Embraer S.A. (EMBJ) Q2 2026 Earnings Call Transcript

Good morning, ladies and gentlemen, and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. Esta conferencia será realizada originalmente en inglés 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 Guy Paiva and I'm the head of Investor Relations M&A and the Venture Capital for Embraer. Welcome to Embraer's Second Quarter 2026 Earnings Conference Call. The number in this presentation contained 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 were already discussed at the company's conference call last week. Before we begin, a legal 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, CVM. At this time, all participants are in a 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, Taiz Morais, Corporate Communications Director, and myself. This conference call consists of three parts. First, we'll present the results for the second quarter of 2026. Second, we'll host a Q&A session exclusively for investors. And finally, we'll hold a dedicated Q&A session 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, Ugi.

Good morning and good afternoon, everyone. It is a pleasure to be with you today to discuss Embroer's second quarter 2026 results. We delivered the strongest second quarter revenue in our history. We achieved our highest second quarter deliveries in the past 16 years and reached a new all-time high backlog for the seventh consecutive quarter. We continue to see strong performance across all our business units, driven by our focus on sales execution, efficiency, operational discipline and production ramp-up. Simply put, we continue executing the fundamentals exceptionally well. These results further strengthen our confidence in the outlook for our businesses and have led us to raise our 2026 guidance, also supported by favorable effects. Let me now turn to the key highlights of the quarter. In commercial aviation, Azora placed an order for 15 U195 E-2 aircraft while maintaining 15 purchase rights. During the quarter, the E-2 program surpassed the milestones of 500 firm orders. In executive aviation, we achieved the record second quarter revenues and deliveries, supported by strong market demand. We also received the triple certification for the Praetor 500E and Praetor 600E. In defense and security, the UAE ordered 10 C-390 aircraft with options for an additional 10 units. This marks the platform's first selection in the Middle East and the largest international order for the C-390 to date. In service and support, we continue to expand our recurring revenue base through new contracts, including support for Jets Aviation's U-175 fleet and a new maintenance agreement with the Brazilian Air Force covering its KC-29 fleet. During the quarter, we delivered 65 aircrafts, 20 commercial jets and 45 executive jets. Total company deliveries increased by nearly 7% year-over-year, with commercial aviation growing 5% and executive aviation growing 18%. In commercial aviation, we delivered 30 aircraft in the first half of the year, representing 36% of the midpoint of our full year guidance, one percentage point above the five-year average. In executive aviation, we delivered 74 aircraft in the first half, representing 45% of the midpoint of our full year guidance and an impressive 11% pointage above the five-year average. Our company-wide backlog reached $34.5 billion, an increase of 16% year-over-year, and another all-time record for Embraer. Commercial aviation backlog grew 15% year-over-year, supported by a 1.8 book-to-view ratio over the last 12 months. Defense and security backlog increased 42%, with a strong 2.6 book-to-view ratio. Executive aviation backlog grew 5% year-over-year, while service and support increased 12%, with both segments maintaining book-to-view ratios above one. In addition, we hold approximately 21 billion in options, which could expand our backlog to more than 55 billion over time, if exercised. I would also like to provide a brief update on EVE's continued progress. the flight test campaign is advancing according to plan following the successful completion of rover flights the team is now moving into transition flights an important next step on the path toward certification with that i will now hand the call over to felipe who will walk you through the our financial results felipe the floor is yours 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 starting with commercial aviation revenues increased eight

