a bit in the third quarter, 25 with 11.8% margin.

Now, I guess a bit for the quarter was 172 million with a 8.6% margin.

Antonio Carlos Garcia: If we excluded the one-time impact of Boeing agreement, which boosted the adjusted margin by approximately 900 basis points. For the first 9 months of the year, the adjusted EBIT margin stands at 8.6%, a significant improvement of the 2.9% average over the last 5 years. However, it's important to mention, we still expect a relevant impact from US import tariffs, which should weigh on our Q4 margin, along with additional costs related to our return to office initiative. Let's move it now to the next slide. Embraer generated $300 million in adjusted free cash flow in Q3 2025, mainly supported by operating activities, $224 million in EBITDA and lower accounts receivable. Looking now at our investment, excluding Eve, we allocated a total of $99 million during the quarter, slightly lower than last year.

This compared to 147 million or 8.7% margin in the third quarter 24. If we excluded the 1 time impacts of the buying agreement which boosted the adjusted marine by approximately 900 basis points for the first 9 months of the year. They adjusted every tomorrow it stands at 8.6% a significant Improvement of the 2.9% average over the last past 5 years. However it's important that you mention we still expect a relevant impact from us import Stars which should wait on our EQ for margin along with additional costs related to our return to office initiative.

Let's move on to the next slide. In Q3 2025, Embraer generated $300 million in adjusted free cash flow.

Antonio Carlos Garcia: The figures includes $39 million in CapEx, $37 million in addition to intangibles, $10 million in the pool program to support new contracts, and $30 million in research. Year to date, research investments have reached $33 million or 12% of the $284 million in total investment. These resources are focused on supporting sustainable growth and innovation. In slide 16, net income. Let me walk you through the financial bridge from our reported EBIT to both reported and adjusted net income. We started with the quarter with almost $160 million in EBIT. After accounting for $53 million in net financial expenses, $22 million tax credits, and $12 million in minority interests, we arrive at $170 million in reported net income.

Mainly supported by operating activities 224 million in a betta in lower accounts receivable. Looking now at our investment excluding if we allocated a total of 99 million during the quarter, you'd like to lower than last year.

The figures includes.

39 million capex, 37 million. In addition to intangibles, 10 million in the pool program, to support, the new contracts, and 30 million in research.

Year to date research Investments have reached 33 million or 12% of the 284 million total investment. These resources are focused on supporting sustainable growth and Innovation is like 16 net income.

Let me walk you through the financial Bridge. From our reported Abit to both reported and address and net income.

We started the quarter with almost 160 million inhabitants.

Antonio Carlos Garcia: Adjusting for extraordinary items such as $30 million in deferred taxes and $32 million from Eve's results, we get to $54 million in adjusted net income. We closed the quarter with an adjusted margin of 2.7%, a sharp decline from 13.1% last year. I'd like to emphasize this $167 million reduction was mainly driven by the one-time positive impact of $150 million from Boeing agreement recorded last year, as well less favorable net financial results. Looking at the evolution of our earnings per share, we have seen solid sequential improvement over the past few years. Our EPS totals $1.7 per ADS over the past 12 months are substantially higher than negative $0.20 reported in 2021. Let's move to the next slide.

After accounting for $53 million in net financial expenses, $22 million in tax credits, and $12 million in minority interests, we arrived at $170 million in reported net income. Then, adjusting for extraordinary items, such as $30 million in different taxes and $32 million from IFS results, we arrive at $54 million in adjusted net income.

We closed the quarter with an adjusted margin of 2.7%, a sharp decline from 13.21% last year.

Antonio Carlos Garcia: First of all, I'd like to start this slide talking about our liquidity position. Embraer's standalone net debt position decreased by $646 million to only $439 million in Q3 2025. As the company continued to implement its debt liability strategy and reduce its financial gearing. We ended the quarter with a net debt EBITDA ratio of only 0.5x, excluding lease. For a significant improvement from 1.3x a year earlier. It is important to note this, the increase in leverage compared to year-end 2024 is temporary because of the business seasonality. We do expect to finish the year in a net cash position. Our liability management strategy remains focused on extended debt duration and reduce our cost of debt. The average loan maturity is now 5.9 years, with 96% of our debt in long-term contracts.

I'd like to emphasize this 167 million reduction was mainly driven by the 1 time. Positive impact of 150 million from buying agreement recorded last year as well, less favorable, net Financial results. Look at Evolution for earnings per share. We have seen solid sequential improvement over the past few years. Our EPS is total 1.7 dollars per ads over the past 12 months or substantially higher than negative 20 cents reported in 2021. Let's move to the next slide. First of all,

I'd like to start this slide talking about our liquidity position Standalone. Net deposition decreased by 646 billion to only 439 million in the 30425 as the company continued to implement, its Deputy liability strategy and reduce its financial gain. We ended the quarter with a net that a bit, the ratio of only 0.5 times excluding if for a significant improvement from 1.3 times per year earlier, it is important that, you know, this the increase in leverage compared to year end 2024, it's temporary because of the business seasonality, we do expect to finish the year in a net cash position. Our liability management strategy remains focused on extended debt, duration, and reduced our cost of debt.

Antonio Carlos Garcia: To conclude, I'd like to remind you, we announced a new liability management initiative in Q3 2025, which will be fully concluded in November. The company issued a $1 billion long 12 years bonds at 5.4% coupon. We will repurchase a total of $809 million from our 2028 and 2030 bonds. We will share an updated debt maturity profile and average cost of debt with our full year financials. Slide 18, shareholder remuneration. Before I finish my presentation, I'd like to take a moment to thank our shareholders for their trust and highlight recent developments in our shareholder remuneration initiatives. First, I want to share an exciting milestone. Yesterday, we officially updated our ticker symbol to MBJ, which means Embraer Jets, to better reflect the company's current strategy and vision for the future.

The average loan maturity is now 5.9 years with a 96% of all debts in long-term contracts to conclude. I'd like to remind you, we announced a new liability management initiative in 30 quarter, 25,

Before I finish my presentation, I'd like to take a moment to thank our shareholders for their trust.

And highlight to recent developments in our shareholder remuneration initiatives. First, I want to share an exciting Milestone. Yesterday, we officially update, our ticker symbol to mbj which means in regards

Antonio Carlos Garcia: Second, Embraer declared nearly BRL 210 million in interest on equity over the past two quarters, which translates into BRL 0.28 per share for a 0.35% dividend yield. Just a quick remind, 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 will hand it back to Francisco for his final remarks. Thank you very much.

Francisco Gomes Neto: Thank you, Antonio. I'd like to take a moment to reflect on our recent key achievements and share a few final thoughts. In commercial aviation, strong E-One sales and the continued consolidation of the E-Two platform marked our best sales year. Executive aviation continues to see robust demand across its entire portfolio, reflecting the strength of our products and customer relationships. In defense and security, the KC-390 is gaining traction in key global campaigns, including India and NATO. Sweden's recent order reinforcing its growing international relevance. Meanwhile, service and support continues to expand, highlighted by the groundbreaking of a new MRO facility in the US, further strengthening our global footprint. Looking forward, we expect substantial midterm growth while strategically investing in new technologies to prepare the company for a more ambitious and long-term expansion, always grounded in our culture of safety first and quality always.

