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. Essa conferência será realizada originalmente em inglês, Para ouvir a tradução em português, primeiro selecione o idioma no botão Interpretação e segundo desative 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. Welcome to Embraer's first quarter 2026 earnings conference call. The numbers in this presentation contain non-GAAP financial information. to help investors reconcile EAVS financial information in GAAP standards to Embraer's IFRS. We remind you EAVS results were discussed at the company's conference call earlier this week. Before we begin, a little notice to everyone. This presentation may contain forward-looking statements which involve risks and uncertainties as detailed in the disclaimer available in the slides and in the documents filed with the Brazilian Securities Commission, CDM. At this time, all participants are in listen-only mode. Instructions for the Q&A session will be provided later. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Felipe Santana, Chief Financial Officer, Thais Moraes, Corporate Communications Director, and myself. This conference call consists of three parts. First, we will present the results for the first quarter of 2026. Second, we will host a Q&A session exclusively for investors. And finally, we will hold a dedicated Q&A session for the press. It is my pleasure now to turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco.

Thank you, Gui. Good morning and good afternoon to everyone. It is a pleasure to be here with you to share Embraer's first quarter 2026 results. We achieved the strongest first quarter revenue in our history. The highest aircraft deliveries in a decade. In another all-time record backlog. We continue to see tangible progress in production leveling and greater stability across our assembly lines. As a side note, Q2 is up for a great start. Shout out to the UAE, who just signed a purchase agreement for 10 C390 aircraft, plus 10 options. The second biggest order after the Brazilian Air Force. This gives us confidence, not only to delivery on our 2026 guidance, but also to pursue our mid-term ambition of double-digit billion revenues and double-digit EBIT margins. Turning to the highlights of the quarter. Commercial Aviation, order of 18 E195E2 jets from Finnair, another very important customer in Europe. Resultive Aviation, best first quarter of the decade, driven by strong demand in the launch of the new Praetor 500E and 600E in the mid and super-mid segments. Defense and security, double-digit revenue growth. Momentum for K-59 and A-29 platforms, with a new partnership with Northrop Grumman for the U.S. and gas program. Service and support, expanding recurring revenues through fresh contracts. including Air North for E-170, E-190 fleets, and Hungary for its C-390 fleets. 44 aircraft delivered last quarter, 10 commercial jets, 29 executive jets, and 5 defense. Year-on-year growth, nearly 50% increase overall, with commercial aviation up 43% and executive aviation up 26%. Commercial aviation guidance. 10 commercial jets delivered equal 12% of guidance midpoint, one point above the five-year average. Executive aviation guidance, 29 jets delivered equal 18% of guidance midpoint and seven points above the five-year average. Company backlog reached 32 billion in the quarter, up 22% year-on-year. A new historical record for the sixth consecutive time. Commercial aviation backlog reached 15 billion, up 50% year-on-year, with an impressive three book-to-bill ratio over the past 12 months. Other segments backlog, executive aviation, defense and security, and service and support totaled 17.1 billion, up with single digits year-on-year, with the book-to-bill ratios at or slightly above one. Approximately 20 billion in options, which could expand the backlog beyond 50 billion as exercised over time. Now, I'd like to share a brief update on EV's steady progress. The past campaign is transitioning towards horizontal flights in the second quarter, with our prototype having already completed more than 54 flights. in a total of 2 hours and 17 minutes of flight time year-to-date. With that, I will now turn the call over to Filipe to walk you through our financial results. Filipe, over to you.