percentage to 625 million dollars driven by higher volumes adjust ebit totaled 18 million dollars with a positive 2.9 percent of margin the year over year decline was primarily due to customer mix In executive aviation, revenues increased at 32% to $725 million, supported by higher volumes and product mix. Adjust EBIT reached $170 million with a positive 23.4% of margin. These results include strong operating performance and the effects of U.S. import tariffs and the extraordinary tax credit. Excluding both effects, adjust EBIT margin would have been 16.1%. In defense security, revenues increased 38%, reaching $304 million. Adjust EBIT was $36 million with a positive 11.9% of margin, supported by stronger KC390, revenue recognition, and operating leverage. In service and support, revenues increased 24% to $565 million, driven by higher volumes. Adjust EBIT totaled $106 million, with a positive 18.7% of margin. These results include US import tariffs and an extraordinary tax credit, excluding both items. Adjust EBIT margin would have been 17.6%. At the Consolidate level, net revenues increased at 23% to $2.2 billion in the second quarter. From Business Mix's perspective, Executive Aviation represented 32% of revenues, Commercial Aviation serviced more than 25% each, and Defense 14%. In the first half, revenues reached $3.7 billion, representing 44% of the midpoint of our full-year guidance. Adjust EBITDA was $356 million, with a positive 15.9% of margin, while Adjust EBIT totaled $297 million, with a positive 13.3% of margin. During the quarter, the company recorded approximately $8 million of U.S. import tariffs and an extraordinary tax credit of $68 million. dollars excluding both effects are just even margin would have been ten point six percentage of margin in the first half are just even margin which at ten point six percentage or five point five points higher than the five-year average I just free cash flow is could leave was four hundred and one million dollars in the quarter this reflects stronger operating results sales related pre down payments and a extraordinary tax credit investment total 121 millions during the quarter including 42 million in capex 24 million intangible additions 18 million in the pool program and 36 million in research research expenses include engineering service to current projects as well as other developments acknowledged for future progress I just now income was 290 million dollars in last quarter adjusted net income margin was positive 9.8 percentage up 1.1 points mainly due to operating performance and lower net financial expenses which were partially offset by higher taxes earning per ads now stands at 2.5 dollars on a last 12 month basis net debt to adjust the bidat excluding if improved to 0.2 times in the quarter from 0.7 times a year ago Through our labeled management initiatives, average debt maturity increased to 9.2 years and its average cost declined to 5.1%. During the quarter, we declare 200 million reais in interest on equity. This corresponds to 0.28 reais per share or approximately 0.22 cents of dollars per DS. Based on the share price at the quarter end, this represents a dividend yield of approximately 0.34%. From an operational standpoint, we are maintaining our delivery guidance unchanged at 80 to 85 aircraft in commercial aviation and 160 to 170 aircraft in executive aviation. On the financial side, revenue guidance remains unchanged at $8.2 billion to $8.5 billion. However, we are increasing our adjusted EBIT margin guidance to between 10 to 10.6. At the midpoint, this represents an increase of approximately $110 million or 130 basis points, reflecting the extraordinary tax credit, lower US tariffs and a better business outlook.

We are also increasing our adjusted free cash flow guidance to $400 million or higher, reflecting strong operational performance, progress in our production level initiatives and the strong first half cash generation with that i will hand back to francisco for his closing remarks thank you thank you felipe the second quarter of 2026 reinforced our confidence in embryos strategic positioning and our ability to consistently execute we have also started the third quarter with strong momentum including the announcement of 28 additional e2 orders and welcomed colombia as the newest KC290 customer. Columbia became the 13th country worldwide to select the KC290, further expanding the aircraft's global footprint. We were also pleased to introduce the new EV edition of our best-selling Sinon 300. Strong demand across our businesses continues to support our growth trajectory. Our performance reflects the discipline, focus commitment and energy of our people across the organization their dedication enables us to deliver stronger results today while continuing to invest in the technologies that will drive our future growth behind these achievements are the values that guide everything we do safety first in quality always with that we are now ready to take your questions well now start the question-and-answer session.

We remind you again that 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 and prayer. We also highlight that this conference call is being conducted in English with translation to Portuguese. 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 equity research analysts and investors. The second part of the Q&A will be only for the press. The first question comes from Christine Luak with Morgan Stanley. Please go ahead.

