Embraer S.A 6-K, filed Feb 5, 2025
Embraer S.A. (EMBJ)
About this 6-K
Embraer S.A filed this 6-K on February 5, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of February 2025
Commission File Number: 001-15102
Embraer S.A.
Avenida Dra. Ruth Cardoso, 8501,
30th floor (part), Pinheiros, São Paulo, SP, 05425-070, Brazil
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Exhibit Index
Exhibit 99.3 – Certain Changes to 2023 Form 20-F
This report on Form 6-K shall be deemed to be filed and incorporated by reference in the registration statement on Form F-3 filed with the Securities and Exchange Commission on February 5, 2025 and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 5, 2025
| Embraer S.A. | ||
| By: |
/s/ Antonio Carlos Garcia | |
| Name: Antonio Carlos Garcia | ||
| Title: Executive Vice President of | ||
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of Embraer S.A.’s (which we refer to as “Embraer” or “we”) results of operations for the nine-month periods ended September 30, 2024 and 2023 should be read in conjunction with our annual report on Form 20-F for the fiscal year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”) on April 5, 2024 (which we refer to as the “2023 Annual Report”) and, in particular, “Item 3. Key Information—A. Selected Financial Data and Other Data,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk,” and with our unaudited condensed consolidated interim financial statements as of September 30, 2024 and for the nine-month periods ended September 30, 2024 and 2023 and related notes thereto, included as Exhibit 99.2 to this Form 6-K (which we refer to as the “unaudited condensed consolidated interim financial statements”).
The following discussion contains forward-looking statements that involve risks and uncertainties. Embraer’s actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth herein under “Forward-Looking Statements” and “Item 3. Key Information—Risk Factors” in our 2023 Annual Report. The results of operations for the nine-month period ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2024.
Results of Operations
Nine-month Period Ended September 30, 2024 compared with Nine-month Period Ended September 30, 2023
The following table sets forth statement of income information by segment for the periods indicated:
| Nine-month period ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| (in US$ millions) | ||||||||
| Revenue |
||||||||
| Commercial Aviation |
1,227.5 | 1,095.6 | ||||||
| Executive Aviation |
1,136.7 | 805.0 | ||||||
| Defense & Security |
487.6 | 313.1 | ||||||
| Services & Support |
1,195.4 | 1,031.8 | ||||||
| Other segments |
36.0 | 47.9 | ||||||
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| Total |
4,083.2 | 3,293.4 | ||||||
| Cost of sales and services |
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| Commercial Aviation |
(1,150.6 | ) | (1,006.9 | ) | ||||
| Executive Aviation |
(886.7 | ) | (656.5 | ) | ||||
| Defense & Security |
(423.5 | ) | (255.5 | ) | ||||
| Services & Support |
(867.4 | ) | (769.5 | ) | ||||
| Other segments |
(31.5 | ) | (34.9 | ) | ||||
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| Total |
(3,359.7 | ) | (2,723.3 | ) | ||||
| Gross profit |
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| Commercial Aviation |
76.9 | 88.7 | ||||||
| Executive Aviation |
250.0 | 148.5 | ||||||
| Defense & Security |
64.1 | 57.6 | ||||||
| Services & Support |
328.0 | 262.3 | ||||||
| Other segments |
4.5 | 13.0 | ||||||
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| Total |
723.5 | 570.1 | ||||||
| Operating income (expense) |
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| Commercial Aviation |
(105.7 | ) | (99.6 | ) | ||||
| Executive Aviation |
(108.4 | ) | (116.5 | ) | ||||
| Defense & Security |
(60.3 | ) | (35.0 | ) | ||||
| Services & Support |
(134.7 | ) | (111.4 | ) | ||||
| Other segments |
(53.8 | ) | (76.1 | ) | ||||
| Unallocated(1) |
148.6 | (26.0 | ) | |||||
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| Total |
(314.3 | ) | (464.6 | ) | ||||
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| Operating income before financial result |
409.2 | 105.5 | ||||||
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| (1) | Unallocated items from operating income (expense) refer to certain corporate demands not directly related to the operating segments. In 2024, the amount substantially refers to the reimbursement of expenses received in the context of the arbitration with Boeing. |
The following table sets forth statement of profit or loss information, and this information as a percentage of revenue, for the periods indicated:
| Nine-month period ended September 30, | ||||||||||||||||
| Consolidated Statements of Profit or Loss Data | 2024 | 2023 | ||||||||||||||
| (in US$ millions, except percentages presented in absolute values) | ||||||||||||||||
| Revenue |
4,083.2 | 100.0 | % | 3,293.4 | 100.0% | |||||||||||
| Cost of sales and services |
(3,359.7 | ) | (82.3 | )% | (2,723.3 | ) | (82.7)% | |||||||||
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| Gross profit |
723.5 | 17.7 | % | 570.1 | 17.3% | |||||||||||
| Operating income (expense) |
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| Administrative |
(145.1 | ) | (3.6 | )% | (152.8 | ) | (4.6)% | |||||||||
| Selling |
(230.8 | ) | (5.7 | )% | (223.7 | ) | (6.8)% | |||||||||
| Expected credit (losses) reversal |
(2.9 | ) | (0.1 | )% | 8.5 | 0.3% | ||||||||||
| Research |
(37.0 | ) | (0.9 | )% | (72.6 | ) | (2.2)% | |||||||||
| Other income (expenses), net |
105.1 | 2.6 | % | (32.6 | ) | (1.0)% | ||||||||||
| Equity in associates |
(3.6 | ) | (0.1 | )% | 8.6 | 0.3% | ||||||||||
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| Operating income before financial result |
409.2 | 10.0 | % | 105.5 | 3.2% | |||||||||||
| Financial income |
283.6 | 6.9 | % | 99.9 | 3.0% | |||||||||||
| Financial expenses |
(284.8 | ) | (7.0 | )% | (250.3 | ) | (7.6)% | |||||||||
| Foreign exchange gain (loss), net |
(19.6 | ) | (0.5 | )% | (1.9 | ) | (0.1)% | |||||||||
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| Income (loss) before income tax |
388.4 | 9.5 | % | (46.8 | ) | (1.4)% | ||||||||||
| Income tax |
(71.8 | ) | (1.8 | )% | 12.3 | 0.4% | ||||||||||
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| Income (loss) for the period |
316.6 | 7.8 | % | (34.5 | ) | (1.0)% | ||||||||||
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Revenue
Revenue increased 24.0%, to US$4,083.2 million in the nine months ended September 30, 2024 from US$3,293.4 million in the nine months ended September 30, 2023.
Our Commercial Aviation segment revenue increased 12.0%, to US$1,227.5 million in the nine months ended September 30, 2024 from US$1,095.6 million in the nine months ended September 30, 2023, mainly due to an increase in commercial deliveries, to 42 in the nine months ended September 30, 2024 from 39 in the nine months ended September 30, 2023 and product mix, as deliveries of our E-Jets E2 family increased to 27 aircraft in the nine months ended September 30, 2024, from 21 aircraft delivered in the same period of 2023, while the delivery of E175 aircraft decreased to 15 from 18, respectively. Our E-Jets E2 family command higher average selling prices compared to the E175 aircraft, mainly due to greater capacity and size.
Our Executive Aviation segment revenue increased 41.2%, to US$1,136.7 million in the nine months ended September 30, 2024 from US$805.0 million in the nine months ended September 30, 2023, due to an increase in aircraft deliveries to 86 in the nine months ended September 30, 2024 from 66 in the nine months ended September 30, 2023 as well as an increase in product mix as deliveries of medium jets (Praetors) increased 50.0% compared to the same period in 2023, while light jets (Phenoms) deliveries increased 20.5% in the nine months ended September 30, 2024 compared to the same period in 2023. Praetors command higher average selling prices compared to Phenoms, mainly due to greater capacity and size.
Our Defense & Security segment revenue increased 55.7%, to US$487.6 million in the nine months ended September 30, 2024 from US$313.1 million in the nine months ended September 30, 2023, mainly due to an increase in revenue recognition of our C-390 Millenium aircraft, in accordance with the percentage of completion method (the “PoC method”), and an increase in sales of our A-29 Super Tucano.
Our Services & Support segment revenue increased 15.9%, to US$1,195.4 million in the nine months ended September 30, 2024 from US$1,031.8 million in the nine months ended September 30, 2023, mainly due to an increase in customer demand for training, maintenance, repair and component overhaul.
Cost of Sales and Services
Cost of sales and services increased 23.4%, to US$3,359.7 million in the nine months ended September 30, 2024 from US$2,723.3 million in the nine months ended September 30, 2023. This increase in cost of sales and services was lower than the 24.0% increase in revenue in the nine months ended September 30, 2024, as compared to the same period in 2023, which resulted in a decrease in cost of sales and services as a percentage of revenue to 82.3% in the nine months ended September 30, 2024, as compared to 82.7% in the same period in 2023, mainly due to higher delivered volumes in our Commercial Aviation and Executive Aviation segment to 128 in the nine months ended September 30, 2024 from 105 in the nine months ended September 30, 2023.
Cost of sales and services in our Commercial Aviation segment increased 14.3%, to US$1,150.6 million in the nine months ended September 30, 2024 from US$1,006.9 million in the nine months ended September 30, 2023. This increase in costs and services was higher than the increase of revenue for this segment during the period mainly due to higher freight costs and product mix of E-Jets E2 family and E175 aircraft.
Cost of sales and services in our Executive Aviation segment increased 35.1%, to US$886.7 million in the nine months ended September 30, 2024 from US$656.5 million in the nine months ended September 30, 2023, mainly due to higher number of aircraft delivered to 86 in the nine months ended September 30, 2024 from 66 in the nine months ended September 30, 2023. This increase in costs and services was lower than the increase in revenue for the segment mainly due to gains of our internal production efficiency programs.
Cost of sales and services in our Defense & Security segment increased 65.8%, to US$423.5 million in the nine months ended September 30, 2024 from US$255.5 million in the nine months ended September 30, 2023. This increase in cost of sales and services was higher than the 55.7% increase in revenue in this segment, mainly due to customer mix and baseline adjustments related to contract advances of our C-390 Millennium, in accordance with the PoC method.
Cost of sales and services in our Services & Support segment increased 12.7%, to US$867.4 million in the nine months ended September 30, 2024 from US$769.5 million in the nine months ended September 30, 2023, mainly due to higher volumes and the mix of spare parts sold.
Gross Profit
As a result of the aforementioned factors, our gross profit increased 26.9%, to US$723.5 million in the nine months ended September 30, 2024 from US$570.1 million in the nine months ended September 30, 2023.
Operating Income Before Financial Result
Operating income before financial result increased 287.9%, to US$409.2 million in the nine months ended September 30, 2024 from US$105.5 million in the nine months ended September 30, 2023, as a percentage of revenue increased to 10.0% in the nine months ended September 30, 2024 from 3.2% in the nine months ended September 30, 2023, as further explained below:
Administrative. Administrative expenses decreased 5.0%, to US$145.1 million in the nine months ended September 30, 2024 from US$152.8 million in the nine months ended September 30, 2023, due to decreased expenses in third party services, such as legal and consultancy services, and personnel expenses.
Selling. Selling expenses increased 3.2%, to US$230.8 million in the nine months ended September 30, 2024 from US$223.7 million in the nine months ended September 30, 2023, due to increase in workforce to meet fleet growth and enhance our sales initiatives, such as marketing events, demonstration flight and sales campaign in Defense & Security segment.
Research. Research expenses decreased 49.0%, to US$37.0 million in the nine months ended September 30, 2024 from US$72.6 million in the nine months ended September 30, 2023, mainly due to EVE development costs began to be capitalized as intangible assets as the program reached sufficient maturity.
Other Income (Expenses), Net. Other income (expenses), net improved 422.4%, to an income of US$105.1 million in the nine months ended September 30, 2024 from an expense of US$32.6 million in the nine months ended September 30, 2023, mainly due to the credit recognition of the gross amount of US$150.0 million by Boeing on October 3, 2024 in connection with the arbitration agreement.
Financial Income (Expenses), Net
Financial income (expenses) decreased 99.2%, to an expense of US$1.2 million in the nine months ended September 30, 2024 from an expense of US$150.4 million in the nine months ended September 30, 2023, mainly due an income from derivative financial instruments, interest on receivables and fair value adjustments on warrants, partially offset by an expense related to long-term incentives associated with phantom shares.
Foreign Exchange Loss
Foreign exchange loss increased 931.6%, to US$19.6 million in the nine months ended September 30, 2024 from US$1.9 million in the nine months ended September 30, 2023, mainly due to appreciation of the Euro against the U.S. dollar in the nine months ended September 30, 2024, related to the assets and liabilities of subsidiaries which are recorded in Euro.
Income (Loss) Before Income Tax
As a result of the aforementioned factors, our income (loss) before income tax changed by 929.9%, to an income of US$388.4 million in the nine months ended September 30, 2024 from a loss of US$46.8 million in the nine months ended September 30, 2023.
Income Tax
Income tax changed by 683.7%, to an expense of US$71.8 million in the nine months ended September 30, 2024 from a benefit of US$12.3 million in the nine months ended September 30, 2023, mainly due to the impact of the exchange rate fluctuations over non-monetary assets (primarily inventories, intangibles, and property, plant and equipment), as well as a higher operating result which reduced deferred income tax assets in 2024.
Income (Loss) for the Period
As a result of the aforementioned factors, our income (loss) for the period changed by 1,017.7%, to an income of US$316.6 million in the nine months ended September 30, 2024 from a loss of US$34.5 million in the nine months ended September 30, 2023. As a percentage of revenue, our income (loss) for the period increased to 7.8% in the nine months ended September 30, 2024 from (1.0)% in the nine months ended September 30, 2023.
Liquidity and Capital Resources
Cash Flow Analysis
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Net Cash Used in Operating Activities
In the nine months ended September 30, 2024, net cash used in operating activities was US$176.0 million, compared to net cash used in operating activities of US$186.2 million in the nine months ended September 30, 2023. This decrease in net cash used in operating activities was mainly due to an increase in income for the nine months ended September 30, 2024, plus a positive impact of trade accounts payable and trade accounts payable (supplier financing) of US$245.8 million and other payables of US$94.6 million, which were adversely affected by uses of cash for financial investments of US$107.3 million and derivative financial instruments of US$218.6 million.
Net Cash Used in Investing Activities
In the nine months ended September 30, 2024, net cash used in investing activities was US$461.2 million compared to net cash used in investing activities of US$272.0 million in the nine months ended September 30, 2023, mainly due to an increase of US$65.4 million in additions to intangible assets and an increase in cash used in financial investments of US$145.4 million mainly in long-term financial investments, such as credit linked notes.
Net Cash Used in Financing Activities
In the nine months ended September 30, 2024, net cash used in financing activities was US$157.6 million compared to net cash used in financing activities in the nine months ended September 30, 2023 of US$329.3 million. This decrease in net cash used in financing activities was primarily due to the Company’s strategy to reduce gross debt through an increase in the prepayment of borrowings, which outpaced the new borrowing sources during the same period in 2023.
Capital Expenditures
Our capital expenditures during the period were related to property, plant, and equipment, with the exception of assets related to the exchange pool program and aircraft under lease or available for lease. These investments were mainly focused on the construction of new facilities, as well as improvements and modifications to our plants and production facilities for the production of new aircraft models.
For the nine-month period ended September 30, 2024, the total capital expenditures in our Commercial Aviation, Executive Aviation and Services & Support segments accounted for US$133.9 million, net of US$4.6 million related to contracted capital expenditures from Defense & Security.
For more information on our capital expenditures, see “Item 5. Operating and Financial Review and Prospects— B. Liquidity and Capital Resources—Capital Expenditure” in our 2023 Annual Report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of September 30, 2024.
Subsequent Events
Facilities with Multilateral Development Banks and Agencies
In October 2024, Eve Soluções de Mobilidade Aérea Urbana Ltda., or Eve Soluções, entered into a credit facility with the Brazilian National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Economico e Social), or BNDES, in the amount of R$500 million (US$91.8 million), maturing in October 2040.
In October 2024, Eve Holding, Inc., or Eve Holding, entered into a credit facility with Citibank in the aggregate principal amount of US$50 million maturing in 2028. This facility has a restrictive covenant requiring Eve Holding to comply with a minimum debt service coverage ratio. As of the date of this Form 6-K, Eve Holding has not made any disbursement under this credit facility.
Early Repayment of Debts
In November 2024, in accordance with our cash management strategy, we prepaid an export financing in the principal amount of US$28.4 million and bearing interest at a rate of 5.43% per annum, and, in December 2024, we prepaid two export financing with principal amount of US$202.3 million combined, bearing interest at a rate of 4.99% per annum and 5.44% per annum. We did not incur breakage costs due to these optional prepayments.
Equity Swap
In December 2024, we entered into derivative instruments with Banco Itaú BBA S.A. to reduce volatility in the price of our shares. These instruments contain cash settlement provisions and have a maximum maturity of 12 months from each signing date. Under these instruments, we receive the price variation on 16,156,597 of our shares, along with any distributed dividends, and we pay consideration equal to the interbank deposit certificate (Certificados de Depósito Interbancário – CDI) rate plus 0.7% per annum.
Aircraft Deliveries in 2024
We delivered 75 aircraft in the three months ended December 31, 2024, of which 31 were in the Commercial Aviation segment and 44 in the Execution Aviation segment, compared to 75 aircraft in the three months ended December 31, 2023, of which 25 were in the Commercial Aviation segment, 49 in the Execution Aviation segment and one in the Defense & Security segment. Deliveries of aircraft in our Comercial Aviation segment totaled 73 in the twelve months ended December 31, 2024, compared to 64 in the twelve months ended December 31, 2023. Deliveries of aircraft in our Executive Aviation segment totaled 130 in the twelve months ended December 31, 2024, compared to 115 in the twelve months ended December 31, 2023.
Exhibit 99.2
Embraer S.A.
Unaudited condensed consolidated interim financial statements
as of and for the nine-month period ended September 30, 2024
INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
| Page | ||||
| Unaudited condensed consolidated statement of financial position |
3 | |||
| Unaudited condensed consolidated statement of profit or loss |
5 | |||
| Unaudited condensed consolidated statement of comprehensive income |
6 | |||
| Unaudited condensed consolidated statement of changes in equity |
7 | |||
| Unaudited condensed consolidated statement of cash flows |
8 | |||
| Notes to the unaudited condensed consolidated interim financial statements |
9 | |||
| Embraer S.A. |
| |
| Unaudited condensed consolidated statement of financial position | ||
| (In millions of U.S. dollars) | ||
| ASSETS |
Note | 09.30.2024 | 12.31.2023 | |||||||||
| CURRENT |
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| Cash and cash equivalents |
3 | 831.5 | 1,629.2 | |||||||||
| Financial investments |
4 | 643.5 | 521.7 | |||||||||
| Trade accounts receivable |
5 | 253.9 | 217.6 | |||||||||
| Derivative financial instruments |
6 | 105.6 | 17.5 | |||||||||
| Customer and commercial financing |
7 | 13.8 | 8.4 | |||||||||
| Contract assets |
24.2 | 743.8 | 509.1 | |||||||||
| Inventories |
8 | 3,340.4 | 2,636.0 | |||||||||
| Income tax and social contribution |
138.3 | 203.0 | ||||||||||
| Other assets |
9 | 410.2 | 312.9 | |||||||||
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| 6,481.0 | 6,055.4 | |||||||||||
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| NON-CURRENT |
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| Financial investments |
4 | 296.4 | 170.0 | |||||||||
| Trade accounts receivable |
5 | 1.5 | 3.4 | |||||||||
| Derivative financial instruments |
6 | 0.6 | - | |||||||||
| Customer and commercial fi nancing |
7 | 28.2 | 54.4 | |||||||||
| Contract assets |
24.2 | 2.2 | 2.4 | |||||||||
| Deferred income tax and social contribution |
20.1 | 132.5 | 137.7 | |||||||||
| Other assets |
9 | 205.9 | 141.3 | |||||||||
| Investments |
46.1 | 28.2 | ||||||||||
| Property, plant and equipment |
12 | 1,905.1 | 1,770.7 | |||||||||
| Intangible assets |
13 | 2,466.9 | 2,331.0 | |||||||||
| Right of use |
104.9 | 88.0 | ||||||||||
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| 5,190.3 | 4,727.1 | |||||||||||
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| TOTAL ASSETS |
11,671.3 | 10,782.5 | ||||||||||
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The notes are an integral part of these condensed consolidated interim financial statements.