Thank you, Francisco. Good morning and good afternoon, everyone. Let me start with the results by business unit. All comparisons are year-over-year, unless otherwise noted. Slide 9. commercial aviation, and executive aviation. Starting with commercial aviation, revenues were up 45% to $293 million, driven by higher deliveries and pricing. Adjusted EBIT was negative $28 million, with a negative 9.7% of margin, due to client mix, logistics costs, and the absence of suppliers' credits recorded last year. In executive aviation, revenues increased nearly 30% to $418 million, reflecting strong demand and favorable product mix. Adjusted EBIT reached $25 million, with a positive 6% of margin. The declining margin was mainly due to U.S. import tariffs, client mix, and higher selling expenses. Slide 10, Defense Security and Services Support. In defense securities, revenues increased 62%, reaching $227 million. Adjusted EBIT was $38 million, with a positive 17% of margin, driven by higher KC3 night revenue recognition, increased 829 production, and positive one-time items. In service support, revenues reached $490 million, Adjusted EBIT totaled $70 million with a positive 14.3% of margin supported by materials and more than offsetting the impact of U.S. import tariffs. Slide 12, Net Revenues. At the consolidated level, net revenues increased 31% to $1.4 billion in the first quarter, representing 17% of guidance midpoint, two points above the five-year historical average. From a business mix perspective, services accounted for 34% of revenues, commercial and executive aviation around 20% each, and defense, 16%. Slide 13, adjusted EBITDA and EBIT. Adjusted EBITDA was $144 million, with 9.9% of margin, a small increase compared to a year ago. Now, adjusted EBIT was $1. $94 million with a 6.5% of margin, one point higher year-over-year, and 7.7 points above the five-year average. Slide 14, free cash flow and investments. Adidas free cash flow, excluding ETH, was negative for $147 million in the quarter. This reflects our preparation for higher numbers of aircraft deliveries in the coming quarters. Investments totaled $99 million during the quarter, compared to 8 million last year, including 38 million in CAPEX, 36 million in tangible additions, 14 million in the pool program, and 11 million in research. Slide 15, adjusted net income. Adjusted net income was 28 million in the last quarter, a decrease of $22 million. The adjusted net income margin was positive 1.9%. Down 2.6 points, earnings per ADS improved from negative 1.0 in 2022 to 1.9 in 2025, and now stands at 1.7 on the last 12-month basis. Slide 16, financial position. Financial average stood at 0.6 times that that would be done if we scored even, or 0.1 times higher than last year, driven by a lower cash position. Our average debt maturity is still at a comfortable 8.7 years, and its average cost at 5.6% in U.S. dollars. Shareholder remuneration. For fiscal year 2025, we distributed 25% of net income, declaring a total of 524.90 million Brazilian reais in shareholder remuneration, through interest on equity and dividends. This corresponds to 0.72 Brazilian cents per share and a dividend yield of approximately 0.9%. With that, I will hand it back to Francisco for his final remarks. Thank you.

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

We will now start the question and answer session. We remind you again, this conference is being recorded. It's broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Empire. We also highlight this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. This conference is being held originally in English. To hear the translation in Portuguese, press the interpretation button 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, make sure your microphone is on and start your questions. 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 equity research analysts and investors. The second part of the Q&A will be only for the press. The first question comes from Christine Gliwak with Morgan Stanley. Please go ahead. Please hold a second.

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

Hi, Christine. Thank you very much for your question. You know, we are closely monitoring the situation of the war. So rising costs, of course, may impact the airline's fleet expansion and renewal plans. At this time, there is no direct impact on Embraer. So we don't see any dismissing interest in new campaigns or any movements to delay deliveries.

Great. Super helpful. And if I could follow up on another question. You know, we've seen that, you know, the E2 weighs less than the E220. I think the weight difference is something like 8,000 kilos. In this environment where airlines are reminded again that, you know, oil is a variable that they can't control and can vary widely, are they factoring this in about the decision when they're evaluating the A220 and the E2? And is this environment incrementally better for the E2 from what you've seen? Are there signs of that, or are we still in early stages for those kinds of campaigns?

Oh, absolutely. We see, you know, we are now very well positioned with E2 in this environment because, you know, we have the most efficient aircraft in that segment of a small narrow valley, and we see more and more airlines showing interest in this, in our product. So, again, we are, let's say, cautiously optimistic about the new campaigns with E2s.

Great. Thank you.

Thank you.

The next question comes from Marcelo Mota with J.P. Morgan. Please go ahead.

Hi, everyone. I'm Francisco Feliz. Congrats for the new position. Well deserved. It's a question regarding the defense one of the $25 million. If you guys could explain us, you know, a little bit more details on, you know, what it means, you know, and what has happened now. So, any information that can help us to, you know, to figure out the $25 million will be very helpful. Thank you.

Hi, Marcelo. Agui Paiva here in Embraer. Thanks for the question. As you know, in defense, we have a lot of – we are counting on the percentage of completion methodology. and we did have an amendment to a contract with a client in the quarter, and that amendment was calculated retroactively to the start of the contract, and therefore we booked that benefit fully in the quarter. That explains the $25 million for the division.

Perfect. Super clear. Thank you, Gui.

The next question comes from Luis Perfero. with Wolf Research. Please go ahead.