Hey, good morning, Francisco, Felipe, Guy, and Daiz. I wanted to ask about margins. Margins were a career standout in a quarter. Can you talk about more and provide more detail about what drove operating leverage in executive aviation and defense, was there anything that was one time in the quarter? Basically, how should we think about this as being structural change in your cost structure versus quarter-specific? And any update regarding your grow efficiency strategy would be really helpful so that we can better understand your margin trajectory from here.

Hi, Christine. Good morning, and thanks for the call. Q2 was really strong for us in effective aviation. We have done a lot of progress in our production-level initiatives in the last two years, and we're almost close to where we want to be. That has definitely helped the results. In the quarter, when you look at executive, obviously, we have also the impact of a tax credit and the tariff payments, and that helps the results on a net basis for the division for around $54 million at the average level.

Great. And anything about what would be structural change in your cost structure versus – and thinking about the broader growth efficiency plan in the next few years. Maybe it's a little too early to look out a few years, but it seems like you're achieving some of your margin targets much earlier than expected. So I just wanted to see if there's more upside from here.

Yeah. Maybe I can. Yeah, go ahead again.

No, I was just going to highlight one of the things that is very passionate about Francisco, which is, you know, lean operations and the fact that we do Kaizans and we do OBEAs and we do efficiency projects on a day-to-day basis. It's not, you know, there's not a silver bullet, Christine. This is like an ongoing effort by thousands and thousands of people that do this on a regular basis. But I'll pass it to Francisco because it's one of his most passionate topics.

Okay, thank you. But you really answered the question. But, Kristine, it is true what he just said. So, we have seen our executive JS production, I mean, progressing very well with the production leveling initiative. So, this year we still have some issues to be fixed with a few suppliers that are still delivering parts late. I mean, forcing us to move aircraft late in the line, but it's improving, it's improving. So we expect that in 2027, we will see a much better performance in terms of production levelling, which will help us to see a higher productivity and higher efficiency of our Thank you very much.

Thank you. The next question comes from Marcelo Morta with JP Morgan. Please go ahead.

Hi everyone. Thanks for taking my question. I would like to hear more about this 4 million improvement in business outlook that you mentioned as one of the reasons to improve the adjusted debit margin guidance.

Just wondering here if this is related to a specific segment, if this is also a cash gain, if it's you know more on the accounting so anything that you could comment about the the upside and downside risk for these four million to be four million dollars to be lower or higher it would be very interesting thank you good morning Marcelo Philippe here thank you for a question so this four million is really connected with what he mentioned in Francisco right on enterprises enterprise efficiency where we focus in all business units so these four million is spread out among all the business unit of course that we see that more on exact aviation mainly because of the production labeling and all the

efforts that we're doing but it's here is recurring the way that we see this four million dollars improving from all the segments that we have the next question comes from Lucas Macchioli with PTG please go ahead thank you hey guys morning yeah I know I just wanted to clarify this let's say one-off effects on the queue, of course, because of rotation, the tax credits, right? I mean, if you could just kind of give us some color on what's the nature of it, and if this was like a cash impact already in the queue, I'm assuming it is, but just to confirm the numbers, right? And if you guys can give us at least some more color on what's the nature of it, and if there's any other kind of a reversal coming in the second back of the year as well. Thanks for the clarification.

Good morning.

Flip, first. No, no, thank you for your question. So this impact, we have both, right? We have both on cash and also on EBIT, right? Most of it is refund of the tariffs that we impact the company last year in the first quarter and the second quarter of this year. So this is what we have done. We still have some pending amount to receive on cash, but everything was already recognized on the EBIT margin of the company. And going forward, we're not going to have any more direct tariffs to the company, but we're also going to have indirect tariffs to the company impacting especially 7Support, around $12 million annually basis.

Great. That's clear. Thank you, Felipe.

Next question comes from Louis Raffetto with Wolf Research. Please go ahead.

Good morning, guys. You just actually answered the question I had whether that $6 million was the tariff refund or not. It seems like it is. So just to be clear, the $12 million that you still have indirect, so basically expect $6 million in the back half and primarily in services.

