EMBJ Q1 2026 Earnings Call

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): With the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. [Foreign language]. My name is Guilherme Paiva, and I'm the Head of Investor Relations M&A and Venture Capital for Embraer. Welcome to Embraer's Q1 2026 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 were discussed at the company's conference call earlier this week. Before we begin, a legal notice to everyone. This presentation may contain forward-looking statements which involve risks and uncertainties as detailed in the disclaimer available in the slides and in the documents filed with the Brazilian Securities Commission, CVM. At this time, all participants are in listen only mode. Instructions for the Q&A session will be provided later.

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Felipe Santana, Chief Financial Officer, Thais Moraes, Corporate Communications Director, and myself. This conference call consists of 3 parts. First, we will present the results for Q1 2026. Second, we will host a Q&A session exclusively for investors. Finally, we will hold a dedicated Q&A session for the press. It is my pleasure now to turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco.

Francisco Neto (President and CEO): Thank you, Gui. Good morning and good afternoon to everyone. It is a pleasure to be here with you to share Embraer's Q1 2026 results. We achieved the strongest Q1 revenue in our history, the highest aircraft deliveries in a decade in another all-time record backlog. We continue to see tangible progress in production leveling and greater stability across our assembly lines. As a side note, Q2 is up for a great start. Shout out to the UAE, who just signed a purchase agreement for 10 C-390 aircraft plus 10 options, the second biggest order after the Brazilian Air Force. This gives us confidence not only to delivery on our 2026 guidance, but also to pursue our midterm ambition of double-digit billion revenues and double-digit EBIT margins. Turning to the highlights of the quarter. Commercial Aviation.

Francisco Neto (President and CEO): Order of 18 E195-E2 jets from Finnair, another very important customer in Europe. Executive Aviation. Best Q1 of the decade, driven by strong demand in the launch of the new Praetor 500E and 600E in the mid and super mid segments. Defense and Security. Double-digit revenue growth. Momentum for KC-390 and A-29 platforms, plus a new partnership with Northrop Grumman for the US NGAS program. Service and Support. Expanding recurring revenues through fresh contracts, including Airnorth for E170, E190 fleets in Hungary for its C-390 fleet. 44 aircraft delivered last quarter, 10 commercial jets, 29 executive jets, and 5 defense. Year-on-year growth. Nearly 50% increase overall, with commercial aviation up 43% and executive aviation up 26%. Commercial aviation guidance.

Francisco Neto (President and CEO): 10 commercial jets delivered equal 12% of guidance midpoint, 1 point above the 5-year average. Executive Aviation guidance. 29 jets delivered equal 18% of guidance midpoint and 7 points above the 5-year average. Company backlog reached BRL 32 billion in the quarter, up 22% year-on-year. A new historical record for the sixth consecutive time. Commercial aviation backlog reached BRL 15 billion, up 50% year-on-year with an impressive 3 book-to-bill ratio over the past 12 months. Other segments backlog. Executive Aviation, Defense and Security, and Service and Support totaled BRL 17.1 billion, up mid-single digits year-on-year with book-to-bill ratios at or slightly above 1. Approximately BRL 20 billion in options, which could expand backlog beyond BRL 50 billion as exercised over time.

Francisco Neto (President and CEO): I'd like to share a brief update on Eve's steady progress. The past campaign is transitioning towards horizontal flights in Q2, with our prototype having already completed more than 54 flights in a total of 2 hours and 17 minutes of flight time year to date. With that, I will now turn the call over to Felipe to walk you through our financial results. Felipe, over to you.

Felipe Santana (CFO): Thank you, Francisco. Good morning and good afternoon, everyone. Let me start with the results by business unit. All comparisons are year over year, unless otherwise noted. Slide 9, Commercial Aviation and Executive Aviation. Starting with Commercial Aviation, revenues were up 45% to $293 million, driven by higher deliveries and pricing. Adjusted EBIT was -$28 million with a -9.7% of margin due to client mix, logistics costs, and the absence of suppliers credits recorded last year. In Executive Aviation, revenues increased nearly 30% to $480 million, reflecting strong demand and favorable product mix. Adjusted EBIT reached $25 million, with a +6% of margin. The declining margin was mainly due to US import tariffs, client mix, and higher selling expenses. Slide 10, Defense, Security, and Services Support.

Felipe Santana (CFO): In Defense Security, revenues increased 63%, reaching $227 million. Adjusted EBIT was $38 million, with a +17% of margin driven by higher KC-39 revenue recognition, increased A-29 production, and positive one-time items. In Service Support, revenues reached $490 million. Adjusted EBIT totaled $70 million, with a +14.3% of margin supported by materials and more than offsetting the impact of US import tariffs. Slide 12, Net Revenues. At a consolidated level, net revenues increased 31% to $1.4 billion in Q1, representing 17% of guidance midpoint, 2 points above the 5-year historical average. From business mix perspective, services accounted for 34% of revenues, commercial and executive aviation around 20% each, and defense 16%. Slide 13, Adjusted EBITDA and EBIT.

Felipe Santana (CFO): Adjusted EBITDA was $144 million with 9.9% of margin, a small increase compared to a year ago. Adjusted EBIT was $94 million with a 6.5% of margin, 1 point higher year-over-year and 7.7 points above the 5-year average. Slide 14, Free Cash Flow and Investments. Adjusted free cash flow excluding IF was -$447 million in the Q. This reflects our preparation for a higher numbers of aircraft deliveries in the coming quarters. Investments totaled $99 million during the Q, compared to $88 million last year, including $38 million in CapEx, $36 million in tangible additions, $14 million in the Pull to the Left program, and $11 million in research. Slide 15, Adjusted Net Income. Adjusted net income was $28 million in the last Q, a decrease of -$22 million.