Good morning. Good morning. Iggy, maybe just to follow up on that, was that something that would have been expected for this to happen this year, just timing uncertain, that adjustment in defense, or would that be incremental to the full year?

That was something that was expected by us. The timing was a little bit ahead that we had booked and expected, but it was forecasted for the year. Okay, great.

Thank you. And then, so just on the share report, you've done two quarters in a row now. Is this something we should continue to expect to see? Yeah, we're taking a conservative approach because of the occurrence of high uncertainties, and we prefer to wait for additional visibility. before we make any change to our outlook, but we are very comfortable on the midpoint of our guidance. Thank you very much.

The next question comes from Ron Epstein with Bank of America. Please go ahead.

Yeah, hey, good morning, guys. The In your prepared remarks, you mentioned about investments in the future. Could you walk through what you're thinking about those investments, and could you discuss a little bit where you're investing for the future?

Hi, Ron. Philippe here. Thank you for the question. So, as you mentioned, we keep investing on our increase of production in Melbourne facility. to support the increase of the backlog on active aviation. Also, we continue to invest to increase our footprint, especially on the MRO in Texas that we'll be investing. And also, we'll be investing in Ogima to increase the production also on the KC and also on the GTF program. So, this is the focus of the investment of the company currently.

Maybe if I can compliment you, Felipe, we are also investing in new technologies around I mean, to be prepared for, you know, a new cycle of products of Embraer in the next future.

Got it, got it. And then what are you all seeing in your own supply chain today? I know engines have been a gating factor with your ability to deliver aircraft at a quicker rate. How is the engine supply chain going and are there other areas where you're seeing... challenges in the supply chain. Like I know in the executive aviation industry, things like, you know, just windows have been hard to get a hold of. How is that going?

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

Got it, got it, got it. And then can you speak to a little bit of any, how do I say it, ongoing campaigns in regions of the world? Are there any regions of the world that are higher today than others in terms of campaigns for E1 or E2?

There are campaigns in almost all the regions for EGS. We normally do not disclose the campaigns. But we are optimistic that we will have a good year as well. Not as good as last year because last year we had amazing sales of EGFs, but this year is going to be good as well.

Got it. Thank you.

You are welcome, Ron.

The next question comes from Andrea Ferreira with Bradesco PPI. Please go ahead.

Hi, good morning. Thank you for taking my question, and I wanted to congratulate Felipe on the new job. Just going back to the one-off items this quarter, so tariffs are clear, impacts on defense. I think you probably had a previous question. But on the commercial side, maybe not really a one-off, but we're seeing higher logistics costs. Could you give more details, like did it accelerate production rates or deliveries, or was it something else? And if you could give us a color of how much impact that was on margins or in USD. Thank you.

Hi, André. Felipe here. Thank you for your question. We do have these logistics costs, and we believe there was much more one item during the first quarter. We don't foresee that. on the coming quarters, and this basically was around $7 million of impact on the first quarter.

Okay, thank you. And was it related to anything specific or different from the previous quarters?

No, no, nothing different.

Okay, thank you. Have a good day. Thank you.

You too.

Next question comes from Luca Macchioli with APG. Please go ahead.

Hey, guys. Morning. And welcome, Felipe, to the group. And just one question on defense and regarding these latest contracts you guys signed with the Emirates. Just wanted to know if that is kind of a building platform for that client to maybe distribute more of your products throughout the region. You know, like, I mean, if there's any kind of a, volume upside on top of that signed contract already, or how do you guys see this kind of opportunity in the middle list? And second question, on margin-based though, I mean, how big was the delivered margin versus your forecast, right? Because, I mean, in terms of delivers and in terms of volumes, you guys had a stronger quarter, but even looking on a year-over-year comparison, your margins were slightly weaker, right? I know there's climate, there's logistics costs, or all of the sorts of the effects that you guys already mentioned, but just wanted to know if that's already included on your curve for expected margin improvement throughout the year, you know? Thanks, guys, for the questions.

Right. Lucas, good morning. Francisco here. I will start with the question number one, and then Felipe will help you with, Guy or Felipe will help with the question number two. Well, I don't need to tell you how happy we are with this new order in the Middle East, the first one in the region for the KC-390. Very important and relevant order. I mean, 10 aircraft firms and 10 options, and yes, this open opportunity for us to extend the new views with the neighborhood in the region, right? It shows, as happens in Europe, that, you know, this aircraft really is the best in class in that segment. And going to the Middle East, yes, we see an opportunity for new sales in the region with the KC. And these 10 options can help us to do that, you know, the same thing we have with Portugal and we have with the Netherlands. I think you will take care of the second one, right?

