管理層發言
Good morning, ladies and gentlemen. Thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. My name is Gui Paiva, and I am the head of Investor Relations, M&A, and the venture capital for Embraer. Welcome to Embraer's second quarter 2026 earnings conference call. The numbers in this presentation contain non-GAAP financial information to help investors reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you Eve's results were already discussed at the company's conference call last week. Before we begin, a legal notice to everyone. This presentation may contain forward-looking statements which involve risks and uncertainties, as detailed in the disclaimer available in the slides and in the documents filed with the Brazilian Securities Commission, CVM. At this time, all participants are in a listen-only mode. Instructions for the Q&A session will be provided later. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Felipe Santana, Chief Financial Officer, Thais Moraes, Corporate Communications Director, and myself. This conference call consists of three parts. First, we will present the results for the second quarter of 2026. Second, we will host a Q&A session exclusively for investors. Finally, we will hold a dedicated Q&A session for the press. It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco.
Thank you, Gui. Good morning and good afternoon, everyone. It is a pleasure to be with you today to discuss Embraer's second quarter 2026 results. We delivered the strongest second quarter revenue in our history. We achieved our highest second quarter deliveries in the past 16 years and reached a new all-time high backlog for the seventh consecutive quarter. We continue to see strong performance across all our business units, driven by our focus on sales execution, efficiency, operational discipline, and production ramp-up. Simply put, we continue executing the fundamentals exceptionally well. These results further strengthen our confidence in the outlook for our businesses and have led us to raise our 2026 guidance, also supported by favorable effects. Let me now turn to the key highlights of the quarter. In commercial aviation, Azorra placed an order for 15 E195-E2 aircraft while maintaining 15 purchase rights. During the quarter, the E2 program surpassed the milestones of 500 firm orders. In executive aviation, we achieved record second quarter revenues and deliveries, supported by strong market demand. We also received a triple certification for the Praetor 500E and Praetor 600E. In defense and security, the UAE ordered 10 C-390 aircraft with options for an additional 10 units. This marks the platform's first selection in the Middle East and the largest international order for the C-390 to date. In service and support, we continue to expand our recurring revenue base through new contracts, including support for Jazz Aviation's E175 fleet and a new maintenance agreement with the Brazilian Air Force covering its KC-390 fleet. During the quarter, we delivered 65 aircraft, 20 commercial jets, and 45 executive jets. Total company deliveries increased by nearly 7% year-over-year, with commercial aviation growing 5% and executive aviation growing 18%. In Commercial Aviation, we delivered 30 aircraft in the first half of the year, representing 36% of the midpoint of our full-year guidance, one percentage point above the five-year average. In Executive Aviation, we delivered 74 aircraft in the first half, representing 45% of the midpoint of our full-year guidance and an impressive 11 percentage points above the five-year average. Our company-wide backlog reached $34.5 billion, an increase of 16% year-over-year and another all-time record for Embraer. Commercial Aviation backlog grew 15% year-over-year, supported by a 1.8 book-to-bill ratio over the last 12 months. Defense and Security backlog increased 42%, with a strong 2.6 book-to-bill ratio. Executive Aviation backlog grew 5% year-over-year, while Service and Support increased 12%, with both segments maintaining book-to-bill ratios above one. In addition, we hold approximately $21 billion in options, which could expand our backlog to more than $55 billion over time if exercised. I would also like to provide a brief update on Eve's continued progress. The flight testing campaign is advancing according to plan. Following the successful completion of hover flights, the team is now moving into transition flights, an important next step on the path toward certification. With that, I will now hand the call over to Felipe, who will walk you through our financial results. Felipe, the floor is yours.