Felipe Santana (CFO): The adjusted net income margin was +1.9%, down 2.6 points. Earnings per ADS improved from -1.0 in 2022 to 1.9 in 2025, and now stands at 1.7 on the last 12 months basis. Slide 16, Financial Position. Financial leverage stood at 0.6x net debt to EBITDA, if we exclude Eve, or 0.1x higher than last year, driven by a lower cash position. Our average debt maturity is still at a comfortable 8.7 years, and its average cost at 5.6% in US dollars. Shareholder remuneration. For fiscal year 2025, we distributed 25% of net income, declaring a total of BRL 524.90 million in shareholder remuneration through interest on equity and dividends.

Felipe Santana (CFO): This corresponds to BRL 0.00782 per share and a dividend yield of approximately 0.9%. With that, I will hand it back to Francisco for his final remarks. Thank you.

Francisco Neto (President and CEO): Thank you, Felipe. The Q1 2026 strengthens our belief in Embraer's strategic positioning and execution capability. Rising deliveries, sustained demand across all segments, and expanding recurring revenues are converging to fuel sustainable top-line growth. These results reflect the discipline, the focus, and commitment of our people across the organization. That same discipline drives efficiency while we invest in new technologies to enable ambitious and profitable long-term expansion. Anchored by our values, safety first and quality always guiding everything we do. This approach positions Embraer to keep delivering value for our customers, employees, and shareholders. With that, I'd like to move on to the Q&A.

Operator (AI Assigned): 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 request participants interested in asking questions to press the paid 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.

Operator (AI Assigned): 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 Kristine Liwag with Morgan Stanley. Please go ahead. Please hold a second.

Kristine Liwag (Head of Aerospace and Defense Equity Research): Hi. Good morning, everyone. Thank you for sharing your results this morning. You know, Francisco, Felipe and Felipe, congratulations on your new role. You know, you've got a record backlog, so, you know, I'm recognizing that the business is a position of strength. Can you talk about how Iran and oil prices are affecting customers' decision regarding their fleet? Is this a period where they're leaning on and really evaluating new airplanes? Are they looking at continued life extensions of the existing aircraft that they have? Any color that you have to share about how they're looking at this dynamic would be helpful. Thank you.

Francisco Neto (President and CEO): Hi, Kristine. Thank you very much for your question. You know, we are closely monitoring the situation on the war. Rising costs, of course, may impact airlines' fleet expansion and renewal plans. However, at this time, there is no direct impact on Embraer. We don't see any diminishing interest in new campaigns or any movements to delay deliveries.

Kristine Liwag (Head of Aerospace and Defense Equity Research): Great. Super helpful. If I could follow up on another question. You know, we've seen that, you know, the E2 weighs less than the A220. I think the weight difference is something like 8,000 kilos. In this environment where airlines are reminded again that, you know, oil is a variable that they can't control and can vary widely, are they factoring this in about the decision when they're evaluating the A220 and the E2? Is this environment incrementally better for the E2 from what you've seen? Are there signs of that or are we still in early stages for those kinds of campaigns?

Francisco Neto (President and CEO): No, absolutely. We see, you know, we are now very well positioned with E2 in this environment because, you know, we have the most efficient aircraft in that segment of a small narrow body, and we see more and more airlines showing interest in this in our product. Again, we are, I say, cautiously optimistic about new campaigns with the E2s.

Kristine Liwag (Head of Aerospace and Defense Equity Research): Great. Thank you.

Francisco Neto (President and CEO): Thank you.

Operator (AI Assigned): The next question comes from Marcelo Motta with JP Morgan. Please go ahead.

Marcelo Motta (Research Analyst): Hey. Hi, everyone. Francisco, Felipe, congrats for the new position. Well deserved. It's a question regarding the defense one-off, the $25 million. If you guys could explain us, you know, a little bit more details on, you know, what it means, you know, and what it happened now. Any information that can help us to, you know, to figure out the $25 million will be very helpful. Thank you.

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Hi, Marcelo. Gui Paiva here in Embraer. Thanks for the question. As you know, in defense, we accounted on the percentage of completion methodology. We did have an amendment to a contract with a client in the quarter. That amendment was calculated retroactively to the start of the contract. Therefore, we booked that benefit fully in the quarter. That explains the BRL 25 million for the division.

Marcelo Motta (Research Analyst): Perfect. Super clear. Thank you, Gui.

Operator (AI Assigned): The next question comes from Luis Brefero with Wolfe Research. Please go ahead.

Louis Raffetto (Research Analyst): Good morning.

Francisco Neto (President and CEO): Good morning.

Felipe Santana (CFO): Good morning, Luis.

Louis Raffetto (Research Analyst): Hey, Gui. Maybe just to follow up on that. Was that something that would have been expected for this to happen at this year, just timing uncertain, that adjustment in defense, or would that be incremental to the full year?

Felipe Santana (CFO): No, that was something that was expected by us. The timing was a little bit ahead that we had booked, expected. It was forecasted for the year.

Louis Raffetto (Research Analyst): Okay, great. Thank you. Just on the share repo, you've done 2 quarters in a row now. Is this something we should continue to expect to see?

Felipe Santana (CFO): We're taking a conservative approach because of the current and high uncertainties, and we prefer to wait for additional visibility before we make any change to our outlook, but we are very comfortable on the midpoint of our guidance.

Louis Raffetto (Research Analyst): Thank you very much.

Operator (AI Assigned): The next question comes from Ron Epstein with Bank of America. Please go ahead.

Ron Epstein (Senior Aerospace and Defense Analyst): Yeah. Hey, good morning, guys. In your prepared remarks, you mentioned about investments in the future. Could you walk through what you're thinking about those investments, and could you discuss a little bit where you're investing for the future?

Felipe Santana (CFO): Hi, Ron. Felipe here. Thank you for the question. As we mentioned, we keep investing on our increase of production in Melbourne facility to support the increase of the backlog on executive aviation. Also, we continue to invest to increase our footprint, especially on the MRO in Texas that we'll be investing. Also investing in OGMA to increase the production also on the KC and also on the GTF program. This is the focus of the investment of the company currently.

