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 these events, and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. Esta conferência será realizada originalmente em inglês. Para ouvir a tradução em português, pressione o botão Interpretação da plataforma e selecione o idioma desejado. Para melhorar a qualidade da transmissão em português, clique também em Desativar o áudio original na plataforma Zoom. My name is Gui Paiva, and I'm the head of Investor Relations M&A and Venture Capital for Embraer. I want to welcome you to our fourth quarter of 2025 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. They 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 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 question and answer sessions. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Baltesio Sousa, Corporate Communications Manager, and myself. This conference call will have three parts. In the first part, top management will present the company's Q4 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 Neto. Please go ahead, Francisco.

Thank you, Yogi. And good morning and good afternoon to everyone. It is a pleasure to be here with you to share Embraer's fourth quarter and full year 2025 results. 2025 was a remarkable period for our company. We met our deliveries guidance on the operational side, while we outperformed the expectations on the financial side. This performance reflects a longer trend. Embraer has been able to deliver two digits of revenue growth over the past three years, despite the supply chain challenges. 2025 was also a marquee period for the E2 program, with strong sales across all continents, which has consolidated further the E2 platform as the benchmark in the small narrow-body segment. At the company level, our record revenue and backlog provide strong visibility to investors about our ability to deliver sustainable growth for many years to come, as we have robust processes and governance in place. We have made significant progress across the production chain through closer collaboration with suppliers. process digitalization, and investment in artificial intelligence tools. The production labeling initiatives have now been extended across all our platforms, and they should help support production stability in 2026 and onwards. We are well positioned in strategic markets, supported by partnerships under discussion with global players in India, Mahindra and Adani Group, and in the U.S., Northrop Grumman. These partnerships reinforce our strategic position and support long-term growth potential across both our commercial aviation and defense segments. To conclude, all our business units are performing very well, with solid execution and bigger backlogs. During the quarter, we saw strong sales momentum across all business units. In commercial aviation, highlights included new orders from 2N for 20 E195E2s, Helvetic Airways for 3 E195E2s, as well as 4 E175 orders from Haute Devoir. In executive aviation, revenues reached an all-time high of circa 750 million, as we delivered 53 business jets, the highest number ever in a single quarter. In defense and security, we reinforced our global footprint with Sweden's order for four KC-390 plus 90 options. In Portugal, signed its sixth aircraft order along with 10 options for NATO countries. Finally, in service and support, we signed an E195E2 pull program with Air Link. and a maintenance service extension with Republic for its E1 fleet. Let me now walk you through our sales performance for the full year. During the 12 months, Commercial Aviation recorded 157 E2 new orders across all continents, plus 140 options. In addition, the E1 program reinforced its marketing position with 64 new orders plus 68 options. These achievements increased the division's backlog to $14.5 billion, with an impressive 2.8 to 1 book-to-bill ratio. In executive aviation, total sales reached approximately $2.3 billion, supported by strong demand across the portfolio, including the continued success of the Phenom 300. Now, the world's best-selling light jet for 14 straight years. The backlog in the division now stands at 7.6 billion, supported by a consistent 1.1 to 1 book-to-bill ratio. Defense and security achieved another strong year, with five KC-390 aircraft sold to two NATO countries. plus 19 additional options, and 10 A-29 Super Tucanos sold to Uruguay, Panama, and Sierra Nevada. The business unit closed the quarter with a $4.6 billion backlog and a 1.4 to 1 book-to-bill ratio. Finally, in service and support, the sales momentum remained strong. During the year, the POO program added approximately 75 aircraft, and the executive care program signed another 37 new contracts as a result the business unit finished the quarter with a 4.9 billion backlog and a 1.2 to 1 book to view ratio together these results drove a consolidated 1.71 book-to-bill ratio for Embraer in 2025. I will now move on to our operational results for the year. In my comments, we reflect year-over-year comparisons. In commercial aviation, revenues increased by 7%, driven by higher volumes. The adjusted EBIT margin improved from 2.5% to 2.7%, supported by lower expenses. In executive aviation, revenues increased a significant 25%. The adjusted EBIT margin increased from 11.7% to 12%. The gains reported from higher volumes, pricing, and operating leverage more than offset the negative impact of U.S. tariffs. Moving to defense and security, revenues grew 36%, mainly because of higher KC390 and A29 Super Tucano volumes. The adjusted equity margin improved from 6.2% to 7.9%, as a consequence of operating leverage and client mix. In service and support, revenues rose 18%, driven by higher volumes in the ramp-up of the Ogma GTF engine shop. The adjusted EBIT margin decreased from 16.5% to 15.5%, mainly because of the ramp-up of new operations. Before I conclude, I would like to share a brief update on EV's steady progress. The first flight of EV's EVTOL prototype in December 2025 marked an important milestone. Since then, our full-scale prototype has flown 28 missions for a total of more than one hour in rover flight. The program continues to advance through flight tests towards certification in 2027.