Thank you, Francisco. Good morning and good afternoon, everyone. Let me start with the results by business unit. All comparisons are year-over-year, unless otherwise noted. Starting with Commercial Aviation, revenues increased 8% to $625 million, driven by higher volumes. Adjusted EBIT totaled $18 million with a 2.9% margin. The year-over-year decline was primarily due to customer mix. In Executive Aviation, revenues increased 32% to $725 million, supported by higher volumes and product mix. Adjusted EBIT reached $170 million with a positive 23.4% margin. These results include the strong operating performance and the effects of U.S. import tariffs and an extraordinary tax credit. Excluding both effects, adjusted EBIT margin would have been 16.1%. In Defense and Security, revenues increased 38%, reaching $304 million. Adjusted EBIT was $36 million, with a positive 11.9% margin, supported by stronger KC-390 revenue recognition and operating leverage. In Service and Support, revenues increased 24% to $565 million, driven by higher volumes. Adjusted EBIT totaled $106 million with an 18.7% margin. These results include U.S. import tariffs and an extraordinary tax credit. Excluding both items, adjusted EBIT margin would have been 17.6%. At the consolidated level, net revenues increased 23% to $2.2 billion in the second quarter. From a business mix perspective, Executive Aviation represented 32% of revenues, Commercial Aviation and Service more than 25% each, and Defense 14%. In the first half, revenues reached $3.7 billion, representing 44% of the midpoint of our full-year guidance. Adjusted EBITDA was $356 million, with a 15.9% margin, while adjusted EBIT totaled $297 million with a 13.3% margin. During the quarter, the company recorded approximately $8 million of U.S. import tariffs and an extraordinary tax credit of $68 million. Excluding both effects, adjusted EBIT margin would have been 10.6%. In the first half, adjusted EBIT margin reached 10.6% or 5.5 points higher than the five-year average. Adjusted free cash flow, excluding Eve, was $401 million in the quarter. This reflects the stronger operating results, sales-related pre-down payments, and extraordinary tax credit. Investment totaled $121 million during the quarter, including $42 million in CapEx, $24 million in tangible additions, $18 million in the pool program, and $36 million in research. Research expenses include engineering services to current projects, as well as other development technologies for future programs. Adjusted net income was $290 million in the last quarter. Adjusted net income margin was 9.8%, up 1.1 points, mainly due to operating performance and lower net financial expenses, which were partially offset by higher taxes. Earnings per ADS now stands at $2.50 on a last 12-month basis. Net debt to adjusted EBITDA, excluding Eve, improved to 0.2x in the quarter from 0.7x a year ago. Through our liability management initiatives, average debt maturity increased to 9.3 years and its average cost declined to 5.1%. During the quarter, we declared BRL 200 million in interest on equity. This corresponds to BRL 0.28 per share or approximately $0.22 per ADS. Based on the share price at the quarter end, this represents a dividend yield of approximately 0.34%. From an operational standpoint, we are maintaining our delivery guidance unchanged at 80 to 85 aircraft in commercial aviation and 160 to 170 aircraft in executive aviation. On the financial side, revenue guidance remains unchanged at $8.2 billion to $8.5 billion. We are increasing our adjusted EBIT margin guidance to between 10%-10.6%. At the midpoint, this represents an increase of approximately $110 million or 130 basis points, reflecting the extraordinary tax credit, lower U.S. tariffs, and a better business outlook. We are also increasing our adjusted free cash flow guidance to $400 million or higher, reflecting strong operational performance, progress in our production leveling initiatives, and a strong first-half cash generation. With that, I will hand it back to Francisco for his closing remarks. Thank you.
Thank you, Felipe. The second quarter of 2026 reinforced our confidence in Embraer's strategic positioning and our ability to consistently execute. We have also started the third quarter with strong momentum, including the announcement of 28 additional E2 orders, and welcomed Colombia as the newest KC-390 customer. Colombia became the 13th country worldwide to select the KC-390, further expanding the aircraft's global footprint. We were also pleased to introduce the new EV edition of our best-selling Phenom 300. Strong demand across our businesses continues to support our growth trajectory. Our performance reflects the discipline, focus, commitment, and energy of our people across the organization. Their dedication enables us to deliver strong results today while continuing to invest in the technologies that will drive our future growth. Behind these achievements are the values that guide everything we do. Safety first and quality always. With that, we are now ready to take your questions.