Francisco Neto (President and CEO): Maybe if I can complement you, Felipe. We are also investing in new technologies, Ron. I mean, to be prepared for, you know, a new cycle of products of Embraer in the next future.

Ron Epstein (Senior Aerospace and Defense Analyst): Got it. Got it. What are you all seeing in your own supply chain today? I know engines have been a gating factor with your ability to deliver aircraft at a quicker rate. How is the engine supply chain going, and are there other areas where you're seeing challenges in the supply chain? Like I know in the executive aviation industry, things like, you know, just windows have been hard to get a hold of. How's that going?

Francisco Neto (President and CEO): Thanks for the question, Ron. I mean, we still have some pacers that we are working with them very closely, that, you know, is pushing our deliveries further to the next quarters. We have seen a lot of improvements. You can see by the deliveries we made in Q1, I mean, 47% more than we did in Q1 last year, this shows how the situation is improving. Regarding engines specifically, I mean, E2 we have the situation under control in terms of deliveries. E1 improving as well. We don't see any risk for us for our guidance this year in terms of production and deliveries. We are working closely with the suppliers to improve the delivery cadence that we can level our production. You know, I mean, improving the, in this year, but achieving a highest level of leveling production in 2027.

Ron Epstein (Senior Aerospace and Defense Analyst): Got it. Can you speak to a little bit of any, how do I say it, ongoing campaigns in regions of the world? Are there any regions of the world that are hotter today than others in terms of campaigns for E1 or E2?

Francisco Neto (President and CEO): The campaign is in almost all the regions for E-Jets. We normally do not disclose the campaigns, but we are optimistic that we will have a good year as well, not as good as last year, because last year we had amazing sales of E-Jets, but this year is going to be good as well.

Ron Epstein (Senior Aerospace and Defense Analyst): Got it. Thank you.

Francisco Neto (President and CEO): You are welcome, Ron.

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

Andre Ferreira (Head of Transport Equity Research): Hi. Good morning. Thank you for taking my question, and I wanted to congratulate Felipe on the new job. Just going back to the one-off items this quarter. Charter clear impacts on the fence, I think you covered in a previous question. On the commercial side, maybe not really a one-off, but we are seeing higher logistics costs. Could you give more details? Like did it accelerate production rates or deliveries or was it something else? If you could give us a color of how much impact that was, on margins or in USD. Thank you.

Felipe Santana (CFO): Hola, Andre. Hi, Andre. Felipe here. Thank you for your question. We do have these logistics costs. We believe there was much more than one item during Q1. We don't foresee that on the coming quarters. This basically was around $7 million of impact on Q1.

Andre Ferreira (Head of Transport Equity Research): Thank you. Was it related to anything specific or different from the previous quarters?

Felipe Santana (CFO): No. No, nothing different.

Andre Ferreira (Head of Transport Equity Research): Okay, thank you. Have a good day.

Felipe Santana (CFO): Thank you.

Francisco Neto (President and CEO): You too.

Operator (AI Assigned): The next question comes from Lucas Marquiori with BTG. Please go ahead.

Lucas Marquiori (Associate Partner and Executive Director): Hey, guys. Morning. Welcome Felipe to the group. Just one question on defense and regarding this latest contract you guys signed with the Emirates. Just wanted to know if that is kind of a building platform for that client to maybe distribute more of your products throughout the region. You know, like, I mean, if there's any kind of a volume upside on top of that signed contract already or how do you guys see this kind of opportunity in the Middle East? Second question on margin base though. I mean, how good it was the delivered margin versus your forecast, right?

Lucas Marquiori (Associate Partner and Executive Director): I mean, in terms of deliveries, in terms of volumes, you guys had a stronger quarter, even looking on a year-over-year comparison, your margins were slightly weaker, right? I know there's commodity, there's logistics costs, there are all of the sorts of the effects that you guys already mentioned, but just wanted to know if that's already included on your curve for expected margin improvement throughout the year, you know? Thanks, guys, for the questions.

Francisco Neto (President and CEO): Right. Lucas, good morning. Francisco here. I will start with the question 1, then Felipe will help you with Gui or Felipe will help you with the question 2. Well, I don't need to tell you how happy we are with this new order in the Middle East, the first one in the region for the KC-390. Very important and relevant order. I mean, 10 aircraft firms and 10 options. Yes, this open opportunity for us to extend new deals with the neighborhood in the region, right? I mean, it shows, as happened in Europe, that, you know, this aircraft really is the best in class in that segment.

Francisco Neto (President and CEO): Going to the Middle East, yes, we see an opportunity for new sales in the region with the KC, and these 10 options can help us to do that. You know, the same thing we have with Portugal and have with the Netherlands. Felipe, second Gui, I think you will take care of the second one, right?

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Yes. Thanks for the question, Lucas. Good to hear you. We know we operate a complex business, so obviously there are fluctuations that happen quarter to quarter. I think most importantly, if we're looking forward, we feel very confident and comfortable with the guidance that we put out, with 9% of EBIT margin at the midpoint of EBIT. If we continue to see the status quo of tariffs not being implemented on Brazil and on us, we estimate in the last quarter that we could see an additional 60 basis points for the year.

Lucas Marquiori (Associate Partner and Executive Director): Thank you, guys. Have a good day.

Francisco Neto (President and CEO): You too, Lucas.

Operator (AI Assigned): The next question comes from Noah Poponak with Goldman Sachs. Please go ahead.

Noah Poponak (Managing Director of Aerospace and Defense Equity Research): Hey, good morning, everyone.

Francisco Neto (President and CEO): Morning.

Noah Poponak (Managing Director of Aerospace and Defense Equity Research): Maybe on the margin question and topic, just given, you know, some moving pieces and as Gui just alluded to, the quarterly volatility that can happen. If we take the full year total company margin guidance that you have, is it possible to just speak to, for full year 2026 versus 2025, what you see by segment? Which segments are higher, which are lower directionally?