Thank you, Francisco. Good morning and good afternoon to everyone. I'd like to start by highlighting that, despite a year marked by challenges and volatility, the company remained focused on disciplined execution, delivering results in line with its commitments. Let's now take a closer look at our financial results for the fourth quarter and full year 2025. All my comments will be based on year-over-year comparison, and let's otherwise note, turning to the next slide, that we start with deliveries. In the last quarter, Embraer delivered 91 aircraft, 32 commercial jets, 53 executive jets, and 6 defense-related. This represents a 21% increase if commercial aviation delivers up 3% and executive aviation up significant 20%. More importantly, for the full year, we delivered 78 jets in commercial aviation. for a 7% increase, and in line with our 77 to 85 aircraft guidance for the period. Meanwhile, in executive aviation, we deliver 155 jets, up a relevant 20% during the period, and at the high end of our 145 to 155 aircraft guidance for the year. This is like the 12th backlog on revenue. Our company-wide backlog reached $31.6 billion during the quarter, up a significant 20% and higher than our previous record. The backlog for commercial aviation and defense and security increased plus 42% and plus 10% to be expected, for servant supports plus 7% and for executive aviation plus 3%. In addition to our affirmed backlog, we currently have approximately 20 billion in options held by our customers. These are not included in our backlog, but they represent a meaningful upside potential over the coming years. As these options are exercised, they could support a significant expansion of our backlog, potentially dropping it towards 50 billion over time. Beyond the size of the backlog, it is also important to focus on its quality and overall composition. The accrued backlog reflects a more attractive customer mix, which positions the company for a more favorable firm margin profile perspective over time. Any financial impacts from this mix will continue to depend on execution, delivery phasing and external factors. Moving on to revenues. Our top line increased 15% and almost reached 3 billion in Q4-25. From a business perspective, our revenue remained well diversified across segments. Commercial aviation accounted for 37%, executive aviation approximately 30%, service and support around 20%, and defense and security 13%. Our top line of $7.6 billion for the full year was above the high end of our guidance, an increase of plus 18% when compared to 2024. Moving to the next slide, please. We generated $298 million in adjusted EBITDA in Q4 2025 with an 11.3% mark and $889 million in the year with an 11.7% mark. compared to 12.1 percent more a year ago if we exclude the one-time impact of the boeing agreement Slide 14, adjusted EBIT. Now, adjusted EBIT was $231 million for the quarter with an 8.7% margin compared to 11.5% in the same period a year ago. As we highlighted in our last earnings call, we expected a relevant impact from U.S. imported tariffs in Q4. In addition, we faced additional infrastructure-related costs which weighed on margins. total $27 million during the period, and non-recurring infrastructure costs reached $20 million. For the year, we generated $657 million with the same 8.7% mark, in line with last year if we screwed the one-time Boeing EF-M. Surpassing the upper end of our 8.3% guidance for 2025. This performance was achieved despite the impact of U.S. importers and reflects our discipline in our ongoing cost reduction initiatives and efficiency gains. Let's move now to the next slide. Embraer generated $738 billion in adjusted free cash flow in the port. Mainly supported by operations, higher number of aircrafts delivered and sales campaigns. For 2025, we generated $491 million in adjusted free cash flow. and helped the company to cover an average close to 60% of its EBITDA in free cash flow over the past three years. The 2025 figure compares to 676 million in 2024, which includes a one-off 150 million inflow related to the Boeing agreement. We exceeded our guidance of 200 million or higher, supported by our continued efforts to reduce working capital requirements. Looking now at our investments, excluding EVE, we allocated almost $100 million during the quarter. The figure includes $27 million in CAPEX, $34 million in addition to intangibles, $12 million in the pool program to support new contracts, and $27 million in research. On a yearly basis, Embraer Standalone invested a total of $383 million in 2025, 10% lower compared to $428 million in 2024. Our capital allocation continues to be geared towards segments with higher returns, such as executive aviation services and support, mainly in the U.S. We continue to see our CapEx run-out rate at close to $400 million per year in the near future. In slide 16, adjusted net income. Our adjusted net income was positive $153 million for the quarter. supported by a 5.8% adjusted mark, compared to 7.5% in the same period last year. Meanwhile, we ended the year with 