分析師問答
We'll now start the question-and-answer session. We remind you again that this conference is being recorded. Its broadcast is intended exclusively for the participants of this event. It may not be reproduced or retransmitted without the express authorization of Embraer. We also highlight that this conference call is being conducted in English with translation to Portuguese. We request participants interested in asking questions to press the Raise a Hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. To give everyone a chance to participate, we request to ask just one question per time. If you need assistance, please use the Q&A button on the platform. We'll also answer questions sent via the platform chat. The first part of the Q&A session will be exclusively for equity research analysts and investors. The second part of the Q&A will be only for the press. The first question comes from Kristine Liwag with Morgan Stanley. Please go ahead.
Hey. Good morning, Francisco, Felipe, Gui, and Thais. I wanted to ask about margins. Margins were a clear standout in the quarter. Can you talk about more, and provide more detail about what drove operating leverage in executive aviation and defense? Was there anything that was one time in the quarter? Basically, how should we think about this as being structural change in your cost structure versus quarter specific? Any update regarding your Growficiency strategy would be really helpful so that we can better understand your margin trajectory from here.
Hi, Kristine. Good morning, and thanks for the call. Q2 was really strong for us in executive aviation. We have done a lot of progress in our production leveling initiatives in the last two years. We're close to where we want to be. That has definitely helped the results. In the quarter, when you look at it as active, obviously we also have the impact of a tax credit and the tariff payments, and that helped the results on a net basis for the division for around $54 million at the EBIT level.
Great, anything about what would be structural change in your cost structure versus, and thinking about the broader Growficiency plan in the next few years. Maybe it's a little too early to look out a few years, but it seems like you're achieving some of your margin targets much earlier than expected. I just wanted to see if there's more upside from here.
Yeah.
Maybe I can—yeah, go ahead, Gui. Go ahead.
I was just going to highlight one of the things that you're very passionate about, Francisco, which is lean operations and the fact that we do Kaizen and we do Obeya, and we do efficiency projects on a regular basis. There's not a silver bullet, Kristine. This is an ongoing effort by thousands of people that do this on a regular basis. I'll pass it to Francisco because it's one of his most passionate topics.
Okay. Thank you. You did answer the question. Kristine, it is true what Gui just said. We have seen our executive jets production progressing very well with the production leveling initiative. This year, we still have some issues to be fixed with a few suppliers that are still delivering parts late, forcing us to move the aircraft late in the line. It's improving. We expect that in 2027, we'll see a much better performance in terms of production leveling, which will help us to see a higher productivity and higher efficiency of our lines.
Great. Thank you very much.
The next question comes from Marcelo Motta with JPMorgan. Please go ahead.
Hi, everyone. Thanks for taking my question. I would like to hear more about this $4 million improvement in business outlook that you mentioned as one of the reasons to improve the adjusted EBIT margin guidance. Just wondering here, if this is related to a specific segment, if this is also a cash gain, if it's more on the accounting. Anything that you could comment about the upside and downside risks for this $4 million to be lower or higher, it would be very interesting. Thank you.
Good morning, Marcelo. Felipe here. Thank you for your question. This $4 million is really connected with what Gui mentioned, and Francisco, on enterprise efficiency, where we focus in all business units. This $4 million is spread out among all the business units. Of course, we see it more in Executive Aviation, mainly because of the production leveling and all the efforts that we're doing. Here it's recurring, the way that we see this $4 million improving across all the segments that we have.
Thanks. Super clear.
The next question comes from Lucas Marchiori with BTG. Please go ahead.
Thank you. Hey, guys. Morning. I just wanted to clarify these one-off effects in the quarter, of course, the tax credits. If you could just give us some color on what's the nature of it, and if this was a cash impact already in the quarter, I'm assuming it is, but just to confirm the numbers. Then if you guys can give us at least some more color on what's the nature of it, and if there's any other kind of a reversal coming in the second half of the year as well. Thanks for the clarification.
Hey, Lucas. Good morning. Felipe, start.
Thank you, Lucas, for your question. Good morning. This impact, we have both, right? We have both on cash and also on EBIT. Most of it is refund of the tariffs that we impacted the company last year in the first quarter and the second quarter of this year. What we had done, we still have some pending amount to receive in cash, but everything was already recognized on the EBIT margin of the company. Going forward, we are not going to have any more direct tariffs to the company, but we will have indirect tariffs impacting especially service support of around $12 million on an annual basis.