3
| Embraer S.A. |
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| Unaudited condensed consolidated statement of financial position | ||
| (In millions of U.S. dollars) | ||
| LIABILITIES |
Note | 09.30.2024 | 12.31.2023 | |||||||
| CURRENT |
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| Trade accounts payable |
14 | 1,159.6 | 787.0 | |||||||
| Trade accounts payable - Supplier finance |
15 | 48.4 | 37.6 | |||||||
| Lease liability |
17.1 | 18.3 | 13.8 | |||||||
| Loans and financing |
16 | 101.5 | 127.1 | |||||||
| Other payables |
18 | 411.9 | 332.3 | |||||||
| Contract liabilities |
24.2 | 2,126.1 | 1,919.0 | |||||||
| Derivative financial instruments |
6 | 29.3 | 85.7 | |||||||
| Taxes and payroll charges payable |
19 | 37.0 | 42.6 | |||||||
| Income tax and social contribution |
115.7 | 195.6 | ||||||||
| Unearned income |
10.1 | 10.2 | ||||||||
| Provision |
21.1 | 99.6 | 114.7 | |||||||
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| 4,157.5 | 3,665.6 | |||||||||
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| NON-CURRENT |
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| Lease liability |
17.1 | 94.7 | 82.2 | |||||||
| Loans and financing |
16 | 2,544.5 | 2,759.3 | |||||||
| Other payables |
18 | 139.5 | 55.4 | |||||||
| Contract liabilities |
24.2 | 725.5 | 621.9 | |||||||
| Derivative financial instruments |
6 | 18.4 | 39.5 | |||||||
| Taxes and payroll charges payable |
19 | 13.1 | 18.3 | |||||||
| Income tax and social contribution |
20.4 | 3.6 | 5.1 | |||||||
| Deferred income tax and social contribution |
20.1 | 330.7 | 304.7 | |||||||
| Unearned income |
14.0 | 17.7 | ||||||||
| Provision |
21.1 | 214.2 | 173.5 | |||||||
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| 4,098.2 | 4,077.6 | |||||||||
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| TOTAL LIABILITIES |
8,255.7 | 7,743.2 | ||||||||
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| SHAREHOLDERS’ EQUITY |
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| Capital |
1,551.6 | 1,551.6 | ||||||||
| Treasury shares |
(28.2 | ) | (28.2 | ) | ||||||
| Revenue reserves |
1,280.1 | 1,280.1 | ||||||||
| Share-based remuneration |
49.5 | 44.8 | ||||||||
| Other comprehensive loss |
(161.3 | ) | (152.7 | ) | ||||||
| Result in transactions with non controlling interest |
135.2 | 90.9 | ||||||||
| Retained earnings |
306.9 | - | ||||||||
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| 3,133.8 | 2,786.5 | |||||||||
| Non-controlling interests |
281.8 | 252.8 | ||||||||
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| |||||
| TOTAL SHAREHOLDERS’ EQUITY |
3,415.6 | 3,039.3 | ||||||||
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|
|
|
|
| |||||
|
|
|
|
|
|
| |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
11,671.3 | 10,782.5 | ||||||||
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|
|
| |||||
The notes are an integral part of these condensed consolidated interim financial statements.
4
| Embraer S.A. |
| |
| Unaudited condensed consolidated statement of profit or loss For the three-months and nine-months periods ended September 30 2024 and 2023 |
||
| (In millions of U.S. dollars, except per share data) | ||
| Three months ended | Nine months ended | |||||||||||||||||||
| Note | 09.30.2024 | 09.30.2023 | 09.30.2024 | 09.30.2023 | ||||||||||||||||
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|
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| ||||||||||
| REVENUE |
1,692.4 | 1,284.4 | 4,083.2 | 3,293.4 | ||||||||||||||||
| Cost of sales and services |
25 | (1,377.6 | ) | (1,051.3 | ) | (3,359.7 | ) | (2,723.3 | ) | |||||||||||
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|
| |||||||||
| GROSS PROFIT |
314.8 | 233.1 | 723.5 | 570.1 | ||||||||||||||||
| OPERATING INCOME (EXPENSE) |
||||||||||||||||||||
| Administrative |
25 | (48.0 | ) | (51.4 | ) | (145.1 | ) | (152.8 | ) | |||||||||||
| Selling |
25 | (77.9 | ) | (72.6 | ) | (230.8 | ) | (223.7 | ) | |||||||||||
| Expected credit (losses) reversal |
0.5 | (4.7 | ) | (2.9 | ) | 8.5 | ||||||||||||||
| Research |
(9.6 | ) | (17.0 | ) | (37.0 | ) | (72.6 | ) | ||||||||||||
| Other income (expenses), net |
26 | 108.0 | (9.3 | ) | 105.1 | (32.6 | ) | |||||||||||||
| Equity in associates |
(2.6 | ) | 6.3 | (3.6 | ) | 8.6 | ||||||||||||||
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| |||||||||
| OPERATING INCOME BEFORE FINANCIAL RESULTS |
285.2 | 84.4 | 409.2 | 105.5 | ||||||||||||||||
| Financial income |
27 | 99.0 | 37.5 | 283.6 | 99.9 | |||||||||||||||
| Financial expenses |
27 | (123.8 | ) | (58.1 | ) | (284.8 | ) | (250.3 | ) | |||||||||||
| Foreign exchange gain (loss), net |
28 | (16.4 | ) | (6.6 | ) | (19.6 | ) | (1.9 | ) | |||||||||||
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| |||||||||
| INCOME (LOSS) BEFORE INCOME TAX |
244.0 | 57.2 | 388.4 | (46.8 | ) | |||||||||||||||
| Income tax |
19.3 | (62.3 | ) | 7.1 | (71.8 | ) | 12.3 | |||||||||||||
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| |||||||||
| INCOME (LOSS) FOR THE PERIOD |
181.7 | 64.3 | 316.6 | (34.5 | ) | |||||||||||||||
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| |||||||||
| Attributable to: |
||||||||||||||||||||
| Owners of Embraer |
178.8 | 61.0 | 306.9 | (28.6 | ) | |||||||||||||||
| Non-controlling interests |
2.9 | 3.3 | 9.7 | (5.9 | ) | |||||||||||||||
| Earnings (loss) per share – basic and diluted in US$ |
0.24 | 0.08 | 0.42 | (0.04 | ) | |||||||||||||||
The notes are an integral part of these condensed consolidated interim financial statements.
5
| Embraer S.A. |
| |
| Unaudited condensed consolidated statement of comprehensive income For the three-months and nine-months periods ended September 30 2024 and 2023 |
||
(In millions of U.S. dollars)
| Three months ended | Nine months ended | |||||||||||||||
| 09.30.2024 | 09.30.2023 | 09.30.2024 | 09.30.2023 | |||||||||||||
| INCOME (LOSS) FOR THE PERIOD |
181.7 | 64.4 | 316.6 | (34.5 | ) | |||||||||||
| ITEMS THAT ARE OR MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS |
||||||||||||||||
| Financial instruments - Cash flow hedge, net of tax |
7.0 | (7.9 | ) | (4.4 | ) | 1.3 | ||||||||||
| Financial instruments - FVOCI |
0.6 | - | 0.6 | - | ||||||||||||
| Translation adjustments |
42.2 | (23.9 | ) | (9.5 | ) | (3.7 | ) | |||||||||
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| |||||
| OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX EFFECTS |
49.8 | (31.8 | ) | (13.3 | ) | (2.4 | ) | |||||||||
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| |||||
| TOTAL COMPREHENSIVE INCOME (LOSS) |
231.5 | 32.6 | 303.3 | (36.9 | ) | |||||||||||
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| |||||
| Attributable to: |
||||||||||||||||
| Owners of Embraer |
226.1 | 30.3 | 298.3 | (28.1 | ) | |||||||||||
| Non-controlling interests |
5.4 | 2.3 | 5.0 | (8.8 | ) | |||||||||||
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| |||||
| 231.5 | 32.6 | 303.3 | (36.9 | ) | ||||||||||||
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| |||||
The notes are an integral part of these condensed consolidated interim financial statements.
6
| Embraer S.A. |
| |
| Unaudited condensed consolidated statement of changes in equity For the nine-months ended September 30 2024 and 2023 |
||
| (In millions of U.S. dollars) | ||
| Revenue reserves | Other comprehensive (loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital | Treasury shares |
Share-based remuneration |
Government grants |
Legal reserve | For investment and working capital |
Result in transactions with non- controlling interest |
Accumulated (losses) profit |
Post- employment benefit |
Cumulative translation adjustment |
Financial instruments |
Total | Non-controlling interest |
Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
1,551.6 | (28.2 | ) | 40.3 | 49.0 | 204.4 | 862.7 | 77.4 | - | (41.5 | ) | (151.0 | ) | 2.8 | 2,567.5 | 256.8 | 2,824.3 | |||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||
| Loss for the period |
- | - | - | - | - | - | - | (28.6 | ) | - | - | - | (28.6 | ) | (5.9 | ) | (34.5 | ) | ||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | - | - | - | - | - | - | - | (0.8 | ) | - | (0.8 | ) | (2.9 | ) | (3.7 | ) | ||||||||||||||||||||||||||||||||||||||
| Financial instruments - Cash flow hedge |
- | - | - | - | - | - | - | - | - | - | 1.3 | 1.3 | - | 1.3 | ||||||||||||||||||||||||||||||||||||||||||
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| Total of comprehensive loss |
- | - | - | - | - | - | - | (28.6 | ) | - | (0.8 | ) | 1.3 | (28.1 | ) | (8.8 | ) | (36.9 | ) | |||||||||||||||||||||||||||||||||||||
| Share-based remuneration |
- | - | 3.8 | - | - | - | - | - | - | - | - | 3.8 | - | 3.8 | ||||||||||||||||||||||||||||||||||||||||||
| Result in transactions with non controlling interest |
- | - | - | - | - | - | 4.4 | - | - | - | - | 4.4 | - | 4.4 | ||||||||||||||||||||||||||||||||||||||||||
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| At September 30, 2023 |
1,551.6 | (28.2 | ) | 44.1 | 49.0 | 204.4 | 862.7 | 81.8 | (28.6 | ) | (41.5 | ) | (151.8 | ) | 4.1 | 2,547.6 | 248.0 | 2,795.6 | ||||||||||||||||||||||||||||||||||||||
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| At December 31, 2023 |
1,551.6 | (28.2 | ) | 44.8 | 49.0 | 204.4 | 1,026.7 | 90.9 | - | (46.0 | ) | (116.8 | ) | 10.1 | 2,786.5 | 252.8 | 3,039.3 | |||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||
| Income for the period |
- | - | - | - | - | - | - | 306.9 | - | - | - | 306.9 | 9.7 | 316.6 | ||||||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | - | - | - | - | - | - | - | (4.8 | ) | - | (4.8 | ) | (4.7 | ) | (9.5 | ) | ||||||||||||||||||||||||||||||||||||||
| Financial instruments - Cash flow hedge |
- | - | - | - | - | - | - | - | - | - | (3.8 | ) | (3.8 | ) | - | (3.8 | ) | |||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||
| Total of comprehensive loss |
- | - | - | - | - | - | - | 306.9 | - | (4.8 | ) | (3.8 | ) | 298.3 | 5.0 | 303.3 | ||||||||||||||||||||||||||||||||||||||||
| Share-based remuneration |
- | - | 4.7 | - | - | - | - | - | - | - | - | 4.7 | 0.7 | 5.4 | ||||||||||||||||||||||||||||||||||||||||||
| Capital contribution |
- | - | - | - | - | - | - | - | - | - | - | - | 65.6 | 65.6 | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants |
- | - | - | - | - | - | - | - | - | - | - | - | 5.1 | 5.1 | ||||||||||||||||||||||||||||||||||||||||||
| Result in transactions with non controlling interest |
- | - | - | - | - | - | 44.3 | - | - | - | - | 44.3 | (47.4 | ) | (3.1 | ) | ||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||
| At September 30, 2024 |
1,551.6 | (28.2 | ) | 49.5 | 49.0 | 204.4 | 1,026.7 | 135.2 | 306.9 | (46.0 | ) | (121.6 | ) | 6.3 | 3,133.8 | 281.8 | 3,415.6 | |||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||
The notes are an integral part of these condensed consolidated interim financial statements.
7
| Embraer S.A. |
| |
| Unaudited Condensed consolidated statement of cash flows For the nine-months ended September 30 2024 and 2023 |
||
| (In millions of U.S. dollars) | ||
| Note | 09.30.2024 | 09.30.2023 | ||||||||
| OPERATING ACTIVITIES |
||||||||||
| Income (loss) for the period |
316.6 | (34.5 | ) | |||||||
| ADJUSTMENTS FOR: |
||||||||||
| Depreciation and amortization expenses |
169.6 | 157.5 | ||||||||
| Realization of contribution from suppliers |
13 | (18.6 | ) | (17.4 | ) | |||||
| (Reversal) loss for inventory obsolescence |
5.2 | (3.9 | ) | |||||||
| Adjustment to fair value - Financial investments |
19.9 | (3.2 | ) | |||||||
| Expected credit loss (reversal) |
2.9 | (8.5 | ) | |||||||
| (Gain) loss on disposal of fixed assets (1) |
11.3 | (1.7 | ) | |||||||
| Income tax and social contribution |
20.3 | 71.8 | (12.3 | ) | ||||||
| Accrued interest |
133.9 | 141.5 | ||||||||
| Interest on marketable securities |
(13.0 | ) | (4.4 | ) | ||||||
| Equity in associates gains and losses |
10.1 | 3.6 | (8.6 | ) | ||||||
| Foreign exchange gain (loss), net |
28 | 18.6 | (8.3 | ) | ||||||
| Other provisions |
51.3 | (20.6 | ) | |||||||
| Others |
5.4 | 8.5 | ||||||||
| CHANGES IN: |
||||||||||
| Financial investments |
(116.2 | ) | (8.9 | ) | ||||||
| Derivative financial instruments |
(169.8 | ) | 48.8 | |||||||
| Trade accounts receivable |
(70.7 | ) | (46.4 | ) | ||||||
| Contract assets |
(235.1 | ) | (67.5 | ) | ||||||
| Customer financing |
21.2 | 30.8 | ||||||||
| Inventories |
(762.8 | ) | (707.2 | ) | ||||||
| Other assets |
(190.8 | ) | (76.7 | ) | ||||||
| Trade accounts payable and Trade accounts payable - Supplier finance |
392.2 | 146.4 | ||||||||
| Other payables |
158.8 | 64.2 | ||||||||
| Contract liabilities |
314.9 | 419.1 | ||||||||
| Taxes and payroll charges payable |
(70.5 | ) | 74.1 | |||||||
| Financial guarantees |
- | (3.0 | ) | |||||||
| Unearned income |
(4.0 | ) | 4.3 | |||||||
| Income tax and social contribution paid |
(57.1 | ) | (86.6 | ) | ||||||
| Interest paid |
17.1 | (164.6 | ) | (161.7 | ) | |||||
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| |||||
| NET CASH USED IN OPERATING ACTIVITIES |
(176.0 | ) | (186.2 | ) | ||||||
|
|
|
|
|
|
| |||||
| INVESTING ACTIVITIES |
||||||||||
| Acquisition of property, plant and equipment |
12 | (169.3 | ) | (148.8 | ) | |||||
| Proceeds from sale of property, plant and equipment |
- | 16.7 | ||||||||
| Additions to intangible assets |
13 | (191.9 | ) | (126.5 | ) | |||||
| Additions to investments in subsidiaries and affiliates, net of cash acquired |
(14.3 | ) | (17.9 | ) | ||||||
| Financial investments |
(146.7 | ) | (1.3 | ) | ||||||
| Proceeds from loans granted |
60.5 | - | ||||||||
| Dividends received |
0.5 | 5.8 | ||||||||
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| |||||
| NET CASH USED IN INVESTING ACTIVITIES |
(461.2 | ) | (272.0 | ) | ||||||
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| |||||
| FINANCING ACTIVITIES |
||||||||||
| Proceeds from borrowings |
17.1 | 560.7 | 1,947.0 | |||||||
| Repayment of borrowings |
17.1 | (768.8 | ) | (2,266.3 | ) | |||||
| Receipt in the offering of subsidiary shares |
65.6 | - | ||||||||
| Costs in the offering of subsidiary shares |
(2.4 | ) | - | |||||||
| Lease payments |
17.1 | (12.7 | ) | (10.0 | ) | |||||
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| |||||
| NET CASH USED IN FINANCING ACTIVITIES |
(157.6 | ) | (329.3 | ) | ||||||
|
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|
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| |||||
| DECREASE IN CASH AND CASH EQUIVALENTS |
(794.8 | ) | (787.5 | ) | ||||||
| Effects of exchange rate changes on cash and cash equivalents |
(6.5 | ) | (4.2 | ) | ||||||
| Cash and cash equivalents at the beginning of the period |
3 | 1,626.3 | 1,815.6 | |||||||
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| |||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
3 | 825.0 | 1,023.9 | |||||||
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| |||||
| (1) | Fixed assets comprise property, plant and equipment, intangible, right of use and investments. |
The notes are an integral part of these condensed consolidated financial statements.
8
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 1. | OPERATIONS |
Embraer S.A. (“Embraer”) is a publicly traded company listed in the Novo Mercado segment of the Brazilian Stock Exchange (B3 S.A. - Brasil, Bolsa, Balcão), under the ticker code EMBR3. Additionally, Embraer has also issued American Depositary Shares, represented by American Depositary Receipts (“ADRs”) which are registered with the Securities and Exchange Commission (“SEC”) and listed on the New York Stock Exchange (“NYSE”) under the ticker code ERJ.
Embraer is domiciled in São José dos Campos, State of São Paulo, and, along with its subsidiaries (together referred to as “the Company”), engages in the following main activities:
Q To design, build and market aircraft and aerospace materials and related accessories, components and equipment;
Q To perform and carry out technical activities related to the manufacturing and maintenance of aerospace materials;
Q To contribute training technical personnel as necessary for the aerospace industry;
Q To engage in and provide services for other technological, industrial, commercial, and service activities related to the aerospace industry;
Q To design, build and market equipment, materials, systems, software, accessories, and components for the defense, security, and energy industries, as well as promote and carry out technical activities related to the manufacturing and servicing thereof;
Q To conduct other technological, industrial, commercial and services activities related to the defense, security, and energy industries.
The Company has strategic divisions, which are its reportable segments (see Note 30): Commercial Aviation, Executive Aviation, Defense & Security and Services & Support.
1.1 Significant event and its impacts on the condensed consolidated interim financial statements
1.1.1 Russia - Ukraine conflict
Since March 2022, the Company has suspended the supply of parts, maintenance, and technical support services for certain customers to comply with the sanctions imposed on Russia, Belarus and certain regions of Ukraine by laws of jurisdictions to which Embraer is subject.
The Company continues to monitor its supply chain in view of the uncertainties related to the conflict between Russia and Ukraine and the challenges of the current macroeconomic scenario. While there is no immediate concern about the availability of titanium in our supply chain given the Company´s inventory position and existing alternative sources in other countries, Embraer will continue to monitor its supply chain to identify potential disruptions.