253 million in the adjusted net income, compared to 461 million in the prior year. We finished the year with a 3.3% adjusted mark. It was lower than 7.2% recorded in 2024. I would like to emphasize the decline was mainly driven by the one-time 150 million impact from the Boeing agreement, less favorable net results, and U.S. import stores. Turning to the next slide, let me walk you through the financial bridge from our reported EBIT in 2025 to both reported and adjusted net income. We finished the year with 680 million in EBIT. After accounting for $340 million in net financial expense, mainly inflated by the mark-to-mark gains of our share price in our stock-based compensation plan. $91 million in tax credit and $7 million in minority interest. We arrive at $352 million in reported net income. To arrive at adjusted net income, we exclude extraordinary items. These adjustments included a negative 137 million related to deferred taxes, which was partially offset by a positive 38 million from EIFS results. With that, we get 253 million in adjusted net income for the year. Looking at the evolution of our earnings pressure, we have seen solid sequential improvement of the past few years. EPS was negative $0.26 per EDS in 2021. Improved to $1.4 per EDS in 2024, if we exclude the one-off related effect, and reached $1.9 per EDS in 2025. This trajectory highlighted the structural improvements in profitability and the progress we have made in strengthening the company's earnings profile over the past few years. In slide 18, financial position, we continue to strengthen our balance sheet throughout the year. and as a consequence, our liquidity position has increased significantly, our standalone net debt decreased by 220 million, reaching a net cash position of 109 million at the end of 2025. The solid position of our balance sheet ensures the company remains well prepared to navigate potential volatility ahead. Consequently, our leverage position, excluding ETH, improved further. from 0.1 times net debt to EBITDA to 0.1 times net cash to EBITDA by the year ahead. As a reminder, in the third quarter, we announced a new liability management initiative, which was fully executed. The average maturity of reimbursements without EIF increased to 9.1 from 3.7 years, significantly improving our debt maturity profile. Today, 96% of our debt is long-term, which provides us with financial flexibility. Importantly, these actions also led to a reduction in our average cost of debt, which declined to 5.5% from 6.2%, further straightening our financial profile. Slide 19 – Shareholder Remuneration We declare a total of R$568 million in 2025 in shareholder remuneration, combining interest in equity and dividends. This amount corresponds to 0.78 Brazilian cents per share and represents a dividend yield of approximately 0.9%. As a reminder, this distribution should be complemented by an additional dividend to ensure compliance with the minimum 25% net income distribution required under the Brazilian corporate law. The full amount will be paid in a single installment following our 2026 annual shareholders bid. In slide 20, Guidance. Before I present our 2026 guidance, I would like to remind you Embraer has delivered its financial estimates here in New York City 2021, reflecting a disciplined approach to planning and execution. Now, to conclude my presentation, let me go over the details of our 2026 guide. In terms of operations, we forecast commercial aviation should deliver between 80 and 85 aircraft. Meanwhile, for executive aviation, we forecast 160 to 170 jets, representing a year-over-year increase of approximately 6% in both segments, based on the midpoint of the range. Turning to financials, we forecast a consistent double-digit growth. We estimate top-line to settle between $8.2 and $8.5 billion. with the midpoint of the range 10% higher than what we generated last year. We forecast EBIT margin between 8.7 and 9.3% for the year, which would imply around 750 million at the midpoint of the range, and approximately 15% higher than the adjusted 657 million EBIT generated in 2025. Finally, if we move to free cash flow generation, we estimate an adjusted free cash flow without ETH of 200 billion or higher for the year. Remember, our mid-term goal is to convert 50% of our EBITDA in free cash flow. If we look from 2024 to 2026, we should generate circa 1.4 billion or more in free cash flow, which is 50% of circa 2.8 billion implied EBITDA by our 2024 and 2025 protocols and our 2026 guidance. It is important to highlight this guidance reflects our assessment of the operating environment prior to February 20, before the latest round of changes to U.S. import tariffs. We are taking a conservative approach at this point in time because of the increased policy uncertainty and prefer to wait for additional visibility before making any change to our output. We will update or reiterate our 2026 guidance on a quarterly basis as the years goes by. Let me stop here and now I'll hand it back to Francisco for his final remarks. Thank you very much.