To better reflect the company's currency strategy and vision for the future. Second amlar, declare nearly 20010 million, Brazilian area, ice interest on Equity, over the past 2 quarters, which translate into 28, Brazil cents, per share for at 0.35% dividend, yield us a quick reminder. 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 you'll be paying in a single installment. After our 2026, annual shareholders meeting with that, I will hand it back to Francisco for his final, mark. Thank you very much.

Thank you, Antonio. I'd like to take a moment to reflect on our recent key achievements and share a few final thoughts.

Aviation strong E1 sales and they continued consolidation of the E2 platform Market. Our best sales year as active. Aviation continues to see robust demand across its entire portfolio reflecting the strength of our products and customer relationships in defense and security. The cases United is gaining Traction in key Global campaigns including India and NATO

Francisco Gomes Neto: With that, I would like to move on to the Q&A session.

With Sweden's recent orders, reinforce its growing International relevance meanwhile service and support continues to expand highlighted by the groundbreaking of a new mro facility in the US further. Strengthening our Global Footprints looking forward. We expect substantial midterm growth while strategically investing in new technologies. To prepare the company for a more ambitious, and long-term expansion always grounded in our culture of Safety, First and quality always.

With that, I would like to move on to the Q&A session.

Operator: We will now start the question and answer session. We remind you again 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.

We will now start the question and answer session.

We remind you again. 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 employer.

We also highlight this conference call as being conducted in English with Translate translation to Portuguese.

Please.

Let me say a short announcement for Portuguese speakers.

Antonio Carlos Garcia: We request participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, 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. We'll start the Q&A session dedicated to research analysts and investors. The first question comes from Kristine Liwag with Morgan Stanley. Please go ahead.

Operator: We request participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, 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. We'll start the Q&A session dedicated to research analysts and investors. The first question comes from Kristine Liwag with Morgan Stanley. Please go ahead.

We request participants interested in asking questions to press the raise a hand button on the platform. When your name is announced, make sure your microphone is on and start your question to give everyone a chance to participate. We request to ask just 1 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.

We'll start the Q&A session dedicated to research analysts and investors

The first question comes from.

Christine liwag with Morgan Stanley. Please go ahead.

Kristine Liwag: Hey, good morning, everyone. Good morning, Francisco, Antonio, and Guy.

Francisco Gomes Neto: Morning.

Hey, uh, good morning everyone. Uh, good morning, Francisco, Antonio, and geese.

Antonio Carlos Garcia: Morning.

Morning.

Kristine Liwag: First, you know, I mean, Antonio, the balance sheet and the financial strength of the company is pretty remarkable, especially with, you know, what we saw in 2020 with COVID and all the changes. With the net cash position, slated for the company by year-end, I was wondering how you guys think about future return to shareholders, especially if you're not gonna build another big R&D cycle, would you consider share buybacks or increasing dividends? How do we think about return to shareholders?

Lucas Marquiori: With the net cash position, slated for the company by year-end, I was wondering how you guys think about future return to shareholders, especially if you're not gonna build another big R&D cycle, would you consider share buybacks or increasing dividends? How do we think about return to shareholders?

Cycle. Um, would you consider uh share BuyBacks um or increasing dividends. Um how do we think about uh returns of shareholders?

Antonio Carlos Garcia: Thanks, Christina, for the great question. I was expecting this already. I would say, to be honest, we start to repay or resume dividends this end of last year. Now, I would say we are very happy that we are able to do it, Point one. Point two, we are evaluating our capital structure. Is a valid question you are raising right now. We do not have today, a firm opinion how to move forward. I do not see additional dividends at this point in time. We are already paying 25% of the net income of the year, which is already, for a heavy intensive business, already a lot. I would say, we do not have a response right now, but we are evaluating further move on this direction in order.

Thanks, Christina, for the great question. Uh, I was expecting this already. I would say, to be honest, we started to repay our dividends at the end of last year. Let's say we are very happy that we are able to do it.

Point 2, we are evaluate. Our capital structure is a valid question you are raising right now.

We do not have today uh uh a firm opinion. How to move forward? I do not see additional dividends at this point in time we are at paying 25% of the net income of the year which is already

Antonio Carlos Garcia: For example, buyback is something that's on the table right now to be discussed, we do not have an answer right now. We are really paying attention to this point as well.

Lucas Marquiori: Great. Thank you. If I could do a follow-up. You know, a few weeks ago, American Airlines announced that they're retrofitting their E-Jets fleet and, to do the overhead bin. I think you guys are doing the work on that. I was wondering, since they wanna do a full interior refresh, is there an expansion of work scope that you can now address, especially as you've increased your services offering? Are you doing the complete retrofit for American, or are you only doing portions of it? How do we think about, you know, if other airlines in the US decide to also retrofit their fleet with your more expanded services capability, how do you think about that market, and could you capture more of that?

Kristine Liwag: Great. Thank you. If I could do a follow-up. You know, a few weeks ago, American Airlines announced that they're retrofitting their E-Jets fleet and, to do the overhead bin. I think you guys are doing the work on that. I was wondering, since they wanna do a full interior refresh, is there an expansion of work scope that you can now address, especially as you've increased your services offering? Are you doing the complete retrofit for American, or are you only doing portions of it? How do we think about, you know, if other airlines in the US decide to also retrofit their fleet with your more expanded services capability, how do you think about that market, and could you capture more of that?

For a heavy intensive intensive business. I read a lot, I would say uh we do not have a response right now but we are evaluating further move on this direction. In order. For example buy back is something that's on the table right now to be discussed but we do not have an answer right now but we are really taking pay attention to this point as well.

Antonio Carlos Garcia: Oh, thanks. Francisco speaking. Kristine Liwag, thanks for the question. Well, this is part of our initiative to improve the E175, E1. I mean, this is the first movement was with the interior, this includes not only the pins, but includes seats, new seats, and Recaro seats. This includes the lighting, a new and modern lighting, and also available a better connectivity for the aircraft. Yes, we have a program with American Airlines, this, I would say this kit is available for other customers, we can do it if they want, at our new MRO in Dallas.

Francisco Gomes Neto: Oh, thanks. Francisco speaking. Kristine Liwag, thanks for the question. Well, this is part of our initiative to improve the E175, E1. I mean, this is the first movement was with the interior, this includes not only the pins, but includes seats, new seats, and Recaro seats. This includes the lighting, a new and modern lighting, and also available a better connectivity for the aircraft. Yes, we have a program with American Airlines, this, I would say this kit is available for other customers, we can do it if they want, at our new MRO in Dallas.

Great, thank you. And if I could do a follow-up, you know, um, a few weeks ago, uh, American Airlines, uh, announced that they're retrofitting their, their ejects, uh, Fleet and you know, to do the overhead bin. I think you guys are doing the work on that, but I was wondering, um, as soon as they want to do a full, uh, interior refresh. Is there an expansion of work scope that you can now address? Especially as you've increased your Services offering? Are you doing, uh, the complete retrofit for American? Or are you only doing portions of it and how do we think about, um, you know, if other airlines in the US decide to also retrofit their, their Fleet, with your more expanded Services, uh, capability. How do you think about that market? And could you capture more of that?

