Embraer S.A.

Good morning, ladies and gentlemen, and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. Esta conferência será realizada originalmente em inglês. Para ouvir a tradução em português, pressione o botão Interpretação na plataforma e selecione o idioma desejado. Para melhorar a qualidade da transmissão em português, clique também em Desativar o áudio original na plataforma Zoom. My name is Guy Paiva, and I'm the head of investor relations, M&A, and the venture capital for Embraer. I want to welcome you to our third quarter 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. For detailed financial information, the company encourages revealing publications filed by the company with the Brazilian Comissão de Valores Imobiliários, or CVM. At this time, all participants are in a listen-only mode. We will give instructions later on for participation in the two Q&A sessions. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, António 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'll 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 Neto. Please go ahead, Francisco.

Thank you, Yugi, and good morning, everyone. It's a pleasure to be here with you to share Embraer's third quarter 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 E195E2s plus 50 options and LATAM for 24 E195E2s 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 third quarter revenues, reaching approximately $580 million. We also celebrated a historic milestone, the delivery of our 2000th business jet, marking a record for year-to-date deliveries. 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 sixth KC-390, including additional optional options to support future European acquisitions. We also signed new agreements for the A-29 Super Tucano with Panama and Sierra Nevada in the U.S., reinforcing the aircraft's relevance and versatility. The division closes 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 Commute Air and launched Starlink's connectivity solutions for Praetor and Legacy operators. As a result, the business unit finished the quarter with a 4.9 billion backlog in an 1.8 to 1 book-to-view 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. And 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. We have achieved important improvements, such as reducing the production time of Pretors by 40%, K-Suite United by 33%, and EGS 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 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 shortages decreased by 25% compared to last year. I will now move on to operational results by segment. Our 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 executive aviation, revenues increased 4%, helped by higher prices. Adjusted EBIT margin decreased 4.2 percentage points because of product mix, U.S. important tariffs, 2.6 percentage points, and higher costs. Moving to defense and security, revenues grew 27% because of higher KC-290 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. In service and support, revenues rose 16%, driven by higher volumes in the ramp-up of the Ogma GTF engine shop. Adjust 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 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.

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 and less noted. But before we dive into our financial results for the third quarter of 2025, I would like to start reiterating our 2025 guidance. We expect to deliver between 77 and 85 aircrafts 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 80.3% in adjusted EBIT margin and more than 200 million in adjusted free cash flow from a financial perspective. This forecast may appear conservative at the first glance, but they reflect the supply chain risks we still face in Q4. Having said that, I'd like to reinforce our estimates reflects our confidence in our operational prowess and the resilience of our business model. We remain comfortable with our outlook and feel confident we are on track to meet our four-year guidance. That said, let's take a look at our financial results for the quarter. In slide 12, delivers, Embraer delivered 62 aircrafts in the third quarter, 25, 20 commercial jets and 41 executive jets and one KC-390 military plane. This represents a 5% increase compared to the same period last year. with commercial aviation delivers up 25% year over year and executive aviation is stable. More importantly, for the first nine months, we have delivered 46 commercial jets, which is 57% of the midpoint of our guidance, and two percentage points above our five years average for the period. 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 customers, which in total roughly $20 billion. 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 the third quarter of 25 with an 11.8% margin. Now, adjusted EBIT for the quarter was $172 million with an 8.6% margin. This compared to a 147 million or 8.7% margin in the third quarter of 2024, if we excluded the one-time impact of the Boeing agreement, which boosted the adjusted margin by approximately 900 basis points. For the first nine months of the year, the adjusted EBITDA margin stands at 8.6%, a significant improvement of the 2.9% average over the last past five years. However, it's important to mention, we still expect a relevant impact from U.S. import tariffs, which should wait 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 third quarter 25. Mainly supported by operating activities, 224 million in EBITDA and lower accounts receivable. Looking now at our investment, excluding ETH, we allocated a total of 99 million during the quarter, slightly lower than last year. 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 total investment. These resources are focused on supporting sustainable growth and innovation. 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 net financial expenses, 22 million tax credits, and 12 million in minority interest, we arrive at 170 million EBIT. in reported net income, then adjusting for extraordinary items such as $30 million in deferred taxes and $32 million from EIFS 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 as favorable net financial results. Looking at the evolution of earnings per share, we have seen solid sequential improvement over the past few years. Our EPS totaled $1.7 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. Embraer's standalone net debt position decreased by 646 million to only $439,030.25, 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 0.5 times, excluding ETH, for a significant improvement from 1.3 times a year earlier. It is important to note 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 debit duration and reduce our cost of debt. The average loan maturity is now 5.9 years. with 96% of our debts in long-term contracts. To conclude, I'd like to remind you, we announced a new liability management initiative in 30 quarter 25. which will be fully concluded in November. The company issued a $1 billion long 12-year bond at a 5.4% coupon, and 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. Second, Embraer declared nearly 210 million Brazilian reais in interest on equity over the past two quarters, which translates into 28 Brazilian cents per share for a 0.35% dividend yield. Just 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 will be paid in a single installment after our 2026 Annual Shareholders Meeting. With that, I will hand it back to Francis for his final remarks. Thank you very much.