Thank you, Antonio. To conclude, 2025 clearly marked the consolidation of our strategy across all businesses. In commercial aviation, Record orders supported the consolidation of the E2 platform, as they reinforced its global relevance and provided long-term visibility for the business. In executive aviation, stronger retail and fleet demand, supported by higher delivery volumes, reflected the strength of our portfolio, which was further reinforced by the recent announcement of the next generation of the Praetor 500E and 600E. In defense and security, we continue to advance K59 campaigns globally, including key strategic opportunities. In service and support, the growing footprint of our operations is strengthening our ability to generate recurring revenues. Our continued focus on driving efficiency and financial discipline across all areas of the company is paying off, as our best-in-class operations and services that support our customers. Looking ahead, we expect substantial growth over the mid-term, while we prepare the company for more ambitious long-term expansions, supported by a new generation of products and technologies, always grounded in our culture of safety first and quality always. With that, I would like to move on to the Q&A session.

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 translations in Portuguese. Please let me say a short announcement for Portuguese speakers. Esta conferência está sendo realizada originalmente em inglês. Para ouvir a tradução em português, pressione o botão Interpretação da plataforma Zoom e selecione o idioma português. Após selecionar o idioma no botão Interpretação, clique também em Desativar o áudio original na plataforma para melhorar a qualidade da transmissão em português. We request participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. To give everyone a chance to participate, we request to ask just one question per time. If you need assistance, please use the Q&A button on the platform. We will also answer questions sent via the platform chat. The first part of the Q&A session will be exclusively for equities research analysts and investors. The second part of the Q&A will be only for the press. Please hold while we collect questions. The first question comes from Marcelo Mota with J.P. Morgan. Please go ahead.

Hi, everyone. Thanks for taking my question. The question is regarding the strategic partnerships that the company has been announcing. So just wondering if you can provide us an update on, you know, the stage of each one, you know, in India for the commercial and for the defense and also in the U.S. for defense. Thank you very much.

Thank you, Marcelo. Francisco speaking. Good question to start the Q&A today. So, yes, we are focused on strategic partnerships to support long-term growth for Embraer. And the two main ones are India, where we have been working two fronts, the MTA and mid-transportation aircraft with India Air Force that we've been working for a few years already. And a more recent partnership, this one with Mahindra. So we expect an RFP from the customers still this year. And the second one is with Adeni Group is to focus on the, executive civil aviation improve connectivity between smaller cities in india both uh opportunities can bring a relevant uh business and potential growth for embryo so again uh defense we expect rfp for this year and uh civil aviation we are still building the case but uh we have said that if we get orders still in 2026 and do the rollout of jets by 2028 in India. In the U.S. Sorry, thank you, Antonio. In the U.S., we announced recently the partnership with Northrop Grumman to develop the boom capability for the C-390 as an option to complement the tanker fleet of U.S. Air Force with our KC-390. We don't have a timeline to find it, but we are working very hard we recently took the kc for demonstrations in the u.s super clear thank you very much francisco antonio you are welcome marcelo the next question comes from christine lewag with morgan stanley please go ahead

Hi, this is Gabby on for Christine. Thank you for taking the question. Just to follow up on the Northrop Grumman Partnership, on the partnership around adding boom capability to the KC390, could you provide any more detail or color on the structure of the partnership and how responsibilities are being split strategically? How significant is adding a boom for the KC390's competitiveness there? particularly in the context of end gas, and how should we think about the potential size of the opportunity over time? Thank you.

Thank you. Good questions, Christine. So at this point, we have signed the MOU with Northrop Grumman, and the main focus is the collaboration to enhance the capabilities of the KC390 Millennium, focusing on the integration of an autonomous boom refueling system and agile combat employment solutions. This is designed to meet the future needs of the U.S. Air Force and allied nations, not only U.S. We don't have a timeframe defined yet. But the main purpose is really to engage this discussion with the US Air Force and have the KC-39 to complement the fleet they have. We don't see this, you know, this collaboration. Our strategy is based on the premise that it does not compete with the KC-46. or any other strategic tanker, but rather it's a complementary capability. And our intention, if we get a sizeable order, this aircraft will be assembled and produced in the US.

Don't know the site.

We don't know the size yet, and we don't have a clear view about timeframe, Cristine.

Great. Thank you so much. And just a quick follow-up, if I can. Can you just provide a quick update on the supply chain environment across both commercial and executive aviation? What are the major constraints you're still seeing, and what areas have you seen improvement in? Thank you so much.

Well, last year we faced some issues in supply chain, but even then we, as a company, were able to overcome the issues and deliver the planned aircraft in the year. This year, we see the supply chain improving, but it's still with a few bottlenecks that we want to be even more proactive this year than we were last year to anticipate all the issues and act with great effectiveness. And we have started doing that already in January. And yes, we are, I'd say, We are monitoring the situation, but we are positive that this year is going to be better than last year.

Thank you so much.

Thank you.

Excuse me, just a short announcement for participants. If you wish to write a question via the chat, please click on the Q&A button on the Zoom platform. The next question comes from Miles Walton with Wolf Research. Please go ahead.

Great, thank you. I was hoping you could touch on the margin outlook by segment, maybe just a little bit more color below the surface. Pretty good to have margin expansion. I think service and support probably going against you, and I think I heard that the tariffs are in the guidance, and I would imagine those would be incremental year on year, given a full year of effect. So maybe just talk to what the margins would be without tariffs, and then also any color of where the uplift is happening within the segments. Thanks.

Hey, Miles. Good morning, and thanks for the question. This is Geek. I think one way to kind of think about the outlook for margins is to account that last year we paid $54 million in tariffs, and we are carrying over around 20, 25 from inventory into 26. So, you know, if you adjust for that, we are probably looking for something close to 75 to 100 basis over time as both of them unwind.

