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| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class: |
Trading Symbol |
Name of each exchange on which registered |
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Common shares, without par value (represented by, and traded only in the form of, American Depositary Shares (evidenced by American Depositary Receipts), with each American Depositary Share representing four common shares) |
ERJ |
New York Stock Exchange |
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5.980% Notes due 2035 |
N/A |
New York Stock Exchange |
| Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | Non-accelerated filer | ☐ | |||||
| Emerging growth company | ☐ | |||||||||
| U.S. GAAP ☐ | International Financial Reporting Standards as | ☒ | Other ☐ | |||||
| issued by the International Accounting Standards Board |
TABLE OF CONTENTS
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| 16H. |
Mine Safety Disclosure | 144 | ||||
| 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 144 | ||||
| 16J. |
Insider Trading Policies | 144 | ||||
| 16K. |
Cybersecurity | 144 | ||||
| PART III |
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| Item 17. |
FINANCIAL STATEMENTS | 147 | ||||
| Item 18. |
FINANCIAL STATEMENTS | 147 | ||||
| Item 19. |
EXHIBITS | 147 | ||||
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INTRODUCTION
In this annual report, “Embraer,” “we,” “us,” “our” or the “Company” refer to Embraer S.A. and its consolidated subsidiaries. All references herein to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “US$,” “dollars” or “U.S. dollars” are to dollars of the United States of America. All references to the “Brazilian government” are to the federal government of Brazil.
Presentation of Financial and Other Data
Financial Data
Our audited consolidated financial statements as of December 31, 2024 and 2023 and for the three years ended December 31, 2024, or our 2024 audited consolidated financial statements, are included in this annual report.
Our consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
After analyzing our operations and businesses on a standalone basis with regard to the applicability of International Accounting Standards, or IAS 21 – The Effects of Changes in Foreign Exchange Rates, particularly in relation to the factors involved in determining our functional currency, management concluded that our functional currency is the U.S. dollar. This conclusion was based on an analysis of the following factors, as set forth in IAS 21: (i) the currency that most influences sale prices of goods and services; (ii) the currency of the country whose competitive forces and regulations most determine the sale prices of our goods and services; (iii) the currency that most influences the costs of providing goods and services; and (iv) the currency in which the funds for financial operations are largely obtained. Our audited consolidated financial statements included elsewhere in this annual report are presented in U.S. dollars, which is our presentation currency.
For certain purposes, including providing reports to our Brazilian shareholders, filing financial statements with the Comissão de Valores Mobiliários (Brazilian securities commission), or CVM, and determining dividend payments and other distributions and tax liabilities in Brazil, we have prepared, and will continue to be required to prepare, financial statements in accordance with Law No. 6,404 of December 15, 1976, as amended, or the Brazilian Corporate Law.
Other Data and Backlog
In this annual report:
| • | some of the financial data reflects the effect of rounding; |
| • | aircraft ranges are indicated in nautical miles; |
| • | one nautical mile is equal to approximately 1.15 ordinary or “statute” miles, or approximately 1.85 kilometers; |
| • | aircraft speeds are indicated in nautical miles per hour, or knots, or in Mach, which is a measure of the speed of sound; |
| • | “ANAC” means the Agência Nacional de Aviação Civil, the Brazilian aviation regulatory authority; |
| • | “Brazilian Central Bank” means the Banco Central do Brasil, the central bank of Brazil; |
| • | “EASA” means the European Union Aviation Safety Agency; |
| • | “FAA” means the Federal Aviation Administration; |
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| • | the term “eVTOL” means electric vertical takeoff and landing aircraft; |
| • | the term “regional jet” refers to commercial jet aircraft in the 35-100 seat-segment; |
| • | the term “commercial aircraft” as it applies to Embraer, refers to our aircraft in the up to 150 seat-segment, which includes our regional jets; |
| • | the term “EMBRAER 170/190 jet family” refers to aircraft models EMBRAER 170 (E170), EMBRAER 175 (E175), EMBRAER 190 (E190) and EMBRAER 195 (E195); |
| • | the term “E-Jets E2 family of jets” refers to aircraft models E175-E2, E190-E2 and E195-E2; |
| • | the terms “entry-level jet” and “light jet” refer to executive jets that usually carry from four to seven passengers and up to ten passengers, respectively, and ranges between 1,100 and 2,100 nautical miles. These jets are designed for short take-off distances and may be operated by a single-pilot; |
| • | the term “medium cabin jet” refers to executive jets that usually carry from nine and up to twelve passengers and can cover distances ranging from 2,000 to 4,000 nautical miles; |
| • | the term “large jet” refers to executive jets that usually carry up to 19 passengers and can cover distances greater than 4,000 nautical miles; |
| • | the term “ultra-large jet” refers to executive single aisle airline jets that usually have longer ranges and over-sized cabin spaces and can carry up to 19 passengers; |
| • | the term “executive jets,” as it applies to us, refers to our aircraft sold to companies, including fractional ownership companies, corporate flight departments, charter companies and air-taxi companies and high-net-worth individuals; and |
| • | the term “tactical transport aircraft” refers to military aircraft for personnel, troops and cargo transport and humanitarian aid support aircraft in the 15-30-ton payload range; |
| • | the term “advanced training” refers to programs designed for pilots with specialized skills to learn the best techniques to handle complex missions, operate advanced systems and prepare them to move to front-line combat aircraft. |
| • | the term “multi-mission” refers to the capability of performing a range of different roles using the same platform; |
| • | the term “frigates” refers to medium-size warships, typically ranging between 100 to 150 meters, with displacement between 2000 and 7000 tons; |
| • | the term “urban air traffic management” or UATM refers to systems and processes designed to regulate air traffic for urban air mobility, which includes vehicles such as eVTOLs, helicopters and drones; and |
| • | the term “KC-390” refers to the C-390 version that has aerial refueling capabilities. |
We calculate our backlog as the sum of the contract values of all firm orders (i) for any aircraft that have not yet been delivered, (ii) for services and support contracts for all business segments, including repair services and spare parts contracts for a period of more than one year, and (iii) for services and technologies contracted and not yet performed in our Defense & Security segment. A firm order is a firm commitment from a customer, represented by a signed contract and the non-refundable advance payment received by us. Options to acquire aircraft are not considered as part of our backlog.
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Special Note Regarding Forward-Looking Statements
This annual report includes forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, principally in Items 3 through 5 and Item 11 of this annual report. We have based these forward-looking statements largely on our current expectations and projections about future events and industry and financial trends affecting our business. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:
| • | general economic, political and business conditions in Brazil and in our other markets; |
| • | political, economic or financial instability, as well as geopolitical instability abroad, especially in light of the geopolitical conflicts around the world, such as the conflicts between Russia and Ukraine as well as Israel and Hamas; |
| • | disruptions in the supply chain, including reliance on key suppliers and raw material availability; |
| • | changes in competitive conditions and in the general level of demand for our products; |
| • | management’s expectations and estimates concerning our future financial performance, financing plans and programs, and the effects of competition; |
| • | risks related to environmental regulations, climate change impacts, and achieving carbon emissions targets; |
| • | the effects of customers canceling, modifying or rescheduling orders; |
| • | the effect on our revenues of changing priorities or reductions in the Brazilian government or international government defense budgets; |
| • | cybersecurity threats and compliance with data privacy regulations in various jurisdictions; |
| • | our level of indebtedness; |
| • | our capital expenditure plans; |
| • | inflation and fluctuations in exchange rates; |
| • | the impact of volatile fuel prices and the airline industry’s response; |
| • | our ability to develop and deliver our products on a timely basis; |
| • | availability of sales financing for our existing and potential customers; |
| • | existing and future governmental regulations, including economic policies of the Brazilian government; |
| • | our relationship with our workforce; |
| • | the outbreak of communicable diseases in Brazil and other countries; and |
| • | other risk factors, including those set forth under “Item 3. Key Information—D. Risk Factors.” |
The words “believe,” “may,” “will,” “forecast,” “estimate,” “plan,” “continue,” “anticipate,” “intend,” “expect” and similar words herein are intended to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this annual report might not occur. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements. As a result of various factors, including those risks described in “Item 3. Key Information—D. Risk Factors,” undue reliance should not be placed on these forward-looking statements.
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Part I
| Item 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Not applicable.
| Item 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
Not applicable.
| Item 3. | KEY INFORMATION |
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
This section is intended to be a summary of more detailed discussions contained elsewhere in this annual report. You should carefully read and consider the following risks, along with the other information included in this annual report. The risks described below are not the only ones we face. Additional risks that we do not presently consider material, or of which we are not currently aware, may also affect us.
Business Operations and Contracts
Any accidents or catastrophic events involving our aircraft could adversely affect us.
We believe that our reputation and the safety record of our aircraft are important selling points for our products. However, the safe operation of our aircraft depends to a significant degree on a number of factors largely outside our control, including our customers’ proper maintenance and repair of our aircraft and pilot skill, and adherence to operational guidelines. The occurrence of one or more accidents or catastrophic events involving one of our aircraft—including but not limited to mechanical failures, pilot error and extreme weather conditions—could adversely affect our reputation and future sales, as well as the market price of our common shares and the ADSs.
Our aircraft sales are subject to cancellation and rescheduled delivery provisions that may reduce our future income, profitability, backlog and cash flow.
A portion of our aircraft firm orders is subject to significant contingencies prior to delivery. Some of our sales contracts may be terminated, or a portion or the entirety of a particular firm order may be canceled, for different reasons, including (i) extended delays in delivering aircraft or failure to obtain certification of the aircraft or otherwise meet performance milestones and other requirements, (ii) the failure of a customer to honor its aircraft purchases or (iii) production rate shortfalls.
Our customers may also reschedule deliveries or cancel orders, particularly during an economic downturn. In 2024, we had a net income of US$5.9 million related to contractual fines paid by customers due to contract cancellations compared to contractual fine net income of US$8.2 million in 2023 and US$17.8 million in 2022. Material cancellations, delays or decreases in the number of aircraft delivered in any year would reduce our sales and revenue, and, consequently, our profitability, cash flow and backlog.
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We may be required to refund cash contributions in connection with the production or development of our aircraft if certain milestones for our aircraft are not reached.
We have arrangements with our risk-sharing partners, pursuant to which they have contributed to us, in cash, through December 31, 2024, a total of US$1,435.1 million since the beginning of the development of the EMBRAER 170/190, Phenom 100/300 and Legacy 450/500 (rebranded as Praetors) jet families and the E2 jet family. Cash contributions would have to be refunded by us to the risk-sharing partners to the extent that we had failed to fulfill certain agreed-upon milestones. In 2024, we met all the required milestones, and as a result, the full amount of the cash contributions was nonrefundable.
Although, currently, no cash contributions from our risk-sharing partners are due to be refunded, we may enter into similar arrangements, and if we are unable to meet certain milestones agreed upon with our risk-sharing partners, we may be required to refund cash contributions.
We work with a limited number of key suppliers.
We do not manufacture all of the parts and components used in the production of our aircraft. In 2024, 77.1% of our consolidated production costs in our Commercial Aviation, Executive Aviation and Defense & Security segments consisted of materials and equipment purchased from our suppliers, including our risk-sharing partners. Risk-sharing arrangements are those in which suppliers are responsible for the design, development and manufacture of major components or systems of our aircraft. In some cases, the aircraft are designed specifically to accommodate a particular component, which cannot be substituted by another manufacturer without significant investments. In addition, there are only a limited number of suppliers of certain key components of aircraft globally. We work closely with our main suppliers in order to mitigate any potential supply chain risk, but we cannot ensure that these risks, which could negatively and adversely affect our operating and financial performance, will not materialize.
In addition, as a result of post-pandemic economic recovery which resulted in a global increase in demand, our suppliers may not have the ability to fully meet such increasing demands of their customers, including us, especially because of the ongoing industry workforce constraints and other supply chain challenges. Therefore, we cannot ensure that we will not be adversely affected by this global supply-chain dynamics, which is still affecting the industry world-widely.
Any decrease in Brazilian government-sponsored customer financing or increases in government-sponsored financing that benefits our competitors, may decrease the competitiveness of our aircraft.
Traditionally, aircraft original equipment manufacturers, or OEMs, from time to time, have received support from governments through governmental export credit agencies, or ECAs, in order to offer competitive financing conditions to their customers, especially in periods of credit tightening from the traditional lending market.
Official government support may constitute unofficial subsidies causing market distortions, which may rise to disputes among governments at the World Trade Organization, or WTO. Since 2007, an agreement known as the Aircraft Sector Understanding, or ASU, developed by the Organization for Economic Co-operation and Development, or OECD, has provided guidelines for the predictable, consistent and transparent use of government-supported export financing for the sale or lease of civil aircraft, in order to establish a “level-playing field.” ECAs from signatory countries are required to offer terms and conditions no more favorable than those contained in the ASU’s base financial agreement when financing sales of aircraft that compete with those produced by the OEMs of their respective countries. The effect of the agreement is to encourage aircraft purchasers to focus on the price and quality of aircraft products offered by OEMs rather than on the financial packages offered by their respective governments.
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The Brazilian ECA, the Brazilian Social and Economic Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), or the BNDES, and the Brazilian National Treasury Export Guarantee Fund (Agência Brasileira Gestora de Fundos Garantidores e Garantias S.A.), offer financing and export credit insurance to our customers under terms and conditions required by the ASU. Any reduction or restriction to the Brazilian export financing program, and any increase in our customers’ financing costs for participation in this program, above those provided in the ASU’s base financial agreement, may cause the cost-competitiveness of our aircraft to decline. Other external factors may also impact our competitiveness in the market, including, but not limited to, aircraft OEMs from countries which are not signatories to the ASU agreement offering attractive financing packages, or any new government subsidies supporting any of our major competitors.
From 2005, when we first delivered the EMBRAER 170/190 jet family, through December 31, 2024, 29.8% of our Commercial Aviation deliveries were subject to official export credits. In the years ended December 31, 2024, 2023 and 2022, 42.5%, 29.7% and 31.6%, respectively, of our Commercial Aviation deliveries were supported by the Brazilian export financing program. We cannot ensure that the Brazilian government, for policy reasons or otherwise, will not reduce or discontinue this type of funding for the financing of our aircraft or that other sources of funding will be available to our customers. The loss or significant reduction of funds available to our customers, without an adequate substitute, could lead to a reduction in sales of our aircraft or to an increase of eventual aircraft financing arrangements.
Industry and Competition
A downturn in our key markets may reduce our sales and revenue, and, consequently, our profitability.
Market conditions have a significant impact on demand for our aircraft and related services. The aircraft market is predominantly driven by long-term trends in airline passenger and cargo traffic. The principal factors underlying long-term traffic growth are sustained economic growth and political stability both in developed and emerging markets. Demand for our aircraft is further influenced by a wide variety of factors, including airline profitability, availability of aircraft financing, world trade policies, government-to-government relations, technological advances, price and other competitive factors, fuel prices, pandemics, epidemics and environmental regulations.
A substantial portion of our results are comprised of sales of aircraft, which have historically been cyclical due to a variety of factors that are both external and internal to the air travel industry, including general economic conditions, and the outbreak of communicable diseases, which we cannot fully foresee as of the date of this annual report.
Economic downturns in our industry may reduce air travel demand and corporate and personal spending, and investments by governments in new assets, which may negatively impact our Commercial Aviation, Executive Aviation, Defense & Security and Services & Support segments. These downturns have led in the past and may also lead in the future, to a decrease in the volume of financing available to our customers for aircraft purchases, particularly in the aforementioned segments. A continued downturn in general economic conditions could result in further reductions in air travel and decreased orders for our aircraft. Our customers could also continue to defer or to cancel their purchases of our aircraft. We cannot predict the magnitude or duration of the impact that the events could not only have on the air transport industry as a whole, but also on our business in particular.
We depend on key customers.
In our Commercial Aviation segment, as of December 31, 2024, 90.9% of our firm orders in backlog for the EMBRAER 175s were from American Airlines, Republic Airlines and Skywest Airlines. The backlog for our E-Jets E2 jet family is mostly comprised of orders from Azul Linhas Aéreas Brasileiras S.A., or Azul, Porter Airlines, or Porter, Azorra Aviation Holdings, LLC, or Azorra, Mexicana de Aviación, or Mexicana, and AerCap Holdings N.V., or AerCap—which orders represent 78.8% of our E-Jets E2 jet family orders. We believe we will continue to depend on a select number of key customers, and the loss of or difficulty in maintaining the relationship with any one of them would significantly reduce our sales and market share. Moreover, our key customers may face financial difficulties, which may adversely affect us.
In the Executive Aviation segment, we have been increasingly recognized as an OEM with reliable aircraft and strong brand and portfolio, which has increased the demand for our aircraft. Fleet deliveries account for a significant part of our deliveries plan, and as the majority of the world’s fleet is destined to four large clients, the executive aviation industry depends on few customers, which may adversely affect our delivery plans, especially for Praetors.
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In our Defense & Security segment, we believe we are the largest supplier of defense aircraft and related services to the Brazilian Armed Forces. As of December 31, 2024, 37.5% of the KC-390 aircraft in backlog were ordered by the Brazilian Air Force. Moreover, we also been growing our backlog internationally: as of December 31, 2024, 62.5% of the KC-390 Millennium aircraft in our firm order backlog were for global customers, the major of which were the Netherlands, Austria, Portugal and South Korea with 46.9% of KC-390 Millennium firm order backlog. However, we cannot guarantee that our global customers will continue acquiring our defense solutions in the future, in particular with respect to the KC-390, which is the highest revenue source for Embraer Defense & Security as of the date of this annual report.
We may face a number of challenges resulting from the development of new products and the possible pursuit of strategic opportunities and transactions.
We cannot ensure that our products will be accepted by our customers and the market, and if any of our new products do not meet customer expectations or market demand, our business would be adversely affected. In addition, as we continue to develop new products, we may need to reallocate existing resources and coordinate with new suppliers and risk-sharing partners. Finally, cost overruns and delays in the development and delivery of new products would adversely affect us.
We may pursue strategic opportunities and transactions, just as we have in the past, including joint ventures, partnerships, acquisitions or divestitures. We may face a number of challenges, including difficulties in identifying appropriate partners, assimilating with or adjusting to our partners’ or targets’ operations and personnel, maintaining internal standards and controls, as well as the diversion of our management’s focus from our ongoing business.
For instance, as of the date of this annual report, we own 83.7% of Eve UAM, LLC, or EVE, which is responsible for the development of EVE’s urban air mobility) solution, or UAM solution, through design and production of eVTOL, service and support, fleet operations and UATM. The expected long-term results from this operation are subject to risks, such as the establishment of the UAM market, the adoption by consumers of an entirely new form of mobility offered by eVTOL aircraft and the UAM market, possible underperformance of the UAM solutions developed by Eve Holding, Inc., or Eve Holding, including the eVTOL aircraft, difficulties related to product certification, licensing and governmental authorization, among others. Moreover, as we hold such a significant portion of the EVE’s shares, any challenges related to EVE’s business or operation may adversely affect us.
We cannot ensure that we will be able to meet challenges related to strategic opportunities and transactions, nor that our long-term estimates with respect to the prospects, operations, growth potential, integration and other factors related to these strategic opportunities will materialize. Accordingly, we cannot ensure that our business or the trading price of our common shares or ADSs will not face disruptions as a result of future opportunities or transactions or the markets’ perception thereof.
We face risks of being engaged in a global business and operating in global industries, which may adversely affect us.
We conduct our operations across multiple jurisdictions. Compliance with laws and regulations, including anti-corruption and anti-money laundering laws, sanctions, is one of our priorities in the countries where we do business. If we fail to maintain proper and effective internal controls, we may not be able to promptly identify breaches of legal, regulatory, accounting, governance, or ethical standards, especially taking into account the number of contracts with foreign customers and suppliers. Failing to comply with these rules and regulations could lead to legal and administrative proceedings, investigations, financial penalties, and loss of licenses, adversely affecting our reputation and our results of operation.
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Additionally, a significant portion of our revenues derive from customers located outside Brazil, representing 91.7% of our revenues in 2024, and we expect sales to foreign customers will continue to account for a significant portion of our revenue in the foreseeable future. Our production and supply chain are spread globally, with parts manufactured in one or more countries and assembled in another, which makes us subject to risks of doing business internationally.
Some of those risks include: (i) protectionist measures adopted by the governments of specific countries, (ii) changes in the global trade environment, including quotas, tariffs, penalties, subsidies or local content requirements, which may increase our production costs and affect our capacity to compete in equal terms in the market for our products, (iii) changes in regulatory requirements, (iv) changes to U.S. and non-U.S. governmental regulations and policies, (v) imposition of sanctions, sourcing or trade restrictions, (vi) compliance with several non-Brazilian and non-U.S. laws and regulations, and exposure to a significant number of supply and customer contracts governed by laws other than Brazilian or U.S. federal or state laws.
For example, discussions regarding the imposition or increase of tariffs on products imported into the United States of America have been ongoing since the election campaign of President Donald Trump. Following his inauguration, President Trump increased trade tariffs on key U.S. trade partners, including Mexico and Canada, and imposed significant tariffs on a wide range of imports, such as certain goods from China and steel and aluminum imports from various countries. Additionally, the U.S. administration has expressed interest in implementing reciprocal tariffs on trading partners, which could impact Brazil due to its trade relationship with the United States of America. However, as of the date of this annual report, no U.S. law or executive order has imposed additional tariffs specifically on Brazilian products. While the potential impact of such measures on our operations is uncertain, a broad tariff on Brazilian imports into the United States of America would likely disrupt our supply chain and U.S. operations.
Moreover, the defense and security industry is subject to trade compliance requirements, as well as export control rules and regulations. Our defense and security products are mainly affected by North American and European rules and regulations on trade compliance and export controls. Accordingly, if any of these governments, or the governments of the countries where we have operations, decide to impose restrictions on trade and export activities, we may be unable to sell or deliver aircraft to some countries for a period of time, which may adversely affect our results of operation and financial condition.
As we conduct our operations across multiple jurisdictions, compliance with laws and regulations, including anti-corruption and anti-money laundering laws, sanctions, is one of our priorities in the countries where we do business. We may not be able to promptly identify breaches of legal, regulatory, accounting, governance, or ethical standards, especially taking into account the number of contracts with foreign customers and suppliers. Failing to comply with these rules and regulations could lead to legal and administrative proceedings, investigations, financial penalties, and loss of licenses, adversely affecting our reputation and our results of operation.
We are subject to significant competition.
The worldwide commercial aircraft manufacturing industry is highly competitive, with a very limited number of OEMs and suppliers. Although we have attained a significant market share for our commercial aircraft products, we cannot ensure that we will be able to maintain it. In order to remain competitive in the commercial aircraft manufacturing market in the long-term, we must continue to make technological, efficiency and performance enhancements to our aircraft.
The executive aviation industry has a noticeable high loyalty index, with customers that tend to maintain their known suppliers, which is an entry barrier to uprising competitors. As a relatively new entrant to the executive jets market, we face significant competition from companies with longer operating histories and established reputations in the industry. Some of our competitors in the executive jets market have a longer track record and a more established customer base. We cannot ensure that we will continue to increase our market share in the executive aviation market, or that we will not experience a reduction in our current market share in this business segment, especially taking into account competitors’ growth and investments and continued limitations in our supply chain capacity.
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The defense and security industry in general is affected by geopolitical factors, as sovereign countries have discretion on how, when and how much to invest in military equipment. Accordingly, not always the best technical and commercial solutions are chosen by these sovereign countries, due to the many geopolitical factors involved in their decision-making process.
In addition, protectionist measures adopted by the governments of specific countries could adversely affect us. Our production is spread globally, with parts manufactured in one or more countries and assembled in another, and as a result any limitations to trade, including quotas, tariffs, subsidies or local content requirements, may increase our production costs and affect our capacity to compete in equal terms in the market for our products.
Regulatory, Compliance and Legal
Intellectual property violations may adversely affect us.
We rely on patent, copyright, trademark and trade secret laws, and agreements with our employees, customers, suppliers and other parties, to establish and maintain our intellectual property rights in technology and products used in our operations. Despite these efforts to protect our intellectual property rights, any of our direct or indirect intellectual property rights could be challenged, invalidated or circumvented. In addition, although we believe that we lawfully comply with the intellectual property rights granted to others, we may be accused of infringement on occasion and could have claims asserted against us in the future. These claims could harm our reputation, lead to fines and penalties and prevent us from offering certain products or services. Any claims or litigation in this area, whether we ultimately win or lose, could be time-consuming and costly, hurt our reputation and/or require us to enter into licensing arrangements. We may not be able to enter into these licensing arrangements on acceptable terms. If any infringement brought against us is successful, an injunction may also be ordered against us to stop infringing the alleged rights, which could adversely affect us, our research and/or production.
Changes in Brazilian fiscal policies and tax laws could have an adverse effect on our financial condition and results operation. In addition, we benefit from certain tax and other government-granted benefits and the suspension, cancellation or non-renewal of those benefits would have a material adverse effect on us.
The Brazilian government has frequently implemented and may continue to implement changes in its fiscal policies, including, but not limited to tax rates, fees, sectoral charges and occasionally the collection of temporary contributions. Changes in tax laws and in the interpretation of tax laws by Brazilian tax authorities and courts may occur and may result in tax increases and revocation of tax exemptions.
The Brazilian tax reform of consumption taxes was approved by the Brazilian Congress and is now expected to come into effect gradually between 2027 and 2032, pending the resolution of certain administrative matters.
Nonetheless, Brazilian legislators continue debating a comprehensive tax reform, focused on income tax legislation, which may include the increase of existing taxes and contribution rates, the revocation of income tax exemptions on the distribution of profits and dividends and further changes relating to interest on net equity. For example, the Brazilian government recently submitted to the Brazilian Congress a bill of law that would subject profits and dividends distributed to certain Brazilian shareholders and any foreign shareholders to a 10% withholding income tax. The approval of these legislative proposals or changes in fiscal policies, tax laws and interpretations may impact our tax obligations and may have a material adverse effect on our financial condition and results, and on investments in our ADSs.
Similarly to other Brazilian companies across multiple industries, we receive certain tax and other government-granted benefits, including incentives related to our export and research and development activities. To take advantage of the tax benefits, we must meet certain requirements, such as making investments in research and development, record taxable profits, among others. For additional information, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Tax Incentives.” For our effective tax reconciliation, please refer to note 23.3 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
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Moreover, these incentives may be cancelled or suspended by the Brazilian government at any time without prior notice, and the maintenance of such incentive plans by the Brazilian government depends on factors we cannot control or predict. We cannot ensure that these incentives will be maintained or renewed or that we will be able to obtain new incentives.
We are subject to stringent certification and regulatory requirements, which may adversely affect us.
Our civil aviation products are subject to regulation in Brazil and in each jurisdiction where our customers are located. ANAC, the aviation authority in Brazil, as well as authorities in other countries in which our customers are located, most notably the FAA and the EASA, must certify our civil aviation products before we can deliver them to our customers. We cannot ensure that we will be able to obtain certification of our aircraft on a timely basis or at all. In addition, complying with the requirements of regulatory authorities can be both expensive and time-consuming. If we fail to obtain a required certification from an aviation authority for any of our aircraft, that aviation authority can prohibit the registration of that aircraft within its jurisdiction until certification has been obtained. Changes in government regulations and certification procedures could also delay our start of production as well as entry of a new product into a new market. Despite our continuous efforts to strictly observe and comply with all aviation certification and other regulatory requirements, we cannot predict how future laws or changes in the interpretation, administration or enforcement of those laws will affect us. We may be required to incur significantly more costs to comply with these laws and/or to respond to these changes.
Internal Controls
Our ability to prevent breaches of legal, regulatory accounting, ethical or governance standards could be impaired if we fail to maintain proper and effective internal controls, which could harm our operating results, our ability to operate our business and our reputation.
We cannot ensure that our subsidiaries will not identify significant deficiencies or material weaknesses in their internal controls nor that there will not be material weaknesses or significant deficiencies in our internal controls over financial reporting in the future. Material weaknesses or significant deficiencies identified at our subsidiaries level could result in material weaknesses or significant deficiencies in our internal controls.
Our failure to maintain effective internal controls over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. In addition, we may not be able to prevent or detect a material misstatement in our financial statements on a timely basis or at all. Such misstatements could result in a future restatement of our financial statements, which could cause us to fail to meet our reporting obligations or material adverse effect on our business financial condition, and results of operations.
Labor and Workforce
We may suffer from a lack of qualified personnel.
From time to time, there is significant competition within the aviation industry for skilled personnel, particularly engineers. We may be unable to recruit and retain the necessary number of highly skilled engineers and other personnel we require. Failure to coordinate our resources in a timely manner or to attract and retain skilled personnel could slow down our development efforts and cause delays in production and deliveries of our aircraft, which would adversely affect us.
Scope clause restrictions in airline pilot contracts may limit demand for commercial aircraft in the U.S. market.
A key limiting factor in demand for regional jets is the existence of scope clauses contained in airline pilot contracts. These scope clauses, which are more prevalent in North America, but also exist in other important regions, including Europe, are negotiated between the airlines and the pilot unions, usually every three years, for purposes of imposing restrictions relating to the (i) number of aircraft that a regional carrier may operate; (ii) number of seats in an aircraft that a regional carrier may operate; and (iii) the weight of the aircraft that a particular regional carrier may operate.
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The most recent rounds of negotiations relating to scope clauses between the major carriers in the United States of America were concluded in 2023 with no significant changes. As a result, our opportunities for near-term growth in the U.S. regional jets market in the 76-seat jet category may be limited. In this context and considering that the United States of America is the most important market for the EMBRAER 175. On February 25, 2025, we announced an additional four-year pause on the development of the E175-E2 jet, in addition to the previous pause announced on February 18, 2022. We cannot assure you that current restrictions will be reduced, or that they will not be expanded, including by amending these scope clauses to cover larger-sized commercial aircraft.
The supply of pilots to the airline industry may be limited.
FAA regulations may negatively impact the supply of qualified pilot candidates eligible to be hired in the airline industry. A first officer in U.S. domestic operations must hold an airline transport pilot certificate and an aircraft type rating to fly the aircraft. An airline transport pilot certificate requires that a pilot be 23 years of age and have 1,500 hours total time as a pilot. Due to these requirements, there may be a continued scarcity of new entrant pilots who meet the experience qualifications, mainly affecting regional carriers which are the usual entry airlines for new pilots (major airlines are expected to hire many of the experienced pilots).
In order to mitigate this issue, certain airlines, for example American Airlines, Jet Blue, and United Airlines, especially in the United States of America, have adopted internal measures, including but not limited to creating professional pilot programs and providing financing alternatives. While we believe that these efforts have substantially addressed the issue for the time being, any future inability to recruit, train and retain qualified pilots may materially affect our customers’ operations.
Cybersecurity
Failure to adequately protect against risks relating to cybersecurity could materially and adversely affect us.
We, like all business organizations, are subject to a broad range of cyber threats, with varying levels of sophistication. The techniques and tools used in cyber threats can evolve rapidly and include new technologies, such as advanced automation and artificial intelligence. These cyber threats can jeopardize the confidentiality, availability and integrity of our systems and data, including our customers’ confidential, classified or personal data.
We maintain extensive technical security controls, policy enforcement mechanisms, monitoring systems and management oversight to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in our systems, certain types of threats, including cyber-attacks, could materially and adversely affect our business and reputation. A successful cyberattack may result in unavailability of our services, leak or compromise of the integrity of information and could give rise to the loss of significant amounts of client data, other sensitive information and loss of funds as well as damage to our reputation, directly affecting our clients and business partners. For instance, on November 24, 2020, we suffered a cybersecurity incident in our IT systems, which was later identified as a ransomware attack. Immediately after the incident, we employed significant IT & Cybersecurity resources, took measures to protect and strengthen the security of our systems, isolated the affected environment and repaired our network.
Furthermore, some of our business partners and suppliers have access to some limited confidential and strategic information regarding our projects and engineering data. As many of these suppliers face similar security threats, any attacks on their systems may result in unauthorized access to our systems or data.
Despite our security controls and measures to prevent the violation of our systems, we cannot guarantee that other cyberattacks or similar breaches will not happen in the future.
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We utilize artificial intelligence which could expose us to liability or adversely affect our business.
We utilize and continue to explore further uses of artificial intelligence, or AI, in connection with our business, products and services. However, regulation of AI is rapidly evolving worldwide as legislators and regulators are increasingly focused on these powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, privacy, data protection and information security, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations. AI is the subject of ongoing review by various governmental and regulatory agencies around the world, and various jurisdictions are applying, or are considering applying, their platform moderation, cybersecurity and data protection laws and regulations to AI or are considering legal frameworks for AI.
AI regulation was included in the Brazilian Senate’s priority list for 2024, culminating in its approval of Bill No. 2,338/23 on December 10, 2024. The bill establishes general national standards for the development, implementation, and responsible use of AI systems in Brazil, introducing compliance requirements, liability standards, and usage restrictions, including a risk-based framework that mandates preliminary assessments to classify AI systems by risk level, enhanced human oversight for high-risk applications, and significant penalties for violations. It will now proceed to the Brazilian House of Representatives for further deliberation and approval. If enacted, the bill could impose additional compliance burdens, establish liability frameworks, or mandate specific transparency and accountability measures for our use of AI systems.
We may not be able to anticipate how to respond to these rapidly evolving laws and regulations, and we may need to expend resources to adjust our offerings in certain jurisdictions if the legal and regulatory frameworks are inconsistent across jurisdictions. Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all the legal or regulatory risks that may arise relating to the use of AI. If laws and regulations relating to AI are implemented, interpreted or applied in a manner inconsistent with our current practices or policies, such laws and regulations may adversely affect our use of AI and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes or result in increased compliance costs and potential increases in civil claims against us, any of which could adversely affect our operating results, financial condition and prospects.
Environmental, Social and Governance
We are subject to environmental, health and safety risks.
Our products, as well as our manufacturing and service activities, are subject to environmental laws and regulations in each of the jurisdictions in which we operate. These laws regulate product performance or content, energy use, greenhouse gas emissions, air quality, water and noise pollution, hazardous substance management, human health risks arising from the exposure to hazardous or toxic materials, the remediation of soil and groundwater contamination, among other matters.
In addition, environmental regulations related to climate change, including CO2 emissions standards adopted by the International Civil Aviation Organization, or the ICAO, are one of the main drivers of global aerospace industry research and development investments since they may affect customer preferences. We may incur additional costs to improve or create new compliance programs to meet environmental regulatory requirements. We currently have several comprehensive programs in place to reduce the effects of our operations on the environment. For additional information, see “Item 4. Information on the Company—D. Property, Plant and Equipment.”
Moreover, our services and products must comply with health and safety laws and regulations, as well as substances and preparations. We strive to maintain the highest quality standards and closely follow potential and confirmed changes in laws and regulations to adapt, redesign, redevelop, recertify or eliminate our products to remain compliant with those claims. Seizures of non-compliant products may occur, and we may incur penalties. In the event of an accident or other serious incident involving a product, we may be required to conduct investigations and undertake preventive and remedial actions.
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Climate change may have adverse effects on our business and financial condition.
Climate change related risks are gaining increasing social, regulatory, economic and political relevance, both in Brazil and internationally. New regulations related to climate change may affect our operations and business strategy, leading us to incur financial costs resulting from: (i) physical risks; and (ii) transition risks, including climate litigation. Physical climate risks are those that arise from changes in weather and climate that impact the economy, including rising global average temperatures, which can cause sea level rise and acute climate risks caused by natural disasters, including but not limited to floods, fires and hurricanes. Such disasters could adversely affect our and our clients’ and business partners’ operations, including by impairing flight services and aircraft circulation. In addition, physical risks could cause market volatility and negatively affect the trading price of our ADSs. In addition, our facilities and operations may also suffer physical damages due to severe weather events which may represent increased operational costs.
Transition climate risks are those that arise from the transition to a low-carbon economy. We expect that the market may face significant and rapid developments in terms of new technologies, policy, legal and regulatory demands capable of impacting our activities and the value of our assets.
Effects from both physical and transitional climate risks may also represent losses for our clients and business partners, affecting their profitability as well as their ability to fulfill their obligations.
If we do not adequately identify and embed the risks associated with climate change into our risk framework to appropriately measure, manage and disclose the various financial and operational risks that may result from climate change, or if we fail to adapt our strategy and business model to a changing regulatory and market environment, we could face a material adverse impact on our business growth rates, competitiveness, profitability, capital requirements and financial condition.
We may not be able to achieve our carbon emissions targets or make progress in other environmental, social, and governance initiatives.
In August 2021, we announced our intention to reach carbon neutrality in our operations by 2040 reducing Scope 1 and 2 emissions at least by 50%. This commitment relies mostly on the purchase of sustainable aviation fuels, or SAFs, electricity from renewable sources and carbon offsets. Our estimates concerning the timing and cost of implementing our targets are subject to several risks and uncertainties, such as low availability of SAF, especially in Brazil where the majority of operations is concentrated, and variations in fuels, energy and offset prices. We are setting our strategies and new products aiming to a net-zero emission aviation by 2050. In order to reinforce this commitment, we signed in 2021 with other representatives of the aerospace sector, the commitment “Fly Net Zero.” This goal will be supported by accelerated efficiency measures, energy transition and innovation across the aviation sector and in partnership with governments around the world.
We have also committed to certain diversity, inclusion and education targets, such as having 50% diverse hires in all new entry-level programs by December 31, 2025; securing access of more than 80% of the students from Embraer high schools to public universities and private universities with full-tuition scholarships; having 20% of women in senior leadership positions by December 31, 2025, among others. We are also subject to certain legal obligations to meet diversity, equity and inclusion targets.
We cannot assure you that our environmental, social and governance, or ESG, targets and commitments and any ESG-related obligations will be achieved since they depend on several factors over which we have no influence or control.
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Geopolitical and Macroeconomic Risks
Brazilian political and economic conditions have a direct impact on our business and the trading price of our common shares and ADSs.
The Brazilian government has frequently intervened in the Brazilian economy and occasionally has made drastic changes in policy and regulations. The Brazilian government’s actions to control inflation and affect other policies and regulations have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency exchange and remittance controls, devaluations, capital controls and limits on imports. Our business, financial condition, results of operations and the trading price of the common shares and the ADSs may be adversely affected by changes in policy or regulations at the federal, state or municipal level involving or affecting factors, such as:
| • | interest rates; |
| • | currency fluctuations; |
| • | monetary policies; |
| • | inflation; |
| • | liquidity of capital and lending markets; |
| • | tax policies; |
| • | labor regulations; |
| • | energy and water shortages and rationing; and |
| • | other political, social and economic developments in or affecting Brazil. |
Uncertainty over whether the Brazilian government would implement changes in policy, regulation or legislation creates instability in the Brazilian economy, increasing the volatility of the Brazilian securities markets. These uncertainties and other future developments in the Brazilian economy may adversely affect our activities, and consequently our operating results, and may also adversely affect the trading price of our common shares and ADSs. We cannot predict which policies the Brazilian government will adopt or if these policies or changes in current policies may have an adverse effect on us or the Brazilian economy.
These factors are compounded as our results of operations and financial condition have been, and will continue to be, affected by the growth rate of the Brazilian GDP. Brazilian GDP growth rates have fluctuated over the past years, with a contraction of 4.1% in 2020 followed by expansions of 4.6% in 2021, 2.9% in 2022, 2.5% in 2023 and 3.4% in 2024. The Focus report, a summary of market expectations collected by the Brazilian Central Bank and released on March 21, 2025 the consensus of Brazilian economists was for expectations of Brazilian GDP to increase 1.98% in 2025. Growth of the Brazilian GDP is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on the use of our products and services.
Political instability may adversely affect our business and results of operations, the price of our common shares and our debt instruments.
Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected, and continue to affect, the confidence of investors and that of the public in general, resulting in economic downturn and heightened volatility of securities issued by Brazilian companies. Political instability and uncertainty regarding political developments and the policies the Brazilian government may adopt or alter may have material adverse effects on the macroeconomic environment in Brazil, as well as on the operations and financial performance of businesses operating in Brazil, including ours.
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Inflation and government efforts to curb inflation may contribute significantly to economic uncertainty and to heightened volatility in the Brazilian and international securities markets and, consequently, may adversely affect us.
Inflation and interest rate volatility have in the past caused material adverse effects in the Brazilian and global economy. Sudden increases in prices and long periods of high inflation may cause, among other effects, loss of purchasing power and distortions in the allocation of resources in the economy.
In Brazil, inflation and certain actions taken by the Brazilian Central Bank to curb it have had significant negative effects on the Brazilian economy. Brazil’s General Price Index (Índice Geral de Preços – Mercado), or the IGP-M index, registered inflation of 6.5% in 2024, compared to deflation of 3.2% in 2023 and inflation of 5.5% in 2022. Brazil’s National Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo), or the IPCA index, recorded inflation rates of 4.8% in 2024, 4.6% in 2023 and 5.8% in 2022. Measures to curb high inflation rates include a tightening of monetary policy, with an increase in interest rates, resulting in restrictions on credit and short-term liquidity.
The Brazilian Central Bank’s Monetary Policy Committee (Comitê de Política Monetária), or COPOM, is responsible for setting the Brazilian official interest rate, or the SELIC rate. The COPOM frequently adjusts the official base interest rates in situations of economic uncertainty to meet the economic goals established by the Brazilian government. After reaching a historical low of 2.0% in August 2020, the COPOM began increasing interest rates in March 2021 and, as a result, the SELIC rate reached 9.25% in December 2021 and 13.75% in December 2022. On August 2023, the Brazilian Central Bank started cutting the SELIC rate as a result of a slowdown in inflation, and the SELIC rate was set to 10.50% as of May 2024. Nevertheless, renewed inflationary pressures—driven in part by fiscal concerns stemming from persistent budget deficits and increased government spending—prompted the Brazilian Central Bank to reverse course and resume hiking rates in September 2024, with the SELIC rate reaching 12.25% by December 2024. As of the date of this annual report, the SELIC rate stands at 14.25% per annum, reflecting the challenges of controlling inflation amid a strong economy, historically low unemployment levels, and fiscal imbalances requiring tighter monetary policy to maintain economic stability.
In the international scenario, inflation has reached record highs in recent years. In the U.S., consumer inflation measured by the U.S. Consumer Price Index, or the CPI, peaked at 6.5% in 2022, moderated to 3.4% in 2023, and 2.9% in 2024. Similarly, in Europe, consumer inflation measured by the Harmonised Index of Consumer Prices (HICP) was 9.2% in 2022, 2.9% in 2023, and 2.4% in 2024. The rise in inflation prompted central banks to reverse the strong stimulus policies implemented during the COVID-19 pandemic. The European Central Bank increased interest rates from -0.5% in 2021 to 2.0% in 2022, reaching a peak of 4.5% in 2023. The Federal Reserve similarly raised rates from 0.08% in 2021 to 4.33% in 2022 and 5.33% in 2023. However, in 2024, both central banks began a measured reversal of these policies, with the European Central Bank cutting rates to 3.5% and the Fed lowering the federal funds rate to a range of 4.25%-4.5% by the end of the year. These moves were driven by moderating inflation, slowing economic growth, and easing supply chain pressures. Despite these recent rate cuts, interest rates remain at historically high levels compared to pre-pandemic norms. Both the European Central Bank and the Federal Reserve are generally expected to maintain rates at these elevated levels in the near term to ensure inflation remains under control and economic stability is preserved.
Increases in interest rates, or the maintenance of interest rates at historically high levels, could adversely affect our ability to incur additional debt and increase the cost of service of debt, resulting in an increase in our financial costs, which may reduce our liquidity, thereby adversely affecting our ability to meet our financial obligations. As of December 31, 2024, 5.6% of our consolidated cash and cash equivalents were indexed to the variation of the Brazilian CDI rate. Therefore, fluctuations in Brazilian interest rates and inflation may adversely affect us. On the other hand, a significant decrease in the CDI or inflation rates may adversely affect the revenue we receive from our financial investments.
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Exchange rate volatility may adversely affect us.
The Brazilian currency has, during the last decades, experienced frequent and substantial variations in relation to the U.S. dollar and other foreign currencies. In 2022, the real appreciated against the U.S. dollar in comparison to December 31, 2021, reaching R$5.2177 per US$1.00 as of December 31, 2022. In 2023, the real appreciated against the U.S. dollar in comparison to December 31, 2022, reaching R$4.8413 per US$1.00 as of December 31, 2023. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$6.1923 per US$1.00 on December 31, 2024, which reflected a 27.9% depreciation in the real against the U.S. dollar during the year, influenced in part by the outcome of the U.S. presidential election which is expected to result in a stronger U.S. dollar relative to other currencies, as well as concerns surrounding the Brazilian economy and the Brazilian government’s fiscal situation. As of March 21, 2025, the real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$5.7241 per US$1.00. There can be no assurance that the real will not depreciate further against the U.S. dollar.
On the other hand, depreciation of the real against the U.S. dollar creates inflationary pressures in Brazil and causes increases in interest rates, which negatively affects the growth of the Brazilian economy as a whole, and curtails access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciation of the real against the U.S. dollar has also, including in the context of an economic slowdown, led to decreased consumer spending, deflationary pressures and reduced growth of the economy as a whole. On the other hand, appreciation of the real relative to the U.S. dollar and other foreign currencies could lead to a deterioration of the Brazilian current accounts, as well as dampen export-driven growth. Depending on the circumstances, either depreciation or appreciation of the real may materially and adversely affect us.
Although most of our revenue and debt is U.S. dollar-denominated, the relationship of the real to the value of the U.S. dollar, and the rate of depreciation of the real relative to the prevailing rate of inflation, may adversely affect us, mainly due to the following factors:
| • | In 2024, 13.4% of our total costs were denominated in reais. |
| • | Our income tax expense is significantly impacted by exchange rate fluctuations, since taxes on income are largely determined and paid in Brazilian reais based on our Brazilian tax books. We must record deferred taxes resulting from exchange rate fluctuations on the reported basis of our nonmonetary assets (mainly property, plant and equipment and intangible assets). If the real had devalued or appreciated by 10% against the U.S. dollar in relation to the actual exchange rate as of December 31, 2024, the deferred income tax expense would have been higher or lower by US$168.2 million. For additional information on the effects of the variation of the real against the U.S. dollar, see notes 23 and 34 to our 2024 audited consolidated financial statements. |
| • | Depreciation of the real against the U.S. dollar or other currencies would reduce our real-denominated revenues from our Defense & Security segment, when converted to the U.S. dollar as our functional currency. |
| • | Appreciation of the real against the U.S. dollar or other currencies increases the costs of our products when measured in U.S. dollars and may result in a decrease in our margins. |
Depreciations of the real relative to the U.S. dollar could also reduce the U.S. dollar value of distributions and dividends on our ADSs and may also reduce the market value of our common shares and ADSs. While our functional currency is the U.S. dollar our shareholders’ equity is required under Brazilian Corporate Law to be accounted and maintained in Brazilian reais, including amounts to be distributed to shareholders (dividends and interest on own capital). For more information, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividends Policy.”
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Developments and the perception of risk in other countries, especially other emerging markets, may adversely affect the market price of Brazilian securities, including our ADSs, our common shares and our debt instruments.
The market value of securities of Brazilian issuers, including securities issued by us, may be affected by economic and market conditions in other countries, including the United States of America, European Union and Latin American countries and other emerging market countries. For instance, political divisions in the United States of America, particularly around fiscal, inflation, energy, and geopolitical policies, may result in sudden policy changes that adversely impact the U.S., global, and Brazilian economies and capital markets. Although economic conditions in those countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in other countries may have an adverse effect on the market value of securities of Brazilian issuers. To the extent the conditions of the global markets or economy deteriorate, the business of companies with significant operations in Brazil may be adversely affected. Moreover, crises elsewhere may diminish investor interest in securities of Brazilian issuers, including ours. This could adversely affect the trading price of our securities and could also make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms, or at all.
Any downgrade of Brazil’s could adversely affect the market price of our common shares, ADSs and debt instruments.
Credit ratings affect investors’ perceptions of risk and, as a result, the yields required on debt issuances in financial markets. Rating agencies regularly evaluate Brazil and its sovereign ratings, taking into account a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness and the prospect of change in these factors.
As of the date of this annual report, Brazil’s sovereign credit ratings were BB with a stable outlook, Ba1 with a positive outlook and BB with a stable outlook by Standard & Poor’s, Moody’s and Fitch, respectively, which ratings are below investment grade. Consequently, the prices of securities offered by companies with significant operations in Brazil may be adversely affected. A prolongation or worsening of the current low growth rates of the Brazilian economy and continued political uncertainty, among other factors, could lead to further ratings downgrades or the maintenance of Brazil’s credit ratings at sub-investment grade levels. Any of these events could increase the perception of risk of investors and, as a result, adversely affect the price of securities issued by Brazilian companies, including our ADSs.
Developments related to the Russia-Ukraine and the Israel-Hamas conflicts may adversely affect us.
The global developments relating to Russia’s invasion of Ukraine have generated uncertainty in the global economy. As soon as the war was declared, we have suspended 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 we are subject.
As the Russia-Ukraine conflict persists, we continue to closely monitor developments to assess potential restrictions or impacts that may arise. The conflict has also led to an increase in cyber-attacks targeting critical networks, airlines, and suppliers, further amplifying operational risks across the aviation industry. The conflict has also highlighted the direct risks to aviation safety. Recent incidents related to these matters illustrate the heightened risks for civilian aircraft operating in or near conflict zones. These events not only pose immediate safety concerns but also contribute to reputational risks for manufacturers, heightened scrutiny of aviation operations, and potential disruptions to the industry as a whole.