Oh, thanks, Francisco speaking. Christina, thanks for the question. And uh, wow. This is part of our, uh, initiative to improve the u75 eu1. I mean, this is the first movement was with the interior. And this includes not only the beings but includes the, uh, seats new seats Ricardo seats. This includes the, the lightning, a new modern lightning and, uh, also available a better connectivity for the aircraft. So yes, we, uh, we have a program with American Airlines but this I'll say this a kit is uh, available for other customers. And we can do it if they want at our new mro in Dallas.

Lucas Marquiori: Great. Well, thank you very much. Looking forward to more contracts.

Kristine Liwag: Great. Well, thank you very much. Looking forward to more contracts.

Antonio Carlos Garcia: Oh, thank you. We too.

Thank you, we too.

Operator: The next question comes from Marcelo Motta with JPMorgan Chase & Co. Please go ahead.

The next question comes from Marcelo Ma with JP Morgan. Please go ahead.

Marcelo Motta: Hi, everyone. Thank you for taking my question. My question is regarding the EBIT margin on the executive segment. I mean, you comment about, you know, the impact of product mix and higher costs. Just wondering, you know, when we look at the component of higher cost, if you think this is more structural, it's more like a one-off on this quarter. Then if you could explain also what helped the defense EBIT margin, that would be great as well. Thank you very much.

Guy: Hi, Marcelo. This is Guy. Good morning, and thanks for the question. In Executive Aviation, we have seen, like in other business, cost inflation. That's something that has been a trend in the industry for the past few years. We would expect that to continue. We have been obviously being very resilient in protecting our margins in the business, but we obviously will see some fluctuations on a quarter-to-quarter basis. Regarding defense, there was an impact on the higher KC volumes, and just the client mix, where we had a higher participation of foreign or foreign clients.

Guilherme Paiva: Hi, Marcelo. This is Guy. Good morning, and thanks for the question. In Executive Aviation, we have seen, like in other business, cost inflation. That's something that has been a trend in the industry for the past few years. We would expect that to continue. We have been obviously being very resilient in protecting our margins in the business, but we obviously will see some fluctuations on a quarter-to-quarter basis. Regarding defense, there was an impact on the higher KC volumes, and just the client mix, where we had a higher participation of foreign or foreign clients.

Hi everyone. Thank you for taking my question. My question is regarding the the AIT margin on the executive segment. I mean you comment about you know the impact of product makes and higher cost. So just wondering, you know, when we look at the the component of higher cost uh if you think this is more, structural is more like a 1 off on this quarter and then if you could explain also what helped the, the defense a bit margin? That would be great as well. Thank you very much.

Antonio Carlos Garcia: Marcelo, just to complement you in regards to Executive Aviation, please take into account that 1 year ago, we didn't have a tariff. The heavy impact on the Executive Aviation margin is also the tariff. More is eating up some 2, 3.5% of our margin in a comparable basis. I would say that explains the aviation as well.

I must tell this is Gee good morning, and thanks for the, the question. Um, in as active variation, uh, we have seen like in other business cost inflation. That's something that has been a training in the industry for the past few years. Um, and I we we would expect that to continue. Uh, we have been obviously being very resilient and protecting your margins in the business, but we obviously will see some fluctuations on a quarter to quarter basis, um, regarding defense. Um, there was um an impact on the higher case volumes. Um and just the client makes uh where we had um a higher participation of foreign foreign or foreign clients.

And Marcelo, uh, just to compliment you. In regards to Executive Aviation, please take it to our continent 1 year ago. We didn't have it serviced, and they have impact on the existing. Aviation Mar is also the Third

More is getting up some 2 3 and a half percent of our margin in a comparable basis. I would say that explains the deviation as well.

Marcelo Motta: Perfect. Thank you very much.

Perfect, thank you very much.

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

The next question comes from Lucas Mercury with BTG Pactual. Please go ahead.

Lucas Marquiori: Thanks. Hey, guys. Morning. My question is just on the one-offs on the margin as well, especially on commercial aviation. Just trying to understand what are these tax credits that you guys mentioned you guys had on this Q. I mean, particularly to what they relate to and how should we think about, I mean, their recurrency going forward. Also on the defense as well, what exactly is this one-off contract-related adjustment? Is this a change in the contract of a foreign client that helped on the margin? I mean, just trying to kind of clear that out. Thanks for the clarifications.

PQ. I mean, particularly to what they relate to and how should we think about? I mean their uh, their recurrency going forward and also on the defense as well. What exactly is this? 1-off contract related adjustment? Is this a

Change in the contract of a foreign client that helped on the margin. I mean, just trying to kind of.

Guy: Hi, Lucas. Guy here. Good morning. Thanks for the question again. In commercial aviation, the tax credits are related to some import parts that we did a study, and we're able to kind of claim these credits. Okay? On defense, we reassign a plane in the production to a different client that was already, let's call it halfway in its production. Given that it is percentage of completion, we recalculate the revenues and the profitability of the contract, given that it was already halfway through.

Guilherme Paiva: Hi, Lucas. Guy here. Good morning. Thanks for the question again. In commercial aviation, the tax credits are related to some import parts that we did a study, and we're able to kind of claim these credits. Okay? On defense, we reassign a plane in the production to a different client that was already, let's call it halfway in its production. Given that it is percentage of completion, we recalculate the revenues and the profitability of the contract, given that it was already halfway through.

a clear that out. Thanks for the clarifications.

Hi, Lucas G here. Good morning, thanks for the question again. Um, so in in in commercialization the the tax credits are related to some important parts that we did a study and were able to kind of claim these credits. Okay. Um, and on the on defense, uh we reassign a plane in the production to a different client that was already. Let's call it halfway in its production. Um, so given that it is the percentage of completion. We recalculate um, the revenues and the profitability of the contract given that it was already halfway through.

Andre Ferreira: Awesome. Thank you.

Francisco Gomes Neto: Thanks, Lucas.

Awesome. Thank you.

Let's look up.

Operator: The next question comes from André Mazini with Citi. Please go ahead.

The next question comes from Andrea Mazini with City. Please go ahead.

André Mazini: Hi, guys. Francisco, Antonio, Gui. My question is on the state of the Pratt GTF engines. The competitor A220 product is having some major issues with the Pratt. Reading a piece of news saying that 17% of the A220 fleet is grounded because of the Pratt GTF. We understand the engines are not the same, right? The A220 uses the PW1500G, while the E2, the PW1900G. But the question is if the PW1900G is indeed having no issues whatsoever. That is the first one. The second one, if I may, a totally different topic. This November, of course, the world is looking to Brazil for the COP and the Amazon.

Hi guys, Francisco, Antonio, G. Uh so my my question is on the state of the Pratt gtf engines.

So the competitor rate to 20 product is having some major issues with the, with the Pratt, we're adding a piece of news saying that 17% of the hu 20 Fleet is grounded uh because of the project f.

We understand the engines are not the same, right? The HU 20 uses the PW1500, while the issue is the PW1900.

André Mazini: I wanted to ask about an old program, the SIVAM program, the Amazon surveillance system, that you guys participated, call it 25 years ago. The planes from that program were Embraer's 145s. If there's any renewal program for, or plan for those planes and the status of the Amazon surveillance systems and Embraer's participation overall? Thank you.