And as Antonio is speaking, just to complement, I would say overall picture, if you see what we have reported and the trajectory that we are right now, and the huge impact on tariffs was in executive aviation, and we delivered the same number we delivered last year, and percentage-wise, which means it doesn't matter if we have tariffs or if we have a crisis, we always find a way to compensate. I would say, if we take service and executive aviation is already on double-digit space and the margin profile, and we are moving towards defense, I would say, it's up to speed also to go also to double-digit, I would say, then we keep on our challenge here with commercial aviation to move to mid-single-digit. I would say, on a consolidated level, we are coming closer to double-digit VAT margin for this company here.

Okay, great. And then maybe just one other one on cash flow performance in the fourth quarter. Is this similar to last year where some of the defense orders came through with higher advances, or were there other attributes driving the performance?

Miles, I would say some effects. For sure, we deliver more than 90 aircraft in Q4, and especially in commercial aviation where the When we deliver, we get more cash than compared with the others because of the size of the PDP, the advanced payment, and by delivery, we get more money. I would say two, three facts. A lot of delivers concentrate in Q4, and luckily, we got some final anticipation and advanced payment from the Fence customer, if you put – To be honest, also nice sales campaign in December on executive aviation. I would say sum up all together, we brought this nice development here. You know that it's hard for us to predict. That's why you see the guidance 200 plus again. But it was more or less the same as happened in 2024. Sounds good.

Thank you.

Thank you.

The next question comes from Noel Popanak with Goldman Sachs. Please go ahead.

Hey, good morning, guys. Good morning, Noel. Can you hear me? Yes, yes. Just wanted to follow up on the delivery projections and profile here. I know at commercial you've talked about getting back above 100%. I hear you. It sounds like supply chain is still a bit of a hurdle. I guess it's a little surprising to see the low end of the guidance pretty much flat. Maybe you could just talk about the hurdles left to get back to 100, when you think you can get there. And then on the executive side, similar question. I know you've talked about potentially expanding capacity to get to 200 there. What's the latest thinking and time frame to get to those types of numbers on the executive side? Thank you.

Thank you, Francisco speaking. Yes, I understand your point. But we are very focused this year to be from the mid to the high end of the guidance in terms of commercial aviation deliveries. And I said before, we believe we are better prepared this year with the supply chain together, while we are preparing the ground to reach 100 aircraft probably in 2027. We are working in that direction, not confirmed yet for sure, but we are working in that direction to create capacity to be there by 2027, maximum 2028. We believe 2027 will be feasible. Same on the executive aviation. We are working in two fronts. We are expanding capacity in some bottlenecks of the production. We have been doing that already for a couple of years while we work on improving efficiency in our production lines. So now we produce one pretor or one phenol in half of the time that we used to do back in 2021. So we are moving forward. I'd say we're moving fast to reach those targets, production targets, in the next years.

And we have orders for that.

And we have orders for that with the best news, right? Yes.

Yes. Okay, great. And how does the rate of growth in services that you've embedded in this initial 2026 guidance, how does that compare to what you saw in 2025? Yes.

No, I'm not speaking here. It's nice to talk to you again. We are seeing services support. Is service and support also in the double-digit space in regards to growth? I would say, and to be honest, it's growing faster than the aircraft divisions because we have other contracts as well, and that's why we see even a fast-speed growth for service and support comparing with the aircraft delivery on the other three segments. I would say more the double-digit for service and support to move forward for the next two, three years.

Okay. Okay.

Thank you so much. Thank you, Onua. Thank you.

The next question comes from Lucas Marchiori with BTG Factual. Please go ahead.

Thank you. Hey, guys. Morning. Yeah, I just wanted to follow up on the tariff discussion and actually try to understand what's the situation there. I know there's different sections of investigations and that, I mean, our later understanding was that this is zero now. I just wanted to confirm that and for how long should it remain that way or what's the bureaucratics there that we need to see happening for that to change? And also, if there is any difference in tariffs for Embraer versus its main rivals, its main peers, if there is any kind of a dislocation of competitiveness or actually an improvement in competitiveness because of these zeroed tariffs right now, just wanted to hear your thoughts on that one.

Thank you very much, guys. Thanks for your question. Well, first, yes, we confirmed that all Embraer aircraft engines and parts are exempt from the 10% tariffs as of February 24th. Yes, we still have some inventory that we paid the tariff in US inventory, but we'll deal with that during the year, and this is already included in our projections. Of course, we welcome the level playing field in our industry, since Embraer was the only manufacturer to pay tariffs on aircraft exports before. And this outcome will benefit our U.S. customers. So airlines, they can keep their plan to renew their fleet of jets, and we'll keep buying a lot of U.S. aircraft. parts, because, you know, more than 40% of our aircraft has a U.S. content. So, I think the decision was very positive, and it will benefit not only Embraer, but U.S. customers and suppliers as well. How long this will take? We expect this to be, you know, a long-term decision, and about the the sections no 232 301. We are now monitoring the topics very closely. And why we keep focus on our regular business. But so far, we don't expect any, any big changes. But you know, this show political situation is a little volatile. But let's see, we are now very optimistic that this will remain. and we will continue to reinforce our position and the aerospace industry position in the U.S. as well.