Russia remains one of the world’s largest suppliers of titanium, a critical material for aircraft manufacturing. Although there is no concern over the availability of titanium in our supply chain, considering our current inventory position and the existing alternative sources in other countries, we will continue to actively monitor our supply chain to identify and mitigate any potential constraints. In addition, the conflict between Russia and Ukraine may adversely affect people’s safety and activities of our employees, especially those residing in Europe.
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Moreover, despite the ceasefire agreement signed between Israel and Hamas, we continue to monitor developments to identify any potential impacts on the supply chain, operations, or customer support. Given that we have suppliers in the Middle East, any disruptions, shipments delays or cost increases could adversely affect our business. It is unclear whether this conflict will be contained or resolved, and what effects it may still have on global political and economic conditions in the long term.
As a company that operates globally, the adverse effects—global or localized—of the ongoing war between Russia and Ukraine, the conflicts in the Middle East and the economic sanctions and import or export controls imposed on the Russian government, could have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Our Common Shares and ADSs
If holders of our ADSs exchange the ADSs for common shares, they risk losing the ability to remit foreign currency abroad and Brazilian tax advantages.
The Brazilian custodian for the common shares has obtained an electronic certificate of registration from the Central Bank permitting it to remit foreign currency abroad for payments of dividends and other distributions relating to the common shares or upon the disposition of the common shares. These remittances under an ADR program are subject to a specific tax treatment in Brazil that may be more favorable to a foreign investor if compared to remitting gains originated from securities directly acquired by the investor in the Brazilian regulated stock markets. Therefore, an investor who opts to surrender ADSs in exchange for the underlying common share may be subject to less favorable tax treatment on gains with respect to these investments.
Pursuant to CMN Resolution No. 4,373, in order for the investor to surrender ADSs for the purpose of withdrawing the common shares represented thereby, the investor is required to appoint a Brazilian financial institution duly authorized by the Central Bank of Brazil and CVM to act as its legal representative, who shall be responsible, among other things, for keeping and updating the investors’ certificates of registrations with the Central Bank of Brazil, which entitles registered foreign investors to buy and sell directly on the B3 – Brasil, Bolsa, Balcão, or B3. These arrangements may require additional expenses from the foreign investor. Moreover, if the representatives fail to obtain or update the relevant certificates of registration, investors may incur additional expenses or be subject to operational delays which could affect their ability to receive dividends or distributions relating to the common shares or the return of their capital in a timely manner.
The custodian’s certificate of registration or any foreign capital registration directly obtained by the holders may be affected by future legislative or regulatory changes, and we cannot assure the holders that additional restrictions applicable to them, the disposition of the underlying common or preferred shares, or the repatriation of the proceeds from the process will not be imposed in the future.
The Brazilian government has veto power over the change in our corporate control, and of our name, trademark or corporate purpose and over the creation or alteration of our Defense & Security programs, and its interests could conflict with the interests of the holders of our common shares and ADSs.
The Brazilian government holds one share of a special class of our common stock called a “golden share,” which carries veto power over certain matters such as change of control, name, trademark or corporate purpose and over the creation or alteration of our Defense & Security programs (whether or not the Brazilian government participates in those programs). For example, in 2010, we changed our corporate name to Embraer S.A. and altered our bylaws to allow us to enter the defense and security market, which required the approval of the Brazilian government. The Brazilian government may veto transactions that may be in the interest of the holders of our common shares or ADSs. We cannot ensure that we will be able to obtain approvals from the Brazilian government in the future to effect important corporate changes or transactions, or other important corporate changes that may be required.
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Our bylaws contain provisions that could discourage our acquisition or prevent or delay transactions that you may favor.
Our bylaws contain provisions that have the effect of avoiding the concentration of our common shares in the hands of a small group of investors to promote the dispersed ownership of those shares. These provisions require any shareholder or group of shareholders that acquires or becomes the holder of (i) 35% or more of the total shares issued by us or (ii) other rights over shares issued by us that represent more than 35% of our capital, to submit to the Brazilian government a request for making a public tender offer to purchase all of our shares on the terms specified in our bylaws. If the request is approved, the shareholder or group of shareholders must commence the public tender offer to purchase all of our shares within 60 days of the date of approval. If the request is refused, the shareholder or group of shareholders must sell all of their shares that exceed the 35% limit within 30 days, so that the holding of this shareholder or group of shareholders falls below 35% of our capital stock. These provisions may have anti-takeover effects and may discourage, delay or prevent a merger or acquisition, including transactions in which our shareholders might otherwise receive a premium for their common shares and ADSs. These provisions can only be altered or overridden with the approval of our board of directors and our shareholders in a shareholders’ meeting convened for this purpose and with the consent of the Brazilian government, as holder of the golden share.
Our bylaws contain provisions that limit the voting rights of certain shareholders, including non-Brazilian shareholders.
Our bylaws contain provisions that limit the rights of a shareholder or group of shareholders, including brokers acting on behalf of one or more holders of ADSs, to exercise voting rights in respect of more than 5% of the outstanding shares of our capital stock at any general meeting of shareholders. Our bylaws also contain provisions that limit the right of non-Brazilian shareholders to exercise voting rights in respect of more than two-thirds of the voting rights that may be exercised by Brazilian shareholders present at any general meeting of shareholders. This limitation will effectively prevent our takeover by non-Brazilian shareholders and limit the ability of non-Brazilian shareholders to effect control over us. For additional information on our voting rights, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights of Shares—Limitation on the Voting Rights of Non-Brazilian Shareholders.”
We do not have a controlling shareholder and as a result we may be subject to certain risks.
As a widely held corporation, we do not have a controlling shareholder or a control group that hold rights that permanently ensure it the majority of votes in the resolutions of the general shareholders’ meeting or the power to elect the majority of the members of our board of directors. In the absence of a single, controlling shareholder or group of controlling shareholders, the minimum quorum required by law for the approval of certain matters may not be reached, which could adversely affect our business.
In addition, we and our shareholders may not be afforded the same protections provided by the Brazilian Corporate Law against abusive measures taken by other shareholders and, as a result, we may be required to incur significant expenses and may not be compensated for any losses we suffer. Any sudden and unexpected changes in our management, changes in our corporate policies or strategic direction, takeover attempts or any disputes among shareholders regarding their respective rights may adversely affect our business and results of operations.
Holders of ADSs may not be able to exercise their voting rights.
Holders of ADSs may only exercise their voting rights with respect to the underlying common shares in accordance with the provisions of the deposit agreement governing our ADSs. Under the deposit agreement, ADS holders must vote the common shares underlying their ADSs by giving voting instructions to the depositary. Upon receipt of the voting instructions from the ADS holder, the depositary will vote the underlying common shares in accordance with these instructions. Otherwise, ADS holders will not be able to exercise their voting right unless they surrender the ADS for cancellation in exchange for the common shares.
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Pursuant to our bylaws, the first call for a shareholders’ meeting must be published at least 30 days in advance of the meeting and the second call must be published at least 15 days in advance of the meeting. When a shareholders’ meeting is convened, holders of ADSs may not receive sufficient advance notice to surrender the ADSs in exchange for the underlying common shares to allow them to vote with respect to any specific matter. In addition, the depositary has no obligation to notify ADS holders of an upcoming vote or distribute voting cards and related materials to ADS holders, unless we specifically instruct the depositary to do so. If we ask the depositary to seek voting instructions from ADS holders, the depositary will notify ADS holders of the upcoming vote and will arrange to deliver proxy cards to those holders. We cannot ensure that ADS holders will receive proxy cards in time to allow them to instruct the depositary to vote the shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for an untimely solicitation of voting instructions. As a result, holders of ADSs may not be able to fully exercise their voting rights.
The relative illiquidity and volatility of the Brazilian securities markets may substantially limit the ability of holders of our common shares or the ADSs to sell the common shares underlying ADSs at the price and time they desire.
Investing in securities, including our common shares or the ADSs, of issuers from emerging market countries, including Brazil, involves a higher degree of risk than investing in securities of issuers from more developed countries.
The Brazilian securities markets are substantially smaller, less liquid, more concentrated and more volatile than major securities markets in the United States of America and other jurisdictions and are not as highly regulated or supervised as some other markets. The relatively small market capitalization and illiquidity of the Brazilian equity markets may substantially limit the ability of holders of our common shares or ADSs to sell the common shares or the ADSs at the price and time desired. For additional information on the B3, see “Item 9. The Offer and Listing—C. Markets—Trading on the B3.”
Holders of our ADSs might be unable to exercise preemptive rights with respect to the common shares.
Holders of our ADSs may not be able to exercise the preemptive rights relating to the common shares underlying their ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not required to file a registration statement with respect to the shares or other securities relating to these preemptive rights, and we cannot assure holders of our ADSs that we will file any registration statement. Unless we file a registration statement or an exemption from registration applies, holders of our ADSs may receive only the net proceeds from the sale of their preemptive rights by the depositary or, if the preemptive rights cannot be sold, the rights will lapse.
Judgments of Brazilian courts with respect to our common shares will be payable only in reais.
If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of the common shares, we will not be required to discharge our obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and those amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not provide non-Brazilian investors with full compensation for any claim arising out of or related to our obligations under the common shares or the ADSs.
| Item 4. | INFORMATION ON THE COMPANY |
A. History and Development of the Company
Overview
Embraer S.A. is a publicly held corporation duly incorporated under the laws of Brazil with an indefinite term of duration. Our principal executive office is located at Avenida Dra. Ruth Cardoso, No. 8,501, 30th floor (part), Eldorado Business Tower, Pinheiros, ZIP Code 05425-070, city of São Paulo, state of São Paulo, Brazil. Our telephone number is 55-11-3040-6874, and our internet address is ri.embraer.com.br.
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Originally formed in 1969 by the Brazilian government, we became a publicly held corporation in 1989 and were privatized in 1994. In the privatization process, the Brazilian government created the golden share, a special class of shares to ensure that the Brazilian government has certain veto rights, in particular regarding military programs.
In 2000, we registered with the SEC and listed our American Depositary Receipts on the New York Stock Exchange. In 2006, we began a corporate restructuring process with the objective of simplifying our capital structure, which since then is comprised solely of common shares. Moreover, we joined a special listing segment of the B3 known as Novo Mercado, enhancing our corporate governance standards; and, since doing so, we have not had a controlling shareholder or controlling shareholder group.
In 2010, our shareholders approved a change of our corporate name from “Embraer – Empresa Brasileira de Aeronáutica S.A.” to “Embraer S.A.” In addition, our shareholders broadened our corporate object and the scope of our Defense & Security segment to allow this segment to manufacture and trade equipment, materials, systems, software, accessories and components for the defense, security and energy industries, as well as to perform technical activities and services related to these areas. As a result, our bylaws were amended to reflect the addition of these activities to our corporate purposes.
In 2011 and 2012, we made acquisitions and entered into partnerships in the Defense & Security segment, including the acquisition of Atech and Bradar Indústria S.A., or Bradar (which was merged into Embraer in 2018), Savis Tecnologia e Sistemas S.A. (which was merged into Embraer in 2021) and Visiona Tecnologia Espacial S.A., or Visiona.
In 2020, through our subsidiary Embraer Defesa e Segurança Participações S.A., we acquired 61% of Tempest Serviços de Informática S.A., or Tempest Security Intelligence, and its subsidiaries, the largest cybersecurity company in Brazil. In 2024, Embraer Defesa e Segurança Participações S.A. indirectly acquired 100% of Tempest and its subsidiaries.
In 2021, we, through our subsidiary EVE, entered into a business combination agreement with Zanite Acquisition Corp., or Zanite, to further develop EVE’s comprehensive, practical and capital efficient UAM solutions. The objective of this solution is the design and production of eVTOL, service and support of such vehicle, fleet operations and UATM. The transaction closed on May 9, 2022 and Zanite changed its name to Eve Holding. Eve Holding’s shares were listed on the New York Stock Exchange on May 10, 2022.
In June 2023, we, through our subsidiary Embraer Aircraft Holding, Inc., or EAH, and Nidec Motor Corporation, one of the world’s leading comprehensive electric motor manufacturers, comprised by approximately 340 group companies all over the world, entered into an agreement, or the Framework Agreement, which establishes the terms and conditions for the formation of a new company named Nidec Aerospace, LLC, or Nidec. The objective of this partnership is the joint development and manufacture of electric propulsion systems for aeronautical usage, including for vertical take-off and landing vehicles, and for fixed-wing aircraft. The transaction closed on October 5, 2023.
Business Development
We have grown from a government-controlled company, originally established to develop and produce aircraft for the Brazilian Air Force, into a publicly held company that produces aircraft for commercial and executive aviation and for defense and security purposes and related services. As part of our evolution, we have obtained, developed and enhanced our engineering and technological capabilities through our own development of products for the Brazilian Air Force and through joint product development with foreign companies on specific projects. We have applied these capabilities that we gained from our Defense & Security segment to further develop our Commercial Aviation segment.
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Commercial Aviation
Our first regional aircraft was EMB-110 the Bandeirante, a 19-passenger twin-engine non-pressurized turboprop aircraft initially designed to service the transport needs of the Brazilian Air Force. This aircraft was certified in 1973. The Bandeirante was followed by the EMB 120 Brasília, which was certified in 1985. The EMB 120 Brasília is a high performance, pressurized turboprop commercial aircraft seating up to 30 passengers and was designed to serve the longer routes and higher passenger traffic of the growing regional aircraft market. Drawing upon the design of the EMB 120 Brasília and the jet technology acquired in our development of the AM-X, a jet strike bomber for the Brazilian Air Force, we developed the ERJ 145 regional aircraft family, our first jet product for commercial use. This family comprises three aircraft, which seat up to 37, 44 and 50 passengers. The first member of the ERJ family, the ERJ 145, was certified in 1996. We have expanded our jet product line with the development of the EMBRAER 170/190 jet family, which has the capacity to seat between 70 and 118 passengers and was designed to serve the aircraft market’s trend towards larger, higher volume and longer-range jets. The first member of this family, the EMBRAER 170, was certified in February 2004, and its derivatives, the EMBRAER 175 and the EMBRAER 190, were certified in December 2004 and August 2005, respectively. The certification of the EMBRAER 195 was granted in June 2006. In June 2013, Embraer launched the second generation of its E-Jets family of commercial aircraft, the E-Jets E2, comprising three aircraft, the, E190-E2 and E195-E2. The E190-E2 and the E195-E2 entered service in April of 2018 and September of 2019, respectively. Our Commercial Aviation segment accounted for 34.5%, 35.1% and 34.0% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. For more information, see “—B. Business Overview—Commercial Aviation Segment.”
Executive Aviation
We developed a line of executive jets throughout time, beginning with the Legacy 600, which was discontinued in 2016 to focus on the success of its longer-range successor, the Legacy 650. In 2005, we launched the Phenom 100, an entry-level jet, and the Phenom 300, a light jet. Later in 2006, the Lineage 1000, an ultra-large jet, was added as the largest executive jet in our executive jets portfolio. Then, in 2008, we launched the Legacy 450 and Legacy 500, both medium cabin jets and in 2009, we presented the Legacy 650, a large executive jet that was positioned in our portfolio between the Legacy 500 and the Lineage 1000. The enhanced version of the Lineage, the Lineage 1000E, was introduced in 2013. The Legacy 500 and the Legacy 450 entered into service in October of 2014 and December 2015, respectively. In 2016, we launched the Phenom 100EV and the Legacy 650E. In 2017, the Phenom 100EV entered into service and we also launched the Phenom 300E, an enhanced version of our Phenom 300, with a revolutionary interior design, which entered into service in October 2017 with a demonstration aircraft. In 2018, we introduced the Praetor 500 midsize and Praetor 600 super-midsize business jets, which entered into service in June and in December 2019, respectively. Also in 2019, we successfully implemented the sunset strategy of the Legacy 650 and Lineage 1000E. In 2020 we concentrated our business efforts on the renewed and highly competitive Phenom and Praetor product lines, sunsetting the Legacy 450 and 500 models. Finally, in 2023, we launched the Phenom 100EX, the latest evolution from the Phenom 100 series, which entered into service in early 2024. Our Executive Aviation segment accounted for 27.6%, 26.7% and 27.4% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
Defense & Security
In our Defense & Security segment, after the success of our first Bandeirante and Brasília aircraft, we entered the military aviation segment with various products for the Brazilian Armed Forces. The first of this group of products included the EMB-312 Tucano, a basic trainer, and the EMB-111 Bandeirulha, for maritime patrol, both of which have also been exported. During the 1980’s, Embraer and Aermacchi also jointly developed the AMX.
In the early 2000’s, we began the production of the newly developed A-29 Super Tucano, or Super Tucano. The Super Tucano is an advanced training aircraft that entered into service in 2004 and is still under production, with over 290 units sold to more than 20 countries as of December 31, 2024. Throughout the years, we have developed several other aircraft tailored to our costumers’ missions, in particular the KC-390 Millennium, the largest aircraft ever manufactured in Brazil. We also entered the radars and land systems market with the acquisition of Bradar in 2011, which was fully incorporated into Embraer in 2018. Bradar’s offerings include the SENTIR M20, SABER M60, and SABER M200 VIGILANTE radars, as well as new developments in this area of expertise.
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Moreover, we have invested in various companies in the defense and security industry, expanding our portfolio to offer to our customers around the globe a broad line of intelligence, surveillance and reconnaissance aircraft, services, systems and solutions, ground radars, aircraft for transportation of authorities, tactical military transport, aerial refueling, basic and advanced training aircraft, satellites and cybersecurity solutions through our wholly owned subsidiary Atech. Through Atech, we have been producing complex systems for critical missions, in the area of command and control, communications, computer intelligence, cyber defense, air defense and air traffic control for defense, security and other civil applications. With a 51% equity interest in Visiona, we also operate in the satellite development, production and satellite- based services markets.
In 2018, Embraer formed the consortium Águas Azuis in partnership with Thyssenkrupp Marine Systems and our subsidiary, Atech. The consortium was selected in 2019 as the preferred supplier to build four new Tamandaré Class Frigates for the Brazilian Navy. In 2021, we further reinforced our defense portfolio by the merger of Savis Tecnologia e Sistemas S.A into the Company, a wholly owned subsidiary specialized in the development and integration of complex land systems. Savis’ offerings include the development, integration and implementation of the SISFRON Program.
As of the date of this annual report, in our view, we remain the leading supplier of defense aircraft to the Brazilian Air Force, based on the number of aircraft sold, and we have also sold aircraft to armed forces in the United States of America, Europe, Asia, Africa, and Latin America. Our Defense & Security segment accounted for 11.3%, 9.8% and 9.1% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. Revenues from sales to the Brazilian government accounted for 23.0%, 23.8% and 42.5% of this segment’s revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Services & Support
Our Services & Support segment is focused on providing a complete portfolio of solutions for the operations of Embraer aircraft and products in the Commercial Aviation, Executive Aviation and Defense & Security segments. The portfolio comprises materials solutions, pay-by-hour programs, maintenance, aircraft modifications, training, integrated support, digital services, engineering services, among others. This operating segment also includes our subsidiary OGMA – Indústria Aeronáutica de Portugal S.A., or OGMA, which is an Embraer subsidiary based in Portugal that offers maintenance, repair and overhaul, or MRO, services, for civil and military aircraft and engines (manufactured by Embraer or by third parties), and Embraer CAE Training Services, which provides training services. Finally, this segment has a network of more than 80 owned and authorized service centers spread across the world, customer service centers dedicated to each market and a team of more than 4,000 employees responsible for supporting more than 4,750 Embraer aircraft, as well as other original manufacturer aircraft, engines and radars.
Our Services & Support segment accounted for 25.6%, 26.9% and 27.9% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Other Segments
Finally, our Other segments include various activities and deliveries not included in the foregoing segments. We provide parts for structural, fuel, mechanical and hydraulic systems to Sikorsky Aircraft Corporation, Helicopter Support Inc. and Liebherr Aerospace to support their aftermarket. We also manufacture spare parts, including landing gear, fuel system and fuel tanks, for Sikorsky’s S-92 and H-92 Helibus helicopters. In addition, we also have the Ipanema aircraft, a crop duster developed in the 1970s under the specifications of the Brazilian Ministry of Agriculture. Now in its seventh generation, all new Ipanema aircraft are delivered with engine powered by biofuel (Ethanol). As of December 31, 2024, we had delivered a total of 1,671 Ipanema aircraft, including 65 units delivered in 2024.
Additionally, we have invested in cybersecurity solutions through our subsidiary Embraer Defesa e Segurança Participações S.A., which, in 2020, acquired 61% of Tempest, the largest cybersecurity company in Brazil, and in 2024, we indirectly acquired the remaining 39% of the company.
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Our Other segments accounted for 1.0%, 1.5% and 1.6% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. For additional information on our Other segments, see note 36.5 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
B. Business Overview
Overview
We are the leading manufacturer of jets with up to 150 seats in the world, based on the number of aircraft delivered over the last decade, holding a 29.1% market share in terms of accumulated deliveries since 2004, according to a Cirium Fleet Analyzer data report dated December 31, 2024. As a result, we have a franchise footprint represented by our global customer base. Our focus is to achieve customer satisfaction with a range of products and services addressing the commercial airline, executive jets and defense and security markets. We have developed a customer-centric technology-driven portfolio of commercial aviation products and services that allows us to build long-term relationships with our clients in the commercial aviation, executive jets and defense and security markets. We grew from a government-controlled company that developed and produced products for the Brazilian Armed Forces to a publicly held company that produces aircraft for and provides related services to commercial and executive aviation, as well as for defense and security purposes. Providing high quality customer support is a key element of our customer focus and is critical to our ability to maintain customers with whom we have a long-term relationship.
One of our main market opportunities lies in direct product replacement, particularly in regions where our products are well perceived, such as North America and Europe. Additionally, we believe there is significant potential in specific markets like India, Brazil, Turkey, and Saudi Arabia. For Commercial Aviation, this is driven by the development of regional aviation in these areas, along with the global growth of the sub-150 seat segment, as airlines adjust their fleets to better suit demand. For Executive Aviation, we, through our vision of delivering the ultimate experience in business aviation, serve the worldwide base of High Net Worth Individual or HNWI, corporate owners and flight department, charter and fractional operators. We also serve first-time buyers and additions and replacements markets.
For our Defense & Security segment, the demand is driven by the need to replace older tactical transport aircraft that are reaching retirement age.
In 2024, we generated revenue of US$6.4 billion, of which 94.7% was U.S. dollar denominated. Of our aggregate revenue in 2024:
| • | 34.5% of such revenue originated from our Commercial Aviation segment, 25.6% from our Services & Support segment, 27.6% from our Executive Aviation segment, 11.3% from our Defense & Security segment and 1.0% was from our Other segments; and |
| • | 59.1% of such revenue originated from clients in North America, followed by clients in Europe with 22.5%, Brazil with 8.3%, the Asia-Pacific region with 4.0%, Latin America (except Brazil) with 4.2% and other regions with 1.9%. |
In 2023, we generated revenue of US$5.3 billion, of which 93.5% was U.S. dollar denominated. Of our revenue in 2023:
| • | 35.1% was from our Commercial Aviation segment, 26.9% was from Services & Support segment, 26.7% was from our Executive Aviation segment, 9.8% was from our Defense & Security segment and 1.5% was from our Other segments, and |
| • | 62.3% of our revenue was from clients in North America, followed by clients in Europe with 21.5%, Brazil with 8.6%, Asia Pacific with 3.9%, Latin America (except Brazil) with 1.9% and other regions with 1.9%. |
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As of December 31, 2024, 2023, and 2022, we had a total firm order backlog of US$26.3 billion, US$18.7 billion and US$17.5 billion, respectively.
We continue our long-term strategy of focusing on consistent execution of our strategic business plan and efficiency programs with lean concepts, seeking partnership opportunities to drive growth, investing in innovation as a primary source of future growth and further developing our ESG program that reinforces our commitment towards:
| (i) | Carbon reduction: we achieved carbon neutral growth starting in 2022 and seek to reach carbon neutrality in our operations by 2040, use 100% renewable electricity by 2030 and produce products to support zero emissions aviation by 2050; |
| (ii) | Social responsibility: we expect to reach 50% of diversity hiring in our entry level programs and 20% of women in senior leadership positions by December 31, 2025. We also aim to maintain the enrollment of more than 80% of students in Embraer-funded schools into public universities or private universities with full-tuition scholarships by December 31, 2025; |
In 2024, we achieved 53% diversity hiring in our entry-level programs and saw 80% of students from Embraer-funded schools gain admission to public universities or private universities with full-tuition scholarships. We hope to maintain these achievements in 2025.
| (iii) | Corporate governance standards: we aim to maintain the highest international governance standards and robust ethics and compliance programs. |
Our Strengths
We believe that our primary strengths are as follows.
Aircraft design and technology; cost and operating efficiency
We conceive, develop and manufacture clean sheet design aircraft with cutting edge technology to help our customers reduce their operating, maintenance and training costs because of the efficient design of our parts. Within a jet family the parts share similar technology and features that reduce our design, development and production costs and allow us to offer competitive prices to our customers with high quality standards. For example, the Praetor 500 and Praetor 600 jets have similar characteristics and technologies that enhance our value proposition for the midsize and super-midsize business segments. We constantly monitor trends and behaviors in the aviation industry, to adapt our products to the constantly changing environment we are inserted in.
Our investments in innovative technologies, such as automation design, enable us to increase operational efficiency by reducing engineering and production costs, and lowering customers’ maintenance costs. For instance, our subsidiary EVE, which is a leading developer of next-generation UAM solutions, is developing a comprehensive UAM solution that includes the design and production of eVTOLs, a portfolio of maintenance and support services focused on our and third-party eVTOLs, and a new urban air traffic management system designed to allow eVTOLs to operate safely and efficiently in dense urban airspace alongside conventional aircraft and drones. We have also invested in cybersecurity solutions by acquiring Tempest in 2020 and using Beacon, which is an innovative platform designed to connect the aviation maintenance system.
Leading commercial aircraft manufacturer with a large customer base and a global footprint
We are the leading manufacturer of jets with up to 150 seats, based on the number of aircraft delivered, and have a strong global customer base. As of the date of this annual report, more than 170 airlines from over 90 countries use our commercial aircraft on five continents. Our customers include some of the largest and most significant network, regional and low-cost carriers in the world. We believe that there are significant market opportunities in the commercial and executive aviation sector based on the growing demand for our products and aircraft replacement opportunities in the next decade.
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Strategic risk-sharing partners
With respect to our commercial and business aircraft, we developed strategic relationships with key risk-sharing partners. These risk-sharing partners develop and manufacture significant portions of our aircraft’s systems and components with their own funds, thereby reducing our development expenses. These risk-sharing partners also fund a portion of our research and development expenses through direct contributions of cash or materials. These strategic relationships enable us to reduce our development expenses and risks, improve our operating efficiency, enhance the quality of our products and reduce the number of our suppliers, thereby providing us with flexibility in our production process and operations, and, consequently, allow us to adjust production in response to market demand.
Experienced and skilled workforce
Our over 20,000 employees are experienced and highly skilled. As of December 31, 2024, engineers comprised approximately one-fifth of our workforce. We believe that our employees’ high skill and knowledge levels and our continuous training and incentive programs allow us to efficiently pursue new programs and offer high technical expertise and guidance to our customers.
ESG standards
ESG has long been part of our strategy, including in the development of increasingly more eco-efficient aircraft and in the adoption of more sustainable production processes and management of natural resources. We embed our business strategy with social responsibility and environmental impact in everything we do, from our processes and facilities to product development and our supply chain. We work across all our key stakeholder audiences to develop sound strategies, define indicators, and establish targets that are integrated into our corporate sustainability plan. Certain parts of our long-term ESG commitments are: (i) achieve carbon neutrality in operations by 2040, through the acquisition of electricity 100% from renewable sources, the increasing use of sustainable aviation fuel (SAF) and the compensation of residual emissions that are not reduced through efficiency projects, alternative energy available or new technologies, (ii) develop sustainable disruptive products, services and technologies, including electrification, hybrids, biofuels, including SAF and other innovative alternative energies; (iii) launch “eVTOL” aircraft with zero emission by 2027; and (iv) leverage diversity in the hiring of entry-level programs, in leadership positions and in the aeronautical specialization program maintained by us.
Skilled defense engineering and market-leading products in our Defense & Security segment
From inception through December 31, 2024, we had sold more than 1,400 defense aircraft, including government transport aircraft, to more than 60 armed forces and operators worldwide. The A-29 Super Tucano and the KC-390 Millennium are the main products of our Defense & Security segment. The A-29 Super Tucano is the most sold aircraft in its class, according to our internal analysis, and we believe its success is due to it being a rugged and reliable turboprop platform with a high-precision-class payloads delivery system. The KC-390 Millennium, in turn, is a multi-role military transport aircraft developed to become a market leader in its category. It has several capabilities and may be used for a variety of missions, such as firefighting and aerial refueling (through the KC-390 Millennium variant). The KC-390 Millennium provides flexibility, strength, mobility, easy maintenance and the latest technology. Our workforce is highly capable of understanding our customers’ operational needs and their requirements regarding our defense products and services portfolio. We believe our team offers capable, flexible and low lifecycle cost products with global applications to our customers. We also believe that we have a strong ability to engage with several stakeholders in partnerships, enabling the development of state-of-the-art defense and space solutions within reduced time cycles.
Visible and well-diversified customer base
We sell our aircraft and provide services in North America, Europe, Brazil, Asia Pacific, Latin America and other regions. We also have diversified business segments with flexibility to shift overall focus according to demand. Our revenue generation is spread among those business segments, with increasing expansion of recurring services revenue, and does not present concentration risks. As of December 31, 2024, 38.7% of our firm orders was from our Commercial Aviation segment, 28.0% was from our Executive Aviation segment, 15.9% was from our Defense & Security segment and 17.5% was from our Services & Support segment.
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Liquidity position and debt maturity profile
We have implemented and executed cash management policies and procedures to enhance our liquidity and our ability to efficiently manage our liabilities and debt maturities. Our debt profile is focused on long-term unsecured debt, with 21.4% of our debt being secured as of December 31, 2024. Our steady cash generation allied with higher aircraft deliveries, cost reduction and efficiency measures improved our cash position in 2024, with cash and cash equivalents, and financial investments totaling US$2.6 billion and a revolving credit facility available in the amount of US$1.0 billion, in each case as of December 31, 2024. As a result of our efforts and achievements in the area, we have been rated investment grade by Standard & Poor’s as of February 2024, by Fitch as of September 2024 (both assigning a rating of BBB- with a stable outlook to Embraer) and by Moody’s as of December 2024 (which assigned a rating of Baa3 with a stable outlook).
Business Strategies
With a view to further grow our business and increase our profitability, we intend to continue to offer our customers cost-effective, high quality, and reliable aircraft and services. Below are certain key elements of our business strategy.
Focus on marketing of our commercial aircraft
We are fully committed to marketing our jets of up to 150 seats. As of December 31, 2024, there were approximately 350 units in the ERJ jet family in operation, which is a series of twin-engine jet-powered regional jets; approximately 1,400 units in the EMBRAER 170/190 jet family; and approximately 113 units in the E-Jets E2 jet family, which are medium-range jet airliners, in active service, according to a Cirium report dated December 31, 2024. For more information, see “—Commercial Aviation Segment—Products.” We believe there are market opportunities for the EMBRAER 170/190 jet family and for the E-Jets E2 generation, especially for airlines seeking to expand their fleet in the mid-density segment and substitute aging aircraft in the below-150 seat category. Additionally, commercial jets will have opportunities with mainline and low-cost carriers that are right sizing their fleets to adjust capacity and will provide us with significant opportunities to increase our competitiveness by offering a full range of jets of up to 150 seats to our customers.
Maintain our market leadership for commercial jets with up to 150 seats
Our new generation of commercial aircraft, the E-Jet E2 jet family, reinforces our commitment to maintain our market leadership in the segment of commercial jets up to 150 seats. Our commercial aircraft have state-of-the-art engines, aerodynamically advanced wings, full fly-by-wire flight controls and improvements to other systems that increase efficiency by reducing fuel consumption, maintenance costs, emissions and external noise significantly.
Develop innovative and sustainable solutions
To advance the future of regional air mobility while aligning with industry-wide sustainability goals, we introduced the Energia jet family. Targeted at the nine- to 50-seat market, this initiative enables us to study, explore, and potentially commercialize cutting-edge technologies that will shape the industry’s future through innovative designs and new propulsion systems. It also facilitates discussions around airport infrastructure, passenger convenience, and opportunities for seamless travel experiences. Moreover, we have invested in EVE, which is a leading developer of next-generation UAM solutions. EVE is developing a comprehensive UAM solution that includes the design and production of eVTOLs, a portfolio of maintenance and support services focused on our and third-party eVTOLs, and a new UATM system designed to allow eVTOLs to operate safely and efficiently in dense urban airspace alongside conventional aircraft and drones.
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Comprehensive well-positioned portfolio in the executive aviation market.
We have streamlined our portfolio to feature four clean sheet aircraft designs in the small and medium cabin jet classes. The Phenom 100EX is an entry-level jet, the Phenom 300E, a light jet, the Praetor 500, a midsize jet, and the Praetor 600, a super-midsize jet. We believe that this revamped portfolio is industry-leading in performance, comfort and technology. We are committed to understanding and responding to market and customer needs and to continuously improving our product and customer support for our executive jets. For over a decade, we have introduced disruptive clean sheet design aircraft to the market. In 2024, the Phenom 300E was the most delivered light jet for the thirteenth consecutive year and the most delivered twinjet in the whole executive jets industry for the fifth consecutive year, according to the General Aviation Manufacturers Association, or GAMA.
Provide complete and integrated solutions to the customers of our Defense & Security segment
In our Defense & Security segment, we offer a broad range of solutions covering air, land, sea, space and cybersecurity environments. Our portfolio of solutions includes tactical transport aircraft, advanced training aircraft, radars, air traffic management systems, satellites. We are constantly evaluating, developing and efficiently integrating new opportunities to meet our customers’ needs.
Continue to pursue niche market opportunities in the defense and security market
We offer solutions for transportation, close air support, tactical, training, intelligence, surveillance, reconnaissance and cybersecurity through our subsidiary Atech, among others. With our products, we provide enhanced capabilities through a defense-integrated portfolio that meets the needs of a wide range of governments’ military needs. This is only possible due to our culture of continuously pursuing market opportunities with our existing and potential customers with whom we work to develop innovative and tailored solutions throughout time.
Expand our international sales, while continuing our partnership with the Brazilian Armed Forces in our Defense & Security segment
Historically, the Brazilian Armed Forces have been our key partner in the development and acquisition of aircraft and land systems. Since our foundation in 1969, we have developed state-of-art engineering, operations capability and supply chain management expertise at a level that allows us to not only continue addressing the needs of our Brazilian customers, but also of international customers, providing them with tailored solutions. We are fully committed to continue expanding our international sales, while consolidating our position as a key partner of the Brazilian Armed Forces.
Maintain our focus on customer experience
We believe that focusing on customer experience is fundamental to our entrepreneurial success and business strategy. Our philosophy is to offer and deliver a comprehensive portfolio of services and support solutions to all customers ensuring best product availability with competitive operational costs. Our high-quality customer service and support is key to our success, as it allows us to maintain long-term relationships with our customers and increase the competitiveness of our products. As the number of our aircraft in operation continues to grow and our business expands, we have increased our commitment to provide quality after-sale support, including technical assistance, training, maintenance, spare parts, product modifications and other related services.
Maintain and reinforce operational excellence
We are committed to elevating service levels and operational excellence, ensuring continuous effort to exceed customer expectations and with high quality standards. We focus on three main initiatives to exceed customer expectation: (i) fleet expansion to optimize existing resources; (ii) guaranteeing spare parts availability and optimizing inventory turnover to strategically minimize downtime and enhance cost-effectiveness; and (iii) footprint synergy to optimize resources and operations across different locations, fostering collaboration, and improving overall efficiency. We have also started using artificial intelligence tools to enhance the customer experience within our Services & Support segment. We believe artificial intelligence tools help improve our ability to gather and analyze data, identify patterns and trends, anticipate maintenance needs and optimize material logistics. We believe that combining artificial intelligence tools, coupled logistics and data, will help us developed tailored solutions to meet the requirements of our customers’ operations.
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Continuously foster the growth of our Services & Support segment
Growth is a strategic imperative for our Services & Support segment, and we are committed to several initiatives to foster growth such as increasing of our services backlog, ensuring a robust pipeline that supports sustained expansion, strengthening our presence in both organic and agnostic markets, and considering diverse opportunities that align with our core competencies, such as the expansion of our maintenance capacity through the extension of our MRO service centers in the United States of America in 2024. Also, we are always seeking to develop innovative and competitive solutions, leveraging technology to enhance efficiency and meet the evolving needs of our stakeholders and providing unique value to our clients.
Motivate our employees and improve our production processes and managerial practices
We constantly seek to exceed our customers’ expectations. To achieve this goal, we commit to efficient production processes and best managerial practices, with high quality standards. The success of our products and services is ultimately a combination of the contribution of our employees and the production processes we have developed over the years. We strive to motivate our employees and refine our production processes. We implement and develop corporate programs, including our Embraer Enterprise Excellence Program, or P3E, based on lean manufacturing philosophy, which comprises reducing production and response times from suppliers to customers.
Commercial Aviation Segment
Overview
We design, develop and manufacture a variety of commercial aircraft. See “Item 4. Information on the Company—A. History and Development of the Company—Business Development—Commercial Aviation.” Our Commercial Aviation segment accounted for 34.5%, 35.1% and 34.0% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, our firm orders in backlog for our commercial aviation aircraft totaled US$10.2 billion as compared to US$8.8 billion as of December 31, 2023.
Products
ERJ Jet Family
Beginning in 1996, we developed the ERJ family, our 37-50-passenger twin jet-powered regional jet, to address the growing demand among regional airlines for medium-range, jet-powered aircraft. Until the launch of the EMBRAER 170/190 jet family, the ERJ was our most important product, achieving great results and being responsible for consolidating our presence in the United States of America regional market. As of December 31, 2024, 350 ERJ aircraft remained in service around the world, according to Cirium Fleet Analyzer data as of December 31, 2024.
EMBRAER 170/190 Jet Family
The EMBRAER 170/190 jet family provides our customers four aircraft models in the regional passenger jet range, and is comprised of four models: the EMBRAER 170, the EMBRAER 175, the EMBRAER 190 and the EMBRAER 195.
The EMBRAER 170 is a 66-78 seat jet and the EMBRAER 175 is a 70-90 seat jet, while the EMBRAER 190 is a 98-114 seat jet and the EMBRAER 195 is a 100-124 seat jet. The EMBRAER 170 was certified by ANAC, the FAA, the Joint Aviation Authority of Europe (the former advisory organization that made certification recommendations to non-European Union national authorities), or the JAA, and the EASA in February 2004, and deliveries of the EMBRAER 170 began in March 2004. The EMBRAER 175 was certified by ANAC in December 2004, by the EASA in January 2005 and by the FAA in August 2006. The EMBRAER 190 was certified by ANAC in August 2005, by the FAA in September 2005 and by the EASA in June 2006. The EMBRAER 195 was certified by ANAC in June 2006, by the EASA in July 2006 and by the FAA in June 2007.
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We designed the EMBRAER 170/190 jet family to maximize the benefits of commonality among the four aircraft models of the family. Aircraft in the EMBRAER 170/190 family share approximately 86% of the same components. The high level of commonality in this jet family lowered our development expenses and shortened our development period. We believe that this commonality leads to significant savings to our customers in the form of easier training, less expensive parts and maintenance and lower operational costs. Due to differences in size and weight, the EMBRAER 170/190 jet family does not share the same wing design. This regional jet family has engines fixed under its main wings—a design intended to enhance power, improve fuel economy and minimize turnaround times. All of the aircraft models of this family are powered by engines manufactured by General Electric Aircraft Engines and contain state-of-the-art avionics manufactured by Honeywell International Inc. (Aerospace).
The EMBRAER 170/190 jet family’s principal features are:
| • | Performance. All four jets in the EMBRAER 170/190 jet family have a maximum cruising speed of Mach 0.82. The EMBRAER 170 and the EMBRAER 175 with all passengers on board have maximum ranges of 1,800 and 1,750 nautical miles, respectively, and each is available in the advanced-range version, with maximum ranges of 2,150 and 2,250 nautical miles, respectively. The EMBRAER 190 and EMBRAER 195 with all passengers on board have maximum ranges of 1,850 and 1,600 nautical miles, respectively, and each is available in the advanced-range version with maximum ranges of 2,450 and 2,300 nautical miles, respectively. |
| • | Ground servicing. The underwing engine design and the existence of four doors, two in the front and two in the back, provide for enhanced accessibility and efficiency of ground services. |
| • | Cabin and cargo space. We have enhanced passenger safety and comfort in the EMBRAER 170/190 jet family. The aircraft’s “double-bubble” design enables a four-abreast cabin, a wide aisle, greater interior space and headroom, and a larger baggage compartment than the regional jets of our competitors, including those regional jets that are in the development stage. |
Set forth below are recent orders that we received for our EMBRAER 170/190 jets:
| • | In July 2022, we announced that we had received a firm order from Alaska Air Group for eight additional E175 jets. |
| • | In December 2022, we delivered three new E190 aircraft to CIAF Leasing, a company headquartered in Cairo, Egypt. |
| • | In June 2023, American Airlines signed a firm order with Embraer for seven new E175s. American Airlines thereafter ordered more four new E175s in October 2023 and two new E175s in December 2023. |
| • | In September 2023, Nigeria-based Air Peace, West Africa’s largest airline, signed a firm order for five E175 aircraft. |
| • | In October 2023, SkyWest ordered 19 new E175 jets for operation by United Airlines under a capacity purchase agreement. |
| • | In March, 2024, American Airlines placed a firm order with Embraer for 90 E175s, with purchase rights for 43 additional jets. The aircraft will be delivered with 76 seats in American Airlines’ standard dual-class configuration. The firm orders were included in our backlog of the first quarter of 2024. |
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As of December 31, 2024, the EMBRAER 170/190 jet family had 164 orders in backlog, while a total of 1,710 aircraft in this family have already been delivered to customers worldwide, according to Cirium Fleet Analyzer as of December 31, 2024.
E-Jets E2 Jet Family
In June 2013, we launched the second generation of our E-Jets family of commercial aircraft, named the E-Jets E2, comprising three aircraft, the E175-E2, E190-E2, and E195-E2. The E190-E2 and E195-E2 entered service in April of 2018 and September of 2019, respectively.
The launch of the E-Jets E2 jet family advances our vision of offering leading-edge commercial aircraft with a capacity for 70 to 150 seats, seamless mainline comfort, and performance for flexible and efficient utilization by regional, low-cost and network carriers. Our strategy is to offer all the benefits of a new design, but with the reliability of an updated platform and commonality with the EMBRAER 170/190 jet family. We have continually invested in the E-Jets program, so that our customers can stay competitive with aircraft that have the lowest operating costs and the highest passenger appeal.
In a typical single-class layout, the E175-E2 was extended by one seat row, compared to E175, and will seat up to 90 passengers, while the E190-E2 is the same size as the E190, with up to 114 seats. The E195-E2, compared to the E195, has grown by three seat rows and accommodates up to 132 seats in a typical single class configuration or up to 144 seats in a high-density configuration.
In 2015, two years after the launch of the program, we began to assemble the first of the E-Jets E2 family, an E190-E2, at our factory in São José dos Campos, and the Pratt &Whitney PW1900G PurePower® Geared Turbofan™ (GTF) engine for the Embraer E190-E2 and E195-E2 aircraft successfully completed its first flight initiating the engine’s flight test program.
In 2016, we launched the E190-E2, which made its first flight. In 2017, we launched the second model of the E2 generation, and announced that Azul, the largest operator of the current generation E195s in the world, would be the launch operator of the E195-E2.
In 2018, we received a type certificate (certificação de tipo) from ANAC, the FAA and EASA for the E190-E2, the first member of the E-Jets E2 family of commercial aircraft, being the first time that an aircraft program with the level of complexity of the E2 received a type certificate from three major worldwide certification authorities simultaneously. In that same year, we delivered the first aircraft E190-E2 aircraft to Widerøe, the largest regional airline of Scandinavia.
In 2019, the E195-E2 received simultaneous approval and was certified by ANAC, the FAA and EASA, and we delivered the first E195-E2, the largest of the three members of the E-Jets E2 family of commercial aircraft, which made its inaugural flight in that same year. The recipients were AerCap, the world’s largest aircraft leasing company, and Azul, which is the global launch operator for the E195-E2. On December 12, 2019, the Embraer E175-E2 made its inaugural flight from our facility in São José dos Campos. This aircraft has a relevant market potential, being the most efficient and comfortable commercial aircraft in the market for the 76-seat category, whether to substitute the EMBRAER 175 or to enhance the regional air mobility through new markets. However, on February 25, 2025, we announced an additional four-year pause on the development of the E175-E2 jet, in addition to the previous pause disclosed on February 18, 2022, mostly because U.S. mainlines’ scope clauses are not expected to change at least until 2027. We constantly monitor discussions between airlines and the pilot unions regarding the maximum take-off weight (MTOW) limitation for aircraft with up to 76 seats. We intend to keep offering the EMBRAER 175 with all the improvements made to the platform throughout the years of operation and feedback of our customers.
In 2022, we announced the launch of the E190F and E195F Passenger to Freight Conversions (P2F), designed to meet the changing demands of e-commerce and modern trade that require fast deliveries and decentralized operations. The full freighter conversion is available for all pre-owned E190 and E195 aircraft, and its entry into service occurred in 2024. In 2022, the Embraer E190-E2 was granted the Type Certificate by the Civil Aviation Administration of China (CAAC). On August 10, 2023, the E195-E2 was granted this same certification.
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In July 2022, during the Farnborough Airshow, Porter Airlines placed a firm order for 20 Embraer E195-E2 passenger jets, adding to their existing 30 firm orders.
In October 2022, SalamAir signed a firm order with us for six E195-E2
On December 15, 2022, the Embraer E195-E2 and E190-E2 were granted the Type Certification from Transport Canada Civil Aviation (TCCA), following certification from ANAC, the FAA (United States of America), and EASA (Europe) in 2019 and 2018 respectively.
In December 2022, the first five of 50 Embraer E195-E2 ordered by Canadian company Porter Airlines were delivered. Porter was the North America entry customer for Embraer’s E195-E2 and opened up operations in the region. In November 2023, Porter added 25 Embraer E195-E2 to its order, increasing the order to a total of 75 Embraer E195-E2.
In December 2022, the Spanish carrier Binter, which is an award-winning airline from the Canary Islands, placed a firm order for five E195-E2s. Binter then placed an additional order for six Embraer E195-E2 aircraft in June 2023.
In January 2023, we announced that we had received an order for 15 E195-E2s from an undisclosed customer.
In May 2023, Malaysia’s SKS Airways selected the Embraer E195-E2 for use. In addition, we and commercial aviation lessor Azorra announced a new eight-aircraft deal with Royal Jordanian Airlines, which agreement introduced both the E190-E2 and E195-E2 to the airline’s fleet.
In October 2023, the Luxembourg-based carrier Luxair ordered four E195-E2s, including two purchase options and three purchase rights for additional E2 jets.
In November 2023, the Embraer E195-E2 was granted certification for steep approach into London City Airport from EASA. This achievement is an important milestone, allowing airlines to operate the E195-E2 at London City Airport (LCY), known for its challenging approach and short runway. Together with the E190-E2, which received Steep Approach certification in 2021, both members of the E2 family are approved for operations from this meaningful airport.
Also in November 2023, the Embraer E190-E2 and E195-E2 was granted a type certification from the Civil Aviation Authority of Singapore (CAAS). Scoot, a low-cost subsidiary of Singapore Airlines, began to operate the E190-E2 in 2024.
In May 2024, LOT Polish Airlines announced a lease of three new E195-E2s from Azorra. The airline will configure the E195-E2s, each of which seats a maximum of 146 passengers, in a comfortable single class layout with 136 seats. All aircraft deliveries were completed in 2024.
In June 2024, Mexicana de Aviación, Mexico’s state-owned carrier, ordered 20 E-Jets E2 aircraft—10 E190-E2 jets and 10 E195-E2 jets, which we will begin to deliver in the second quarter of 2025. Mexicana, the first E-Jets E2 operator in Mexico, will configure the E190-E2 with 108 seats and the E195-E2 with 132 seats—both in a single class layout.
In August 2024, Virgin Australia placed a firm order with Embraer for eight E190-E2 small narrowbody aircraft, as part of its fleet renewal plan. Deliveries are scheduled to begin in the second half of 2025.
In December 2024, Luxembourg carrier Luxair signed a firm order for an additional two E195-E2s. In exercising the two options secured in their 2023 firm order for four E195-E2 aircraft, Luxair completed the total of six E195-E2s on order. The first aircraft delivered from the first order, which was placed in 2023, is expected to fly in early 2026, and the new order secured additional delivery slots in 2027.