But the question is, if the pw1 1900 is indeed having no issues whatsoever. Uh, so that's the, the first 1 and the second 1. If I met, uh, totally different topic is November. Of course, the world is looking to Brazil for the, the cop and the Amazon. So, I want you to ask about an old program, they see van programmed, the Amazon surveillance system that you guys participated call it 25 years ago, the planes from that program were embarrassed 1, 145. So if there's any renewal renewal program for, uh, or plan for, for those planes and the status of the Amazon surveillance systems, and embrace participation overall, thank you

Francisco Gomes Neto: Hey, Andrea. Francisco speaking. Thanks for your question. First start with the E2 GTF. E-E2 uses the third generation of the PW1900G engine, which has incorporated several upgrades and improvements. on top, the E2 is a lighter, much lighter aircraft compared to the others. which makes, which means the less demand on the engines. That's why the E2 has suffered much less than the competition. now, the engines are getting better and better with new improvements being implemented. we expect much better performance and durability of the engines going forward for the E2s, which is a good news for the airlines.

Hey, Andrea, Francisco, speaking. Thanks for your question. So first start with the

E2 gtf.

I mean, you know, the 2, I mean it uses the third generation of the PW 1900s G engine.

Which has incorporated several upgrades and improvements.

Francisco Gomes Neto: About this Amazon program, we don't have any project at this point of time with this project. I mean, we are working with the Brazilian Force in some projects, but not this one as far as I know.

And, uh, on top Day 2 is, uh, it's a lighter much lighter. Aircraft compared to the others. So, which makes, uh, which means the less demands on the, on the engine. So that's why they, they too have suffered much less than the competition. And now, I mean the the engines are getting better and better with new improvements being implemented. So we expect uh, much better performance and durability of the engine is coming going. Going forward? Uh for the EOS which is a good news for the airlines uh about this uh Amazon program. We don't have uh any project at this point of time with the with this uh,

With this project. I mean,

We are working with the Brazilian force on some projects, but uh,

Not this 1 at, as far as I know.

André Mazini: Very clear. Thank you, Francisco.

Very clear. Thank you, Francisco.

Francisco Gomes Neto: Thanks, Andrea.

Operator: The next question comes from Andre Ferreira with Bradesco BBI. Please go ahead.

Thanks Sandra.

The next question comes from Andrea with predko PPI, please go ahead.

Andre Ferreira: Yes. Good morning. Thank you for taking my question. I have two here. First one, going back to the tax credits in commercial aviation. We saw BRL 56 million in the quarter, looking at the ITR. Just wanted to make sure if that is all in the commercial aviation segment, which would mean that the tax credits were more or less 1.5% in terms of EBIT, positive impact on EBIT margin. Second point about the tariff. The total impact, adding executive aviation and service was, if I'm correct, $17 million, right? Which seems lower than initial expectations, but there could be, you know, some help from inventories here.

Yes, good morning. Thank you for taking my question. I have two here. So first, going back to the tax credits in Commercial Aviation, we saw a $56 million highs in the quarter, looking at the ITR. So I just wanted to make sure if that is all in the Commercial Aviation segment, which would mean...

that the tax credits were more or less uh 1.5% um in terms of a bit positive impact on a bit margin

And also, uh, second point about the tariffs. So the total impact, including executive aviation and services was, um, correct? $17 million, right?

Andre Ferreira: You expect a higher impact in Q4, or I mean, not just from seasonality, but also even on a more comparable basis. That's it from my side.

Uh, which seems lower than than initial expectations, but there could be, you know, some help from inventories here. So you expect a higher impact in the fourth quarter? Or I mean, not just from seasonal seasonality, but also even on a more comparable basis.

André Mazini: Hi. Good morning. Thanks for the question. This is Gui here. In terms of the tax credits, it's gonna be low single-digit value. It's less than BRL 56 million that you alluded to. In terms, what's the second question? Sorry. On the tariffs. The tariffs in the quarter were BRL 17 million and a total of BRL 27 million year-to-date. We originally mentioned after Q1 results that we expected to be around BRL 60 to 65 million for the full year. That would imply that we still have about BRL 35, 38 million to go. The company has been working hard to reduce its exposure, we hope that we can finish the year under the original amount that we mentioned.

Guilherme Paiva: Hi. Good morning. Thanks for the question. This is Gui here. In terms of the tax credits, it's gonna be low single-digit value. It's less than BRL 56 million that you alluded to. In terms, what's the second question? Sorry. On the tariffs. The tariffs in the quarter were BRL 17 million and a total of BRL 27 million year-to-date. We originally mentioned after Q1 results that we expected to be around BRL 60 to 65 million for the full year. That would imply that we still have about BRL 35, 38 million to go. The company has been working hard to reduce its exposure, we hope that we can finish the year under the original amount that we mentioned.

Uh, that's it from my side.

This is G here and comes to the tax credits. I'm just going to be low single digit value. Um so it's it's less than the 56 million rias that you alluded to um and in terms um

André Mazini: It was, yes, the inventory cycle has played a role so far.

Andre Ferreira: It was, yes, the inventory cycle has played a role so far.

What's the second question? Sorry on the uh on the terrorists, the terrorists in the quarter, were 17 million and a total of 27 million, a year to date. We originally um mentioned um after q1 results that we expected to be around 6 to 65 million for the full year. So that would imply that we still have about 35, 38 million to go. But the company has been working hard to reduce its exposure and we hope that we can finish the year. Under the original amount that we, uh, that we mentioned.

Francisco Gomes Neto: Just to complement you, just one off. Is the second question you're getting about the same issue? It's the normal business as usual. We have temporary importation when we have changes in the supply chain here. We get the credit. There's nothing that is something special. It's just part of the daily life here. Just that you guys don't believe it's something extraordinary.

And it was yes, the inventory cycle has played a role uh so far.

Uh, just, uh, just to compliment you. Just, uh, one offer is the second question. You're getting about the same issue as the normal business as usual. Now, we have temporary importation. When we have changes in the supply chain here, we get the credit that there's nothing. That is something special; it's just part of the daily life here. Just from that, you guys don't believe it's something extraordinary.

Andre Ferreira: Very clear. Thank you.

Francisco Gomes Neto: Thanks, Andrea.

Very clear. Thank you.

Operator: The next question comes from Gabriel Rezende with Itaú BBA. Please go ahead.

The next question comes from Gabriel.

Please go ahead.

Gabriel Rezende: Hi, good morning. I would like to just touch on the company's guidance, especially on the profitability side. Just wondering how relevant could be the supply chain risks for Q4, as well as the impact from US tariffs that made the company to choose to not revise its guidance support, especially considering that you have already delivered in the year-to-date figure, these very high EBIT margin, which is already above what you're expecting for the full year. Just trying to understand which one of these effects would be more relevant, either the potential delays on deliveries due to supply chain issues.

Alberto Valerio: The US tariff impact for Q4. Thank you.

Francisco Gomes Neto: Right, Gabriel, I answer half of the question, and then Antonio will complement the answer. Well, regarding the supply chain, I mean, the risk for the supply chain in 2025, I mean, is over. I mean, we have all the parts we need to assemble the aircraft. Now it's up to us to assemble the aircraft. You know, we have a concentration of aircraft to be delivered and, you know, in the next two months. That's why we decided to keep the guidance as it is. Again, no risk with supply chain at this point of time. Now we are working hard to make sure we have a better 2026 in terms of production stability, production leveling than it was in 2025. About the EBIT, Antonio, do you want to comment?

