Embraer S.A.

My name is Gui Paiva, and I'm the head of investor relations and M&A for Embraer. I want to welcome you to our first quarter earnings conference call of 2025. 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 our own numbers are presented in U.S. 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. 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 you instructions later on for participation in the two question-and-answer sessions. As a reminder, this conference is being recorded. Participants on today's conference call are Francisco Gomez Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Luis Harrison, Corporate Communications Director, and myself. This conference call will have three parts. In the first part, top management will present the company's Q1 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 to our president and CEO, Francisco Gomes. Please go ahead, Francisco.

Thank you, Yugi. Good morning. and good afternoon to all. Welcome to Embraer's first quarter 2025 results conference call. We delivered the highest first quarter revenue of the past nine years at a significant 1.1 billion. We also registered the highest first quarter adjusted EBITDA margin of the past five years at almost 10%. Embraer ended the period with a 26.4 billion backlog, marginally higher than the previous all-time record printed in the last quarter. Aircraft deliveries were up almost 30% higher year on year, evidence of our continuous focus on operational efficiency. Embraer will, from now onwards, resume payment regular dividends and interest on equity for its shareholders. To conclude this part, we reiterate our 2025 guidance, which implies double-digit growth in our aircraft deliveries and revenue growth. Let's go over the main highlights for the company during the quarter. Executive Aviation delivered a solid performance reflected in sales, deliveries and backlog. The division also reached the highest first quarter revenue since 2014, in a record backlog of 7.6 billion. In defense and security, Sweden and Slovakia confirmed the selection of the KC-390 Millenium, while Uruguay converted its A-29 Super Tucano options into firm orders, and Panama selected the aircraft. The division ended the quarter with a stable 4.2 billion backlog. In commercial aviation, the Japanese ANA placed an order for 15 E190E2 that should be included in the 10 billion division backlog in the second half of the year. The E195E2 from Helvetic Airways became the largest jet flying to London City Airport ever. Service and support kept its solid growth pace with the start of the next industrialization stage of the prior to it an engine shop at Ogima in Portugal. The division backlog remained stable at 4.6 billion. Embraer has been working on a production leveling plan since 2023. Our main objective is to create stability and have a more linear production pace throughout the year. The plan will allow us to increase efficiency, productivity and improve cash flow. This year, we have already seen the first results of the project and from 2026 onwards, we can expect a more stable production over the year. We also continue to work very close with our suppliers to support our more linear production plan. We can see improvements in several operational KPIs for all our family of products, such as an increase in aircraft production, a reduction of travel work, reduction in assembling cycle, and increase in productivity. Here, for instance, we share improvements in the Praetor production line. Let now touch upon a topic we have all dealt with over the past two months, U.S. tariffs. First of all, it is important to highlight first quarter results were not impacted by them. Second, our initial analysis points towards limited impact, so we remain confident and reiterate our 2025 guidance. Third, Embraer has a substantial amount of U.S. content in its aircraft, which mitigates partially our exposure. And last, and more importantly, we are working on initiatives to minimize the impact of U.S. tariffs on our business. We have argued for zero tariffs to globalize the aerospace production chain, as it has been the case for many decades. I will now move on to operational results by segment over the next few slides. All figures are based on year-on-year comps. In commercial aviation, revenues were stable, and we noticed a relevant improvement in the adjusted EBIT margin, driven by product and customer mix. In executive aviation, revenues expanded 35% because of higher volumes and product mix. The adjusted EBIT margin increased because of operating leverage and cost containment initiatives. In defense and security, top line grew 72% because of stronger KC390 revenues recognition, customer mix, and product stage. The better adjusted EBIT margin was driven by higher volumes, lower expenses, and negative extraordinary items a year ago. Moving to services and support, revenues increased 16%, mainly because of the Ogma GTF ramp-up. The adjusted EBIT margin decreased because of product mix and the start of North America's active Monroe ramp-up. partially compensated for positive one-time items. Finally, 2025 could be a decisive year for EVE, as the company should complete the first flight of its full-scale prototype and should receive its first firm orders, opening a brand new path of long-term growth. I will now hand it over to Antonio to give you further details about the financial results. And then I will be back with the closing remarks.