Great. That's clear. Thank you, Felipe.
The next question comes from Louis Raffetto with Wolfe Research. Please go ahead.
Yes.
Hey, good morning, guys.
Morning, Louis.
I think you just actually answered the question I had, whether that $60 million was the tariff refund or not. Seems like it is. Just to be clear, the $12 million that you still have indirect, basically expect $6 million in the back half and primarily in services?
Yeah. That's it. Total, Louis.
Okay. Are we done with going through the tariff cost from the backlog or from inventory, excuse me?
Yes, we are.
Okay. Maybe just, I know you mentioned the 28 orders, just can you expand on any additional pipeline opportunities this year or sales opportunities?
Yeah. Louis, Francisco speaking. Thanks for the question. Yes, we are happy with this last announcement we did in Farnborough with these 28 orders. Yes, we are working on other campaigns, but they still need to cross the finish line. Yes, we are positive about more sales of our products until the end of the year.
Thank you very much.
You are welcome.
The next question comes from Alberto Valerio with UBS. Please go ahead.
Good morning, Francisco, Felipe, and Gui. Thank you for giving the opportunity to do my questions here. I have two on my side. The first one, really strong margins on the executive jets. You mentioned the Kaizen model of Embraer and so forth. Can we consider that there's any different mix for this quarter for looking forward? We used to have 12% margins on business jets. It's coming ex-tariff at 16%. Should we consider for the future something between, or you think it's more toward 16%? My second one on backlog. I think you guys are very comfortable for the guidance of long term on 2030 for the commercial with 1.6, if I'm not mistaken. With the book-to-bill of this year, with more than two times, 2.6 for defense and 1.1 for the business jet. The business jet is the only one that the book-to-bill is a little bit below the long-term goals. The business jet is the only one I'm talking about to see if you guys are comfortable with the long term. Thank you very much.
Hi, Alberto, good morning. Thanks for the question. On Executive Aviation, I guess we continue to see a gradual improvement in our operations despite having a product and client mix which has provided a little bit of headwind. That is just a testament to the efficiency gains that the company has been able to generate to offset the slight headwinds that I alluded to. When you look through the rest of the company, we continue to be really optimistic. We have seen defense margins continue to improve on a steady basis, you obviously saw the order that we were able to obtain from the UAE in Q2. We do expect the success of the KC platform to continue in the next few years. We have continued to expand the backlog in services also, which provide us with a steady stream of value for the company. We have continued to work, and we should continue to see improvements in the second half, and most importantly, in the next few years for the profitability that we have in our commercial aviation as well. Right now, with a record backlog for the company, we are able to produce at the target levels that we have for 2030, which is going to be our capacity. We remain very upbeat about the outlook for the company in the next few years.
Fantastic. Very clear, Gui. Congrats on the result.
The next question is from Lucas Barbosa with Santander. Please go ahead.
Good morning, Francisco, Felipe, and Gui. Congratulations on the results, and thanks for taking my question. My question is on commercial aviation. This quarter, the margin saw a slight drop due to client mix. I wanted to understand what are the expectations in terms of customer mix and margins for the second half 2026 or 2026 as a whole. In other words, could we see a year-over-year expansion in margins for the second half or for 2026 as a whole? Should we see this drop that we saw in second quarter persisting throughout the year? Thank you very much.
Thank you, Lucas, for your question. Felipe here. When we look at the results of second quarter commercial aviation, as we mentioned, we had an impact of customer mix and driven by legacy contracts. For the full year, commercial aviation should be in line with what it was last year. We're going to see some improvements going forward on EBIT and also customer mix on commercial aviation.
Perfect. Super clear. Thank you very much.
The next question comes from Lucas Laghi with XP. Please go ahead.
Hi, everyone. Good morning. I have a follow-up question on profitability. We saw this very strong performance on Executive, but also in Services. Almost 18% recurring EBIT margin in Services division. My question is how to think of the structural levels for Services going forward. I guess that this performance was slightly above what we saw as a reference in conversations with market participants. It's interesting that gross margin declined and EBIT margin increased. I'm not sure about the effects of operating leverage that you still have to capture going forward. If you could also comment on the nature and the profile of the revenues this quarter, thinking of the different components that you have in Services, and how to think of this going forward. Should we see more upside or downside considering this 18% return level that you saw in the second quarter going forward? Thank you very much.