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As of December 31, 2024, our E-Jets E2 jet family had 179 orders in backlog, and 155 aircraft had already been delivered to customers worldwide. The main operators of these jets include airlines in various regions, such as Azul (Latin America), Widerøe (Europe), Helvetic (Europe), KLM (Europe), Binter (Europe), Scoot (Asia Pacific), Air Peace (Africa), Royal Jordanian (Middle East) and Porter (North America).
Customers
We have a diverse, global customer base, and our major operators for commercial aircraft include some of the largest regional, low-cost and mainline airlines in the world. As of December 31, 2024, our largest E-Jet customers by number of aircraft in service were SkyWest, Republic, American Airlines, KLM, Mesa, Azul, Tianjn, LOT Polish, Horizon Air and Porter. In addition, as of December 31, 2024, 90.9% of our firm orders in backlog for the current EMBRAER 170/190 jet family are from the airlines Republic Airlines, Skywest and American Airlines. Moreover, as of December 31, 2024, our E-Jets E2 family backlog mainly comprises orders from the companies Azul, Porter, Azorra Mexicana and AerCap, which represented 78.8% of our E-Jets E2 family orders.
We generally sell our commercial aircraft pursuant to contracts with our customers on a fixed-price basis, adjusted by an escalation formula. Our contracts generally include an option for our customers to purchase additional aircraft at a fixed-price option, subject to the same escalation formula. In addition, our contracts include a product support package to cover the entry into service of our aircraft, as well as a general warranty for such aircraft. Other provisions for specific aircraft performance and design requirements are negotiated with our customers. In addition, some of our contracts contain cancellation provisions and trade-in options.
Sales and Marketing
Our current marketing strategy is based upon our assessments of the worldwide commercial airline market and of the needs of our customers. We actively market our aircraft to international airlines and regional affiliates of major global airlines through our regional offices in the United States of America, Europe and Asia. Our success depends, to a significant extent, on our ability to identify our customers’ needs, including needs for customer service and product support, and to fill those needs in a timely and efficient manner while maintaining the high quality of our products. Our market and airline analysts focus on the long-term trends of the market, competitive analysis, product-enhancement planning, and airline analysis. In terms of direct marketing to our customers, we rely on relationship development, social media, and professional network. As a way to keep our customers informed and enhance awareness and brand recognition, we participate at air shows and events, webinars and other forums. Besides São José dos Campos in Brazil, we have regional sales offices in Amsterdam, the Netherlands; Fort Lauderdale, Florida, United States of America; Beijing, China; and Singapore.
Production, New Orders and Options
Prior to starting production or development of a new project, we secure letters of intent for future orders of a significant number of aircraft. We typically begin taking orders and building a backlog two years before we begin producing a new aircraft model, aiming to receive a significant number of orders before we deliver the initial aircraft. Once an order is taken, we reserve a place for that order on the production line, ensuring that we will maintain production sufficient to meet demand. Once a place is reserved on the production line, we are able to give customers delivery dates for their orders.
We include an order in backlog once we have received a firm commitment, represented by a signed contract. Our backlog does not include options and letters of intent for which definitive contracts have not been entered into.
Our options generally provide our customers the right to purchase an aircraft at a fixed price and on a specified delivery date, subject to escalation provisions, under a purchase agreement. Once a customer decides to exercise an option, we account for it as a firm order. Occasionally, we have extended the exercise date for our options and renegotiated the delivery schedule of firm orders, as well as allowed customers to convert their firm orders or options for one aircraft into firm orders or options for another aircraft within the same commercial aircraft family.
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Competition
We generally face competition from major manufacturers in the international aircraft market. Each category of our products faces competition of a different nature and generally from different companies. Some of our competitors have greater financial, marketing, and other resources than we do. We currently face the strongest competition from the following aircraft:
| • | A220, former CSeries, 110 to 150-seat jets acquired by Airbus from Bombardier, which entered into service in 2016; |
| • | C909, a 90-seat regional jet produced by the Commercial Aircraft Corporation of China, or COMAC; |
| • | SSJ100, a 103-seat regional jet produced by JSC Yakovlev Corporation, a branch of United Aircraft Corporation; |
| • | SpaceJet (former MRJ), a 76 to 88-seat jet which was under development by Mitsubishi Aircraft Corporation, but had its development suspended in 2020 and officially cancelled in 2023; |
| • | CRJ-700, CRJ-900 and CRJ-1000, 70-seat, 86-seat and 98-seat regional jets, respectively, formerly produced by Bombardier, acquired by Mitsubishi Heavy Industries (MHI); |
| • | Dash 8-400 (former Q-400) a 72-seat turboprop program from Bombardier acquired by Havilland Canada which belongs to Viking Air; and |
| • | ATR-72, a 68-seat turboprop produced by ATR Aircraft. |
We are the leading manufacturer in the market for jets up to 150 seats in the world, with a 29.1% market share in terms of accumulated deliveries since 2004, according to a Cirium Fleet Analyzer data report dated December 31, 2024.
The key competitive factors in the markets in which we participate include design and technological strength, aircraft operational costs, aircraft price, including financing costs, customer service and manufacturing efficiency. We believe that we will be able to compete favorably based on our aircraft performance, efficiency, low operating costs, product development experience, global customer base, market acceptance, cabin design and aircraft price. In addition, while the competitive landscape has become increasingly aggressive, deals such as the Airbus acquisition of a majority stake in Bombardier’s C-Series Program, rebranded as A220, are evidence of the opportunities in the 100-150 seats market. With the Airbus sales team marketing the A220 Program, we believe customers who would not have previously considered aircraft of this size may seek our E190/E195-E2 as a comparable alternative.
Executive Aviation Segment
Overview
We design, develop, and manufacture a variety of executive jets within our Executive Aviation segment. Our current portfolio of executive jets comprises the entry-level Phenom 100 EX, the light Phenom 300E, the midsize Praetor 500, and the super-midsize Praetor 600.
We market our executive jets to companies, including fractional ownership companies, corporate flight departments, charter and air-taxi companies, high-net-worth individuals, and flight academies, including independent, commercial airline, and military flight academies. Our Executive Aviation segment accounted for 27.6%, 26.7% and 27.4% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, our firm orders in backlog for our executive jets totaled US$7.4 billion, as compared to US$4.3 billion on December 31, 2023.
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In May 2005, we launched the Phenom 100 and Phenom 300, which are executive jets in the entry-level and light jet categories, respectively. The Phenom 100 jet, which carries up to eight people, received ANAC and FAA certification in December 2008, the same month of its entry into service. The Phenom 300 carries up to eleven people and has a larger fuselage, wingspan, and longer range than the Phenom 100. It received ANAC and FAA certification and entered service one year after the Phenom 100. Since the inception of the Phenom 100 through the end of 2024, we delivered 416 Phenom 100 aircraft and 834 Phenom 300 jets. Focused on constant improvement, we launched the Phenom 100EV and the Phenom 300E in 2016 and 2017, respectively.
In 2020, we introduced the new Phenom 300E, featuring enhancements in performance, comfort, and onboard technology. The new Phenom 300E is currently the only in-production single-pilot jet to reach Mach 0.80, offering a quieter cabin and upgrades to its avionics suite. These features include predictive windshear and a runway overrun awareness and alerting system, which are our exclusive intellectual property and the first technology of its kind to be developed and certified in business aviation. The model was granted certification by ANAC, EASA, and the FAA.
In August 2020, we announced the Phenom 300MED, a unique medical evacuation, or MEDEVAC, transportation solution suitable to the Phenom 300 model series, which is also available for retrofit, through a partnership with the companies umlaut and Aerolite AG (Aerolite). Embraer and umlaut jointly developed a new supplemental type certificate (STC) utilizing Aerolite equipment in 2021 and 2022. Certified in January 2023, the STC is available for national aviation agencies such as the EASA (Europe), the FAA (United States of America) and the ANAC (Brazil). Designed as an ideal solution for both civil and government applications, the MEDEVAC solution will be installed exclusively by Embraer’s award-winning Services & Support organization, ensuring the highest quality, reliability, and service experience direct from the manufacturer.
In October 2023, we launched the Phenom 100EX, the newest generation of the Phenom 100 series, with improvements focused on experience for both users and pilots. The Phenom 100EX combines enhanced comfort, operational versatility, and single-pilot-friendly technology. The aircraft features a complete airstair, large entrance door, and an accessible baggage compartment. It offers the tallest and widest cross section in its class combined with extra-large windows. The cockpit is wider with further pilot legroom provided by extended seat tracking, an open-concept cockpit for easier communication with the cabin, and enhanced safety as the first in its class to offer a Runway Overrun Awareness and Alerting System (ROAAS). Additional avionics improvements, as part of the Prodigy Touch, based on the Garmin 3000, include FlightStream 510, stabilized approach, predictive windshear, automatic 3D volumetric scanning with lightning, hail prediction and more.
In April 2008, we formally launched two new programs in the medium cabin category, the medium-cabin jet Legacy 450, with a 2,575 nautical mile range and a capacity for up to nine passengers, and the super midsize jet Legacy 500, with a 3,125 nautical mile range and a capacity for up to 12 passengers. The Legacy 500 was certified by ANAC and the FAA in 2014, the same year that it entered service. The Legacy 450 was certified by ANAC and the FAA in August 2015 and by the EASA in September 2015. In November of the same year, we announced an increase of the Legacy 450’s range to 2,900 nautical miles, and it entered service in December. In November 2017, we introduced the 5,800-foot cabin altitude for the Legacy 450/500 jets, which further enhanced customer experience. These two aircraft programs have helped strengthen our position in the market and establish our portfolio as one of the broadest in the executive aviation industry. Both the Legacy 450 and 500 had their final deliveries to customers in 2020 and were rebranded as Praetors.
In October 2018, we launched the new Praetor 500 and Praetor 600, the most disruptive and technologically advanced midsize and super-midsize jets, respectively, introducing unprecedented range into their categories. The Praetor 600 is the farthest-flying super-midsize business jet, which allows nonstop flights between London and New York. The Praetor 500 is the fastest midsize aircraft, capable of reaching Europe from the west coast of the US with a single stop. The Praetor 500 is the successor of the Legacy 450 in the midsize class as the Praetor 600 is for the Legacy 500 in the super midsize class. The Praetor 600 was certified and entered service in April 2019 and in June 2019, respectively, while Praetor 500 was certified and entered service in August 2019 and in December 2019, respectively.
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In 2020, we announced a series of breakthrough cabin enhancements for the Praetor 500 and Praetor 600. In addition to the lowest cabin internal atmospheric pressure in the class (equivalent to an altitude of 5,800 feet) and 100% fresh air capability, HEPA filter is a standard feature on all Praetor aircraft as well as an electric lavatory pocket door that enables the emergency exit to be moved away from the main cabin. In 2020, we announced the completion of the first European conversion of a Legacy 450 to a Praetor 500. As of December 31, 2024, we delivered 148 Praetor 500 units, including 17 Legacy 450 and 41 conversions from Legacy 450 to Praetor 500, and delivered 197 Praetor 600 units, including 80 Legacy 500. In May 2023, we logged 250 options orders of Praetor 500, worth US$5 billion, for NetJets, one of the largest fractional operators in the world.
As of December 31, 2024, we had delivered over 1,900 executive jets to more than 1,080 customers across 70 countries, with a backlog exceeding 480 aircraft.
Competition
Phenom 100EV and Phenom 300E competitors in the entry-level and light jet categories include Textron, Honda and Pilatus. In the midsize class, the Preator 500 competes with aircraft produced by Textron, while, in the super-midsize class, the Praetor 600 competes with Textron, Gulfstream and Bombardier aircraft.
Continuing Internationalization
In October 2014, we announced an expansion to our Legacy 500 and Legacy 450 assembly complex in Melbourne, Florida, which more than doubled the size of our campus at the Melbourne International Airport. Since then, we have continued to expand our complex footprint, with delivery centers, assembly hangars, and paint and flight preparation facilities. As of December 31, 2024, our Melbourne campus had a constructed area of approximately 500,000 square feet.
Defense & Security Segment
We conceive, design, develop, manufacture and support a wide range of integrated solutions for the defense and security market. Our products include training, advanced training aircraft, aerial surveillance platforms, military transport aircraft, government transport aircraft and command, control, communications, computer, intelligence, surveillance and reconnaissance systems, border surveillance and security, and cybersecurity. We offer a complete portfolio of customer services, ranging from maintenance and material solutions to complete Contractor Logistical Support programs. Using our commercial platforms and executive jets, we also offer a comprehensive range of aircraft dedicated to transportation of authorities, medical evacuation and general transportation missions for the defense and security market.
As of December 31, 2024, we had sold more than 1,400 defense aircraft, including government transport models, to over 60 armed forces and operators worldwide. We are also the leading supplier of defense aircraft to the Brazilian Air Force, measured by the total number of aircraft in its fleet. The Defense & Security segment contributed to 11.3%, 9.8% and 9.1% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, our firm orders backlog for this segment stood at US$4.2 billion, up from US$2.5 billion at the end of 2023.
Products
Military Transport – KC-390 Millennium
The KC-390 Millennium is a multi-mission military transport aircraft developed to set higher standards in its class. The KC-390 Millennium is efficient for cargo and troop transport, aerial resupply and humanitarian missions, among other uses, as well as for uses in adverse situations, evacuations, firefighting and aerial refueling (through the KC-390 Millennium variant—the “K” denoting that the aircraft has aerial refueling capabilities). Designed with modern engineering solutions, this aircraft is an innovation in military transport aviation and features flexibility, strength, mobility, easy maintenance and advanced technology.
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As of December 31, 2024, the KC-390 Millennium fleet had accomplished approximately 16,000 flight hours, with a mission capability rate of 93% and mission completion rates above 99%. Moreover, the KC-390 Millennium was the tactical transport choice solution for ten countries: Brazil, Portugal, Hungary, the Netherlands, Austria, the Czech Republic, South Korea, Sweden, Slovakia and an undisclosed nation, as follows:
| • | Brazil—Between 2019 and 2024, we delivered seven KC-390 Millennium multi-mission transport aircraft to the Brazilian Air Force. During the COVID-19 pandemic, the Brazilian Air Force operated the KC-390 in logistics transport operations, carrying essential supplies to combat the pandemic in Brazil. The latest delivery was the seventh aircraft, delivered to the Brazilian Air Force in September of 2024. |
| • | Portugal—In 2019, the Portuguese government signed the first export contract of KC-390 Millennium aircraft, including the acquisition of five aircraft and one flight simulator, together with a 12-year contract of services to support the fleet, which will be used for military transport. In 2023, the Portuguese Air Force received its first aircraft, which is the first KC-390 with NATO configuration. The second aircraft was delivered on June 2024. This aircraft has presented reliability and availability levels similar to those observed in the Brazilian fleet, with very high productivity. |
| • | Hungary—In November 2020, we entered into an export agreement with the Hungarian government for the acquisition of two KC-390 Millennium, i.e., variants with the capacity to carry out in-flight refueling missions. The Hungarian fleet is also the first to be equipped with an intensive care unit. The first aircraft was delivered to the Hungarian Air Force in September 2024. |
| • | South Korea—In December 2023, the C-390 Millennium won the public bidding process for the South Korean Large Transport Aircraft II program, which will supply new military aircraft to the Republic of Korea Air Force. South Korea is the first customer of the C-390 Millennium in Asia. |
| • | Netherlands—In June 2022, the Ministry of Defense of the Netherlands announced the decision to acquire five KC-390 Millennium aircraft to substitute its fleet of C-130H Hercules. This decision culminated in a joint order by the Dutch and Austrian governments to acquire nine KC-390 Millennium aircraft during a ceremony at the Farnborough Airshow in 2024—five of which would be delivered to the Royal Netherlands Air Force. |
| • | Austria—In September 2023, the Austrian government decided to select the KC-390 Millennium as their new multi-mission platform. In July 2024, as part of the “Replacement of Tactical Airlift Capacity” project, the Austrian government made a joint purchase with the Dutch government of nine KC-390 Millennium, four aircraft of which would be delivered to the Austrian Air Force. |
| • | Czech Republic—In October 2023, the Czech Republic also selected the KC-390 Millennium as their new multi-mission platform and began the contract negotiation phase. This culminated in an October 2024 order for two KC-390 Millennium aircraft, which will be able to perform a wide range of missions, such as tactical transport of troops, vehicles, and equipment, medical evacuation, firefighting, disaster management, humanitarian support, and air-to-air refueling. |
| • | Sweden— In November 2024, the Swedish Ministry of Defense announced the selection of the Embraer KC-390 Millennium as Sweden’s new tactical transport aircraft. This strategic decision from another NATO member country marks the first acquisition of the KC-390 Millennium in Northern Europe, underscoring Sweden’s commitment to enhancing its defense capabilities with state-of-the-art aircraft. |
| • | Slovakia— In December 2024, the Slovak Minister of Defense acknowledged that the Embraer KC-390 Millennium is the option that better fits Slovakia’s future military transport requirements. The Slovak Ministry of Defense is expected to start formal steps toward the purchase of three KC-390s in 2025. |
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| • | Undisclosed Nation—In December 2024, we signed a contract with an undisclosed customer for the sale of two C-390 Millennium multi-mission aircraft. The contract also includes a comprehensive training and support package as well as the supply of spare parts. The aircraft will be specially configured to meet customers’ requirements, which include tactical transport of troops and vehicles, humanitarian aid, disaster management and medical evacuation. |
In February 2024, our Defense & Security segment announced that we had signed a memorandum of understanding (MoU) with Mahindra Defense Systems, a subsidiary of Mahindra, with the objective of jointly fulfilling the acquisition of the KC-390 Millennium multi-mission aircraft by the Indian Air Force in its upcoming Medium Transport Aircraft (MTA) procurement project. The MoU was signed at the Embassy of Brazil in New Delhi. We and Mahindra have since engaged with the Indian government and Air Force to identify the next steps of the MTA program, as well as contact the local aerospace industry in India to start developing the industrialization plan for the project.
In December 2024, we signed an agreement with the Brazilian Air Force to deepen collaborative studies aimed at expanding the capabilities of the KC-390 Millennium platform for Intelligence, Surveillance and Reconnaissance (ISR) missions, with a focus on Maritime Patrol. Thanks to its versatility, ruggedness, state-of-the-art communications, and self-protection systems, we believe that this aircraft has great potential to meet and exceed the operational requirements not only the Brazilian Air Force, but also of customers worldwide.
Close Air Support and Advanced Training – A-29 Super Tucano
The A-29 Super Tucano is an aircraft equipped for close air support and counter-insurgency scenarios, containing integrated sensors, datalink, cockpit protection and multiple payload configurations. The A-29 Super Tucano is the best-selling aircraft in its class, according to our internal analysis, and we believe its success is due to it being a rugged and reliable turboprop platform with a high-precision-class payloads delivery system. The A-29 Super Tucano is also a full-fledged tactical trainer due to its handling features, low operational cost, and state-of-the-art avionics systems.
We have been acting as a subcontractor for the U.S. government and have delivered through the Sierra Nevada Corporation, or the SNC, a U.S. government contractor, 47 A-29 Super Tucanos to different countries as of December 31, 2024. In 2021, we delivered nine aircraft to SNC, three of them for the AFSOC (Air Force Special Operations Command) Program of the United States of America Air Force, and six through the U.S. Foreign Military Sales program to the Nigeria Air Force Program. In addition, through our Gavião Peixoto unit, we delivered five more aircraft to an undisclosed customer, together with advanced training systems, mission planning and debriefing stations, optional equipment and logistics package.
In 2023, we announced the launch of the A-29N Super Tucano. This variant incorporates advanced avionics, NATO-specific communications systems and other non-disclosed new capabilities tailored to meet the operational requirements of NATO nations.
In addition, we and the Brazilian Air Force entered into a memorandum of understanding (MoU) to study a technology upgrade package known as mid-life upgrade for the Brazilian Air Force fleet.
Since its entry into service in 2004, more than 290 units have been sold to over 20 different countries as of December 31, 2024, surpassing 580,000 flight hours. Super Tucano orders in 2024 included six aircraft sold to the Paraguayan Air Force in July, one aircraft sold to the Uruguayan Air Force in August (with an option to add five more in 2025), four aircraft sold to an undisclosed African customer and six sold to an undisclosed customer in December, in addition to 12 A29-N aircraft sold to Portugal.
Fighter Jet – F-39 Gripen Program
In July 2014, we entered into an agreement with Saab AB, or Saab, to collaborate in a joint management program for the F-X2 Project, currently called F-39 Gripen Program, pursuant to the selection of the Gripen NG as Brazil’s next generation fighter jet. Under this agreement, we have performed a material role in the overall program, and we have also taken an extensive share of work in systems development, integration, flight testing, final assembly and aircraft deliveries of the state-of-the-art Gripen NG aircraft for the Brazilian Air Force.
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In 2023, we and Saab inaugurated the production line of the Gripen E fighter in Brazil, at our unit in Gavião Peixoto, Brazil. Of the 36 Gripen E aircraft ordered by the Brazilian Air Force, 15 will be assembled on this production line. As of December 31, 2024, the first three aircraft are already under production at the assembly line in Brazil.
Military Modernization Programs
We offer military aircraft modernization services and currently have two ongoing programs under contract—one with the Brazilian Air Force and one with the Brazilian Navy.
Our program with the Brazilian Air Force relates to the modernization of five E-99M Airborne Early Warning and Control aircraft, or AEW&C aircraft. The agreement also includes six mission planning and analysis stations, which will be employed for training and crew development. In 2020, the first two units were delivered, and one more was delivered each year through 2022. In 2023, the program obtained the full operational capability certification, or FOC certification, and delivered the last modernized aircraft in the final configuration. In 2024, the aircraft delivered between 2020 and 2022 were reconfigured to the FOC version, followed by the demobilization of the program.
Our modernization program with the Brazilian Navy is the upgrade of A-4 Skyhawk fighter jets (AF-1, per the Brazilian Navy’s designation), with the purpose of incorporating new technology, including new avionics, radar, power generation, and independent oxygen-generating systems. By 2022, all seven modernized AF-1 (AF-1B) fighter jets were delivered to the Brazilian Navy, as well as the fixed-base simulator AATD (Advanced Aircraft Training Device). In 2023, the aircraft received the FOC certification, and in 2024, we began the aircraft reconfiguration to the FOC version. The process will be concluded in 2025 and followed by the demobilization of the program.
In addition to our ongoing programs, we also concluded the A-1M modernization program with the Brazilian Air Force. This program focused on modernizing the AM-X aircraft, an aircraft developed by us and sold to the Brazilian Air Force approximately 20 years ago. The platform naturally became technologically outdated over time. From 2013 through 2021, we delivered 11 modernized aircraft, and the program was completed with the Verification Plan by the Brazilian Air Force in 2021. The demobilization of the production line began thereafter and was concluded in 2024.
Radars and Land Systems Programs
Our portfolio of capabilities with respect to radars and land systems includes the development, integration, project management, sourcing, manufacturing, implementation, deployment and life cycle support of radars and land systems for multiple applications, including: low-altitude air defense, surface surveillance, air traffic control, identification friend or foe (IFF), medium-range air defense, surveillance and early warning, monitoring and protection of borders, protection of critical infrastructures, among others. Our products include both fixed, modular, and transportable solutions. Our line comprises a comprehensive range of products, namely the SENTIR M20 ground surveillance radar, the SABER M60 short-range air defense radar, the S200R air traffic control and air defense radar, the SABER M200 VIGILANTE medium-range air defense radar, among other integrated solutions. One of these solutions is the SISFRON, with the purpose to monitor Brazil’s land boarders, which system architecture, development and implementation is led by Embraer.
A few of our highlights in 2024 in connection with this portfolio were as follows:
| • | In 2024, the Brazilian Army signed a contract to acquire one unit of the M200 Vigilante radar, which operates as a medium-range sensor for Airborne Surveillance and Early Warning applications. In 2023, the M200 Vigilante had already completed a successful testing campaign that included its deployment to the Amazon on a Brazilian Air Force KC-390 Millennium aircraft. |
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| • | We have signed a contract with Finep to finalize the development of the technology that will be incorporated into the SABER M200 multi-mission radar. This equipment will enhance the operational capabilities of the Brazilian Armed Forces and ensure air defense readiness. |
| • | Embraer has also continued the development of a process of the counter-battery radar, contracted by the Brazilian Army in 2022, that will leverage the same knowledge and technology applied to the SABER M200 radars. In 2024, the prototype ran successful tests of its projectile detection capabilities. |
| • | Additionally, in 2024, the SISFRON Phase 2 program surpassed 45% completion with the delivery of two Mobile Command & Control Centers to the Brazilian Army, providing greater mobility to its operations. |
| • | Finally, in 2024, we completed the Operational and Technical Evaluation of the SENTIR M20 land vigilance radar. The evaluation was a key step in the process of contracting the equipment for the Brazilian Army. |
Principal Defense & Security Subsidiaries and Joint Ventures
Atech
Since 2013, Atech has worked on many strategic projects for the Brazilian government, including the LABGENE program and Brazilian air defense systems. Atech is also responsible for the development, implementation, and modernization of Brazil’s air traffic control centers. The LABGENE program continues to progress, and in 2023, Atech delivered the External Nuclear Detection System (Sistema de Detecção Nuclear Externa) and the Internal Nuclear Detection System (Sistema de Detecção Nuclear Interna) to the Brazilian government. Atech’s business capabilities include complex systems, solutions for critical missions, and technologies to support decision making.
In 2024, Atech signed five new contracts for the development, modernization and implementation of air traffic control systems in Brazil in partnership with the Department of Airspace Control of the Brazilian Air Force. In addition, the contract for Phase 3 of the urban air traffic management system was signed with Eve Air Mobility as part of the strategic partnership between the companies. In addition, we continued advancing the following key defense projects:
| • | DACOM: Ongoing progress in the modernization of the Brazilian Air Force’s air defense system. |
| • | LABGENE (Nuclear Power Generation Laboratory) – Brazilian Navy: Completion of the delivery of a positioning indication system for the reactor’s power control bars, as well as the manufacturing of the plant’s control and safety systems, which are now entering the integration and testing phase. |
| • | Atech’s Participation in the Tamandaré Class Frigates: Acceptance of the integrated platform management system and the commencement of the commissioning of the first ship. Factory testing of the combat management system has been completed, and the integration and commissioning laboratory at Atech Rio is now operational. |
Visiona
In 2012, Embraer and Telecomunicações Brasileiras S.A. (Telebras) incorporated Visiona, with Embraer holding a 51% stake and Telebras a 49% stake. Visiona became the prime contractor for the Brazilian Strategic and Defense Communications Geostationary Satellite (Satélite Geoestacionário de Defesa e Comunicações Estratégicas), being responsible for the system integration.
In 2023, the VCUB-1 nano satellite was launched into space aboard SpaceX’s Transporter 7 mission. In 2024, all planned objectives were successfully achieved and the mission was declared a success with the publication of the first-ever images captured by a private Brazilian satellite. Additionally, as part of the VCUB-1 mission, Visiona completed the development and validation of onboard data management, communications, and orbit and attitude control systems for satellites, signifying full mastery of onboard satellite software.
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In 2023, Visiona won a government grant in the amount of R$220.0 million to develop a new very high-resolution observation satellite (SATVHR). In 2024, the company concluded all subsystems preliminary design reviews and surpassed the 50% conclusion milestone for the project.
Águas Azuis
Águas Azuis is a specific purpose company held by Embraer, Atech, and Thyssenkrupp Marine Systems founded and contracted in 2020 to build four Tamandaré-class frigates for the Brazilian Navy. The first-of class frigate was launched into the water in August 2024 in a ceremony with the presence of the President of Brazil and several national and foreign authorities. The second frigate fulfilled its keel laying in June 2024 and, by the end of the year, the third frigate had started being built. As of the date of this annual report, three out of the four frigates contracted are under construction.
Competition
Our military aircraft faces competition from various manufacturers in different countries in each market segment. The Super Tucano competes in the close air support market with the Textron AT-6 (United States of America), L3 Harris’ SkyWarden (United States of America), KAI KA-1 (South Korea), TAI Hürkuş (Turkey) and Aero Vodochody L-39NG (Czech Republic), among others. In the training market, it competes with the Pilatus PC-21 (Switzerland) and Textron T-6A/B (United States of America), among others.
In the military transportation segment, the KC-390 Millennium operates in the medium airlift segment in the 20-ton category. Its main competitor is the Lockheed Martin C-130J (United States of America). Due to the multi-mission design of the KC-390 Millennium, including medical evacuation, search & rescue, firefighting, air-to-air refueling, transport of troops and aerial resupply, we expect competition from other aircraft that can execute some similar missions These competitors include the Airbus A400M (Europe), Airbus C-295 (Europe), Kawasaki C-2 (Japan), Leonardo C-27J (Italy) and Ilyushin IL-76 (Russia).
In our special mission subsegment, which comprises the aircraft that will be used by government officials and authorities, our business jets face competition from the main manufacturers of business jets, such as Textron and Gulfstream (United States of America), Bombardier (Canada), and Dassault (France).
Services & Support Segment
Overview
On December 20, 2016, we announced the creation of Embraer Services & Support, which is a services and customer support business unit that brings together capabilities that were previously allocated to each business segment. Our Services & Support segment is responsible for developing solutions in support of current and new products and services, as well as for managing the associated processes and resources.
As of December 31, 2024, this segment supported approximately 4,750 products and served over 2,000 customers in nearly 100 countries. This operating segment also supports the Commercial Aviation, Executive Aviation and Defense & Security segments through a network of specialized operations in dedicated sites, such as warehouses, MRO facilities, training centers with full flight simulators and more than 200 field support representatives, who work side-by-side with operators to understand their specific needs and ensure product performance.
Through a comprehensive portfolio of services covering all segments, our team of experts offers the following services and products:
| • | Field support for on-site or remote assistance for operational and technical challenges, ensuring maximum performance and convenience; |
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| • | Technical support, offering leverage analytics, engineering expertise, and real-time fleet monitoring to meet our operators’ technical needs with precision and cutting-edge efficiency; |
| • | Flight operations solutions to enhance our customers’ operations through tailored solutions, consulting, supervision, and training resources, optimizing efficiency and safety; |
| • | Aircraft modification, elevating our fleet’s performance with expert execution and coordination of system upgrades, along with cabin, avionics, and connectivity modifications for a superior onboard experience; |
| • | Meticulous materials management, ensuring seamless availability of parts for both scheduled and unscheduled maintenance; |
| • | Optimized maintenance solutions prioritizing efficiency and safety for sustained operational excellence; |
| • | Training programs to prepare the flight crew, maintenance technicians, and operations personnel to achieve the highest levels of competence; and |
| • | 24/7 technical support at our customer care center, providing assistance to every product platform we have to offer, from the EMB-120 Brasilia to the E-Jets E2 and Praetor 600. |
Our global network of over 14 owned MROs and more than 80 authorized service centers are designed to support our customers with effective, reliable, and efficient customized solutions. Our MROs are located in the United States of America (Mesa, Arizona; Fort Lauderdale, Florida; Melbourne, Florida; Nashville, Tennessee; Macon, Tennessee, Fort Worth, Texas, Dallas Love Field, Texas, Cleveland, Ohio and Sanford, Florida), Brazil (Sorocaba, Gavião Peixoto, and São José dos Campos, São Paulo), France (Le Bourget), and Portugal (Alverca).
To further support our customers, our global logistics capabilities and warehouses offer unparalleled access to a comprehensive inventory of spare parts, complemented by new parts planning and repair management systems to ensure uninterrupted operations. These warehouses are located in the United States of America (Davie and Fort Lauderdale, Florida), France (Mitry Mory), Singapore, China (Beijing), and Brazil (São José dos Campos and Taubaté).
Our Services & Support segment accounted for 25.6%, 26.9% and 27.9% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, our firm orders in backlog for our Services & Support segment amounted to US$4.6 billion, compared to US$3.1 billion as of December 31, 2023.
In 2023, new contracts and renewals were signed in our Flight Hour Pool Program (which is an agreement that allows the customer to receive support for a wide range of repairable components for their fleet based on its flight hours) with customer operators such as: Porter Airlines, SKS, Star Air, Marathon Airlines, Sky High, Royal Jordanian Airlines, Fly Amelia, National Jet Express, a Rex Group company, Scoot, LuxAir, among others.
Furthermore, digital evolution continues to be key in our business. In 2023, several resources were launched to improve the customer experience, such as the (i) electronic commerce tool for purchasing or renewing services, such as technical publications, the Aircraft Health Analysis and Diagnosis, or AHEAD (which is an operational management tool that continuously monitors aircraft inflight through automatic transmission of aircraft system alert messages to the ground), and smart troubleshooting, (ii) “customer academy,” which consists of tutorials for customer support, and (iii) improvements to the eParts system (which is a system that allows the customers to manage and purchase aircraft parts such as parts request, order tracking, quotation, material return, among others).
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In 2024, we announced the expansion and investment in the United States of America of our MRO services network to support the growing fleet of E-Jets E2 aircraft with the opening of a new Embraer owned service center at the Perot Field Alliance Airport, in Fort Worth, Texas. In partnership with the City of Fort Worth, Denton County and the State of Texas, we expect to begin operations in an existing hangar, in the beginning of the second quarter of 2025, while building a second hangar that should be concluded by 2027. With the new facilities, Embraer’s capacity to serve the E-Jets customers will increase by 53% in the United States of America, and investments are expected to reach up to US$70 million, creating approximately 250 new aviation jobs in Texas. The new Fort Worth service center will be added to the global network of Embraer which includes 80 authorized centers and 12 owned service centers around the world.
Services & Support related to the Commercial Aviation Industry
Our teams of highly skilled technicians work directly with the Commercial Aviation operators to design a maintenance package that address the needs of the business unit, such as:
| • | Flight-Hour Pool Program, which allows airlines to minimize upfront investment in high-value repairable inventories and resources using Embraer’s expertise and vast component repair service provider network. The program results in significant savings on repair and inventory carrying costs, reduction in warehousing space, and virtual elimination of repair management resources; |
| • | Embraer Collaborative Inventory Planning (ECIP), which is a tailored expendable spare parts inventory management program designed to assist customers reduce operational costs by optimizing inventory levels; |
| • | Embraer Parts Exchange Program, which offers operators a highly comprehensive list of rotable parts available for ad-hoc exchanges which includes the exchange and repair costs; and |
| • | Customer Stock Optimization, which comprises strategic management and allocation of inventory to meet customer demand while minimizing excess stock and associated costs. |
We constantly monitor customer satisfaction levels and keep open communication channels with them to understand customer needs and define the most appropriate actions for the continuous improvement of our support. To do so, we use the following tools and forums:
| • | annual customer support satisfaction survey to identify our competitive position; |
| • | specific action plans and commitments with each customer, known as Customer Integrated Action Plans; |
| • | teamwork and systematic identification and integrated action plans to solve problems affecting us, our suppliers and customers; |
| • | periodic dedicated meetings at the customer’s headquarters; |
| • | Embraer Operators’ Conferences, which are held once a year and in different regions of the world, with the presence of all operators of E-Jets and E2s, as well as suppliers and partners; |
| • | Maintenance Cost Workshop, a yearly event held to share best maintenance practices and discuss cost reduction initiatives among operators and the Embraer team; |
| • | eTalks, which is a series of monthly lives created to keep customers informed and updated about different subjects related to Embraer Services & Support; |
| • | interactive forums for discussions in the web portal FlyEmbraer, fostering the exchange of experiences among operators and Embraer; |
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| • | participation in international fairs related to maintenance, technology, customer relationship management and others; and |
| • | an internal program, Embraer Excellence in Customer Experience, which aims to address changes in the Services & Support segment of the commercial aviation division, in order to elevate the performance of our Commercial Aviation segment, covering current and future market needs, with the purpose of obtaining the highest levels of customer satisfaction based on their experience in the commercial aviation industry. |
In 2023, the new generation version of the AHEAD system was launched. AHEAD is a tool that helps airlines and customers to implement digital predictive maintenance on their E-Jet E1 and E2 fleets, using data to identify and predict potential issues before they become critical.
In 2023, Embraer-CAE Training Services announced the expansion of the joint venture between CAE Training Services and Embraer, with the purpose of including training programs for pilots and cabin crew for the E-Jet E2 family. The new pilot training program will take place in Singapore and will feature a new state-of-the-art full flight simulator for the E2 E-Jets at the on-site CAE Flight Training Center.
During 2023, we reached an important milestone with the passenger aircraft conversion program for cargo aircraft, which was the official launch of the aircraft, revealing its painting scheme to the market, and initiated ground testing. Pursuant to this program, full freighter conversion is available for all pre-owned EMBRAER 190 and EMBRAER 195 aircraft, which entered into service in 2024.
In 2024, one of the main drivers for Commercial Aviation services was the signing of a Memorandum of Understanding (MoU) between Fokker Services Asia (a subsidiary of Fokker Services Group) and Embraer. This MoU sets Fokker Services Group Asia’s facility in Seletar, Singapore on track to become an Authorized Service Center for Embraer’s first-generation E-Jets family, supporting the steadily growing Embraer presence in the Asia-Pacific region. A few months later, Fokker Services Asia received official certification as an Embraer Authorized Service Center, focusing on the E190 aircraft. Also, SIAEP, a subsidiary of SIA Engineering Company Limited (SIAEC), has become the first Embraer Authorized Service Center in the Asia-Pacific region to offer maintenance, repair, and overhaul services for Embraer’s E-Jets E2 family.
Embraer and Scoot, the low-cost subsidiary of Singapore Airlines, have signed a contract for the Embraer Collaborative Inventory Planning (ECIP), a tailored expendable spare parts inventory management program designed to help customers reduce operational costs by optimizing inventory levels. The ECIP agreement, coupled with the Pool Program will provide comprehensive support for Scoot’s incoming fleet of nine E190-E2 jets. The airline will be the first ECIP customer in the Asia-Pacific region.
Another important milestone during this first semester was the introduction of the E-Jets E2 full-flight simulator (FFS) in Singapore, the first in the Asia-Pacific region. E-Jets E2 training is the latest program offered by the recently expanded Embraer CAE Training Services (ECTS) joint venture. The E2 training program will feature CAE’s competency-based training assessment (CBTA) courseware, interactive classroom instruction with the CAE Simfinity virtual simulator (VSIM), and immersive practical training in a new state-of-the-art CAE 7000XR Series FFS.
Additionally, Embraer is expanding its MRO services network in the United States of America to support the growing fleet of E-Jets. A new Embraer-owned service center will be established at Perot Field Alliance Airport in Fort Worth, Texas. The first E-Freighter, Embraer’s E190F, a converted jet from passenger transport to freighter, successfully completed its first flight. At the end of 2024, the E190F, a passenger-to-full-cargo conversion, was certified by ANAC.
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Services & Support related to the Executive Aviation Industry
Services and support provided to Executive Aviation aircraft continue to be strong, mostly driven by the high volume of aftermarket aircraft transactions and the addition of new customers to our Executive Care program, which is a comprehensive airframe maintenance program carefully designed and managed by Embraer to provide a simple and predictable way for budget aircraft’s maintenance costs. We have also improved our services and support structure to enhance our customers’ experience.
To measure our customers’ satisfaction, we implemented the Customer Experience Program, supported by a marketing tool that measures customer satisfaction based on the customer’s experience. The score and feedback received allow us to be more responsive on developing initiatives as well as predict their needs.
Our Customer Care Center has a team of specialists dedicated to support all Embraer Executive Aviation and offers complete and timely assistance for their operational, technical and maintenance needs. It operates 24 hours a day, seven days a week, and is based at Embraer’s headquarters in São José dos Campos. Its priority is to minimize downtime from the customer’s first contact to final completion, by quickly and efficiently applying appropriate resources to critical needs, assuring that customers have expert assistance anywhere in the world.
Since 2014, our product support consistently achieved top rankings in our industry surveys. In 2016, we secured the number one position in both the Aviation International News (AIN) and Pro Pilot Product Support Surveys for the first time. The following year, AIN again recognized us as the leader in product support. In 2018, we claimed the top spot in the Pro Pilot Product Support Survey and secured the second position in AIN’s survey. In 2020 and 2021, we maintained our top-ranking status across all categories in Pro Pilot’s Product Support Survey, such as company response time, costs of parts, and overall ranking. By 2022, we advanced to first place in AIN’s Product Support Survey and secured the second spot in Pro Pilot’s Survey. Overall results and customer satisfaction on executive jets kept Embraer at the top of the 2023 product support surveys, earning first place in Professional Pilot Magazine and third place in AIN.
In 2023, we successfully implemented a new full flight simulator for the Phenom 300E in Las Vegas, Nevada. Additionally, for the fifth consecutive year, Embraer fixed-base operator, or FBO operator, in Sorocaba, São Paulo, was recognized as the best FBO in Brazil, according to Aviation International News research. This recognition is a result of our continued commitment to improve our solutions, including the expansion of the Sorocaba on-site service center in 2022.
Furthermore, during the year, in partnership with FlightSafety, we implemented the third full flight simulator for Praetors, in Orlando, Florida, and launched the auto throttle for Phenom 300E aircraft.
Embraer-CAE Training Services announced the expansion of its training capacity with two new Phenom 300 flight simulators to meet the growing demand for training in executive jets in the United States of America and Europe. In the same period, we partnered with Elite Jets to replace the seats in the Phenom 300 fleet with our new logo and announced the doubling of our maintenance capacity through the extension of our service centers in the United States of America, including increasing from one ground handling team to 28 teams distributed around the country supporting all MROs.
In July 2023, we celebrated 40 years of our presence in France. We currently have a Business Jet Service Center in Le Bourget, and a warehouse in Mitry-Mory, just outside Charles de Gaulle Airport.
In 2024, Embraer, EVE and Groupe ADP (Aéroport de Paris) signed a Memorandum of Understanding (MoU) to advance the future of low-carbon aviation in and around Paris-Le Bourget Airport, France. As part of this initiative, Embraer Services & Support plans to design and relocate its current facilities to a new maintenance building, aiming to more than double its existing capacity.
The new Embraer MRO facility in Cleveland, Ohio, United States of America, began operations in July 2024, followed by the launch of another facility in Sanford, Florida, United States of America in August 2024. For the second consecutive year, we ranked first in the Pro Pilot Product Support Survey 2024 and climbed to second in Aviation International News’s ranking.
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Services & Support related to the Defense & Security Industry
The Services & Support segment provides solutions to several air forces and government entities through our comprehensive portfolio. These solutions are tailored to our customer needs and may include provision of material, training, maintenance, engineering and other aspects that will enhance fleet availability and mission readiness.
Our support services may range from simple transactional sales to integrated support programs. We assess our customer capabilities and requirements to define the integrated solution that will keep the fleet operating in the most effective way.
The multi-mission KC-390 Millennium has a dedicated team to design and implement the most effective entry into service solution. The customer participates directly in the process, alongside the Embraer team, encompassing overall strategy as well as specific details, assuring a reliable and smooth operation from the beginning of the process.
As part of the integrated support program, we also provide services to new and existing customers of our Super Tucano, which is an aircraft used by several air forces around the world.
Additionally, we also provide support aircraft services to passenger carriers from several government organizations. For instance, we have support services designed to fulfill requirements, including sale of spare parts, maintenance, training and technical support, among others, relating to (i) recent aircraft Phenom 100, Phenom 300, Legacy 450; (ii) older aircraft, including Legacy 600 and ERJ-145, and (iii) legacy aircraft, including Bandeirantes (EMB-110) and Brasília (EMB-120). Through the support services we provide to our customers, we can complement commercial or business aircraft with equipment and sensors, thereby making our customers’ fleet available for different types of missions.
In 2022, Embraer Services & Support for the defense market also achieved important milestones, as the second phase of the SISFRON program, which started in the first quarter of 2022.
During the same year, new temporary support contracts were signed with the Brazilian Federal Police for two E175s and with SATENA, which represented new revenue to Embraer Services & Support. New agreements also include sustainment engineering (aircraft support and maintenance); pilot training; M60 radars on demand and technical representative contract for the Legacy 500 fleet.
Also in 2022, the Services & Support segment team supported the preparation for entry into service of the KC-390 fleet of the Portuguese Air Force and the Hungarian Defense Force and the operation of 100% of the Super Tucano fleet in the Philippines. In training, the team assisted in the first and successful operation of the KC-390 to airdrop cargo supplies at the Brazilian research base in Antarctica, in addition to completing pilot training in the Turkmen Air.
In the Defense & Security segment, the Services & Support segment entered into an integrated logistics support contract, or ILS, for the A-29 with the Chilean Air Force and Embraer’s participation in the first meeting of the Users Group KC-390, organized by the Portuguese Air Force.
In June 2023, a major milestone was the inauguration of the first complete flight simulator for the KC-390 Millennium multi-mission jet at the Embraer Academy, located at the Eugênio de Mello unit in São José dos Campos, state of São Paulo, Brazil. In addition, the execution of spot contracts for spare parts and repair with the Philippine Air Force, and the ILS contract with the Hellenic Air Force were relevant accomplishments.
In 2023, a major milestone was the extension of the ILS contract for the Brazilian Air Force fleet, consisting of 24 ERJ-135, Legacy 600 and AEW aircraft. In our management’s view, ILS is the preferred choice in the defense market, which we believe will guarantee our military and government customers the availability of assets at predictable and competitive costs.
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In 2024, we reached milestones such as: the entry into service support of the seventh KC-390 Millennium multi-mission aircraft delivered to the First Squadron of the First Group of the Brazilian Air Force at the Galeão Air Force Base in Rio de Janeiro; the five-year celebration of service for the KC-390 for the Brazilian Air Force; and the Hungarian Air Force KC-390 Millenium’s entry into service by our technical team. We also announced that we will provide training solutions for the KC-390 Millenium to the Royal Netherlands Air Force. The agreement includes a full-flight simulator, and a cargo handling station trainer developed with Rheinmetall.
OGMA
OGMA, an Embraer subsidiary located in Alverca, Portugal, combines the accumulated know-how as an aircraft manufacturer and maintenance service provider. It offers worldwide MRO services, for defense, commercial and executive aviation as well for aircraft engines and components. Furthermore, OGMA plays an important role as a major aerostructures supplier of integrated solutions to OEMs and first tier suppliers. OGMA delivers assemblies and sub-assemblies of both metallic and composite materials. As of December 31, 2024, we owned 65% of OGMA’s voting capital, with the remaining 35% held by idD - Portugal Defense S.A.
In 2018, OGMA celebrated 100 years of activity in the aeronautical market. Since its formation, OGMA has been investing in the areas of MRO and manufacturing of aerostructures. In 2018, it also entered into an agreement for the maintenance and management of the Brazilian Air Force’s C-130 aircraft fleet, strengthening OGMA’s position in this market. OGMA further extended the MRO spectrum, obtaining certification for maintenance of the Rolls-Royce AE1107 engine. In addition, it entered into a pylon manufacturing agreement with one of the largest manufacturers of executive aircraft.
In 2020, OGMA entered into 12 new contracts to provide MRO services to the Defense & Security and Commercial Aviation segments, and repair of maintenance components, such as those related to hydraulic, pneumatic, fuel, electrical and avionics systems. Still in 2020, OGMA became a new authorized maintenance center for Pratt & Whitney engines, as a result of a project developed by OGMA, with the support of Embraer, over the prior 12 months, allowing the expansion of its scope of services in the area of engine maintenance, and marking the entry of Pratt & Whitney maintenance, repair and overhaul in Portugal.
In 2021, OGMA had major achievements such as: Pratt & Whitney signed agreement for PW GTF engines, the Rolls-Royce AE 2100 Program: delivery of the first Nacelle within the contracted TAT, and an agreement for OGMA Aeronautical Academy. Also, featured in Aerospace & Defense Review, OGMA was ranked as one of the “Top 10 MRO Service Companies in Europe 2021.”
In 2022, OGMA delivered the last F-16 to the Royal Netherlands Air Force (RNLAF), the second ERJ-175 for the Brazilian Federal Police and delivered a C-130 for the Portuguese Air Force.
OGMA has also achieved two important market recognitions, being ranked as one of the “Top 10 MRO Service Companies in Europe in 2022” by Aerospace & Defense Review. OGMA was named as one of the best places to work, ranking first in the aviation industry, according to the employer branding study developed by Randstad Portugal.
In 2023, OGMA carried out the first base maintenance of an E2 aircraft, the first in the world, and completed the maintenance of the C-295 aircraft to the Portuguese Air Force.
In 2023, OGMA carried out maintenance on model EH101 helicopters from the Portuguese Air Force and model C-295 and C-130 H aircraft from the Brazilian Air Force. OGMA carried out the first heavy C-Check maintenance (which is a maintenance check performed every 20–24 months) on the three E2 aircraft from Widerøe, the largest regional airline in Scandinavia. These aircraft are part of the first group of aircraft to undergo this type of maintenance in the world.
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In 2023, after maintenance services, we delivered ERJ-145 aircraft to Loganair, ERJ-135 to the Indian Air Force, EJet170 to the Royal Oman Police and Nordic Aviation Capital, 190E2 aircraft to Placard, C-130 to the Chilean Air Force and the Chadian Air Force, and F-16 and EH- helicopter 101 to the Portuguese Air Force. Around 25 Rolls-Royce engines were also delivered after repair and maintenance. Regarding aerostructures, OGMA delivered several manufactured and assembled parts to our main customers.