As of September 30, 2024, the Company has no material assets or liabilities exposed to Russia, Belarus or Ukraine; therefore, no relevant accounting impact was identified through the date of authorization for issuance of these unaudited condensed consolidated interim financial statements.
1.1.2 Israel - Hamas conflict
The conflict between Israel and Hamas could impact the Company’s supply chain. The Company has been closely monitoring these potential impacts on supply chain and operations.
As of September 30, 2024, the Company has no material assets or liabilities exposed to Israel or Palestine; therefore, no relevant accounting impact has been identified through the date of authorization for issuing these consolidated financial statements.
9
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 2. | BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES |
2.1 Basis for preparation and presentation of interim financial statements
These unaudited condensed consolidated interim financial statements (“interim financial statements”) as of and for the nine months ended September 30, 2024 comprise Embraer S.A. and its subsidiaries.
These interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, and should be read in conjunction with the Company’s last annual consolidated financial statements as of and for the year ended December 31, 2023 (“last annual financial statements”). They do not include all the information required for a complete set of financial statements prepared in accordance with IFRS Accounting Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.
In preparating these interim financial statements, Management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgments made by management in applying the Company’s accounting policies and the key resources of estimation uncertainty were the same as those described in the last annual financial statements (not included herein).
The accounting standards that came into effect on January 1, 2024 did not have a material effect on unaudited condensed consolidated interim financial statements.
These interim financial statements were approved and authorized for issue by the Company’s Management on February 5, 2025.
2.2 Functional and presentation currency
These interim financial statements are presented in U.S. dollars (“US$” or “Dollars”), which is the Company’s functional currency. All amounts have been rounded to the nearest million, unless otherwise indicated.
10
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
2.2.1 Subsidiaries
These interim financial statements include the interim financial statements of Embraer S.A. and subsidiaries listed below:
| Interest (%) | ||||||||||
| Entity |
2024 | 2023 | Country |
Core activities | ||||||
| Direct controlled | ||||||||||
| ELEB Equipamentos Ltda. |
100% |
100% |
Brazil | Sale of hydraulic and mechanical equipment for the aviation industry | ||||||
| Embraer Aircraft Holding, Inc. |
100% |
100% |
USA | Concentrates corporate activities in the USA | ||||||
| Embraer Aviation International - EAI |
100% |
100% |
France | Sale of parts and after sale services in Europe, Africa and the Middle East | ||||||
| Embraer Defesa e Segurança Participações S.A. |
100% |
100% |
Brazil | Coordinates investments in the Defense & Security segments | ||||||
| Embraer GPX Ltda. |
100% |
100% |
Brazil | No operations | ||||||
| Embraer Netherlands B.V. |
100% |
100% |
Netherlands | Concentrates corporate activities in Europe for leasing and selling used aircraft | ||||||
| Embraer Netherlands Finance B.V. |
100% |
100% |
Netherlands | Financial operations raising and investing funds of the Embraer Group | ||||||
| Embraer Overseas Ltd. |
100% |
100% |
Cayman Islands | Financial operations raising and investing funds of the Embraer Group | ||||||
| Embraer Spain Holding Co. SL |
100% |
100% |
Spain | Concentrates corporate activities abroad | ||||||
| Fundo de Investimento em Participações Embraer Ventures |
100% |
100% |
Brazil | Exclusive fund created with the objective of technological and financial aggregation based on investment and support to small and medium-sized companies focused on disruptive innovation in areas related to the A&D sector. | ||||||
| Yaborã Indústria Aeronáutica S.A. |
100% |
100% |
Brazil | No operations | ||||||
| Indirect controlled | ||||||||||
| Airholding S.A. |
100% |
100% |
Portugal | Coordinates investments in subsidiaries in Portugal | ||||||
| Atech - Negócios em Tecnologias S.A. |
100% |
100% |
Brazil | Development and control, communications, computer and intelligence services | ||||||
| Coqueiro Par Participações Ltda. (“Coqueiro”) |
(i) |
100% |
- | Brazil | Participation in other companies. | |||||
| ECC Investment Switzerland AG |
100% |
100% |
Switzerland | Coordinates investments in subsidiaries abroad | ||||||
| Embraer (China) Aircraft Technical Services Co. Ltd. |
100% |
100% |
China | Sale of spare parts and support services in China | ||||||
| Embraer Aircraft Customer Services, LLC |
100% |
100% |
USA | Sale of spare parts and support services in North America and the Caribbean | ||||||
| Embraer Aircraft Maintenance Services, LLC |
100% |
100% |
USA | Maintenance of aircraft and components | ||||||
| Embraer Asia Pacific PTE. Ltd. |
100% |
100% |
Singapore | Sale of spare parts and support services in Asia | ||||||
| Embraer Business Innovation Center, Inc. |
100% |
100% |
USA | R&D of technological innovations in the aerospace sector and related areas | ||||||
| Embraer CAE Training Services (NL) B.V. |
51% |
51% |
USA | Pilot, mechanic and crew training | ||||||
| Embraer CAE Training Services (U.K.) Limited |
51% |
51% |
Netherlands | Pilot, mechanic and crew training | ||||||
| Embraer CAE Training Services, LLC |
51% |
51% |
United Kingdon | Pilot, mechanic and crew training | ||||||
| Embraer Defense and Security, Inc. |
100% |
100% |
USA | Supply of Super Tucano aircraft to the American Air Force (LAS) | ||||||
| Embraer Engineering & Technology Center USA, Inc. |
100% |
100% |
USA | Engineering services related to aircraft research and development | ||||||
| Embraer Executive Aircraft, Inc. |
100% |
100% |
USA | Final assembly and delivery of executive jets | ||||||
| Embraer Executive Jet Services, LLC |
100% |
100% |
USA | After sale support and aircraft maintenance | ||||||
| Embraer Finance Ltd. |
100% |
100% |
Cayman Islands | Support to the Company in structuring specific operations | ||||||
| Embraer Portugal S.A. |
100% |
100% |
Portugal | Coordinates investments and economic activities in subsidiaries in Portugal | ||||||
| Eve Holding, Inc. (“Eve Holding”) |
(ii) |
83.5% |
89.4% |
USA | Publicly held company, with shares traded on the NYSE, which owns the full interest of EVE UAM, LLC. | |||||
| Eve Soluções de Mobilidade Aérea Urbana Ltda. |
(ii) |
83.5% |
89.4% |
Brazil | Eve subsidiary with operations in Brazil. | |||||
| Eve UAM, LLC. |
(ii) |
83.5% |
89.4% |
USA | Development, design, manufacture, marketing, certification and support of aircraft and urban air traffic management solutions related to urban air mobility. | |||||
| EZS Informática S.A. |
(i) |
100.0% |
76.6% |
Brazil | Retail trade of computer products, maintenance, repair and related services | |||||
| OGMA - Indústria Aeronáutica de Portugal S.A. |
65% |
65% |
Portugal | Aviation maintenance and production | ||||||
| Tempest Security Intelligence Limited |
(i) |
100.0% |
76.6% |
United Kingdon | Retail trade of computer products, maintenance, repair and related services | |||||
| Tempest Serviços de Informática S.A. (“Tempest”) |
(i) |
100.0% |
76.6% |
Brazil | Research, development and services in the areas of Information Technology, Information Security and Intelligence | |||||
| Visiona Internacional B.V. |
51% |
51% |
Netherlands | International subsidiary of Visiona | ||||||
| Visiona Tecnologia Espacial S.A. |
51% |
51% |
Brazil | Supply and development of satellite solutions | ||||||
| Joint operations | ||||||||||
| EZ Air Interior Limited |
50% |
50% |
Ireland | Fabrication of interiors for commercial aircraft | ||||||
The mains changes that occurred during 2024 are:
(i) In May 2024, Embraer Defesa e Segurança Participações S.A. acquired the entire interests of Coqueiro, which owns a 23.4% interest in Tempest. As a result of this acquisition, the Company’s ownership interest in EZS Informática S.A., Tempest, and Tempest Security Intelligence Limited increased to 100%.
(ii) In July 2024 and September 2024, certain investors, including the Company, contributed US$ 95.6 million to Eve Holding. As a result of this contribution and the extinguishment of 8,296,470 warrants, Eve Holding issued 27,218,588 shares. The Company contributed US$ 30 million, out of the US$ 95.6 million, and received 7,500,000 shares. As a result of this
11
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
transaction, the Company´s interest in Eve Holding decreased to 83.5%. Consequently, the Company’s interest in Eve Soluções de Mobilidade Aérea Urbana Ltda. and Eve UAM, LLC., both subsidiaries of Eve Holding, also reduced to 83.5%.
| 3. | CASH AND CASH EQUIVALENTS |
| 09.30.2024 | 12.31.2023 | |||||||
| Cash and banks |
292.3 | 330.3 | ||||||
|
|
|
|
|
|||||
| 292.3 | 330.3 | |||||||
|
|
|
|
|
|||||
| Cash equivalents |
||||||||
| Private securities (i) |
117.5 | 130.1 | ||||||
| Fixed deposits (ii) |
421.6 | 1,168.8 | ||||||
|
|
|
|
|
|||||
| 539.1 | 1,298.9 | |||||||
|
|
|
|
|
|||||
| Cash and cash equivalents in the statement of financial position |
831.5 | 1,629.2 | ||||||
|
|
|
|
|
|||||
| Bank overdraft |
(6.5) | (2.9) | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents in the statement of cash flows |
825.0 | 1,626.3 | ||||||
|
|
|
|
|
|||||
(i) Financial investments in Bank Deposit Certificates and Private Securities Repurchase Agreements issued by financial institutions in Brazil.
(ii) Fixed term deposits in dollars issued by financial institutions.
| 4. | FINANCIAL INVESTMENTS |
| 09.30.2024 | 12.31.2023 | |||||||||
| Public securities |
(i) | 67.2 | 66.6 | |||||||
| Private securities |
(ii) | 109.4 | 146.4 | |||||||
| Structure note |
(iii) | 84.7 | - | |||||||
| Investment funds |
(iv) | 123.6 | 27.4 | |||||||
| Fixed-term deposit |
(v) | 466.7 | 350.5 | |||||||
| Others |
(vi) | 88.3 | 100.8 | |||||||
|
|
|
|
|
|||||||
| 939.9 | 691.7 | |||||||||
|
|
|
|
|
|||||||
| Current |
643.5 | 521.7 | ||||||||
| Non-current |
296.4 | 170.0 | ||||||||
(i) Debt securities issued by the Brazilian government with maturity in 2030.
(ii) Corporate bonds issued by private financial institutions and non-financial institutions.
(iii) Structured notes subject to the credit risk of the financial institution and the Brazilian government in the amount of US$ 36.9 and structured notes subject to the credit risk of two financial institutions (concurrently) in the amount of US$ 47.8.
(iv) Embraer Multi-Strategy Equity Investment Fund in the amount of US$ 21.9 and portfolio managed by PNC Bank in the amount of US$ 101.7.
(v) Fixed-term deposits in US$ issued by financial institutions.
(vi) Refers mainly to the investiment in shares of the Republic Airways Holdings (“Repulic Airways”).
As of September 30, 2024, the weighted average nominal interest rates, considering cash equivalents and financial investments, are 10.49% p.a. made in Brazilian Reais (“R$”), equivalent to 97.77% of the Interbank Deposit Certificate (“CDI”), and 5.62% p.a. in US$ (2023: 13.15% p.a. in R$, equivalent to 99.59% of CDI, and 5.34% p.a. in US$).
12
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 5. | TRADE ACCOUNTS RECEIVABLE |
| Note | 09.30.2024 | 12.31.2023 | ||||||||||
| Foreign customers |
214.3 | 201.7 | ||||||||||
| Accounts receivable due from related parties |
11.2 | 21.8 | 2.1 | |||||||||
| Domestic customers |
30.5 | 27.0 | ||||||||||
|
|
|
|
|
|||||||||
| 266.6 | 230.8 | |||||||||||
| Expected credit losses |
(11.2) | (9.8) | ||||||||||
|
|
|
|
|
|||||||||
| 255.4 | 221.0 | |||||||||||
|
|
|
|
|
|||||||||
| Current |
253.9 | 217.6 | ||||||||||
| Non-current |
1.5 | 3.4 | ||||||||||
The amounts and maturities of these trade accounts receivable are shown below:
| 09.30.2024 | 12.31.2023 | |||||||
| Not past due |
192.8 | 213.2 | ||||||
| Up to 90 days |
36.5 | 13.6 | ||||||
| From 91 to 180 days |
28.1 | 1.2 | ||||||
| More than 180 days |
9.2 | 2.8 | ||||||
|
|
|
|
|
|||||
| 266.6 | 230.8 | |||||||
|
|
|
|
|
|||||
The increase in overdue amounts noted on September 30, 2024 when compared to December 31, 2023 is associated with a specific customer who did not adhere to the agreed-upon payment terms. However, this default did not significantly affect the allowance for expected credit loss since the Company can offset any incurred losses with the guarantees provided by the customer, as per the contractual agreement.
The changes in allowance for expected credit losses during the period consisted of the following:
| 09.30.2024 | 12.31.2023 | |||||||
| Beginning balance |
(9.8) | (12.6) | ||||||
| Additions/Reversal |
(3.7) | (1.8) | ||||||
| Write-off |
2.3 | 4.6 | ||||||
|
|
|
|
|
|||||
| Ending balance |
(11.2) | (9.8) | ||||||
|
|
|
|
|
|||||
For additional information on measuring expected credit losses, see Note 23.1.3.
| 6. | DERIVATIVE FINANCIAL INSTRUMENTS |
Q Equity swap: the main objective of neutralizing fluctuations in the EMBR3 share price, with a view to the future settlement of share-based payment plans (see Note 22.1). The fair value of these instruments is determined by calculating the difference between (i) the multiplication of the share’s closing price and the number of shares traded, and (ii) the notional value remunerated by the contractual interest rates until maturity, which is then discounted to present value using current market rates.
Q Purchase of sell and buy currency options: in order to protect cash flows for wage expenses denominated in R$ from currency fluctuations risks. The strategy used by the Company involves a zero-cost collar, which consists of purchasing a put option and selling a call option, all contracted with the same counterparty to maintain a zero-net premium. The Company adopts the Black-76 pricing model along with observable data to measure the fair value of these instruments.
Q Non-deliverable forward (NDF): the purpose of protecting the Company from risks associated with fluctuations in exchange rates. The fair value of these instruments is measured using the discounted cash flow model. Future
13
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
cash flows are estimated based on future exchange rates observed at the reporting period and future contractual rates, then discounted at current market rates.
Q Eve Holding has issued warrants that grant holders the right, but not the obligation, to purchase shares of Eve Holding (NYSE: EVEX). The fair value of these instruments is measured as follows:
Q Public warrants: these warrants are listed and traded on the NYSE under the ticker code EVEX.WS. Their fair value is derived directly from observable market prices.
Q Private warrants: the measurement of the fair value of public and private share purchase options is identical since the differences between them do not affect their fair value. In this way, the fair value is calculated based on the unit price of the option multiplied by the number of options.
Q Strategic warrants: these warrants are divided into two categories: penny and market warrants. The fair value of penny warrants considers the fair value of the EVEX share minus the exercise price. Furthermore, if the exercise of the option is conditioned on the occurrence of future events, the probability of these events occurring is also considered in the measurement. The fair value of market warrants is measured based on the Black-Scholes pricing model.
| Purpose | Risk | Instrument | Notional | Maturity | 03.31.2024 | 12.31.2023 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Cash flow hedge designated as hedge accounting |
2.0 | 8.9 | ||||||||||||||||||||||||||||||||||
| Payroll expenses liquidated in Reais |
Exchange | Zero-cost collar derivative financial instruments, with purchase of put options at the exercise price of R$ 5.00 and sale of call options at the weighted average exercise price of R$ 5.48. | 74.7 | 2024 | (2.6) | 8.9 | ||||||||||||||||||||||||||||||
| Payroll expenses liquidated in Reais |
Exchange | Zero-cost collar derivative financial instruments, with purchase of put options at the exercise price of R$ 5.40 and sale of call options at the weighted average exercise price of R$ 6.63. | 303.1 | 2025 | 4.6 | - | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Others derivatives not designated as hedge accounting |
56.5 | (116.6) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Export |
Exchange rate | Non-Deliverable forwards to exchanges euro currency debt to US dollars currency. | - | 2024 | - | (0.1) | ||||||||||||||||||||||||||||||
| Export |
Exchange rate | Non-Deliverable forwards to exchanges euro currency debt to US dollars currency. | 60.0 | 2025 | (1.1) | - | ||||||||||||||||||||||||||||||
| Equity |
Share price: ticker EMBR3 | Equity swap | 66.6 | 2024 | 93.7 | 8.5 | ||||||||||||||||||||||||||||||
| Equity |
Share price: ticker EMBR3 | Equity swap | 19.9 | 2025 | 7.8 | - | ||||||||||||||||||||||||||||||
| Equity |
Share price: ticker EVEX | Private warrants | 14.3 | 2027 | (1.6) | (14.0) | ||||||||||||||||||||||||||||||
| Equity |
Share price: ticker EVEX | Public warrants | 8.2 | 2027 | (0.9) | (11.3) | ||||||||||||||||||||||||||||||
| Equity |
Share price: ticker EVEX | Strategic warrants | 32.5 | 2027 | (41.4) | (99.7) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| 58.5 | (107.7) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Current | 105.6 | 17.5 | ||||||||||||||||||||||||||||||||||
| Non-current | 0.6 | - | ||||||||||||||||||||||||||||||||||
| Current | (29.3) | (85.7) | ||||||||||||||||||||||||||||||||||
| Non-current | (18.4) | (39.5) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Net derivative financial instruments | 58.5 | (107.7) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
As of September 30, 2024, the Company had no margin calls related to derivative transactions.
14
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 7. | CUSTOMER AND COMMERCIAL FINANCING |
| 09.30.2024 | 12.31.2023 | |||||||
| Aircraft |
24.0 | 41.0 | ||||||
| Spare parts |
30.8 | 29.8 | ||||||
|
|
|
|
|
|
| |||
| 54.8 | 70.8 | |||||||
| Fair value adjustment |
(9.9 | ) | (4.6 | ) | ||||
| Expected credit losses |
(2.9 | ) | (3.4 | ) | ||||
|
|
|
|
|
|
| |||
| 42.0 | 62.8 | |||||||
| Current |
13.8 | 8.4 | ||||||
| Non-current |
28.2 | 54.4 | ||||||
There are no overdue balances of the customer and commercial financing as of September 30, 2024.
The changes in allowance for expected credit losses for the periods consisted of the following:
| 09.30.2024 | 12.31.2023 | |||||||
| Beginning balance |
(3.4) | (24.0) | ||||||
| Reversal |
0.5 | 20.6 | ||||||
|
|
|
|
|
|||||
| Ending balance |
(2.9) | (3.4) | ||||||
|
|
|
|
|
|||||
Based on the Company’s assessment, the highest risk rating for financing customers is CCC, with a maximum expected credit loss of 55.25% for the period.
For additional information on measuring expected credit losses, see Note 23.1.3.