Felipe here. Thank you for your question. As we mentioned, we do efficiency initiatives in all business units, including Support. When we look to the almost 18% margin on Service Support in the second quarter, we really believe that should be sustainable for the next quarters. Especially because of the scale that we have and also all the new deals that we've been signing on pool agreements with customers across Commercial Aviation, Defense and Executive, which is helping us to see better margins going forward in Service Support. We also have OGMA, which is improving, especially on the GTF engines. For the coming years, we're going to see better margins coming also from OGMA.
If you allow me to complement, we have been pushing for efficiency gains in the entire organization. We need to make sure that we have the right cost structure, the right expenditure to support the business, the right level of investment, and continuous productivity gains. This is for us to enjoy the growth we are planning for the future, improving profitability more than proportionally. That's why we are doing this very strongly across the organization. We should see profitability growing more than revenues in the coming years.
Perfect. Thank you very much, Francisco and Felipe. Have a great day.
The next question comes from Ron Epstein with Bank of America. Please go ahead, sir.
Yeah. Hey, good morning, guys. Can you speak about your investment in Eve? How are you thinking about that? Is that something that should be 100% part of Embraer, or is that something that should be spun off? When you think about the engineering cost of that, should those engineers be deployed on something else? It seems like you are halfway in, halfway out. How are you thinking about that?
Hi, Ron. Francisco here. Thank you very much for your question. We are very confident about Eve's contribution to Embraer's growth, especially beyond 2029–2030, to complement our growth strategy at the beginning of the next decade. We had more than 60 vertical flights. We recently completed our first partial transition to horizontal flight. We have hundreds of engineers supporting Eve, and we expect to certify entry into service of the eVTOLs by the end of 2028. In parallel, we are working to improve current products, and also supporting new sales of our KC-390. New sales mean new configurations that require engineering support. We continue evaluating emerging technologies and product opportunities to support longer-term growth. This can include commercial aviation, executive aviation, or defense.
Got it. Have you seen any impact, and forgive me if you already answered this, I might have missed it, any impact on sales campaigns from what's been going on in the Middle East?
Well, in defense, yes. Because of the geopolitical situation, we have seen countries accelerating sales campaigns. You saw the recent announcement after the UAE, and we announced Colombia recently. You saw Greece also mentioning a potential deal through Portugal for the KC-390. We are working on other campaigns as well that I cannot disclose at this time. Yes, the geopolitical situation is helping the defense business. I think not only for us, for the market. Embraer is benefiting because we have a strong product in the military transport aircraft segment.
How about on the commercial side, what's the impact been?
Commercially, the air transportation industry has been extremely resilient despite higher ticket costs. People are still flying, and this creates increasing demand for new planes. Given the large backlog for bigger aircraft, customers must wait many years to receive new aircraft. Combined with a better understanding of the benefits of the small narrow-body in their fleets, we see many opportunities for our E2s with new orders in the future. Last year was great. This year is also going well, and we are still pursuing many campaigns for the E2s. The environment has been beneficial for Embraer across defense and commercial jets. We are in a good moment.
Got it. Great. Thank you very much.
You are very welcome, Ron.
The next question comes from Daniel Gasparete with Itaú BBA. Please go ahead.
Good morning, guys. Thank you very much for the opportunity, congrats on the results. The first question is regarding India, both commercial and defense aviation. Could you provide an update on India? The second question is a follow-up on the Eve de-risking. When do you feel Eve will be de-risked operationally? Only after full certification by the end of 2028, or when you have sufficient flight test data is there a threshold of comfort? Also, one confirmation: you mentioned looking at new ventures across commercial, executive, and defense—just to clarify. Thank you very much.
Good morning, Daniel. Let me tackle the Eve question, and Francisco can complement on India. On Eve, the project will be materially de-risked when we achieve the major milestones: a full transition flight and reversal to landing. As we progress through the rest of this year and into early 2027, we expect material progress in the campaign.