And look, as Antonio is speaking here, we ran an assessment and we came to a conclusion it's too early to bet to stay or it's going to revert in another section here. That's why when you see our guidance profile, as of today, we see more upside than downside because we are not paying tariffs. But uh we have to wait because we don't want to it could be very complicated and volatile yeah as we are seeing the world every single day yeah yeah no that's that's clear guys thanks a lot have a good day you too thank you lupus the next question comes from alberto valerio with ubs please go ahead

Good morning, Francisco, Antonio, Guy. Thank you for taking my questions. I would like to talk about the audits for the year. What should we expect? We should expect one-time book. Or do we think that it could be even more, but the guidance of commercial and executive is still having some supply issues on it included? Thank you.

Alberto, Antonio speaking. You asked about our expectation for a new sales campaign? Yeah, I think that's your question.

Exactly this. So what should we expect in terms of book to build for the year? If you build one time, we can expect a little bit more, and the guidance is, for instance, H-285 on the commercial jets because you have still some supply issues for the year. Thank you.

Well, first of all, I mean, we had a stellar year last year in terms of sales of E2, right? 157 new sales plus 140 options. This brings a lot of confidence in the platform for the future, and we keep selling the E1s as well. For this year, you know, as I said before, we are preparing to increase our production output for EGX for the next years. So we expect this year, we are working in various sales campaign, and we expect the book to be again, above one to one for these years in terms of sales. And I mean, supply chain, as I said before, we are working now this year, again, very, very close. to the suppliers, especially the pacers, in order to, you know, to mitigate the issues and deliver this year, you know, the guidance. We expect from mid to high end of the guidance and prepare the company to increase the production in the following years for EGS.

Perfect. Thank you very much. Thank you. Thank you, Alberto.

The next question comes from Andre Mazzini with Citi. Please go ahead.

Yes, hi, Francisco, Antonio, and Gui. So two questions. The first one around defense and geopolitics, of course, that's a hot topic. So will it make sense to accelerate defense applications for EVE? Would that increase LOIs, pre-delivery payments, and even get maybe to break even faster. I know we have their own earnings call, but I think it's pretty important for Amber Air as well. So why don't you hear your thoughts on that? This is the first one. The second one about the buyback program just announced. If you can read it, the buyback program is meaning that over the next 12 months, right, the duration of the program, You prefer to allocate capital in Embraer stock rather than going for a large new program such as a new airframe and et cetera. And more generally, how do you think about the tradeoffs of, you know, buyback, plowing money back into the company and new development, plowing money back into buybacks, right? Or new developments, new developments on aircrafts, airframes and whatnot. Thank you.

Thanks, Andrea. I want to number one and then Antonia and Guy will answer number two. So EV now we are very focused on the certification process of the EV, the product we have, the EV100. And I know they are discussing all the opportunities. But at this point of time, they are really focused on the certification of the program until the end of 2027. I think for more questions, I recommend you to go to the EV presentation, they will give you more details.

Under Antonio's speaking, in regards to the buybacks, it's quite simple. If you see the material factory issue, we are considering to replace the equity swap we have in the market. Basically, what we are doing, we are just uh changing reducing the activities of uh intro share from the treasure in order to hedge our long-term incentive programming is going to be much more faster than 12 months probably going to take one or two days to be concluded. That's more or less. We are not increasing the shares, just changing from an act swap to a share buyback. And we do not, today the company does not do this buyback in regards to total shareholder remuneration, just to hedge the long-term incentive plan.

And also just to complement, the company continues to invest heavily on the businesses that we have the higher ROICs.

and that includes executive aviation and services yeah thank you thank you thank you guys the next question comes from louisa musi with safra please go ahead bernie

Just a follow-up question, because we saw some media reports yesterday indicating that India actually has opened a bid for, like, 60 units from military aircraft, and the total contract value would be 11 billion. I mean, could you share, like, your perspectives on this deal in terms of how you expect the competitive dynamics to evolve and how – Could you differentiate yourself from the other competitors?

Luisa, thanks for the question. Francisco speaking. We are very excited about this opportunity because we believe we have the best value proposition for India with our product, the KC39. It is very competitive, very modern, exactly for that segment. And we have also been working with Mahindra with, you know, with a lot of activities to be compliant with made in India expectations from them. So, again, we are very excited and working very hard to win that business. That will be a very important step for the KC program. So, yes, this is a The original plan was from India is to buy from 40 to 80 aircraft, so 60 is the midpoint. And yeah, this will generate billions of dollars in terms of revenue opportunity.