That's it, please. Okay.

And are we done with going through the tariff costs from sort of the backlog or from inventory, excuse me?

Yes, we are.

Okay. and then maybe just I know you mentioned the 28 orders just can you expand on any additional pipeline opportunities Skyline opportunities yeah Luis Francisco speaking thanks for the question yes we are happy with this last announcement we did in Farnborough with these 28 orders and yes we are working in other campaigns but they are still need to do some work to cross the finish line but yes we we are positive with more sales of our

products until the end of the year thank you very much you're welcome the next question comes from Alberto Valerio with UBS please go ahead good morning Francisco Felipe and Gui thank you for giving the opportunity to do my questions here.

I have two on my side. The first one, really strong margins on executive jets. You mentioned the Kaizen model of Embraer and so forth. But can we consider that it is any different mix for this quarter, for looking forward? We used to have 12% margins on business jets coming at 16. Should we consider for the future something between or think it's more towards the 16? And my second one on backlog, I think you guys are very comfortable for the guidance of long term on 2030 for the commercial with 1.6, if I'm not mistaken, times what we have the book to be off this year with more than two times, 2.6, the defense and 1.1 for the business jets. the business ethics one that I'm talking about to see if you you guys are comfortable with the long term it's the only one that the book to view is a little bit below the long term goals thank you very much

good morning and thanks for the question on on executive aviation I guess we continue to see a gradual improvement in our operations despite having a product a client mix which has provided a little bit of headwinds, and that is just a testament to the efficiency gains that the company has been able to generate to offset these light headwinds that I alluded to. When you look through the rest of the company, we continue to be really optimistic. We have seen defense margins continue to improve on a steady basis, and you obviously saw the order that we were able to obtain from the UAE in Q2, and we do expect the success of the KC platform to continue in the next few years. We have continued to expand the backlog in services also, which provide us with a steady stream of value for the company, and we have continued to work, and we should continue to see improvements in the second half, and most importantly, in the next few years for the profitability that we have in our commercial aviation as well right now with a record backlog for the company we are able to produce at a target levels that we have for 2030 you know which is going to be our capacity and so we remain very upbeat about the outlook for the company in the next few years fantastic very very clear here congrats on the result next question is from Lucas

Barbosa with Santander. Please go ahead.

Good morning Francisco Felipe and Gui. Congratulations on the results and thanks for taking my question. So my question is on commercial aviation. This quarter the margin saw a slight drop due to client mix. I wanted to understand what are the expectations in terms of customer mix and margins for the second half, 2026 or 2026 as a whole. In other words, could we see a year-over-year expansion in margins per second half or for 2026 as a whole, or should we see this drop that we saw in the second quarter persisting throughout the year? Thank you very much.

Thank you, Lucas, for your question, Philip, here. When we look right to the results of the second quarter of commercial aviation, as we mentioned, we had an impact, right, of customer mix and driven by legacy contracts. When you look right for the full year of commercial aviation, it should be in line from what it was last year, So we're going to see some improvements going forward on EBIT and also customer mix on commercial aviation.

Super clear. Thank you very much.

Next question comes from Lucas Lucky with XP. Please go ahead.

Hi, everyone. Good morning. I have a follow-up question on profitability. But, I mean, we saw this very strong performance on executive, but also in services. I mean, almost 18% of recurring EBIT margin in the services division. My question is, I mean, how to think of the structurally levels for services going forward. I guess that this performance was slightly above what we saw as a reference during our conversations with market participants. So, I mean, it's interesting that gross margin declined and EBIT margin increased. So, I'm not sure about the fact of operating leverage that you still have to capture going forward. And you could also comment on the nature and the profile of the revenues this quarter, thinking of these different components that you have in services and how to think of this going forward. You should see some more upside or downside considering this 18% return on levels of the science in tech party going forward. Thank you very much.