Yes, thanks for the question, Lucas. Good to hear you. So, you know, we operate a complex business, so obviously there are fluctuations that happen quarter to quarter. I think most importantly, if we're looking forward, we feel very confident and comfortable with the guidance that we put out with 9% of the margin at the midpoint of it. And if we continue to see the status quo of tariffs not being implemented on Brazil and on us,

we estimate in the last quarter that we could see an additional 60 basis for the year.

Thank you, guys. Have a good day.

You too, Lucas.

The next question comes from Noah Poponek with Codeman Sachs. Please go ahead.

Hey, good morning, everyone. Morning. Good morning. Maybe on the margin question and topic, just given some moving pieces and, as Guy just alluded to, the quarterly volatility that can happen, if we take the full-year total company margin guidance that you have, is it possible to just speak to, for full-year 2026 versus 2025, what you see by segment, which segments are higher, which are lower directionally?

Thank you, Noah. Philippe here. What we foresee when we compare, right, by business units on commercial, probably going to see stable compared to last year. On the fence, an improvement going up, as active as well, going up, and service support as well. So, most of the growth that we're going to see will be pushed by these three business units and commercial much more steady.

Okay, great. That's helpful. And then as you've discussed investing in output for executive, where does that get you on, you know, possible, capable annual deliveries? And what do you think, where do you want to take supply annual deliveries relative to the effort to, you know, grow and give customers jets but also keep backlog and keep supply-demand tight?

No, no. This is really a great question. And this is, you know, a combination of our supply chain capabilities and our own production capabilities. So, we are working on both fronts. So, we are investing in expanding our sites in Brazil, Portugal, and the United States over the past two years. and also optimizing the utilization of our assets, producing more aircraft in the same area. So, in parallel, we have been working very closely with our key suppliers to make sure that they supply the parts we need to support our growth. We are growing year after year. We are growing this year. We are planning to grow in the following years. So we are saying that by the end of the decade, we expect to reach production of 120 commercial jets and 200 executive jets and 10 KC-390. This is the plan we have been working on. And also very important, we want to deliver all the aircraft on time to our customers, and we are improving that direction as well.

Okay. And then maybe just the last one on defense revenue and growth. Given the growth rate in the quarter, obviously it's an easier absolute dollar compare in the year-ago quarter. But I guess what's within the total company full year 2026 revenue guidance, what's assumed for defense growth or a range of dollars? And then as you execute on that program growth beyond this year, how can we think about or how can you frame where defense revenues can make it to, you know, closer to the end of the decade?

Should it be here? No. Thank you. On defense, right, we don't give specific numbers. But the way that we see is that around six, probably six aircraft this year, and 12 specific That's the way that we see, and we see the space of deliveries growing, especially on KC, year per year, up to 10 aircrafts in the end of the decade.

To complement this answer, we have been working on an initiative we call Pull to the Left, which aims to anticipate the revenues and higher profitability. And then we are focusing on enhancing our execution process, accelerating revenue, and improving profitability at a faster pace. So, as things are now coming to a more stable situation, we believe there is an opportunity for us to accelerate our efficiency programs within the company.

Okay. Excellent. Thank you so much.

You are welcome, Noah.

The next question comes from Daniel Gasparetti with Itaú BVA. Please go ahead.

Good morning, guys. Thank you very much for the opportunity. Two questions here from my side. The first one will be to, if you could kindly walk us through what happened and what affected the margins on the depth of aviation. You mentioned the expenses with the operator. Just to get a better idea of how much it was, how much the margin would be, excluding for that and that would be the question number one and also if you could comment on the same dynamic for the commercial aviation and secondly would be on the adjustments on the Republic order just to have a better understand of how that works in terms of is there any kind of cost for the client I mean it's like a conversation to have with them and you can simply accommodate them or does that change the price, does it have any kind of fee? Just have a better understanding of how that works in terms of rearrangement of dollars. Thank you very much.

Felipe here, Gasparres. Thank you for your question. So, the first question I will answer here. So, when I look to executive aviation, the margins, right, the marginless pressure reflected U.S. tariffs, right? We had U.S. tariffs this quarter that we didn't have last year. Also, the customer mix, we had much more companies being delivered compared to the last year. And also, with the launch of the new Prater 500 and 600E models, we also had an impact on the selling expenses to that. But the way that we see the coming quarters will be normalized, and we don't expect any more impacts on the margins of executive aviation. And the second question, Guy, will take you.