Okay, thank you very much.

Thank you, Luisa.

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

Hey, Lucas. Good morning. Hey, guys. Thank you for taking my questions. Two quick follow-ups. First one on the service of division. I mean, margin performance very strong. Just trying to understand what has been the main drivers this quarter. I mean, you mentioned materials, for example. Just trying to understand if this – I mean, should you continue to work with 20-ish percent EBIT margin going forward? I mean, is this assumption that we should – guide for in the upcoming years and a follow-up on the guidance for 2026 regarding the still regarding the margin but I mean we estimate around $90 million of EBIT impact considering a 10% tariff, which you mentioned that you included as an assumption for your guidance. So just to understand if that is the level of impact that we could consider as an upside given that you're – emerged in a current 0% tariff environment. So just to understand the size of the upside potential regarding EBIT for this year in this tariff topic. Thank you very much.

Lucas, this is Antonio speaking. Thanks for the nice question. To be honest, I would love to take the 280% value for Q4 for service division and move forward, but not now. What's happening in Q4? we have a lot of bad guys throughout the year, and then has been compensated in Q4, also with compensation for suppliers, this and this and this. That's why we see this nice 20% margin Q4. For sure, we are not happy with 15%. We are moving towards a bigger number, but I would say for your assumption here, 15%, 16% is okay to move forward. But We do see improvement, but not in the pace that we should assume already for 2026. And for the tariffs, I would ask Ignitio.

Hey, Lucas. Morning. So I think for 2025, we pay $54 million, and as I mentioned, we have about $25 million in inventory. So you can use that $80 million as a good proxy. But we're going to unwind that in 26 and in 27, right? Because the inventory impact will hit us in 26 and will be only unwind in 27. So I would expect two-thirds of the benefits to come in this year if the status quo is maintained for the tariff, and we hope it does, with the balance one-third being upside for 27. Perfect.

Very clear. Thank you, guys.

Thank you, Lucas.

Our next question comes from the chat and is from Andrea Ferreira with Bradesco BBI. Congratulations on the results. The guidance assumes tariffs, so to confirm if it is exempt, is there upside to the margin numbers? Would that translate in any way to the delivery guidance as well?

Hi, Andrea. Thanks for the question. I think we just answered that with Lucas in the previous question. So let's move on to the next, please.

Thank you. The next question is also from the chat. It's from Christine. Following up on the supply chain question, there's a public dispute between Airbus and Pratt about engine deliveries. For your commercial delivery outlook in 2026, how much conservatism is built into your assumption and is Pratt able to support?

Yes, thanks for the question. Yes, as I said before, we have some bases that we are working on very closely in 2026. But, I mean, we have been working in a very collaborative way. with our suppliers, I mean, trying to help each other. And, again, we are very confident that we will deliver the aircraft we are planning for the year, and we don't have any big issues with Pratt this year. They are doing that.

Thank you very much, gentlemen. This concludes the question and answer session for equity research analysts and investors. Now, we will start the Q&A session dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese. We will also answer questions sent via the platform chat. Please hold while we poll for questions. Please hold while we poll for questions. The first question comes from Pablo Diaz. Please go ahead.

Hello, guys. Good morning. Thanks for this meeting. Can you hear me?

Yes, we can.

Thanks. Just wondering about the joint venture with with Adani in India and the new production line for the E175. I'm wondering if that production line is going to be focused on the E1, and if there is any possibility for that line to later migrate to E2, providing the certification process is retaken. Thanks.

Pablo, thanks for the question. At this point of time, we don't have a joint venture yet. We have signed an MOU with Danny to explore the opportunities in this civil aviation. And at this point of time, focus on the E175E1.

All right. Thanks.

The next question comes from Kurt Epstein with Aviation International News. Please go ahead.

Thank you, gentlemen. Good morning. I was wondering if you could detail the impact on your executive aviation division by the tariffs over the past year?

Hi, good morning. I think the easy way to think is that out of the 54 million that we paid in 25, about 80, 85% of that was in our executive aviation division.

For nine months, starting April onwards. And for the whole year, it should be something like 60 to 70 million, but today you are back to zero, Kurt.

Back to zero. Thank you very much, John.

Thank you.

Thank you very much. This concludes the question and answer session in English for the press. 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.

Now we're going to start our Q&A session in Portuguese.

Our first question is from the chat by Nelson During.

We'll see the first Gripen being delivered in the 25th of March in Gavião Peixoto. Congratulations, Bosco and the defense staff. Is Empraer going to be a part of the Gripen agreement in Colombia and other potential contracts?