Here, thank you for your question. As has been mentioned, we not just do efficiency on the business unit of aircraft, but also on service support. So when we look to the 17%, almost 18% of margin on service support on the second quarter, we really believe that should be the way that we could do for the next quarters, right? Especially mainly because of the scale that we have and also these new deals that we've been signing on pool agreements and everything with the customers on commercial aviation and also on the fence and executives is also helping us to see better margins going forward on service and support. And, of course, we do have Augma, right, as well, that is also improving, especially on the DTF engines. So, also, for the coming years, we're going to see better margins coming also from Augma.

And, Filipo, if you allow me to complement your explanation, we have been pushing for efficient gains in the entire organization to make sure that we have the right cost structure the right expenditure to support the business the right level of investment and continuous productivity gains so this is for us to enjoy the growth we are planning for the future improving more than proportional the profitability so that's why we we we are doing this very strongly in the entire organization then we should see the profitability growing more than the revenues in the coming years perfect thank you very much have a great day you too thank you the next question comes from Ron Epstein with Bank of America.

Please go ahead, sir.

Your investment in the, how are you thinking about that? Is that something that should be 100% part of Embraer, or is that something that should be cut loose? When you think about the engineering cost of that, should those engineers be deployed on something else, or you're halfway in, halfway out? Like, how are you thinking about that?

Hi, Ron Francisco here. Thank you very much for your question. I mean, we are very confident about the EBITDA contribution to the Embraer growth, especially you know beyond the 2029 2030 to you know to complement our growth strategy at the beginning of the next decade we are now we had more than 60 flights vertical flights we had also we completed completed recently our first partial transition to uh to horizontal flight So, we have, yes, hundreds of engineers supporting EVE, but we expect to certify an entry into service of the EVE tools by the end of 2028. But in parallel, we are working to improve current products and also supporting new sales of our KC390. So, new sales mean new configurations that require a lot of engineering support. And also, investing in new technologies, I mean, to support a new cycle of products. And, you know, as I have mentioned, we continue evaluating emerging technologies and product opportunities to support a long-term growth strategy. This can be, you know, commercial aviation, executive aviation, or even defense.

Got it, got it. And then, have you seen any impact, and forgive me if you already answered this, I might have missed it, any impact on sales campaigns from?

Well, I mean, in defense, yes. We, because of the geopolitical situation, we have seen countries accelerating sales campaigns. So, you saw the recent announcement after the UAE, we announced Columbia recently. I mean, you saw Greece also mentioning a potential deal through Portugal of KC-290, and we are working on other campaigns as well that cannot disclose at this point of time. So yes, the geopolitical situation is helping the defense business. I think not only for us, for the market, but yes, Embraer is benefiting because we have a great product that transports the military aircraft segments.

And how about on the commercial side? What's the impact, Ben?

Commercial? Actually, I mean, what we see is that the air transportation industry has been extremely resilient despite the higher costs of the tickets. So people are still flying, and this creates an increasing demand in the market for new planes. In Rome, as there is a huge backlog for bigger aircraft, now the customers, the airlines, they have to wait many years to receive a new aircraft, combining with a better understanding of the benefits of the small narrow body to their fleets. We see a lot of opportunities for our E2s with the new world in the future. So last year was great. This year also, we are doing very well. And we are still working on a lot of new campaigns for the E2s as well. I think all this environment has been beneficial for Embraer, for defense, for commercial jets, and we keep selling jets as well. So, yeah, we are in a good moment, I would say.

Got it. Thank you very much.

You are very welcome, Ron.

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

Good morning, guys. Thank you very much for the opportunity and congrats on the results. The first question, please, will be regarding, if you could provide us with an update on India, both on commercial and defense aviation. That would be great. Thank you very much. And the second question will be a follow-up on the previous question. When do you guys feel that EVE is going to be de-risked, I would say, operationally? Do you feel like it's going to be only after the total certification by the end of 2008? Or do you feel that when you have enough flights or you're comfortable enough with the envelope of tests, that could be a threshold of comfort, please? And just one confirmation, Francisco, you said about new ventures, you said about commercial, as we have discussed in the past, but you mentioned the France, if I'm not mistaken. Just to clarify that, please. Thank you very much.