Daniel, about India: we have two fronts of opportunity. In defense, there's the Medium Transport Aircraft opportunity for 60–80 KC-390s. We believe we have the best product for that application. We have signed an MOU with Mahindra, our partner, and we are waiting for the Indian Air Force to issue the RFP so we can present our proposal with a localization strategy. In civil aviation, there's an opportunity to introduce our E-Jets, both E1s and E2s, to improve connectivity between smaller cities under the Make in India initiative. We have an MOU with the Adani Group and are in close conversation with them to explore that opportunity. Both are great opportunities to grow and expand production capabilities outside Brazil.
Thank you, Francisco and Gui. Just one follow-up: when you mentioned looking at new ventures across commercial and executive aviation, you also mentioned defense—will that be considered as well?
In defense, we have two main products: the KC-390 and the Super Tucano. We recently announced an upgrade to the Super Tucano with a new cockpit and features to detect and defeat drones, and we expect that will help increase Super Tucano sales as well.
Okay, great. Thank you very much.
You are welcome, Daniel.
The next question comes from Andre Mazzini with Citi. Please go ahead.
Hi Francisco, Felipe, Gui, and Thais. We see a couple of large airlines bringing engine MRO in-house this year. Ryanair announced they would do this. Do you think this may be a trend for E-Jet operators as well, or will it likely be contained to larger jets and very large fleets? Thank you.
Thank you, Andre. I think this makes sense only for very large volumes. Airlines that operate a sizable fleet may find it worthwhile because the investments are huge. Also, an airline's main purpose should be flying; bringing MRO in-house makes sense largely for large fleets. We don't see this as a broad trend across all markets.
Great, Francisco. If I may, a quick follow-up: could you remind us the breakdown in service revenue between Embraer airplanes and other OEMs' airplanes? I understand OGMA also does larger narrow bodies. I would imagine the bulk is Embraer, but what's the share currently between Embraer and non-Embraer in service revenue? Thank you.
Good morning. OGMA should be running close to $350 million to $400 million of revenues this year. The bulk of OGMA's revenue is from non-Embraer fleets, as that business is OEM-agnostic. The balance, which should be about $1.5 billion to $1.6 billion, will be Embraer or fleet-related business.
Super interesting. Thank you, Francisco and Gui.
We will start a Q&A session dedicated to the press. We'll answer questions in English, then in Portuguese. Please hold while we compile the questions. The first question comes from Ioannis Rekas with flight.com.gr. Please go ahead.
Good afternoon from Greece. Can you hear me? I would like to congratulate you for these exceptional results. My question concerns Greece's potential requirement for KC-390. The program was passed by parliament and we're expecting a cost of EUR 600 million. Can you share more updates? Also, comments on the difference in cost between Colombia's and Greece's program per unit?
Thank you for your question. This opportunity is being discussed between Greece and Portugal. There is an opportunity for relatively short deliveries to Greece. We don't know the commercial details, and we cannot disclose prices because every aircraft is different with different specifications, which leads to different costs for each program.
The next question comes from Edgardo Gimenez with Aviacionline. Please go ahead.
Hi. Can you hear me now? With recent E2 orders from LATAM and Abra Group, do you see the E2 family as a potential good fit for low-cost carriers in the region, such as JetSMART, Volaris, or Viva? Have you actively pitched business cases to these kinds of low-cost carriers in Latin America?
Edgardo, thanks for the question. Absolutely. We see the E2 as a perfect fit for this application. We see Azul doing very well in Brazil, and now LATAM. The Abra Group's routes are not fully decided yet, but the idea is to improve connectivity between smaller cities. Mexico is another opportunity. Avianca under the Abra Group is a possibility. Mexico already has over 60 Embraer E1s in operation with different carriers. Mexicana has introduced E2s successfully. We hope other airlines will look at the E2 to complement operations alongside larger narrow-bodies in an efficient way.
Thank you very much.
The next question was sent via the chat from Robert Wall with Aviation Week: On KC-390 rates, given the recent orders and potential opportunities, what is your thinking about going higher than 10 aircraft per year in 2030?