As of September 30, 2024, the maturity schedule for non-current customer and commercial financing balance is as follows:
| Year |
||||
| 2025 |
0.8 | |||
| 2026 |
10.4 | |||
| 2027 |
9.8 | |||
| Thereafter |
7.2 | |||
|
|
|
| ||
| 28.2 | ||||
|
|
|
| ||
15
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 8. | INVENTORIES |
| 09.30.2024 | 12.31.2023 | |||||||||||||||||||||||||||||||||||
| Gross amount | Write-down for obsolescence |
Write-down for market value |
Net book value | Gross amount | Write-down for obsolescence |
Write-down for market value |
Net book value | |||||||||||||||||||||||||||||
| Raw materials |
1,266.2 | (84.9) | - | 1,181.3 | 1,118.9 | (81.7) | - | 1,037.2 | ||||||||||||||||||||||||||||
| Work in process |
1,270.3 | - | - | 1,270.3 | 774.9 | - | - | 774.9 | ||||||||||||||||||||||||||||
| Spare parts |
484.6 | (37.1) | (1.4) | 446.1 | 477.6 | (34.3) | (1.4) | 441.9 | ||||||||||||||||||||||||||||
| Finished goods |
(i) | 98.7 | - | - | 98.7 | 61.6 | - | - | 61.6 | |||||||||||||||||||||||||||
| Held by third parties |
109.1 | (4.1) | - | 105.0 | 97.5 | (1.3) | - | 96.2 | ||||||||||||||||||||||||||||
| Advances to suppliers |
37.4 | - | - | 37.4 | 25.4 | - | - | 25.4 | ||||||||||||||||||||||||||||
| Inventory in transit |
151.1 | - | - | 151.1 | 155.7 | - | - | 155.7 | ||||||||||||||||||||||||||||
| Consumption materials |
55.6 | (5.1) | - | 50.5 | 51.7 | (8.6) | - | 43.1 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| 3,473.0 | (131.2) | (1.4) | 3,340.4 | 2,763.3 | (125.9) | (1.4) | 2,636.0 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(i) The following aircraft were held in the finished goods inventory:
Q September 30, 2024: three Phenom 300, one Praetor 500, three Praetor 600, one Phenom 100, five Ipanema, and one Super Tucano.
Q December 31, 2023: three Phenom 300, one Praetor 500, and two Praetor 600.
(ii) The movement of write-down for reduction in market value was as follows:
| 09.30.2024 | 12.31.2023 | |||||||
| Beginning balance |
(1.4) | (5.7) | ||||||
| Additions |
- | (0.6) | ||||||
| Reversals |
- | 4.9 | ||||||
|
|
|
|
|
|||||
| Ending balance |
(1.4) | (1.4) | ||||||
|
|
|
|
|
|||||
(iii) The movement of write-down for obsolescence was as follows:
| 09.30.2024 | 12.31.2023 | |||||||
| Beginning balance |
(125.9) | (126.1) | ||||||
| Additions |
(41.0) | (50.5) | ||||||
| Disposals |
6.9 | 13.5 | ||||||
| Reversals |
28.9 | 37.5 | ||||||
| Foreign exchange loss |
(0.1) | (0.3) | ||||||
|
|
|
|
|
|||||
| Ending balance |
(131.2) | (125.9) | ||||||
|
|
|
|
|
|||||
16
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 9. | OTHER ASSETS |
| Note | 09.30.2024 | 12.31.2023 | ||||||||||
| Taxes recoverable |
9.1 | 168.9 | 130.6 | |||||||||
| Boeing expense recovery |
21.2.5 | 150.0 | - | |||||||||
| Prepaid expenses |
82.5 | 66.5 | ||||||||||
| Other debtors |
52.4 | 60.9 | ||||||||||
| Costs to comply with contracutal obligations |
40.1 | - | ||||||||||
| Loan with a joint operation |
25.5 | 22.4 | ||||||||||
| Court-mandated escrow deposits |
36.5 | 39.0 | ||||||||||
| Advances to employees |
26.7 | 18.0 | ||||||||||
| Advances for services to be rendered |
5.4 | 3.7 | ||||||||||
| Guarantee deposits |
13.1 | 11.8 | ||||||||||
| Collateralized accounts receivable |
1.6 | 2.9 | ||||||||||
| Loans granted |
- | 60.5 | ||||||||||
| Others |
13.5 | 37.9 | ||||||||||
|
|
|
|
|
|||||||||
| 616.2 | 454.2 | |||||||||||
|
|
|
|
|
|||||||||
| Current |
410.2 | 312.9 | ||||||||||
| Non-current |
205.9 | 141.3 | ||||||||||
9.1 Taxes recoverable
| 09.30.2024 | 12.31.2023 | |||||||||||
| Tax Credits - Court Decisions |
(i | ) | 64.9 | - | ||||||||
| ICMS (State Value-added Tax) and IPI (Excise Tax) |
48.5 | 56.0 | ||||||||||
| PIS (Social Integration Program) and COFINS (Contribution for Social |
24.2 | 34.7 | ||||||||||
| Value added tax |
8.8 | 4.6 | ||||||||||
| Reintegra (Special regime for exporters) |
8.3 | 16.6 | ||||||||||
| Income tax and social security on net income withheld |
6.3 | 7.0 | ||||||||||
| Advance service tax (ISS- Service tax) |
5.5 | 6.3 | ||||||||||
| Others |
2.4 | 5.4 | ||||||||||
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| 168.9 | 130.6 | |||||||||||
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|||||||||
| Current |
87.3 | 72.9 | ||||||||||
| Non-current |
81.6 | 57.7 | ||||||||||
(i) In April 2024, the Company obtained a favorable outcome based on the certification of the final judgment of the lawsuit that questioned the collection of withholding income taxes on transfers of certain amounts abroad. As a result, the Company recognized a tax credit of US$ 69.8, of which US$ 40.1 in other income, referring to the principal amount, and US$ 29.7 in financial income, referring to the interest income on the principal amount by Brazilian reference interest rate. The Company has already started using this tax credit. In addition, the favorable outcome has led to the reversal of the provision previously recognized regarding this matter (Note 21.1.1).
Additionally, on September 24, the Company recognized tax credits related to a final favorable court decision about social contribution - SAT. A tax credit of US$ 5.4 was recognized, of which US$ 1.3 in other income, referring to the principal amount, and US$ 4.1 in financial income, referring to the interest income on the principal amount by Brazilian reference interest rate.
17
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 10. | INVESTMENTS |
10.1 Investments movement
| Equity in associates |
Cumulative translation adjustment |
|||||||||||||||||||||||||||
| Dividends | Addition | |||||||||||||||||||||||||||
| 12.31.2023 |
Result |
|
|
09.30.2024 | ||||||||||||||||||||||||
| MSW Multicorp 2 Fundo de Investimento em Participações |
1.7 | 0.9 | (0.5 | ) | - | 1.1 | 3.2 | |||||||||||||||||||||
| Xmobots Holding S.A. |
(i | ) | - | (1.6 | ) | (2.1 | ) | - | 25.7 | 22.0 | ||||||||||||||||||
| Fundo de Investimento em Participações Aeroespacial Multiestratégia |
3.2 | (0.1 | ) | (0.3 | ) | (0.5 | ) | 0.1 | 2.4 | |||||||||||||||||||
| Nidec Aerospace, LLC. |
5.6 | (4.5 | ) | - | - | - | 1.1 | |||||||||||||||||||||
| Águas Azuis Construção Naval SPE Ltda. |
17.7 | 1.7 | (2.0 | ) | - | - | 17.4 | |||||||||||||||||||||
| Centimfe - Centro Tecnologico da Industria de Moldes e Ferramentas Especiais |
- | - | - | - | - | - | ||||||||||||||||||||||
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| 28.2 | (3.6 | ) | (4.9 | ) | (0.5 | ) | 26.9 | 46.1 | ||||||||||||||||||||
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(i) The Company’s interest in Xmobots Holding S.A. increased to 36.92% (2023: 10.24%), resulting from the acquisition of an additional equity interest, via the Embraer Ventures Equity Investment Fund, in March 2024. Due to this increase and other conditions, the Company now has significant influence on the financial and operating policies of the investee.
Therefore, the investment that, prior to the transaction, was measured at fair value and presented as financial investments, is now measured using the equity method.
The transaction price was R$ 89.9 million, with R$ 65.5 million (US$ 13.2) was settled. The remaining balance is presented as other payables (Note 18).
10.2 Interest in entities
10.2.1 Subsidiaries without non-controlling interests
There are no contractual or legal restrictions on the Company’s access to assets or settlement of liabilities of these subsidiaries.
There are inherent risks to the operations of these entities, the most significant of which are described below:
Q Economic Risks: potential losses from fluctuations in market conditions (i.e. price of products, exchange rate and interest).
Q Operational risk: potential losses resulting from the emergence of new technologies or failure of current processes.
Q Credit risk: potential losses that might occur if a third party (customer) becomes unable to meet its obligations, and
Q Liquidity risk: financial inability to meet financial obligations.
18
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
10.2.2 Subsidiaries with non-controlling interests
| 09.30.2024 | 12.31.2023 | |||||||||||||||||||||||
| Non-controlling interest | Non-controlling interest | |||||||||||||||||||||||
|
|
||||||||||||||||||||||||
| Income (loss) |
Income (loss) |
|||||||||||||||||||||||
| Entity | % | Equity | % | Equity | ||||||||||||||||||||
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| Embraer CAE Training Services, LLC |
49.0 | % | 33.1 | 8.4 | 49.0 | % | 29.0 | 11.0 | ||||||||||||||||
| Embraer CAE Training Services (NL) B.V. |
49.0 | % | 10.6 | 1.7 | 49.0 | % | 9.4 | (0.6 | ) | |||||||||||||||
| EVE Holding Inc. |
16.5 | % | 42.5 | 50.0 | 10.6 | % | 11.0 | (96.2 | ) | |||||||||||||||
| OGMA-Indústria Aeronáutica de Portugal S.A. |
35.0 | % | 46.4 | (0.5 | ) | 35.0 | % | 46.0 | 2.3 | |||||||||||||||
| Tempest Serviços de Informática S.A. |
- | - | - | 23.4 | % | 7.2 | 21.3 | |||||||||||||||||
| Visiona Tecnologia Espacial S.A. |
49.0 | % | 13.5 | (0.5 | ) | 49.0 | % | 14.5 | (0.9 | ) | ||||||||||||||
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| 146.1 | 117.1 | |||||||||||||||||||||||
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| Listing Expenses |
100.0 | % | 135.7 | - | 100.0 | % | 135.7 | - | ||||||||||||||||
|
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|
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| 281.8 | 252.8 | |||||||||||||||||||||||
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The financial position of the two most significant entities with non-controlling interests is summarized below, which are OGMA - Indústria Aeronáutica de Portugal S.A. and Eve Holding. Other entities combined represent less than 5% of consolidated profit before income taxes.
| OGMA | EVE | |||||||||||||||
| 09.30.2024 | 12.31.2023 | 09.30.2024 | 12.31.2023 | |||||||||||||
| Total assets |
375.9 | 289.5 | 308.4 | 230.1 | ||||||||||||
| Total liabilities |
243.3 | 158.0 | 50.6 | 126.1 | ||||||||||||
| Shareholders’ equity |
132.6 | 131.5 | 257.8 | 104.0 | ||||||||||||
| 09.30.2024 | 09.30.2023 | 09.30.2024 | 09.30.2023 | |||||||||||||
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|||||||||
| Revenue |
223.6 | 120.3 | - | - | ||||||||||||
| (Loss) income for the period |
(0.5) | (0.2) | 50.0 | (96.2) | ||||||||||||
As of September 30, 2024, the market capitalization value of the Company’s interest in Eve Holding is US$804.8 (2023: US$1,763.4). This corresponds to 248,399,589 (2023: 240,899,589) shares, valued at US$3.24 (2023: US$7.32). The market capitalization for these shares does not necessarily reflect the realization value on the sale of a representative lot of shares.
Subsidiaries with non-controlling interests are subject to the same risks as the wholly owned subsidiaries.
The Company has significant restrictions on access to cash balances, cash equivalents, and financial investments of Eve Holding to settle obligations not directly related to the business of Eve Holding, as defined in the Eve Holding shareholders’ agreement (protective law).
19
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 11. | RELATED PARTIES |
11.1 Related party transactions
The main transactions with related parties refer to:
Q Assets: (i) accounts receivable for spare parts, aircraft sales and product development, under conditions agreed between the parties, considering the volumes, risks involved and corporate policies; (ii) balances of financial investments; and (iii) bank deposits.
Q Liabilities: (i) purchase of aircraft components and spare parts, under conditions agreed between the parties, considering the volumes, risks involved, and corporate policies; (ii) advances received on sales contracts, according to contractual agreements; (iii) commission for sale of aircraft and spare parts; (iv) financing for research and product development at market rates for this kind of financing; (v) loans and financing; and (vi) export financing.
Q Profit or loss: (i) purchases and sales of aircraft, components and spare parts and development of products for the Defense & Security market; (ii) financial income and expenses from financial investments and expenses from loans and financing; and (iii) supplementary pension plan.
11.2 Brazilian Federal Government
The Brazilian Federal Government maintains direct and indirect participation through the ownership of a common share called golden share. As of September 30, 2024, the Brazilian Federal Government held an indirect interest of 5.37% in the Company’s capital through BNDES Participações S.A. (“BNDESPAR”), a wholly owned subsidiary of the BNDES, which, in turn, is controlled by the Brazilian Federal Government.
The Brazilian Federal Government plays a key role in the Company’s business activities, as a:
Q Major customer for Defense & Security products (through the Brazilian Air Force, Brazilian Army, and Brazilian Navy).
Q Source of research and development financing through technology development institutions (FINEP and BNDES).
Q Export credit agency (through the BNDES), and
Q Source of short-term and long-term financing and a provider of asset management and commercial banking services (through Banco do Brasil).
The balances and results with related parties were as follows:
| 09.30.2024 | ||||||||||||||||||||||||||||||||||||
| Trade accounts receivable |
Other assets * |
Cash and Cash equivalents |
Contract assets |
Loans and financing |
Other payables |
Contract liabilities |
Operating results |
Financial results | ||||||||||||||||||||||||||||
| Banco do Brasil S.A. |
- | - | 268.1 | - | - | - | - | - | 8.0 | |||||||||||||||||||||||||||
| BNDES |
- | - | - | - | 670.2 | - | - | - | (25.5 | ) | ||||||||||||||||||||||||||
| Comando da Aeronáutica (Brazilian Air Force) |
21.8 | - | - | 323.8 | - | 12.1 | 58.2 | (17.6 | ) | - | ||||||||||||||||||||||||||
| Embraer Prev - Soc. Previdência Complementar |
- | - | - | - | - | - | - | (11.7 | ) | - | ||||||||||||||||||||||||||
| Exército Brasileiro (Brazilian Army) |
- | - | - | 18.7 | - | - | 7.7 | (0.2 | ) | - | ||||||||||||||||||||||||||
| Ez Air Interior Limited |
- | 25.5 | - | - | - | 25.5 | - | - | - | |||||||||||||||||||||||||||
| Governo Brasileiro - Bonds (Brazilian government -Bonds) |
- | 67.2 | - | - | - | - | - | - | 1.9 | |||||||||||||||||||||||||||
| Governo Brasileiro - Structured Notes |
- | 36.9 | - | - | - | - | - | - | 1.0 | |||||||||||||||||||||||||||
| Marinha do Brasil (Brazilian Navy) |
- | - | - | 1.2 | - | - | 9.0 | (2.2 | ) | - | ||||||||||||||||||||||||||
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| 21.8 | 129.6 | 268.1 | 343.7 | 670.2 | 37.6 | 74.9 | (31.7 | ) | (14.6 | ) | ||||||||||||||||||||||||||
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20
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 12.31.2023 | 09.30.2023 | |||||||||||||||||||||||||||||||||||
| Trade accounts receivable |
Other assets * |
Cash and Cash equivalents |
Contract assets |
Loans and financing |
Other payables |
Contract liabilities |
Operating results |
Financial results | ||||||||||||||||||||||||||||
| Banco do Brasil S.A. |
- | - | 282.7 | - | - | - | - | - | (0.6 | ) | ||||||||||||||||||||||||||
| BNDES |
- | - | - | - | 627.7 | - | - | - | (11.6 | ) | ||||||||||||||||||||||||||
| Caixa Econômica Federal |
- | - | 0.1 | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Comando da Aeronáutica (Brazilian Air Force) |
2.1 | - | - | 305.9 | - | - | 71.9 | (0.2 | ) | - | ||||||||||||||||||||||||||
| Embraer Prev - Sociedade de Previdência Complementar |
- | - | - | - | - | 0.3 | - | (11.3 | ) | - | ||||||||||||||||||||||||||
| Exército Brasileiro (Brazilian Army) |
- | - | - | 6.6 | - | - | 8.9 | (0.3 | ) | - | ||||||||||||||||||||||||||
| Ez Air Interior Limited |
- | 22.4 | - | - | - | 22.4 | - | - | - | |||||||||||||||||||||||||||
| FINEP |
- | - | - | - | - | - | - | - | (0.1 | ) | ||||||||||||||||||||||||||
| Governo Brasileiro - Bonds |
- | 66.6 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Marinha do Brasil (Brazilian Navy) |
- | - | - | 2.4 | - | - | 3.8 | (0.5 | ) | - | ||||||||||||||||||||||||||
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| ||||||||||
| 2.1 | 89.0 | 282.8 | 314.9 | 627.7 | 22.7 | 84.6 | (12.3 | ) | (12.3 | ) | ||||||||||||||||||||||||||
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(*) As of September 30, 2024, it includes the balances presented in financial investments US$ 104.1 (2023: US$ 66.6) and in other assets US$ 25.5 (2023: US$ 22.4).
11.3 Remuneration of key management personnel
The remuneration of key management personnel comprises:
| 09.30.2024 | 09.30.2023 | |||||||||||
| Short-term benefits |
6.1 | 6.5 | ||||||||||
| Share-based payment |
(i | ) | 9.2 | 1.4 | ||||||||
|
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|
|||||||||
| Total remuneration |
15.3 | 7.9 | ||||||||||
|
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(i) Share-based payment increased in nine months of 2024 with the appreciation of Embraer’s share price compared to the same period of the previous year.
| 12. | PROPERTY, PLANT AND EQUIPMENT |
The Management has not identified events indicating that the carrying amount exceeds its recoverable amount as of September 30, 2024.
21
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 09.30.2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Land | Buildings and improvements |
Installations | Machinery and equipment |
Furniture and fixtures |
Vehicles | Aircraft | Computers and peripherals |
Tooling | Other assets | Exchange pool program assets |
Construction in progress |
Total | ||||||||||||||||||||||||||||||||||||||||
| Cost |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
10.2 | 667.4 | 88.7 | 733.6 | 40.3 | 11.9 | 4.5 | 102.1 | 623.8 | 19.1 | 789.4 | 121.1 | 3,212.1 | |||||||||||||||||||||||||||||||||||||||
| Additions |
0.1 | 1.0 | - | 41.6 | 0.7 | 0.4 | - | 5.1 | 12.8 | - | 35.3 | 72.3 | 169.3 | |||||||||||||||||||||||||||||||||||||||
| Disposals |
(0.8 | ) | - | - | (3.2 | ) | (0.2 | ) | (0.1 | ) | - | (0.6 | ) | (0.8 | ) | - | (13.4 | ) | - | (19.1) | ||||||||||||||||||||||||||||||||
| Reclassifications* |
- | 11.9 | 0.6 | 56.9 | 0.3 | - | 16.9 | 0.2 | - | - | 27.1 | (69.8 | ) | 44.1 | ||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | 0.1 | 0.9 | - | 0.1 | - | (0.3 | ) | - | - | 4.8 | 1.1 | 6.7 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| At September 30, 2024 |
9.5 | 680.3 | 89.4 | 829.8 | 41.1 | 12.3 | 21.4 | 106.5 | 635.8 | 19.1 | 843.2 | 124.7 | 3,413.1 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated depreciation |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
- | (216.2 | ) | (39.4 | ) | (403.2 | ) | (28.3 | ) | (8.7 | ) | (4.5 | ) | (93.7 | ) | (406.0 | ) | (19.1 | ) | (222.3 | ) | - | (1,441.4) | |||||||||||||||||||||||||||||
| Depreciation |
- | (14.2 | ) | (1.4 | ) | (20.7 | ) | (1.9 | ) | (0.4 | ) | - | (2.3 | ) | (17.7 | ) | - | (12.6 | ) | - | (71.2) | |||||||||||||||||||||||||||||||
| Disposals |
- | - | - | 2.0 | 0.2 | 0.1 | - | 0.6 | 0.4 | - | 4.5 | - | 7.8 | |||||||||||||||||||||||||||||||||||||||
| Interest on capitalized assets |
- | (0.9 | ) | - | - | - | - | - | - | - | - | - | - | (0.9) | ||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | - | (0.7 | ) | - | - | - | 0.2 | - | - | (1.8 | ) | - | (2.3) | |||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| At September 30, 2024 |
- | (231.3 | ) | (40.8 | ) | (422.6 | ) | (30.0 | ) | (9.0 | ) | (4.5 | ) | (95.2 | ) | (423.3 | ) | (19.1 | ) | (232.2 | ) | - | (1,508.0) | |||||||||||||||||||||||||||||
|
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| Net |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
10.2 | 451.2 | 49.3 | 330.4 | 12.0 | 3.2 | - | 8.4 | 217.8 | - | 567.1 | 121.1 | 1,770.7 | |||||||||||||||||||||||||||||||||||||||
| At September 30, 2024 |
9.5 | 449.0 | 48.6 | 407.2 | 11.1 | 3.3 | 16.9 | 11.3 | 212.5 | - | 611.0 | 124.7 | 1,905.1 | |||||||||||||||||||||||||||||||||||||||
(*) Non-cash transactions: reclassification between property plant and equipment and inventories.