That will be all. all right then thanks for your question let's try to to share this in parts okay maybe you start then you sure okay good morning thanks for the question so let me tackle the the question francisco can complement on india on eve um i think the project will be the risk when we kind of uh achieve the major milestones that we have in the project so that would include at least you you know, a full transition flight and reversal to lending. But, you know, as we progress in the campaign for the rest of the year and into early 27, you know, we do expect this material progress to play out. Francisco?

Yeah, Daniel, thanks for the question about India. In India, we have two fronts of opportunities, very good opportunities. The first one in defense with the MTA, Middle Transport Aircraft, that is an opportunity between 60 to 80 KC-390s. We believe we have the best product for that application, but it's a bit. So, we have signed an MOU with Mahinda, our partner, and we are just waiting for the customer, the india air force to issue the rfp for us to present our proposal with uh with a localization strategy in parallel we have been working in the civil aviation as well with an opportunity to introduce our agents e1s or and e2s to help india to improve the connectivity between smaller city and you know taking advantage of the making india initiative so in that uh in that sense we have signed an MOU with the Adani group and we are in close conversation with them to find

the best way to explore that opportunity but both a great opportunity for us for Embraer to to grow in expanding our production capabilities outside Brazil thank you Francisco thank you Guy and just just want to follow up on the question that I made on the previous answer that you gave you you mentioned about looking about new ventures you mentioned commercial and adaptive aviation as we have always been discussing but you also mentioned defense i would just like to clarify that if i understood that correctly you would be there will be something that you're going to be considering as well or it'll be only on commercial and executive aviation please

well in defense we have uh you know two main products right the case in the Super Tucano. We recently announced an upgrade in the Super Tucano with a new cockpit and new features to detect and eliminate drones and we expect that will help us to increase sales of Super Tucano as well.

Okay great thank you very much.

You are welcome Daniel.

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

Hi, Francisco, Felipe, Gui, and Thais. Thanks for the question. So, we see a couple of large airlines bringing engine MRO in-house. This year, there was news of Ryanair announcing they would do this, you know, bring it in-house. Do you think this may be a trend for e-jet operators as well? Or this will probably be contained into larger jets and very large fleets, right? 600 737 in the case of this particular airline. Thank you. Thank you so much.

Thank you. A very good question. That's my opinion. I think this makes sense only for large volumes, right? So, airlines that operate a sizable fleet, that this maybe makes sense because the investments are huge and also, you know, I mean, the main purpose of the airline should be flight, right? But anyway, maybe with big fleet, this makes sense. We don't see this as a trend for all the markets.

Great, Francisco, and if I may, a quick follow-up, if you could remind us the breakdown in the service revenue between Embraer airplanes and other OEMs, airplanes, we understand OGMA, for instance, they also do larger narrow bodies, I would imagine, of course, the bulk of it is Embraer, but what's the share currently between Embraer and non-Embraer in the service revenue? Thank you so much.

Hi, good morning. So, in terms of our service division, Augment should be running something close to $350 million to $400 million of revenues this year, and the bulk of that is going to be non-embray air fleets. And that is the agnostic part of the business, and the balance of that, which should be about $1.5, $1.6 billion, will be our embrair or fleet-related business.

Very interesting. Thank you, Francesca.

Thank you, ladies and gentlemen. Now we will start the Q&A session dedicated to the press. First, we'll answer questions in English and then we'll be answering questions in Portuguese. We will also answer questions sent via the platform chat. Please hold while we compile the questions. The first question comes from Ione Svekas with slide.com.gr. Please go ahead.