In the last quarter of 2023, we delivered C-295 aircraft to the Portuguese Air Force and began heavy maintenance training for the GTF engines.
In 2024, OGMA launched the new maintenance line for Pratt & Whitney’s GTF PW1100 family and concluded the induction of the first engine.
Other Segments
Overview
In our Other segments, we supply Sikorsky Aircraft Corporation, Helicopter Support Inc. and Liebherr Aerospace with parts for structural, fuel, mechanical, and hydraulic systems to support their aftermarket needs. Additionally, we manufacture spare parts for Sikorsky, such as landing gear, fuel system, and fuel tanks for its S-92 and H-92 Helibus helicopters.
We produce the Ipanema aircraft, a crop duster originally developed in the 1970s under specifications from the Brazilian Ministry of Agriculture. Now in its seventh generation, all new Ipanema aircraft are delivered with an engine powered by biofuel (ethanol). This aircraft is produced on demand, and as of December 31, 2024, we had delivered a total of 1,671 units, including 65 in 2024.
Our Other segments also include services related to the development and certification of eVTOLs, including the creation of a maintenance and services network for eVTOLs and the creation of an air traffic management system (urban air mobility, or UAM business).
For the years ended December 31, 2024, 2023, and 2022, our Other segments accounted for 1.0%, 1.5% and 1.6% of our revenue, respectively. This segment also includes revenues from our subsidiary, Tempest. For further details, please see note 36 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
Tempest Security Intelligence
Founded in 2000, Tempest is the leading cybersecurity company in Brazil, providing complete solutions for business protection in the digital world. The portfolio of products and services provided by Tempest is aligned with the framework of the National Institute of Standards and Technology (NIST), a non-regulatory government agency linked to the Technology Administration of the United States Department of Commerce. With more than 400 professionals and offices in Recife and São Paulo, Tempest has ensured the protection of more than 800 companies of all sizes and industries, providing a comprehensive end-to-end portfolio with more than 80 solutions, including consulting, managed security services and integration services.
In 2024, Tempest became a company 100% owned by Embraer, reinforcing Embraer’s confidence in the continued growth of cybersecurity and positioning Tempest as a key player within Embraer’s strategic vision. We believe this move strengthens Tempest’s ability to expand and innovate in the cybersecurity sector, ensuring long-term resilience and a more robust market presence.
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This year also marked a significant leadership transition at Tempest. In August, Mr. João Paulo Lins was announced as Tempest’s new CEO as part of a planned transition. Previously, Mr. Lins served as the chief technology officer of Tempest, playing a crucial role in that company’s strategic leadership. During this period, he was actively involved in the creation of AllowMe Tecnologias Ltda., or AllowMe, and in merger and acquisition strategies involving AllowMe itself (which was sold in 2023 to Serasa Experian), El Pescador (which was sold in 2019 to KnowBe4), and the acquisition of EZ-Security (which was acquired by Embraer in 2018). With his extensive experience, Mr. Lins brings a strategic vision focused on growth, operational efficiency and strengthening partnerships to enhance the company’s offerings and market competitiveness.
Throughout 2024, Tempest undertook a major restructuring of its security operations center, introducing a new set of offerings and a revamped model. These changes aim to provide customers with more scalable, effective and tailored security services, ensuring that Tempest remains at the forefront of cybersecurity operations.
Additionally, Tempest has been actively restructuring its reselling software sales division, forging strategic partnerships with key players such as Google SecOps. This collaboration has been instrumental in securing important contracts throughout the year, enhancing Tempest’s ability to deliver cutting-edge cybersecurity solutions to its clients.
As a long-term strategy, the Threat Intelligence segment remained a focal point, reflecting strong market demand and Tempest’s ability to adapt its offerings. Revenue in this segment, including Threat Intelligence and SaaS, saw a 20.2% year-over-year growth between 2024 and 2023, reinforcing Tempest’s transition towards a more software-based approach.
With these strategic advancements, leadership transition and a reinforced partnership with Embraer, we believe that Tempest is well-positioned for continued growth and innovation in the cybersecurity industry, ensuring its clients remain protected in an increasingly complex digital landscape.
Aircraft Operating Lease Activities
In order to provide better financial support to our commercial activities, as well as to manage and reduce financial risks related to aircraft marketing, we created ECC Leasing in September 2002. ECC Leasing has been able to remarket aircraft in its portfolio with conditions and at values similar to market conditions and without any guarantee from Embraer. All sale and leasing transactions were entered into based on market rates, helping to sustain the present and future value of our products.
In January 2017, ECC Leasing merged with Embraer Netherlands, with assets and activities incorporated under Embraer Netherlands. The mission of Embraer Netherlands, as our company responsible for aircraft operating lease activities, is to manage and remarket Embraer’s aircraft portfolio, which as a result of contractual obligations, may be acquired by us via trade-in transactions. We also provide remarketing services to third parties looking to sell their Embraer manufactured aircraft.
In 2024 and 2023, Embraer Netherlands did not sell or deliver any aircraft, compared to one aircraft delivered in 2022, for a total amount of US$24.5 million. Since the remarket aircraft business was established in 2002 through December 31, 2024, we sold 267 aircraft, of which none was available or under sale negotiations at the end of 2024.
We believe the results of Embraer Netherlands will be largely dependent on market conditions, aircraft availability levels and the demand for jets mainly in the 70 to 150-seat category.
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Markets
The following table sets forth our revenues by segment and geographic region of end users for the periods indicated:
| Year ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in US$ millions) | ||||||||||||
| Commercial Aviation |
||||||||||||
| North America |
1,615.6 | 1,489.4 | 1,234.7 | |||||||||
| Latin America (except Brazil) |
95.4 | 32.2 | — | |||||||||
| Asia Pacific |
29.0 | — | — | |||||||||
| Brazil |
0.3 | 4.2 | 2.4 | |||||||||
| Europe |
440.8 | 293.8 | 234.9 | |||||||||
| Others |
27.5 | 27.2 | 71.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
2,208.6 | 1,846.8 | 1,543.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Executive Aviation |
||||||||||||
| North America |
1,330.3 | 1,054.1 | 914.1 | |||||||||
| Latin America (except Brazil) |
36.7 | 21.4 | 20.0 | |||||||||
| Asia Pacific |
35.3 | 20.1 | — | |||||||||
| Brazil |
156.3 | 85.7 | 87.8 | |||||||||
| Europe |
204.1 | 226.9 | 212.6 | |||||||||
| Others |
— | — | 9.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
1,762.7 | 1,408.2 | 1,244.4 | |||||||||
|
|
|
|
|
|
|
|||||||
| Defense & Security |
||||||||||||
| North America |
0.1 | 1.0 | 2.9 | |||||||||
| Latin America (except Brazil) |
81.2 | — | 1.4 | |||||||||
| Asia Pacific |
60.2 | 67.1 | 3.6 | |||||||||
| Brazil |
181.9 | 141.9 | 210.2 | |||||||||
| Europe |
384.6 | 304.9 | 194.0 | |||||||||
| Others |
12.9 | 0.5 | 0.5 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
720.9 | 515.4 | 412.6 | |||||||||
|
|
|
|
|
|
|
|||||||
| Services & Support |
||||||||||||
| North America |
835.1 | 737.8 | 706.0 | |||||||||
| Latin America (except Brazil) |
53.9 | 44.6 | 31.6 | |||||||||
| Asia Pacific |
131.7 | 117.3 | 97.3 | |||||||||
| Brazil |
127.0 | 141.4 | 132.1 | |||||||||
| Europe |
408.0 | 305.1 | 242.8 | |||||||||
| Others |
80.8 | 71.4 | 56.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
1,636.5 | 1,417.6 | 1,266.7 | |||||||||
|
|
|
|
|
|
|
|||||||
| Other |
||||||||||||
| North America |
0.1 | — | — | |||||||||
| Brazil |
65.9 | 80.5 | 72.7 | |||||||||
| Europe |
— | — | 0.1 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
66.0 | 80.5 | 72.8 | |||||||||
|
|
|
|
|
|
|
|||||||
Suppliers and Components; Risk-Sharing Arrangements
We do not manufacture all the parts and components used in the production of our aircraft. As of December 31, 2024, 77.1% of our consolidated production costs in our Commercial Aviation, Executive Aviation and Defense & Security segments consisted of materials and equipment purchased from our risk-sharing partners and other major suppliers. Risk-sharing arrangements with suppliers of key components enable us to focus on our core business: design, development, manufacture and sale of aircraft and systems for the Commercial Aviation, Executive Aviation, and Defense & Security segments. Risk-sharing arrangements are those in which suppliers are responsible for the design, development and manufacture of major components or systems of our aircraft.
In our Commercial Aviation, Executive Aviation and Defense & Security segments, we rely on risk-sharing partners to supply vital components of our aircraft. We select suppliers on the basis of, among other factors, technical performance and quality of their products, production capacity, prior relationship and financial competitiveness. We have had continuing relationships with most of our major suppliers since production of the Bandeirante aircraft began in 1975.
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In addition, we have entered into purchase agreements with our major suppliers, which cover our production. These contracts contain pricing formulas that take into consideration the various factors that affect the business of our suppliers and help us mitigate the effects of price volatility (which in some cases can be significant) of the materials, parts and components that are required for our operating activities. As a standard, we are not required to purchase a minimum amount of materials annually under these supply contracts. Our ongoing supplier relationships depend on cooperation, performance and the maintenance of competitive pricing.
As the Russia-Ukraine conflict persists, we continue to closely monitor developments to assess potential restrictions or impacts that may arise, including potential increases in the prices of the products sold by our suppliers. In addition, the conflict has resulted in an increase in cyber-attacks around the world, further amplifying operational risks across the aviation industry.
As soon as the conflict began, we suspended 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 we are subject. Russia is one of the largest titanium suppliers in the world, and titanium is a key element for the aircraft manufacturing process. Although there is no concern over the availability of titanium in our supply chain, considering our current inventory position and the existing alternative sources in other countries, we will continue to monitor our supply chain in order to identify any potential constraints.
Moreover, despite the ceasefire agreement signed between Israel and Hamas, we continue to monitor developments to identify any potential impacts on the supply chain, operations or customer support, particularly because we have suppliers in the Middle East and any disruptions, shipments delays or cost increases could adversely affect our business.
For additional details on our supplier relationships, please refer to “Item 3. Key Information—D. Risk Factors—Business Operations and Contracts—We work with a limited number of key suppliers.”
Commercial Aviation
EMBRAER 170/190 Jet Family and E-Jets E2 Jet Family
We are continuously improving the EMBRAER 170/190 jet family, together with risk-sharing partners that supply key systems for the aircraft. Our supplier arrangements for the EMBRAER 170/190 jet family differ from the supplier arrangements of the ERJ 145 regional jet family, in which we use fewer suppliers. In the EMBRAER 170/190 jet family, each risk-sharing partner is responsible for the development and production of aircraft systems, including the landing gear, the hydraulic system and the flight control system, rather than individual components, and fewer components are supplied by companies that are not risk-sharing partners. The assumption of responsibility for systems by our risk-sharing partners lowers our capital expenditures, which decreases our development risks and increases our operating efficiency by reducing the number of suppliers per product and cutting production costs.
When the E-Jets were launched, they were one of the most advanced aircraft in operation. The fly-by-wire system, the integrated avionics and the double-bubble cross-section brought a new level of technology and passenger comfort for the segment. The family’s success led to 29.1% market share of deliveries in the up to 150 seats jet segment from 2004 to 2024, according to Cirium. Notwithstanding, during the last ten years we have been continually improving the family. New performance packages, maintenance improvements, external noise reduction and fuel burn reduction are examples of improvements developed.
The E-Jets E2 project is an important example of our commitment to keep our market leadership in the segment. The state-of-the-art technology applied to the engines, wings, and avionics make the E2 family a highly efficient tool for airlines. The E2 represents a new level of aerodynamic efficiency, as applied to the wing with one of the highest aspect ratios of the industry and advanced wing shape. The E2 also has improved systems and avionics, including fourth generation full fly-by-wire flight controls, and Pratt & Whitney’s PurePowerTM Geared Turbofan high by-pass ratio engines (PW1700G on the E175-E2, PW1900G on the E190-E2 and E195-E2). These improvements result in double-digit reductions of fuel burn, emissions, noise and maintenance costs. Cockpit commonality with the current generation of E-Jets is a key driver in the design of the E-Jets E2, in order to enable a smooth transition for the E-Jets pilots. Honeywell’s Primus Epic™ 2 advanced integrated avionics system with large landscape displays and advanced graphics capabilities, and Honeywell’s Next Generation Flight Management System (NGFMS), already in development with current-generation E-Jets, provide exceptional pilot situational awareness and flexibility for continuous innovation on the flight deck. The E-Jets E2 jet family has the additional objective of increasing revenue opportunities, as the family is designed to provide better aircraft availability and to increase ancillary revenue for operators.
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Known for its comfortable and roomy cabins, with no middle seats, the E-Jets passenger experience is further enhanced in the E2 generation. The U.K. design firm PriestmanGoode was contracted to develop the aircraft cabin jointly with Embraer. The interiors establish a new benchmark in cabin design, improve the passenger experience, and deliver a more comfortable and improved environment tailored to passengers’ needs, while maximizing airlines’ operational efficiency.
Other suppliers and partners for the E-Jets E2 include, among others: Liebherr (control systems for flaps and slats), Moog (fly-by-wire), Safran (horizontal stabilizer control system), Collins Aerospace (wheels, brakes, APU, electrical system), Safran AeroSystem (engine and APU fuel feed, pressure refueling, fuel transfer, fuel tank inerting and ventilation, and fuel gauging and control), Crane Aerospace & Electronics (electronic control module for landing gear, brake control systems and proximity sensors), ASTK (fuselage segments, rudder and elevators), the Embraer equipment division (responsible for the landing gear) and Aernnova Aerospace (vertical and horizontal stabilizers, wing skins, spars, stubs and ribs).
Parker-Meggitt designs and produces a random high-performance assembly for in-flight connectivity, while Panasonic provides the wireless streaming onboard platform.
Executive Aviation
The risk-sharing partners for the Phenom 100EV and Phenom 300E jets are Pratt & Whitney Canada, the engines supplier, Garmin, the avionics systems supplier, and for the Phenom 100EX Eaton Corporation, the hydraulic systems supplier. The main risk-sharing partners for the Praetor 500 and Praetor 600 jets are Honeywell, which is the engines supplier, and Rockwell Collins, the avionics systems supplier.
Defense & Security
With respect to our Defense & Security segment, we established business arrangements with various entities for the supply of parts. One example is our partnership with ELTA Systems, a subsidiary of the Israel Aerospace Industries, announced in 2019 for the launch of the Praetor 600 AEW&C aircraft. With respect to the KC-390 Millennium, we have a partnership with Raytheon Technologies, responsible for various aircraft parts, including the engines and the avionics system, with Rheinmetall, our preferred supplier for simulators and training devices; and with BAE Systems to explore KC-390 opportunities in the Middle East. For the A-29 Super Tucano, we have a partnership with Elbit Systems, which is a strategic and relevant supplier of core electronic components, and a partnership with Sierra Nevada Corporation (SNC) for sales of the A-29 Super Tucano through the United States of America’s FMS (Foreign Military Sales) program.
Aircraft Financing Arrangements
Commercial aircraft customers may request financing support for aircraft acquisition. This support usually includes providing assistance to customers in obtaining financing arrangements from different sources, including ECAs, leasing companies, commercial banks and capital markets.
Additionally, customers may sometimes require short-term bridge financing prior to arranging long-term debt financing, as long-term funding may not be available for them at the time of delivery. On a case-by-case basis, we have provided interim financing, above market rates, to customers who already have their financing arrangement structured or who are in the process of negotiating such arrangements.
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Government Regulation and Aircraft Certification
We are subject to regulation by regulatory aviation agencies, both in Brazil and abroad. These agencies are responsible for the regulation and inspection of civil aviation activities as well as aeronautical and airport infrastructure of the country it belongs. Besides certification in Brazil, we must obtain certification in each jurisdiction in which Embraer manufactured aircraft is registered and operated. The certifying authority in Brazil is ANAC, a special-regime governmental department with regulatory agency status linked to the Ministry of Ports and Airports. ANAC is responsible for the regulation, inspection and certification of aircraft, operators, manufacturers, aircraft maintenance organizations, aerodromes, schools and civil aviation professionals. We are also subject to the regulation of aviation authorities in other countries, including the FAA in the United States of America and the EASA for the European Union. Once an aircraft is certified by ANAC and validated by the FAA and/or the EASA, some authorities may opt to ratify the product certification instead of running a full domestic validation process. Other countries, such as Canada, require compliance with their own specific national requirements before certification. Some countries simply validate and complement the original certification from ANAC, the FAA or the EASA, in accordance with their own rules. ANAC has a bilateral certification agreement with several aviation authorities, including the FAA and the EASA. This cooperation among regulatory authorities leads to simplified certification by the foreign authorities.
Aircraft certification is a continuous process. ANAC must approve any change in the design of any of our aircraft. Significant changes to aircraft design may require a separate validation/certification by other authorities as specified in their regulations and bilateral agreements. Changes in aircraft certification requirements do not require a new certification or a new validation of a previously certified aircraft, but significant safety improvements may otherwise be required by the authorities acting through operational rules or airworthiness directives.
Our defense products must comply with the certification guidelines defined in each contract with the customer. Unlike our civil aircraft, our defense products are rarely subject to regulatory obligations. Some contracts, including those for civil aircraft modified for military purposes, require civil certification (e.g., India, SIVAM, etc.). Other contracts, including those for LAS and KC-390 Millennium, require approval from the Military Certification Authority, which may adopt regulatory obligations derived from civil aviation regulations. The adoption of the European Military Airworthiness Regulations (EMAR) by the air forces of European Union member states in recent years has influenced other countries to include similar regulatory obligations in their contracts.
Environmental, Social and Governance Practices
Overview
ESG has been part of our strategy, including in the development of increasingly more eco-efficient aircraft and in the adoption of more sustainable production processes and management of natural resources. This includes two decades of positive social impact produced by Instituto Embraer, which manages our social projects. Nonetheless, we will establish new ESG commitments and targets for the next years.
We are embedding our business strategy with social responsibility and environmental impacts in everything we do, from our processes and facilities to product development and our supply chain. We work across all our key stakeholder audiences to develop sound strategies, define indicators, and establish targets that are integrated into our corporate sustainability plan.
Sustainability is key for the continuity of any business and we are committed to align our economic targets to social and environmental performance. In light of new global ESG requirements, we have been preparing our next steps to face the challenges of fighting climate change and increasing our diversity, inclusion and equity. These priorities add to our commitment to business ethics and absolute focus on the safety of our products, which are key pillars in our sector. Our new portfolio of products and services is significantly competitive and aligned with a new structure that is more agile, efficient and focused on sustainable growth.
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Environmental
Environmental management is an essential part of our strategy and ranges from the development of new products and services, industrial operations to the dismantling and final disposal of the aircraft at its end-of-life.
Our Environment, Health and Safety at Work Policy defines the main corporate guidelines for the management of eco-efficiency, supply chain, product development and climate change, as well as compliance with laws and regulations. The maintenance of ISO 14001 certification, since 2002, has shown compliance and continuous improvement of our processes. Since setting our ESG targets in 2021, we have implemented several actions to progress on our sustainability journey. One of the first measures aimed at decarbonizing operations is to reduce scope 2 emissions associated with the use of electricity. Regarding this scope, contracts focused on this have come into effect in Brazil (since January) and in Portugal, at OGMA (since July). All the electricity consumed in both countries now comes from solar or wind sources. With renewable energy supplying the sites in Brazil and Portugal, Embraer has reached 80% of its consumption from these sources as of the date of this annual report, with the objective of reaching 100% by 2030.
In the United States of America, in 2024, a partnership with Florida Power & Light Company (FPL) was signed for the installation of solar panels at our Melbourne, Florida unit. The project—the largest photovoltaic project ever carried out by Embraer—will start operating in 2025 at the Embraer Executive Jets headquarters, with the goal of supplying 100% of the electricity demand for the entire hangar of the unit’s service center.
SAF fuel use continues to grow at the Melbourne unit, in the United States of America, where the fleet of executive jets was supplied with almost double the volume of SAF used in 2023: 760,000 liters. SAF has the potential to reduce carbon emissions in the aerospace industry by up to 80% compared to traditional fuel, according to the International Air Transport Association, or IATA. The main challenge lies in the volume of production, which is currently insufficient to meet global demand, and in the costs involved in ensuring supply. To promote the use and production of SAF in Brazil, Embraer actively participated in the technical subcommittee called ProBioQAV, within the scope of the “Fuel of the Future: program of the Ministry of Mines and Energy of the Brazilian government. This subcommittee established the technical premises for drafting Law No. 14,993/2024, known as the “Fuel of the Future Law,” and actively contributed to discussions leading to its approval in 2024. This law is an important stimulus for the production and use of sustainable fuels in Brazil, providing the necessary legal certainty for potential actors in the SAF chain to develop their action plans for creating this new production ecosystem.
2024 was also the second year of adoption of the CDP Supply Chain tool, designed to engage and assess the maturity of Embraer’s suppliers in response to climate change. In 2024, we increased the number of suppliers engaged and planned actions to develop and mitigate risks associated with climate change in the supply chain.
To reduce the environmental impact of our products, the E195-E2, Embraer’s largest commercial aircraft, received recent upgrades that increased its fuel efficiency from 10.0% to 12.5%, higher than its main competitor. It is also considered the quietest in its class, making it an efficient solution in response to regulations aimed at reducing noise pollution in large urban centers. In June 2022, we conducted the first flight of an E195-E2 aircraft using 100% renewable SAF in partnership with engine manufacturer Pratt & Whitney. The test confirmed that Pratt & Whitney’s GTF™ engines and the E-Jets E2 family can operate with up to 100% SAF without compromising safety or performance.
Embraer also advanced the concept of sustainable energy aircraft in 2024. We expanded our research to include 50-seat planes in the program, in addition to existing 30-seat models. We also broadened our analysis of hydrogen or dual-fuel turbines, adding these to our ongoing analysis of hybrid, electric, and fuel cell technologies. One of these energy models is expected to achieve technological readiness in the next decade, in line with the goal of net-zero carbon aviation emissions by 2050.
Social
We continuously invest in personnel, diversity, inclusion and education, constantly seeking competitiveness and innovation. We make sure that our employees have adequate work conditions, professional development plans, quality of life and wellbeing. Accordingly, we offer an attractive compensation compared to market standards, and social and labor benefits. We also maintain social and environmental programs and projects that value education, culture, leisure and health. For us, promoting social inclusion is key to building a fairer and more sustainable society.
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Occupational Safety
We seek excellence in our occupational health and safety performance, a topic considered a priority for Embraer. To this end, we promote educational and preventive actions in a continuous manner and directed by the Environment, Health and Safety at work (MASS) policy of global scope, which is a guideline for setting goals linked to our business excellence criteria.
The management model adopted in the Embraer Business Excellence Program - P3E uses the concept of Safety, Quality, Delivery and Cost (SQDC), aiming at the standardization and optimization of our operational and cost indicators. In addition to the criteria of business excellence, we have maintained international certifications in its largest manufacturing units for 20 years.
In 2022, the Brazil units successfully achieved the certification of ISO 45001, ensuring the implementation of all the tools provided for in this requirement. We have been working on the creation of important corporate programs that aim at preventive behavior in its operations, in order to record potential situations on a daily basis, directing the dealings quickly and assigning responsibilities among all involved. A consistent policy coupled with the assurance of a robust management system and programs with a focus on preventive has brought results compared to the most recognized global parameters.
Social Projects
We believe that promoting social inclusion is key to building a fairer and more sustainable society. Over the years, we have developed several social programs to help develop the communities where we operate.
| • | Embraer Institute. Working on the same challenges as Embraer, the Embraer Institute is aligned with the Company’s strategies. Since the beginning of its activities, more than 20,000 people have benefited from its social engagement initiatives and more than 5,000 students have graduated from Embraer schools, which are known for their high acceptance rates at Brazil’s top universities. Embraer schools offer free, full-time high school education to students from public schools and low-income families in São Jose dos Campos and Botucatu, in the state of São Paulo. In addition to these, we have several paying students, which accounted for approximately 20% of the total student body (720 students as of December 31, 2024). For scholarship students, in addition to quality education, the following are offered free of charge: uniforms, school materials, transportation, and meals. As of the date of this annual report, 85% of graduating students are able to enter public or private higher education with full scholarships. |
In order to maintain positive results, Embraer schools seek to achieve excellence across three pillars: general education, training itineraries, and life project. While the general education and training itineraries pillars seek to prepare young people for the best universities and a successful career, respectively, the life project pillar aims to provide support for the development and social and emotional health of students. For each pillar, the schools have a dedicated team and workload, in addition to modern laboratories and facilities.
In 2024, the Embraer Institute expanded its impact through strategic partnerships and programs such as Diverse Science (Ciência Diversa), Climate Emergency, and Wings of Good (Asas do Bem), connecting organizations and volunteers to urgent causes.
Throughout its history, the institute has benefited thousands of people with initiatives aligned with the Brazilian government and our stakeholders. Its operations are guided by transparency, with clear guidelines set forth by its deliberative council, supervisory board, and executive board. This year, the focus remained on inclusion, sustainability, and strengthening educational training, bringing concrete results to students, families, and communities in the regions where Embraer is present.
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| • | Climate Emergency. Created in 2022, the purpose of the Embraer Institute’s Climate Emergency program is to provide humanitarian assistance to communities affected by natural disasters. In 2024, the program stood out in its response to the floods in the state of Rio Grande do Sul, one of the most serious emergencies of the year in Brazil. Heavy rains hit over 115 municipalities in the state, leaving thousands of people displaced, many in extremely vulnerable situations. To help these communities, the Embraer Institute worked in partnership with the NGO Visão Mundial Brasil. The operation included sending two KC-390 aircraft loaded with supplies, in addition to three trucks with donations. More than R$1 million was raised, converted into 120 tons of essential supplies, such as basic food baskets and hygiene and cleaning kits. More than 40,000 people directly benefited from this program, including from psychosocial care for the affected families. |
| • | Asas da Conservação Project. The Wings of Conservation (Asas da Conservação) project, developed at the Botucatu unit of our Embraer schools, had the support of Embraer volunteers and the partnership of the UNESP Passarinhando group. This year, the project involved the construction of a scale model representing the Botucatu state forest close to the school, and the creation of a small-scale wind tunnel. These tools served to explore the study of bird aerodynamics and its relationship with the principles of aviation. Students participated in field activities in the state forest itself, where they went on ecological trails and planted native species, such as the Aroeira-Pimenteira and the Manaca-da-Serra. The project was presented at events such as the International STEM Women Congress, at local public schools, and at the Embraer Operators Conference (EOC), held in Foz do Iguacu. In 2024, Asas da Conservação received national recognition by winning the regional and national stages of the Brazilian Health and Environment Olympiad (Olimpíada Brasileira de Saúde e Meio Ambiente), organized by the Oswaldo Cruz Foundation, being elected “Best High School Science Project.” |
| • | Zero Carbon Mission. The Zero Carbon Mission project, developed by students at the Juarez Wanderley Embraer School in São Jose dos Campos, seeks to neutralize and offset the school’s carbon dioxide emissions, promote sustainable practices, and raise awareness about climate change. As part of the activities, students prepared a greenhouse gas, or GHG, inventory mapping the school’s emissions. Based on the results, they created initiatives such as planting native seedlings and building a compost bin to treat organic waste, reducing the environmental impact. In addition, students also developed a manual to replicate the project’s practices at other schools. In 2024, the Zero Carbon Mission prevented the emission of over 900 tons of CO2. The project was recognized with the “Best High School Climate Action” award at the Brazilian National Schools for Climate Congress and received a compost bin as part of the award. |
| • | Social Technology in Partnership with the Banco do Brasil Foundation. In 2024, the partnership between the Embraer Institute and the Banco do Brasil Foundation brought social technology to the curriculum of Embraer schools. Students learned theoretical content on topics such as climate change, problem-solving, and social innovation, in addition to developing practical projects. The result of this work was the delivery of 10 solar heaters to five institutions in the São Jose dos Campos and Botucatu communities. Those devices, created by the students themselves, use simple and low-cost materials and heat water for taps and showers, generating a reduction of up to 30% in electricity consumption. In total, 300 families were benefited directly. |
| • | Educational Projects and Community. In 2024, the Embraer schools strengthened their connection with the community through projects such as the Mini Glider Challenge and the Science and Technology Olympiad for Girls, which brought students from the public school system closer to the science, technology, and aviation fields: |
| • | Mini Glider Challenge. The Mini Glider Challenge is an initiative by the Embraer Institute in partnership with EVE, carried out with the support of volunteers from the Asas do Bem program. The project offers practical workshops for eighth and ninth grade students in public primary schools, where young people learn to build and test mini gliders. The experience provides a first contact with engineering and aviation concepts, in addition to stimulating teamwork and creative thinking. The built mini gliders are tested in a final competition that, in 2024, had more than 100 participating students from the cities of São Jose dos Campos, Gavião Peixoto, Botucatu, and Taubaté. |
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| • | Science and Technology Olympiad for Girls. The Science and Technology Olympiad (OCT) is an annual initiative by the Embraer Institute, aimed at public school students. In its third edition, held in 2024, the competition was exclusively aimed at girls, with the purpose of encouraging female participation in careers in the exact sciences and promoting gender equality in the technological field. Registration was free and intended for female students in the seventh and eighth grades of primary education in public schools in 13 cities in São Paulo, including São Jose dos Campos, Botucatu, Anhembi, Areiopolis, Bofete, Caçapava, Gavião Peixoto, Itatinga, Jacarei, Pardinho, Pratania, São Manuel, and Taubaté. Winners were awarded medals and certificates. This initiative aims to expand the possibilities for professional development and success of those young women, contributing to the training of future professionals in the science, technology, engineering and mathematics fields, or STEM fields. |
| • | Revoar Program. The Revoar Program offers financial support to young graduates from Embraer schools who have started higher education. In partnership with the Semear Institute, the program has already benefited over 60 students since its creation, with the goal of combating university dropout. The number of scholarship recipients grew from 21 in 2023 to 45 in 2024, with students in their first year of undergraduate studies receiving monthly financial aid and individual support from Embraer volunteers. During the program, participants receive guidance on how to deal with the challenges of university life and prepare for internships and opportunities in the job market, including at Embraer itself. Revoar stands out for being funded by voluntary donations from Embraer employees and collaborators. |
| • | Ciência Diversa. Ciência Diversa, a program by the Embraer Institute, continued in 2024 its initiatives focused on technological training and social inclusion. In partnership with Toti Diversidade, an online platform promoting the inclusion of refugees and migrants, and with Instituto Verdescola, an NGO that works on educational and social development, the program carried out initiatives focused on vulnerable groups, creating opportunities in fields such as science and technology. In São Sebastiao, the Ciência Delas project, carried out with Verdescola, trained girls in environmental education, science, technology, and entrepreneurship. They learned how to recycle plastic collected on beaches, transforming it into filaments for 3D printers. In addition, they created sculptures of marine animals, combining social and environmental impact with the development of new skills. The partnership with Toti Diversidade, in turn, offered online full-stack programming courses for refugees, expanding opportunities for qualification and insertion in the technology market. Ciência Diversa selected 60 participants in 2024, of which 45 successfully completed the training, contributing to the inclusion of historically underrepresented groups in high-demand areas. In 2025, the fourth edition of the Ciência Diversa program will continue to focus on women, LGBTQIA+ people, people of color, and people with disabilities. In addition, it will continue to fund projects by civil society organizations, or CSOs, in the STEM fields. The goal for next year is for at least 70% of the beneficiary audience to belong to those groups. Approved initiatives will be monitored continuously and evaluated based on criteria such as social impact, innovation, and potential for transformation. |
| • | Asas do Bem. The Embraer Institute’s volunteer program organizes its actions through the Asas do Bem platform, which connects employees with educational and social projects developed by CSOs. This platform helps bring together social and educational causes that benefit groups in vulnerable situations and promotes initiatives aligned with the United Nations Sustainable Development Goals (SDGs). In 2024, over 600 people participated as volunteers and 4,000 were benefited from activities such as mentoring, guided tours, and projects at Embraer schools. The actions can be carried out in person or online. They reinforce the role of employees in supporting educational and social development in the communities where Embraer is present. |
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| • | Accelerating Careers. The Accelerating Careers mentoring program, run by the Embraer Institute in partnership with the Joule Institute, connects Embraer mentors with young students in STEM fields. For two months, participants receive guidance on developing their professional careers, with a focus on career planning, technical skills, and job market challenges. In 2024, participants also had the opportunity to visit the Embraer “Ozires Silva” plant in São Jose dos Campos, where they explored the commercial aircraft assembly and delivery hangar and participated in lectures with company professionals. Since its creation, the program has benefited more than 220 young people, offering mentoring meetings that promote the exchange of experiences and knowledge between mentors and students. The initiative seeks to support participants at the beginning of their careers and encourage them to explore opportunities in strategic fields such as science and technology. |
| • | Extra Activities at Embraer Schools. The Volunteer Program also promoted practical activities that brought students from Embraer schools closer to the professional reality. Workshops, lectures, and games were held across different areas of knowledge, providing inspiring experiences and encouraging young people to explore new educational and career opportunities. |
| • | Embraer Foundation. Embraer Foundation is a non-profit organization that aims not only to improve the communities where Embraer employees work and live, but also expand aviation opportunities for young people and underrepresented communities. The foundation was created in 2017 in the United States of America, inspired by the Embraer Institute model. Motivated by Embraer’s value of building a sustainable future, the foundation works in partnership with local communities to develop education, entrepreneurship, and volunteer projects. |
Corporate Governance
To ensure a corporate management focused on sustainable growth and business perpetuity, we adhere to the corporate governance standards of the Novo Mercado, the highest tier of corporate governance for companies listed on the B3. We are committed to maintain the highest international standards of governance and a robust ethics and compliance program, fully aligned with global standards.
Governance Structure
Our governance structure comprises our board of directors, advisory committees to the board of directors, fiscal council, board of executive officers, internal audit and external audit. For more information on our governance bodies, see “Item 6. Directors, Senior Management and Employees” and “Item 16G. Corporate Governance.”
Ethics and Compliance
Our Compliance Program is based on seven pillars that aim to ensure high levels of corporate compliance and ethics in all our businesses: corporate governance, risk management, policies and procedures, communication and training, whistleblower channel—Helpline, monitoring and third-party assessment.
In line with our commitment to complying with all applicable anti-corruption laws and regulations and abiding by our Ethics and Integrity are in everything we do” motto, we work to ensure that an effective anti-corruption compliance program is deeply embedded throughout the Company and its subsidiaries, based on the following missions:
| • | ensure the Company’s compliance with laws, regulations and internal policies; |
| • | prevent, assess and respond to compliance-related events; |
| • | guide all employees to conduct their activities with ethics and integrity; |
| • | provide continuous improvement in compliance actions; |
| • | promote a culture of integrity based on Embraer’s values and its code of ethics and conduct; |
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| • | support Embraer departments and group companies in preventing risks, detecting red flags, improving processes, investigating and solving problems; and |
| • | consolidate all compliance initiatives, especially those related to anti-corruption and the whistleblower channel - Helpline. |
Risk Management
Our risk management method focuses on the following categories of risks: strategic risks, operating risks, financial risks, regulatory/legal risks and cyber risks.
Our structure is strengthened by the operation of our risks and internal controls department, comprising the following macroprocesses: management of internal controls, management of corporate risks, segregations of duties, crisis management, monitoring of potential violations and business continuity.
The purpose of our risk and internal controls department is to ensure that the identification, prioritization, assessment, mitigation and management of the main risks are conducted in accordance with the best practices established by us and the market, ensuring transparency and integrity in our processes. We also use these tools to prevent uncertainties that may negatively affect our results. We seek the continuous improvement of our risks management and internal controls system. For more information, see “Item 15. Controls and Procedures.”
Management Model and Strategic Planning
Our management model comprises long-term planning, as set forth in our strategic plan, and short- and medium-term projects, as set forth in our action plan. Our strategic plan is our main avenue for the future. Through strategic mapping, we establish initiatives in order to drive Embraer’s growth and sustainable future while endeavoring to secure operational efficiency and meeting our economic and financial objectives. These efforts are guided by our safety and quality standards, core values and cultural pillars. Our action plan sets clear objectives for the first year, with a strong focus on execution. Our strategic plan and our action plan aim to secure our business continuity and the creation of value for shareholders, focusing on increasing our competitiveness, improving our corporate excellence model and continuously seeking to improve our results. For more information on our strategic plan, see “—Business Strategies.”
Seasonality
We have historically experienced seasonality in our results of operations and cash flow generation. This is mainly due to a traditionally higher number of deliveries in the fourth quarter, particularly in our Executive Aviation segment, which is in line with overall executive jet industry seasonality. Deliveries of executive jets in the fourth quarter historically constitute an average of over 40% of annual deliveries in our Executive Aviation segment, while in our Commercial Aviation segment the historical fourth quarter deliveries average is more than 35%.
We are currently developing a plan to mitigate such delivery concentration, referred to as Production Leveling. The Production Leveling plan has the main purpose of creating stability and having a leveled production throughout the whole year for both the Executive and Commercial Aviation segments. The main focus of our Production Leveling plan is on (i) sales and operating planning, (ii) sales and operations execution, and (iii) production plan and control, aiming to assess the demand and real capacity of our suppliers and our production facilities, assure the execution of a defined plan, mitigating risks for the short- and medium-term, and control aircraft production and completion on an hourly basis. We believe our synchronized planning, combined with execution management and our qualified workforce will contribute to the success of our Production Leveling plan, minimize delivery concentration and improve our operating results in the future.
C. Organizational Structure
Our operations are conducted by Embraer S.A. as the controlling and principal operating company. We have a number of direct and indirect subsidiaries, the majority of which is not considered significant. A complete list of our subsidiaries is filed as Exhibit 8.1 to this annual report, and a description of our joint ventures and project subsidiaries and strategic alliances is included in “Item 4. Information on the Company—B. Business Overview” above.
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D. Property, Plant and Equipment
Overview
For information about our property, plant and equipment, see note 14 to our 2024 audited consolidated financial statements included elsewhere in this annual report. For a discussion of our capital expenditures relating to property, plants and equipment, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures.”
Production
The manufacture of an aircraft consists of three principal stages: production of primary parts, assembly of major components and final assembly. Primary parts include metal sheets and plates (produced from die-cast molds, stretch forming or various chemical treatments), parts produced using computerized and non-computerized machines, and prefabricated parts. The primary parts are then assembled, or mated, with one another to produce the aircraft’s major components, which are in turn joined to create the aircraft’s basic structure. In the final assembly stage, the aircraft’s various operating systems (including wiring and electronics) are installed into the structure and tested.
We have the flexibility to increase or decrease production as a response to changing demand.
Commercial Aviation
In July 2009, in line with our initiatives to improve production efficiency pursuant to the Business Efficiency Strategy (Frente Eficiência Empresarial), we converted the final assembly for the E-Jets E1 family to a line concept in São José dos Campos, which resulted in a significant reduction in the cycle of production time. In 2015, we started the prototype production for the new E-Jets E2 family of jets, with the first delivery and production certification in 2018. We have production facilities for commercial aviation aircraft in São José dos Campos, state of São Paulo, Brazil.
In 2022, we entered into an agreement with Toyota do Brasil to embrace Toyota Production System (TPS) principles and concepts in its industrial operations. The program aims to eliminate waste, obtain operational efficiency, and increase value generation for stakeholders. During the first phase of this project, carried out throughout the second half of 2022, a team of TPS specialists from Toyota do Brazil was immersed into our daily work to evaluate and suggest improvements for our manufacturing area at the Ozires Silva Unit, located in São José dos Campos, Brazil. The first phase of the project has been concluded and presented a 50% cycle reduction for a specific commercial jets wing assembly process and 17% in overall wing manufacturing. Due to the results of the first phase, both companies decided on October 2023 to extend the project for an assembly line station.
Executive Aviation
Executive Aviation aircraft are currently produced in Melbourne, Florida in the United States of America and Gavião Peixoto, state of São Paulo, Brazil. The Melbourne facility is a final assembly plant with a Customer Center and an Engineering Office. In 2014, we announced an expansion plan to assemble the Legacy 450 and the Legacy 500 (currently Praetor 500 and Praetor 600) in this facility, to improve our production capacity. We have been increasing the number of executive jets produced in Melbourne since 2016. Since 2020, the Gavião Peixoto facility has manufactured executive jets and assembled the Praetor 500 and Praetor 600 aircraft.
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Defense & Security
The Gavião Peixoto facility includes flight-testing capabilities for all Embraer aircraft and a final assembly line for our defense aircraft. This facility has been operational since November 2002. In May 2014, we inaugurated the final assembly line of the new military transport and aerial refueling jet, the KC-390 Millennium, and in February 2015, it successfully performed its first flight. Embraer is currently conducting additional flight tests for the KC-390 Millennium to validate operational improvements and address the increase in demand. In the fourth quarter of 2018, we received the Type Certificate from ANAC for the multi-mission airlift KC-390 Millennium and delivered the first aircraft in 2019.
We have a final assembly facility in Jacksonville, Florida, for Defense & Security where we initiated the final assembly line for the Super Tucano for the United States of America’s Air Force’s LAS Program in 2013. The Super Tucano is also manufactured at the Gavião Peixoto unit, responsible for the final assembly line and the manufacturing of large segments that supplies both of our final assembly sites.
In 2016, we launched the GDDN in Gavião Peixoto. It is the hub for the Gripen NG technology development in Brazil for Saab and Embraer together with the Brazilian partner industries and institutions. The GDDN includes the development environment and simulators required to undertake the fighter development work. In addition, the GDDN is connected to Saab in Sweden and the industrial partners in Brazil, securing both technology transfer and efficient development.
Other Segments
We manufacture aerospace systems and components at our São José dos Campos facility. This production was originally carried out by our subsidiary ELEB Equipamentos Ltda., or ELEB, which was one of our productive subsidiaries located in São José dos Campos, ELEB has since been merged with and into the Company and these activities are now carried out by the equipment division of Embraer. Our main products in this initiative are structural parts, landing gear systems, hydraulics and electro-mechanical sub-assemblies, such as actuators, valves, accumulators and pylons.
Additionally, in the city of Botucatu, located in the state of São Paulo, Brazil, we produce the Ipanema crop duster, which is developed pursuant to specifications of the Brazilian Ministry of Agriculture.
Production in our Subsidiaries
EZ Air Interior Limited, our subsidiary for the production of interior parts for our Commercial Aviation segment in Mexican factories, began production and shipping of parts to Brazil in 2013. It achieved full production capacity in January 2015.
In 2015, we completed the acquisition of a new subsidiary, Embraer Aero Seating Technologies. We progressively increased our ownership stake in the company, headquartered in Irwindale, California, which provides luxury seating solutions for the aviation industry and for Embraer product lines. In 2016, we opened a new state-of-the-art manufacturing facility in Titusville, Florida, which had its production capabilities moved to our site in Melbourne, Florida, in 2021.
In 2023, our subsidiary Eve Holding, responsible for the development of eVTOL announced that the first eVTOL production facility will be located in Taubaté, state of São Paulo, and is scheduled to begin operations in 2026.
In July 2024, our subsidiary Eve Holding announced a significant advancement in the assembly of its first full-scale eVTOL prototype. During the 45th Farnborough Airshow, EVE unveiled the aircraft being built in the Embraer test facility of Gavião Peixoto, state of São Paulo.
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Environmental Matters
We have the material environmental permits required to operate our business in our sites around the world. The terms of these operating permits are reviewed every year and, as of December 31, 2024, we were in compliance with all of them. In addition, our Environmental and Occupational Health and Safety Management System was established in 2001, allowing us to maintain ISO 14001 certification since 2002. Certified environmental, health and safety management systems have been progressively implemented across our manufacturing sites, with around 82% of our employees operating under an ISO 14001 and ISO 45001.
Since 2009, we have carried out our GHG emissions inventory in accordance with ISO 14064 Part I. As of 2020, we have increased the coverage of GHG emissions data, and in 2023 our GHG emissions inventory included 18 facilities, representing approximately 98% of coverage.
Work procedures and instructions are set up in order to ensure that the activities that cause environmental impacts are carried out in order to minimize or mitigate any environmental damage. We perform studies of environmental aspects and impacts and we implement actions to eliminate, reduce or control them, including infrastructure works.
We established a corporate procedure for performing environmental diagnoses and detailed investigations for finding the presence of contaminants in soil and water due to past activities. This procedure is applied to the relevant areas where Embraer has production and/or maintenance facilities, as well as to new relevant areas being acquired. The diagnosis results are periodically reported and monitored by the internal Risk Department, the CCRA (Committee for Environmental Risk and Control), our board and shareholders.
We take into account environmental and safety requirements to enter into agreements with third parties. Embraer is committed to hire suppliers, service providers and contractors who respect the environment, health and safety through their practices and processes, and we have a systematic procedure for their continual evaluation and monitoring.
We encourage not only the environmental certification but also the development of a full life cycle orientation for products and services, as this remains the most cost-efficient and practical way to effectively reduce environmental impacts. The environmental management system attempts to create economic value by reducing environmental costs and exposure at each stage of the product life, from design to operations and to end of life.
The implementation of further innovative and eco-efficient technologies and processes is a key factor in ensuring our sustainability, increasing the attractiveness of our products and our overall competitiveness. We continuously pursue eco-efficiency, seeking responsible business opportunities by developing breakthrough technologies, products and services, as well as by reducing the environmental impact of our activities and products throughout their life cycle, and, more generally, by integrating environmental concerns into our daily business. We recognize that environmental requirements, such as reduction of greenhouse gas emissions, are becoming one of the main drivers of airline fleet decisions and are already influencing aircraft developments.
We are committed to Brazilian and international legislations as well as our customers’ requirements. Our suppliers must also ensure that the environmental requirements will be met through their upstream supply chain. Accordingly, our suppliers and their supply chain must comply with applicable environmental legislations, such as European REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) regulation (EC) No 1907/2006, TSCA (Toxic Substances Control Act), SCIP (Substances of Concern In articles as such or in complex objects (Products), established under the Waste Framework Directive (WFD)) and any other relevant rules that may affect our products.
The REACH regulation aims to improve the protection of human health and the environment through more strict regulation of chemicals. The regulation establishes progressive withdrawal of some of the substances considered of very high concern for human health and the environment.
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To ensure compliance with REACH and SCIP requirements, since 2015 our engineering team uses an internal system to register substances present in raw materials and articles. In 2023, we created an automated process in which a contracted service provider requests and stores SVHC (Substances of Very High Concern) declarations from suppliers of purchased materials such as articles and complex objects. Our substances enriched database allows us to continuously evaluate the impact of and respond to REACH and SCIP regulatory changes, as well as upcoming regulations. As of December 31, 2024, we had not suffered any penalties in connection with REACH.
Our commitment to environmental sustainability and compliance with regulations are further reflected in our adherence to the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). This internationally recognized system establishes harmonized criteria for the classification and labeling of substances and compounds with respect to physical, health, and environmental hazards. By complying with the GHS, we ensure that our products are manufactured, handled, and transported in a safe and environmentally responsible manner.
Our dedication to developing advanced, innovative environmental solutions for our products is reflected in our membership in the International Aerospace Environmental Group (IAEG), as one of the twelve founding members, formed to address the complexity of the regulations on health and environment, impacting the Aerospace Industry and our supply chain and customers, and also as an associate company at the Aircraft Fleet Recycling Association (AFRA), the leading global organization for developing and promoting the safe and sustainable management of circularity of components and aircraft end-of-life.
Our commitment to responsible manufacturing practices and our goal to minimize the environmental impact of our products is evident in our continuous disruption in the use of hazardous materials. We are actively promoting waste reduction during aircraft maintenance and operations by using LED lamps, which are free of mercury and have a longer lifespan than fluorescent bulbs. We are also working on sourcing materials and articles that do not employ hazardous chemicals, as well as on the reduction of the use of hazardous substances such as Hexavalent Chromium and Cadmium in our manufacturing sites. We believe these practices not only serve as an important step towards reducing the environmental impact of our products, but also sets a high bar for other companies to follow.
Insurance
We maintain insurance at levels deemed to meet all risks associated with our operations and legislation. The insurance covers potential damages to our property, inventories, working process, cargo and aircraft hulls for our own fleet. In addition, we maintain a comprehensive aviation products liability policy, for claims arising out of our legal liability as manufacturers, repairers, suppliers or servicers. We also possess natural disaster and business interruption insurance.
4A. Unresolved Staff Comments
We have no unresolved staff comments.
| Item 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
This discussion should be read in conjunction with our audited consolidated financial statements and notes thereto and other financial information included elsewhere in this annual report. The purpose of this discussion is to provide management’s explanation of factors that have materially affected our financial condition and results of operations for the historical periods covered by the financial statements, and management’s assessment of factors and trends which are anticipated to have a material effect on our financial condition and results of operations for future periods.
This annual report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Item 3. Key Information—D. Risk Factors” and the matters set forth in this annual report generally.