Hi, good morning. I would like to make uh just to touch on the company's guidance, especially on the profitability side. Just wondering how relevant could be the supply chain risks for the fourth quarter, as well as the the impact from us tariffs. Uh, that made the company choose to not. Revise, its guidance supports especially considering that you have already delivered in the in the year to date figured this. This uh, very high a bit margin, uh, which is already above what you're expecting for the, the full year. So, just trying to understand which 1 of the these effects to be more relevant, either the potential delays and deliveries due to supply chain issues or the use us terrorists impact for the fourth quarter. Thank you.

Gabrielle, I, I want to half of the question and then I'm trying to view compliment. Uh, the answer, well regarding the supply chain.

I mean the the risk for the supply chain in 2025, I mean,

It's over. I mean, we have all the parts we need to assemble the aircraft. Now, it's up to us.

Antonio Carlos Garcia: No, just to complement what Francisco is saying. Assuming that we will be able to get the aircraft out of the door, I would say we look more from the high end than for the lower end. I would say, as I mentioned my first comment, we calculated the risk. You could take 0.3% EBIT margin comparing with the 8.6% we have in the last nine months. If everything goes well, I would say there's nothing that goes against that we may be able to even surpass the high end of the margin. We need to deliver. There's a lot of aircraft to be delivered to end of December just because of it. Please do not forget, our guidance was not contemplated the tariffs.

To assemble to assemble the aircraft. But you know we have a concentration of aircraft to be delivered and no and the next 2 months that's why we decided to to keep the guns as it is uh again, no risk of with supply chain at this point of time. Now we are working hard to to make sure we have a better 2026 in terms of production, stability production leveling. Then it was in 2025. But the in 2001 to comment know, just to complement that first. See, if you think assuming that we, we will be able to get the aircraft out of the door. I would say, we look more from the high end, then for the lower end, I would say, as I mentioned my, uh, first comment

We calculated the risk.

You could take 0.3% a bit margin comparing with the 8.6 we have in the last 9 months. If everything goes well I would say there's nothing that goes against that we may be able to even surpass the high end of the market, but we need to deliver. There's a lot of aircraft to be delivered to end of December.

Just because of it.

Antonio Carlos Garcia: It seems to be conservative, but we were able to offset the guidance. We are still there. More or less, I would say, looking for the high end than the lower end, I would say is a remarkable achievement for our company here.

And please do not forget, our guidance was not contemplated at all. It seems to be conservative, but we were able to offset the guidance. We are still there and, more or less, I would say we are looking for the high end. The lower end, I would say, is a remarkable achievement for our company here.

Alberto Valerio: Yeah, it's definitely well noted, Antonio. Thanks, Francisco, as well.

Gabriel Rezende: Yeah, it's definitely well noted, Antonio. Thanks, Francisco, as well.

Antonio Carlos Garcia: Thank you.

Yeah, definitely. Well noted uh Antonio thanks for as well.

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

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

Lucas Laghi: Good morning, everyone. Thank you for taking my question. I would like to focus on the services division. I mean, we have been seeing this increase in profile of agnostic revenues and acceleration of GTF engines contracts on OGMA. I guess you guys were very clear during the investor day on the potential for this top-line pocket that you guys are aiming. Could you please elaborate on the profitability profile of this division going forward? I mean, should the margins be lower or higher considering this shift in top line new profile toward this agnostic revenues? Just getting to know, I mean, a bit more about profitability given this new profile of revenues.

Good morning, everyone. Thank you for taking my question. I would like to focus on the Services Division. We have been seeing this increasing profile of agnostic revenues and acceleration of GTF engines contracts on Augma. I guess you guys were very clear.

Lucas Laghi: Thinking specifically of on the Q3, I mean, we saw this decline on EBIT margin on services. We know it's hard to, I mean, to get all the factors on a quarter basis. Was this related to this different revenue stream, I mean, that you're seeing with this increase in revenues from other sources? Or was it a matter of conjuncture factors, as you highlighted in the release? Just to clarify on profitability here as well. Thank you very much.

YouTube, uh, please elaborate on the profitability profile uh, of this division going forward. I mean, there should be margins below or higher considering this, um, shift in Topline, uh, new profile toward this, uh, agnostic revenues, um, just getting to know. I mean, a bit more about profitability given this new profile of, of, of revenues and thinking specifically, uh, um, on the third quarter. I mean, we saw this decline, uh, on ebit margin on Services, we know. It's, it's hard to. I mean, uh, to, to get all the, the, the factors on a quarter on quarter basis. But, uh, was this related to this different, um, Revenue stream. I mean, that you're seeing with this increase in, um, uh, revenues from other sources, or was it a matter of conjuncture factors, uh, as you highlighted in the release, just to, uh, clarify on on profitability here as well.

Antonio Carlos Garcia: Lucas, thanks for the question. Tony speaking here. I'm going to answer the Q3, and then Francisco is going to complement the long-term view for the margin. What has happened on the service, we have some bad guys throughout the year. The special loss in Q3 means if you delay parts to the customer having to pay, giving credit or pay penalties, and then we get the, I would say, liquidate the damage from suppliers in Q4. It's just, in my opinion, a time lapse from bad guys to good guys. I would say we should be fine with the normally 14%, 15% EBIT margin for service for this year. I would say around 15%. It's just a, I would say, a timing window here between Q3 and Q4.

[Company Representative] (Embraer): Lucas, thanks for the question. Tony speaking here. I'm going to answer the Q3, and then Francisco is going to complement the long-term view for the margin. What has happened on the service, we have some bad guys throughout the year. The special loss in Q3 means if you delay parts to the customer having to pay, giving credit or pay penalties, and then we get the, I would say, liquidate the damage from suppliers in Q4. It's just, in my opinion, a time lapse from bad guys to good guys. I would say we should be fine with the normally 14%, 15% EBIT margin for service for this year. I would say around 15%. It's just a, I would say, a timing window here between Q3 and Q4.

Thank you very much.

Okay, thank you for the question. Tony speaking. Here, I am going to answer Q3, and then for assistance, I am going to complement the long-term view for the Mari. What is happening on the surface? We have some bad guys throughout the year. The special laws in Q3 mean if you delay parts.

To the customer have to pay uh giving credit or pay payments. And then we get the, I would say liquidate the damage from suppliers in Q4, it's just my opinion time lapse.

Francisco Gomes Neto: For the future, Lucas, we, you know, the service and support is one of our most important growth drivers in the organization. That's why we have been investing a lot. I mean, last year we duplicated our structure to support our business jets in the US. This means more service at Embraer MROs, more revenues, more profits. Now we are doing the same with commercial jets with this project in Dallas, in Texas. Again, we expect an important growth in terms of revenues and profitability in the next 5 years from our service and support division.

From bad guys to good guys, I would say we should be fine with the normally 14, 15% a bit margin for a service for this year. I would say around 15%. If there's a, I would say a time window here between Q3 and Q4.

and uh, and for, for the, for the future, Lucas

1 of our most important growth drivers in the organization. That's why we have been investing a lot. I mean, last year, we we duplicated our structure to support our business jets in the US. This means more more service at the embro mros more, more revenues more profits, and now we are doing the same with commercial jets with this uh project in Dallas, Texas.