Good afternoon from Greece. can you hear me yeah yes we can go ahead great great I would like to congratulate you first of all for these exceptional results and my question has of course to do with the potential of a Greece requirement for C390 it is a program that was passed from the parliament and we're expecting the cost of 600 million euros so I would like if you can share with us some more updates regarding that. And a comment, of course, in the difference of the cost between Colombia's and Greece's program per unit. Thank you very much.

Thank you for your question. This opportunity is being discussed between Greece and Portugal. That's why there is an opportunity for short deliveries to Greece. We cannot disclosure we don't know the details about uh commercial conditions and we we can't disclosure i mean price because every aircraft is different every aircraft has a different specification and this means a different cost for each program great thank you thank you very much thank you very much you are welcome once again if you would like to ask a question please click raise hand at this Ladies and gentlemen, please hold while we compile the questions.

It comes from Edgardo Jimenez from the Ancien Line. Please go ahead. Mr. Jimenez, your mic is...

Can you hear me now? Yes? Yes, you can. Go ahead. Sorry. No, my question was, with resident ICHU orders from LATAM and ABRA Group, do you see the ICHU family as a potential good fit for low-cost carriers in the regions? such as Zetmar, Volaris, or Viva?

Have you actually actively pitched business devices to this kind of low-cost carriers in Latin America?

Yeah, well, thanks for the question. Absolutely. We see the E-2, I mean, as a perfect fit for this kind of application. We see now, you know, Azul doing very well in Brazil, now coming in Latin. The other group, we don't know yet, where they will fly the E-2s. But the idea is the same to improve connectivity between smaller cities and Mexico is another opportunity. So, Evianca, of course, in Colombia, under the Arbor Group, for Mexico, for sure. We have, I mean, I think over 60 E-1s flying in Mexico with different Aeromexico and other now Mexicana introducing the E2s with a success operation and yes we hope the other lines will look at the E2 as well as an opportunity to complement you know the large the operation for large and narrow body in a very efficient way thank you very much ladies and gentlemen once again if you would like to pose a

Question, please click raise hand at this time. Please hold while we compile the questions. This question was sent from the chat and is from Robert Wall with Aviation Week. On C-390 rates, given the recent orders and what you were seeing and potential opportunities, what is your thinking to go higher than 10 aircraft per year in 2030?

Well, I mean, an opportunity we have, we are working on is with India, and this will allow us to implement a second assembling line outside Brazil and go to production levels above 10 per year. And another opportunity we are working on is with the United States, that will also allow us, if things go well, and depending on the size of the order, to implement a third assembly line that will allow us to increase even further the production of K-639. But I believe Bosco, our VP of Defense, is with us. Bosco, do you want to add anything on that? I think it's not here, yes. Okay, that's it.

Thank you very much, sir. This concludes the question and answer session in English for the breath. This question and answer session is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English. Agora, vamos iniciar a session.

Now we will initiate the Q&A session in Portuguese. Next question is from Marcelo Rocha with CBN Valley. You may proceed, sir. Sir, Mr. Marcelo Rocha, with CBN Valley, you may proceed. Ladies and gentlemen, I believe Marcelo Rocha's microphone is on mute. So, I'll jump to the next question from Karim Salomon, with seu dinheiro. You may proceed, ma'am.

Bom dia. Good morning.

Bom dia.

Embrayer's backlog continues to hit record numbers. Is there any ceiling to how much Embrayer can invest? What are the investments to increase production going forward? Or whether the efficiency gains you mentioned are just enough to keep up with the speed of deliveries? Hi Karen, this is a very good question. it's a combination of both things warm we will continue to invest in efficiency and this is something that we've been mentioning frequently with traders for instance in 2021 it it used to take us 18 months to produce trader and today we can produce the same plane at eight and a half months and we are doing the same thing with all the other aircrafts and with we can produce more aircraft with the same structure but at the same time we're also investing to increase our production capacity therefore we believe that by 2030 our production capacity we reach 120 to 130 commercial jets a year plus 200 executive planes and 10 KC's in Brazil and the KC as I said in a previous question we still there have the opportunity to have new production lines and this is true I mean India is a possibility the u.s. is another possibility and the commercial jets it's our project with India moves forward with we might even have a second production line of commercial jets so there the outlook is very good but we are doing that in a very responsible way while at the same time we increase our backlog. Production capacity will not be a limiting factor to our future growth.