Hi, Gasparetti. Thanks for the question. So, in terms of the Republic order, I think it's important to highlight first that there was no change whatsoever to the total order of aircraft order with us and in the backlog. The adjustment was purely limited to the delivery schedule, which was revised by mutual agreement between the two parties. And we – and Republic slots were reallocated already for other customers, so it should have no impact on our deliveries for the next few years.

Okay, great. Thank you, Felipe. Thank you, Gui.

The next question comes from Alberto Valerio with UBS. Please go ahead.

Morning, Francisco, Felipe, Gui. Thank you for taking my question. First, welcome, Felipe. It would be a pleasure to work with you on this, if you need anything. I have two on my side. The first on tariffs. I would like to know if this was one non-recurring item on the first quarter. I thought this new 10% tariff would not be hitting the aerospace products. The second one, and also on tariffs, the section 232 has any involvement or any impact on your cost, on the cost of your suppliers. from Mexico and Canada. The second one is about the book to view, how have been in the second quarter, what should expect for the divisions, and if you could tell us if change expectation because the war, I imagine that service might change with some grounding of all the aircrafts, if you may comment on this one. Thank you very much.

Thank you, Robert, for your question. So, again, the tariffs, right, we had the impact on the first quarter of $13 million, mainly related to inventory effects. But looking forward, we still have another $11 million inventory that should impact the second quarter of this year. When we look, right, to the potential impact of the U.S. Action 232, we maintain the tariffs on our guys given everything that's going on, right? because this reflects a conservative approach that we do have. As soon as we have more visibility, then we can make any changes on the guidance or share with you what we have of impact. And also on your second questions, we don't give any information about the book to be on the current order, okay?

Perfect. Thank you very much. Thank you.

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

Yes. Hi, Francisco, Felipe, Gui. Welcome to the call and CFO position. Felipe, happy to chat. So the first one, we see Rolls-Royce wanting to go back to the narrow body engine market, which is currently dominated by CFM Sleep and Pratt's GTF. So I wanted to ask you guys if Embraer Israel is in conversation with Rolls-Royce for any future partnership, likely for future projects, new airframes, but if you guys are speaking to Rolls. This is the first one, then I have a second.

The question, I mean, we are making studies for a new cycle of products for Embraer, right? I mean, either the commercial jet or a business jet. So, in that regard, we are talking to potential suppliers, I mean, of the different products to understand the new technology and so on. But I cannot disclose more details on that. I mean, with the specific number, we talk to all of them, but I don't have specific information to share with you about this or that specific supplier.

Perfect. Thank you, Francisco. And the second one. on potential competition. So, Boeing is slated to certify the 777-7 later this year. The 777-7 is a 140-seat jet, so a little bit larger in terms of seat counts than the 195E2. So, do you think the 777-7 competes in any sense with the 195E2, or given that it's a more expensive and longer-range plane, It should be used for totally different missions or if there's any overlap. Thank you.

I think they might compete with us in one or another campaign, but we believe that for that segment up to 156, the E2 is the most competitive jet, you know, the most efficient jet in that segment. So, and then we believe, yeah, we might have some competition in some campaigns, but we are very confident that the E2 is the best option for the customers to complement the larger and narrow buyers. It was developed for that segment with all the experience acquired with the first generation. So, again, more and more customers are seeing that. We have now 24 customers for our E2s and are working in different new campaigns as well. Thank you, Francisco.

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

Good morning, Francisco, Gui, Felipe. Congrats on the new role. I have a question on defense. I mean, showing a very strong commercial activity right on the C390 front. Just wanted to better understand, considering your current capacity output, I guess you mentioned like six aircrafts this year, expectations for 10 aircrafts by the end of the decade. So just better understanding, considering your current backlog, how full are your capacity considering Brazilian footprint as we speak? And if you see a further space for accelerating new orders, without any new expansion on this context. I mean, if new orders continue to accelerate, if you see any potential room for expansion in your facility here in Brazil. And I mean, still on the topic, but we understand the optionalities by building a new plant on the US, on India. Just if you could give us an update on that front as well. I mean, how are those conversations with India and the U.S. evolving? I mean, your partnership with Northrop Grumman. So just better understanding the whole capacity and utilization context on the C390. Thank you.