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Except as otherwise indicated, all consolidated financial information in this annual report has been prepared in accordance with IFRS Accounting Standards and presented in U.S. dollars, while, for local purposes, our consolidated financial statements are also prepared in IFRS but are presented in reais. For certain purposes, including providing reports to our shareholders located in Brazil, filing financial statements with the CVM and determining dividend payments and other distributions and tax liabilities in Brazil, we have prepared and will continue to be required to prepare parent company financial statements in accordance with IFRS, presented in reais.
A. Operating Results
The following discussion is based largely upon our current expectations about future events and trends affecting our business. Actual results for our industry and performance could differ substantially. For additional information related to our forward-looking statements, see “Introduction—Special Note Regarding Forward-Looking Statements” and for a description of certain factors that could affect our industry in the future and our own future performance, see “Item 3. Key Information—D. Risk Factors.”
Overview
We are the world’s leading manufacturer of jets with up to 150 seats, with a 29.1% market share in accumulated deliveries since 2004, according to a 2024 Cirium report. With a global customer base and a customer-centric, technology-driven portfolio, we cater to the commercial airline, executive jet, and defense and security markets. Originally established as a government-controlled company producing aircraft for the Brazilian Armed Forces, we have evolved into a publicly traded company that serves diverse global markets, maintaining long-term client relationships through high-quality customer support. In 2024, our revenue reached US$6,394.7 million, with North America and Europe being our largest markets, while we also see growth opportunities in regions such as India, Brazil, Turkey, and Saudi Arabia.
Our strategy focuses on consistent execution of our business plan, operational efficiency, and partnerships to drive innovation and growth. We are committed to ambitious ESG targets, including carbon neutrality in operations by 2040, achieving 50% diversity hiring in entry-level programs and 20% representation of women in senior leadership by 2025, and maintaining the highest international corporate governance standards. With a firm order backlog of US$26.3 billion as of December 31, 2024, we continue to position ourselves as a leader in sustainable aviation and social responsibility.
Selected Operational Data
The following tables present a summary of our aircraft deliveries per segment and type of aircraft for the periods indicated.
| Year ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Commercial Aviation Segment |
73 | 64 | 57 | |||||||||
| EMBRAER 175 |
26 | 25 | 35 | |||||||||
| EMBRAER 190 |
— | — | 3 | |||||||||
| E190-E2 |
8 | 1 | 1 | |||||||||
| E195-E2 |
39 | 38 | 18 | |||||||||
| Defense & Security Segment |
3 | 3 | 4 | |||||||||
| KC-390 Millennium |
3 | 2 | 1 | |||||||||
| A-29 Super Tucano |
— | — | — | |||||||||
| Modernization Programs |
— | 1 | 2 | |||||||||
| Special Mission(1) |
— | — | 1 | |||||||||
| Executive Aviation Segment |
130 | 115 | 102 | |||||||||
| Praetor 500 |
28 | 20 | 15 | |||||||||
| Praetor 600 |
27 | 21 | 21 | |||||||||
| Phenom 100 |
10 | 11 | 7 | |||||||||
| Phenom 300 |
65 | 63 | 59 | |||||||||
| Other Segments |
65 | 65 | 55 | |||||||||
| Ipanema |
65 | 65 | 55 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
271 | 247 | 218 | |||||||||
|
|
|
|
|
|
|
|||||||
| (1) | Our Special Mission category comprises aircraft of our Executive Aviation segment portfolio that we have sold to customers of our Defense & Security segment. |
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The following tables present a summary of our aircraft backlog per segment and type of aircraft as of each of the dates indicated.
| As of December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Commercial Aviation Segment |
343 | 298 | 291 | |||||||||
| EMBRAER 175 |
164 | 100 | 90 | |||||||||
| E190-E2 |
25 | 16 | 7 | |||||||||
| E195-E2 |
154 | 182 | 194 | |||||||||
| Defense & Security Segment |
65 | 40 | 40 | |||||||||
| KC-390 Millennium |
32 | 22 | 21 | |||||||||
| A-29 Super Tucano |
17 | 3 | 3 | |||||||||
| Modernization |
— | — | 1 | |||||||||
| Gripen E |
15 | 15 | 15 | |||||||||
| Special Mission(1) |
1 | — | — | |||||||||
| Executive Aviation Segment |
483 | 308 | 281 | |||||||||
| Phenom 100/300; Praetor 500/600 |
483 | 308 | 281 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total backlog (in aircraft) |
891 | 646 | 612 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total backlog (in US$ millions) |
26,312.1 | 18,723.1 | 17,488.4 | |||||||||
|
|
|
|
|
|
|
|||||||
| (1) | Our Special Mission category comprises aircraft of our Executive Aviation segment portfolio that we have sold to customers of our Defense & Security segment. |
Significant Factors Affecting Our Results of Operations
Supply Chain Global Crisis
The primary constraint in our mission to achieve pre-pandemic level of deliveries lies in the supply chain disruptions that have affected our industry on a large scale in the last few years, and which have impacted our suppliers’ ability to deliver parts and goods to us in a timely manner, therefore affecting our delivery schedule and ability to comply with contracts. Nonetheless, Embraer delivered 73 aircraft in Commercial Aviation in 2024, at the top of revised estimates of 70-73 for the year and within the original estimates of 72-80).
In 2024, the Executive Aviation segment continued to witness the impact of a globally disrupted supply chain. Despite the ongoing efforts throughout our industry to mitigate supply problems, there are still significant challenges to increase production capacity and provide availability of parts to fleet maintenance. This scenario has been progressively improving as we continue to closely monitor these risks and our supply chain, in order to improve future predictability of parts. In 2024, our executive aircraft deliveries achieved a 13% increase compared to 2023, reaching 130 units, for the year and at the midpoint of our original deliveries estimate for 2024.
The Defense & Security segment has benefitted from the current geopolitical landscape, which has driven an increase in global defense spending. This trend expanded our customer base and positively impacted the segment’s performance. We believe we are well positioned to provide highly effective solutions, creating sales opportunities for our Defense & Security segment, especially in the areas of aircraft platforms, critical software, command, control, communications and intelligence (C4I) and sensors in all domains (air, sea, land, space and cybersecurity). In 2024, our KC-390 Millennium program capitalized on these opportunities by securing contracts with the Netherlands, Austria, the Czech Republic and an undisclosed customer. Furthermore, as the global fleet of military tactical transport aircraft approaches retirement age, we believe the KC-390 Millennium has the potential to capture a significant share of the replacement market.
Given our business expansion and the diversification of our fleet, which reaches various customer profiles, we believe the Services & Support segment is well-positioned to increase profitability over the next several years, especially considering the increasing demand for services as the fleet ages. In 2024, revenue from Services & Support constituted 25.6% of our revenues, with a 6.3% CAGR over the past six years, reflecting growth potential within Embraer.
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The reliance on long-term contracts, active maintenance events, parts sales, and training contributes to revenue stability. Factors like the renewal rate of contracts, favorable margin, and stable non-backlog revenue from maintenance and training enhance sustained profitability. Also, OGMA provides multi-brand diversification with MRO and repair services for both Embraer and non-Embraer customers, which we believe further strengthens our competitive position.
Brazilian Economic Environment
The Brazilian government has frequently intervened in the Brazilian economy and occasionally made drastic changes in policy and regulations. The Brazilian government’s actions to control inflation and affect other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies and incentives, price controls, currency devaluations, capital controls and limits on imports. Changes in Brazil’s monetary, credit, tariff and other policies could adversely affect our business, as could inflation, currency and interest-rate fluctuations, social instability and other political, economic or diplomatic developments in Brazil, as well as the Brazilian government’s response to these developments.
Rapid changes in Brazilian political and economic conditions that have occurred and may occur require continued assessment of the risks associated with our activities and the adjustment of our business and operating strategy accordingly. Developments in Brazilian government policies, including changes in the current policy and incentives adopted for financing exports of Brazilian goods, or in the Brazilian economy, over which we have no control, may have a material adverse effect on our business.
The following table shows data for Brazilian GDP growth, inflation, interest rates and the U.S. dollar exchange rate for and as of the periods indicated.
| As of and For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | 2021 | 2020 | ||||||||||||||||
| Growth in gross domestic product |
3.4 | % | 2.9 | % | 2.9 | % | 4.6 | % | (4.1 | )% | ||||||||||
| Inflation (IGP-M)(1) |
6.5 | % | (3.2 | )% | 5.5 | % | 17.8 | % | 23.1 | % | ||||||||||
| Inflation (IPCA)(2) |
4.8 | % | 4.6 | % | 5.8 | % | 10.1 | % | 4.5 | % | ||||||||||
| CDI rate(3) |
10.9 | % | 13.0 | % | 12.4 | % | 4.4 | % | 2.8 | % | ||||||||||
| SOFR rate(4) |
4.7 | % | 5.3 | % | 4.6 | % | 0.1 | % | 0.1 | % | ||||||||||
| Appreciation (depreciation) of the real vs. U.S. dollar |
(27.9 | )% | (7.2 | )% | (6.5 | )% | 7.4 | % | 28.9 | % | ||||||||||
| Period-end exchange rate—US$1.00 |
R$ | 6.1923 | R$ | 4.8413 | R$ | 5.2177 | R$ | 5.5805 | R$ | 5.1967 | ||||||||||
| Average exchange rate—US$1.00(5) |
R$ | 5.4746 | R$ | 4,9841 | R$ | 5.1386 | R$ | 5.4071 | R$ | 5.2426 | ||||||||||
Sources: Fundação Getúlio Vargas, or FGV, Brazilian Central Bank and Bloomberg.
| (1) | Inflation (IGP-M) is the general market price index measured by FGV. |
| (2) | Inflation (IPCA) is a broad consumer price index measured by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística). |
| (3) | The CDI rate is average of inter-bank overnight rates in Brazil (as of the last date of the respective period). |
| (4) | Three-month Secured Overnight Financing rate, or the SOFR rate, the benchmark interest rate for U.S. dollar-denominated loans and derivative instruments, as of the last date of the period. |
| (5) | Represents the average selling rate of the exchange rates on the last day of each month during the period. |
Inflation and exchange rate variations have had, and may continue to have, substantial effects on our financial condition and results of operations. Inflation and exchange rate variations affect our monetary assets and liabilities denominated in reais. The value of these assets and liabilities as expressed in U.S. dollars declines when the real devalues against the U.S. dollar and increases when the real appreciates. In periods of devaluation of the real, we report (i) a remeasurement loss on real-denominated monetary assets and (ii) a remeasurement gain on real-denominated monetary liabilities. The appreciation of the U.S. dollar relative to the Brazilian real and other currencies in 2024 had a positive effect on our results of operations in that year. For additional information on the effects of exchange rate variations on our financial condition and results of operations, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Rate Risk.”
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For additional information on the impact of macroeconomic factors on our financial position, see note 27 of our 2024 audited consolidated financial statements. In addition, for a discussion of related macroeconomic risks, please see “Item 3. Key Information—D. Risk Factors—Geopolitical and Macroeconomic Risks—Inflation and government efforts to curb inflation may contribute significantly to economic uncertainty and to heightened volatility in the Brazilian and international securities markets and, consequently, may adversely affect us” and “—Exchange rate volatility may adversely affect us.”
Tax Incentives
Tax Incentives for Companies in Research and Development
Brazilian Law No. 11,196/2005, commonly referred to as the Lei do Bem, grants tax benefits to entities involved in research and development activities for technological innovation.
To take advantage of the tax benefits, a beneficiary must (i) assess its income tax according to the real profit (lucro real) method, (ii) record taxable profits, (iii) be current with all of its fiscal obligations, and (iv) have qualifying investments in research and development.
Technological innovation is deemed to be the development of a new product or manufacturing procedure, as well as the addition of new features or characteristics to an existing product or manufacturing procedure, which entails incremental improvements and gains in quality or productivity, therefore resulting in greater market competitiveness.
We and other Brazilian companies across multiple industries benefit from these tax incentives with respect to the income tax (Imposto de Renda Pessoa Jurídica), or IRPJ, and the social contribution on net income tax (Contribuição Social sobre o Lucro Líquido), or CSLL. These benefits allow us to deduct from our taxable net income an additional amount between 60% to 80% of our expenditures related to research and development activities for technological innovation during a fiscal year.
For a discussion of certain risks related to these tax incentives, please refer to “Item 3. Key Information—D. Risk Factors—Regulatory, Compliance and Legal—Changes in Brazilian fiscal policies and tax laws could have an adverse effect on our financial condition and results operation. In addition, we benefit from certain tax and other government-granted benefits and the suspension, cancellation or non-renewal of those benefits would have a material adverse effect on us.”
Tax Incentives for Exporting Companies
Normative Instruction No. 2,126/2022, issued by the Brazilian Federal Revenue Service (Secretaria da Receita Federal), established the Special Customs Regime of Industrial Warehouse under Automated Control of Customs Board (Regime Aduaneiro de Entreposto Industrial sob Controle Informatizado), or RECOF. This regime allows the beneficiary company to import or to acquire in the local market raw materials, parts and components destined to industrial application on which federal taxes are not levied. Part of these goods must be processed, and it can be subsequently shipped both to domestic and foreign markets. When exporting the finished good, the Company is exempted from federal tax payments.
Similarly, Decree No. 45,490/2000, enacted by the state of São Paulo, introduced the Simple Special Customs Regime (Regime Especial Simplificado de Exportação), a state-level counterpart to RECOF, which suspends or exempts the Brazilian state value added tax (ICMS) for exporting companies.
For a discussion of certain risks related to tax reform, please refer to “Item 3. Key Information—D. Risk Factors—Regulatory, Compliance and Legal—Changes in Brazilian fiscal policies and tax laws could have an adverse effect on our financial condition and results operation. In addition, we benefit from certain tax and other government-granted benefits and the suspension, cancellation or non-renewal of those benefits would have a material adverse effect on us.”
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Principal Components of Our Statement of Income
Revenue
We generate revenue from the sale of aircraft and spare parts as well as from providing maintenance and repair, training and other product support services. In 2024, we presented revenues from Commercial Aviation, Executive Aviation, Defense & Security, Services & Support, and Other segments. Below is a brief description of the Company’s operating segments:
| • | Commercial Aviation: This segment focuses on the development, production, and sale of commercial jets, including the E-Jets 175 E1 (70 to 90 seats) and E-Jets E2 (88 to 146 seats). It represents the core of the Company’s business, catering to regional and mainline airlines globally. |
| • | Executive Aviation: This segment encompasses the development, production, and sale of executive jets, including the Phenom and Praetor models. It serves private and corporate customers seeking high-performance, state-of-the-art aircraft for business and personal use. |
| • | Defense & Security: This segment is dedicated to the development and production of military solutions. Our main revenue drivers are the KC-390 Millennium and the A-29 Super Tucano. It also includes other activities like research and development of integrated systems, border monitoring and surveillance, radars, and command and control systems (C4ISR). |
| • | Services & Support: This segment provides a comprehensive portfolio of solutions for operators of Embraer aircraft in the Commercial Aviation, Executive Aviation, and Defense & Security segments. Its offerings include field support, technical support, flight operations solutions, aircraft modifications, materials management, maintenance solutions, and training programs. |
| • | Other Segments: This covers activities with a smaller financial impact, mainly including the supply of structural parts and hydraulic systems and production of agricultural crop-spraying aircraft, development and certification of eVTOLs (electric vertical take-off and landing vehicles), creation of eVTOL service networks and air traffic control systems, as well as cybersecurity solutions through Tempest, which serves civil, government, and defense markets. |
In 2024 and 2023, 62.0% and 61.5% of our revenue came from aircraft deliveries of Commercial Aviation and Executive Aviation. Revenue arising from the sale of Commercial and Executive aircraft are predominantly denominated in U.S. dollars. In turn, revenue from the Defense & Security segment represents 11.3% of our revenue in 2024. Moreover, 69.8% of such Defense & Security revenue was in U.S. dollar-denominated currency and 30.2% was in Brazilian real-denominated currency, as compared to 77.5% and 22.5% in 2023, respectively. Our Services & Support segment accounted for 25.6% and 26.9% of our revenue in 2024 and 2023, respectively. Finally, our Other segments accounted for 1.0% and 1.5% of our revenue in 2024 and 2023, respectively.
For the sales of our aircraft, we receive an initial deposit upon the execution of the purchase agreement, progress payments prior to the delivery of each aircraft and a final payment upon delivery. The final payment typically represents the majority of the sale price. The deposits and the progress payments are for the most part nonrefundable in the event orders are canceled, except in the case of the Defense & Security segment. A significant part of our revenue from the Defense & Security segment is accounted for under the percentage of completion method, and we continued to execute under existing contracts with the Brazilian government, including the KC-390 Millennium program, SISFRON, deliveries of special mission aircraft, and others.
Payments in advance of delivery are recorded under contract liabilities as a liability on our statement of financial position and, when we deliver the aircraft, these payments are recognized as revenue. We generally receive monetary deposits for each option to purchase an executive or commercial jet.
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Our sales contracts in U.S. dollars with our Executive Aviation and Services & Support segment segments customers generally include adjustments for inflation as measured by the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, when deliveries are not in the same calendar year of the sale except when fixed prices are pre-determined considering the estimated inflation and strategic price positioning planning of a given aircraft model, in line with Embraer’s strategic planning. Our sales contracts with our Commercial Aviation and generally Defense & Security segment customers include adjustments to the purchase price of the aircraft based on an escalation formula, which is based on a mix of indexes related to raw material, transportation equipment and labor costs. Specific to Defense & Security sales contracts with Brazilian customers, national indexes are used to adjust the prices of the relevant contract. The initial deposits and progress payments are non-refundable (except in some instances contemplated in the agreement). Once a customer exercises an option to purchase an aircraft, we account for it as a firm order, and we begin to receive the respective progress payments and recognize revenue upon delivery of the aircraft or the contractual milestone.
In 2024, our Services & Support segment backlog reached US$4.6 billion, as compared to US$3.1 billion in 2023, driven by renewed contracts of integrated logistical support services and comprehensive airframe maintenance programs, such as the Flight Hour Pool Program for Commercial Aviation and Embraer Executive Care for Executive Aviation. These long-term contracts in the backlog cover mainly pool contracts and other services as spare parts, repair, maintenance, and technical services.
A significant part of our Defense & Security segment contracts, including the contracted research and development for specific programs, meets the criteria for revenue recognition by percentage of completion. For the contracts that do not meet the criteria for percentage of completion, we recognize revenue at a point of time, on the moment the product is delivered, or the service is rendered. Certain contracts contain provisions for the redetermination of price based upon future economic conditions. Our defense customers continue to provide customer advances, which are converted into revenue as we fulfill pre-determined stages of completion of the project, including conception, development and design, and engineering, systems integration and customization. These installments are nonrefundable for the most part.
Cost of Sales and Services
Cost of sales and services consists of the cost of the aircraft, spare parts and services rendered, comprising:
| • | Raw materials. Substantially all materials costs are covered by contracts with suppliers. Prices under these contracts are generally adjusted based on an escalation formula which reflects, in part, inflation in the United States of America. |
| • | Labor. These costs comprise salaries and related charges primarily in Brazilian reais. |
| • | Depreciation. Property, plant and equipment in general are depreciated over their useful lives, ranging from two to 60 years, on a straight-line basis. Depreciation of aircraft under operating leases is recorded in cost of sales and services from the beginning of the lease term using the straight-line method over the estimated useful life and considering a residual value at the end of the lease term. |
| • | Amortization. Internally generated intangible assets are amortized in accordance with the estimated sales of the series of aircraft. Intangible assets acquired from third parties are amortized on straight-line bases over the estimated useful lives of the assets. |
We accrue a liability for the obligations associated with product warranties at the aircraft delivery date, which is estimated based on historical experience and recorded in cost of sales and services.
We enter into transactions that represent multiple-element arrangements, including training, technical assistance, spare parts and other concessions. These costs are recognized when the product or service is provided to the customer.
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Results of Operations
The following table presents statement of profit or loss data by segment for the periods indicated:
| For the Year Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in US$ millions) | ||||||||||||
| Revenue |
||||||||||||
| Commercial Aviation |
2,208.6 | 1,846.8 | 1,543.9 | |||||||||
| Executive Aviation |
1,762.7 | 1,408.2 | 1,244.4 | |||||||||
| Defense & Security |
720.9 | 515.4 | 412.6 | |||||||||
| Services & Support |
1,636.5 | 1,417.6 | 1,266.7 | |||||||||
| Other |
66.0 | 80.5 | 72.8 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
6,394.7 | 5,268.5 | 4,540.4 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cost of sales and services |
||||||||||||
| Commercial Aviation |
(2,008.9 | ) | (1,698.3 | ) | (1,382.3 | ) | ||||||
| Executive Aviation |
(1,407.7 | ) | (1,134.8 | ) | (953.2 | ) | ||||||
| Defense & Security |
(590.9 | ) | (429.6 | ) | (326.9 | ) | ||||||
| Services & Support |
(1,179.0 | ) | (1,039.0 | ) | (912.5 | ) | ||||||
| Other |
(55.1 | ) | (57.2 | ) | (53.3 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total |
(5,241.6 | ) | (4,358.9 | ) | (3,628.2 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Gross profit |
||||||||||||
| Commercial Aviation |
199.7 | 148.5 | 161.6 | |||||||||
| Executive Aviation |
355.0 | 273.4 | 291.2 | |||||||||
| Defense & Security |
130.0 | 85.8 | 85.7 | |||||||||
| Services & Support |
457.5 | 378.6 | 354.2 | |||||||||
| Other |
10.9 | 23.3 | 19.5 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
1,153.1 | 909.6 | 912.2 | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income (expense) |
||||||||||||
| Commercial Aviation |
(144.5 | ) | (124.6 | ) | (145.5 | ) | ||||||
| Executive Aviation |
(149.0 | ) | (146.6 | ) | (141.5 | ) | ||||||
| Defense & Security |
(85.4 | ) | (57.5 | ) | (76.4 | ) | ||||||
| Services & Support |
(187.5 | ) | (163.4 | ) | (203.4 | ) | ||||||
| Other |
(67.3 | ) | (55.9 | ) | (386.4 | ) | ||||||
| Unallocated income (expense) |
148.1 | (47.1 | ) | (69.5 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total |
(485.6 | ) | (595.1 | ) | (1,022.7 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Operating (loss)/profit before financial result |
||||||||||||
| Commercial Aviation |
55.2 | 23.9 | 16.1 | |||||||||
| Executive Aviation |
206.0 | 126.8 | 149.7 | |||||||||
| Defense & Security |
44.6 | 28.3 | 9.3 | |||||||||
| Services & Support |
270.0 | 215.2 | 150.8 | |||||||||
| Other |
(56.4 | ) | (32.6 | ) | (366.9 | ) | ||||||
| Unallocated income (expense) |
148.1 | (47.1 | ) | (69.5 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total |
667.5 | 314.5 | (110.5 | ) | ||||||||
|
|
|
|
|
|
|
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The following table sets forth statement of profit or loss for the years indicated, in addition to presenting each line item as a percentage of our revenue for the periods indicated:
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||||||
| (in US$ millions, except percentages presented in absolute values) | ||||||||||||||||||||||||
| Revenue |
6,394.7 | 100.0 | % | 5,268.5 | 100.0 | % | 4,540.4 | 100.0 | % | |||||||||||||||
| Cost of sales and services |
(5,241.6 | ) | 82.0 | % | (4,358.9 | ) | 82.7 | % | (3,628.2 | ) | 79.9 | % | ||||||||||||
| Gross profit |
1,153.1 | 18.0 | % | 909.6 | 17.3 | % | 912.2 | 20.1 | % | |||||||||||||||
| Administrative expenses |
(198.9 | ) | 3.1 | % | (204.9 | ) | 3.9 | % | (184.9 | ) | 4.1 | % | ||||||||||||
| Selling expenses |
(309.7 | ) | 4.8 | % | (314.7 | ) | 6.0 | % | (274.4 | ) | 6.0 | % | ||||||||||||
| Expected credit (losses) reversal |
(21.1 | ) | 0.3 | % | 10.2 | 0.2 | % | (17.4 | ) | 0.4 | % | |||||||||||||
| Research expenses |
(55.0 | ) | 0.9 | % | (90.3 | ) | 1.7 | % | (110.0 | ) | 2.4 | % | ||||||||||||
| Other income |
266.1 | 4.2 | % | 170.7 | 3.2 | % | 110.5 | 2.4 | % | |||||||||||||||
| Other expenses |
(162.7 | ) | 2.5 | % | (176.3 | ) | 3.3 | % | (555.0 | ) | 12.2 | % | ||||||||||||
| Equity in associates(1) |
(4.3 | ) | 0.1 | % | 10.2 | 0.2 | % | 8.5 | 0.2 | % | ||||||||||||||
| Operating income |
667.5 | 10.4 | % | 314.5 | 6.0 | % | (110.5 | ) | 2.4 | % | ||||||||||||||
| Financial income |
311.1 | 4.9 | % | 128.6 | 2.4 | % | 166.5 | 3.7 | % | |||||||||||||||
| Financial expenses |
(415.6 | ) | 6.5 | % | (321.9 | ) | 6.1 | % | (290.0 | ) | 6.4 | % | ||||||||||||
| Foreign exchange gain (loss), net |
(6.0 | ) | 0.1 | % | (0.5 | ) | 0.0 | % | 28.2 | 0.6 | % | |||||||||||||
| Income (loss) before income tax |
557.0 | 8.7 | % | 120.7 | 2.3 | % | (205.8 | ) | 4.5 | % | ||||||||||||||
| Income taxes |
(202.4 | ) | 3.2 | % | 43.6 | 0.8 | % | 2.3 | 0.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) for the year |
354.6 | 5.5 | % | 164.3 | 3.1 | % | (203.5 | ) | 4.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Attributable to: |
||||||||||||||||||||||||
| Owners of Embraer |
352.5 | 5.5 | % | 164.0 | 3.1 | % | (185.4 | ) | 4.1 | % | ||||||||||||||
| Non-Controlling Interests |
2.1 | 0.0 | % | 0.3 | 0.0 | % | (18.1 | ) | 0.4 | % | ||||||||||||||
| (1) | Share of net profit of investments accounted for under the equity method. |
2024 Compared with 2023
Revenue
Our revenue increased US$1,126.2 million, or 21.4%, to US$6.394.7 million in 2024 from US$5,268.5 million in 2023. This was primarily due to (i) the increase in deliveries in Commercial and Executive Aviation, despite the supply chain shortage which has been affecting the aeronautical industry; and (ii) higher revenues in Services & Support and Defense & Security.
Revenues from our Commercial Aviation segment increased US$361.8 million, or 19.6%, to US$2,208.6 million in 2024 from US$1,846.8 million in 2023. This was primarily due to an increase of 14.1% in commercial aircraft deliveries, to 73 aircraft in 2024, from 64 in 2023. The increase in revenues was higher than the increase in the number of deliveries, as larger commercial jets deliveries (E190-E2 and E195-E2) increased 20.5% to 47 aircraft in 2024 from 39 in 2023, while EMBRAER 175 deliveries increased 4.0% to 26 aircraft in 2024 from 25 aircraft in 2023 (E-Jets E2 jets tend to carry higher average selling prices compared to EMBRAER 170/190 jets).
Revenue from our Executive Aviation segment increased US$354.5 million, or 25.2%, to US$1,762.7 million in 2024 from US$1,408.2 million in 2023. This was primarily due to a 13.0% increase in executive jet deliveries, to 130 in 2024 from 115 jets in 2023. The increase in revenues was higher than the increase in the number of deliveries, as deliveries of executive mid-size jets (Praetors) increased 34.1%, to 55 aircraft in 2024, from 41 in 2023, while deliveries of executive light jets (Phenoms) increased 1.4%, to 75 aircraft in 2024 from 74 aircraft in 2023 (Praetors tend to carry higher average selling prices compared to Phenoms).
Revenue from our Defense & Security segment increased US$205.5 million, or 39.9%, to US$720.9 million in 2024 from US$515.4 million in 2023. This was primarily due to: (i) the higher volume of revenues recorded using the percentage of completion method of revenue recognition in the KC-390 Millennium program (which method allows for revenue recognition as certain milestones are achieved and progress is made within the contracts); and (ii) the recognition of revenues arising from new KC-390 Millennium and A-29 Super Tucano agreements entered into in 2024.
Revenue from our Services & Support segment increased US$218.9 million, or 15.4%, to US$1,636.5 million in 2024 from US$1,417.6 million in 2023. This was primarily due to: (i) the higher demand for parts and components, mainly as a result of the growth of flight operator activities in the Commercial Aviation and Executive Aviation segments in 2024; and (ii) the revenues from the engine maintenance services contract entered into with Pratt Whitney by our subsidiary OGMA.
Revenue from our Other segments decreased US$14.5 million, or 18.0%, to US$66.0 million in 2024 from US$80.5 million in 2023. This was mainly due to the decrease in sales revenue in our subsidiary Tempest and the effect of the appreciation of the U.S. dollar against the Brazilian real on our Ipanema revenues in 2024.
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Cost of Sales and Services
Our cost of sales and services increased US$882.7 million, or 20.3%, to US$5,241.6 million in 2024 from US$4,358.9 million in 2023. This was primarily due to: (i) the increase in Commercial and Executive Aviation deliveries; (ii) higher cost recognition in Defense & Security, using the percentage of completion method; and (iii) higher costs due to higher services and spare parts demand in Services & Support. The increase in cost of sales and services was lower than the 21.4% increase in revenues in 2024 as compared to 2023, which resulted in a decrease of 0.7 p.p. in cost of sales and services as a percentage of revenue to 82.0% in 2024, from 82.7% in 2023.
Cost of sales and services in our Commercial Aviation segment increased US$310.6 million, or 18.3%, to US$2,008,9 million in 2024 from US$1,698.3 million in 2023. This was primarily due to the increase in E-Jets E2 deliveries and revenues in 2024, as compared to 2023. Cost of sales and services increased by less than the 19.6% increase in revenues, mainly due to a more favorable E-Jets E2 customer mix in 2024, as compared to 2023, partially offset by higher freight costs of materials. Gross margin in our Commercial Aviation segment (calculated as gross profit from our Commercial Aviation segment divided by revenue from the Commercial Aviation segment) increased to 9.0% in 2024 from 8.0% in 2023.
Cost of sales and services in our Executive Aviation segment increased US$272.9 million, or 24.0%, to US$1.407.7 million in 2024 from US$1,134.8 million in 2023, which was lower than the 25.2% increase in revenues for the segment. This was mainly due to: (i) a more price-positive product mix; and (ii) greater deliveries volume. Gross margin in our Executive Aviation segment (calculated as gross profit from our Executive Aviation segment divided by revenue from the Executive Aviation segment) increased to 20.1% in 2024 from 19.4% in 2023.
Cost of sales and services in our Defense & Security segment increased US$161.3 million, or 37.5%, to US$590.9 million in 2024 from US$429.6 million in 2023. This increase in cost of sales and services was lower than the 39.9% increase in revenue in the same period, mainly due to a decreased share of KC-390 Millennium demand in the product mix and a greater number of A-29 Super Tucano volumes, partially offset by higher costs due to cost recognition related to the contract advances of the KC-390 Millennium, in accordance with the percentage of completion method in 2024. Gross margin in our Defense & Security segment (calculated as gross profit from our Defense & Security segment divided by revenue from the Defense & Security segment) increased to 18.0% in 2024 from 16.6% in 2023.
Cost of sales and services in our Services & Support segment increased US$140.0 million, or 13.5%, to US$1,179.0 million in 2024 from US$1,039.0 million in 2023. This increase in cost of sales and services was lower than the 15.4% increase in revenue in the same period, mainly due to the sale of spare parts with higher margins and an increase of services provided in our subsidiary OGMA in 2024 as mentioned above under “—Revenue”. Gross margin in our Services & Support segment (calculated as gross profit from our Services & Support segment divided by revenue from the Services & Support segment) increased to 28.0% in 2024 from 26.7% in 2023.
Cost of sales and services in the Other segments decreased US$2.1 million, or 3.7%, to US$55.1 million in 2024 from US$57.2 million in 2023. This decrease in cost of sales and services was lower than the 18.0% decrease in revenue in the same period, mainly due to greater material costs in connection with the production of Ipanema aircraft as a result of the appreciation of the U.S. dollar against the real.
Gross Profit
As a result of the aforementioned factors, our gross profit increased US$243.5 million, or 26.8%, in the year, to US$1.153.1 million in 2024 from US$909.6 million in 2023. Our gross margin (calculated as gross profit divided by revenue) increased 0.7 p.p. to 18.0% in 2024 from 17.3% in 2023.
Operating Income (Expenses)
As further discussed below, operating expenses decreased US$109.5 million, or 18.4%, to US$485.6 million in 2024 from US$595.1 million in 2023. Operating expenses as a percentage of revenues decreased to 7.6% in 2024 from 11.3% in 2023, as further explained in the paragraphs below.
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Administrative expenses decreased US$6.0 million, or 2.9%, to US$198.9 million in 2024 from US$204.9 million in 2023. The majority of our administrative expenses are fixed and do not increase or decrease at the same rate as changes in our revenues. The main driver of the decrease in administrative expenses in 2024 as compared to 2023 was the decrease in third-party services and personnel expenses, mainly as a result of corporate efficiency measures, such as a reduction in consultancy and legal services and in executive compensation at one of our subsidiaries.
Selling expenses decreased US$5.0 million, or 1.6%, to US$309.7 million in 2024 from US$314.7 million in 2023. This was primarily due to reduced sales operations, including fewer marketing events, demonstration flights and sales campaigns in 2024 in Commercial Aviation and in our subsidiary Eve Holding. However, these savings were partially offset by the increase of commercial activities, primarily in Defense & Security and to a lesser degree in Services & Support and Executive Aviation.
Expected credit losses (reversal) increased US$31.3 million, to an expense of US$21.1 million in 2024 from a reversal of US$10.2 million in 2023. This was primarily due to provisions for expected credit losses related to one of our customers in the Services & Support segment.
Research expenses decreased US$35.3 million, or 39.1%, to US$55.0 million in 2024 from US$90.3 million in 2023. This was primarily due to a change in the EVE project approval status that resulted in the capitalization of research expenses to intangible assets in the last months of 2023 as compared to being expensed prior to the approval.
Other income increased US$95.4 million, to US$266.1 million in 2024 from US$170.7 million in 2023. This was primarily due to the proceeds from the Boeing arbitration agreement in 2024.
Other expenses decreased US$13.6 million, to US$162.7 million in 2024 from US$176.3 million in 2023. This was primarily due to: (i) a tax credit received from foreign services provided to the Company; and (ii) lower expenses due to efficiency gains in corporate programs.
Operating Income (Loss) Before Financial Result
As a result of the aforementioned factors, our operating income (loss) before financial result increased US$353.0 million, or 112.2%, to an operating income of US$667.5 million in 2024 from an operating income of US$314.5 million in 2023. Our operating margin (which is calculated as operating income divided by revenue) increased 4.4p.p. to a positive margin of 10.4% from a positive margin of 6.0% in 2023.
Financial Result
Financial income. Financial income increased US$182.5 million, or 141.9%, to US$311.1 million in 2024 from US$128.6 million in 2023, primarily due to derivative financial instruments, the positive fair value measurement of EVE’s warrants and interest on receivables.
Financial expenses. Financial expenses increased US$93.7 million, or 29.1%, to US$415.6 million in 2024 from US$321.9 million in 2023, primarily due to: (i) the expenses related to our phantom shares program, which was affected by the appreciation of Embraer’s common shares; (ii) the adjustment to fair value of financing to customers; and (iii) the negative fair value measurement of EVE’s warrants. These factors were partially offset by the decrease in interest on loans and financing accrued. For more information on our phantom shares plan, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Phantom Shares Plan.”
Foreign Exchange Gain (Loss), Net
Foreign exchange gain (loss), net increased US$5.5 million, to a loss of US$6.0 million in 2024 from a loss of US$0.5 million in 2023. This was primarily due to the depreciation of the real against the U.S. dollar in 2024, which affected assets, net of liabilities, denominated in reais.
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Income Before Income Tax
As a result of the aforementioned factors, income before income taxes increased US$436.3 million, to US$557.0 million in 2024 from US$120.7 million in 2023.
Income Tax Expense
Income tax expense increased to an expense of US$202.4 million in 2024, from a benefit of US$43.6 million in 2023, primarily due to the impact on deferred income taxes of the exchange rate over non-monetary assets (mainly inventories, intangibles, and property, plant and equipment). In addition, in 2024, we had changes in the foreign exchange variation tax regime, which allows the Company to gain advantages in calculating current income tax, generating deductible expenses under the accrual basis and thereby avoiding cash outflows for income tax payments during the year. The option to change such regime is provided by law and our management can elect between the cash and accrual methods annually.
Income for the Year
As a result of the aforementioned factors, our income for the year increased US$190.3 million, or 115.8%, to US$354.6 million in 2024 from US$164.3 million in 2023. As a percentage of revenue, net margin (which is calculated as income for the year divided by revenue) increased 2.4 p.p. to a positive margin of 5.5% from a positive margin of 3.1% in 2023.
2023 Compared with 2022
For a description of our results of operation for 2023 as compared to 2022, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Results of Operations—2023 Compared with 2022” of our annual report on Form 20-F for the year ended December 31, 2023, filed with the SEC on April 5, 2024.
B. Liquidity and Capital Resources
Overview
Our liquidity needs arise mainly from working capital requirements, research and development, principal and interest payments on our debt, capital expenditures and distributions to shareholders. To meet these needs, we generally rely on funds provided by operations, borrowings under our credit arrangements, cash contributions from risk-sharing partners, advance payments from customers and, to a lesser extent, issuance of debt. For additional information on our working capital requirements and our capital sources, see “Item 4. Information on the Company—B. Business Overview—Suppliers and Components; Risk-Sharing Arrangements” and “Item 4. Information on the Company—B. Business Overview—Commercial Aviation Segment—Production, New Orders and Options” and “—Credit Facilities and Lines of Credit.”
As of the date of this annual report, we believe that our traditional sources of funds are sufficient to meet our foreseeable working capital requirements, including planned capital expenditures. However, there can be no assurance that our traditional sources of funds, or that the cost or availability of our credit facilities or future borrowing sources, will not be materially impacted by market disruptions.
As of the date of this annual report, we continue to experience certain ongoing challenges resulting from global political and economic conditions, such as delays in our supply chain, production operations, the shortage of pilots in the regional airline sector in United States of America which affect the demand for our products, mainly in Commercial Aviation. We expect that our customers may reschedule deliveries, fail to exercise options or cancel firm orders as a result of potential economic downturns, or financial volatility in our markets.
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Cash Flow Analysis
As of December 31, 2024, we had US$1,563.0 million in cash and cash equivalents. We believe that our current available cash and cash equivalents and the cash flows from our operating activities will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the coming 12 months.
The following table shows the generation and use of cash for the periods indicated:
| For the Year Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in US$ millions) | ||||||||||||
| Cash Flow Data |
||||||||||||
| Net cash generated in operating activities |
871.2 | 617.0 | 751.3 | |||||||||
| Net cash used in investing activities |
(599.7 | ) | (447.6 | ) | (109.5 | ) | ||||||
| Net cash used in financing activities |
(335.7 | ) | (348.7 | ) | (669.2 | ) | ||||||
Our cash and cash equivalents include cash on hand, interbank certificate deposits with banks and fixed term deposits in dollars issued by financial institutions, which have an immaterial risk of change in value. For more details, see note 5 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
2024 Compared with 2023
Net Cash Generated in Operating Activities
In 2024, net cash generated in operating activities amounted to US$871.2 million, an increase of US$254.2 million, or 41.2%, compared to net cash generated in operating activities of US$617.0 million in 2023. The increase in the operating cash flow was mainly due to higher net income in 2024, supported by the increase in contract liabilities (customer payments advances) as a result of the increase in sales and higher trade accounts payable. These factors were partially offset by the increase in accounts receivable and contract assets and the decrease in taxes and payroll charges payable. Cash used by working capital accounts (accounts receivable and inventories and trade account payables) was US$324.7 million in 2024 compared to cash used by working capital accounts of US$241.5 million in 2023.
Net Cash Used in Investing Activities
In 2024, net cash used in investing activities amounted to US$599.7 million, an increase of US$152.1 million, or 34.0%, from US$447.6 million in 2023. This was primarily a result of an increase of investments in intangible assets in 2024 and long-term financial investments, such as credit linked notes, as compared to 2023.
Net Cash Used in Financing Activities
In 2024, net cash used in financing activities amounted to US$335.7 million, a decrease of US$13.0 million, or 3.7%, compared to US$348.7 million in 2023. This was primarily due to (i) proceeds from the placement of Eve shares in 2024 amounting to US$65.6 million; and (ii) a higher net outflow of cash related to borrowing payments in 2024 of US$380.1 million, compared to US$331.2 million in 2023, which represents an increase in cash used of US$48.9 million.
2023 Compared with 2022
For a discussion of our cash flows for 2023 compared with 2022, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash Flow Analysis” of our annual report on Form 20-F for the year ended December 31, 2023, filed with the SEC on April 5, 2024.
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Capital Expenditures
We capitalize our expenditures related to product development projects as non-current intangible assets in our statement of financial position when it is probable that the relevant projects will generate future benefits, taking into account their commercial and technological feasibility and availability of technological and financial resources and only if their cost can be reliably measured. We amortize the assets in the form of charges to cost of sales and services in our statements of profit or loss, based on the total estimated number of aircraft to be delivered for each new product development project. We also capitalize expenditures related to property, plant and equipment as non-current assets in our statement of financial position and depreciate the assets in the form of charges to cost of sales and services in our statements of profit or loss. For additional information on how we amortize our intangible assets and depreciate our property, plant and equipment, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Principal Operating Data and Components of Our Statement of Income—Cost of Sales and Services.”
In our Commercial Aviation, Executive Aviation and Services & Support segment, we include our investments in development and property, plant and equipment as part of our capital expenditures. Development costs in these businesses are capitalized from the date of board approval for the relevant project until the final certification.
We also incur expenditures for our Defense & Security segment under both development and production contracts, as the same investment process of our other segments. However, we have some customers which may fund part of our programs, such as our agreement with the Brazilian government for the development and production of the KC-390 Millennium. A significant part of these contracts is defined as construction contracts and the revenue associated with these contracts is realized on a percentage of completion basis, as contract milestones are achieved.
Most of our development expenditures are associated with the development of new products for the Commercial Aviation, Executive Aviation and Defense & Security segments. For additional information on our development expenditures, see “Item 5. Operating and Financial Review and Prospects—C. Research and Development, Patents and Licenses, etc.—Research.”
Our disbursements in capital expenditures were related to property, plant and equipment, thereby composing our additions in the period except for the exchange pool program assets and aircraft under lease or available for lease. These investments are related mainly to (i) construction of new facilities and (ii) improvements and modifications to our plants and production facilities for the production of new aircraft models.
Our capital expenditures are generally financed by funds provided by operations, borrowings under our credit arrangements, cash contributions from risk-sharing partners, advance payments from customers and, to a lesser extent, capital increases to meet these needs. See “C. Research and Development, Patents and Licenses, etc.—Capital Expenditures—Research.”
As of December 31, 2024, the total capital expenditures in our Commercial Aviation, Executive Aviation and Services & Support segments accounted for US$195.3 million. The anticipated source of funds to satisfy such investments is related to our cash generated in operating activities.
Credit Facilities and Lines of Credit
Revolving Credit Facility
On August 6, 2024, our subsidiaries EAH and Embraer Netherlands Finance B.V., or Embraer Netherlands Finance, entered into a revolving credit facility in the amount of US$1.0 billion, maturing on August 6, 2029, with 17 international financial institutions. The facility is guaranteed by Embraer and certain of our subsidiaries, and borrowings under the facility will accrue interest at a rate comprised of Term SOFR plus a margin of 0.950% to 1.700% per annum, depending on our corporate rating at the time of the disbursement. As of December 31, 2024, neither EAH nor Embraer Netherlands Finance had incurred any borrowing under this facility.
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Facilities with Multilateral Development Banks and Agencies
The Brazilian government has been an important source of export financing for our customers through the BNDES-Exim program, managed by the BNDES. On December 15, 2022, we entered into an export financing agreement with the BNDES in the total amount of R$2.2 billion (US$400 million) under the BNDES-Exim program, which was partially paid in the total amount of US$28.3 million in November 2024. As of December 31, 2024, the total amount outstanding under this agreement was US$372.8 million.
In February, 2024, we entered into a credit innovation facility with BNDES in the aggregate amount of R$500 million (or approximately US$80.7 million). As of December 31, 2024, we had received disbursements of US$8.2 million under this credit facility, which was also the total amount outstanding as of such date.
In January 2023, we entered into a credit facility with Citibank, N.A. in the aggregate principal amount of US$200 million to finance purchases of supplies made by us in the United States of America. Disbursements under this credit facility will be made according to proof of purchases of inputs from suppliers. This credit facility is guaranteed by Export-Import Bank, the official US export credit agency. As of December 31, 2024, we had received disbursements of US$24.6 million under this credit facility, and the total amount outstanding under this agreement was US$10.7 million.
In August 2020, we entered into a working capital guarantee agreement with the Export-Import Bank of the United States of America in an aggregate principal amount of US$97.2 million, which amount was disbursed in 2020 and paid in December 2023. This working capital and export financing has strengthened our cash position and guaranteed funding for our entire operational process, from production to product shipment for the export market. In December 2023, we decided to renew this agreement for an additional three-year period. As of December 31, 2024, no disbursements had been made under this facility.
In June 2022, we entered into a credit facility with J.P. Morgan Chase Bank, NA, London Branch in the aggregate principal amount of US$100 million, guaranteed by U.K. Export Financing. As of December 31, 2024, the total outstanding amount under this facility was US$66.8 million.
Senior Notes
In February 2017, Embraer Netherlands Finance issued US$750.0 million aggregate principal amount of 5.400% senior unsecured guaranteed notes due 2027, or the 2027 notes.
In September 2020, Embraer Netherlands Finance issued US$750.0 million aggregate principal amount of 6.950% senior unsecured guaranteed notes due 2028, or the 2028 notes.
In July 2023, Embraer Netherlands Finance issued US$750.0 million aggregate principal amount of 7.000% senior unsecured guaranteed notes due 2030, or the 2030 notes.
As of December 31, 2024, US$533.2 million, US$491.9 million and US$761.7 million was outstanding on the 2027 notes, the 2028 notes, and the 2030 notes, respectively. We may from time to time seek to retire or purchase our outstanding debt, including our guaranteed notes due 2027, 2028 and 2030, through cash purchases, tender offers and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise—and have subsequently done so with respect to our notes due 2027 (see “—Subsequent Event” below). The repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material, and notes repurchased may be canceled or resold, but will only be resold in compliance with applicable requirements or exemptions under the relevant securities laws.
Other Facilities
We have various other long-term loans and credit agreements with aggregate outstanding borrowings amounting to US$245.9 million as of December 31, 2024. For additional information on these financing arrangements, see note 19 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
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As of December 31, 2024, US$533.8 million of our loans and financing (current and non-current) is secured by real estate, machinery, equipment, and US$705.1 million is subject to bank guarantees.
We continue to evaluate additional financing opportunities in order to maintain a long-term indebtedness profile that supports and is aligned with the business cycle. For additional information on our loans and financings, including currency and maturity breakdowns and breakdowns between fixed and floating rate debt, see note 19 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
Subsequent Events
Other than the events described below, no subsequent events have occurred after December 31, 2024. See note 37 to our 2024 audited consolidated financial statements.
Corporate restructuring
In January 2025, the subsidiary ELEB merged into Embraer. In addition, in January 2025, our subsidiary Airholding S.A. merged with and into our subsidiary Embraer Portugal S.A.
Repurchase offer
In February 2025, the Company repurchased and settled the following outstanding notes in a total of US$411.0 million:
| • | US$253.0 million: this amount includes a partial repurchase of our 2027 notes. This amount comprises US$250.0 million in principal and US$3.0 million in premium expenses. |
| • | US$158.0 million: this includes a partial repurchase of our 2028 notes. This amount comprises US$150.0 million in principal, US$1.0 million in interest, and US$7.0 million in premium expenses. |
Subsequently, the Company announced the full redemption of the outstanding notes remunerated at 5.40% p.a. with maturity in 2027. In March 2025, these notes were redeemed in the total amount of US$ 279.1 consisting of US$272.4 million in principal, US$2.1 million in interest, and US$4.6 million in premium expenses.
Debt issuance
In February 2025, the Company, through its subsidiary Embraer Netherlands Finance B.V., raised funds by issuing guaranteed bonds totaling US$650.0 million, which will mature in 2035 and have a coupon of 5.98% p.a. The bonds are fully and unconditionally guaranteed by Embraer.
New civil action
In March 2025, a shareholder derivative action captioned Taylor v. Embraer Aircraft Holding, Inc., et al was filed in the Court of Chancery of the State of Delaware, against EAH and Eve Holding’s directors and executive officers, asserting breach of fiduciary duty claims related to the private placement of common stock and warrants that were issued to EAH in September 2024. The defendants intend to defend against the plaintiff’s claims in this action. As of the date of this annual report, we have assessed that it is not probable that we will be required to expend funds to resolve this claim.
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Repurchasing Embraer’s own shares
In March 2025, Embraer repurchased its own equity instruments. The number of shares acquired was 1,066,667 ordinary shares in the total amount of R$82.2 million (equivalent to US$14.5 million), including the qualifying costs attributable to this equity transaction.