An opportunity we are working on is with India. That would allow us to implement a second assembly line outside Brazil and go to production levels above 10 per year. Another opportunity is with the United States. If things go well and depending on order size, a third assembly line could further increase KC-390 production. I believe Bosco, our VP of Defense, might have added thoughts, but he is not with us on the call. That's our current thinking.
This concludes the English press Q&A. The session will now continue in Portuguese. To switch to English, please press the interpretation button on the platform and then select English.
Now we will initiate the Q&A session in Portuguese. Next question is from Marcelo Rocha with CBN Vale. You may proceed, sir. Mr. Marcelo Rocha's microphone appears to be muted; we'll move to the next question from Karen Salomon with Seu Dinheiro.
(Translated) Embraer's backlog continues to hit record numbers. Is there any ceiling to how much Embraer can invest? What are the investments to increase production going forward? Or are the efficiency gains you mentioned just enough to keep up with the speed of deliveries?
(Translated response) It's a combination of both. We will continue to invest in efficiency, and this is something we've mentioned frequently. For example, Praetor production used to take 18 months in 2021 and today can be produced in eight and a half months. We are applying the same improvements across other aircraft. This allows us to produce more aircraft with the same structure. At the same time, we're investing to increase production capacity. By 2030, we believe our production capacity could reach 120–130 commercial jets per year, plus 200 executive planes and 10 KC-390s in Brazil. For the KC-390 specifically, opportunities in India and the U.S. could lead to additional production lines. If the India project moves forward, we might have a second commercial jet production line there. Production capacity will not be a limiting factor to future growth. Thank you very much. Next question is from Cristian Favaro at Valor Econômico.
(Translated) Hi, thank you for taking my question. Congrats on your results. I would like to hear more about the guidance update. Productivity gain was an interesting aspect, especially regarding executive jets. Just to confirm, this is due to fine-tuning with vendors and your outlook is positive. My other question relates to the guidance update mainly due to U.S. tariffs. You mentioned tariffs were down but you did not update guidance on revenue. Do you see any room for future updates given the current scenario? Also, considering spare parts that were previously subject to tariffs, do you think this will persist going forward? I'd like a better understanding of whether further adjustments are possible.
(Translated response) The guidance adjustment involves a combination of factors: tax credits or tariff refunds recognized this quarter; the fact that we are no longer subject to direct tariffs following recent decisions; and an improved business outlook. We review the business plan regularly, and publishing quarterly results is the moment to reiterate or update guidance, as we did this quarter. Next question is from Marcelo Rocha with CBN Vale in writing. (Translated) A question addressed to Francisco: you mentioned that Eve should start commercial operations by the end of 2028. How many units should be in the market by that period, and what would be the first anticipated commercial flights in Brazil and abroad? (Translated response) Our expectation is to start operations by the end of 2028. Today we have about 3,000 letters of intent for purchases, some of which are firm orders. Entry into service should likely occur in Brazil and the U.S., probably simultaneously, given engineering and market opportunities. We will start production in Taubaté with top capacity close to 480 units per year. Given the aircraft's range, final assembly will be close to where they operate. We will assess additional production plans after initial market feedback. We don't have anything further defined at the moment, but we plan to support Eve entering operations starting in 2028. Next question in writing from Nelson Düring with DefesaNet: what is the projected share for defense in your total P&L? Now it is at 14%. (Translated response) Historically, defense has been in the range of 14%–15% of our total P&L. We estimate that at least by 2030, the defense sector should represent around 12%–14% of total revenue, with growing profitability. Another question in writing from Nelson Düring: What versions are being projected for KC-390? Is a Maritime Patrol Aircraft (MPA) version moving forward? (Translated response) We do not have detailed information on specialized versions beyond the C-390 and KC-390 today. The difference between the C-390 and KC-390 relates to air-to-air refueling capability and other specific configurations requested by customers. As of now, we are focusing on C-390 and KC-390 variants per customer specifications; we don't have an MPA version in production at this time. Thank you. With that, we conclude the Q&A session, and also this earnings release presentation from Embraer. Thank you very much for joining us, and have a very good day.