Very good question. First, I mean, we are... We are investing to expand our production capacity for the KC39, as I said, growing one per year, 626, 727, 828, 929, and 1030. And this capacity is enough to support the current sales campaigns we are working on. But in parallel, we are working in opportunities that might bring much higher volumes, like India and the U.S., right? But those campaigns will require a localization of our production. So then, India is moving, is progressing as planets with the India Air Force. We are working very close to that campaign. But if we win that campaign, the aircraft will be assembled in India with a lot of local suppliers as well. This will help us to increase the capacity and fulfill the requirements of the MTA program in India. On the other front, the U.S. The U.S. is the same. So, we now are working with the Northrop Grumman to develop, you know, the boom in all the systems capabilities to, you know, to make sure that the KC-390 will be ready I mean, to enter in the U.S. Air Force. And also, if we win a relevant order, these aircraft will be assembled in the U.S. as well. So, with those two fronts, we will be able to increase our capacity and, of course, to grow significantly our defense business.

Thank you. Thank you, Francisco.

You are welcome, Lucas.

Thank you all very much. Now we'll start the question and answer session dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese. We'll also answer questions sent via the platform chat. Please hold while we poll for questions. The first question comes from Richard Sherman with Air Insight. Please go ahead.

Good morning. Can you hear me? Yes, we can, Richard. Go ahead. Good morning. Hello, hello. I have two questions, actually. In your remarks and answers, you mentioned the leveling of the production going to 2027. The original plan was to get to a more level production level already this year. What are the reasons that this is pushed out to 2027? And my second question is, as you have been aware, on Wednesday, Tony Fernandes announced the big order for the Airbus A220, but he also mentioned that he was taking or had taken a serious look at the Embraer A2. What's your view? Have you been given a fair chance to offer the E2 to Aresia? And at what stage did you get in the negotiations?

All right. So, let's start with the question number one, Richard. Yeah, we are having progress leveling our production this year. I mean, as I suggest, we are now almost with the production leveled. I mean, we saw... good improvements in Q1 last year and this year again. And you see this, the phenols and the kraters, we now see the production almost leveled at the level we are looking for. So, 2027 will be just a fine adjustment for executive jets. On commercial jets, Richard, we have some more challenges because of some pacers, suppliers. So, we did it better this year. and we expect to improve even further for 2027. So, we are working, we have been working already with the suppliers to make sure that we will have a better start in 2027 than we had in 2026. So, yeah, the program is moving well. Receptive jets more advanced, but commercial jets are also improving. The second question about AirAsia. First of all, I mean, after our customer is good, it's good to see another low-cost carrier in the region recognizing the advantages of a small narrow-body jet, right? So, and this is a trend that we expect to continue as we build on our record backlog and huge E2 momentum in the market. Remember, we sold the last year, I mean, almost 200 E2s. So, obviously, we would have liked to add to our global family of 24 E2 operators. But, you know, our competitor, we knew since the beginning that our competitor has huge incumbents in that airline and earlier slots. So, and as we did very well last year, I mean, and we also have a lot of opportunities this year We don't see this a big issue for England. This will not affect our growth plans for commercial jets. And yes, it was a good experience working with their agent. I think they understood the benefits of our product. Our product would bring it to their feet, but at the end of the day, they decided to go with the competition, and we respect their decision.

Thank you. Can I add one more question in follow-up on the first answer you gave? Do you expect to improve the commercial jet production and get it more level already in the second half of the year?

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

Obrigado.

De nada. Thank you, Richard.

Thank you. The next question comes from Jonathan Humerdinger with Flight Global. Please go ahead.

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

Well, Jonathan, thanks for the question. Well, first, we are now, as you see, we have been focusing a lot on improving our performance in terms of delivery and sales of the products we have, right? We have a very modern and competitive portfolio of products, and we are increasing our backlog, and now it's with new orders for all the segments, commercial, executive, and defense. And this will take Embraer to a very important midterm growth in terms of revenues, in terms of profitability. But in parallel, we are investing new technologies, you know, aerostructures, wings, cockpits, and so on, in order to be ready to develop a new airplane. So we are making studies in the two fronts, and we don't have, we're not at the point to disclosure any more information on that because we don't have a decision yet about the segment we want to go to. But we know we need a strong product with a strong value proposition with a robust, I mean, funding strategy because we don't want to put in risk the financial health of the company. So, yeah, we are working in all those fronts, but we are not ready yet to disclose more information on that.