Good morning, Nelson. Thank you for your question. No, we haven't established any contracts.

However, we do have a good collaboration with Saab. We are working with them to cooperate with them, and if possible, to bring the assembly of these aircrafts to Gavião Peixoto. Because we have installed capacity, it would be good for us and for them, but we don't have any contracts that we have entered into yet.

You may proceed, sir.

Mr. Nascimento, I think your microphone is muted. Can you please unmute your microphone so we can hear you?

We have no audio from Mr. Nascimento.

So our next question, again from Nelson During, also came through the chat. How does Embraer see the landscape for raw materials supply as aluminum and titanium as critical elements for engines and avionics, both for military and civil aviation? Hi, Nelson. Thank you again for your question. 2026 in our in our calculations should be better in terms of supply when compared to 2025. there will still be some difficulties in terms of parts but raw material is not one of the difficulties i think as for raw materials we are quite comfortable with the current inventory we have And there is another item that we are monitoring quite closely to ensure not only the year's total production, but a better production of aircraft production throughout the year. So, again, we are working very closely with suppliers since the beginning of the year, and we are quite positive and comfortable when it comes to aircraft delivery for 2026.

Thank you very much. Thank you.

So we'll try again. Next question from Mr. Nascimento for Vale 360 News. You may proceed, sir. Hello, Francisco. Good morning. I do apologize. For my mistake, it was something related to my own equipment. I have three basic questions, Francisco. The first question is whether Embraer in the period where tariffs were implemented i know that you you had a meeting with the representatives of the brazilian foreign relations office in new york in an attempt to align the issue of terror so this is question number one if you want i can you know ask the two other questions later on i mean in fact Embraer did not take direct part in that event. I mean, we just did a follow-up, but we were not there at the time. What we did was try to facilitate the event, but we didn't have any direct participation. And my second question is about the recent decision by the US when the president was questioned by the courts that said that he couldn't charge the tariffs, that the tariffs were unconstitutional. Do you think that Embraer could try to collect the tariffs that were charged unduly? And how much more of the tariffs were charged? In terms of recovering the money paid in tariffs, we are monitoring the situation, trying to understand what our peers will do and what kind of outcome they will get from there. So then we will decide what to do. i mean in terms of what has been paid we already paid 80 million dollars okay so finally francisco we see the the war escalating in the world and countries trying to to strengthen their defense i mean and embryo with kc and super tucano should fit into that scope my question is whether embryo is developing or thinking about developing new equipment for the defense side to probably serve some worldwide need nelson right now our focus is to is in selling our equipment kc is a new product that was launched in 2019 and Also, taking this opportunity with, I mean, sales of Super Tucano and also some of our equipment from Artec, one of our subsidiaries. But right now, there is nothing being developed at the moment. Okay, thank you.

Thank you.

Our next question comes from the chat.

Shandu Alves from Vale.

Do we know the deadlines of the RFP for 60 jets for India? How long is this process going to take? When are we going to get an answer? And who is competing for this?

All right.

First question. We're keeping an eye on this, but we can't control their deadlines. Of course, the clients from India are going to set their deadlines. We expect to see an RFP this year, a request for proposals. This is an important step for aircraft selling because competitors will be showing their RFPs and then they will have some time to go over them. Of course, right now we have no visibility over that.

And our competitors are Lockheed Martin from the U.S.

with the 630 Hector and Airbus in Europe with A400.

Thank you.

Our next question is from Leda Alvin, Bloomberg News. Please go ahead.

Hi, good morning.

Thank you for taking my question. Could you please confirm the values that we have in paid tariffs for now? If you could break it down by segment, that would be useful.

Thank you. Hi, Lida.

This is Antonio. In total, we already paid $80 million. 85% of that is for executive aviation, and the rest of it is for service and support. So $80 million so far is everything we've paid since April 2025. And since February 24, we went back to zero, but we still don't know what's going to happen from now on.

Thank you.

Next question, also from the chat. It's from Paulo Ricardo Martins with Folha de São Paulo. How can the war in Iran impact Embraer? Could it jeopardize the delivery of aircrafts for the Middle East? Ricardo, thank you for your question. Paulo Ricardo, thank you for your question. at the moment we're just monitoring the situation very closely our main focus and number one focus is with the people we have in the region because they are experiencing the situation day to day where they're trying to cater to their needs and the expectations of the families we are also taking care of our suppliers both direct and indirect in the region and so far we haven't seen any critical issue that could compromise our deliveries and we are not seeing any impacts in deliveries or even short-term sales so the focus now at the moment is just to monitor the situation so as to help us take mitigating actions in due time so that we can deliver whatever we're launching for this year ladies and gentlemen thank you very much that concludes the q a session of today's conference call and this concludes embryos conference call thank you for joining us and have a very good day