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Thank you, Noah. Felipe here. What we foresee when we compare, right? By business unit is the on Commercial, probably gonna see stable compared to last year. On Defense, an improvement going up. Executive as well, going up, and certain Support as well. Most of the growth that we're gonna see will be pushed by these three business units and Commercial much more steady.

Noah Poponak (Managing Director of Aerospace and Defense Equity Research): Okay, great. That's helpful. As you've discussed investing in output for executive, where does that get you on, you know, possible capable annual deliveries? What do you want to take supply annual deliveries relative to the effort to, you know, grow and give customers jets, but also keep a backlog and keep supply demand tight?

Francisco Neto (President and CEO): No, Noah, this is really a great question. This is, you know, a combination of our supply chain capabilities and our own production capabilities. What we are working on both fronts. We are investing in expanding our sites in Brazil, Portugal, and the United States over the past 2 years. You know, and also optimizing the utilization of our assets, producing more aircrafts in the same area. In parallel, we have been working very closely with our key suppliers to make sure that they supply the parts we need to support our growth. We are growing year after year. We are growing this year. We are going to grow in the following years.

Francisco Neto (President and CEO): We are seeing that by the end of the decade, we expect to reach production of 120 commercial jets, 200 executive jets, and 10 KC-390. This is the plan. Working on. Also very important, we want to deliver all the aircraft on time to our customers, and we are improving that direction as well.

Noah Poponak (Managing Director of Aerospace and Defense Equity Research): Okay. Maybe just the last one on defense revenue and growth. Given the growth rate in the quarter, obviously it's an easier absolute dollar compare in the year ago quarter. I guess what's within the total company full year 2026 revenue guidance, what's assumed for defense growth or a range of dollars? As you execute on that program growth beyond this year, how can we think about or how can you frame where defense revenues can make it to, you know, closer to the end of the decade?

Felipe Santana (CFO): Felipe here, Noah. Thank you. On defense, right? We don't give specific numbers, but the way that we see is that around 6, probably 6 aircraft this year, KC, and 12 A-29. That's the way that we see, and we see the space of deliveries growing, especially on KC year per year, up to 10 aircraft in the end of the decade.

Francisco Neto (President and CEO): Felipe, if you allow me to complement this answer. Noah, we have been working in a new initiative we call Pull to the Left, which aim to anticipate the revenues and higher profitability. Then we are focusing on enhancing our execution process, accelerating revenue and improving profitability at a faster pace. As things are now coming to a more stable situation, we believe there is an opportunity for us to accelerate our efficiency programs within the company.

Noah Poponak (Managing Director of Aerospace and Defense Equity Research): Okay. Excellent. Thank you so much.

Francisco Neto (President and CEO): You are welcome, Noah.

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

Daniel Gasparete (Partner and Lead Analyst for Transportation and Capital Goods Equity Research): Good morning, guys. Thank you very much for the opportunity. Two questions here from my side. The first one will be to, if you could kindly walk us through what happened and what affected the margins on the executive aviation. You mentioned the expenses with the operator. Just to get a better idea of how much it was, how much the margin would be excluded for that? That would be the question 1. Also, if you could comment on the same dynamic for the commercial aviation. Secondly, would be on the adjustment on the Republic order, just to have a better understanding of how that works in terms of is there any kind of cost for the client?

Daniel Gasparete (Partner and Lead Analyst for Transportation and Capital Goods Equity Research): I mean, it's like a conversation to have with them, and you can simply accommodate them, or does that change the price? Does it has any kind of fee? Just have a better understanding of how that works in terms of rearrangement of the orders. Thank you very much.

Felipe Santana (CFO): Felipe Gaspari here. Thank you for your question. The first question I will answer here. When I look to Executive Aviation, the margins, right? The margin was pressured reflected US tariffs, right? We had the US tariffs this quarter that we didn't have last year. Also the customer mix, we had much more fractional companies being delivered compared to the last year. Also with the launch of the new Praetor 500E and 600E models, we also had an impact on the selling expenses to that. The way that we see the coming quarters will be normalized, that we don't expect any more impacts on the margins of Executive Aviation. The second question, Gui will take you.

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Hi, Felipe Gaspari. Thanks for the question. In terms of the Republic order, I think it's important to highlight first that there was no change whatsoever to the total order of aircraft order with us and in the backlog. The adjustment was purely limited to the delivery schedule, which was revised by a mutual agreement between the two parties. In Republic, the slots were reallocated to our other customers. It should have no impact on our deliveries for the next few years.

Daniel Gasparete (Partner and Lead Analyst for Transportation and Capital Goods Equity Research): Okay. Great. Thank you, Felipe. Thank you, Gui.

Operator (AI Assigned): The next question comes from Alberto Valerio with UBS. Please go ahead.

Alberto Valerio (Executive Director): Morning, Francisco, Felipe, Gui. Thank you for taking my question. First, welcome, Felipe. It'd be a pleasure to work with you. Count on us if you need anything. I have two on my side. The first on tariffs. I would like to know if this was one non-recurring item on the Q1. I thought this new 10% tariff would not be hitting the aerospace products. The second one also on tariffs, the Section 232 has any involvement or any impact on your cost, if on the cost of your suppliers, from Mexico and Canada? The second one, it's about the book-to-bill. How have been in the Q2? What should expect for the divisions? If you could tell us if change expectation, or I imagine that service might change with some grounding of all the aircrafts. If you may comment on this one. Thank you very much.

Felipe Santana (CFO): Felipe here. Thank you, Alberto, for your question. Regarding the tariffs, right? We had the impact on Q1 of $13 million. Mainly related to inventory effects. Looking forward, we still have another 11 million inventory that will should impact the Q2 of this year. When we look right to the potential impact of the US Section 232, we maintain the tariffs on our guys, given everything that's going on, right? This reflects a conservative approach that we do have. As soon as we have more visibility, we can make any change or even the guidance or share with you what we will have of impact. On your second questions, we don't give any information about the book-to-bill in the current quarter, okay?