22
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 12.31.2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Land | Buildings and improvements |
Installations | Machinery and equipment |
Furniture and fixtures |
Vehicles | Aircraft | Computers and peripherals |
Tooling | Other assets | Exchange pool program assets |
Construction in progress |
Total | ||||||||||||||||||||||||||||||||||||||||
| Cost |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
10.2 | 655.8 | 88.4 | 724.3 | 42.7 | 11.9 | 4.5 | 115.0 | 615.6 | 18.5 | 709.4 | 51.5 | 3,047.8 | |||||||||||||||||||||||||||||||||||||||
| Additions |
- | 2.8 | - | 29.9 | 1.1 | 0.2 | - | 2.8 | 13.4 | 0.6 | 106.9 | 81.0 | 238.7 | |||||||||||||||||||||||||||||||||||||||
| Disposals |
- | (1.3) | (0.4) | (29.0) | (4.0) | (1.4) | - | (16.8) | (5.4) | - | (21.0) | - | (79.3) | |||||||||||||||||||||||||||||||||||||||
| Reclassifications* |
- | 9.2 | 0.4 | 5.8 | 0.3 | 1.1 | - | 0.4 | 0.2 | - | (15.6) | (17.4) | (15.6) | |||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | 0.9 | 0.3 | 2.6 | 0.2 | 0.1 | - | 0.7 | - | - | 9.7 | 6.0 | 20.5 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
10.2 | 667.4 | 88.7 | 733.6 | 40.3 | 11.9 | 4.5 | 102.1 | 623.8 | 19.1 | 789.4 | 121.1 | 3,212.1 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated depreciation |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
- | (196.8) | (36.6) | (396.4) | (29.2) | (9.5) | (4.3) | (106.6) | (389.4) | (18.5) | (211.3) | - | (1,398.6) | |||||||||||||||||||||||||||||||||||||||
| Depreciation |
- | (18.9) | (2.8) | (25.0) | (2.6) | (0.5) | (0.2) | (3.1) | (21.9) | (0.6) | (16.0) | - | (91.6) | |||||||||||||||||||||||||||||||||||||||
| Disposals |
- | 0.8 | 0.1 | 19.6 | 3.7 | 1.4 | - | 15.9 | 5.3 | - | 8.7 | - | 55.5 | |||||||||||||||||||||||||||||||||||||||
| Reclassifications* |
- | - | - | - | - | - | - | - | - | - | 0.3 | - | 0.3 | |||||||||||||||||||||||||||||||||||||||
| Interest on capitalized assets |
- | (1.1) | - | - | - | - | - | - | - | - | - | - | (1.1) | |||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
- | (0.2) | (0.1) | (1.4) | (0.2) | (0.1) | - | 0.1 | - | - | (4.0) | - | (5.9) | |||||||||||||||||||||||||||||||||||||||
|
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|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
- | (216.2) | (39.4) | (403.2) | (28.3) | (8.7) | (4.5) | (93.7) | (406.0) | (19.1) | (222.3) | - | (1,441.4) | |||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Net |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
10.2 | 459.0 | 51.8 | 327.9 | 13.5 | 2.4 | 0.2 | 8.4 | 226.2 | - | 498.1 | 51.5 | 1,649.2 | |||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
10.2 | 451.2 | 49.3 | 330.4 | 12.0 | 3.2 | - | 8.4 | 217.8 | - | 567.1 | 121.1 | 1,770.7 | |||||||||||||||||||||||||||||||||||||||
(*) Non-cash transactions: reclassification between property plant and equipment and inventories.
23
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 13. | INTANGIBLE ASSETS |
The Management has not identified events indicating that the carrying amount exceeds its recoverable amount as of September 30, 2024.
| 09.30.2024 | ||||||||||||||||||||||||||||||||||||||||
| Internally developed | Acquired from third party |
|
||||||||||||||||||||||||||||||||||||||
| Defense and Security
|
Service | |||||||||||||||||||||||||||||||||||||||
| Commercial | Executive | and | Others | EVTOL | Software | Goodwill | Others | Total | ||||||||||||||||||||||||||||||||
|
|
|
Support |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Intangible cost |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,311.3 | 1,603.4 | 145.9 | 31.0 | 14.5 | 42.4 | 301.6 | 23.8 | 9.0 | 3,482.9 | ||||||||||||||||||||||||||||||
| Additions |
32.0 | 43.6 | 20.6 | 8.2 | 1.8 | 82.3 | 3.4 | - | - | 191.9 | ||||||||||||||||||||||||||||||
| Disposals |
- | - | - | - | - | - | (0.4) | - | (0.7) | (1.1) | ||||||||||||||||||||||||||||||
| Reclassifications* |
9.5 | - | - | - | - | - | - | - | - | 9.5 | ||||||||||||||||||||||||||||||
| Interest on capitalized assets |
- | - | - | - | - | 1.8 | - | - | - | 1.8 | ||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | (1.0) | - | (1.0) | - | - | (2.4) | - | (4.4) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At September 30, 2024 |
1,352.8 | 1,647.0 | 165.5 | 39.2 | 15.3 | 126.5 | 304.6 | 21.4 | 8.3 | 3,680.6 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated amortization |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
(119.8) | (697.9) | (52.8) | - | (4.9) | - | (274.0) | - | (2.5) | (1,151.9) | ||||||||||||||||||||||||||||||
| Amortization |
(33.0) | (35.6) | (4.1) | - | (1.0) | - | (6.8) | - | (0.5) | (81.0) | ||||||||||||||||||||||||||||||
| Amortization of contribution from suppliers |
10.5 | 8.1 | - | - | - | - | - | - | - | 18.6 | ||||||||||||||||||||||||||||||
| Disposals |
- | - | - | - | - | - | 0.4 | - | 0.7 | 1.1 | ||||||||||||||||||||||||||||||
| Interest on capitalized assets |
- | (1.1) | - | - | - | - | - | - | - | (1.1) | ||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | 0.2 | - | 0.4 | - | (0.1) | - | 0.1 | 0.6 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At September 30, 2024 |
(142.3) | (726.5) | (56.7) | - | (5.5) | - | (280.5) | - | (2.2) | (1,213.7) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Intangible, net |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,191.5 | 905.5 | 93.1 | 31.0 | 9.6 | 42.4 | 27.6 | 23.8 | 6.5 | 2,331.0 | ||||||||||||||||||||||||||||||
| At September 30, 2024 |
1,210.5 | 920.5 | 108.8 | 39.2 | 9.8 | 126.5 | 24.1 | 21.4 | 6.1 | 2,466.9 | ||||||||||||||||||||||||||||||
| 12.31.2023 | ||||||||||||||||||||||||||||||||||||||||
| Internally developed | Acquired from third party | |||||||||||||||||||||||||||||||||||||||
| Defense and Security
|
Service | |||||||||||||||||||||||||||||||||||||||
| Commercial | Executive | and | Others | EVTOL | Software | Goodwill | Others | Total | ||||||||||||||||||||||||||||||||
|
|
|
Support |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Intangible cost |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
1,274.4 | 1,544.6 | 132.4 | 9.0 | 4.6 | - | 302.0 | 22.3 | 10.6 | 3,299.9 | ||||||||||||||||||||||||||||||
| Additions |
36.9 | 58.8 | 26.1 | 22.0 | 3.1 | 42.4 | 2.8 | - | - | 192.1 | ||||||||||||||||||||||||||||||
| Disposals |
- | - | - | - | (8.6) | - | (3.4) | - | (1.6) | (13.6) | ||||||||||||||||||||||||||||||
| Reclassifications |
- | - | (13.6) | - | 13.6 | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | 1.0 | - | 1.7 | - | 0.2 | 1.5 | - | 4.4 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At December 31, 2023 |
1,311.3 | 1,603.4 | 145.9 | 31.0 | 14.4 | 42.4 | 301.6 | 23.8 | 9.0 | 3,482.8 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated amortization |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
(81.1) | (663.0) | (51.9) | - | (2.4) | - | (253.1) | - | (1.9) | (1,053.4) | ||||||||||||||||||||||||||||||
| Amortization |
(58.2) | (43.9) | (3.4) | - | (1.5) | - | (24.0) | - | (0.9) | (131.9) | ||||||||||||||||||||||||||||||
| Amortization of contribution from suppliers |
19.5 | 10.3 | - | - | - | - | - | - | - | 29.8 | ||||||||||||||||||||||||||||||
| Disposals |
- | - | - | - | 2.3 | - | 3.4 | - | 0.3 | 6.0 | ||||||||||||||||||||||||||||||
| Reclassifications |
- | - | 2.7 | - | (2.7) | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Interest on capitalized assets |
- | (1.3) | - | - | - | - | - | - | - | (1.3) | ||||||||||||||||||||||||||||||
| Translation adjustments |
- | - | (0.2) | - | (0.5) | - | (0.3) | - | - | (1.0) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At December 31, 2023 |
(119.8) | (697.9) | (52.8) | - | (4.8) | - | (274.0) | - | (2.5) | (1,151.8) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Intangible, net |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2022 |
1,193.3 | 881.6 | 80.5 | 9.0 | 2.22 | - | 48.9 | 22.32 | 8.7 | 2,246.5 | ||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,191.5 | 905.5 | 93.1 | 31.0 | 9.6 | 42.4 | 27.6 | 23.8 | 6.5 | 2,331.0 | ||||||||||||||||||||||||||||||
(*) Non-cash transaction: reclassification between inventories and intangible assets.
| 14. | TRADE ACCOUNTS PAYABLE |
| 09.30.2024 | 12.31.2023 | |||||||
| Foreign suppliers |
515.1 | 420.4 | ||||||
| Domestic suppliers |
204.3 | 175.7 | ||||||
| Risk partners |
440.2 | 190.9 | ||||||
|
|
|
|
|
|
| |||
| 1,159.6 | 787.0 | |||||||
|
|
|
|
|
|
| |||
24
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 15. | TRADE ACCOUNTS PAYABLE: SUPPLIER FINANCE |
The Company has entered into agreements with financial institutions to conduct commercial operations with domestic and foreign suppliers. In these transactions, suppliers can exclusively transfer at their discretion the right to receive titles issued against the Company to these financial institutions, which in turn come to be the creditor of discounted instruments. The suppliers that carry out this operation receive the resources before the commercial term of the security, discounting the costs and financial charges of the transaction.
This arrangement does not significantly alter the prices and commercial conditions negotiated with suppliers, nor are there any financial charges for the Company.
As of September 30, 2024, the amount payable by the Company arising from these operations is US$ 48.4 (2023: US$ 37.6), with an average payment term of 104 days (2023: 104 days).
| 16. | LOANS AND FINANCING |
| Currency | Interest rate - % |
Maturity | 09.30.2024 | 12.31.2023 | ||||||||||||||
| Property, plant and equipment |
||||||||||||||||||
| US$ | SIFMA | 2025-35 | 20.1 | 20.5 | ||||||||||||||
| Guaranteed Notes |
||||||||||||||||||
| US$ | 5.40% p.a. | 2027 | 526.1 | 532.9 | ||||||||||||||
| US$ | 6.95% p.a. | 2028 | 483.4 | 491.2 | ||||||||||||||
| US$ | 7.00% p.a. | 2030 | 748.2 | 760.3 | ||||||||||||||
| Working capital |
||||||||||||||||||
| R$ | CDI + 2.60% p.a. | 2026 | 3.7 | 4.3 | ||||||||||||||
| Euro | 5.08% p.a. to 5.64% p.a. | 2024-25 | 34.7 | 30.7 | ||||||||||||||
| Euro | Euribor 1M + 1.40% p.a. | 2025 | 6.6 | 2.9 | ||||||||||||||
| Euro | Euribor 12M + 1.31% p.a. | 2024-26 | 1.6 | 2.3 | ||||||||||||||
| US$ | SOFR 6M + 0.50% p.a. | 2025 | 10.5 | 22.4 | ||||||||||||||
| US$ | SOFR 6M + 2.60% | 2027 | - | 102.4 | ||||||||||||||
| US$ | 4.35% p.a. to 4.50% p.a. | 2024-30 | 25.8 | 25.2 | ||||||||||||||
| US$ | SOFR 6M + 0.75% p.a. | 2024-31 | 75.1 | 57.6 | ||||||||||||||
| Export financing |
||||||||||||||||||
| US$ | 5.92% p.a. | 2026 | 30.0 | 30.5 | ||||||||||||||
| US$ | 5.43% p.a. | 2027 | 400.8 | 401.0 | ||||||||||||||
| US$ | 5.44% p.a. | 2028 | 170.0 | 170.0 | ||||||||||||||
| US$ | 4.99% p.a. | 2028 | 30.4 | 30.5 | ||||||||||||||
| US$ | SOFR 12M + 1.77% | 2028 | - | 165.8 | ||||||||||||||
| Projects |
||||||||||||||||||
| R$ | 4.55% p.a. | 2026-35 | 14.8 | 13.2 | ||||||||||||||
| US$ | 5.30% p.a. to 5.77% p.a. | 2027-35 | 54.2 | 12.7 | ||||||||||||||
| Others |
||||||||||||||||||
| US$ | 10.50% p.a. | 2028 | 10.0 | 10.0 | ||||||||||||||
|
|
|
|
|
|||||||||||||||
| Total |
2,646.0 | 2,886.4 | ||||||||||||||||
|
|
|
|
|
|||||||||||||||
| Current |
101.5 | 127.1 | ||||||||||||||||
| Non-current |
2,544.5 | 2,759.3 | ||||||||||||||||
25
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
As of September 30, 2024, the maturity schedule for non-current loans and financing balance is as follows:
| 2025 |
11.1 | |||
| 2026 |
50.1 | |||
| 2027 |
943.1 | |||
| 2028 |
710.0 | |||
| Thereafter |
830.2 | |||
|
|
|
| ||
| 2,544.5 | ||||
|
|
|
|
16.1 Guarantees
As a guarantee for part of the Company’s financing, properties, improvements, machinery, equipment, and bank guarantees were pledge in the total amount of US$ 740.1 (2023: US$ 799.8). For the financing of subsidiaries, guarantees were created in the form of financial guarantees and endorsement from Embraer S.A., which totaled the amount of US$ 1,898.2 (2023: US$ 1,998.9).
16.2 Restrictive clauses
Loans and financing contracts are subject to restrictive clauses and include restrictions on the creation of new lines on assets, significant changes in the Company’s share control and significant sale of assets.
The financing contract signed between the Company and BNDES in December 2022 has a restrictive financial covenant. As of September 30, 2024, the Company was in compliance with the restrictive clause and the next mandatory measurement of the indicator will be performed on December 31, 2024.
| 17. | SUPPLEMENTAL CASH FLOW INFORMATION |
17.1 Reconciliation of debt with cash flows arising from financing activities
| Loans and financing |
Lease liabilities |
Other debts | Total | |||||||||||||
| At December 31, 2023 |
2,886.3 | 95.9 | - | 2,982.2 | ||||||||||||
| Proceeds |
547.6 | - | 13.1 | 560.7 | ||||||||||||
| Payments |
(755.7 | ) | (12.8 | ) | (13.1 | ) | (781.6 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Cash flow from financing activities |
(208.1 | ) | (12.8) | - | (220.9 | ) | ||||||||||
| Others |
||||||||||||||||
| Interest payment |
(164.6 | ) | - | - | (164.6 | ) | ||||||||||
| Interest expense |
131.3 | 4.5 | - | 135.8 | ||||||||||||
| Exchange rate variation and conversion adjustments |
(2.6 | ) | (7.1 | ) | - | (9.7 | ) | |||||||||
| Addition - Lease Liabilities |
- | 32.9 | - | 32.9 | ||||||||||||
| Disposals - Lease Liabilities |
- | (0.4 | ) | - | (0.4 | ) | ||||||||||
| Others |
3.7 | - | - | 3.7 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| At September 30, 2024 |
2,646.0 | 113.0 | - | 2,759.0 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Current |
101.5 | 18.3 | ||||||||||||||
| Non-current |
2,544.5 | 94.7 | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||
| 2,646.0 | 113.0 | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||
26
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 18. | OTHER PAYABLES |
| Note | 09.30.2024 | 12.31.2023 | ||||||||||
| Provisions related to payroll |
158.0 | 123.0 | ||||||||||
| Share-based payment plans |
22.1 | 142.1 | 45.4 | |||||||||
| Provision for employee profit sharing |
59.3 | 66.2 | ||||||||||
| Other accounts payable |
30.4 | 45.5 | ||||||||||
| Mutual with jointly operation |
25.5 | 22.4 | ||||||||||
| Contractual obligations |
25.4 | 15.8 | ||||||||||
| Non-controlling purchase options - EVE |
20.0 | 24.0 | ||||||||||
| Accounts payable company acquisition |
(i | ) | 17.9 | - | ||||||||
| Insurance |
17.0 | 4.9 | ||||||||||
| Brazilian air force |
12.1 | 7.7 | ||||||||||
| Commission payable |
10.4 | 10.4 | ||||||||||
| Training simulator |
5.7 | 2.0 | ||||||||||
| Recourse and non-recourse debt |
1.6 | 2.9 | ||||||||||
| Non-controlling purchase options - Tempest |
- | 15.1 | ||||||||||
| Facilities and services |
26.0 | 2.4 | ||||||||||
|
|
|
|
|
|||||||||
| 551.4 | 387.7 | |||||||||||
|
|
|
|
|
|||||||||
| Current |
411.9 | 332.3 | ||||||||||
| Non-current |
139.5 | 55.4 | ||||||||||
(i) Refers to the balance payable for the acquisition of Coqueiro (Note 2.2.1) and Xmobots (Note 10.1), of US$ 13.4 and US$ 4.5, respectively.
| 19. | TAXES AND PAYROLL CHARGES PAYABLE |
| 09.30.2024 | 12.31.2023 | |||||||
| INSS (social security contribution) |
28.2 | 32.1 | ||||||
| IRRF (withholding tax) |
10.1 | 13.6 | ||||||
| FGTS (government employee severance indemnity fund) |
3.6 | 4.6 | ||||||
| Taxes refinancing program |
2.0 | 0.3 | ||||||
| IPI (manufacturing tax) |
1.1 | 1.3 | ||||||
| Service tax (“ISS”) |
1.0 | 1.7 | ||||||
| PIS and COFINS |
0.7 | 0.7 | ||||||
| Social Security |
0.1 | 1.2 | ||||||
| Others |
3.3 | 5.4 | ||||||
|
|
|
|
|
|||||
| 50.1 | 60.9 | |||||||
|
|
|
|
|
|||||
| Current |
37.0 | 42.6 | ||||||
| Non-current |
13.1 | 18.3 | ||||||
27
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 20. | INCOME TAXES |
20.1 Deferred income tax
The components of deferred tax assets and liabilities are as follows:
| 09.30.2024 | 12.31.2023 | |||||||||||
| Temporarily non-deductible provisions |
(i | ) | 177.0 | 165.9 | ||||||||
| Tax loss carryforwards |
116.6 | 1.1 | ||||||||||
| Functional currency effect of the non monetary assets |
(ii | ) | (430.9 | ) | (316.5 | ) | ||||||
| Gains not realized |
40.2 | 33.0 | ||||||||||
| Effect of differences in fixed asset |
(66.9 | ) | (55.1 | ) | ||||||||
| Derivatives / Hedge Accounting |
(30.9 | ) | 1.1 | |||||||||
| Other differences between basis: account x tax |
(iii | ) | (3.3 | ) | 3.5 | |||||||
|
|
|
|
|
|||||||||
| Deferred tax assets (liabilities), net |
(198.2 | ) | (167.0 | ) | ||||||||
|
|
|
|
|
|||||||||
| Total deferred tax asset |
132.5 | 137.7 | ||||||||||
| Total deferred tax liability |
(330.7 | ) | (304.7 | ) | ||||||||
(i) Revenues and expenses temporarily non-deductible include accounting provisions, foreign exchange rate gains or losses included in income tax calculation when cash-settled and other differences which will be included or excluded from the tax base when realized for fiscal purposes.