Early settlement of financing
In March 2025, the Company fully settled its contract with BNDES, which had an interest rate of 5.49% per annum and was set to mature in 2027. No additional costs due to the prepayment were incurred.
C. Research and Development, Patents and Licenses, etc.
Research and Development
Our research and development activities are driven by our corporate strategic planning in the short, medium, and long terms. We refer to research activities as technological development and to development activities as integrated product development.
Based on our work defining our product and services strategies, including innovation, growth, and business prospects, we carry out projects that include the production and commercialization of new aircraft, systems, and aerospace services.
With a focus on our internal business plans and continuous monitoring of the global technology environment, we define a technological development plan which aims to research and develop solutions to the main challenges we will face in the medium and long terms, in order to remain competitive in our business segments.
In an effort to reduce development risk and optimize financial results of our projects, our development strategy and teams have the essential skills to manage and execute multi-disciplinary projects, maintaining and coordinating a global network of development partners and integrating diverse groups such as universities, research and development institutes, companies, and startups. As a result, application of advanced technologies allows for the evolution of products, including lighter, quieter, more comfortable and energy efficient aircraft, in addition to improvements in design and production cycles and optimization of company resources.
Following the results of our internal technological development planning, the new product and services design phase begins. In this phase our efforts are coordinated in an integrated manner with advanced project engineering and our business segments, which work in collaboration with future customers and potential partners to conclude the design of new products and services. Once the design is approved, the product development program is created. In this capital-intensive phase, our development, product, process and services groups work together with strategic partners, suppliers and regulatory agencies, to begin the detailed development of the product, its production, systems and associated services, until the effective entry into service of the product.
The majority of our research and development activities is concentrated in Brazil, but we also maintain internal initiatives and partnerships in several locations around the world.
We incur research expenses related to the creation of new technologies that may be applied to our aircraft. These expenses are not associated with any particular aircraft and include the implementation of quality assurance initiatives, improvements to the productivity of production lines and studies to determine the latest developments in technology and quality standards. Under IFRS, research costs are expensed as incurred in the research line item of our statement of profit or loss in the financial statements.
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Intellectual Property
Our intellectual property, which includes utility patents, design patents, trade secrets, know-how and trademarks, is important to our business. We hold trademarks over our name and symbol and the names of our products, some of which are registered and some of which are in the process of registration in a number of countries, including, but not limited to, Brazil, the United States of America, Canada, Singapore, Hong Kong, China, the European Union and Japan. As of December 31, 2024, Embraer had approximately 571 trademarks registered or in the process of registration, and our subsidiary EVE had 107 trademarks registered or in the process of registration. Our trademarks are generally renewed at the end of their validity period, which usually runs for ten years from the date of application for registration. We do not believe that the loss of any of our trademarks would have a material impact on our business or results of operations.
We develop our intellectual property in our research, development and production process. Under the agreements we have with some of our suppliers and risk-sharing partners, we are granted access to information and technology necessary to better develop, manufacture and market our products. We aim to protect our intellectual property rights resulting from investments in technical research and development. Currently, we hold granted patents and patent applications from the appropriate registries in Brazil, the United States of America, the European Union, Russia, Japan, India and China in connection with the various technologies of our products. We require that our suppliers and risk-sharing partners respect the intellectual property rights of third parties, and we believe that we have the necessary intellectual property rights to conduct our business and operations.
Considering our utility and design patent portfolios, as of December 31, 2024, Embraer had filed 889 patent applications and had been granted 771 patents, and EVE had filed 33 patent applications and had been granted 20 patents.
Innovation
We intend to keep investing in technologic innovative solutions and searching for opportunities to transform our business, products, services, and markets aiming for a more sustainable future. Through innovations and new technologies, we aim to gain efficiency, flexibility, and agility to obtain competitive advantages.
Innovations that resulted in products and services launched in the last five years accounted for 51.9% of our revenues in 2024. We believe innovation is key to the competitiveness and continuous growth of our business. For this reason, we have created a vice-presidency dedicated to Corporate Strategy, Digital and Innovation, that reports directly to our chief executive officer.
We have also implemented the Innovation Verticals, focused on research, technology and innovation to accelerate business results, and whose main purpose is to organize and prioritize innovation efforts and investments, activating the best power of a common, co-created corporate vision about business models, niches, technologies, future products, services and processes. The Innovation Verticals integrate our innovation efforts across all business segments, affiliates and Embraer-X, a market accelerator committed to the development of innovative solutions. Our current Innovation Verticals are: (i) Zero Emission, (ii) Autonomous Flight, (iii) Artificial Intelligence, Data Science and Cybersecurity (iv) Industry 4.0, (v) Airframe Competitiveness, and (vi) Passenger Experience.
Embraer-X positioned itself as a market incubator and accelerator committed to the development of solutions that can positively impact the global society, such as supporting the energy transition in the aviation industry and benefiting other sectors. It works as a connection between Embraer and the global innovation ecosystems, continuously seeking to identify and develop meaningful partnerships that can leverage the overall company strategy and build a contribution to a sustainable future.
Embraer-X strengthened relations with The Netherlands, opening, in 2022, an office at the Aerospace Innovation Hub@ TUD, from the Delft University of Technology (TU Delft). The strategic position of Embraer-X at the Aerospace Innovation Hub@TUD serves as a basis to continuously connect to the institution’s business ecosystem, such as our long-lasting partnership with the Royal NLR and also with the Dutch Government led Sustainable Aviation Initiative. It has also enabled Embraer-X to establish a connection with the broader European ecosystem, forming links with countries such as Austria, Switzerland, Finland, among others.
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In 2024, Embraer-X establish local offices in Silicon Valley and the Boston metropolitan area, aiming to expand its partnerships with cutting-edge technology companies, venture investors, and academic and research institutions in the main innovation ecosystems of North America and the world. Strengthening Embraer’s commitment to Sustainable Aviation objectives, in 2024 Embraer-X also entered into relevant partnerships with Greentown Labs, the largest climate tech incubator in North America, and Sustainable Aero Lab, an innovation hub that targets tangible reduction of the climate footprint of aviation, leveraging in both cases open innovation in connection with global researchers, experienced entrepreneurs, founders, industry professionals and investors. Beacon, the second business accelerated by Embraer-X after EVE, has transitioned to Services & Support segment connecting with digital transformation efforts and Embraer’s digital solutions portfolio in a strategic spin-in transaction (incorporating Beacon in our Services & Support segment instead of incorporating it in our corporate structure as a separate entity). Beacon brought synergy and integration with our current business, connecting operators, maintenance services and mechanics in a more agile and collaborative way, aiming to increase the number of partners and users on the platform.
Moreover, our subsidiary Eve Holding met all 2024 milestones it had presented to the market, including the conclusion of its first prototype and the initial stages of the ground tests. It has also defined with ANAC the basis of certification and defined the configuration of its eVTOL factory, and secured funding for this project with the BNDES. Lastly, Eve consumed US$141 million of cash last year, close to the low end of the US$130- US$170 million guidance it had announced for 2024.
In addition to agreements and partnerships, Embraer-X also makes active use of venture capital. Connected to Embraer Ventures, our corporate venture capital vehicle, and seeks to identify and create synergies with technology-based startups of high economic and social impact. Currently, Embraer Ventures implements its strategy through five venture capital funds: (i) the Brazil Aerospace Fund (FIP-AERO), (ii) Catapult Ventures I, and (iii) Catapult Ventures II, which are based in the Silicon Valley, (iv) Catapult Opportunities, which is a side fund of Catapult I, (v) MSW Multicorporate II, and (vi) United Airlines Ventures (UAV). The technology topics covered by the investments are our current innovation verticals among others. Besides being a shareholder in FIPs, Embraer Ventures also invests directly in minority stakes in companies.
In February 2024, we announced that we had joined the Sustainable Flight Fund, an initiative of United Airlines Ventures created to boost the supply and availability of SAF through investments in innovative start-ups. Embraer joined 22 other partners from different sectors of the industry, in addition to United Airlines.
To enhance pre-competitive aeronautical research capabilities in Brazil and other countries, Embraer has been collaborating with various research and technology organizations worldwide. This partnership encompasses a wide range of technologies, including Sustainable Aviation Fuels (such as hydrogen), Electrification, Autonomy, Flight Safety, Aircraft Condition-Based Maintenance, Aircraft Design, New Materials and Structures, Noise Reduction, Airborne Systems, Augmented Reality, Artificial Intelligence, and Data Science, as well as Flexible Manufacturing Solutions
Some research and technology projects are developed in cooperation with reference universities and research centers in Brazil and abroad, including: Instituto Tecnológico da Aeronáutica, Universidade Federal de Santa Catarina, Universidade de São Paulo-Escola de Engenharia de São Carlos, Universidade Estadual de Campinas, Universidade Federal de São Paulo, Universidade do Estado de São Paulo, Universidade Federal de Itajubá, Universidade Federal de Viçosa, Universidade Federal de Uberlândia, Universidade Federal de Santa Maria, Universidade Federal de Pernambuco, Centro Universitário da FEI, SENAI, Centro de Pesquisa em Energia e Materiais, CERTI, CPQD, Instituto de Pesquisa Tecnológica, Instituto de Estudos Avançados, Instituto Tecgraf de Desenvolvimento de Software Técnico-Científico da PUC-Rio, Instituto Nacional de Tecnologia, MIT, Bristol University, Instituto Superior de Engenharia do Porto, Tu Delft, DLR, Intelligent Vision Systems, Rosemount, Goodrich/Collins Aerospace, GMV, University of Stuttgart, University of Linköping, University of Hanyang, Cranfield University, City University London, RollsRoyce, Politecnico de Torino, Deep Blue SRL, Wideroe, SAAB, Mälardalen University and FACC AG.
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Embraer and the Technological Institute of Aeronautics (ITA) have been partners since the end of 2022 in FLYMOV, an Engineering Research Center (ERC) dedicated to researching and developing innovative and potentially disruptive technologies at the pre-competitive stage, to revolutionize the future of air mobility. Enhancing technological readiness through basic and applied research in emerging technologies can significantly reduce uncertainties and risks associated with generating innovations for production processes, new products, and services. FLYMOV comprises over 130 individuals, including researchers, Embraer employees, and scholarship recipients at the undergraduate, master’s, doctorate, and post-doctorate levels. This ambitious initiative aims to set a new benchmark for the competitiveness of the national industry and to train professionals who will drive innovation in the air mobility ecosystem. Our research focuses on several key areas:
| • | Aero-Propulsive Integration for Electric Aircraft (APIE); |
| • | Machine Control for Electric Propulsion (MCEP); |
| • | Decision Methods for Autonomous Systems (DMAS); |
| • | Advanced Design for Metallic Additive Manufacturing (ADAM); and |
| • | Intelligent Aircraft Final Assembly (IAFA). |
In June 2023, we, through our subsidiary Embraer Aircraft Holding, Inc., and Nidec Motor Corporation, one of the world’s leading comprehensive electric motor manufacturers, comprised by approximately 340 group companies all over the world, agreed on the formation of a new company named Nidec Aerospace, LLC, for the joint development and manufacture of electric propulsion systems for aeronautical usage, including for vertical take-off and landing vehicles, and for fixed-wing aircraft. The transaction was consummated on October 5, 2023.
We have created “Innovation Month,” which aims to strengthen the innovation culture within Embraer and prepare the Company for the coming years. Throughout the month of September 2024, four interconnected events took place: Innovation Day, Marathon Startup Program, Embraer Technology and Innovation Seminar (SETI) and HackaEmb (one event per week) all of which brought discussions that shape Embraer’s future, with over 19,000 accesses to the event’s internal communication portal. The month ended with an event to recognize employees who stood out in internal innovation programs and the team involved, with a total of 143 innovators recognized.
Moreover, the Green Light is our entrepreneurship program that evaluates innovative proposals presented voluntarily by employees and provides time availability, technical and business mentoring, and resources for them to carry out the idea until its technical and economic feasibility is proven. In 2024, 20 innovative projects were under development.
In May 2023, in partnership with Saab, we began the production line of the Gripen E in Brazil, at our Gavião Peixoto unit. This was an important milestone in the technology transfer program and of our commitment to work together with Saab on new business opportunities. Our plant will be responsible for producing 15 Gripen E fighters, and the units assembled in Brazil will be delivered from 2025.
Our digital transformation strategy includes a focus on enablers and projects, ensuring that we have the necessary tools and initiatives to support our strategic goals. On enablers, we have projects related to our architecture, people, governance, and technology. To accelerate digital transformation by increasing human capital aligned with our strategy, we launched two new entry programs: (i) Software Specialization Program (in partnership with the Federal University of Pernambuco, enhancing knowledge of embedded software and data science) and the (ii) Social Tech Program (a career acceleration program in technology providing quality education to underrepresented groups). In the past three years, more than 1,700 students graduated from these programs. Our projects are adopting a data-driven approach, with the aim of increase our operational efficiency. This involves leveraging advanced analytics and big data to make informed decisions, optimize processes, and create personalized experiences for our customers. By integrating data insights into our operations, we aim to drive innovation, improve efficiency, and deliver greater value to our stakeholders.
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D. Trend Information
General Information
Our total firm order backlog as of December 31, 2024 was US$26.3 billion, of which US$10.2 billion was from the Commercial Aviation segment, US$7.4 billion was from the Executive Aviation segment, US$4.6 billion was from the Services & Support segment and US$4.2 billion was from the Defense & Security segment. Our total firm order backlog as of December 31, 2023 was US$18.7 billion, of which US$8.8 billion was from the Commercial Aviation segment, US$4.3 billion was from the Executive Aviation segment, US$2.5 billion was from the Defense & Security segment and US$3.1 billion was from the Services & Support segment. Our total firm order backlog as of December 31, 2022, was US$17.5 billion, of which US$8.6 billion was from the Commercial Aviation segment, US$3.9 billion was from the Executive Aviation segment, US$2.4 billion was from the Defense & Security segment and US$2.6 billion was from the Services & Support segment.
On February 27, 2025, we released our projections for 2025, including a deliveries range of 77 to 85 aircraft in the Commercial Aviation segment and a range of 145 to 155 aircraft in the Executive Aviation segment, compared to the deliveries of 73 aircraft in the Commercial Aviation segment and 130 aircraft in Executive Aviation segment in 2024.
Economic uncertainty will continue to play a role in investment attitude and philosophy of the private and public sectors. Business jet prospective buyers around the globe are reviewing their cash flows and capital expenditures in order to preserve capital, which is affecting market growth fundamentals and perspectives. Furthermore, the COVID-19 pandemic negatively affected the supply of pilots in the United States of America, many of which decided to change careers or retire as a result of the pandemic, and also resulted on the global shortage of components, affecting our supply chain cycles. For more information, see “Item 3. Key Information—D. Risk Factors.” For additional information on trends in our business, see “Item 4. Information on the Company—B. Business Overview—Business Strategies.” For additional information on risks affecting our business, see “Item 3. Key Information—D. Risk Factors.”
Commercial Aviation Segment
In the Commercial Aviation segment, the extensive airline traffic disruption caused by COVID-19, which affected our customers’ operations throughout the world, was only recovered during 2024, when the global commercial airline traffic reached 2019 levels, as reported by IATA.
For the E175 market, the regional aircraft market in the United States of America reestablished itself after a period of shortage of pilots’ availability. As a result, we have once again been receiving relevant additional orders for this aircraft type. We believe that these orders should reinforce the relevance of segment as the backbone of the United States of America’s network for the foreseeable future.
For the E190-E2 and the E195-E2, demand comes mostly from turboprop markets growth, narrowbody complementation and E1 model replacement, the latter having a particular importance, since the customer footprint in the segment is our most relevant asset going forward. As the E2 was launched early in the E1 lifetime due to competitive reasons, the relevant E1 replacement wave should happen in the next few years and finalize by the end of this decade.
The following table summarizes our order book in our Commercial Aviation segment for any aircraft type for which there were outstanding orders as of December 31, 2024.
| Aircraft Type |
Firm Orders |
Deliveries | Backlog | |||||||||
| EMBRAER 175 |
943 | 779 | 164 | |||||||||
| E190-E2 |
52 | 27 | 25 | |||||||||
| E195-E2 |
282 | 128 | 154 | |||||||||
| Total |
1,277 | 934 | 343 | |||||||||
|
|
|
|
|
|
|
|||||||
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The following tables provide further break down of our Commercial Aviation order book as of December 31, 2024 by customer and country.
EMBRAER 175
| Customer |
Firm Orders |
Delivered | Backlog | |||||||||
| Air Canada (Canada) |
15 | 15 | — | |||||||||
| Air Lease (USA) |
8 | 8 | — | |||||||||
| Air Peace (Nigeria) |
5 | — | 5 | |||||||||
| Alitalia (Italy) |
2 | 2 | — | |||||||||
| American Airlines (USA) |
204 | 112 | 92 | |||||||||
| Belavia (Belarus) |
1 | 1 | — | |||||||||
| CIT (USA) |
4 | 4 | — | |||||||||
| ECC Leasing (Ireland)* |
1 | 1 | — | |||||||||
| Flybe (UK) |
11 | 11 | — | |||||||||
| Fuji Dream (Japan) |
2 | 2 | — | |||||||||
| GECAS (USA) |
5 | 5 | — | |||||||||
| Horizon Air / Alaska (USA) |
50 | 44 | 6 | |||||||||
| KLM (The Netherlands) |
17 | 17 | — | |||||||||
| LOT Polish (Poland) |
12 | 12 | — | |||||||||
| Mauritania Airlines (Mauritania) |
2 | 2 | — | |||||||||
| Mesa (USA) |
7 | 7 | — | |||||||||
| NAC / Aldus (Ireland) |
2 | 2 | — | |||||||||
| NAC / Jetscape (USA) |
4 | 4 | — | |||||||||
| Northwest (USA) |
36 | 36 | — | |||||||||
| Oman Air (Oman) |
5 | 5 | — | |||||||||
| Overland Airways (Nigeria) |
3 | 2 | 1 | |||||||||
| Republic Airlines (USA) |
187 | 146 | 41 | |||||||||
| Royal Jordanian (Jordan) |
2 | 2 | — | |||||||||
| Skywest (USA) |
228 | 212 | 16 | |||||||||
| Suzuyo (Japan) |
11 | 11 | — | |||||||||
| TRIP (Brazil) |
5 | 5 | — | |||||||||
| Undisclosed |
4 | 1 | 3 | |||||||||
| United Airlines (USA) |
110 | 110 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
943 | 779 | 164 | |||||||||
|
|
|
|
|
|
|
|||||||
| * | Aircraft delivered by ECC Leasing to Air Caraibes. |
E190-E2
| Customer |
Firm Orders |
Delivered | Backlog | |||||||||
| AerCap (Ireland) |
5 | 5 | — | |||||||||
| Air Kiribati (Kiribati) |
2 | 1 | 1 | |||||||||
| AirCastle (United States of America) |
2 | — | 2 | |||||||||
| Azorra (USA) |
16 | 8 | 8 | |||||||||
| Helvetic (Switzerland) |
8 | 8 | — | |||||||||
| Mexicana (Mexico) |
10 | — | 10 | |||||||||
| Placar Linhas Aéreas (Brazil) |
1 | 1 | — | |||||||||
| Widerøe (Norway) |
3 | 3 | — | |||||||||
| Virgin Australia (Australia) |
4 | — | 4 | |||||||||
| Undisclosed |
1 | 1 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
52 | 27 | 25 | |||||||||
|
|
|
|
|
|
|
|||||||
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E195-E2
| Customer |
Firm Orders |
Delivered | Backlog | |||||||||
| AerCap (Ireland) |
43 | 27 | 16 | |||||||||
| Air Peace (Nigeria) |
13 | 5 | 8 | |||||||||
| AirCastle (United States of America) |
23 | 16 | 7 | |||||||||
| Azorra (USA) |
23 | 9 | 14 | |||||||||
| Azul (Brazil) |
51 | — | 51 | |||||||||
| Binter Canarias (Spain) |
16 | 15 | 1 | |||||||||
| Helvetic (Switzerland) |
4 | 4 | — | |||||||||
| ICBC (China) |
10 | 9 | 1 | |||||||||
| Luxair (Luxembourg) |
6 | — | 6 | |||||||||
| Mexicana (Mexico) |
10 | — | 10 | |||||||||
| Porter (Canada) |
75 | 43 | 32 | |||||||||
| Royal Jordania (Jordan) |
2 | — | 2 | |||||||||
| Salam Air (Oman) |
6 | — | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
282 | 128 | 154 | |||||||||
|
|
|
|
|
|
|
|||||||
Executive Aviation Segment
In 2024, the executive aviation market continued to show growth, reflecting the efforts to raise production capacity towards normalization between supply and demand. Global industry deliveries were lower than expected, but still 5% higher year-over-year. As for new aircraft demand, it remained robust throughout 2024, modestly below the activity seen in the previous year, although it exceeded prior expectations. The fractional ownership market, in particular, secured additional orders, driven by the high demand for flexible and personalized travel options. In the face of resilient demand, the industry’s backlog continued to grow, pointing to a smoother transition on the normalizing trend of the industry’s book-to-bill.
In this scenario, our executive jets stood out in all fronts. As the leader in deliveries growth over the past four years according to data published by GAMA, we also achieved high sales and revenue results while maintaining resilient price discipline. With superior book-to-bill performance compared to our peers and an increasing market share of 31% in our classes, our portfolio has seized the benefits of our customer-centric philosophy and consistent efforts to scale and level production. We remain focused on meeting the growing demand for our products, which are renowned for innovation, technology, and sustainability.
In 2024, we delivered 130 jets, a growth of 13% in deliveries that led to a market share capture of approximately 18% across all jet classes.
Defense & Security Segment
Regarding our Defense & Security segment, we expect an increase in global defense spending driven by the current geopolitical landscape. With our comprehensive product portfolio and global presence, we are well-positioned to deliver highly effective solutions, creating significant sales opportunities in areas such as aircraft platforms, critical software, command, control, communications, and intelligence (C4I), as well as sensors across all domains—air, sea, land, space, and cybersecurity.
In 2023, our KC-390 Millennium program capitalized on market opportunities, securing contracts with South Korea and being selected by Austria, the Czech Republic, and the Netherlands. As the global fleet of military tactical transport aircraft nears retirement, we expect the KC-390 Millennium to capture a substantial share of the replacement market.
In 2024, we signed contracts to supply the KC-390 Millennium to four customers: Netherlands, Austria, the Czech Republic and an undisclosed customer. The aircraft was also selected by Sweden and Slovakia, and negotiations with these countries are ongoing. Moving forward, we expect the main growth driver for the KC-390 to remain the replacement of older tactical transport platforms as those approach retirement age.
The A-29 Super Tucano continues being the leader in its segment and, in 2024, a total of 29 aircraft were acquired by five customers: Paraguay, Uruguay, Portugal and two undisclosed customers. The platform is operated by 20 countries and is expected to maintain its standing leadership on the market.
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Services & Support Segment
In the Services & Support segment, we are confident that integrating an in-service fleet perspective with our existing business excellence initiatives will position the segment to achieve higher return rates. This strategy involves a comprehensive analysis of the external business environment across all dimensions, enabling the identification of potential operational risks. Overall, the combination of fleet growth, a diversified customer base, and strategic initiatives positions the Services & Support segment for sustained profitability.
E. Critical Accounting Estimates
For an overview of our critical accounting estimates, please see note 3 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
| Item 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. Directors and Senior Management
We are managed by our board of directors (Conselho de Administração), composed of a minimum of nine and a maximum of 11 effective members. Our board of executive officers (Diretoria) is composed of no less than four and no more than 11 members (each an executive officer). We have a permanent fiscal council (Conselho Fiscal), which is composed of at least three and no more than five members and an equal number of alternates.
There are no family relationships among the members of our board of directors, the members of our board of executive officers or the members of our fiscal council.
Board of Directors
Our board of directors meets ordinarily eight times a year and extraordinarily when called by the chairman. It is responsible for, among other things, establishing our general business policies and electing our executive officers and supervising management.
Our board of directors is appointed by our shareholders for a two-year term, reelection is permitted, and there are three appointed seats as follows: (i) one effective and one alternate member to be appointed by the Brazilian government, as holder of the “golden share,” and (ii) two effective and two alternate members to be appointed by our employees (one board member and his alternate to be appointed by the Employee Investment Club of the Company – CIEMB – Clube de Investimentos dos Empregados da Embraer and one board member and his or her alternate to be appointed by the non-shareholder employees of the Company). The remaining eight effective directors are elected in accordance with slate voting, or cumulative voting, rules according to our bylaws. For additional information on the rules and procedures regarding the nomination and election of our board members, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Board of Directors—Election of Board of Directors.” There is no mandatory retirement age for our directors.
According to the Novo Mercado listing segment rules, the members of our board of directors agreed to comply not only with the Novo Mercado rules but also with the rules of the B3 Arbitration Chamber before taking office. In order to take office, the members of the board of directors must execute a term of investiture (termo de posse).
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Set forth below are the names, ages, positions, the year first elected and brief biographical descriptions of the members of our board of directors, as of the date of this annual report:
| Name |
Age |
Position |
Year First |
|||
| Alexandre Gonçalves Silva | 80 | Chairman | 2011 | |||
| Raul Calfat | 72 | Vice-President | 2017(1) | |||
| Claudia Sender Ramirez | 50 | Member | 2021 | |||
| Dan Ioschpe | 60 | Member | 2020 | |||
| Kevin Gregory McAllister | 61 | Member | 2021 | |||
| Mauro Gentile Rodrigues da Cunha | 53 | Member | 2023 | |||
| Márcio Fernando Elias Rosa | 62 | Member | 2023 | |||
| Todd Messer Freeman | 65 | Member | 2021 | |||
| Pedro Luís Farcic | 61 | Member | 2023 | |||
| Alexandre Magalhães Filho | 72 | Member | 2015 | |||
| Edmilson Saes | 63 | Member | 2023(2) |
| (1) | Appointed as the vice-president of our board of directors on May 18, 2020. |
| (2) | Appointed as a member of the board of directors also from 2019 to 2021. |
Alexandre Gonçalves Silva. Mr. Silva holds a Bachelor of Science degree in mechanical engineering from Pontifícia Universidade Católica do Rio de Janeiro (PUC Rio de Janeiro). In his 40-year career, he has occupied positions in several areas, including 22 years as a CEO. Mr. Silva was the CEO of General Electric (GE) in Brazil from 2001 to 2007 and since then, he has occupied positions on boards of directors of various companies. Mr. Silva is the chairman and an independent member of our board of directors, an independent member of the board of directors of Nitroquímica, Iochpe-Maxion, Algar and Sabesp. He was an independent member of the board of directors of Ultrapar from 2015 to 2021 and an independent member of the nomination committee of Vale S.A until April 2021.
Raul Calfat. Mr. Calfat holds a degree in business administration from Fundação Getúlio Vargas (FGV). Mr. Calfat is an independent member and vice-chairman of our board of directors and serves as coordinator of the Strategy and Innovation Committee and member of the People and ESG Committee. Mr. Calfat was the chief executive of Votorantim S.A. until December 2013 and Chairman of the board of directors of Votorantim S.A. from January 2014 until April 2019, has been the chairman of the Board of Directors of Aché Laboratórios Farmacêuticos S.A. since September 2018 and will end his term on March 2025. He has also been an independent member of the Board of Directors of Itaúsa since May 2023 and Chairman of the Board of Directors since April 2024, and an independent member of the Board of Directors of China Three Gorges Brasil. He was an independent member of the Board of Directors of Fleury S.A from May 2021 to April 2022, has been an independent board member of Dexco S.A. from 2015 to 2023 and a member of the Board of Directors of Hospital Sírio-Libanês from 2015 to 2020. He is also a Senior Advisor at RGE Pte Ltd (Singapore), Bracell SP Celulose Ltda.
Claudia Sender Ramirez. Mrs. Ramirez has a bachelor’s degree in chemical engineering from Escola Politécnica da Universidade de São Paulo, obtained in 1998 and an MBA degree from Harvard Business School, earned in 2002. She was recognized by the World Economic Forum as a Young Global Leader in 2014. Mrs. Ramirez an independent member of our board of directors and a coordinator of the People and ESG Committee and member of the Audit, Risk and Ethics Committee. She also is a member of the board of directors of companies listed in Brazil and Europe, such as Gerdau in Brazil, Telefonica in Spain and Holcim in Switzerland. In addition, Mrs. Ramirez is a member of the board of trustees of several NGOs, such as Ensina Brasil, Amigos do Bem, Hospital Israelita Albert Einstein and Gastromotiva. Before serving as a board member, Mrs. Ramirez was President and CEO of LATAM Airlines Brasil and Chief Customer Officer of Latam globally. She started her career at TAM in December 2011. She worked for seven years with consumer goods at Whirpool in Brazil, mainly in the areas of marketing and product development. Prior to joining Whirlpool, she was a consultant at Bain & Company for seven years, working in several industries and countries.
Dan Ioschpe. Mr. Ioschpe holds a bachelor’s degree in journalism from Universidade Federal do Rio Grande do Sul (UFRGS), class of 1986, with a specialization in marketing from Escola Superior de Propaganda em Marketing (ESPM São Paulo), class of 1988, and an MBA degree from the Amos Tuck School at Dartmouth College, class of 1991. Mr. Ioschpe is an independent member of our board of directors, coordinates our Audit Risk and Ethic Committee and is a member of our People and ESG Committee. He is the chairman of the board of directors of Iochpe-Maxion S.A., an independent member of the board of directors of WEG S.A. and Marcopolo S.A., Vice President of IEDI, and a member of the board of Sindipeças and SESI/SP and Vice President of FIESP.
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Kevin Gregory McAllister. Mr. McAllister has a bachelor’s degree from the University of Pittsburgh, Metallurgical and Materials Engineering, obtained in 1987. Mr. McAllister brings more than 30 years of experience in the aerospace industry through his tenures with Howmet Corporation, GE Aviation, and the Boeing Company. He has 27 years of engine experience at GE, complemented by close to three years of experience at Boeing, serving as the President and CEO of Boeing Commercial Airplanes. He is a certified Six Sigma Master Black Belt, with a deep understanding of operational efficiency and excellence. Mr. McAllister’s current experience as a senior operating partner at the private equity firm AE Industrial Partners, has provided him with a much broader industry exposure, particularly as it relates to new markets and technologies, such as satellites, space and eVTOL. Mr. McAllister is the current Emeritus Chair of the Board of Directors of ORBIS International, a non-profit global organization dedicated to preserving and restoring sight worldwide. Also, he has served in various positions in other companies or third sector organizations, he was a member of the Board of Director of the Washington Roundtable and Challenge Seattle, organization that brings senior executives together for positive change in policies that support a vibrant Washington state economy and served as President of the Wings Club Board of Governors, the premier global society of aviation professionals and a leading forum for aviation issues since 1942. Mr. McAllister has been an independent member of our board of directors since September 2021 and also serves as a member of our Strategy and Innovation Committee.
Mauro Gentile Rodrigues da Cunha. Mr. Cunha holds a degree in Economics from the Pontifícia Universidade Católica do Rio de Janeiro and an MBA from the University of Chicago. He is an independent Director with more than 27 years of experience in capital markets and corporate governance. He served from 2012 to 2019 as President of AMEC – Association of Capital Market Investors. In this position, he led the association that represents about 60 institutional investors, with approximately USD 150 billion invested in the Brazilian variable income market, with the objective of developing the capital market and defending the rights of minority shareholders. Before that, he worked for 18 years in several asset managers, including Opus, Mauá, Bradesco Templeton, Investidor Profissional, Banco Pactual and Morgan Stanley Asset Management, among others. He was also a member of the Board of Directors (2002 to 2009) and Chairman of the Board of Directors (2007-2009) of IBGC – Instituto Brasileiro de Governança Corporativa, one of the largest corporate governance institutions in the world. Mr. Rodrigues da Cunha was also Chairman of the Board of Directors of IBGC – Instituto Brasileiro de Governança Corporativa for two years, and a member of the institution for seven years. In that period, the IBGC became a national reference in corporate governance, and one of the largest institutes dedicated to the subject in the world. Since 1999, he has participated in the Boards of Directors and Fiscal Councils of Brazilian companies, always as an independent member. In 2013 he became the first independent member effectively elected by minority shareholders at Petrobras. Between 2019 and 2020 he served as Chairman of the Board of Directors of Caixa Econômica Federal. He has also worked on the board of companies such as Vale, brMalls, Totvs, Eletrobras, Usiminas, CESP and Mahle Metal Leve, among others. Today he serves as a member of our board of directors, where he is a member of the Audit, Risk and Ethics Committee, and is a member of the boards of directors of Hypera Pharma and Klabin. Mr. Rodrigues da Cunha is a consultant and professor of corporate governance, in addition to holding the designations NACD.DC, CFA (since 1997), CCA+/CC+ (IBGC), and CNPI (Apimec).
Márcio Fernando Elias Rosa. Mr. Rosa holds a degree in Law from the Instituição Toledo de Ensino de Bauru-SP, a Master’s and PhD in State Law from the Pontifícia Universidade Católica of São Paulo, practiced teaching (administrative law and collective protection) and was a member of the Public Prosecutor’s Office of São Paulo between 1986 and 2018. He was Secretary of Justice and Citizenship in the Government of the state of São Paulo (2016-2018) and president of the Fundação Casa. In the Public Prosecutor’s Office of the state of São Paulo, he was named the Attorney General of the State for two terms. At the Prosecutor’s Office of the state of São Paulo he was also a prosecutor of Justice of Diffuse and Collective Rights and promoter of justice and citizenship. Finally, he is executive secretary of the Ministry of Development, Industry, Trade and Services (MDIC). He also acts as legal consultant to companies with operations in Brazil and abroad in the area of environmental law and civil liability. He acted as an expert before the English, German and Dutch courts in a civil liability action. He also advised publicly traded companies on compliance procedures. Mr. Rosa has been a member of our board of directors since April 2023 and also serves as a member of Strategy and Innovation Committee.
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Todd Messer Freeman. Mr. Freeman holds an MBA in Finance & Strategic Planning from The Wharton School of the University of Pennsylvania in 1987, and an M.A. in International Studies from the University of Pennsylvania. He was also a Fellow at the Lauder Institute of Management and International Studies while at the University of Pennsylvania. He received his bachelor’s degree in Accounting & Finance from Lehigh University in 1982. Mr. Freeman brings over 30 years of global experience in the aviation industry. He built experience at JP Morgan, Airbus and GE Aircraft Engines but most of his career was focused on the global aircraft leasing sector. He held various commercial leadership positions at GECAS including 12 years leading GECAS’ regional aircraft business. He has a deep understanding of the regional aircraft market and the competitive landscape. From 2019 to 2021, Mr. Freeman served as a Special Advisor to the Chairman of Nordic Aviation Capital, the largest regional aircraft lessor at the time. Mr. Freeman holds and has held several positions in other companies, charities, or aviation industry organizations, as follows: Board Chair of Airlink, an aviation-focused humanitarian organization; Member of the Board of Mubadala Infrastructure Partners; Board Chair of the ISTAT Foundation; Member of the Board of the Regional Airline Association (US); Member of the Board of the European Regions Airline Association; Member of the Board of GRA, Inc (airline/airport advisory). He is also an active, FAA-certificated flight instructor and an Angel Flight volunteer pilot. Mr. Freeman has been an independent member of the Board of Directors of Embraer S.A. since September 2021, and serves as a member of Strategy and Innovation Committee.
Pedro Luís Farcic. Mr. Farcic has been Chief of Staff of the Brazilian Air Force since January 2025, and was Commander of the Air Force Readiness Command (Air Force operational) from January 2024 to January 2025. In the military field, he has served in various positions, including Chief of Staff of the Commander of the Air Force from January 2019 to April 2021 and Sub-Chief of Staff of the Air Force Staff from January 2018 to December 2018. Mr. Farcic has completed several academic courses, such as: Flight Officer Training Course at the Air Force Academy; Officers Improvement Course at the Air Force Improvement School; Command and Staff Course at the Air Force Command and Staff School; Aerospace Policy and Strategy Course at the Air Force Command and Staff School; Budget and Financial Management Course at the National School of Public Administration; and Post-Graduation in Planning and Business Management at the Catholic University of Brasília. Mr. Farcic has received several awards, including the Merit Medal of the Joint Chiefs of Staff of the Armed Forces, the Order of Merit of Defense Medal – Grand Officer Degree, the Order of Aeronautical Merit Medal – Grand Officer Degree, the Order of Military Judicial Merit Medal – High Distinction Degree, the Order of Rio Branco Medal – Grand Cross Degree, the National Defense Medal of France and the Santos-Dumont Merit Medal. Mr. Farcic was appointed in 2023 by the Brazilian government, in its quality as the holder of our golden share, as a member of our board of directors.
Alexandre Magalhães Filho. Mr. Magalhães Filho holds a bachelor’s degree in accounting sciences from Faculdade de Ciências Econômicas e Administrativas Professor Ulisses Vieira, class of 1975, with a specialization in budget analysis. He is a member of our board of directors appointed by CIEMB (Clube de Investimentos dos Empregados da Embraer) since 2015. He was an employee of Embraer S.A. from 1986 to 2022, having held the following positions: from 1986 to 2008, Budget Supervisor, Advisor to the Controller, and Economic Planning and Pricing Manager; from 2008 to 2010, Cost Manager; from 2011 to 2016, Manager of Accounting, Cost and Tax Processes, being responsible for cost, accounting and tax processes, including the costing of products and services, accounting for 29 companies, controllership and accounting consolidation in accordance with IFRS for 50 companies of the Embraer group, and tax operations; and from 2017 to 2022 he was Manager of Financial Processes. Mr. Magalhães Filho was a member of the fiscal council of: (i) of Banco do Brasil Previdência Privada (BBPREV) from 1997 to 2009; (ii) Embraer Prev – Sociedade de Previdência Complementar from 2010 to 2012, being reelected for the period from 2015 to 2018 and being elected to its board of directors from 2018 to 2021; and (iii) the Embraer Employees Cooperative (Cooperemb) from 2009 to 2011 and 2021 to 2022, and thereafter being elected to serve as manager from April 2022 to February 2026.
Edmilson Saes. Mr. Saes holds a bachelor’s degree in civil engineering from the Universidade do Vale do Paraíba, and a postgraduate degree in strategic business management from the National Institute of Graduate Studies (INPG) in 2000, a course in aircraft design from the University of Kansas in 2001, and a board member course from the Brazilian Institute of Corporate Governance in 2019. He is a product development engineer at Embraer. He has been an employee of the Company since March 1982, with extensive experience in the area of product development engineering and program management. Member appointed by the Company’s non-shareholder employees to our board of directors from April 2019 to April 2021 and 2023 to 2025. Since 2016 Mr. Saes is responsible for our engineering experimentation laboratory. He worked in the area of product development projects until 1999, and as a program management engineer from 2000 to 2015, focusing on technical management and team management for product development. In 2007 he was responsible for the registration of the Phenom 100 Program in the FINEP award for technological innovation, which led us to be awarded in the category of innovative product, which was our first award on this category and led us to conquest many other awards. Mr. Saes is also a volunteer at the Embraer Institute since 2021, working with Colégio Embraer, which provides lectures and coordinates guided tours of the Company for students.
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Board Committees
Three committees were formed to assist the board of directors in its duties and responsibilities: the Strategy and Innovation Committee, the Audit, Risk and Ethics Committee and the People and ESG Committee. For more information, see “—C. Board Practices—People and ESG Committee” below.
Executive Officers
Our executive officers are responsible for our day-to-day management. The board of executive officers has responsibilities established by our bylaws and by the board of directors. The terms of office for our executive officers are two years and reelection is permitted. The vote of at least seven members of our board of directors is necessary to remove an executive officer. Our bylaws prohibit any executive officer from also serving simultaneously as a member of our board of directors.
According to the Novo Mercado rules, the members of our board of directors agreed to comply not only with the Novo Mercado rules but also with the rules of the B3 Arbitration Chamber before taking office. In order to take office, the members of the board of directors must execute a term of investiture (termo de posse).
Set forth below are the names, ages, positions, the year first elected and brief biographical descriptions of our current executive officers, as of the date of this annual report:
| Name |
Age | Position |
Year First Elected |
|||
| Francisco Gomes Neto | 66 | President and Chief Executive Officer | 2019 | |||
| Antonio Carlos Garcia | 59 | Executive Vice President – Chief Financial and Investor Relations Officer | 2020 | |||
| Luis Carlos Marinho da Silva | 53 | Executive Vice President, Operations | 2023 | |||
| Roberto de Deus Chaves | 50 | Executive Vice President, Global Purchasing | 2023 |
Francisco Gomes Neto. Mr. Gomes Neto holds a degree in electrical engineering from Universidade de Mogi das Cruzes (UMC), class of 1981, and an MBA degree in controlling and finance from Universidade de São Paulo (USP), class of 2001. He has also concluded specialization courses in business administration at Fundação Getúlio Vargas (FGV) in 2000, finance and risk management at St. John’s University in 2002, executive education programs at University of Michigan in 2002 and at Instituto Brasileiro de Governança (IBGC) in 2018. Mr. Gomes Neto is our president and chief executive officer since May 2019. He has extensive experience in management positions, including CEO positions for approximately 20 years, in the transportation sector in Brazil and abroad. Mr. Gomes Neto was the CEO of Marcopolo Group, one of the leading bus body manufacturers in the world, when he led the company’s transformation process, generating strong sales growth and market value for the business. He was also the CEO Americas of +Hummel and was the president of Knorr Bremse, a leading company in commercial vehicle control systems.
Antonio Carlos Garcia. Mr. Garcia. Mr. Garcia holds a degree in accounting from Faculdades Integradas Campos Salles, class of 1989 and an MBA degree in business administration from Pontifícia Universidade Católica de São Paulo (PUC – São Paulo), class of 1999. Furthermore, Mr. Garcia holds an MBA at Duke University from Siemens Management Program in 2001. He also participated in ThyssenKrupp Executive Program at Harvard Business School in 2011. Mr. Garcia was elected as Embraer Executive Vice President, Financial and Investor Relations on January 1, 2020. Since July 2020 he is also responsible for Procurement. Mr. Garcia worked at ThyssenKrupp where he served as global CFO of the forged technologies business segment in Germany. Previously, he worked for six years at the ZF Group in Brazil and over eighteen years at the Siemens Group, where he worked in several business segments. In 2023 Mr. Garcia concluded the CFO Leadership Program at Harvard Business School.
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Luis Carlos Marinho da Silva. Mr. Marinho has been our operations vice president from July 29, 2020 to May 2023 and Executive Vice President, Operations since May 5, 2023, being responsible to define and implement all the operational organization performance improvements. He has large experience in implementation lean philosophy in aeronautical industry with focus on increase the productivity, simplify process and establish a culture of excellence at production, logistics, strategic and planning bringing value to the customer. Starting his career at Embraer in 1999, Mr. Marinho became managing director of ELEB in 2014. Prior to that he served as manufacturing engineering manager at GPX unit and as a manager in logistics in subcontractors and supervisor in logistics from 2004 until 2008. He also was responsible for the maintenance and the quality in avionic engineering for 8 years at VASP. Mr. Marinho holds bachelor degrees in electrical engineering and a master degree in business administration and course in finance and accounting for nonfinancial executives at Stanford University.
Roberto de Deus Chaves. Mr. Chaves is the Executive Vice President of Global Procurement & Supply Chain being responsible for the long-term strategic relationship with suppliers and partners, further strengthening collaboration and performance as well as bringing more value to our joint businesses and helping Embraer to capture its full potential. He joined us in 2001 and has held multiple senior management positions in the Supply Chain area, including an international experience in our former JV in Harbin-China, as well as the Head of Procurement in the latest aircraft development such as the Phenom, Praetor and E2 Programs. More recently Mr. Chaves has been leading our Shared Services Organization, the Commercial Aviation Carve-Out Program Office, and in 2023 he was appointed to be the Executive Vice President for our Global Procurement & Supply Chain organization . He is also Board Member at Embraer Prev and EZAir Interior Limited. Mr. Chaves holds a bachelor’s degree in mechanical engineering as well as marketing specialization and MBA degree in business administration and prior to Embraer, has worked for SKF and General Motors.
B. Compensation
Overview
Our executive officers, board of directors and fiscal council members are entitled to fixed compensation. In addition, our executive officers are eligible to participate in our executive profit-sharing plan, which provides them with variable compensation that is based on their and our performance and is limited to a percentage of our net income for the year.
In 2024, the aggregate compensation that we paid to members of the board of directors, the audit, risks and ethics committee, and the executive officers for services in all capacities was US$16.1 million, of which US$2.8 million related to members of the board of directors and US$13.4 million related to the executive officers. In the same period, we paid US$0.2 million to members of the fiscal council.
In 2024, members of our committees of the board of directors, including our audit, risks and ethics committee, received an aggregate additional compensation of US$0.7 million, which is included in the aforementioned aggregate amount of US$2.8 million paid out as compensation.
In addition, in 2024, we contributed US$0.1 million for the payment of pension benefits to our executive officers. Members of our board of directors and fiscal council do not receive these benefits. The board of directors’ members, fiscal council members and executive officers did not receive any compensation (including benefits in kind) from any of our subsidiaries. As of December 31, 2024, none of the board of directors’ members, fiscal council members or executive officers had any financial or other interests in any transaction involving us which was not in the ordinary course of our business.
In 2024, the maximum, average and minimum yearly compensation paid to an individual member of our board of directors was US$0.5 million, US$0.3 million and US$0.1 million, respectively.
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In 2024, the maximum, average and minimum yearly compensation paid to an individual member of our board of executive officers was US$7.4 million, US$3.3 million and US$0.7 million, respectively.
In 2024, the maximum, average and minimum yearly compensation paid to an individual member of our fiscal council was US$50.8 thousand, US$41.9 thousand and US$39.2 thousand, respectively.
Phantom Shares Plan
In February 2014, we adopted a long-term incentive plan aligned with our remuneration policy. This plan is based on the granting of virtual shares to officers and management and its objective is the attraction and retention of highly qualified staff to ensure continuity of management and alignment of interests of officers and key personnel of the Company with that of shareholders. The amounts distributed are defined with reference to the market, under the conditions described in the plan. In general, participants in the plan are entitled to receive two classes of virtual shares, 50% in the form of virtual restricted shares and 50% in the form of virtual performance shares linked to performance indicator targets. We pay the amount of long-term incentive by converting the virtual shares into reais based on the average price of the Company’s shares in the ten trading sessions preceding the relevant determination date, generally after the third anniversary of the grant date.
The objective of our long-term incentive plan is the attraction and retention of highly qualified personnel and to allow those who can contribute to our performance the opportunity to participate in our profits. Incentives under the plan are intended to promote continuity among our management and alignment of interests between our executives and shareholders.
The table below sets forth information about the grants under our phantom shares plan with outstanding virtual shares as of December 31, 2024
| Date Granted |
Total Benefit Granted |
Number of Virtual Shares Granted |
Fair Value of Shares on December 31, 2024(1) |
Number of Shares Outstanding as of December 31, 2024(2) |
||||||||||||
| (in R$ millions) | (in R$ millions) | |||||||||||||||
| March 24, 2020 |
27.7 | 1,633,741 | 9.3 | 171,749 | ||||||||||||
| March 11, 2022 |
40.4 | 2,292,434 | 107.0 | 2,039,084 | ||||||||||||
| September 05, 2022 |
187.1 | 13,621,919 | 282.1 | 8,166,825 | ||||||||||||
| November 18, 2022 |
78.7 | 4,494,033 | 115.0 | 2,718,268 | ||||||||||||
| March 9, 2023 |
56.7 | 3,471,772 | 115.3 | 3,359,022 | ||||||||||||
| September 13, 2023 |
33.3 | 1,802,095 | 26.4 | 1,409,459 | ||||||||||||
| February 8, 2024 |
89.8 | 4,088,971 | 51.3 | 3,989,585 | ||||||||||||
| March 14, 2024 |
58.2 | 2,537,146 | 39.6 | 2,537,146 | ||||||||||||
| (1) | Refers to the estimated fair value of total virtual shares granted on each grant date. |
| (2) | Refers to outstanding virtual shares as of December 31, 2024 considering the respective vesting periods and less the virtual shares already paid to the beneficiaries. |
In 2024, we entered into 18-month swap contracts with Banco Santander S.A. Under these contracts, we will receive the price variation on 3,290,230 of our common shares and will pay interest at an amount equal to the CDI rate plus 0.80% p.a. on the notional amount. We also entered in December 2024 into 12-month swap contracts with Banco Itaú S.A. Under these contracts, we will receive the price variation on 4,032,300 of our common shares and will pay interest at an amount equal to the CDI rate plus 0.70% p.a. on the notional amount. The equity swap agreements will allow us to receive the variation related to the price of our common shares traded on the B3 (plus any distributions on such shares) and pay an amount equivalent to the CDI rate plus a fixed rate during the term of the agreements. For further information on the equity swap agreements, see note 8 to our 2024 audited consolidated financial statements.
For additional information on our phantom shares plan, see note 26.1 to our 2024 audited consolidated financial statements.
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Short-Term Variable Compensation Policy
Our short-term variable compensation policy is designed to promote the retention of executives and alignment of their interests with those of shareholders. Goals with greater impact and importance for our company are given greater weight.
