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.