(ii) The income tax and social contribution tax bases of Embraer S.A. are impacted by exchange rate fluctuations, assets and liabilities registered in the tax books are held in R$ at their historical value and the accounting base is in dollars (functional currency), as well as income tax expenses/revenues recorded in the income statement. This item reflects the effect of these fluctuations.
(iii) It refers to differences between the accounting and tax bases of assets and liabilities, such as adjustments to contract revenues, loans costs, among others.
The changes in deferred income taxes are as follows:
| From the statement of income |
Other comprehensive income |
Total | ||||||||||
| At December 31, 2022 |
(372.1 | ) | 49.6 | (322.5 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Temporarily non-deductible provisions |
55.3 | - | 55.3 | |||||||||
| Tax loss carryforwards |
(15.5 | ) | - | (15.5 | ) | |||||||
| Functional currency effect of the non-monetary assets |
107.1 | - | 107.1 | |||||||||
| Gains not realized |
12.2 | - | 12.2 | |||||||||
| Effect of differences in fixed asset |
(16.1 | ) | - | (16.1 | ) | |||||||
| Derivatives / Hedge Accounting |
(0.1 | ) | - | (0.1 | ) | |||||||
| Other differences between basis: account x tax |
9.7 | 2.9 | 12.6 | |||||||||
|
|
|
|
|
|
|
|||||||
| At December 31, 2023 |
(219.5 | ) | 52.5 | (167.0 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Temporarily non-deductible provisions |
11.1 | - | 11.1 | |||||||||
| Tax loss carryforwards |
115.5 | - | 115.5 | |||||||||
| Functional currency effect of the non-monetary assets |
(114.4 | ) | - | (114.4 | ) | |||||||
| Gains not realized |
7.2 | - | 7.2 | |||||||||
| Effect of differences in fixed asset |
(11.8 | ) | - | (11.8 | ) | |||||||
| Derivatives / Hedge Accounting |
(31.3 | ) | (0.7 | ) | (32.0 | ) | ||||||
| Other differences between basis: account x tax |
(7.0 | ) | 0.2 | (6.8 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| At September 30, 2024 |
(250.2 | ) | 52.0 | (198.2 | ) | |||||||
|
|
|
|
|
|
|
|||||||
20.2 Recoverability of deferred tax assets
As of September,30, 2024, the Company did not recognize deferred tax assets totaling US$ 72.9. This amount includes US$ 0.2 related to temporary differences and US$ 72.7 associated with tax losses from subsidiaries, for which there is no forecast of future taxable profits (2023: US$ 85.9, which comprised US$ 2.4 related to temporary differences and US$ 83.5 related to tax losses).
28
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
20.3 Reconciliation of income tax expense
| 09.30.2024 | 09.30.2023 | |||||||||||
| Loss before income tax |
388.4 | (46.8 | ) | |||||||||
|
|
|
|
|
|
| |||||||
| Income tax and social contribution at the nominal Brazilian enacted tax rate - 34% |
(132.1 | ) | 15.9 | |||||||||
|
|
|
|
|
|
| |||||||
| Functional currency effect of the non-monetary assets |
(143.2 | ) | 54.1 | |||||||||
| Research and development tax incentives |
1.5 | 0.6 | ||||||||||
| Equity in the earnings of subsidiaries |
(1.2 | ) | 2.6 | |||||||||
| Non-reconized DTA on tax losses carryfoward |
1.7 | (36.3 | ) | |||||||||
| Diferent tax rates in subsidiaries |
54.2 | 30.5 | ||||||||||
| Other differences between accounting and fiscal basis |
(i) | 147.3 | (55.1 | ) | ||||||||
|
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|
|
|
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| |||||||
| 60.3 | (3.6 | ) | ||||||||||
|
|
|
|
|
|
| |||||||
| Income tax and social contribution income (expense) benefit as reported |
(71.8 | ) | 12.3 | |||||||||
|
|
|
|
|
|
| |||||||
| Current income tax and social contribution expense as reported |
(41.1 | ) | (47.2 | ) | ||||||||
| Deferred income tax and social contribution income (expense) benefit as reported |
(30.7 | ) | 59.5 | |||||||||
| Effective rate |
-18.5% | -26.3% | ||||||||||
(i) Refers substantially to permanent additions and exclusions, such as exclusions of Reintegra credits, subsidy to stimulate technological innovation (FINEP, art. 442 of RIR/18), as well as the exclusion of non-incidence of income and social contribution taxes on Selic update of undue tax debts.
In line with the legislation on Taxation on Universal Bases (Law 12,973 and Normative Instruction 1,520, both from 2014), Embraer S.A. adds the results of its subsidiaries located abroad to the calculation basis for Income Tax and Social Contribution at the end of the calendar year in which they were determined in the statements of financial position of the respective subsidiaries.
20.4 Uncertainty over income tax treatments
The Company held certain discussions with Brazilian tax authorities over administrative and judicial matters related to uncertain treatments adopted when calculating income taxes.
Embraer is challenging a tax assessment notice that disallowed the offsetting of CSLL with income tax credits paid abroad. This case is in the Federal Regional Court of the 3rd Region, awaiting the judgment of Embraer’s appeal. For this case, a provision of US$ 3.2 was recognized (2023: US$ 4.7).
Except for the aforementioned legal proceedings, the Company, based on the assessment of its internal and external legal advisors, has concluded that the tax treatment of the discussions will likely be accepted by the tax authorities. Among these discussions, the main one refers to the taxation of profits earned by subsidiaries located abroad, in the context of Provisional Measure 2,158-35 of 2001, whose updated amount discussed is US$ 100.1 (2023: US$ 126.5).
20.5 Global Model Anti-Tax Base Erosion Rules (Pillar 2)
The Pillar 2 legislative framework proposed by the Organization for Economic Co-operation and Development (“OECD”) applies to multinational groups whose consolidated revenue is greater than, or equal, to EUR 750 million in at least two of the last 4 years. This proposed legislation suggests that, if an entity in a consolidated group has an effective tax rate lower than 15%, additional taxation could be imposed on undertaxed profits.
For such rules to take effect, different countries around the world need to introduce them into their domestic legal systems.
The Company became subject to the supplementary global minimum tax by Pillar 2 tax legislation as of January 1, 2024, in France, Ireland, Spain, Switzerland, the Netherlands, and the United Kingdom and in Singapore as of January 1, 2025. Although Portugal has not yet introduced the rule into its domestic legal regulations, we understand that the country will follow European Union Directive 2022/2523 and will also adopt the measures as of January 1, 2025. In October 2024, Brazil published Provisional Measure (“MP”) 1,262/2024 and Normative Instruction 2,228/2024, which partially introduce Pillar 2 rules in the country, with effect scheduled for January 1, 2025, subject to the conversion of said MP into law.
29
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
Based on preliminary analyses performed by the Company with the assistance of external advisors, it does not expect any material impacts based on its operations in these jurisdictions and, therefore, it has not recognized any impact on its current or deferred income tax position.
The Company continues to develop detailed analyses of the new rules introduced with the support of external consultants to identify potential impacts for the year 2024 onwards based on the guidelines published by the OECD, as well as by the countries in which the Company has a presence, since the submission of income tax returns for 2024 and compliance with ancillary obligations in jurisdictions that introduced Pillar 2 tax legislation as of January 1, 2024 will take place as of 2026.
| 21. | PROVISIONS AND CONTINGENCIES |
21.1 Provisions
| Note | 12.31.2023 | Additions | Disposals | Reversals | Interests | Translation adjustments |
09.30.2024 | |||||||||||||||||||||||||
| Product warranties |
73.2 | 31.2 | (23.6 | ) | (5.9 | ) | - | (0.1 | ) | 74.8 | ||||||||||||||||||||||
| Provisions for labor, taxes and civil |
21.1.1 | 58.4 | 10.6 | (15.1 | ) | (6.3 | ) | 5.9 | (6.5 | ) | 47.0 | |||||||||||||||||||||
| Post retirement benefits |
48.0 | - | - | - | 3.1 | (5.2 | ) | 45.9 | ||||||||||||||||||||||||
| Provision of third-party materials |
28.6 | 22.7 | (6.1 | ) | - | - | - | 45.2 | ||||||||||||||||||||||||
| Provision for contractual obligations |
- | 40.9 | - | - | - | - | 40.9 | |||||||||||||||||||||||||
| Taxes |
35.8 | 10.2 | (9.6 | ) | (0.1 | ) | - | (3.8 | ) | 32.5 | ||||||||||||||||||||||
| Others |
44.2 | 23.5 | (28.8 | ) | (11.4 | ) | - | - | 27.5 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| 288.2 | 139.1 | (83.2 | ) | (23.7 | ) | 9.0 | (15.6 | ) | 313.8 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Current |
114.7 | 99.6 | ||||||||||||||||||||||||||||||
| Non-current |
173.5 | 214.2 | ||||||||||||||||||||||||||||||
21.1.1 Labor, tax and civil claims
| 09.30.2024 | 12.31.2023 | |||||||||||
| Tax related |
||||||||||||
| IRRF |
(i | ) | - | 11.2 | ||||||||
| PIS and COFINS |
2.8 | 2.6 | ||||||||||
| Social security contributions |
1.9 | 2.0 | ||||||||||
| Import taxes |
0.6 | 0.7 | ||||||||||
| IOF |
3.7 | 3.7 | ||||||||||
| Others |
2.5 | 1.5 | ||||||||||
|
|
|
|
|
|||||||||
| 11.5 | 21.7 | |||||||||||
| Labor related |
||||||||||||
| Class action 1379/1991 |
0.1 | 0.1 | ||||||||||
| Reintegration |
13.7 | 17.5 | ||||||||||
| Overtime |
5.5 | 6.3 | ||||||||||
| Dangerousness |
1.3 | 1.7 | ||||||||||
| Insalubrity |
5.0 | 3.2 | ||||||||||
| Indemnity |
2.2 | 3.4 | ||||||||||
| Third parties |
0.5 | 0.6 | ||||||||||
| Others |
7.1 | 3.7 | ||||||||||
|
|
|
|
|
|||||||||
| 35.4 | 36.5 | |||||||||||
| Civil related |
||||||||||||
| Indemnity |
0.1 | 0.2 | ||||||||||
| 0.1 | 0.2 | |||||||||||
|
|
|
|
|
|||||||||
| 47.0 | 58.4 | |||||||||||
|
|
|
|
|
|||||||||
| Current |
9.3 | 8.4 | ||||||||||
| Non-current |
37.7 | 50.0 | ||||||||||
(i) Tax Authoritries have claimed the payment of IRRF (withholding taxes) on the transfer of certain amounts abroad, which was questioned by the Company. In April 2024, the Company obtained a favorable outcome based on the certification of the final judgment of this action. In view of this, the provision was reversed.
30
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
21.2 Contingent liabilities
21.2.1 Administrative and judicial processes
The estimated contingent liabilities for proceedings related to tax matters and for which the probability of loss is possible are presented below, summarized by tax group:
| 09.30.2024 | 12.31.2023 | |||||||||||
| ISS |
(i) | 74.9 | 73.4 | |||||||||
| Social Security |
61.8 | 66.2 | ||||||||||
| PIS e COFINS |
34.8 | 39.0 | ||||||||||
| Others |
15.0 | 16.4 | ||||||||||
|
|
|
|
|
|
| |||||||
| Total |
186.5 | 195.0 | ||||||||||
|
|
|
|
|
|
| |||||||
(i) In July 2024, the Company received an unfavorable decision at the administrative level, maintaining the authorization related to the ISS (Tax on Services Rendered). In September 2024, the Company was notified about the filing of a tax execution by the Municipality of São José dos Campos and at the time, after presenting a guarantee, it was awaiting the processing of the process.
21.2.2 Labor processes
As of September 30, 2024, the Company has contingent liabilities related to several labor lawsuits totaling US$ 17.9 (2023: US$ 27.2).
21.2.3 Conviasa
The Company has a legal dispute with Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos (“Conviasa”), an airline controlled by the government of Venezuela, which alleges violation by Embraer of contractual obligations that were not complied with by Embraer to comply with US export control and sanctions regulations.
The amount in dispute is yet to be determined as Conviasa is still pending to produce evidence and proof of the alleged damages. The dispute is still at an early stage, and Management, based on its assessment and assisted by legal advisors, evaluated the outcome of this dispute as possible.
21.2.4 FCPA investigations ans settlements
In October 2016, the Company entered into definitive agreements with the United States and Brazilian authorities for the resolution of criminal and civil violations of the United States (Foreign Corrupt Practices Act of 1977 or FCPA) and for the resolution of allegations regarding violations of certain Brazilian laws in four aircraft transactions outside Brazil between 2007 and 2011.
In February 2017, the Company entered into an Exoneration Agreement with the Mozambican authorities for collaboration with the investigations in that country and under which there are no financial obligations for Embraer. In July 2018, the Company and the Attorney General’s Office of the Dominican Republic entered into a collaboration agreement whereby the Company undertook to collaborate with the investigations in that country.
Several individuals and entities are defendants in a criminal case in India related to the sale by Embraer of three aircraft AEW EMB-145 to the Indian Defense Research & Development Organization. Such transaction has been investigated and its results have been the subject of the aforesaid settlement agreement between Embraer and the Brazilian and U.S. authorities in October 2016, related to civil and criminal violations of the Foreign Corrupt Practices Act or FCPA. The Directorate of Enforcement in India initiated a criminal case against Embraer and some of its subsidiaries, as well as other individuals and entities not related to Embraer. Embraer and its subsidiary ECC Investment Switzerland AG are parties to this criminal case, have been served in November 2021 and are duly represented on the records.
The Company is not aware of other relevant cases involving Embraer and its subsidiaries other than mentioned above that relate to the scope of the agreements entered into with the United States and the Brazilian authorities in 2016.
31
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
As of September 30, 2024, the Company believes that there is no adequate basis for estimating provisions or quantifying possible contingencies related to other procedures and developments mentioned herein.
21.2.5 Arbitration Proceedings - The Boeing Company (“Boeing”)
The pending arbitration proceedings between Embraer and its affiliates, on the one hand, and The Boeing Company (“Boeing”) and its affiliates, on the other hand, were concluded in this 3rd quarter of 2024. Boeing made the payment of the gross amount of US$ 150 million to Embraer on October 3, 2024.
The amount recognized in profit or loss is presented as other income (see Note 26).
| 22. | SHARE-BASED PAYMENT ARRANGEMENTS |
22.1 Cash-settled share-based payment transactions
As of September 30, 2024, these transactions and the corresponding labor charges totaled US$ 142.1 (2023: US$ 45.4), as per Note 18.
The movements that occurred in the nine-month period ended September 30, 2024 in the share-based payment were:
Q Approval of two new programs that include:
(i) 4,088,971 shares granted. This plan will be settled in cash and has a vesting period of 4 years. From 2025 onwards, annual advances will be made. The share price on the grant date is R$ 22.43 (twenty-two reais and forty-three cents), which is equivalent to US$ 4.12 (four dollars and twelve cents) at the reporting date.
(ii) 2,537,146 shares granted. This plan will be settled in cash in 2027 and the share price on the date of grant is R$ 22.95 (twenty-two reais and ninety-five cents), which is equivalent to US$4.21 (four dollars and twenty-one cents) at the reporting date.
Q Full settlement of the plan granted in 2019 by delivering of cash corresponding to 164,969 shares value at R$ 27.28 each (twenty-seven reais and twenty-eight cents), which is equivalent to US$5.01 (five dollars and one cent) each at the reporting date.
Q Partial settlement of the plan granted in 2020. The settlement was carried out through the delivery of cash corresponding to 168,061 shares measured at R$ 27.28 each (twenty-seven reais and twenty-eight cents), which is equivalent to US$5.01 (five dollars and one cent) each at the reporting date.
Q Full settlement of the plans granted in 2021. The settlement was carried out through the delivery of cash corresponding to 1,960,022 shares measured at R$ 27.28 each (twenty-seven reais and twenty-eight cents), which is equivalent to US$5.01 (five dollars and one cent) each at the reporting date.
Q Advances made for the plans granted in September 2022 and September 2023, in the amount of US$ 6.7 and US$ 1.2, respectively.
32
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 23. | FINANCIAL INSTRUMENTS |
23.1 Accounting classification and fair value of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an unforced transaction between market participants on the measurement date, in the principal market or, in its absence, in the most advantageous market to which the Company has access on this date.
The fair value of the Company’s financial assets and liabilities was determined using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to generate estimates of fair values. Consequently, the estimates presented below are not necessarily indicative of the amounts that might be realized in the current market exchange. The use of different assumptions and/or methodologies could have a material effect on the estimated realizable values.
The carrying amounts of cash and cash equivalents, accounts receivable, customer and commercial financing, other financial assets and liabilities approximate their fair values.
The methods below were used to estimate the fair value of other class of financial instruments for which fair value is adopted:
Financial investments: discounted cash flow and market multiple.
Derivative financial instruments and warrants: see Note 6.
Customer and commercial financing: discounted cash flow.
Loans and financing: The fair value of bonds is the unit price on the last trading day at the end of the reporting period multiplied by the quantity issued.
For other loans and financing, fair value is based on the amount of contractual cash flows and the discount rate used is based on the rate for contracting a new transaction in similar conditions or in the lack thereof, on the future curve for the flow of each obligation.
When measuring the fair value of a financial instrument, the Company uses observable market data as much as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company may have access to on the measurement date.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data.
There were no transfers between levels in 2024 and 2023.