Thank you, Francisco. Good morning and good afternoon to everyone. I will present now our first quarter financial results. And all of my comments will be based on year-on-year comps and less noted. Let's move to slide 13 and start with deliveries. Embraer delivered 30 aircrafts in commercial and executive aviation combined during the quarter are 20% higher. In executive aviation, the levers were 23 guts, of which 14 were in the light segment and 9 in the mid-size one. The numbers of delivery was 28% higher and, more important, 15% of the midpoint of the company's full year guidance. Moderately above 11%, first quarter average for the past five years. In commercial aviation, deliveries were seven aircrafts, the same number as last year, and represented 9% of the midpoint of the company's full year guidance. I should highlight, we were unable to deliver two additional aircrafts during the quarter because of commercial issues. In slide 14, our backlog reached at all-new all-time high, 26.4 billion, marginally up and sequentially and 25% higher versus a year ago. Talking about each division, the backlog for defense and security soared 73%. while for executive aviation increased more than 65%, supported by new KC-390 Millennium and 829 Super Tucano sails and the marquee contract with FlexJet, respectively. The backlog for substance support increased almost 50%, while for commercial aviation decreased 10%. However, it is important to remember The ANA order has not been yet included in our numbers. Moving on to revenues, our top line reached $1.1 billion in the first quarter. The best first quarter results of the past nine years and 22% higher. Our service and support in the executive aviation divisions together represented almost 70% of the company's total revenue in the quarter. Moving to slide 15, we generated 109 million in adjusted EBITDA in the first quarter with a 9.8% margin. Now, adjusted EBIT for the quarter was 62 million with a 5.6% margin. A significant increase compared to the previous 7 million and 0.8% margin marks from last year. This is great results was supported by executive aviation higher volumes, which ties back to Francisco comments about production leveling, product mixing, lower costs and expenses. A quick word on US tariffs and their potential impact. Our initial estimate is that could negatively impact our EBIT margin by 90 basis points for 2025. However, the company is taking several steps to mitigate these effects, like additional cost reduction measures. And for now, we remain confident we can deliver our guidance 2025. Now let's move to the next slide, 16. In first quarter, we consumed 386 million in adjusted free cash flow because of high working capital needs, mainly in inventory, in preparation for higher numbers of aircraft delivers in the next three quarters. Moving to investments, it is important to highlight Our capital allocation remains focused on segments with high return, such as executive aviation and service and support, mainly in the U.S. First quarter, without EVE, we allocated $38 million for research and development, of which $11 million were expensives. We invested another $37 million in CAPEX and $30 million in the pool program to support the new contracts, totaling $88 million for the quarter. To finish this slide, let's talk about our adjusted net results. We ended the quarter with a negative $74 million for an adjusted minus 6.7% margin compared to $30 million comp. However, reported net income was positive 73 million for a 6.7% margin positive. If we consider 124 million in deferred taxes because of stronger Brazilian foreign exchange rate and 23 million from ETH results. Slide 17, please. As always, I would like to start this slide by highlighting the top right corner. Remember where? was able to reduce both its net and gross debt positions. Without it, by $508 million, it took $680 million over the past 12 months. Thus, the company was able to lower its net debt to a BTDA from 1.8 times to 0.5 times during the period. The negative $285 million free cash flow generation for embedded standalone during the quarter helps to explain the recent increase in financial leverage. As I mentioned on the last call, as part of our liability management plan, we are focused on extending the duration and reduce the cost of our debt. In our most recent liability management step, we issued a 650 million 10 years bond at 158 basis points over U.S. Treasury in Q1. And we repurchased 522 million in 2027 bonds, fully retired, and 150 million in 2028 bonds. With the deal, we extended our debt duration to 6.3 years. compared to 3.8 years in Q4 last year. Slide 18, and to conclude my part, let me talk about shareholder remuneration. For the fiscal year 2024, we approved 51 million reais in dividends, or 7 Brazilian cents per share, to be paid on May 23 to M3 holders. ERJ holders should receive the monies in a few days later. But you can find more information with our U.S. Depository Bank soon. For the fiscal year 2025 and beyond, the company intends to analyze the potential fiscal benefits from these interest and equity declarations. This value will be added with, if required, a top-up dividend to comply with the minimum 25% of net income payments established by the Brazilian corporate law. The company will then pay this money in a single payment after shareholders meeting in the next year. With that, let me stop here and I hand it back to Francisco for his final remarks. Thank you very much.