Thank you very much.

Next question comes from Christian Carrico at Valor Economico. You may proceed. and thank you for taking my question congrats for your results my question is I mean I would like to hear a bit more from you about the guidance update I thought productivity game was an interesting aspect especially in regards to executive just just just to make sure I understood This is basically due to the fine-tuning you did on the side of, you know, vendors and whether you have a very positive, I mean, your outlook is quite positive. My other question relates to guidance updates, mainly due to U.S. tariffs. If I'm not wrong, if I'm not mistaking, the tariffs were down, but you did not update your guidance. So my question is, do you see any room for new updates given this current scenario? And there is also the fact that you have a spare parts residual, and that's why they were subject to tariffs. Do you think this will persist going forward? I would just like to get a better understanding about that issue, and if you see further possibilities of making adjustments going forward. Christian, good morning. this is good any thank you for your question but guidance adjustment as you mentioned it involves a combination of factors one you know tax credits or tariffs credits that we of all of the tariffs that we received this quarter the other issue is that we are no longer being directly taxed I mean giving all the most recent decisions taken by the century and the third aspect refers to the improvement of our business outlook. I mean, the performance is better than what we anticipated in previous quarters. So about reviewing the business plan on a regular basis, when we publish our results every quarter, this is a moment where we can reiterate the previous guidance or we can update it as we did it for this quarter. Perfect. Thank you. Next question is from Marcelo Rocha with CBN Valley. You may proceed, sir. Mr. Rocha, you are good to go. Your microphone is on mute. Could you please check that? Because we cannot hear you. We cannot hear you. Okay, thank you. Next question is in writing from Nelson Dering with Defesa.net. The first question is, what is the productive share for the fans in your total P&L? Now it's at 14%. Well, thank you for your question, Nelson. historically defense has always has always been in the range between 14 and 15 percent in our total panel but now since revenue is growing there is a dollar denominated amount and so this growth as well we then estimate that at least by 2030 the defense sector should be around this range between 12 to 14 percent in terms of total revenue share but with growing profitability this is quite important thank you we also have a second question on the check from marcelo rocha question is addressed to francisco you mentioned that the forecast for if tall from east should start commercial operation by the end of 2028 how many units should be in the market for this period and what would be the first anticipated commercial flight in Brazil and abroad thank you for your question well yes our expectation in terms of Eve starting operation by the end of 2028 I mean today we have about 3,000 you know letter of intent for purchases some are firm orders for ebitol I mean entry into operation should probably occur in Brazil and in the US just you know as an entry level probably simultaneously in Brazil for engineering possibilities and in the US for the opportunities we see in several municipalities. In terms of production, we will start our production in Taubaté as previously announced. In Taubaté the top capacity will be close to 480 units per year and the reassembling of these aircrafts close to where they should be operating in the future because the range of the aircraft is small and with that we will just you know get a feeling of the market and after that we will decide about other evie tall plants we don't have any anything defined at the moment but we just want to support the evie tall entering to operation starting Thank you.

Next question in writing from Nelson During with the FISA NET.

What versions are being projected for KC-390, KC-390 MPA or Maritime Petrol Aircraft? Is that moving forward? nelson i don't have detailed information on these versions but the versions we sell today is c three-nighted a kc three-nighted the difference between the two is the fueling the refueling is, you know, on air, and every business has its different specs. We don't have yet a version for MPA, I mean, as far as I know, until up to now. So, we are focusing on C3 United and KC3 United with the different specs depending on customer request. Thank you. Okay, so thank you and with that we conclude the Q&A session and also this Ernie's release presentation from Embraer. Thank you very much for joining us and have a very good day.