33
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
The following tables show the carrying amount and fair values of financial instruments, including their levels in the fair value hierarchy. It does not include fair value information for financial instruments not measured at fair value if the carrying amount is a reasonable approximation of fair value.
| 09.30.2024 | Financial Instruments at amortized cost |
|
||||||||||||||||||||||||||||||||||||||
| Note
|
Amortized Cost |
Fair value | FVPL
|
FVOCI
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total fair value |
|||||||||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents |
3 | 829.8 | - | - | 1.7 | 831.5 | - | 1.7 | - | 1.7 | ||||||||||||||||||||||||||||||
| Financial investments |
4 | |||||||||||||||||||||||||||||||||||||||
| Public securities |
67.2 | - | - | - | 67.2 | - | - | - | - | |||||||||||||||||||||||||||||||
| Private securities |
75.8 | - | 33.6 | - | 109.4 | - | 33.6 | - | 33.6 | |||||||||||||||||||||||||||||||
| Structure note |
- | - | 84.7 | - | 84.7 | - | 84.7 | - | 84.7 | |||||||||||||||||||||||||||||||
| Investment funds |
- | - | 21.9 | 101.7 | 123.6 | - | 123.6 | - | 123.6 | |||||||||||||||||||||||||||||||
| Fixed-term deposit |
382.4 | - | - | 84.3 | 466.7 | - | 84.3 | - | 84.3 | |||||||||||||||||||||||||||||||
| Others |
- | - | 88.3 | - | 88.3 | - | - | 88.3 | 88.3 | |||||||||||||||||||||||||||||||
| Trade accounts receivable, net |
5 | 255.4 | - | - | - | 255.4 | - | - | - | - | ||||||||||||||||||||||||||||||
| Derivative financial instruments |
6 | - | - | 101.5 | 4.7 | 106.2 | - | 106.2 | - | 106.2 | ||||||||||||||||||||||||||||||
| Other assets |
75.1 | - | - | - | 75.1 | - | - | - | - | |||||||||||||||||||||||||||||||
| Customer and commercial financing |
7 | 40.3 | - | 1.7 | - | 42.0 | - | - | 1.7 | 1.7 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 1,726.0 | - | 331.7 | 192.4 | 2,250.1 | - | 434.1 | 90.0 | 524.1 | ||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Liabilities |
||||||||||||||||||||||||||||||||||||||||
| Loans and financing |
16 | 2,646.0 | 2,725.0 | - | - | 2,646.0 | 1,871.9 | 853.1 | - | 2,725.0 | ||||||||||||||||||||||||||||||
| Trade accounts payable |
14 | 1,159.6 | - | - | - | 1,159.6 | - | - | - | - | ||||||||||||||||||||||||||||||
| Trade accounts payable supplier finance |
15 | 48.4 | - | - | - | 48.4 | - | - | - | - | ||||||||||||||||||||||||||||||
| Other payables |
18 | 551.4 | - | - | - | 551.4 | - | - | - | - | ||||||||||||||||||||||||||||||
| Derivative financial instruments |
6 | - | - | 44.9 | 2.8 | 47.7 | 2.0 | 45.7 | - | 47.8 | ||||||||||||||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 4,405.4 | 2,725.0 | 44.9 | 2.8 | 4,453.1 | 1,873.9 | 898.8 | - | 2,772.7 | ||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
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|
|
|||||||||||||||||||||||
| 12.31.2023 | Financial Instruments at amortized cost |
|
||||||||||||||||||||||||||||||||||||||||||
| Note
|
Amortized Cost |
Fair value
|
FVPL
|
FVOCI
|
Other financial liabilities |
Total
|
Level 1
|
Level 2
|
Level 3
|
Total fair value |
||||||||||||||||||||||||||||||||||
| Assets |
- | |||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents |
3 | 1,629.2 | - | - | - | - | 1,629.2 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Financial investments |
4 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Public securities |
66.6 | - | - | - | - | 66.6 | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Private securities |
105.1 | - | 41.3 | - | - | 146.4 | - | 41.3 | - | 41.3 | ||||||||||||||||||||||||||||||||||
| Investment funds |
- | - | 27.4 | - | - | 27.4 | - | 27.4 | - | 27.4 | ||||||||||||||||||||||||||||||||||
| Fixed-term deposit |
- | - | - | 350.5 | - | 350.5 | - | 350.5 | - | 350.5 | ||||||||||||||||||||||||||||||||||
| Others |
- | - | 100.8 | - | - | 100.8 | - | - | 100.8 | 100.8 | ||||||||||||||||||||||||||||||||||
| Trade accounts receivable, net |
5 | 221.0 | - | - | - | - | 221.0 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Derivative financial instruments |
6 | - | - | 8.5 | 9.0 | - | 17.5 | - | 17.5 | - | 17.5 | |||||||||||||||||||||||||||||||||
| Other assets |
73.2 | - | - | - | - | 73.2 | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Customer and commercial financing |
7 | 41.6 | - | 21.2 | - | - | 62.8 | - | 12.4 | 8.8 | 21.2 | |||||||||||||||||||||||||||||||||
|
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|
|
|||||||||||||||||||||||||
| 2,136.7 | - | 199.2 | 359.5 | - | 2,695.4 | - | 449.1 | 109.6 | 558.7 | |||||||||||||||||||||||||||||||||||
|
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|
|||||||||||||||||||||||||
| Liabilities |
||||||||||||||||||||||||||||||||||||||||||||
| Loans and financing |
16 | 2,886.4 | 2,812.3 | - | - | - | 2,886.4 | 1,843.0 | 969.3 | - | 2,812.3 | |||||||||||||||||||||||||||||||||
| Trade accounts payable |
14 | 787.0 | - | - | - | - | 787.0 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Trade accounts payable supplier finance |
15 | 37.6 | - | - | - | - | 37.6 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Other payables |
18 | 372.6 | - | - | - | 15.1 | 387.7 | - | - | 15.1 | 15.1 | |||||||||||||||||||||||||||||||||
| Derivative financial instruments |
6 | - | - | 125.1 | 0.1 | - | 125.2 | 11.3 | 113.9 | - | 125.2 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| 4,083.6 | 2,812.3 | 125.1 | 0.1 | 15.1 | 4,223.9 | 1,854.3 | 1,083.2 | 15.1 | 2,952.6 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
34
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
| Assets | Liabilities | |||||||
| At 12.31.2022 |
103.9 | 31.0 | ||||||
| Adding shares |
11.5 | - | ||||||
| Reversal |
- | (17.5 | ) | |||||
| Exchange variation |
(1.5 | ) | (0.8 | ) | ||||
| Fair value adjustment |
(4.3 | ) | 2 | |||||
|
|
|
|
|
|||||
| At 12.31.2023 |
109.6 | 15.1 | ||||||
|
|
|
|
|
|||||
| Exchange variation |
- | (1.7 | ) | |||||
| Fair value adjustment |
(19.6 | ) | 6 | |||||
| Reversal |
- | (19.1 | ) | |||||
|
|
|
|
|
|||||
| At 09.30.2024 |
90.0 | - | ||||||
|
|
|
|
|
|||||
The inputs used in the valuation techniques to measure the fair value of Republic Airways’ shares (Note 4) and customer and commercial financing (Note 7) were classified as Level 3.
The significant unobservable inputs used in measuring the fair value of customer and commercial financing are the subscription price of the shares to be issued by the counterparty and the discount rate, which is composed of the risk-free rate and credit risk for the period of the transaction.
The market comparison valuation technique (market approach) was used to measure the fair value of Republic Airways’ shares. This valuation model considers the average market multiple Enterprise Value / Earnings Before Interest, Taxes, Depreciation, and Amortization (“EV / EBITDA”) of companies comparable to Republic Airways.
In the measurement of Republic Airways’ enterprise value Earnings Before Financial Results, Taxes, Depreciation, and Amortization (Adjusted EBITDA) was adopted. The estimate is adjusted for Republic Airways’ net debt and the effect of not actively trading the shares. The significant unobservable inputs are:
Q Average market multiple.
Q Discount for lack of marketability.
If the possibly reasonable changes indicated below were considered in the significant unobservable inputs and other inputs were held constant, the fair value of Republic Airways’ shares would be:
| Increase | Probable | Decrease | ||||||||||||||
| September 30, 2024 | scenario | |||||||||||||||
| Growth rate (6% change) |
89.8 | 88.4 | 89.8 | |||||||||||||
| Discount rate (1% change) |
90.5 | 88.4 | 90.5 | |||||||||||||
23.1.1 Financial risk management policy
The Company has and follows a risk management policy, which involves the diversification of transactions and counterparties, with the objective of identifying the risks related to financial transactions, as well as the operational directives related to these financial transactions. The policy provides for regular monitoring and management of the nature and general situation of the financial risks to assess the results and the financial impact on cash flows. The credit limits and risk rating of the counterparties are also reviewed periodically.
The Company’s risk management policy is part of the financial management policy established by the Executive Directors and approved by the Board of Directors and provides for monitoring by a Financial Management Committee. Under this policy, the market risks are mitigated when there are no offsetting elements in the Company’s operations and when it is considered necessary to support the corporate strategy. The Company’s internal control procedures provide for consolidated monitoring and supervision of the financial results and of the impact on cash flows.
The Financial Management Committee assists the Financial Department in examining and reviewing information in relation to the economic scenario and its potential impact on the Company’s operations, including significant risk management policies, procedures, and practices.
35
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
The financial risk management policy includes the use of derivative financial instruments to mitigate the effects of interest rate fluctuations and to reduce the exposure to exchange rate risk. The use of these instruments for speculative purposes is forbidden.
23.1.2 Capital management
The Company uses capital management to ensure the continuity of its investment program and offer a return to its shareholders and benefits to its stakeholders and maintain an optimized capital structure to reduce costs.
The Company may review its dividends payment policy, pay back capital to the shareholders, issue new shares or sell assets to maintain or adjust its capital structure (to reduce indebtedness, for instance).
Liquidity and the leverage level are monitored to mitigate refinancing risk and to maximize the return to the shareholders. The ratio between the liquidity and the return to the shareholders may be changed pursuant to the assessment of the Board of Directors.
23.1.3 Credit risk
Credit risk is the risk of a counterparty to a transaction not meeting an obligation established in a financial instrument, or in the negotiation of sales to customers, leading to a financial loss. The Company is exposed to credit risk in its operational activities, cash held in banks and other investments in financial instruments held in financial institutions.
Q Cash and cash equivalents and financial investments
The credit risk of cash and cash equivalents and financial investments which is managed by the Financial Department is in accordance with the risk management policy. The credit limit of counterparties is reviewed daily in order to not to exceed the limits established mitigating possible losses generated by the bankruptcy of a counterparty, as well as transactions are carried out with counterparties with investment grade by risk rating agencies (Fitch, Moody’s e Standard and Poor’s). The Financial Management Committee assists the Financial Department in examining and reviewing operations with counterparties.
Q Trade accounts receivable and contract assets with customers
The Company may incur losses on accounts receivable arising from invoicing of spare parts and services to customers. To reduce the credit risk associated with installment sales, the respective credit risk analysis is carried out which considers qualitative aspects, which include the experience of past transactions and quantitative aspects, when applicable, based on financial information. Any increased risk and/ or late payment by the customer may impact the continuity of the supply of parts and services, which may make it impossible for the aircraft to operate.
The Company applies the simplified approach to measure the expected credit losses in relation to accounts receivable from customers that do not have a significant financing component (Note 5). In this measurement, balances are grouped by the period that the securities are outstanding, and the expected loss factor is applied based on actual credit loss experiences for each period. This factor gradually increases as the security remains in default in the portfolio.
For receivables not overdue, the expected credit loss is calculated using the past 10 years’ experience and tracking prospective trends. The prospective expected loss factor under the methodology was 2.3% (2023: 2.2%), except for the Commercial Aviation customers served by the Services & Support segment.
For Commercial Aviation customers served by the Services & Support segment, customer economic data is incorporated into the analysis of expected credit losses, which includes ratings assessed by the main credit agencies, in order to assertively capture prospective factors that may impact the receivables portfolio. The weighted forward-looking factor applied for these clients was 3.9% (2023: 6.0%).
The credit risk characteristic of the Company’s customers is different for the Defense & Security segment since the counterparties refer only to government entities and agencies. The risk in this case is associated with the sovereign risk of each country, especially Brazil, as well as with the continuity of strategic projects under development, for which the Company usually has the enforceable right to receive for the performance completed to date. The Company historically has not presented losses in the trade accounts receivable and contract assets balances with these counterparties.
36
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
Trade accounts receivable and contract assets are written off when there is no reasonable expectation of recovery. Indications include, among others, the inability of the debtor to participate in a plan to renegotiate its debt or possible legal actions have been exhausted.
The Company applies the general approach to measure losses due the expected credit loss on receivables recognized as customer and commercial financing (Note 7). The expected credit loss is estimated based on the full term of the contracts, considering the probability of loss and credit risk of the counterparty, evaluated on a contract-by-contract basis and updated on each reporting date. The fair value of contractual guarantees is considered as coverage and reduction of the risk assumed, whether partially or fully, and the provision for expected credit loss calculated by the Company’s methodology.
23.1.4 Liquidity risk
This is the risk of the Company not having enough funds to honor its financial commitments as a result of a mismatch of terms or volumes of estimated receipts and payments.
Projections and assumptions are established to manage the liquidity of cash in US$ and R$, in accordance with the financial management policy, based on contracts for future disbursements and receipts, and monitored periodically by the Company.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and include contractual interest payments.
For financial liabilities indexed to fixed rates, interest expenses were calculated based on the interest rate established in each contract. For financial liabilities indexed to floating rates, interest expenses were calculated based on the market forecast for each period.
| Contractual cash flows | ||||||||||||||||||||||||
| Book value | Total | Less than one | One to three | Three to five | More than five | |||||||||||||||||||
| year | years | years | years | |||||||||||||||||||||
| At September 30, 2024 |
||||||||||||||||||||||||
| Loans and financing |
2,646.0 | 3,264.9 | 193.4 | 1,302.3 | 873.5 | 895.7 | ||||||||||||||||||
| Trade accounts payable |
1,159.6 | 1,159.6 | 1,159.6 | - | - | - | ||||||||||||||||||
| Trade accounts payable supplier finance |
48.4 | 48.4 | 48.4 | - | - | - | ||||||||||||||||||
| Lease liabilities |
113.0 | 113.0 | 18.3 | 29.9 | 29.6 | 35.2 | ||||||||||||||||||
| Other payables |
551.4 | 551.4 | 411.9 | 63.8 | 72.5 | 3.2 | ||||||||||||||||||
| Derivative financial instruments |
47.7 | 47.7 | 29.3 | 18.4 | — | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
4,566.1 | 5,185.0 | 1,860.9 | 1,414.4 | 975.6 | 934.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Line of credit available
In February 2023, the Company contracted a financing line with BNDES of R$ 500 million, which is set to mature in August 2029. When utilized, this financing will be subject to an interest rate of 2.20% p.a. above the TR (Reference Rate) and an additional 1.10% p.a. plus TFBD (BNDES Fixed Rate in US$) disclosed by BNDES. As of September 30, 2024, no disbursement had been made related to this credit line.
Additionally, the Company has a revolving credit line of US$ 1,000 million maturing in August 2029. This line was negotiated with 17 international financial institutions, and when accessed, it will be remunerated at SOFR plus variable rate ranging from 0.95% to 1.70% p.a., depending on the Company’s corporate rating. As of September 30, 2024, this credit line was not being used.
37
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
23.1.5 Market risk
Market risk is the risk that changes in market prices, such as interest rates and exchange rates, will affect the Company’s earnings or the value of its financial instruments. The Company uses derivatives to manage market risks (Note 6).
Interest rate risk
This risk arises from the possibility of the Company incurring losses on the fluctuation of floating interest rates, which might increase financial expenses, and/or decrease financial income, as well as negatively impacting the fair value of financial assets measured at fair value. The financial instruments subject to interest rate risk are:
Q Cash equivalents and financial investments: the Company’s policy for managing the risk of fluctuations in interest rates on financial investments is to maintain a system to measure market risk, which consists of an aggregate analysis of a variety of risk factors that might affect the return of those investments.
Q Loans and financing: the Company monitors financial markets with the purpose of evaluating hedge structures (derivative instruments) in compliance with the financial and risk management policy to protect its exposure risks of volatility in foreign currency and interest rates.
As of September 30, 2024, the Company’s cash equivalents, financial investments and loans and financing were indexed as follows:
| Pre-fixed | Post-fixed | Total | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Cash, cash equivalents and financial investments |
1,653.9 | 93.37% | 117.5 | 6.63% | 1,771.4 | 100.00% | ||||||||||||||||||
| Loans and financing |
2,528.5 | 95.56% | 117.5 | 4.44% | 2,646.0 | 100.00% | ||||||||||||||||||
Foreign exchange rate risk
The Company’s operations most exposed to foreign exchange gains/losses are those denominated in R$ (labor costs, tax issues, local expenses, and financial investments) as well as investments in subsidiaries in currencies other than the US$.
The Company policy for protection against foreign exchange risks on assets and liabilities is mainly based on seeking to maintain a balance between assets and liabilities indexed in each currency and management of foreign currency purchases and sales to ensure that, on the realization of the transactions contracted, this natural hedge will occur.
This policy minimizes the effect of exchange rate changes on assets and liabilities already contracted but does not protect against the risk of fluctuations in future results due to appreciation or depreciation of the real that can, when measured in dollars, result in an increase or reduction in the portion of costs denominated in R$.
The Company, in certain market conditions, may decide to protect possible future mismatches of expenses or revenues in other currencies to minimize the impact of exchange rate variations on results. To minimize the exchange rate risk on rights and obligations denominated in currencies other than the functional currency, the Company may contract transactions with derivative instruments.
38
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
Below are the amounts of financial instruments denominated in different currencies:
| 09.30.2024 | 12.31.2023 | |||||||
| Loans and financing |
||||||||
| Brazilian reais |
18.4 | 17.5 | ||||||
| U.S. dollars |
2,584.7 | 2,833.0 | ||||||
| Euro |
42.9 | 35.9 | ||||||
|
|
|
|
|
|||||
| 2,646.0 | 2,886.4 | |||||||
|
|
|
|
|
|||||
| Trade accounts payable |
||||||||
| Brazilian reais |
99.6 | 93.7 | ||||||
| U.S. dollars |
1,022.7 | 645.2 | ||||||
| Euro |
31.9 | 42.0 | ||||||
| Other currencies |
5.4 | 6.1 | ||||||
|
|
|
|||||||
| 1,159.6 | 787.0 | |||||||
|
|
|
|||||||
| Trade accounts payable Supplier finance |
||||||||
| Brazilian reais |
22.7 | 18.4 | ||||||
| U.S. dollars |
25.6 | 19.2 | ||||||
|
|
|
|||||||
| 48.3 | 37.6 | |||||||
|
|
|
|||||||
| Total (1) |
3,853.9 | 3,711.0 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents and financial investments |
||||||||
| Brazilian reais |
121.3 | 132.7 | ||||||
| U.S. dollars |
1,614.6 | 2,165.9 | ||||||
| Euro |
30.8 | 12.7 | ||||||
| Other currencies |
4.7 | 9.6 | ||||||
|
|
|
|||||||
| 1,771.4 | 2,320.9 | |||||||
|
|
|
|||||||
| Trade accounts receivable: |
||||||||
| Brazilian reais |
26.7 | 26.7 | ||||||
| U.S. dollars |
193.6 | 171.1 | ||||||
| Euro |
26.0 | 19.2 | ||||||
| Other currencies |
9.1 | 4.0 | ||||||
| 255.4 | 221.0 | |||||||
|
|
|
|
|
|||||
| Total (2) |
2,026.8 | 2,541.9 | ||||||
|
|
|
|
|
|||||
| Net exposure (1 - 2): |
||||||||
| Brazilian reais |
(7.3) | (29.8) | ||||||
| U.S. dollars |
1,824.8 | 1,160.4 | ||||||
| Euro |
18.0 | 46.0 | ||||||
| Other currencies |
(8.4) | (7.5) | ||||||
The Company has other financial assets and liabilities that are also influenced by foreign exchange variations that are not included in the table above. These are used to minimize exposure to the currencies presented.