Alberto Valerio (Executive Director): Perfect. Thank you very much.

Francisco Neto (President and CEO): Thank you.

Operator (AI Assigned): The next question comes from Andre Mazini with Citi. Please go ahead.

Andre Mazini (Head of Latam Research): Yes. Hi Francisco, Felipe, Gui. Welcome to the call and CFO position, Felipe. Happy to chat. The first one, we see Rolls-Royce wanting to go back to the narrow body engine market, which is currently dominated by CFM's LEAP and Pratt's GTF. Wanted to ask you guys if Embraer is already in conversation with Rolls-Royce for any future partnership, likely for future projects, new airframes, but if you guys are speaking to Rolls. This is the first one, I have a second.

Francisco Neto (President and CEO): The question, we are making studies for a new cycle of products for Embraer, right? Either a commercial jet or a business jet. In that regard, we are talking to potential suppliers of the different products to understand the new technology and so on. I cannot disclose more details on that. Normally, we talk to all of them, but I don't have specific information to share with you about this or that specific supplier.

Andre Mazini (Head of Latam Research): Perfect. Thank you, Francisco. The second one on a potential competition. Boeing is slated to certify the 737-7 later this year. The dash seven is a 140-seat jet, so a little bit larger in terms of seat count than the E195-E2. Do you think the dash seven competes in any sense with the E195-E2, or given that it's a more expensive and longer range plane, it should be used for totally different missions, or if there's any overlap? Thank you.

Francisco Neto (President and CEO): They might compete with us in one or other campaign, but we believe that for that segment, up to 150 seats, the E2 is the most competitive jet, you know, the most efficient jet in that segment. Yeah, we might have some competition in some campaigns, but we are very confident that the E2 is the best option for the customers to complement the larger narrow bodies. It was developed for that segment with all the experience Embraer acquired with the first generation. Again, and more and more customers are seeing that. We have now 24 customers for our E2s and are working in different new campaigns as well.

Andre Mazini (Head of Latam Research): Thank you, Francisco.

Operator (AI Assigned): The next question comes from Lucas Laghi with XP. Please go ahead.

Lucas Laghi (Partner, Equity Research Analyst, and VP): Good morning, Francisco, Gui, Felipe. Congrats on the new role. I have a question on defense. I mean, showing a very strong commercial activity right on the C-390 front. Just wanted to better understand, I mean, considering your current capacity output, I guess you mentioned like 6 aircraft this year, expectations for 10 aircraft by the end of the decade. Just better understanding, considering your current backlog, how full are your capacity, considering Brazilian footprint, as we speak? If you see a further space for accelerating new orders without any new expansion, and on this context, I mean, if new orders continue to accelerate, if you see any potential room for expansion in your facility here at Brazil.

Lucas Laghi (Partner, Equity Research Analyst, and VP): I mean, still on the topic, but we understand the optionalities by building a new plant on the US, on India. Just if you could give us an update on that front as well and how are those conversations with India and the US evolving. I mean, your partnership with Northrop Grumman. Just better understanding your whole capacity on utilization of context on the C-390. Thank you.

Francisco Neto (President and CEO): Very good question. First, we are investing to expand our production capacity for the KC-390, as I said, growing 1 per year: 6 in 2026, 7 in 2027, 8 in 2028, 9 in 2029, and 10 in 2030. This capacity is enough to support the current sales campaigns we are working on. In parallel, we are working in opportunities that might bring much higher volumes, like India and the US, right? Those campaigns will require a localization of our production. India is moving, is progressing as planned with the Indian Air Force. We are working very close to that campaign. If we win that campaign, the aircraft will be assembled in India with a lot of local suppliers as well.

Francisco Neto (President and CEO): This will help us to increase the capacity and fulfill the requirement of the MTA program in India. On the other front, US is the same. We now are working with the Northrop Grumman to develop, you know, the boom and other systems capabilities to, you know, to make sure that the KC-390 will be ready, I mean, to enter in the US Air Force. Also, if we win a relevant order, this aircraft will be assembled in the US as well. With those two fronts, we will be able to increase our capacity and of course, to grow significantly our defense business.

Lucas Laghi (Partner, Equity Research Analyst, and VP): Thank you. Thank you, Francisco.

Francisco Neto (President and CEO): You are welcome, Lucas.

Operator (AI Assigned): Thank you all very much. Now we will start the question and answer 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 poll for questions. The first question comes from Richard Sherman with Aerinside. Please go ahead.

Richard Schuurman (Freelance Aviation Reporter): Good morning. Can you hear me?

Francisco Neto (President and CEO): Yes, we can, Richard. Go ahead.

Richard Schuurman (Freelance Aviation Reporter): All right. Good morning. Hello, hello. I have 2 questions, actually. In your remarks and answers, you mentioned the leveling of the production going to 2027. The original plan was to get to a more level production level already this year. What are the reasons that this is pushed out to 2027? My second question is, as you have been aware, on Wednesday, Tony Fernandes announced the big order for the Airbus A220, but he also mentioned that he was taking or had taken a serious look at the Embraer E2. What's your view? Have you been given a fair chance to offer the E2 to AirAsia, and at what stage did you get in the negotiations?

Francisco Neto (President and CEO): All right. Let's start with the question number 1, Richard. Yeah, we are having progress leveling our production this year. I mean, as active jets, we are now almost with the production leveled. I mean, we saw good improvements in Q1 last year and this year again. We see this, the Phenoms and the Praetors, we now see the production almost leveled at the level we are looking for. 2027 will be just a fine adjustment as far as active jets. On commercial jets, Richard, we have some more challenges because of some parts suppliers. We did it better this year, and we expect to improve even further for 2027.