So again, we expect important growth in terms of revenues and profitability in the next 5 years, you know, from our service support division.

Lucas Laghi: Great. Thank you very much, guys. Have a nice day.

Antonio Carlos Garcia: Thanks, Lucas.

Francisco Gomes Neto: You too.

Great, thank you very much, guys. Have a nice day.

Thanks Lucas. You too.

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

The next question comes from, Alberto Valerio with UPS. Please go ahead.

Alberto Valerio: Good morning, Francisco, Antonio, Gui. Thank you for taking my questions. I focus on the bottom line, just to see some recurring and non-recurring items going forward. Financial expenses come a little bit above what we were expecting. Wondering whether the author of EV is inside there. I saw on the cash flows, that's $12.6 million. Another one is about the non-controlling interest also come a little bit higher than we were expecting. Just to know the recurring of these $12.2 million on non-controlled interest. Thank you very much.

Francisco Gomes Neto: Good morning, Humberto. This is Antonio speaking here. For the net financial result is very simple. When the share price goes up, you have mark to market obligation to our longer term incentive. You have a hit in the net financial results because the in-interest you are paying and the interest you are earning, I would say, is $50 million. I would say it's big hit is because of it and no controlling interest. Let me have a look here. It's just that if it was in the mark to market in Q3 was positive. That's why generate a positive impact for the other shareholders just because of it. Again, it's a temporary advantage because probably Eve is going to be more value in Q4 than Q3. That this credit is going to be revert.

Good morning, uh, Francisco. Thank you for taking my questions. I focus on the bottom line, uh, just to see some recurring, you know, recurring expenses going forward. Financial expenses came a little bit above what we were expecting. I was wondering whether the offer of TV is included in that. I saw on the cash flows that it’s $12.6 million. Another point is about the non-controlling interest, which also came a little bit higher than we were expecting. I just want to know the recurrence of this $12.2 million in non-controlling interest. Thank you very much.

Good morning Alberto. This is Tony speak here for the

For the net, Financial results is very simple. When the share price goes up, you have Mark to Mark obligation to our long-term incentive. Then we have a hit and the net Financial results because

There is interest, we are paying and uh the interest, you are earning, I would say, is 50 million. Let's say it's a big hit is because of it.

And no controlling interest. Let me have a look here. It's just that Eve was in the march to March

Francisco Gomes Neto: I hope to be able to answer you.

In Q3 was positive. That's why I generate a positive impact for the other shareholders just because of it. But again is a temporary Advantage because probably Eve is going to be more valuable than Q3 that this this credit is going to be reverted.

Alberto Valerio: Very clear. Thank you very much, Antonio.

I hope to be able to answer you.

Francisco Gomes Neto: Thank you.

Okay, thank you very much.

thank you.

Operator: Thank you. Our next question comes from the chat. It's from Cenk Orcan. Thanks for the presentation. Can you provide some color on expected US tariff impact on coming quarters? Thanks.

Thank you. Our next question comes from the.

From thank working.

Thanks for the presentation.

Can you provide some color on expected US Turf impact on coming quarters? Thanks.

Guy: Hi, Sank. Good morning and thanks for the question. We originally guided for about $60, 65 million US import tariffs for the full year. As I mentioned, years to date, we have already recognized about $27 million of those. We should, you know, based on the regional guidance, we do have about $35 left in Q4. It's important that the company has been working hard to reduce that the size of that potential bill through different initiatives. We do expect it to be lower. Let's see when we publish our full year numbers what's the actual total. Thank you.

Cenk Orcan: Hi, Sank. Good morning and thanks for the question. We originally guided for about $60, 65 million US import tariffs for the full year. As I mentioned, years to date, we have already recognized about $27 million of those. We should, you know, based on the regional guidance, we do have about $35 left in Q4. It's important that the company has been working hard to reduce that the size of that potential bill through different initiatives. We do expect it to be lower. Let's see when we publish our full year numbers what's the actual total. Thank you.

Already recognized about 27 million of those. So we should, you know, based on the original guidance, we do have about 35 left in Q4. But, um, it's important that the company has been working hard to reduce that uh, the size of that potential Bill uh, through different initiatives. And uh, we do expect it to be lower. So let's see when we publish our full year numbers. Uh what's the, what's the actual total? So thank you.

Operator: Thank you very much. This concludes the question and answer session for equity research analysts and investors. We'll start the Q&A session dedicated to the press. We'll be answering questions in English, and then we'll be answering questions in Portuguese. We'll also answer questions sent via the platform chat. Please hold while we compile the questions. Please hold while we compile the questions. The first question comes from Nelson Düring. I'm sorry, just one second because this question is in Portuguese. The next question comes from... The first question is in Portuguese. I'm sorry, everyone. There's no answers in English. We'll be answering the Portuguese questions for now.

Thank you very much. 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.

First, we'll be answering questions in English and then we'll be answering questions in Portuguese.

We'll also answer questions and questions sent via the the platform chat.

Please hold while we compile the questions.

The first question comes from Nelson.

Nelson, during

I'm sorry, I just 1 second because this this question is in Portuguese.

The next question comes from.

The first question is important is, I'm sorry, everyone.

There is no answers in English.

So we'll be answering the Portuguese questions for now.

Operator: A primeira pergunta vem do Nelson Düring. Índia. Como está a campanha do KC-390 na Índia? A recente visita do VP brasileiro avançou a negociação? Qual é o escopo com o Grupo Mahindra? A Índia foca em produção local. Será com partes produzidas no Brasil ou todo na Índia?

I have sent you.

Francisco Gomes Neto: Muito obrigado pela pergunta. O projeto Índia está caminhando muito bem, avançando do nosso lado e do lado indiano. A inauguração do escritório da Embraer há duas semanas em New Delhi foi um passo importante pra nós. E é verdade, tivemos a participação no evento do vice-presidente Geraldo Alckmin, do ministro da Defesa, José Múcio, do comandante da Força Aérea Brasileira. Então a gente tá muito bem posicionado e nós acreditamos que o KC-390 é uma excelente solução pra Força Aérea Indiana. A nossa parceria com a Mahindra inclui a parte de marketing, apoio também a parte marketing vendas e a parte industrial, né.

No event to do.

This.

Marketing.

Francisco Gomes Neto: Uma vez que esse contrato do Middle Transport Aircraft, MTA, ele exige um nível de localização de pelo menos 50%. A produção das peças vão continuar sendo muitas peças produzidas no Brasil e peças de nossos fornecedores. Provavelmente, uma boa parte deve ser ou produzida na Índia ou enviados diretamente na Índia, onde será feito a montagem final de boa parte dos aviões. A estratégia final de localização ainda não está pronta. Nós estamos trabalhando nisso, mas vai ser uma colaboração entre o Brasil e Índia, ou seja, aspectos positivos para ambos os países com esse novo negócio. E um negócio que por KC-390 é um negócio enorme, uma quantidade de aviões parecida com a quantidade total que nós vendemos até agora.

Vendors.

Transport Aircraft.

Aspects positive.