39
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 24. | REVENUE FROM CONTRACTS WITH CUSTOMERS |
24.1 Revenue disaggregation by category and geographic region
| 09.30.2024 | ||||||||||||||||||||||||||||
| North America | Latin America | Asia Pacific | Brazil | Europe | Others | Total | ||||||||||||||||||||||
| Aircraft |
1,812.6 | 199.2 | 35.3 | 127.7 | 257.4 | 27.6 | 2,459.8 | |||||||||||||||||||||
| Long-term contracts - aircraft and development |
- | - | 51.9 | 112.3 | 200.6 | - | 364.8 | |||||||||||||||||||||
| Others |
3.9 | - | - | 15.4 | 13.7 | - | 33.0 | |||||||||||||||||||||
| Service |
414.1 | 38.3 | 74.2 | 78.8 | 238.7 | 44.2 | 888.3 | |||||||||||||||||||||
| Spare Parts |
181.1 | 4.0 | 24.1 | 32.8 | 78.2 | 17.1 | 337.3 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| Total |
2,411.7 | 241.5 | 185.5 | 367.0 | 788.6 | 88.9 | 4,083.2 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| 09.30.2023 | ||||||||||||||||||||||||||||
| North America | Latin America | Asia Pacific | Brazil | Europe | Others | Total | ||||||||||||||||||||||
| Aircraft |
1,482.6 | 21.4 | 16.1 | 60.3 | 320.1 | 27.2 | 1,927.7 | |||||||||||||||||||||
| Long-term contracts - aircraft and development |
0.7 | - | 0.1 | 73.8 | 200.4 | - | 275.0 | |||||||||||||||||||||
| Others |
3.6 | - | - | 4.0 | 12.9 | - | 20.5 | |||||||||||||||||||||
| Service |
353.6 | 24.9 | 68.6 | 92.3 | 161.0 | 41.0 | 741.4 | |||||||||||||||||||||
| Spare Parts |
182.5 | 5.9 | 15.7 | 49.0 | 62.0 | 13.7 | 328.8 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| Total |
2,023.0 | 52.2 | 100.5 | 279.4 | 756.4 | 81.9 | 3,293.4 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
24.2 Contract assets and liabilities
| 09.30.2024 | 12.31.2023 | |||||||
| Contract Assets - Third Parties |
402.4 | 196.7 | ||||||
| Contract assets - Other related parties |
343.6 | 314.8 | ||||||
|
|
|
|
|
| ||||
| Contract assets |
746.0 | 511.5 | ||||||
|
|
|
|
|
| ||||
| Current |
743.8 | 509.1 | ||||||
| Non-current |
2.2 | 2.4 | ||||||
Contract assets – US$ 127.9 included in the contract assets position as of December 31, 2023 were billed and collected by the Company in 2024.
As of September 30, 2024, the expected credit losses on the contract assets amounted to US$ 3.3 (2023: US$ 2.7).
| 09.30.2024 | 12.31.2023 | |||||||
| Advances from customers - Aircraft and Defense long-term contracts |
2,544.8 | 2,252.8 | ||||||
| Advances from customers - Other related parties |
74.9 | 84.6 | ||||||
| Deferred revenue with multiple elements |
231.9 | 203.5 | ||||||
|
|
|
|
|
| ||||
| Contract liabilities |
2,851.6 | 2,540.9 | ||||||
|
|
|
|
|
| ||||
| Current |
2,126.1 | 1,919.0 | ||||||
| Non-current |
725.5 | 621.9 | ||||||
Contract liabilities – Out of the total balances of contract liabilities as of December 31, 2023, US$ 1,479.0 were recognized as revenues in 2024.
40
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
24.3 Performance obligations
The Company has a portfolio of firm orders (“backlog”), which includes performance obligations that are either unsatisfied or partially satisfied.
As of September 31, 2024, the amount of revenue allocated to performance obligations not yet satisfied (or partially satisfied) was US$ 22.7 billion (2023: US$ 18.7 billion). Of this amount, US$ 20.8 billion is expected to be satisfied within the next 5 years (2023: US$ 17.2 billion), according to the Company’s estimate.
| 25. | EXPENSES BY NATURE |
| 09.30.2024 | 09.30.2023 | |||||||||||
| As presented in the statements of profit or loss: |
||||||||||||
| Cost of sales and services |
(3,359.7) | (2,723.3) | ||||||||||
| Administrative |
(145.1) | (152.8) | ||||||||||
| Selling |
(230.8) | (223.7) | ||||||||||
|
|
|
|
|
|
| |||||||
| (3,735.6) | (3,099.8) | |||||||||||
|
|
|
|
|
|
| |||||||
| Expenses by nature: |
||||||||||||
| General manufacturing costs |
(i) | (2,844.5) | (2,262.4) | |||||||||
| Depreciation |
(86.8) | (77.7) | ||||||||||
| Amortization |
(82.8) | (79.8) | ||||||||||
| Personnel expenses |
(558.9) | (518.3) | ||||||||||
| Marketing and sales expenses |
(55.3) | (55.0) | ||||||||||
| Services rendered by third parties |
(59.8) | (57.7) | ||||||||||
| Miscellaneous |
(ii) | (47.5) | (48.9) | |||||||||
|
|
|
|
|
|
| |||||||
| (3,735.6) | (3,099.8) | |||||||||||
|
|
|
|
|
|
| |||||||
(i) Refers to costs of materials and general manufacturing expenses and provision service.
(ii) Refers mainly to expenses related to insurance, taxes and fees.
41
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 26. | OTHER INCOME AND OTHER EXPENSES |
| 09.30.2024 | 09.30.2023 | |||||||||||
| Recovery of expenses |
(i | ) | 150.0 | - | ||||||||
| Tax credits |
41.4 | 5.7 | ||||||||||
| Reversal (Provision) for contingencies |
1.9 | (1.2 | ) | |||||||||
| Royalties |
14.2 | 12.7 | ||||||||||
| Other sales |
7.2 | 5.5 | ||||||||||
| Reimbursement of expenses |
3.7 | 13.9 | ||||||||||
| Revenue from contractual fines |
3.1 | 3.6 | ||||||||||
| Defese billing tax |
- | 14.9 | ||||||||||
| Corporate projects |
(62.0 | ) | (39.0 | ) | ||||||||
| Expenses system project |
(14.7 | ) | (13.9 | ) | ||||||||
| Flight safety standards |
(4.6 | ) | (4.3 | ) | ||||||||
| Expense contractual fines |
(4.3 | ) | (0.3 | ) | ||||||||
| Aircraft maintenance and flights costs - fleet |
(4.1 | ) | (5.4 | ) | ||||||||
| Taxes on other sales |
(3.8 | ) | (3.6 | ) | ||||||||
| Training and development |
(2.7 | ) | (2.8 | ) | ||||||||
| Warrants |
(1.9 | ) | - | |||||||||
| Environmental provision |
(1.7 | ) | (1.3 | ) | ||||||||
| Product modification |
(1.4 | ) | (1.7 | ) | ||||||||
| Tax fines |
(1.3 | ) | - | |||||||||
| Disposal of production units in Évora |
- | (3.2 | ) | |||||||||
| Others |
(13.9 | ) | (12.2 | ) | ||||||||
|
|
|
|
|
|
| |||||||
| 105.1 | (32.6 | ) | ||||||||||
|
|
|
|
|
|
| |||||||
(i) Refers to the reimbursement of expenses incurred by the Company for the carve-out project with Boeing, as Note 21.2.5.
42
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 27. | FINANCIAL RESULT |
| 09.30.2024 | 09.30.2023 | |||||||
| Financial income: |
||||||||
| Derivative financial instruments |
89.4 | - | ||||||
| Warrants: adjustment to fair value |
77.7 | - | ||||||
| Interest on cash and cash equivalents and financial investments |
75.7 | 79.0 | ||||||
| Interest on receivables |
41.1 | 11.3 | ||||||
| Financial structuring |
- | 8.3 | ||||||
| Taxes over financial revenue |
(3.5 | ) | (2.5 | ) | ||||
| Others |
3.2 | 3.8 | ||||||
|
|
|
|
|
|
| |||
| Total financial income |
283.6 | 99.9 | ||||||
|
|
|
|
|
|
| |||
| Financial expenses: |
||||||||
| Interest on loans and financing |
(150.1 | ) | (160.0 | ) | ||||
| Long-term incentives -phanton shares |
(91.1 | ) | (17.0 | ) | ||||
| Other interest and banking operations |
(14.6 | ) | - | |||||
| Fair value adjustment of customer financing |
(12.0 | ) | - | |||||
| IOF - (tax on financial transactions) |
(0.9 | ) | (11.7 | ) | ||||
| Warrants: adjustment to fair value |
- | (35.0 | ) | |||||
| Financial restructuring costs |
- | (3.0 | ) | |||||
| Interest on taxes, social charges and contributions |
0.4 | (5.5 | ) | |||||
| Others |
(16.5 | ) | (18.1 | ) | ||||
|
|
|
|
|
|
| |||
| Total financial expenses |
(284.8 | ) | (250.3 | ) | ||||
|
|
|
|
|
|
| |||
| 28. | FOREIGN EXCHANGE, NET |
| 09.30.2024 | 09.30.2023 | |||||||
| Tax credits |
(17.6 | ) | 6.2 | |||||
| Trade accounts receivable and contract assets |
(34.7 | ) | 12.9 | |||||
| Cash and cash equivalents and financial investments |
(6.5 | ) | (4.2 | ) | ||||
| Others assets |
(2.1 | ) | 6.4 | |||||
| Contract liabilities |
4.2 | - | ||||||
| Loans and financing |
1.7 | (0.2 | ) | |||||
| Provisions |
21.6 | (7.7 | ) | |||||
| Taxes and charges payable |
5.8 | (2.7 | ) | |||||
| Other payables |
(3.5 | ) | 1.5 | |||||
| Suppliers |
8.8 | (5.4 | ) | |||||
| Provisions for contingencies |
4.2 | (2.0 | ) | |||||
| Others liabilities |
(0.5 | ) | 3.5 | |||||
|
|
|
|
|
|
| |||
| Net monetary and foreign exchange variations |
(18.6 | ) | 8.3 | |||||
|
|
|
|
|
|
| |||
| Derivative financial instruments |
(1.0 | ) | (10.2 | ) | ||||
|
|
|
|
|
|
| |||
| Foreign exchange gain (loss), net |
(19.6 | ) | (1.9 | ) | ||||
|
|
|
|
|
|
| |||
43
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 29. | RESPONSIBILITIES AND COMMITMENTS |
Backstop commitments (Commercial Aviation)
In certain firm sales contracts of commercial jets included in backlog, the Company has entered into backstop commitments to provide financing in case the customer fails to obtain sufficient credit lines upon the aircraft deliveries.
Past experience demonstrates the Company was requested and provided financing on limited cases to its customers during the deliveries of E-Jets family, which demonstrates existence of alternative funding sources in the market to transfer the backstop commitments and remote probability of exercise. In addition, the Company retains property of the assembled aircraft until the customer fulfils the payments on delivery, then not being exposed to risks of loss.
With the purpose of mitigating the credit risk exposure, the exercise of backstop commitments relies on current financial conditions of the customer upon exercise notice and conditions precedent to be accomplished. If the Company effectively provides the financing on delivery, the related aircraft is kept as collateral in the financing structure.
| 30. | OPERATING SEGMENTS |
Operating income by segment
| 09.30.2024 | ||||||||||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated | Total | |||||||||||||||||||||||||
| Revenue |
1,227.5 | 487.6 | 1,136.7 | 1,195.4 | 36.0 | 4,083.2 | - | 4,083.2 | ||||||||||||||||||||||||
| Cost of sales and services |
(1,150.6 | ) | (423.5 | ) | (886.7 | ) | (867.4 | ) | (31.5 | ) | (3,359.7 | ) | - | (3,359.7) | ||||||||||||||||||
| Gross profit |
76.9 | 64.1 | 250.0 | 328.0 | 4.5 | 723.5 | - | 723.5 | ||||||||||||||||||||||||
| Operating income (expense) |
(105.7 | ) | (60.3 | ) | (108.4 | ) | (134.7 | ) | (53.8 | ) | (462.9 | ) | 148.6 | (314.3) | ||||||||||||||||||
| Operating income before financial results |
(28.8 | ) | 3.8 | 141.6 | 193.3 | (49.3 | ) | 260.6 | 148.6 | 409.2 | ||||||||||||||||||||||
| 09.30.2023 | ||||||||||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated | Total | |||||||||||||||||||||||||
| Revenue |
1,095.6 | 313.1 | 805.0 | 1,031.8 | 47.9 | 3,293.4 | - | 3,293.4 | ||||||||||||||||||||||||
| Cost of sales and services |
(1,006.9 | ) | (255.5 | ) | (656.5 | ) | (769.5 | ) | (34.9 | ) | (2,723.3 | ) | - | (2,723.3) | ||||||||||||||||||
| Gross profit |
88.7 | 57.6 | 148.5 | 262.3 | 13.0 | 570.1 | - | 570.1 | ||||||||||||||||||||||||
| Operating income (expense) |
(99.6 | ) | (35.0 | ) | (116.5 | ) | (111.4 | ) | (76.1 | ) | (438.6 | ) | (26.0 | ) | (464.6) | |||||||||||||||||
| Operating income before financial results |
(10.9 | ) | 22.6 | 32.0 | 150.9 | (63.1 | ) | 131.5 | (26.0 | ) | 105.5 | |||||||||||||||||||||
(*) Unallocated items from operating income (expense) include certain corporate demands not directly related to the operating segments. In 2024, it substantially refers to the reimbursement of expenses received in the context of arbitration (Note 26).
44
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
Revenue by geographic area and operating segment
| 09.30.2024 |
||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total | |||||||||||||||||||
| North America |
998.7 | - | 817.8 | 595.1 | 0.1 | 2,411.7 | ||||||||||||||||||
| Europe |
105.6 | 235.6 | 139.0 | 308.4 | - | 788.6 | ||||||||||||||||||
| Asia Pacific |
- | 51.6 | 35.3 | 98.6 | - | 185.5 | ||||||||||||||||||
| Latin America, except Brazil |
95.4 | 68.9 | 36.7 | 40.5 | - | 241.5 | ||||||||||||||||||
| Brazil |
0.3 | 131.1 | 107.9 | 91.8 | 35.9 | 367.0 | ||||||||||||||||||
| Others |
27.5 | 0.4 | - | 61.0 | - | 88.9 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total |
1,227.5 | 487.6 | 1,136.7 | 1,195.4 | 36.0 | 4,083.2 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
| 09.30.2023 |
||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total | |||||||||||||||||||
| North America |
926.9 | 0.9 | 559.1 | 536.1 | - | 2,023.0 | ||||||||||||||||||
| Europe |
137.8 | 223.5 | 173.0 | 222.1 | - | 756.4 | ||||||||||||||||||
| Asia Pacific |
- | 0.1 | 15.9 | 84.5 | - | 100.5 | ||||||||||||||||||
| Latin America, except Brazil |
- | - | 21.4 | 30.8 | - | 52.2 | ||||||||||||||||||
| Brazil |
3.7 | 88.4 | 35.6 | 103.8 | 47.9 | 279.4 | ||||||||||||||||||
| Others |
27.2 | 0.2 | - | 54.5 | - | 81.9 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total |
1,095.6 | 313.1 | 805.0 | 1,031.8 | 47.9 | 3,293.4 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
Revenue by category and operating segment
| 09.30.2024 |
||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total | |||||||||||||||||||
| Aircraft |
1,223.1 | 82.3 | 1,136.7 | - | 17.7 | 2,459.8 | ||||||||||||||||||
| Long-term contracts - aircraft and development |
- | 364.8 | - | - | - | 364.8 | ||||||||||||||||||
| Others |
4.4 | 14.9 | - | 13.5 | 0.2 | 33.0 | ||||||||||||||||||
| Service |
- | 25.2 | - | 852.8 | 10.3 | 888.3 | ||||||||||||||||||
| Spare Parts |
- | 0.4 | - | 329.1 | 7.8 | 337.3 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total |
1,227.5 | 487.6 | 1,136.7 | 1,195.4 | 36.0 | 4,083.2 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
| 09.30.2023 |
||||||||||||||||||||||||
| Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total | |||||||||||||||||||
| Aircraft |
1,090.0 | 9.2 | 803.7 | - | 24.8 | 1,927.7 | ||||||||||||||||||
| Long-term contracts - aircraft and development |
- | 275.0 | - | - | - | 275.0 | ||||||||||||||||||
| Others |
5.6 | - | 1.3 | 13.2 | 0.4 | 20.5 | ||||||||||||||||||
| Service |
- | 27.4 | - | 698.3 | 15.7 | 741.4 | ||||||||||||||||||
| Spare Parts |
- | 1.5 | - | 320.3 | 7.0 | 328.8 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total |
1,095.6 | 313.1 | 805.0 | 1,031.8 | 47.9 | 3,293.4 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
45
| Embraer S.A. |
| |
| Notes to the unaudited condensed consolidated interim financial statements | ||
| In millions of U.S. dollars, unless otherwise indicated. | ||
| 31. | SUBSEQUENT EVENTS |
BNDES Credit
In October 2024, Eve Soluções de Mobilidade Aérea Urbana Ltda. entered into a credit operation with BNDES in the amount of R$500 million (equivalent to US$91.8 at the reporting date). The agreement has a final maturity date set for October 2040 and is intended for establishment of a manufacturing unit to produce electric vertical take-off and landing (eVTOL) aircraft. Disbursements will be made available upon the submission of proof of project expenditures.
Citibank Financing
In October 2024, Eve Holding obtained financing from Citibank for US$50.0, indexed to SOFR plus 3.90% p.a. and with a final maturity date in 2028. One of the restrictive clauses of this financing agreement requires compliance with a minimum debt service coverage ratio.
Early repayment of debts
The Company, at its discretion, made early repayments on the following export financing:
In November 2024, the debt maturing in 2027 and indexed to 5.43% p.a. was partially repaid in the amount of US$28.4, including both principal and accreted interests.
In December 2024, two debts maturing in 2028 and indexed to 4.99% p.a. and 5.44% p.a. were fully repaid in the amount of US$202.3, including both principal and accrued interests.
The Company did not incur breakage costs due to these early repayments.
Equity swap
In December 2024, Embraer entered into derivative agreements with Banco Itaú BBA S.A. to reduce volatility in its share price, which impacts future settlements of share-based payment plans. These agreements are cash settlements and have a maximum maturity of 12 months from the negotiated date. Under these agreements, Embraer receives the price variation for 16,156,597 of its own shares, along with any dividends distributed, and pays CDI plus 0.7% p.a.
* * *
46
Exhibit 99.3
This exhibit describes certain changes to our 2023 Form 20-F as filed with the Securities and Exchange Commission on April 5, 2024.
| (a) | Changing “1,369.5” to “1,435.1” on the first sentence of the first paragraph under the heading “Item 3D. Risk Factors—Business Operations and Contracts—We depend on key customers.” |
| (b) | Changing “400” to “427.3” on the first sentence of the seventh paragraph under the heading “Item 5A. Operating Results—Principal Operating Data and Components of Our Statement of Income—Operating Data—Revenue.” |
| (c) | Changing “35.7” to “35.9” on the last sentence of the third paragraph under the heading “Item 11A. Qualitative and Quantitative Disclosures About Market Risk—Interest Rate Risks.” |
| (d) | Changing the second paragraph under the heading “Item 5B. Liquidity and Capital Resources—Credit Facilities and Lines of Credit—Long-term Facilities—Other Facilities” to read as follows: “Of our total indebtedness, US$647.9 million is secured by security interests in real estate, machinery and equipment and bank guarantees, in the aggregate amount of US$799.8 million as of December 31, 2023.” |