Francisco Neto (President and CEO): We have been working already with the suppliers to make sure that we will have a better start in 2027 than we had in 2026. Again, the program is moving well. As active jets, more advanced, but commercial jets are also improving. The second question about AirAsia. I mean, first of all, I mean, after our customer is good, it's good to see another low-cost carrier in the region recognizing the advantages of a small narrow body jets, right? And this is a trend that we expect to continue as we rebuild our record backlog and huge E2 momentum in the market. Remember, we sold the last year, I mean, almost 200 E2s.

Francisco Neto (President and CEO): Obviously, we would have liked to add AirAsia to our global family of 24 E2 operators. You know, our competitor, we knew since the beginning that our competitor has a huge incumbents in that, in that airline and order slots. As we did very well last year, I mean, and we also have a lot of opportunities this year, we don't see this a big issue for Embraer. This will not affect our growth plans for our commercial jets. Yes, it was a good experience working with AirAsia. I think they understood the benefits of our product. Our product would bring it to their feet, but in the end of the day, they decide to go with the competition, and we respect their decision.

Richard Schuurman (Freelance Aviation Reporter): Okay. Thank you. Can I add one more question in follow-up on the first answer you gave? Do you expect to improve the commercial jet production and get it more level already in H2 of the year?

Francisco Neto (President and CEO): We are working on that. In this initiative I mentioned before, that we call Pull to the Left. This includes, you know, also production and deliveries, not in a significant way still this year because of the supply chain. We don't see any risk for us to deliver the guidance we gave to the market of 85 commercial jets and between 160 and 170 business jets. A better improvement in terms of leveling for commercial jets, we will see in 2027 and 2028.

Richard Schuurman (Freelance Aviation Reporter): Obrigado.

Francisco Neto (President and CEO): De nada. Thank you, Richard.

Operator (AI Assigned): Thank you. The next question comes from Jon Hemmerdinger with FlightGlobal. Please go ahead.

Jonathan Hemmerdinger (Americas Air Transport Editor): Hello, everyone. I think you can hear me now. Thanks for doing this. Hey, for future aircraft commercial jets, you touched on it briefly, Francisco. Any update you can give us on what segment you're looking at? How large of an aircraft? What timeline would be? We know you've been considering this for several years. What have you learned in the last year? Just tell us more about that, if you could.

Francisco Neto (President and CEO): Yeah, Jonathan, thanks for the question. Well, first, as you see, we have been focusing a lot on improving our performance in terms of deliveries and sales of the products we have, right? We have a very modern and competitive portfolio of products. We are increasing our backlog and our, with new orders for all the segments, commercial, executive, and defense. This will take us, Embraer, to a very important midterm growth in terms of revenues, in terms of profitability. In parallel, we are investing new technologies, you know, aerostructures, wings, cockpits, and so on, in order to be ready to develop a new airplane.

Francisco Neto (President and CEO): We are making strategies in the two fronts, and we don't have, we're not at the point to disclosure any more information on that because we don't have a decision yet about the segment we want to go to. We know we need a strong product with a strong value proposition, with a robust, I mean, funding strategy because we don't want to put in risk the financial health of the company. Again, we are working in all those fronts, but we are not ready yet to disclosure more information on that.

Jonathan Hemmerdinger (Americas Air Transport Editor): Thank you. I just do wonder if you might say any estimate of timeline, how long you think the E-Jets can carry that growth that you're talking about and when a decision might have to be made.

Francisco Neto (President and CEO): This does not depend only on us. This depend on the technology available in the market, right? For different products. This is what we are working on, so we don't have a timeline to share with you, Jon Hemmerdinger.

Jonathan Hemmerdinger (Americas Air Transport Editor): Very good. Thanks for your time.

Francisco Neto (President and CEO): Thank you.

Operator (AI Assigned): The next question comes from Steve Trimble with Aviation Week. Please go ahead.

Steve Trimble (Defense Editor): Yeah, hi. Thank you very much. I was just, I wondered if you could say anything more about the timeline for setting up infrastructure for the completion center in the UAE, as well as the delivery schedule for the UAE.

Francisco Neto (President and CEO): Well, Steve, I mean, we don't have plans for completion centers at this point of time in UAE. We have, we are working to collaborate with the local suppliers in the UAE, and this is ongoing process. We will increase our collaboration with local suppliers. I mean, we mentioned the Gen5, for example, in case of the KC-390. We don't have this a plan at this point of time for a completion center. It'll be just a collaboration with the local suppliers for us to buy parts made by them.

Steve Trimble (Defense Editor): I see. Do you have a delivery schedule for those UAE C-390s?

Francisco Neto (President and CEO): Yes, we do have. We should start the deliveries by 2028 and continue in the years ahead.

Steve Trimble (Defense Editor): Thank you.

Operator (AI Assigned): Thank you. The next question is sent from the chat. Was sent from the chat, I'm sorry. It is from Edgardo Gimenez Mas with Aviacionline. Has the operational debut of the E190F in Europe led to a concrete increase in interest from lessors or express integrators who were previously in the wait and see phase? What is your assessment on the program's progress to date?

Francisco Neto (President and CEO): Could you repeat the question? I don't know if I get. Could you repeat the question, please?

Operator (AI Assigned): Of course, sir. Has the operational debut of the E190 freighter in Europe led to a concrete increase in interest from lessors or express integrators who were previously in the wait and see phase? What is your assessment of the program's progress to date?

Francisco Neto (President and CEO): Okay. The freighter. Thank you. Thank you for the question. Yes, we have now a customer entering in operation with the E190 freighter. This will help to showcase the product, and we believe it's a great product for e-commerce especially. We have a good expectation about the future sales with the E190 freighter.

Operator (AI Assigned): Thank you very much, sir. The next question comes from Curt Epstein with Aviation International News. Please go ahead.

Curt Epstein (Senior Editor): Yes. Good morning, gentlemen. Can you hear me?