Employee Profit-Sharing Plan
In 2020, we approved a new profit-sharing plan that linked employee profit sharing, as a percentage of the employee’s monthly wage, to the achievement of certain corporate targets, such as free cash flow and operating margin. For the years ended December 31, 2024, 2023 and 2022, we distributed US$44.5 million, US$33.4 million and US$19.2 million, respectively, to our employees under our profit-sharing plan.
Defined Contribution Pension Plan
We sponsor a defined contribution pension plan for employees and participation in this plan is optional. The plan is managed by EMBRAER PREV – Sociedade de Previdência Complementar. Contributions made by us to this plan in the years ended December 31, 2024, 2023 and 2022 were US$17.8 million, US$17.3 million and US$9.7 million, respectively. For additional information on our post-retirement benefits, see note 25.2 to our 2024 audited consolidated financial statements.
Risk management studies are performed annually to identify the future exposure to be recorded as a provision. The provision recorded of medical benefits plan in Brazil amounted to US$31.6 million, US$46.1 million and US$34.2 million as of December 31, 2024, 2023 and 2022, respectively.
The actuarial methods used comply with the generally accepted actuarial methods in force, in accordance with the projected unit credit method.
D&O Insurance
We maintain directors’ and officers’ liability insurance in an amount of US$50.0 million. This insurance covers liabilities resulting from wrongful acts, including any act or omission committed or attempted by any officer or director acting in his or her capacity as officer or director or any matter claimed against an officer or director solely due to his or her serving in such capacity.
According to our by-laws, we may enter into agreements with, or approve indemnity policies covering members of our board of directors, fiscal council, board of executive officers and our committees or of our controlled companies, as well as certain of our employees or employees of our controlled companies, for whom we agree to bear or reimburse certain expenses, costs and damages effectively incurred by the beneficiaries, during or after the period of their relationship with us, related to arbitration, judicial or administrative proceedings, involving acts practiced in carrying out the beneficiaries’ duties, from the date of their investiture or beginning of the employment relationship with us, as applicable.
C. Board Practices
Overview
Our board of directors is appointed for a two-year term. See “—A. Directors and Senior Management—Board of Directors.”
The current executive officers were elected by the board of directors, with a term of office lasting until the meeting of our board of directors to be held following the annual general meeting of our shareholders in 2025 to approve our financial statements for the fiscal year ended December 31, 2024. The members of our board of directors and our executive officers have a uniform two-year term and are eligible for reelection. A vote of at least seven members of our board of directors is necessary to remove an executive officer. See “6A. Directors and Senior Management—Executive Officers.”
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None of our directors is party to an employment agreement providing for benefits upon termination of term. All of our executive officers are party to a service agreement setting forth the rights and obligations of the executive officers.
Audit, Risks and Ethics Committee
Our Audit, Risk and Ethics Committee has no executive power and must have at least three and up to five members, of which (i) the majority of its members must be independent members of the board of directors, (ii) at least one must be an external member, pursuant to our bylaws, and (iii) at least one must have acknowledged experience in corporate accounting matters. A member of the Audit, Risk and Ethic Committee may meet both the requirements of being an independent member of the board of directors with acknowledged experience in corporate accounting matters or being an External Member with acknowledged experience in corporate accounting matters. The primary purpose of the Audit Risks and Ethics Committee is to assist the board of directors. The Audit Risks and Ethics Committee’s responsibilities include validation and submission to the board of directors of guidelines for risk policy, verification of risk management policy compliance, supervision of activities performed by our independent registered accounting firm and monitoring the quality and integrity of internal controls and financial statements. Our Audit, Risk and Ethics Committee is currently composed of three independent members of our board of directors and two external members.
Foreign private issuers are subject to local legislation which may prohibit the board of directors from delegating certain responsibilities to the audit committee, pursuant to Rule 10A-3 of the Exchange Act. Audit committees of foreign private issuers may be granted responsibilities, including advisory powers, with respect to certain matters to the extent permitted by law. Due to certain restrictions imposed by the Brazilian Corporate Law, our Audit Risks and Ethics Committee, unlike a U.S. audit committee, only has an “advisory” role and may only make recommendations for adoption by the full board of directors, which is responsible for the ultimate vote and final decision. For example, our Audit, Risks and Ethics Committee makes recommendations regarding the appointment of auditing firms, which are subject to a vote by the board of directors. Our Audit, Risks and Ethics Committee complies with Brazilian legal requirements (including for “independent directors,” as defined by Brazilian law).
Set forth below are the names, ages, position and the year first elected and brief biographical descriptions of the members of our Audit, Risks and Ethics Committee:
| Name |
Age | Position |
Year First Elected |
|||
| Dan Ioschpe | 60 | Coordinator and Effective member | 2023 | |||
| Claudia Sender Ramirez | 50 | Effective member | 2021 | |||
| Mauro Gentile Rodrigues da Cunha | 53 | Effective member | 2023 | |||
| João Cox Neto | 61 | External member | 2023 | |||
| Vanessa Claro Lopes | 49 | External member | 2019 |
João Cox Neto. Mr. Cox holds a bachelor’s degree in economics from Universidade Federal da Bahia and attended to post graduation in economics at Université du Québec à Montreal and at the College of Petroleum Studies of Oxford University. Mr. Cox has extensive board experience in both public and private companies, and currently serves as an external member of the Audit, Ethics and Risks Committee of Embraer S.A, Vice Chairman of the Board of Directors and head of the Audit, Ethics and Risks Committee of Vivara S.A. Some of his previous board positions include, but are not limited to: Independent Board member of Petrobras S.A.; Vice Chairman of Braskem S.A.’s Board of Directors; Chairman of the Board of TIM Participações S.A.; Vice Chairman of Claro S.A.’s Board of Directors; Vice chairman of the Board of Directors of Cellcom, Independent board member of Linx S.A., CRSFN— National Financial System Resources Council; ABRASCA (Brazilian Association of Publicly Held Companies) and IBRI (Brazilian Institute of Investors’ Relations). As an executive director, his previous experiences included but were not limited to: CEO of Claro S.A. between 2006 and 2010; CEO of Telemig Celular and Amazonia Celular from August 2002 to August 2004; and CFO and investor relations of Telemig Celular Participações and Tele Norte Celular Participações from April 1999 to August 2004. He has significant experience in overseeing complex financial structures, implementing effective risk management practices and ensuring compliance with regulatory requirements.
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Vanessa Claro Lopes. Ms. Lopes holds a bachelor’s degree in accounting sciences from Universidade Federal Fluminense, or UFF, a bachelor’s degree in system analysis from FATEC/BS, and a master’s degree in management systems from UFF, with specialization in corporate management from EAESP FGV and computer networks from Universidade São Judas. Ms. Lopes was a professor of system audit and information security at Faculdade Objetivo from 1997 to 1998. She has 30 years of professional experience and currently serves as an external member of our Audit, Risk and Ethics Committee of Embraer S.A., is an independent member in the Boards of Directors of Afya Limited and Americanas S.A.; coordinator of the audit committee of Tegma Logística S.A. and Americanas SA, and member of the audit committee of Afya Limited. She is also a member of the fiscal councils of Cosan S.A. and Comgás S.A. Mrs. Lopes served as independent member in the Board of Directors and audit committee of Light SA, and she served as chairman of the fiscal council of Via Varejo S.A. and member of the fiscal councils of Gerdau S.A., Terra Santa Agro S.A., Renova Energia S.A., Estácio Participações S.A. and Cosan Logística SA. She has significant experience in publicly held companies, listed in Brazil and in the United States. Mrs. Lopes served as executive officer of the corporate internal audit area of Grupo TAM S.A. and chief internal audit officer of Globex Utilidades S.A., from 2004 to 2014. She started her career in 1995 at PwC Brasil, in the Advisory Services area, and was responsible for the creation, in Brazil, of the group of revenue assurance specialists to service telecommunications companies. She was responsible for the internal audit teams of Grupo Telefônica S.A., from 2000 to 2004, implementing, together with Telefónica in Spain, the risk mapping for all companies of the group in Brazil.
For the biographical descriptions of the other members of the Audit, Risks and Ethics Committee, see “—A. Board of Directors” above.
People and ESG Committee
Our People and ESG Committee has no executive power and its members are appointed by our board of directors. The majority of its members shall be independent members of our board of directors, and the remaining members can be external members, pursuant to paragraph 1 of Section 34 and paragraph 3 of Section 37 of our bylaws. The purpose of this committee is to assist our board of directors with matters related to human resources issues, including appointment of executive officers and removal of executive officers from office and designation of their duties according to our bylaws, compensation and human relations policy and transfer of our resources to employee associations, charity and recreational entities, to the private security fund and foundation. Additionally, this committee also assists our board of directors with corporate governance matters.
Set forth below are the names, ages, position and the year first elected and brief biographical descriptions of the members of our People and ESG Committee:
| Name |
Age | Position |
Year First Elected |
|||
| Claudia Sender Ramirez | 50 | Coordinator and effective member | 2021 | |||
| Dan Ioschpe | 60 | Effective member | 2023 | |||
| Raul Calfat | 72 | Effective member | 2023 | |||
| Cibele Castro | 59 | External member | 2023 |
Cibele Castro. Mrs. Castro holds a degree in Psychology from Universidade Católica de Santos, received in 1988, with a postgraduate degree in Neuroscience and Behavior from the Pontifícia Universidade Católica do Rio Grande do Sul (PUC/RS), received in 2020. She studied Corporate Governance: Maximize your effectiveness in the Boardroom, at The Wharton School of the University of Pennsylvania, in 2023. Mrs. Castro is certified in Innovation by the Global Innovation Management Institute and certified as Board Member by Experience (CCA+) by the IBGC, in 2017. Mrs. Castro is an external member of our People and ESG Committee, an independent director of the Board of Directors of IRB Brasil RE since 2023 and serves as a member of the People, Compensation and Nomination Committee. Mrs. Castro is the coordinator of the People, Compensation, Succession and Eligibility Committee at Banco da Amazonia, since 2022. Mrs. Castro is an External Member of the People, Compensation, Governance and Sustainability Committee (ASG) of Wiz Soluções Financeiras, since 2022. She has been board director since 2008 in the Energy and Telecom sectors. She has 20 years of experience as C-level in family-owned companies and publicly traded multinational companies, in charge of People, IT, Supply Chain, Logistics, Innovation, R&D, Environment, Safety, Security and Infrastructure, with local, regional, and global responsibilities.
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For the biographical descriptions of the other members of the People and ESG Committee, see “—A. Board of Directors” above.
Strategy and Innovation Committee
Our Strategy and Innovation Committee has no executive power and its members are appointed by our board of directors. The majority of its members shall be independent members of our board of directors, and the remaining members can be external members, pursuant to paragraph 1 of Section 34 and paragraph 3 of Section 37 of our bylaws. The primary purpose of our Strategy and Innovation Committee is to assist the board of directors. The Strategy and Innovation Committee’s responsibilities include assisting the board of directors in the performance of its duties, focused on the following areas: (i) strategic objectives and macro-projects relating to our strategic plan and action plan, and (ii) potential opportunities in the assessment of new business.
Set forth below are the names, ages, position and the year first elected and brief biographical descriptions of the members of our Strategy and Innovation Committee:
| Name |
Age | Position |
Year First Elected |
|||
| Raul Calfat | 72 | Coordinator | 2017 | |||
| Kevin Gregory. McAllister | 61 | Effective member | 2021 | |||
| Márcio Fernando Elias Rosa | 62 | Effective member | 2023 | |||
| Todd Messer Freeman | 66 | Effective member | 2021 |
For the biographical descriptions of the members of the Strategy and Innovation Committee, see “A. Board of Directors.”
Fiscal Council
Under the Brazilian Corporate Law, the fiscal council is a corporate body independent of management and the company’s external auditors. The fiscal council has not typically been equivalent to or comparable with a U.S. audit committee. The primary responsibility of the fiscal council has been to monitor management’s activities, review the financial statements, and report its findings to shareholders. In our case, our statutory Audit, Risks and Ethics Committee, established in accordance with the Novo Mercado Listing Rules, will serve as the equivalent of a U.S. audit committee. For additional information on our committees, see “—A. Directors and Senior Management—Committees.”
Under Brazilian Corporate Law, the fiscal council may not have members who are members of the board of directors or the executive committee, or who are our employees or employees of a controlled company or of a company of this group, or a spouse or relative of any member of our management. In addition, Brazilian Corporate Law requires that fiscal council members receive a remuneration of at least 10% of the average amount paid to each executive officer. Brazilian Corporate Law requires a fiscal council to be composed of a minimum of three and a maximum of five members and their respective alternates.
Our fiscal council is composed of three to five members who are elected at the annual shareholders’ meeting, with terms lasting until the next annual shareholders’ meeting after their election. Under Brazilian Corporate Law, if a company acquires control of another company, minority shareholders that in the aggregate hold at least 10% of the voting shares also have the right to elect separately one member of the fiscal council. This provision will not be applicable to us as long as we are subject to widespread control. Set forth below are the names, ages, the year first elected and positions of the members of our fiscal council elected at our annual shareholders’ meeting held on April 25, 2024.
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Set forth below are the names, ages, position and the year first elected of the members of our fiscal council as of the date of this annual report:
| Name |
Age | Position |
Year First Elected |
|||
| Mario Ernesto Vampré Humberg | 61 | Chairperson | 2020 | |||
| Carla Alessandra Trematore | 49 | Vice Chairperson | 2022 | |||
| Elvira Baracuhy Cavalcanti Presta | 59 | Member | 2024 | |||
| Alexandre Navarro Garcia | 58 | Member | 2024 | |||
| Raphael Manhães Martins | 57 | Member | 2022 |
D. Employees
The table below sets forth the number of our employees (including employees of our wholly owned subsidiaries) by category as of the dates indicated. Our total consolidated employees include employees at of our subsidiaries and joint ventures, including Atech, EVE, OGMA, Tempest and Visiona:
| As of December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Production Process |
11,083 | 10,112 | 8,671 | |||||||||
| Research and Development |
3,998 | 3,858 | 3,717 | |||||||||
| Customer Support |
3,365 | 3,216 | 3,010 | |||||||||
| Administrative—Production Support |
301 | 274 | 250 | |||||||||
| Administrative—Corporate |
1,997 | 1,537 | 1,485 | |||||||||
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| Total employees (including wholly owned subsidiaries of Embraer only) |
20,744 | 18,997 | 17,133 | |||||||||
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| Total consolidated employees (including other subsidiaries and joint ventures of Embraer) |
23,898 | 21,889 | 19,990 | |||||||||
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As of December 31, 2024, approximately 87.5% of our workforce was employed in Brazil. Most of our technical staff is trained at leading Brazilian engineering schools, including ITA, which is located in the city of São José dos Campos.
Embraer fully supports the choice of union association of its employees. As of December 31, 2024, 7.1% of our Brazilian employees were unionized, and, according to Brazilian labor laws, salary readjustments and other clauses negotiated in collective bargaining agreements extend to the entire category. As a result, all of our Brazilian employees are covered by clauses negotiated in these agreements.
We actively support the training and professional development of our employees. We have established a program at our facility in the city of São José dos Campos to provide newly graduated engineers with specialized training in aerospace engineering.
E. Share Ownership
As of December 31, 2024, our board members owned 205 of our common shares and our executive officers did not own any of our common shares. As of the same date, members of our fiscal council owned 900 of our common shares, and none of our directors individually owns more than 1.0% of the outstanding common shares.
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
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| Item 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. Major Shareholders
As of the date of this annual report, we have a total authorized capital of 1,000,000,000 shares, of which 740,465,044 common shares were issued, including one special “golden share” held by the Brazilian government. The golden share provides the Brazilian government with veto rights in certain specific circumstances. In addition, non-Brazilian shareholders may have their voting rights restricted in certain specific circumstances. For additional information on the voting rights of our common shares, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights of Shares.”
The table below sets forth information related to the number of shares held by our significant shareholders, as of December 31, 2024, in accordance with the most recent shareholder position information provided to us:
| Common Shares | ||||||||
| Shares(1) | (%) | |||||||
| Brandes Investment Partners, L.P.(2) |
74,039,414 | 10.00 | ||||||
| BlackRock, Inc.(3) |
40,711,074 | 5.50 | ||||||
| BNDES Participações S.A.—BNDESPAR(4) |
39,762,489 | 5.37 | ||||||
| Brazilian government(5) |
1 | 0.00 | ||||||
| Shares in company treasury |
5,832,238 | 0.79 | ||||||
| Others |
580,119,828 | 79.35 | ||||||
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| Total |
740,465,044 | 100.00 | ||||||
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| (1) | The number of common shares includes common shares and common shares represented by ADSs. See “Item 12—D. American Depositary Shares.” |
| (2) | Brandes Investment Partners, L.P. is a 100% employee-owned independent investment advisory firm founded and co-owned by Charles Howard Brandes. The firm manages the Brandes series of mutual funds in addition to other funds and caters to individuals and institutions. |
| (3) | Blackrock Inc. is an American global investment management corporation based in the city of New York, United States of America. Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is the world’s largest asset manager. |
| (5) | BNDES Participações S.A. – BNDESPAR, or BNDESPAR, is a wholly owned subsidiary of Banco Nacional de Desenvolvimento Econômico e Social – BNDES, the Brazilian government-owned national development bank of Brazil. |
| (6) | The Brazilian government (União Federal) holds our “golden share.” See “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights of Shares—Golden Share.” |
There have been no significant changes in percentage ownership by any major shareholder in the past three years. As of December 31, 2024, we had over 75,400 holders of common shares, including common shares in the form of ADSs. As of December 31, 2024, an aggregate of 17,226 ADSs were held by 140 record holders, including The Depository Trust Company in the United States of America.
B. Related Party Transactions
Overview
The Brazilian government, through its direct and indirect stakes in us and its ownership of our “golden share,” is one of our major shareholders. The issuance of the “golden share” was a requirement of the regulations governing our privatization in 1994 and grants the Brazilian government veto rights over certain military-related programs and corporate actions (including transfers of control and changes in our name, logo and corporate purpose). For additional information on the voting rights of our golden share, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights of Shares—Golden Share.” As of December 31, 2024, in addition to the “golden share,” the Brazilian government owned an indirect 5.37% stake in us through BNDESPAR, a wholly owned subsidiary of the BNDES, which, in turn, is controlled by the Brazilian government. As a result, for the purposes of this annual report’s disclosure requirements, we consider transactions between Embraer and the Brazilian government or its agencies as falling within the definition of “related party transactions.”
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The Brazilian government plays an important role in our business activities, including as:
| • | a major customer of our defense products, through the Brazilian Air Force; |
| • | a source for research debt financing through technology development institutions, including FINEP and BNDES; |
| • | an export credit agency, through BNDES; and |
| • | a source of short-term and long-term financing and a provider of asset management and commercial banking services, through Banco do Brasil S.A. |
For additional information on the role of the Brazilian government in our business activities, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Credit Facilities and Lines of Credit,” “Item 4. Information on the Company—B. Business Overview—Aircraft Financing Arrangements,” and “Item 3. Key Information—D. Risk Factors—Business Operations and Contracts—Any decrease in Brazilian government-sponsored customer financing or increases in government-sponsored financing that benefits our competitors, may decrease the competitiveness of our aircraft.” For additional information regarding our related party transactions, see note 13.1 to our 2024 audited consolidated financial statements.
Relationships with the Brazilian Government as a Major Customer
We are the largest supplier of defense products to the Brazilian government, according to Brazilian government sources, mainly through the Brazilian Air Force, which has been a significant customer of Embraer since its inception. In 2024, the Brazilian government, mainly through the Brazilian Air Force, accounted for US$166.0 million of the revenue from sales of our Defense & Security segment. In addition, as of December 31, 2024, we had US$269.0 million in total assets and US$80.5 million in total liabilities in connection with the Brazilian Armed Forces. For a description of our transactions with the Brazilian government, see “Item 4. Information on the Company—B. Business Overview—Defense & Security Segment.” For additional information on our relationship with our key customers, see “Item 3. Key Information—D. Risk Factors—Business Operations and Contracts— We depend on key customers.”
Relationships with the Brazilian Government as a Financing Source
The Brazilian government has been an important source of export financing for our customers through the BNDES-Exim program, managed by BNDES. For additional information on our aircraft financing arrangements, see “Item 4. Information on the Company—B. Business Overview—Aircraft Financing Arrangements.”
We also entered into credit working capital and export financing agreements with BNDES, which as of December 31, 2024, had a total amount of US$463.8 million. The consummation of the financing is subject to customary conditions precedent. For additional information on the amounts, maturity dates and interest rates of these agreements, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Credit Facilities and Lines of Credit.”
Relationships with the Brazilian Government as a Service Provider
As of December 31, 2024, we maintained cash and cash equivalents and financial investments of US$665.4 million with Banco do Brasil S.A., which is controlled by the Brazilian government. Banco do Brasil S.A. has been a provider of regular commercial banking and asset management services to us for many decades and is one of the banks responsible for the payment of our payroll expense. These services include maintaining our checking account.
As of December 31, 2024, US$22.5 million of our cash and cash equivalents and financial investments were indexed to the variation of the CDI rate.
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C. Interests of Experts and Counsel
Not applicable.
| Item 8. | FINANCIAL INFORMATION |
A. Consolidated Statements and Other Financial Information
See to “Item 18. Financial Statements” for our consolidated financial statements and report of our independent registered public accounting firm included elsewhere in this annual report.
Legal Proceedings
Arbitration Proceedings
On January 24, 2019, we entered into a Master Transaction Agreement, or the MTA, and certain other transaction documents with Boeing and certain subsidiaries of Embraer or Boeing, pursuant to which a subsidiary of Boeing would acquire a controlling stake in Embraer’s Commercial Aviation segment, and Embraer, or a subsidiary of Embraer, and Boeing, or a subsidiary of Boeing, would form a joint venture to promote and develop new markets and applications for the KC-390 Millennium multi-mission transport aircraft.
On January 1, 2020, we implemented the internal carve-out of our Commercial Aviation segment by contributing the net assets comprising the segment—including assets, liabilities, properties, rights, and obligations (subject to certain exceptions)—to Yaborã through a capital increase.
On April 25, 2020, we received a notice from Boeing communicating its decision to terminate the MTA, based on Boeing’s assertion that certain closing conditions in the MTA had not been satisfied by Embraer by the April 24, 2020 termination date specified in the agreement. Boeing also terminated the Contribution Agreement. Embraer strongly believed at the time, and continues to believe, that it was in full compliance with its obligations under the MTA and the Contribution Agreement, and that Boeing wrongfully terminated both agreements. Embraer maintained that Boeing was under an obligation to continue to comply with the terms of the MTA and the Contribution Agreement, and that its legal actions against Boeing and its affiliates were a valid enforcement of Embraer’s rights under these agreements.
Following Boeing’s termination of the agreements, both Embraer and Boeing initiated separate arbitration proceedings in connection with the dispute. These arbitration proceedings were later consolidated into a single arbitration proceeding. On September 16, 2024, arbitration proceedings between Embraer and Boeing were concluded, and pursuant to a collar agreement entered into between the parties, Boeing paid the gross amount of US$150.0 million to Embraer.
Labor Lawsuits
We are defendants in individual labor lawsuits, for which we are awaiting the decision of the Brazilian labor courts. Due to the immaterial amount involved in these legal proceedings, we do not believe that any liabilities related to these individual labor lawsuits would have a material adverse effect on our financial condition or results of operations. For a further discussion of our labor lawsuits, see note 24 to our 2024 audited consolidated financial statements.
Tax Matters
We have challenged the constitutionality of certain Brazilian taxes and payroll charges, as well as modifications to and increases in the rates and basis of calculation of those taxes and charges and have obtained writs of mandamus or injunctions to avoid their payment or recover past payments. For a further discussion of our tax lawsuits, see notes 23 and 24 to our 2024 audited consolidated financial statements.
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Interest on the total amount of unpaid taxes and payroll charges accrues monthly based on the SELIC rate, which is the key lending rate of the Brazilian Central Bank, and, accordingly, we make an accrual to the interest income (expenses), net line item on our statements of profit or loss.
Other Proceedings
We are involved in other legal proceedings, all of which are in the ordinary course of business. Our management does not believe that any of our proceedings, if adversely determined, would materially or adversely affect our business, financial condition or results of operations.
As of December 31, 2024, there was a US$41.1 million provision recorded as a liability (taxes, labor and civil related) in our statement of financial position in connection with litigation contingencies that we classify as representing probable losses to us. For a further discussion of these provisions and contingent liabilities, see note 24.1.1 to our 2024 audited consolidated financial statements.
Dividends and Dividend Policy
Our functional currency is the U.S. dollar. Since we are established and domiciled in Brazil, the components of our shareholders’ equity are required under Brazilian Corporate Law to be measured accounted and maintained in Brazilian reais, including amounts to be distributed to shareholders (dividends and interest on own capital). Such a requirement is different from our original accounting records in its functional currency, which is prepared and maintained in historical U.S. dollars. Net earnings or losses incurred by us at the end of each fiscal year in U.S. dollars are translated to Brazilian reais for Corporate Law accounting purposes at the average exchange rate observed for that period, and then distributed, retained or absorbed by the statutory reserves. We file audited consolidated financial statements in Brazil (translated to Brazilian reais based on requirements of IAS 21), which disclose the components of shareholders’ equity accounted as required by the Brazilian Corporate Law.
Amounts Available for Distribution
At each annual shareholders’ meeting, the board of directors is required to recommend how net profits for the preceding fiscal year are to be allocated. For purposes of the Brazilian Corporate Law, net profits are defined as net income after income taxes and social contribution taxes for the fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to employees’ and management’s participation in our profits, determined under IFRS. In accordance with the Brazilian Corporate Law and our bylaws, the amounts available for dividend distribution are the amounts determined under IFRS in our parent company financial statements. The amount for distribution is equal to our net income after taxes less (or plus):
| • | any amounts allocated from the net income after taxes to the legal reserve, and |
| • | any amounts allocated from the net income after taxes to a contingency reserve for anticipated losses or the reversion of the reserve constituted in previous fiscal years. |
We are required to maintain a legal reserve to which we must allocate 5% of net profits for each fiscal year until the amount of the legal reserve equals 20% of our capital stock. However, we are not required to make any allocations to our legal reserve in respect of any fiscal year in which the legal reserve, when added to our other established capital reserves, exceeds 30% of our capital stock. Net losses, if any, may be charged against the legal reserve. The balance of our legal reserve was US$207.0 million, which was equal to 13.3% of our capital stock as of December 31, 2024.
The Brazilian Corporate Law also provides for two additional, discretionary allocations of net profits that are subject to approval by the shareholders at the annual meeting. First, a percentage of net profits may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years. Any amount so allocated in a prior year must be either reversed in the fiscal year for which the anticipated loss was forecast if the loss does not in fact occur or written off in the event that the anticipated loss occurs. Second, the amount for distribution may be limited to the fiscal year’s net profit already realized, and the difference between the amounts shall be allocated to an unrealized revenue reserve. Under the Brazilian Corporate Law, unrealized revenue is defined as the sum of:
| • | price-level restatement of statement of financial position accounts; |
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| • | the share of equity earnings of affiliated companies; and |
| • | profits from installment sales to be received after the end of the next succeeding fiscal year. |
According to our bylaws and subject to shareholder approval, our board of directors may allocate to an investment and working capital reserve up to 75% of our parent company adjusted net income after taxes. The reserve may not exceed 80% of our capital stock. The purpose of the investment and working capital reserve is to make investments in fixed assets or increase our working capital. The balance of the investment and working capital reserve may be used:
| • | in the deduction of accumulated losses, whenever necessary; |
| • | in the distribution of dividends, at any time; |
| • | in the redemption, withdrawal, purchase or open market repurchase of shares, as authorized by law; and |
| • | to increase our capital, including by means of an issuance of new shares. |
We may also grant a participation in our net income to our management and employees. However, the allocation to the investment and working capital reserve or the participation of our management and employees cannot reduce the mandatory distributable amount, as discussed below.
Otherwise, the reserved amounts, except for the contingency reserve and the unrealized revenue reserve that exceeds our capital stock, must be used to increase our capital or be distributed as a cash dividend.
The amounts available for distribution may be further increased by a reversion of the contingency reserve for anticipated losses constituted in prior years but not realized or further increased or reduced as a result of the allocations of revenues to or from the unrealized revenue reserve. The amounts available for distribution are determined on the basis of financial statements prepared in accordance with the Brazilian Corporate Law method. We have not established a contingency reserve.
Revenue reserves are established in accordance with Brazilian corporate law and our bylaws. These reserves are calculated and recorded based on earnings determined as if Brazilian reais were the presentation currency. Dividend distributions are also determined in accordance with Brazilian laws and regulations and are determined as if Brazilian reais were the presentation currency.
As of December 31, 2023, taking into account the presentation currency in Brazilian reais, as determined by such laws and regulations, we had accumulated losses attributable to the owners of the Company in the amount in reais equivalent to US$329.1 million and due to those recorded losses, we did not distribute nor pay dividends in the fiscal years ended December 31, 2023.
In the year ended December 31, 2024, we fully offset our accumulated losses against our income for the year attributable to the owners of the Company in an amount of R$1,593.1 million. As such as of December 31, 2024, we recorded net income distributable as dividends (after accounting for accumulated losses absorption, constitution of the legal reserve and replenishment of the government grants reserve) in the amount of R$205.7 million, equivalent to US$33.2 million. For further information, see note 28.5 to our 2024 audited consolidated financial statements.
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Mandatory Distribution
The Brazilian Corporate Law generally requires that the bylaws of each Brazilian corporation specify a minimum percentage of the amounts available for distribution by the corporation for each fiscal year that dividends must be distributed to shareholders, also known as the mandatory distributable amount. Under our bylaws, the mandatory distribution is based on a percentage of adjusted net income, not lower than 25%, and not on a fixed monetary amount per share. The Brazilian Corporate Law, however, permits a publicly held company to suspend the mandatory distribution of dividends if the board of directors and fiscal council report presented at the shareholders’ meeting indicate that the distribution would be inadvisable in view of Embraer’s financial condition. This suspension is subject to approval of holders of common shares. In this case, the board of directors shall file a justification for the suspension with the CVM. Profits not distributed by virtue of the suspension will be attributed to a special reserve and, if not absorbed by subsequent losses, will be paid as dividends as soon as the financial condition of the corporation permits the payments.
Payment of Dividends
We are required by the Brazilian Corporate Law and by our bylaws to hold an annual shareholders’ meeting by the end of the fourth month after the end of each fiscal year at which, among other things, the shareholders have to decide on the payment of an annual dividend. The payment of annual dividends is based on our parent company financial statements prepared under IFRS for the relevant fiscal year. Brazilian companies, including us, are permitted to make a special distribution to shareholders referred to as interest on shareholders’ equity, which may be distributed cumulatively or in lieu of dividends as part of the mandatory distributable amount. Subject to certain limitations set forth by legislation, distribution of interest on shareholders’ equity can be treated as a tax-deductible expense for IRPJ and CSLL purposes. Under the Brazilian Corporate Law, dividends generally are required to be paid within 60 days following the date the dividend was declared, unless a shareholders’ resolution sets forth another date of payment, which, in either case, must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends (or payments of interest on shareholders’ equity) in respect of its shares, after which the amount of the unclaimed dividends reverts to the Company.
The Brazilian Corporate Law allows a company to pay interim dividends out of preexisting and accumulated profits determined under IFRS for the preceding fiscal year or semester, based on financial statements approved by its shareholders. According to our bylaws, the shareholders may declare, at any time, interim dividends based on the preexisting and accumulated profits, provided that the mandatory dividend has already been distributed to the shareholders. Our bylaws also permit us to prepare financial statements semiannually and for shorter periods. Our board of directors may approve the distribution of dividends calculated with reference to those financial statements, even before they have been approved by the shareholders. However, the dividends cannot exceed the amount of capital reserves.
In general, shareholders who are not residents of Brazil must register with the Central Bank to have dividends, sales proceeds or other amounts with respect to their shares eligible to be remitted outside of Brazil. The common shares underlying our ADSs will be held in Brazil by BTG Pactual Serviços Financeiros S.A. DTVM., also known as the custodian, as agent for the depositary, which will be the registered owner on the records of the registrar for our shares. Our current registrar is BTG Pactual Serviços Financeiros S.A. DTVM. The depositary electronically registers the common shares underlying our ADSs with the Central Bank and, therefore, is able to have dividends, sales proceeds or other amounts with respect to these shares eligible to be remitted outside Brazil.
Payments of cash dividends and distributions, if any, will be made in Brazilian currency to the custodian on behalf of the depositary, which will then convert the proceeds into U.S. dollars and will cause the U.S. dollars to be delivered to the depositary for distribution to holders of ADSs. Under current Brazilian law, dividends paid to shareholders who are not Brazilian residents, including the holders of ADSs, will not be subject to Brazilian withholding income tax, except for dividends declared based on profits generated prior to December 31, 1995. For additional information on Brazilian taxes, see “Item 10. Additional Information—E. Taxation—Material Brazilian Tax Consequences.”
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History of Dividend and Interest on Shareholders’ Equity Payments and Dividend Policy
Law No. 9,249, dated December 26, 1995, as amended, provides for distribution of interest on shareholders’ equity as an alternative form of payment to shareholders and treats those payments as a deductible expense for purposes of calculating Brazilian corporate income tax and social contribution on net profits. These distributions may be paid in cash. The interest is limited to the daily pro rata variation of the TJLP (long term interest rate) and cannot exceed the greater of:
| • | 50% of net income (after the deduction of social contribution on net profits, but before taking into account the provision for corporate income tax and the amounts attributable to shareholders as net interest on shareholders’ equity) for the period in respect of which the payment is made; or |
| • | 50% of the sum of retained profits and profit reserves as of the beginning of the period in respect of which the payment is made. |
Any payment of interest on shareholders’ equity to holders of ADSs or common shares, whether or not they are Brazilian residents, is subject to Brazilian withholding income tax at the rate of 15% or 25% if the beneficiary is resident in a tax haven jurisdiction, that is, a country or location that does not impose any income tax or which imposes the tax at a maximum rate of less than 20%, or in which the domestic legislation imposes restrictions on the disclosure of the shareholding composition or the ownership of the investment. For additional information on Brazilian taxes, see “Item 10. Additional Information—E. Taxation—Material Brazilian Tax Consequences.” The amount paid to shareholders as interest on shareholders’ equity, net of any withholding tax, may be included as part of any mandatory distributable amount.
Under Brazilian law, we are obligated to distribute to shareholders an amount sufficient to ensure the net amount received by them, after payment by us of applicable Brazilian withholding taxes in respect of the distribution of interest on shareholders’ equity, plus the amount of declared dividends, is at least equal to the mandatory distributable amount. When we distribute interest on shareholders’ equity, and that distribution is not accounted for as part of the mandatory distribution, Brazilian withholding tax will apply. All payments to date were accounted for as part of the mandatory distribution.
No dividends nor interest on shareholders’ equity were approved, and no such payments were made, in the years ended December 31, 2023 and 2022. At our annual general meeting to be held on April 29, 2025, our shareholders will vote the proposal for dividend distribution in amount of R$51.4 million equivalent to US$8.3 million, with respect to profits generated in the year ended December 31, 2024. For additional information, see “—Mandatory Distribution” above and note 28.5 to our 2024 audited consolidated financial statements.
Brazilian Corporate Law and our bylaws require us to establish revenue reserves, which must be calculated and recorded based on financial statements in Brazilian reais, which is our presentation currency, instead of financial statements in U.S. dollar, which is our functional currency. Additionally, dividend distributions must align with financial statements in Brazilian reais. As of December 31, 2023, accumulated losses attributable to controlling shareholders of the Company amounted to R$1,593.1 million. As of December 31, 2024, income for the year attributable to controlling shareholders of the Company amounted to R$1,918.9 million.
We also have a government grants reserve, which was formed under article 195-A of the Brazilian Corporate Law. This reserve includes the appropriation of the portion of accumulated profits resulting from government incentives received by us, which cannot be distributed to shareholders in the form of dividends. The government grants reserve is recognized in our income statement under the same expense item to which the grant refers, and it is not included in the calculation basis for mandatory dividends.
Our legal reserve corresponds to an annual allocation of 5% of our net income for the year and cannot exceed 20% of the share capital or 30% in the sum of this reserve and capital reserves pursuant to the Brazilian Corporate Law and our bylaws.
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Our reserve for investments and working capital has the purpose of: (i) ensuring resources for investments in permanent assets without prejudice to profit retention under the terms of article 196 of Law No. 6,404 of December 15, 1976; (ii) reinforcing our working capital plans; (iii) being used in the context of redemption, reimbursement or acquisition of shares in the Company’s capital stock and (iv) being distributed to the Company’s shareholders.
We intend to declare and pay dividends and/or interest on shareholders’ equity, as required by the Brazilian Corporate Law and our bylaws. Our board of directors may approve the distribution of dividends and/or interest on shareholders’ equity, calculated based on our semiannual or quarterly financial statements. The declaration of annual dividends, including dividends in excess of the mandatory distribution, requires approval by the vote of the majority of the holders of our common shares. The amount of any distributions will depend on many factors, including our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and shareholders. Within the context of our tax planning, we may in the future continue to determine it is in our benefit to distribute interest on shareholders’ equity.
B. Significant Changes
Except as otherwise disclosed in our audited consolidated financial statements and in this annual report, there have been no significant changes in our business, financial condition or results of operations since December 31, 2024. For further information, see note 37 to our 2024 audited consolidated financial statements.
| Item 9. | THE OFFER AND LISTING |
A. Offer and Listing Details
Our ADSs are listed on the New York Stock Exchange, or NYSE, under the symbol “ERJ.” In addition, our common shares are traded on the B3 under the symbol “EMBR3.” Each ADS represents four common shares.
Our ADSs began trading on the NYSE on June 5, 2006, with each ADS representing four common shares issued by us. The ADSs are issued under a deposit agreement and J.P. Morgan Chase Bank N.A., or J.P. Morgan, serves as depositary under that agreement.
B. Plan of Distribution
Not applicable.
C. Markets
Trading on the B3
Our common shares are listed and traded on the Novo Mercado segment of the B3. Trades in our common shares on the B3 settle in one business day after the trade date. Delivery of and payment for shares is made through the facilities of the CBLC – Companhia Brasileira de Liquidação e Custódia (clearinghouse for the B3), which maintains accounts for member brokerage firms.
In order to better control volatility, the B3 adopted a “circuit breaker” system pursuant to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the indices of this stock exchange fall below the limit of 10% and 15%, respectively, in relation to the closing value of the index registered in the previous trading session.
The B3 is less liquid than the NYSE and other major exchanges in the world. As of December 31, 2024, the B3 had an aggregate market capitalization of approximately R$4.1 trillion, equivalent to US$0.7 trillion. In comparison, the NYSE had a market capitalization of approximately US$31.6 trillion on the same date. Although any of the outstanding shares of a listed company may trade on the B3, in most cases less than one-half of the listed shares are actually available for trading by the public, the remainder being held by small groups of controlling persons, by governmental entities or by one principal shareholder. As of December 31, 2024, we accounted for approximately 1.0% of the market capitalization of all listed companies on the B3. There is also significantly greater concentration in the Brazilian securities markets than in the NYSE or other major exchanges.
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Trading on the B3 by nonresidents of Brazil is subject to limitations under Brazilian foreign investment legislation.
Novo Mercado Corporate Governance Practices
The B3 has three special listing segments, known as Levels 1 and 2 of Differentiated Corporate Governance Practices and the Novo Mercado, aiming at fostering a secondary market for securities issued by Brazilian companies with securities listed on the B3, by prompting these companies to follow good practices of corporate governance. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance the quality of information provided to shareholders.
To become a Level 1 (Nível 1) company, in addition to the obligations imposed by current Brazilian law, an issuer must agree to (i) ensure that shares of the issuer representing 25% of its total capital are effectively available for trading, (ii) adopt offering procedures that favor widespread ownership of shares whenever making a public offering, (iii) comply with minimum quarterly disclosure standards, (iv) follow stricter disclosure policies with regards to contracts with related parties, material contracts and transactions made by controlling shareholders, directors and officers involving securities issued by the issuer, (v) submit any existing shareholders’ agreements and stock option plans to the B3 and (vi) make a schedule of corporate events available to shareholders.
To become a Level 2 (Nível 2) company, in addition to the obligations imposed by current Brazilian law, an issuer must agree to (i) comply with all of the listing requirements for Level 1 companies, (ii) grant tag-along rights for all shareholders in connection with a transfer of control of the company, offering the same price paid per share for controlling block, (iii) grant voting rights to holders of common shares in connection with certain corporate restructurings and related party transactions, including (1) any transformation of the company into another corporate form, (2) any merger, consolidation or spin-off of the company, (3) approval of any transactions between the company and its controlling shareholder, including parties related to the controlling shareholder, (4) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital increase, (5) appointment of an expert firm to ascertain the fair value of the company in connection with any deregistration and delisting tender offer, and (6) any changes to these voting rights, (iv) have a board of directors composed of at least five members, of which 20% must be independent directors, with a term limited to two years, (v) prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or IFRS, (vi) if it elects to delist from the Level 2 segment, hold a tender offer by the company’s controlling shareholder (the minimum price of the shares to be offered will be determined by an appraisal process), and (vii) adhere exclusively to the rules of the B3 Arbitration Chamber for resolution of disputes between the company and its investors.
To be listed on the Novo Mercado, an issuer must meet all of the requirements described above, in addition to (i) issuing only voting shares, (ii) have at least two, or the equivalent of 20% of the board members, whichever is bigger, independent members on the board of directors, with a term limited to two years, (iii) follow stricter disclosure policies with regards to the company’s policies, the internal rules of procedures, the code of business conduct and periodic reports of the audit committee, and (iv) adopt stricter compliance procedures, including an audit committee, an internal audit and other risk management controls. Regarding the obligation to ensure that shares of the issuer representing 25% of its total capital are effectively available for trading, for the companies listed on the Novo Mercado, the threshold might be reduced to 15% of its capital stock, provided its average daily trading volume remains equal to or greater than R$25.0 million, taking into account the trades performed during the previous 12 months. Our shares are listed on the Novo Mercado segment.
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Regulation of Brazilian Securities Markets
The Brazilian securities markets are regulated by the CVM (the Brazilian Securities and Exchange Commission), which has regulatory authority over stock exchanges and the securities markets generally, and by the Brazilian Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions.
Under the Brazilian Corporate Law, a corporation is either publicly held (companhia aberta), like us, or closely held (companhia fechada). All publicly held companies, including us, are registered with the CVM and are subject to reporting requirements. Our shares are listed and traded on the Novo Mercado segment of the B3 and may be traded privately subject to limitations.
We have the option of asking for the trading of our securities on the B3 to be suspended in anticipation of a material announcement. Trading may also be suspended on the initiative of the B3 or the CVM, among other reasons, based on or due to a belief that the company has provided inadequate information regarding a material event or has provided inadequate responses to the inquiries by the CVM or the B3.
Trading on the B3 by non-residents of Brazil is subject to limitations under Brazilian foreign investment and tax legislation. The Brazilian custodian for our common shares and the depositary for our ADSs has obtained an electronic certificate of registration from the Brazilian Central Bank to remit U.S. dollars abroad for payments of dividends, any other cash distributions, or upon the disposition of the shares and sales proceeds thereto. Pursuant to CMN Resolution No. 4,373, in order for an investor to surrender ADSs for the purpose of withdrawing the shares represented thereby, the investor is required to appoint a Brazilian financial institution duly authorized by the Brazilian Central Bank and the CVM to act as its legal representative, who shall be responsible, among other things, for keeping and updating the investors’ certificates of registrations with the Brazilian Central Bank, which entitles registered foreign investors to trade the underlying shares directly on the B3.
Disclosure Requirements
Pursuant to CVM Resolution No. 44, dated August 23, 2021, the CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of information on the trading and acquisition of securities issued by publicly held companies.
These requirements include provisions that:
| • | establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by the controlling shareholders, resolutions of the general meeting of shareholders and of management of the company, or any other facts related to the company’s business (whether occurring within the company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade those securities or to exercise any of those securities’ underlying rights; |
| • | specify examples of facts that are considered to be material, which include, among others, the execution amendment or termination of a shareholders’ agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the company, and any corporate restructuring undertaken among related companies; |
| • | oblige the investor relations officer, controlling shareholders, other officers, directors, members of the audit committee and other advisory boards to disclose material facts; |
| • | require simultaneous disclosure of material facts to all markets in which the corporation’s securities are admitted for trading; |
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| • | require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation’s shares, within one year; |
| • | establish rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; |
| • | restrict the use of insider information; and |
| • | prohibits the company controlling shareholders, directors, members of the board of directors and the supervisory board to carry out any trading with the securities issued by the company, or related to them, during the period that comes before the date of disclosure of the information quarterly accounting and annual financial statements of the company. |
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
| Item 10. | ADDITIONAL INFORMATION |
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Set forth below is certain information concerning our capital stock, and a brief summary of certain significant provisions of our bylaws, the Brazilian Corporate Law, the relevant rules and regulations of the CVM, and the relevant Novo Mercado rules applicable to our capital stock. This description does not purport to be complete and is qualified by reference to our bylaws and to Brazilian law.
Corporate Purpose
We are a corporation duly incorporated with a principal place of business and jurisdiction in the city of São José dos Campos, São Paulo, Brazil, governed mainly by our bylaws and the Brazilian Corporate Law. According to article I of our bylaws, our corporate purpose is to (i) design, build and market aircraft, equipment, materials, systems, software, accessories and components for the aerospace, defense, security, energy and other industries that require complex, integrated systems to support their operations; (ii) carry out other technological, industrial, commercial and service activities related to the aerospace, defense, security, energy or other industries that require complex, integrated systems to support their operations; (iii) contribute to the training of technical personnel needed for the industries listed in the items above; and (iv) engage in the generation of electrical energy for self-consumption with the possibility of selling surplus.
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Description of Capital Stock
General
As of December 31, 2024, our capital stock consisted of a total of 740,465,044 issued common shares, without par value, including 5,832,238 common shares held in treasury and one special class of common shares known as the “golden share,” held by the Brazilian government. Our bylaws authorize the issuance of up to 1,000,000,000 common shares by a resolution of the board of directors, irrespective of any amendment to our bylaws and of shareholder approval. As of the date of this annual report, we had 733,566,139 outstanding common shares, which were fully paid. Our shareholders must approve at a shareholders’ meeting any capital increase that exceeds the above-referenced authorized capital stock. Our shareholders are not liable for further capital calls. Their liability is limited to the amount of any portion of our capital stock which they have subscribed but have not fully paid in.
Common Shares
Each common share is generally empowered with one vote at our shareholders’ meetings. Pursuant to our bylaws and the B3 listing agreement in connection with the listing of our shares on the Novo Mercado, we cannot issue shares without voting rights or with restricted voting rights.
Changes to rights granted to common shares under our bylaws would generally require an amendment to our bylaws. Under the Brazilian Corporate Law, an amendment to our bylaws requires shareholder approval in a shareholders’ meeting. Changes to our bylaws would generally require approval by a simple majority vote of holders of common shares, except for matters that require the approval of shareholders representing at least one-half of the issued and outstanding voting shares or for matters subject to the approval of our golden share. For additional information on qualified quorum matters and on voting rights relating to the golden share, see “—Voting Rights of Shares—Qualified Quorum Matters” and “—Voting Rights of Shares—Golden Share,” respectively.
The Brazilian Corporate Law and our bylaws require that all our shareholders’ meetings be called by publication of a notice in a newspaper of general circulation in the city where our headquarters are located, in a summarized form and with simultaneous disclosure of the full text of the documents on the page of the same newspaper online, which must provide digital certification of the authenticity of the documents kept on the page issued by a certifying authority accredited by the Brazilian Public Key Infrastructure (ICP-Brazil), currently the O Vale in São José dos Campos, at least 30 days prior to the meeting. In addition, publications are made in another newspaper of general circulation in São Paulo, where the São Paulo Stock Exchange is located, currently the Valor Econômico. The quorum to hold a shareholders’ meetings at first call is the presence of shareholders representing at least 25% of the common shares (except for meetings convened to amend our bylaws or to waive the public tender offer required for delisting from Novo Mercado, which require a quorum of at least two-thirds of the common shares at first call); and at second call the meeting can be held with the presence of any number of shareholders.
According to our bylaws, in order to attend a shareholders’ meeting, a shareholder must show the evidence of ownership of the shares it intends to vote by showing an identification document and a proof of share ownership. Our shareholders may be represented at shareholders’ meetings by a proxy, issued within a one-year period prior to the meeting to (1) one of our directors or officers, (2) a lawyer or (3) a financial institution. Notwithstanding the above, the CVM decided on November 4, 2014 that shareholders that are legal entities may be represented at shareholders’ meetings by their legal representatives or by a duly appointed attorney-in-fact, pursuant to the bylaws and related corporate instruments of the legal entities and pursuant to the Brazilian Civil Code. Investment funds must be represented by their administrator.