Operator: Obrigada. A segunda pergunta. Um segundo, por favor. A próxima pergunta vem de Xandru Alves, com o Jornal O Vale. Prezado Francisco Gomes Neto, como está a negociação com o governo americano para a retirada da taxa de 10% nos aviões? Essa taxa prejudica a Embraer?

Francisco Gomes Neto: Muito obrigado pela pergunta. Bom, a negociação ela ocorre entre os dois governos, né? A Embraer não participa dessa negociação diretamente com os dois governos, mas eu diria que está caminhando muito bem. Cês tão acompanhando aí o encontro do presidente Lula lá em Kuala Lumpur, que aconteceu na semana passada. Foi um passo muito importante agora os dois países continuam com esse processo de negociação.

um,

Francisco Gomes Neto: Nós estamos muito positivos com esse processo. Uma vez ocorrendo um acordo bilateral entre os dois países, as chances da avião e suas partes voltar pra alíquota zero é muito boa, como a gente tem visto acontecer nos demais acordos bilaterais que ocorreram com o Reino Unido, com Europa, com o Japão, e com a Indonésia, onde em todos esses casos, o avião e suas partes voltaram pra alíquota zero. Sim, a segunda parte, obrigado. A segunda parte, sim, é prejudicial em dois aspectos. Um aspecto, as peças que a Embraer envia para os Estados Unidos para a montagem dos aviões executivos, elas estão sofrendo o pagamento da alíquota e que isso aumenta as despesas da Embraer, deixa o produto mais caro.

Francisco Gomes Neto: No caso dos aviões comerciais, ela penaliza o avião porque ele fica mais caro com as tarifas e isso pode desestimular as companhias aéreas a receber os aviões que eles compraram no futuro ou até fazer novas compras.

Due to my car.

Operator: Muito obrigada. Gostaria de dar um anúncio, um breve anúncio para os falantes de inglês. This Q&A session is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English. A próxima pergunta vem de Jessé Nascimento. Por favor, pode prosseguir.

This Q&A session is now being conducted in Portuguese to switch to English. Please press the interpretation button on the platform and then select English.

Jessé Nascimento: Oi, Francisco. É, bom dia. O senhor me ouve?

Francisco Gomes Neto: Perfeitamente, Jessé. Siga em frente. Bom dia.

Jessé Nascimento: O senhor disse no começo aí da apresentação que a Embraer planeja uma expansão mais ambiciosa, né? Como é que vai ser essa expansão? O senhor pode já nos fornecer detalhes, por gentileza?

Francisco Gomes Neto: Vamo lá. Eu tô entendendo que é uma expansão mais ambiciosa no futuro, é isso?

Jessé Nascimento: Isso, exatamente.

What would I?

Francisco Gomes Neto: Tá bom. Bom, muito bem. Nós temos atualmente um portfólio de produtos muito moderno e competitivo. E isso a gente pode observar, né, no nosso backlog de pedidos, que hoje chega a $31 billion e com as opções encosta nos $50 billion. Esses produtos, nós continuamos focando na venda desses produtos e com esse backlog, a gente espera um crescimento muito importante da companhia nos próximos cinco anos. Mas nós tamo pensando além desses cinco anos, além de 10 anos. Nós estamos investindo nesse momento em novas tecnologias, né? Investimentos importantes em novas tecnologias pra Embraer estar preparada prum ciclo de crescimento futuro, com base em novos produtos, novos aviões, que podem ser aviões, pode ser um avião ou aviões na versão executiva, na versão comercial ou na defesa.

Say.

Francisco Gomes Neto: Essa é a nossa visão de curto e longo prazo. Essa é a expansão que eu mencionei no comentário, né? Novos produtos significa oportunidades de maior crescimento da companhia no futuro.

Jessé Nascimento: Esses novos produtos são podem ser produtos na aviação comercial, aviões maiores do que o E195-E2?

Is not now.

Francisco Gomes Neto: Podem ser maiores ou menores, né? Nós tamos olhando também novas tecnologias. É, então, assim, propulsão elétrica, nós tamo investindo no eVTOL, né? Pode ser propulsão híbrida pra aviões, é, de médio tamanho. Ou seja, nós não temos ainda uma definição de qual o rumo que a gente vai seguir. Por isso nós vamos investindo em novas tecnologias, né? Pra gente tá preparado pra fazer essa decisão em algum momento no futuro.

Jessé Nascimento: Pra gente entender, Francisco, por gentileza, a respeito do KC-390, né? Ou do C-390 Millennium com a Índia. É, pelo que eu entendi aí, a Embraer dá o negócio como certo lá com os indianos, é isso?

Francisco Gomes Neto: Não, de forma alguma. Isso é uma concorrência muito difícil. Nós tamos concorrendo com um avião americano, que é um avião consolidado no mercado. Nós tamo concorrendo com um avião francês, mas nós achamos que o C-390, o KC-390 tá muito bem posicionado pra essa aplicação. Daí, até assinar um contrato, tem muita água ainda que vai passar embaixo da ponte. É muito trabalho pra gente fazer.

India.

Jessé Nascimento: Só uma última, por gentileza. Eu sei que talvez você diga pra eu participar lá da conferência da Eve, mas em relação a aos testes em escala real com os carros voadores, esses testes acontecerão aqui no Brazil?

Now, the formal woman.

Francisco Gomes Neto: Os testes são acontecendo aqui no Brasil, né? A gente espera que esse primeiro voo da Eve deva acontecer no final desse ano, começo do ano que vem, e a gente segue trabalhando firme no desenvolvimento desse produto que nós consideramos que vai ser muito importante pra Embraer no futuro. Agora, realmente, esse é mais detalhes, era bom você participar da conferência da Eve que ocorre depois da nossa. Os testes, sim, tão sendo realizados na nossa fábrica de Gavião Peixoto.

Operator: Muito obrigada. Agora a próxima pergunta, é em inglês. Deixe-me falar um breve anúncio para os falantes em português. Pra mudar pra português, por favor, aperte o botão Interpretação na plataforma e selecione Português. The next question will be conducted in English. It comes from Jonathan Hemmerdinger. Please, go ahead.

English.

The next question will be conducted in English.

It comes from John Hammer, please go ahead.

Jonathan Hemmerdinger: Yeah. Sorry, Can you hear me all?

Operator: Yes.

Francisco Gomes Neto: Yeah, we can. John, go ahead.

Jonathan Hemmerdinger: Yeah. Hey, thanks for, thanks for taking the question. I just want to touch on Francisco, you mentioned new commercial products, and you've talked about some of this before, but I also heard you mention potential larger aircraft than the E195. Would you be willing to give any sort of updated timeline on when you might expect to make a decision on what comes next on the commercial side? If so, what is that timeline?

The next question comes from John Hinger. Yeah. Sorry. Can you hear me all? Yes, go ahead. Yeah. Hey, thanks for taking the question. I just want to touch on Francisco. You mentioned new commercial products, and you've talked about some of this before. I also heard you mention potential larger aircraft than the 195.

Would you be willing to give any sort of updated timeline on when you might expect to make a decision on what comes next? In the commercial side?