Francisco Neto (President and CEO): Good morning. Yes.

Curt Epstein (Senior Editor): Yes. In the beginning you mentioned the 29 executive jet deliveries for Q1. You had mentioned there was a disclaimer on there. Is that actually a record for Embraer in Q1 executive jet deliveries?

Francisco Neto (President and CEO): Yes, it is. We are very happy with that.

Curt Epstein (Senior Editor): Okay. Thank you very much.

Francisco Neto (President and CEO): It is a result of this production leveling efforts.

Curt Epstein (Senior Editor): Okay. Thank you. I just wanted to confirm that. I think you'd said in a decade or something like that, so I just want to make sure that is actually the record for the company.

Francisco Neto (President and CEO): Yes. You know, I mean, we are coming from tough times in the past, especially with the supply chain that, you know, was leading us to concentrate deliveries at the end of the year. This means, you know, a weak Q1, because of that concentration the year before. Now we are changing the situation step by step. This, you know, delivering these jets, executive jets in Q1 this year, is proving that we are in the right way.

Curt Epstein (Senior Editor): Thank you so much.

Operator (AI Assigned): The next question comes from the chat and is from Joanna Bailey. How does the UAE's C-390 order help you get a foot in the door in the Middle East? Are you having conversations with other Middle East nations? Could you provide some color on the production level of the C-390 and how you see it ramping up as more orders come in?

Francisco Neto (President and CEO): All right, Joanna, good question. Yes, we do see opportunities to sell the KC-390 to more customers in the region because of this important order of UAE. Yes, we are talking to other customers at this point of time. The third question, the production leveling includes the KC-390 as well. It is a more complex product, complex aircraft. We have been able to reduce both the production lead time of the aircraft and to improve the production distribution of the aircraft, I mean, throughout the year. The challenge is bigger than the other ones because of the supply chain, we are seeing good progress. We are seeing good progress as we are seeing with the E-Jets and executive jets as well.

Operator (AI Assigned): Thank you, sir. The next question also comes from the chat and is from Molly McMillin with Aviation Week. Could you please talk about the demand environment for business jets and whether the war with Iran has created any hesitation or hesitations or impact? Also, could you please talk about the tariffs when it comes to business jets? How much of an impact does that have on demand? Thank you.

Francisco Neto (President and CEO): All right. Thanks. Thanks for the question. Well, we are not seeing impact so far with that might affect the sales of our business jets. Demand is still strong for our business jets as we have a very modern portfolio, especially now with the launch of the Praetor 500E and 600E that are selling very well. With the tariffs, I would ask my colleagues, Felipe and Gui to share more color with you.

Felipe Santana (CFO): Yeah. Thanks, Francisco. On the tariffs on executive jets, it has impacted our costs. We do think that we have a superior product in the industry versus our competition.

Guilherme Paiva (Head of Investor Relations M&A and Venture Capital): Even with the price adjustments that we have taken, it remains very competitive. I think the book-to-bill sales that we posted last year above 1.0 or close 1.0 was very solid. We continue to have the longest queue of customers in the industry, and we're selling our products now into 2029. Especially, we are very excited about the new Praetor family with the enhancements and the value proposition that we're giving to our customers.

Operator (AI Assigned): Thank you, gentlemen. This concludes the question and answer session in English for the press. This question and answer will be now conducted in Portuguese. To switch to English, please press the interpretation button on the platform, then select English. Agora vamos iniciar a sessão de perguntas e respostas em português. A primeira pergunta é de Xandu Alves aqui no chat. Ele diz: Xandu Alves do jornal O Vale. O senhor poderia atualizar as negociações com a Índia e a Força Aérea dos Estados Unidos para a venda do KC-390, C-390? Obrigada.

Francisco Neto (President and CEO): Obrigado pela pergunta. O projeto da Índia, que a gente chama, que é o projeto MTA, né? Medium Transport Aircraft, ele tá avançando bem. Nós tamo trabalhando, temos uma equipe muito focada nisso. Nossa área de defesa tá muito focada nesse projeto, que é um projeto muito grande e muito relevante pra Embraer. Tamo acompanhando isso de perto, tamo nos preparando. Isso vai requerer uma localização da montagem do avião naquele país, vai requerer o uso de várias peças fabricadas no país, nós já tamo trabalhando há algum tempo com as nossas equipes de compras, as equipes de engenharia, as equipes de negócios, pra tá preparado pra poder fazer uma proposta competitiva praquela campanha. Qual que era a segunda questão mesmo?

Francisco Neto (President and CEO): US, tá bom. Bom, no US também, nós tamos com a mesma energia. Nossa equipe de defesa tem trabalhado muito próximo ao nosso parceiro, a Northrop Grumman, que é uma das empresas de defesa mais relevantes nos Estados Unidos, e também fazendo campanhas, levamos o avião várias vezes pros Estados Unidos pra tentar convencer a Força Aérea Americana da importância, dos benefícios desse nosso avião, principalmente nesse segmento lá do NGAS, que é um sistema, uma nova geração de abastecimento a-aéreo dos caças.

Operator (AI Assigned): Obrigada. A próxima pergunta vem de Raquel Brandão, com Investnews. Por favor, pode prosseguir.

Raquel Brandão (Jornalista de Negócios): Oi, oi, Francisco, bom dia, bom dia restante aí.

Francisco Neto (President and CEO): Bom dia, Raquel.

Raquel Brandão (Jornalista de Negócios): Tudo bem? Parabéns pelo resultado.

Francisco Neto (President and CEO): E você?