Thank you. I just do wonder if you might say any estimate of timeline, how long you think the EGES can carry that growth that you're talking about, and when a decision might have to be made.

This does not depend only on us. This depends on the technology available in the market, but for different products. And this is what we're working on. So we don't have a timeline. to share with you, Jonathan. Very good. Thanks for your time. Thank you.

The next question comes from Steve Trimble with Aviation Week. Please go ahead.

Yeah, hi.

Thank you very much.

I was just, I wondered if you could say anything more about the timeline for setting up infrastructure for the completion center in the UAE. as well as the delivery schedule for the UAE.

Well, Steve, I mean, we don't have plans for completion centers at this point of time in UAE. We have, we are working to collaborate with the local suppliers in the UAE, and this is in the ongoing process. So we will increase our collaboration with local suppliers. I mean, we mentioned the Gen 5, for example, in case of the AKC 29th, but we don't have a plan at this point of time for a completion center. It will be just a collaboration with the local suppliers for us to buy parts made by them.

I see. And do you have a delivery schedule for those UAE C3?

Yes, we do have. We should start the delivery by 2028 and continue in the years ahead.

Thank you. Thank you. The next question. is sent from the chat, was sent from the chat, I'm sorry, and it's from Edgardo Jimenez, Jimenez Mazzo, with Aviacion Line. Has the operational debut of the E-190 fighter in Europe led to a concrete increase in interest from lessors or express integrators who were previously in the wait-and-see phase. What is your assessment on the program's progress to date?

Could you repeat the question? I don't know if I get the... Could you repeat the question, please? Of course, sir.

Has the operational debut of the E-190 fighter in Europe led to a concrete increase in interest from lessors or express integrators who were previously in the wait-and-see phase? What is your assessment of the program's progress to date?

Okay, the freighter. Thank you. Thank you for the question. Yes, we have now a customer, so with entering in operation with the U-199 freighter, this will help to showcase the product, and we believe it's a great product e-commerce especially, and we have a good expectation about the future of sales with the U90 freighter.

Thank you very much, sir. The next question comes from Kurt Epstein with Aviation International News. Please go ahead.

Yes, good morning, gentlemen. Can you hear me? Good morning, yes. Yes. In the beginning, you mentioned the 29 executive jet deliveries for first quarter. You had mentioned there was a disclaimer on there. Is that actually a record for Embraer in the first quarter executive jet deliveries?

Yes, it is, and we are very happy with that. Okay.

Thank you.

The result of these production leveling efforts.

Okay, thank you. I just wanted to confirm that. I think you've said in a decade or something like that, so I just want to make sure that is actually the record for the company.

Yes, and, you know, I mean, we are coming from tough times in the past, especially with the supply chain that, you know, was leading us to concentrated deliveries at the end of the year, and this means, you know, a weak Q1 because of that concentration the year before. But now we are changing. this situation step-by-step, and this, you know, delivering these jets, exactly the jets in Q1 this year, is proving that we are in the right way. Thank you so much.

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

All right, Joanna. Joanna, good question. Yes, we do see opportunities to sell the KC-390 more customers in the region because of this important order of . And yes, we are working, we are talking to other customers at this point of time. Yeah, the third question, yeah, the production is included as well. It is a more complex product, complex aircraft, but we have been able to reduce both the production lead time of the aircraft and to improve the production distribution of the aircraft, I mean, throughout the year. The challenge is bigger than the other ones because of the supply chain, but we are seeing good progress. We are seeing good progress as we are seeing with EGES and the ZPVGS as well.

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

Okay. All right, thanks for the question. Well, we are not seeing impact so far with that might affect the sales of our business champs. Demand is still strong for our business champs as we have a very modern portfolio, especially now with the launch The creator of 500E and 600E that are selling.

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

Good morning, Francisco, Gui, Felipe. Congrats on the new role. I have a question on defense. I mean, showing a very strong commercial activity right on the C390 front. Just wanted to better understand, I mean, considering your current capacity output, I guess you mentioned like six aircrafts this year, expectations for 10 aircrafts by the end of the decade. So just better understanding, considering your current backlog, how full are your capacity considering Brazilian footprint as we speak and if you see a further space for accelerating new waters without any new expansion. And on this context, I mean, if new waters continue to accelerate, if you see any potential room for expansion in your facility here in Brazil. And I mean, still on the topic, but we understand the optionalities by building a new plant on the US, on India, Just if you could give us an update on that front as well. I mean, how are those conversations with India and the U.S. evolving? I mean, your partnership with Northrop Grumman. So just better understanding the whole capacity and utilization context on the C390. Thank you.