Francisco Gomes Neto: Oh, John. Actually, John, this is the most frequent question I have had in the past, you know, the past year. Again, I mean, the answer remains the same. We keep investing in new technologies. I mean, we want to be at, to have our, let's say, technology readiness to go for a new product. That might be, you know, executive aircraft or a commercial aircraft, bigger or smaller, we don't have a timeline definition at this point of time.

And if so, what is that timeline?

Oh Joe actually John. This is the most uh frequent question. I have I have had in the past you know, the past year. But again I mean the answer is Remains the Same. We are we keep investing in new technologies. I mean we want to be at to have our let's say technology readiness

Jonathan Hemmerdinger: Yeah, fair enough. If I can follow that up with a question about the US government shutdown. Has that affected any of the FAA work that you're doing, the certification work with Eve, any of the airworthiness ticketing for the aircraft, the E2s or the E1s for that matter? Has it affected any discussions about tariffs? Are these things delayed because of the shutdown?

For a new product that might be, you know, uh, uh, either active aircraft or commercial aircraft, bigger or smaller. But we don't have a timeline definition at this point in time.

Francisco Gomes Neto: No, no. No, not that I know, John. I mean, again, I mean in terms of certification work, we continue working very closely with ANAC in Brazil and also with the contacts with the FAA. The tariffs, I mean, I don't see any big issue because of the shutdown affecting the tariffs negotiation between Brazil and the US.

Yeah, fair enough. Uh, but if I can follow that up with a, a question about the, uh, US Government shutdown, has has that affected any of the FAA work that you're doing the certification work with Eve. Um, any of the, uh, airworthiness ticketing uh, for the aircraft, uh, the the E2, or or the E1, for that matter. And any has it affected any discussions about tariffs or are these things delayed? Because of the shutdown.

No, no, no, no. There are no Johns. I mean, uh, again, I mean in terms of certification work, we continue working very closely with AAC in Brazil and also with the contacts with the FAA.

And then the tariffs... I mean, I don't see any issue because of the shutdown affecting the tariffs negotiation between Brazil and the U.S.

Jonathan Hemmerdinger: Thanks for taking my question.

Francisco Gomes Neto: Thanks, John.

Bank, protecting my question.

Operator: Thank you, John. The next question comes from Chidozie Uzouzi. Please go ahead. Your microphone is muted on your side.

Thank you. Thank you, John.

The next question comes from today.

Please go ahead.

The next question comes from Dawsey Yuzi. Your microphone is muted.

On your side.

Chidozie Uzouzi: Hello. Hello, good afternoon, everyone. My name is Chidozie. I'm calling from Lagos, Nigeria. Thank you, Francisco, for having your vote today. I'm African. I have an African question. Africa is underprivileged. From what you said, Embraer is in a highly poised space of this operation this year. Without having been said, does Embraer have any plans to increase its commitment to building capacity in Africa?

[Analyst]: Hello. Hello, good afternoon, everyone. My name is Chidozie. I'm calling from Lagos, Nigeria. Thank you, Francisco, for having your vote today. I'm African. I have an African question. Africa is underprivileged. From what you said, Embraer is in a highly poised space of this operation this year. Without having been said, does Embraer have any plans to increase its commitment to building capacity in Africa?

Francisco Gomes Neto: Oh, Chidozie. Thanks for the question. Africa is a very important market for Embraer, very important region. We have many aircraft in operation in the continent. More recently, we delivered aircraft for Airlink, South Africa, the E2, but we have many customers operating aircraft in Africa. Again, we'll continue to invest in that region. I mean, to introduce more and more Embraer aircraft and our Embraer services in the continent.

Thanks for the question. Africa is a very important market for very, very important region. We have many aircrafts in operation, in the, in the continent and more. Recently, we delivered the aircraft for are linked South Africa, the E2. But we have many customers operating aircraft and in Africa. So again, we will continue invest in that region. I mean, to introduce you more and more embroidered, aircraft, and, and our services in the continent,

Chidozie Uzouzi: Is there any plans to increase the commitment to building capacity in Africa?

[Analyst]: Is there any plans to increase the commitment to building capacity in Africa?

So, is there any plans to increase the commitment to giving capacity in Africa?

Francisco Gomes Neto: In terms of services, yeah, as much as we deliver more aircraft, then we need more service and support depending on the region. Today we already have a good structure, service structure to support our aircraft in operation in the continent.

In terms of in terms of services. Yeah as much as we deliver more aircraft then we need more service and support depending on the region. But today we already have a good structure service structure to support our aircraft in operation in the in the in the continent.

Chidozie Uzouzi: Thank you, Francisco.

[Analyst]: Thank you, Francisco.

Francisco Gomes Neto: Thank you, Chidozie.

Thank you for.

Thank you to DOI.

Operator: Thank you very much. The next question comes from the chat, and it's from Edgardo Gimenez Mazó from Aviacionline. Is there any update regarding the suspension of the development of the new Embraer Turboprop? How long can this program realistically remain paused before its initial design assumptions and market analysis become obsolete? He's got also a question number two, but if you'd like to answer this one first, please go ahead.

Thank you very much. The next question comes from the chat, and it's from Edgardo. Jandes muscle.

From Aviation Line, is there any update regarding the suspension of the development of the new Emperor Tuber turboprop?

How long can this program? Realistically remain paused before its initial?

Its initial design assumptions and market analysis become obsolete.

Francisco Gomes Neto: No, sure. Thanks for the question. Well, the Turboprop project or initiative has been canceled by us. I mean, we don't have at this point of time any project or initiative in that direction anymore. It might change in the future. At this point of time, the project has, I mean, it's not on hold, it has been canceled. What is on hold is the E175-E2. That one is on hold because of the scope clause in the US. We are, well, following the scope clause. If any change happens, we will consider to restore the work on the E175-E2. Again, Turboprop project has been canceled.

And he's got also a question number 2, but if you'd like to answer this 1, first, please go ahead.

No, sure. Thanks for the question. Well, the tubal prop project or initiative has been canceled by...

us, I mean, we we don't have this point of time, uh,

Any any any project or initiative in that direction anymore? It might change in the future. But this point of time, the project has some. Not on hold, it has been cancelled. What is on? Hold is the 1752 that 1 is on hold because of the scope Clause, uh, in the US. So we are

We are following the scope Clause. If any change, uh, happens then we we we consider to restore the work on the 1752. But again, turbo prop has been project has been canceled.

Operator: Thank you very much, sir. His second question is, I would like to know if there have been any updates regarding the Aerolíneas Argentinas order for the E195-E2 aircraft, which was put on hold after the change of government.

Thank you very much, sir. His second question is, I would like to know if there. There have been any updates regarding the aerolinea, Argentinas order for the e195 E2 aircraft which was put on hold after the change of government.

Francisco Gomes Neto: No. No changes and no updates. We hope one day they will come back and to consider that program, that is a natural replacement of the old E190, E1s, by the E2 family. At this point of time, we don't have any updates on that sales campaign.

No, no change and no updates. We

Uh by the the E2 family, by this point of time, we don't have any updates on that uh sales campaign.

Operator: Thank you very much, sir. Thank you everyone for participating. This has concluded the Q&A session of the Embraer conference.

Operator: Goodbye

Operator: Goodbye.

Thank you very much, sir. Thank you, everyone for participating. This has concluded, uh, the the Q&A session of the emperor conference

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