Raquel Brandão (Jornalista de Negócios): Tudo ótimo, tudo ótimo. Parabéns pelo resultado. Vocês tiveram um número muito forte no Q1 e eu fiquei na dúvida se, como é que vocês tão vendo pro restante do ano. Eu sei que tem uma certa confiança, queria entender se, de alguma maneira, essa crise do combustível que a gente tá vendo, e que pressiona as companhias aéreas, de alguma maneira já começa a ter algum impacto na demanda, se vocês já tão tendo essa conversa do ponto de vista comercial e também até do ponto de vista das aeronaves executivas, das companhias que têm as frotas executivas, enfim, porque combustível é um custo bastante elevado pra aviação, né?

Raquel Brandão (Jornalista de Negócios): queria entender se esse deslocamento de custo pra combustível já tá de alguma maneira afetando perspectiva de demanda, mais à frente, postergação de entregas, como é que isso tá?

Francisco Neto (President and CEO): Oi, Raquel. Obrigado, prazer falar contigo. Bom, sem dúvida alguma, o aumento do custo do combustível vai impactar o custo das linhas aéreas e até alguns planos de expansão deles. Eles tão inclusive cortando, a gente tá vendo várias linhas aéreas cortando ou cancelando voos enquanto dura essa situação. Até o momento, nós tamos monitorando isso de perto. Nosso pessoal da aviação comercial que acompanha isso de perto com vários clientes. Até o momento, não tem nenhum impacto pra nós. Não tem nenhum cliente postergando campanha, processo de campanha de vendas, ou pedindo pra adiar a entrega de aviões. Nós tamo acompanhando isso bem de perto. Na área executiva, também não tamo vendo nenhum impacto até este momento.

Francisco Neto (President and CEO): A quantidade de horas voadas aí nos últimos meses tá batendo recordes mês depois de mês. Não tamo vendo nenhum impacto neste momento pra aviação executiva. Nossas vendas continuam num bom nível de aviões executivos. Enfim, até agora a gente não tá vendo nenhum impacto, apesar de reconhecer que é uma situação difícil, né? Por isso que a gente tá acompanhando muito de perto. Internamente na companhia, nós tamo trazendo mais atenção pros processos de gestão de custo, de gestão de eficiência, pra gente tá preparado aí com algum impacto que possa ocorrer nos meses à frente. Até agora, a gente não tem sentido nenhum impacto.

Raquel Brandão (Jornalista de Negócios): Perfeito. Muito obrigada, Francisco. Parabéns aí mais uma vez pra vocês.

Francisco Neto (President and CEO): Obrigado, Raquel.

Operator (AI Assigned): A próxima pergunta vem de Cristian Favaro, com Valor Investe. Por favor, pode prosseguir.

Cristian Favaro (Repórter de Negócios): Oi, pessoal.

Francisco Neto (President and CEO): Sim, Cristian, perfeitamente.

Cristian Favaro (Repórter de Negócios): Olá, gente, obrigado pelo espaço. Acho que antes de mais nada, parabenizar o Felipe pelo novo cargo, boas-vindas. Acho que eu queria perguntar só uma pergunta mais direta com relação à questão de produção. Acho que nos últimos calls, Francisco, uma coisa que vocês sempre falaram é que é o plano de vocês de espalhar um pouco mais essa produção, que normalmente ficava mais concentrada no fim do ano. Esse resultado que a gente viu agora nesse Q1 é um, de certa forma, um sucesso com relação a esse plano e a gente deve ver aí essa produção mais espalhada no Q2 e Q3 também? Acho que é mais ou menos isso que eu queria perguntar. Obrigado.

Francisco Neto (President and CEO): Não, muito bom, Christian, boa pergunta. É sim, a gente vai ver esse ano aqui uma produção mais bem distribuída ou espalhada, como você falou, entre o H1 e o H2 do ano, né? Ainda com uma concentração um pouco maior no H2, mas muito melhor do que a gente vinha vendo nos anos anteriores. Nós já tamo trabalhando, tamo olhando já o Q1 e o Q2 do ano que vem, pra essa distribuição ser melhor ainda. A gente quer aumentar a produção no Q1 e no Q2, no H1 do ano, pra nivelar com o H2.

Francisco Neto (President and CEO): Esse é um trabalho muito grande, que tem que ser feito na, nas nossas fábricas, pra garantir que nós tamo com as pessoas preparadas, treinadas, com os processos robustos pra poder fazer todas aquelas atividades na hora certa, com os fornecedores, pra eles poderem entregarem as peças boas na hora que a gente precisa, e com os clientes. Pra eles poderem receber os aviões também da forma distribuída ao longo dos anos. Nós tamo avançando muito bem, então a gente deve ver progresso no Q2. O Q1 foi muito relevante, porque o Q1 do ano passado foi baixo. Devemos ver, sim, um progresso no Q2 desse ano também, que vai garantir essa melhor distribuição ou espalhamento da produção e das entregas durante os 12 meses do ano.

Cristian Favaro (Repórter de Negócios): Perfeito, obrigado.

Operator (AI Assigned): A próxima pergunta vem do chat e é de Pedro Baffuso, com CBN Vale: Gostaria de saber os próximos passos do eVTOL.

Francisco Neto (President and CEO): É uma boa pergunta. Bom, o eVTOL, os testes do nosso protótipo, que o protótipo da engenharia tá progredindo muito bem. Vocês viram na apresentação, né? Já são 59 voos com mais de 2 horas de voo. Agora as próximas etapas são a transição do voo para o voo de cruzeiro, né? Que o pessoal já tá se preparando. O ano que vem, nós vamos começar a construir os protótipos, né? Pra gente poder fazer tá preparado pra certificação.

Francisco Neto (President and CEO): Tá indo muito bem e esperamos um bom desenvolvimento aí pros próximos meses, não só no teste, no desenvolvimento do nosso produto, mas também na relação com as autoridades, né, a ANAC, o FAA, pra preparar o processo de certificação dessas aeronaves pra operação comercial no futuro.

Operator (AI Assigned): Muito obrigada. Com isso concluímos as sessões de perguntas e respostas e a conferência de resultados da Embraer. Muito obrigada pela sua participação e tenham todos um bom dia.