Very good question. First, I mean, we are... We are investing to expand our production capacity for the KC2 United, as I said, growing one per year, 626, 727, 828, 929, and 1030. And this capacity is enough to support the current sales campaigns we are working on. But in parallel, we are working in opportunities that might bring much higher volumes, like India and the U.S., right? But those campaigns will require a localization of our production. So then, India is moving, is progressing as planets with the India Air Force. We are working very close to that campaign. But if we win that campaign, the aircraft will be assembled in India with a lot of local suppliers as well. This will help us to increase the capacity and fulfill the requirements of the MTA program in India. On the other front, the U.S. U.S. is the same. So we now are working with the Northrop Grumman to develop, you know, the boom in all the systems capabilities to, you know, to make sure that the KC-390 will be ready I mean, to enter in the US Air Force. And also, if we win a relevant order, these aircraft will be assembled in the US as well. So, with those two fronts, we will be able to increase our capacity and of course, to grow significantly our defense business.

Thank you. Thank you, Francisco.

You are welcome, Lucas.

Thank you all very much. Now we'll start the question and answer session dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese.

We'll also answer questions sent via the platform chat. Please hold while we poll for questions. The first question comes from Richard Sherman with Air Inside. Please go ahead.

Good morning. Can you hear me? Yes, we can, Richard. Go ahead. Good morning. Hello, hello. I have two questions, actually. In your remarks and answers, you mentioned the leveling of the production going to 2027. The original plan was to get to a more level production level already this year. What are the reasons that this is pushed out to 2027? And my second question is, as you have been aware, on Wednesday, Tony Fernandes announced the big order for the Airbus A220, but you also mentioned that he was taking or had taken a serious look at the Embraer E2. What's your view? Have you been given a fair chance to offer the E2 to Aresia? And at what stage did you get in the negotiations?

All right, so let's start with the question number one, Richard. Yeah, we are having progress leveling our production this year. I mean, executive jets, we are now almost with the production leveled. I mean, we saw good improvements in Q1 last year and this year again. And you see this, the phenols and the pretols, we now see the production almost leveled at the level we are looking for. So, 2027 will be just a fine adjustment for ZF-TV Gens. On commercial Gens, Richard, we have some more challenges. because of some pacers, suppliers. So we did it better this year. And we expect to improve even further for 2027. So we are working, we have been working already with the suppliers to make sure that we will have a better start in 2027 than we had in 2026. So again, the program is moving well. Exemptive jets more advanced. But commercial jets are also improving. The second question about AirAsia. First of all, I mean, after our customer is good, it's good to see another low-cost carrier in the region recognizing the advantages of a small narrow-body jet, right? So, and this is a trend. that we expect to continue as we build on our record backlog and huge E2 momentum in the market. Remember, we sold the last year, I mean, almost 200 E2s. So, obviously, we would have liked to add Asia to our global family of 24 E2 operators. But, you know, our competitor, we knew since the beginning that our competitor has huge incumbents in that airline and earlier slots. So, and as we did very well last year, I mean, and we also have a lot of opportunities this year. We don't see this a big issue for Embraer. This will not affect our growth plans for commercial jets. And yes, it was a good experience working with AirAsia. I think they understood. the benefits of our product, our product would bring it to their feet. But at the end of the day, they decide to go with the competition, and we respect their decision.

Thank you. Can I add one more question in follow-up on the first answer you gave? Do you expect to improve the commercial jet production and get it more level already in the second half of the year?

We are working on that in this initiative I mentioned before that we call pull to the left. This includes, you know, also production and deliveries, but not in a significant way still this year. Because of the supply chain, we don't see any risk for us to deliver the, the guidance we gave to the market of 85 commercial jets in between 160 and 170 business jets. But a better improvement in terms of leveling for commercial jets we will see in 2027 and 2028. Thank you. Thank you, Richard.

Thank you. The next question comes from Jonathan Humerdinger with Flight Global. Please go ahead.

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

Well, Jonathan, thanks for the question. Well, first, we are, as you see, we are we have been focusing a lot on improving our performance in terms of deliveries and sales of the products we have, right?