Alternatively, the shareholders might participate in a shareholders’ meetings through a remote voting mechanism, which is regulated by CVM Resolution No. 80, as amended, and aims to facilitate the participation of shareholders in general meetings either through the vote or through the submission of proposals and candidates for the election of members of the board of directors or fiscal council. For this purpose, this regulation provided the following:
| • | the remote voting ballot, through which shareholders may exercise their right to vote prior to the date the shareholders’ meeting is held; |
| • | the possibility of inclusion of candidates and proposals of deliberation of minority shareholders in that bulletin, with due observance of certain percentages of equity interest, in order to facilitate shareholders’ participation in shareholders’ meetings; and |
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| • | the deadlines, procedures and ways of sending this bulletin, which may be forwarded by the shareholder: (a) to the custodian (if the shares held by the shareholder are kept at a centralized deposit) or; (b) to the book-entry agent of the shares issued by the company (if such shares are not kept at a centralized deposit); or (c) directly to the company. |
According to the Brazilian Corporate Law, the common shares are entitled to dividends in proportion to their share of the amount available for distribution. For additional information on payment of dividends on our shares, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy.” In addition, upon any liquidation of the company, the common shares are entitled to return of capital in proportion to their share of our shareholders’ equity.
According to the Brazilian Corporate Law, neither our bylaws nor actions taken at a shareholders’ meeting may deprive a shareholder of the following rights:
| • | the right to participate in the distribution of profits; |
| • | the right to participate equally and proportionally in any remaining residual assets in the event of liquidation of the company; |
| • | preemptive rights in the event of issuance of shares, convertible debentures or warrants, except in some specific circumstances under Brazilian law described in “—Preemptive Rights”; |
| • | the right to supervise our management in accordance with Article 109 of the Brazilian Corporate Law; and |
| • | the right to appraisal rights in the cases specified in the Brazilian Corporate Law, which are described in “—Redemption and Right of Withdrawal.” |
Golden Share
The golden share is held by the Federative Republic of Brazil. For a discussion of the rights to which the golden share is entitled, see “—Voting Rights of Shares—Golden Share.”
Voting Rights of Shares
Each common share is generally empowered with one vote at the general shareholders’ meeting. Pursuant to our bylaws and the B3 listing agreement in connection with the listing of our shares on the Novo Mercado listing segment of B3, we cannot issue shares without voting rights or with restricted voting rights.
Qualified Quorum Matters
Under the Brazilian Corporate Law, the approval of shareholders representing at least one-half of the issued and outstanding voting shares is required for the matters described below:
| • | reducing the mandatory distribution of dividends; |
| • | changing our corporate purpose; |
| • | merging into or consolidating with another company, subject to the conditions set forth in the Brazilian Corporate Law; |
| • | transferring all of our shares to another company or receiving shares of another company in order to make the company whose shares were transferred a wholly owned subsidiary of the other company, known as a merger of shares (incorporação de ações); |
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| • | participating in a centralized group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein; |
| • | conducting a spin-off; |
| • | dissolving or liquidating us; |
| • | canceling any ongoing liquidation of us; or |
| • | creating preferred shares with greater privileges than the existing shares or changing a priority, preference, privilege or condition of redemption or amortization of preferred shares. |
In the event of the last item described above, the approval of shareholders representing the majority of issued and outstanding shares of the affected class would also be required. Our bylaws currently provide that our capital stock shall be divided exclusively into common shares and the only special class is our golden share. For additional information on the golden share, see “—Golden Share.”
Limitations on the Voting Rights of Certain Holders of Common Shares
Our bylaws provide that, at any shareholders’ meeting, no shareholder or group of shareholders, including brokers acting on behalf of one or more holders of ADSs, may exercise votes representing more than 5% of the quantity of shares into which our capital stock is divided. Votes that exceed this 5% threshold will not be considered.
For purposes of our bylaws, two or more of our shareholders are considered to be a “group of shareholders” if:
| • | they are parties to a voting agreement; |
| • | one of them is, directly or indirectly, a controlling shareholder or controlling parent company of the other, or the others; |
| • | they are companies directly or indirectly controlled by the same person/entity, or group of persons/entities, which may or may not be shareholders; or |
| • | they are companies, associations, foundations, cooperatives and trusts, investment funds or portfolios, universalities of rights or any other forms of organization or undertaking (i) with the same administrators or managers, or further (ii) whose administrators or managers are companies that are directly or indirectly controlled by the same person/entity, or group of persons/entities, which may or may not be shareholders. |
In the case of investment funds having a common administrator, only funds with policies of investment and of exercise of voting rights at shareholders’ meetings that fall under the responsibility of the administrator on a discretionary basis will be considered to be a group of shareholders.
In addition, shareholders represented by the same proxy, administrator or representative on any account at any shareholders’ meeting will be considered to be a group of shareholders, except for holders of our ADSs when represented by the relevant depositary. All signatories to a shareholders’ agreement that addresses the exercise of voting rights will also be considered to be a group of shareholders for purposes of the foregoing limitation.
This limitation on the voting rights of certain holders of common shares is illustrated in the following table:
| Equity Interest of Shareholder or Group of Shareholders |
Voting Rights as a Percentage of our Capital Stock | |
| 1% |
1% | |
| 2% |
2% | |
| 3% |
3% | |
| 4% |
4% | |
| 5% |
5% | |
| > 5% |
5% |
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Limitations on the Voting Rights of Non-Brazilian Shareholders
In accordance with the edital (invitation to bid) issued by the Brazilian government in connection with the privatization of Embraer in 1994, voting participation of non-Brazilian holders of Embraer common shares was limited to 40% of Embraer common shares votes at a shareholders’ meeting.
Our bylaws provide that, at any shareholders’ meeting, non-Brazilian shareholders and groups of non-Brazilian shareholders may not exercise voting rights representing more than two-thirds of the total votes of all of the Brazilian shareholders present at the meeting. The total number of votes that may be exercised by Brazilian shareholders and by non-Brazilian shareholders will be assessed after giving effect to the 5% voting limitation described above in “—Limitations on the Voting Rights of Certain Holders of Common Shares.” Votes of non-Brazilian shareholders that exceed this two-thirds threshold will not be considered. If the total vote of non-Brazilian shareholders at any shareholders’ meeting exceeds two-thirds of the votes that may be exercised by the Brazilian shareholders present at such meeting, the number of votes of each non-Brazilian shareholder will be proportionately reduced so that the total vote of non-Brazilian shareholders does not exceed two-thirds of the total votes that can be exercised by Brazilian shareholders present at the shareholders’ meeting.
The fraction of two-thirds effectively limits the voting rights of non-Brazilian shareholders and groups of non-Brazilian shareholders to 40% of share capital represented at the shareholders’ meeting. The objective of this limitation is to ensure Brazilian shareholders constitute a majority of the total votes cast at any shareholders’ meeting. This limitation will effectively prevent our takeover by non-Brazilian shareholders and limit the ability of non-Brazilian shareholders to control us.
For purposes of our bylaws, the following are considered to be “Brazilian shareholders”:
| • | Brazilian individuals, whether native or naturalized, resident in Brazil or abroad; |
| • | legal private entities organized under the laws of Brazil that have their administrative head offices in Brazil and (i) do not have a foreign controlling parent company, unless the parent company meets the requirements of clause (ii) of this item, and (ii) are controlled, directly or indirectly, by one or more Brazilian individuals, whether native or naturalized, resident in Brazil or abroad; and |
| • | investment funds or clubs organized under the laws of Brazil that have their administrative head office in Brazil and whose managers and/or investors holding the majority of their equity interests are persons/entities referred to above. |
A Brazilian shareholder will be required to provide evidence to us and the depositary agent for the book-entry registry that such shareholder satisfies the foregoing requirements and only after this evidence is given will the shareholder be included in the records of Brazilian shareholders.
For purposes of our bylaws, “non-Brazilian shareholders” are any individuals, legal entities, investment funds or clubs and any other organizations that are not considered Brazilian shareholders and that cannot evidence that they satisfy the requirements to for registration as Brazilian shareholders, according to our bylaws.
A “group of shareholders,” as defined above, will be considered to be non-Brazilian whenever one or more of its members is a non-Brazilian shareholder.
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The effect of this limitation on the voting rights of non-Brazilian shareholders (i.e., their participation) is illustrated in the following table, where the column “Non-Brazilian Shareholder Participation” indicates the maximum percentage of votes a non-Brazilian shareholder may cast:
| Brazilian Shareholder Participation |
Non-Brazilian Shareholder Participation | Non-Brazilian Shareholder Participation(1) | ||
| (% of capital stock) | (% of capital stock) | (%) | ||
| 90 |
10 | 10.00 | ||
| 80 |
20 | 20.00 | ||
| 70 |
30 | 30.00 | ||
| 60 |
40 | 40.00 | ||
| 59 |
41 | 39.33 | ||
| 50 |
50 | 33.33 | ||
| 40 |
60 | 26.67 | ||
| 30 |
70 | 20.00 | ||
| 20 |
80 | 13.33 | ||
| 10 |
90 | 6.67 |
| (1) | Number of votes calculated based on two-thirds of the Brazilian shareholders’ votes. |
The tables below illustrate, in different situations, the voting system that will apply at our shareholders’ meetings.
Example 1
All Brazilian shareholders hold less than 5% and non-Brazilian shareholders hold a total of 40%, but without any individual holdings higher than 5%. This example shows a situation where the general restriction for non-Brazilian shareholders does not affect the voting ratio.
| Shareholder |
% Shares Attending |
Effective % of Votes After 5% Vote Restriction |
Effective % of Votes After Non- Brazilian Restriction |
% of Valid Votes |
Vote Ratio (Votes /Share) |
|||||||||||||||
| Brazilian A |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian B |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian C |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian D |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian E |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian F |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian G |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian H |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian I |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian J |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian K |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Brazilian L |
5 | 5 | 5 | 5 | 1.00 | |||||||||||||||
| Total Brazilians |
60 | 60 | 60 | 60 | 1.00 | |||||||||||||||
| Non-Brazilians(1) |
40 | 40 | 40 | 40 | (2) | 1.00 | ||||||||||||||
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| Total |
100 | 100 | 100 | 100 | 1.00 | |||||||||||||||
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| (1) | Assumes that no individual non-Brazilian shareholder holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, this shareholder will also be subject to the 5% voting restriction on such holding. |
| (2) | Two-thirds of 60 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 40 votes. |
Example 2
One Brazilian shareholder holds more than 5% of our capital, the other Brazilian shareholders hold 5% and non-Brazilian shareholders hold a total of 50%, but without any individual holdings higher than 5%.
| Shareholder |
% Shares Attending |
Effective % of Votes After 5% Vote Restriction |
Effective % of Votes After Non- Brazilian Restriction |
% of Valid Votes |
Vote Ratio (Votes/ Share) |
|||||||||||||||
| Brazilian A |
20 | 5 | 5.0 | 8.57 | 0.25 | |||||||||||||||
| Brazilian B |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Brazilian C |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Brazilian D |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Brazilian E |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Brazilian F |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Brazilian G |
5 | 5 | 5.0 | 8.57 | 1.00 | |||||||||||||||
| Total Brazilians |
50 | 35 | 35.0 | 59.99 | 1.00 | |||||||||||||||
| Non-Brazilians(1) |
50 | 50 | 23.3 | (2) | 40.00 | 0.47 | ||||||||||||||
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| Total |
100 | 85 | 58.3 | (2) | 100.00 | 0.58 | ||||||||||||||
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| (1) | Assumes that no individual non-Brazilian shareholder holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, this shareholder will also be subject to the 5% voting restriction on the holding. |
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| (2) | Two-thirds of 35 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 23 votes. |
Example 3
No Brazilian shareholders hold more than 5% of our capital, a non-Brazilian shareholder holds 30% and other non-Brazilian shareholders hold a total of 40%, but without any individual holdings higher than 5%.
| Shareholder |
% Shares Attending |
Effective % of Votes After 5% Vote Restriction |
Effective % of Votes After Non- Brazilian Restriction |
% of Valid Votes |
Vote Ratio (Votes/ Share) |
|||||||||||||||
| Brazilian A |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Brazilian B |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Brazilian C |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Brazilian D |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Brazilian E |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Brazilian F |
5 | 5 | 5.0 | 10.0 | 1.00 | |||||||||||||||
| Total Brazilians |
30 | 30 | 30.0 | 60.0 | 1.00 | |||||||||||||||
| Non-Brazilians A |
30 | 5 | 2.2 | (2) | 4.4 | 0.07 | ||||||||||||||
| Non-Brazilians(1) |
40 | 40 | 17.8 | (2) | 35.6 | 0.44 | ||||||||||||||
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| Total |
100 | 75 | 50.0 | 100.0 | 1.51 | |||||||||||||||
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| (1) | Assumes that no individual non-Brazilian shareholder (except Non-Brazilian A) holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, this shareholder will also be subject to the 5% voting restriction on the holding. |
| (2) | Two-thirds of 30 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 20 votes, proportionally divided between Non-Brazilian A and the other non-Brazilians. |
Example 4
Two Brazilian shareholders holding more than 5% of our capital, three Brazilian shareholders holding 5% and non-Brazilian shareholders holding a total of 30%, but without individual holdings higher than 5%.
| Shareholder |
% hares Attending |
Effective % of Votes After 5% Vote Restriction |
Effective % of Votes After Non- Brazilian Restriction |
% of Valid Votes |
Vote Ratio (Votes/ Share) |
|||||||||||||||
| Brazilian A |
30 | 5 | 5.0 | 12 | 0.17 | |||||||||||||||
| Brazilian B |
25 | 5 | 5.0 | 12 | 0.20 | |||||||||||||||
| Brazilian C |
5 | 5 | 5.0 | 12 | 1.00 | |||||||||||||||
| Brazilian D |
5 | 5 | 5.0 | 12 | 1.00 | |||||||||||||||
| Brazilian E |
5 | 5 | 5.0 | 12 | 1.00 | |||||||||||||||
| Total Brazilians |
70 | 25 | 25.0 | 60 | 1.00 | |||||||||||||||
| Non-Brazilians(1) |
30 | 30 | 16.7 | (2) | 40 | 0.56 | ||||||||||||||
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| Total |
100 | 55 | 41.7 | 100 | 1.56 | |||||||||||||||
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| (1) | Assumes that no individual non-Brazilian shareholder (except Non-Brazilian A) holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, this shareholder will also be subject to the 5% voting restriction on the holding. |
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| (2) | Two-thirds of 25 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 16.7 votes. |
Shareholders’ Agreement
Our bylaws limit any shareholder or group of shareholders from exercising voting control over us.
Golden Share
The golden share is held by the Federative Republic of Brazil. The golden share is entitled to the same voting rights as the holders of common shares. In addition, the golden share entitles the holder thereof to veto rights over the following corporate actions:
| • | change of our name and corporate purpose; |
| • | modification and/or application of our logo; |
| • | creation and/or alteration of military programs (whether or not involving Brazil); |
| • | development of third-party skills in technology for military programs; |
| • | discontinuance of the supply of spare parts and replacement parts for military aircraft; |
| • | transfer of our control; |
| • | any amendments to the list of corporate actions over which the golden share carries veto rights, including the right of the Brazilian government to appoint one acting member to our board of directors and the right of our employees to appoint two acting members to our board of directors and to the rights conferred to the golden share; and |
| • | changes to certain provisions of our bylaws pertaining to voting restrictions, rights of the golden share and the mandatory tender offer requirements applicable to holders of 35% or more of our outstanding shares. |
The matters listed above are subject to prior approval by our board of directors, followed by prior notices to the Brazilian government and to the Brazilian Ministry of Finance. Within 30 days from the notice, the Brazilian government, as holder of the golden share, may exercise its veto rights. After such period or the pronouncement from the Brazilian government, the board of directors shall meet. In case of rejection of the Brazilian government, the board of directors shall reconsider the previous resolution. In case of approval or in the absence of a response from the Brazilian government within the 30-day period, the previous resolution will be ratified and will be deemed to have been approved by our board of directors. In certain cases, pursuant to our bylaws or applicable law, the matter must be subject to approval at a shareholders’ meeting, and the Brazilian government shall also be entitled to exercise its veto rights related to that matter.
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Disclosure of Significant Interest
Brazilian Requirements
Brazilian law provides that all shareholders or groups of shareholders will be required to disclose, through notice to us and to the stock exchanges on which our securities are traded, the negotiation of securities that results in the shareholder surpassing or falling below the thresholds of 5%, 10%, 15%, and so on, of participation in a certain class or type of share representative of a company’s capital stock. In addition, our bylaws provide that all shareholders or groups of shareholders will be required to disclose, through notice to us and to the stock exchanges on which our securities are traded, the acquisition of shares that, together with those already held by them, exceed 5% of our capital stock. A violation of these disclosure obligations could result in the suspension of rights, including voting rights, by a resolution of shareholders at a shareholders’ meeting.
Certain U.S. Legal Requirements
In addition, the Exchange Act imposes reporting requirements on shareholders or groups of shareholders who acquire beneficial ownership (as this term is defined under Rule 13d-3 of the Exchange Act) of more than 5% of our common shares. In general, shareholders must file, within five business days after the acquisition, a report of beneficial ownership with the SEC containing the information prescribed by the regulations under the Exchange Act. This information is also required to be sent to us and to each U.S. securities exchange on which our common shares are traded. Shareholders should consult with their own legal advisor regarding their reporting obligations under the Exchange Act.
Form and Transfer
As our shares are in registered book-entry form, the transfer of shares is governed by the rules of Article 35 of the Brazilian Corporate Law. This Article provides that a transfer of shares is affected by an entry made by BTG Pactual Serviços Financeiros S.A. DTVM, also known as the registrar, in its books, by debiting the share account of the transferor and crediting the share account of the transferee. BTG Pactual Serviços Financeiros S.A. DTVM also performs all the services of safe-keeping and transfer of shares and related services for us.
Transfers of shares by a non-Brazilian shareholder are made in the same way and entered into by that shareholder’s local agent on the shareholder’s behalf except that if the original investment was registered with the Brazilian Central Bank pursuant to Resolution No. 4,373, the foreign investor must also seek amendment, if necessary, through its local agent, of the electronic registration to reflect the new ownership.
The B3 operates as a central clearing system. A holder of our shares may choose, in its discretion, to participate in this system and all shares elected to be put into this system will be deposited in the custody of the B3 (through a Brazilian institution duly authorized to operate by the Brazilian Central Bank and having a clearing account with the B3). The fact that those shares are held in the custody of the B3 will be reflected in our register of shareholders. Each participating shareholder will, in turn, be registered in our register of beneficial shareholders maintained by the B3 and will be treated in the same way as registered shareholders.
Board of Directors
According to the Brazilian Corporate Law, our officers and directors are prohibited from voting on or acting in matters in which their interests conflict with ours.
Our bylaws provide that the shareholders are responsible for determining the global remuneration of the members of our management bodies. Our board of directors is responsible for dividing the remuneration among the members of management. There are no specific provisions regarding the directors’ power to vote on their compensation in the absence of an independent quorum.
With respect to the borrowing powers of the board of directors, the board of directors has the power to authorize the borrowing of funds, either in the form of bonds, notes, commercial paper or other instruments of regular use in the market. Other financing arrangements, including bank loans, may be entered into by us upon the joint signatures of (i) two executive officers, (ii) one officer and one attorney-in-fact or (iii) two attorneys-in-fact.
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There is no requirement under the Brazilian Corporate Law or our bylaws that directors retire upon reaching a certain age. In addition, our bylaws do not provide for the re-election of directors at staggered intervals.
For additional information on our board of directors, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board of Directors” and “Item 6. Directors, Senior Management and Employees—C. Board Practices.”
Election of Board of Directors
The election of members of our board of directors, absent a request to adopt a cumulative voting system, will be conducted under a system of slate voting whereby voting will be based on a slate of directors and no voting will be allowed on individual candidates. Our board of directors is appointed by our shareholders for a two-year term and three reserved seats as follows: (i) one acting member (and his or her alternate) to be appointed by the Brazilian government, as holder of the “golden share” and (ii) two acting members (and his or her alternate) to be appointed by our employees (one board member and his or her alternate will be appointed by the Employee Investment Club of the Company (CIEMB – Clube de Investimentos dos Empregados da Embraer), and one Board member and his or her alternate will be appointed by the non-shareholder employees of the Company). The remaining eight acting directors are elected in accordance with the slate voting or cumulative voting rules contained in our bylaws. A candidate may participate in two or more different slates. Each shareholder may only vote on one slate and the slate that receives the highest number of votes shall be declared elected.
Any shareholder or group of shareholders has a right to propose and submit a slate of members for election to the board of directors different than the slate provided according to our bylaws (i.e., proposed by the board of directors). The same shareholder or group of shareholders may not submit more than one slate. Our bylaws also contain a provision whereby a shareholder that intends to appoint an alternative slate must send written notice at least ten days prior to the general meeting at which the members of the board of directors will be elected, providing us with the name and other particulars and professional resume of the candidates. In case we receive this notice, we must publish a press release to our shareholders, which also must be available on our website within at least eight days before the date of the general meeting, informing shareholders how to obtain a copy of the proposed slate.
Alternatively, the election of members of the board of directors may be conducted under a system of cumulative voting. According to the regulations of the CVM and to our bylaws, adoption of a resolution for cumulative voting depends on a written request by shareholders representing at least 5% of our capital stock, submitted at least 48 hours in advance of the time for which the general shareholders’ meeting has been called, including through a remote voting mechanism. Under the cumulative voting system, each share is entitled to the same number of votes as the number of board members to be elected (subject to the restriction on shareholders holding greater than 5% of the common shares and restrictions on non-Brazilian shareholders as per our by-laws), and each shareholder is entitled to concentrate votes in just one candidate or to distribute the votes among more than one or all of the candidates. Any vacant offices not filled due to a tie in the voting will be subject to a new vote, under the same process.
Preemptive Rights
Each of our shareholders has a general preemptive right to subscribe for shares in the event of any capital increase, or securities convertible into shares, in proportion to its shareholding, except in the event of the grant and exercise of any option to acquire shares of our capital stock. A period of at least 30 days following the publication of notice of the issuance of shares or securities convertible into shares is allowed for exercise of the right, and the right is negotiable. According to the Brazilian Corporate Law and our bylaws, the board of directors may, in its discretion, eliminate the preemptive rights of the shareholders in the event that we issue shares, debentures convertible into shares, or subscription warrants that will be offered either through a stock exchange or in a public offering, or through an exchange of shares in a public offering, the purpose of which is to acquire control of another company, as established by law.
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In the event of a capital increase by means of the issuance of new shares, holders of ADSs, or of common shares, would, except under the circumstances described above, have preemptive rights to subscribe to any class of our newly issued shares. However, a holder may not be able to exercise the preemptive rights relating to the common shares underlying the ADSs unless a registration statement under the Securities Act is effective with respect to those shares to which the rights relate or an exemption from the registration requirements of the Securities Act is available. For additional information on the risks related to our preemptive rights, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Common Shares and ADSs—Holders of our ADSs might be unable to exercise preemptive rights with respect to the common shares.
Redemption and Right of Withdrawal
The Brazilian Corporate Law provides that, under limited circumstances, a shareholder has the right to withdraw from the company and to receive payment for his shares. This right of withdrawal may be exercised by dissenting shareholders if at least half of voting shares outstanding authorize us to:
| • | reduce the mandatory distribution of dividends; |
| • | change our corporate purpose; |
| • | merge into or consolidate with another company, subject to the conditions set forth in the Brazilian Corporate Law; |
| • | transfer all of our shares to another company or receive shares of another company in order to make the company whose shares were transferred a wholly owned subsidiary of the other company, known as a merger of shares (incorporação de ações); |
| • | acquire control of another company at a price which exceeds the limits set forth in the Brazilian Corporate Law; |
| • | participate in a centralized group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein; or |
| • | conduct a spin-off that results in (i) a change of our corporate purposes, except if the assets and liabilities of the spun-off company are contributed to a company that is engaged in substantially the same activities, (ii) a reduction in the mandatory dividend or (iii) any participation in a centralized group of companies, as defined under the Brazilian Corporate Law. |
In addition, if the entity resulting from a merger, merger of shares (incorporação de ações), as described above, or a consolidation or a spin-off of a listed company fails to become a listed company within 120 days of the shareholders’ meeting at which this decision was taken, the dissenting shareholders may also exercise their right of withdrawal.
The dissenting shareholders may exercise the right of withdrawal only in relation to the shares held on the date that is the earliest between the date of the publication of the first call notice for the shareholders’ meeting that approved the resolution giving rise to the right of withdrawal, or on the date of publication of the material fact in relation to such resolution.
The Brazilian Corporate Law contains provisions that restrict withdrawal rights and allow companies to redeem their shares at their economic value, subject to certain requirements. As our bylaws currently do not provide that our shares would be redeemable at their economic value, our shares would be redeemable at their book value, determined on the basis of the last statement of financial position approved by the shareholders. If the shareholders’ meeting giving rise to withdrawal rights occurs more than 60 days after the date of the last approved statement of financial position, a shareholder may demand that its shares be valued on the basis of a new statement of financial position that is as of a date within 60 days of such shareholders’ meeting.
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According to the Brazilian Corporate Law, in events of consolidation, merger, merger of shares (incorporação de ações), participation in a group of companies, and acquisition of control of another company, the right to withdraw does not apply if the shares in question meet certain tests relating to market liquidity and float. Shareholders would not be entitled to withdraw their shares if the shares are a component of a general stock index and shares held by persons unaffiliated with the controlling shareholder represent more than half of the outstanding shares of the relevant type or class. According to CVM Resolution No. 78, dated March 29, 2022, as amended, or CVM Resolution No. 78, the applicable general stock index is the Bovespa index, or Ibovespa, of which we are a component.
Mechanism to Promote Dispersed Ownership of Our Shares
Our bylaws contain provisions that have the effect of avoiding concentration of our shares in the hands of an investor or a small group of investors in order to promote more dispersed ownership of our shares. To this end, these provisions place certain obligations on a shareholder or group of shareholders that becomes a holder of 35% or more of our total capital stock, or an Acquiring Shareholder. Not later than 15 days after a shareholder becomes an Acquiring Shareholder, this shareholder must submit a request to the Brazilian government, through the Ministry of Finance, to make a public tender offer to acquire all of our capital stock. The Brazilian government will have full discretion to accept or deny this request. The Acquiring Shareholder may not purchase any additional shares until the Brazilian government provides its opinion on the public offer. If the request is accepted by the Brazilian government, the Acquiring Shareholder must make a public offer for all shares within 60 days of acceptance. The offer must be made in accordance with the CVM and the B3 regulations and the provisions of our bylaws. If the request is denied by the Brazilian government, the Acquiring Shareholder must sell all shares the Acquiring Shareholder owns in excess of 35% of our total capital stock within 30 days. Failure to comply with these provisions will subject the Acquiring Shareholder to the potential suspension of all voting rights inherent to the shares the Acquiring Shareholder holds, if a resolution to this effect is approved at a general meeting of our shareholders called by our management. These provisions are not applicable to shareholders who become holders of 35% or more of our total capital stock in certain transactions specified in our bylaws as, for example, cancellation of our common shares held in treasury.
The public tender offer must be (i) directed to all of our shareholders, (ii) made through an auction to take place on the B3, (iii) launched at a set price calculated in accordance with the procedure set forth below, (iv) paid upfront, in reais, (v) made so as to assure equal treatment to all shareholders, (vi) irrevocable and not subject to any changes after publication of the bidding offer and (vii) based on a valuation report to be prepared in accordance with the rules set forth in our bylaws and in applicable CVM rules and regulations.
The price to be offered for the shares in the public tender offer will be calculated as follows:
Tender Offer Price = Value of the Share + Premium,
where:
| • | “Tender Offer Price” corresponds to the acquisition price for each share issued by us in the public offering of shares provided hereunder. |
| • | “Value of the Share” corresponds to the greater of: |
| (i) | the highest unit quotation obtained for the shares issued by us during the 12-month period prior to the tender offer among values recorded on any stock exchange on which the shares were traded; |
| (ii) | the highest price paid by the Acquiring Shareholder, during the 36-month period prior to the tender offer, for a share or tranche of shares issued by us; |
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| (iii) | the amount equivalent to 14.5 times our Consolidated Average EBITDA, as defined below, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us; or |
| (iv) | the amount equivalent to 0.6 times the amount of our firm backlog orders, according to the last information disclosed by the latter, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us. |
| • | “Premium” corresponds to 50% of the Value of the Share. |
| • | “Consolidated EBITDA” is our consolidated operating profit before net financial expenses, income tax and social contribution, depreciation, depletion and amortization, as assessed based on the audited statements for our most recent complete fiscal year. |
| • | “Average Consolidated EBITDA” is the arithmetic average of our consolidated EBITDA for the two most recent complete fiscal years. |
The launch of a public tender offer does not preclude us or any of our shareholders from launching a competing public tender offer, in accordance with applicable regulations.
Arbitration
Any disputes or controversies relating to the Novo Mercado rules, our bylaws, the Brazilian Corporate Law, the rules published by the CMN, the Brazilian Central Bank, the CVM, and other rules applicable to the Brazilian capital markets in general, must be submitted to arbitration conducted in accordance with the rules of the B3 Arbitration Chamber, or the Rules.
According to item 1.4 of the Rules, unless otherwise agreed by the Parties, the parties should be bound by the Rules in force on the date of the request for arbitration. Any shareholder that becomes a holder of shares representing our control agrees to comply with the rules of the B3 Arbitration Chamber. These provisions will not apply, however, in the event of a dispute or controversy related to our golden share which shall be subject to the jurisdiction of the central courts of Brasília, Federal District of Brazil.
Going Private Process
If our shareholders determine to take us private and at that time we are controlled by a shareholder, or a group of shareholders, the controlling shareholder or group of shareholders is responsible for conducting a public tender offer for the acquisition of our shares. If our shareholders determine to take us private and at that time we are subject to widespread control, we must conduct the public tender offer, within the limits imposed by applicable law. In this case, we may only purchase shares from shareholders that have voted in favor of our Company becoming a private company after purchasing all shares from the other shareholders that did not vote in favor of the “going private” decision and that have accepted the public tender offer.
Thus, we may become a private company only if we or our controlling shareholders, as the case may be, conduct a public tender offer to acquire all of our outstanding shares (taking into account, for this purpose, the shares held by the shareholders that expressly agree with the ‘going private’ decision or sign up for the public tender offer), subject to prior approval of the public tender offer by the Brazilian government, as holder of the golden share, and in accordance with Brazilian Corporate Law, the CVM regulations and the Novo Mercado rules, as applicable.
The public tender offer must be made at a fair price based on a valuation report of the Company, which means that the offer for the purchase of the totality of shares must be equivalent to at least the value of the Company as appraised. According to our bylaws, the price per share shall be equivalent to, at least, the economic value of those shares as determined in a valuation report prepared by a specialized and independent company of recognized experience, which will be chosen at a shareholders’ meeting from a list of three institutions presented by our board of directors, by an absolute majority of the votes of the shareholders of our outstanding shares present at the meeting (excluding, for this purpose, the shares held by any controlling shareholder or group of shareholders at the time, if any, his/her partners and dependents as described in his/her income tax statement, if the controlling shareholder is an individual; treasury shares; shares held by our affiliates and by other companies that are a part of our economic group, as well as blank votes). All the expenses and costs incurred in connection with the preparation of the valuation report must be borne by the offeror.
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Shareholders holding at least 10% of our outstanding shares (taking into account, for this purpose, all the Company’s shares, except for the shares held by the controlling shareholder; shares held by our affiliates and by other companies that are a part of our economic group; shares held by our officers and directors; and treasury shares) may require our management to call a special shareholders’ meeting to determine whether to perform another valuation using the same or a different valuation method. This request must be made within 15 days following the disclosure of the price to be paid for the shares in the public tender offer. The shareholders who make the request, as well as those who vote in its favor, must reimburse us for any costs involved in preparing the new valuation, if the new valuation price is not higher than the original valuation price. If the new valuation price is higher than the original valuation price, the public tender offer must be made at the higher price.
Delisting from the Novo Mercado
Our delisting from the Novo Mercado, either by voluntary or compulsory action or by virtue of corporate restructuring, shall observe the Novo Mercado rules. At any time, we may delist our shares from the Novo Mercado, provided that a public tender offer for the acquisition of our outstanding shares is carried out.
If we are controlled by a shareholder, or a group of shareholders, at the time of our delisting from the Novo Mercado, either for our shares to be traded outside the Novo Mercado or as a result of a corporate reorganization, the controlling shareholder or group of shareholders is responsible for conducting the public tender offer for the acquisition of our shares. If we are subject to widespread control at the time of our delisting from the Novo Mercado, either for our shares to be traded outside the Novo Mercado or as a result of a corporate reorganization, the shareholders present at the meeting may determine the persons responsible for carrying out the tender offer or decide to waive the tender offer.
If the public tender offer is carried out, our delisting in conditioned to shareholders representing more than 1/3 (one third) of our outstanding shares having (i) expressly agreed with the delisting decision or (ii) accepted the public tender offer (taking into account, for this purpose, the shares held by the shareholders that expressly agree with the delisting decision or sign up for the public tender offer). The decision of the shareholders must specify if the delisting will occur because the securities will no longer be traded on the Novo Mercado, or because we are going private. Our delisting from the Novo Mercado will not result in the loss of our registration as a publicly held company on the Brasil, Bolsa, Balcão, or B3.
According to our bylaws, the price per share for the public tender offer shall be equivalent to, at least, the economic value of those shares as determined in a valuation report prepared by a specialized and independent company of recognized experience, which will be chosen at a shareholders’ meeting from a list of three institutions presented by our board of directors, by an absolute majority of the votes of the shareholders of our outstanding shares present at the meeting (excluding, for this purpose, the shares held by any controlling shareholder or group of shareholders at the time, if any, his/her partners and dependents as described in his/her income tax statement, if the controlling shareholder is an individual; treasury shares; shares held by our affiliates and by other companies that are a part of our economic group, as well as blank votes). In addition, the Novo Mercado rules establish that the offer for the purchase of the totality of shares must be equivalent to at least the fair value of the Company as appraised. All the expenses and costs incurred in connection with the preparation of the valuation report must be paid by the offeror.
A voluntary delisting from the Novo Mercado may occur regardless of the completion of the tender offer mentioned above in the event of a waiver approved at a general shareholders’ meeting, which must observe the rules and conditions of the Novo Mercado Rules.
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Pursuant to our bylaws, we may also be delisted if the São Paulo Stock Exchange decides to suspend trading of our shares on the Novo Mercado due to our non-compliance with the Novo Mercado rules. In this case, the chairman of the board of directors must call a shareholders’ meeting, within two days of the determination by the São Paulo Stock Exchange, in order to replace all members of our board of directors. If the chairman of the board of directors does not call the shareholders’ meeting, any shareholder may do so. The new board of directors will be responsible for the compliance with the requirements that resulted in the delisting.
Additionally, if we are delisted from the Novo Mercado (1) because a decision taken at a general shareholders’ meeting resulted in non-compliance with the Novo Mercado rules, the public tender offer must be conducted by the shareholders that voted in favor of the decision, or (2) as a result of our non-compliance with the Novo Mercado rules resulting from acts of our management, we must conduct the public tender offer in order to become a private company, within the limits imposed by law, if the Company is not controlled by a controlling shareholder or group of shareholders. Otherwise, the controlling shareholder or group of shareholders is responsible for conducting a public tender offer for the acquisition of the shares.
According to the Novo Mercado rules, in the event of a transfer of our shareholding control within 12 months following our delisting from the Novo Mercado, the selling controlling shareholders and the acquirer must offer to acquire the remaining shares for the same price and terms offered to the selling controlling shareholders, adjusted for inflation, or the surplus, if there is any, between the price per share offered at the public tender offer, adjusted for inflation, and the price per share received by the selling controlling shareholders due to the transfer of control.
Sarbanes Oxley Act of 2002
We maintain controls and procedures designed to ensure that we are able to collect the information required to disclose in the report we file with the SEC, and to process, summarize and disclose the information within the periods specified in the rules of the SEC. We have filed the relevant officer certifications under Section 404 of the U.S. Sarbanes Oxley Act of 2002 regarding internal controls over financial reporting as Exhibits 12.1 and 12.2 to this annual report.
C. Material Contracts
Not applicable.
D. Exchange Controls
There are no restrictions on ownership of our common shares by individuals or legal entities domiciled or headquartered outside Brazil. However, the registration of this investment with the Brazilian Central Bank is required and the right to convert dividend payments and proceeds from the sale of common shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation.
Pursuant to Brazilian law, investors may invest in common shares under Resolution No. 4,373, of September 29, 2014, issued by the CMN, governmental authority responsible for formulating the Brazilian monetary and credit policies. The rules of Resolution No. 4,373 allow foreign investors to invest in almost all financial assets and to engage in almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are fulfilled. In accordance with Resolution No. 4,373, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities domiciled or headquartered abroad.
Pursuant to the Resolution No. 4,373, foreign investors must: (i) appoint at least one representative in Brazil with powers to perform actions related to the foreign investment; (ii) provide all required information that shall be sent by the representative to the CVM through the CVM’s website; (iii) be registered as a foreign investor with the CVM and the Brazilian tax authorities; and (iv) register the foreign investment with the Brazilian Central Bank.
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Securities and other financial assets held by foreign investors pursuant to Resolution No. 4,373 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Brazilian Central Bank or the CVM. In addition, securities trading for these investors is restricted to transactions carried out in the stock exchanges or organized over-the-counter markets licensed by the CVM.
Under Resolution No. 4,373, foreign investors registered with the CVM may buy and sell securities on Brazilian stock exchanges or organized over-the-counter markets without obtaining a separate certificate of registration for each transaction. Investors under these regulations are also generally entitled to favorable tax treatment.
Annex II to Resolution No. 4,373 provides for the issuance of depositary receipts in foreign markets in respect of Brazilian issuers’ securities.
In connection with equity offerings of our common shares, an electronic registration was issued in the name of the depositary with respect to the ADSs and is maintained by the custodian on behalf of the depositary. This electronic registration was carried out through the Brazilian Central Bank Information System. Pursuant to the registration, the custodian and the depositary are able to convert dividends and other distributions with respect to the common shares represented by ADSs into foreign currency and remit the proceeds outside Brazil, to the holder of ADSs. In the event that a holder of ADSs exchanges the ADSs for common shares, the custodian must update the registry of the investment with the Brazilian Central Bank within five business days after the exchange. In order to receive the common shares, the investor must have a registration with the Brazilian Central Bank and the CVM pursuant to Resolution 4,373. Until this registration has been obtained, the holder will not be able to receive the common shares.
In addition, if the foreign investor resides in a “tax haven” jurisdiction or is not an investor registered under Resolution No. 4,373, the investor will be subject to less favorable Brazilian tax treatment than a holder of ADSs.
For additional information on Brazilian taxes, see “Item 3. Key Information—D. Risk Factors—Risks Relating to our Common Shares and ADSs—If holders of our ADSs exchange the ADSs for common shares, they risk losing the ability to remit foreign currency abroad and Brazilian tax advantages” and “Item 10. Additional Information—E. Taxation—Material Brazilian Tax Consequences.”
E. Taxation
The following discussion, subject to the limitations set forth below, summarizes certain Brazilian and United States of America tax considerations relating to the ownership of our common shares or ADSs. This discussion does not purport to be a complete analysis of all tax considerations in those countries and does not address tax treatment of shareholders under the laws of other countries. Shareholders that are resident in countries other than Brazil and the United States of America, along with shareholders that are resident in those two countries, are urged to consult with their own tax advisors regarding the tax consequences of an investment in our common shares or ADSs. This summary is based upon the tax laws of Brazil and the United States of America as in effect on the date of this annual report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Any change in the law may change the consequences described below.
Although there presently is no income tax treaty between Brazil and the United States of America, the tax authorities of the two countries have had discussions that may result in this treaty. No assurance can be given, however, as to if or when a treaty will enter into force or how it will affect the U.S. holders of common shares or ADSs.
Material Brazilian Tax Consequences
General. The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of common shares or ADSs, as the case may be, by a holder that is not considered domiciled in Brazil, or a Non-Brazilian Holder, for purposes of Brazilian taxation.
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This discussion is not a comprehensive discussion of all the tax considerations that may be relevant to a decision to purchase our common shares or ADSs and is not applicable to all categories of investors, some of which may be subject to special rules, and does not specifically address all of the Brazilian federal income tax considerations applicable to any particular holder. It is based on the tax laws of Brazil in effect on the date of this report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Each prospective purchaser is urged to consult his own tax advisor about the particular Brazilian tax consequences of an investment in our common shares or ADSs.
Taxation of Dividends. Dividends, including stock dividends and other dividends paid in kind, paid by us to the depositary in respect of the ADSs, or to a Non-Brazilian Holder in respect of the common shares, are currently not subject to withholding tax, provided that they are paid out of profits generated as of January 1, 1996. There are some proposed bills under discussion in the Brazilian Congress which, if enacted, would revoke this exemption. Furthermore, the taxation of dividends has also been mentioned multiples times by the government and law makers as one of the items in the Brazilian tax reform agenda (and was included in the Brazilian government’s proposition of the Income Tax Reform). Should any of these bills be passed by Congress and sanctioned by the president of Brazil, all dividends paid from Brazil would be subject to withholding tax in Brazil upon payment to Non-Brazilian Holders.
Taxation of Gains. According to Law No. 10,833, enacted on December 29, 2003, capital gains realized on the sale or disposition of assets located in Brazil by a Non-Brazilian Holder, regardless of whether the sale or the disposition is made to another non-Brazilian resident or to a Brazilian resident, is subject to taxation in Brazil. Accordingly, on the disposition of the common shares, which are considered assets located in Brazil, the Non-Brazilian Holder will be subject to income tax on the gains assessed, following the rules described below, regardless of whether the transactions are conducted in Brazil or abroad and with a Brazilian resident or not. Regarding the ADSs, although the matter is not free from doubt, arguably the gains realized by a Non-Brazilian Holder on the disposition of ADSs should not be taxed in Brazil, based on the argument that ADSs would not constitute assets located in Brazil for purposes of Law No. 10,833, 2003. However, we cannot ensure about how Brazilian tax authorities and courts would interpret the definition of assets located in Brazil in connection with the taxation of gains realized by a Non-Brazilian Holder on the disposition of ADSs. Thus, the gain on a disposition of ADSs by a Non-Brazilian Holder may be subject to income tax in Brazil according to the rules described below for ADSs or those applicable to the disposition of common shares, when applicable. It is important to clarify that, for purposes of Brazilian taxation, the income tax rules on gains related to disposition of common shares or ADSs can vary depending on the domicile of the Non-Brazilian Holder, the form by which the Non-Brazilian holder has registered its investment with the Central Bank and/or how the disposition is carried out, as described below.
The deposit of common shares in exchange for ADSs may be subject to Brazilian income tax on capital gains at rates ranging from 15% to 22.5%, (or 25% in case of a Non-Brazilian Holder located in a Low or Nil Tax Jurisdiction as defined below), if the acquisition cost of the common shares is lower than (i) the average price per common share on a Brazilian stock exchange on which the greatest number of these shares were sold on the day of deposit or (ii) if no common shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of common shares were sold in the 15 trading sessions immediately preceding such deposit. In this case, the positive difference between the average price of the common shares, calculated as above, and the corresponding acquisition cost, may be considered a capital gain. In some circumstances, there may be arguments to support that such tax treatment is not applicable in case of Non-Brazilian Holders registered under Resolution No. 4,373/14 from the Brazilian Central Bank, or the 4,373 Holder, that are not resident in a Low or Nil Tax Jurisdiction (as defined below). Prospective holders of common shares should consult their own tax advisors as to the tax consequences of the deposit in exchange for ADSs. The withdrawal of ADSs in exchange for common shares should not be considered as giving rise to a capital gain subject to Brazilian income tax, as far as the regulatory rules in respect to the registration of the investment before the Central Bank are duly observed.
Gains assessed on the disposition of common shares carried out on the Brazilian stock exchange (which includes the transactions carried out on the organized over-the-counter market) are:
| • | exempt from income tax when assessed by a Non-Brazilian Holder that (i) is a 4,373 Holder and (ii) is not resident in a Low or Nil Tax Jurisdiction (as defined below); or |
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| • | subject to income tax at a rate of up to 25% in any other case, including the gains assessed by a Non-Brazilian Holder that (i) is not a 4,373 Holder and/or or (ii) is a 4,373 Holder resident in a Low or Nil Tax Jurisdiction (as defined below). In these cases, a withholding income tax of 0.005% of the sale value shall be applicable and can be later offset with the eventual income tax due on the capital gain. Day trade transactions are subject to the rate of 1%. |
Any other gains assessed on a disposition of the common shares that is not carried out on Brazilian stock exchanges are subject to income tax at rates of up to 22.5%, except for a resident of a Low or Nil Tax Jurisdiction (as defined below) which, in this case, is subject to income tax at a rate of 25%. In case the gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% on the sale value shall also be applicable and can be offset with the eventual income tax due on the capital gain. In the case of a redemption of common shares or ADSs or a capital reduction by a Brazilian corporation, the positive difference between the amount effectively received by the Non-Brazilian Holder and the proportional acquisition cost of the common shares or ADSs redeemed is treated as capital gain derived from sale or exchange of common shares not carried out in a Brazilian stock exchange market and is therefore subject to income tax at rates of up to 25%, as the case may be. As a general rule, the gains realized as a result of a disposition transaction of common shares or ADSs are determined by the difference between the amount realized on the sale or exchange of the shares or ADSs and their acquisition cost.
There can be no assurance that the current preferential tax treatment for Non-Brazilian Holders of ADSs and 4,373 Holder of common shares will continue.
Any exercise of preemptive rights relating to the common shares or ADSs will not be subject to Brazilian income tax. Any gain on the sale or assignment of preemptive rights relating to our common shares or the ADSs by a Non-Brazilian Holder of common shares will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposition of these shares.
Taxation on Interest on Shareholders’ Equity. For additional information on taxation on interest on shareholders’ equity, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy—History of Dividend and Interest on Shareholders’ Equity Payments and Dividend Policy.”
In accordance with Law No. 9,249, dated December 26, 1995, as amended, Brazilian corporations may make payments to shareholders characterized as distributions of interest on the company’s shareholders’ equity on top of or as an alternative to making dividend distributions. This interest is calculated by multiplying the TJLP as determined by the Central Bank from time to time by the sum of determined Brazilian company’s net equity accounts. Interest on Shareholders’ Equity are deductible for purposes of calculating the Brazilian corporate income tax and social contribution on net profits, as long as the following limits are observed:
| • | 50% of net profits (after the social contribution on net profits but before taking such distribution and the provision for corporate income tax into account) related to the period for which the payment is made; and |
| • | 50% of the sum of retained profits and profit reserves as of the date of the beginning of the period for which the payment is made. |
The Brazilian Corporate Law establishes that interest attributed to shareholders’ equity in respect of the common shares paid to shareholders who are Non-Brazilian holders, including Non-Brazilian holders of ADSs, are subject to Brazilian withholding income tax at the rate of 15%, (or 25% in case of a resident of a Low or Nil Tax Jurisdiction, as defined below). The distribution of interest on shareholders’ equity may be determined by our board of directors. We cannot ensure that our board of directors will not determine that future distributions of profits may be made by means of interest on shareholders’ equity instead of by means of dividends.
The amounts paid as distribution of interest on shareholders’ equity to a Non-Resident Holder located in a country that has a tax treaty with Brazil may be classified as (i) interest, (ii) dividends or (iii) other revenues. The classification will depend on the actual wording of the treaty. There are some proposed bills under discussion in the Brazilian Congress which, if enacted, would revoke the possibility of the company paying interest on shareholders’ equity. Furthermore, revoking the deductibility of the interest on shareholder’s equity has also been mentioned multiples times by the government and law makers as one of the items in the Brazilian tax reform agenda (and was included in the Brazilian government’s proposition of the Income Tax Reform).
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Low or Nil Taxation Jurisdictions. On June 4, 2010, Brazilian tax authorities enacted Normative Ruling No. 1,037 listing (i) the countries and jurisdictions considered as Low or Nil Taxation Jurisdiction or where the local legislation does not allow access to information related to the shareholding composition of legal entities, to their ownership or to the identity of the effective beneficiary of the income attributed to non-residents (Tax Favorable Jurisdictions) and (ii) the privileged tax regimes, or PTR, which definition is provided by Law No. 9,430, of 27 December, 1996. Brazilian tax authorities periodically update the list of countries/jurisdictions and regimes that shall be treated as Tax Favorable Jurisdiction and PTR.
The concept of PTR, encompasses structures that: (i) are not liable to tax on income or tax it at a maximum rate lower than 20%; (ii) grant tax benefits to non-residents (1) with no requirement to carry out substantial economic activity within the territory or (2) on the condition that they do not carry out substantial economic activity within the territory; (iii) do not tax income from outside its territory, or taxes it at less than 20%; or (iv) do not disclose certain information on the ownership and beneficial ownership of assets or on transactions within its territory, or imposes restrictions on disclosure of that information
On November 28, 2014, the Brazilian Revenue Service issued Rule 488 reducing the concept of Tax Favorable Jurisdictions and of PTR to those that tax the income below the rate of 17% (the previous concept adopted a 20% maximum rate for that purpose).
We believe that the best interpretation of the current tax legislation leads to the conclusion that the above-mentioned PTR concept should apply solely for purposes of Brazilian transfer pricing and thin capitalization rules. Currently, the understanding of the Brazilian tax authorities is in the sense that payment of interest to beneficiaries resident in PTRs is not subject to the same treatment applicable to beneficiaries in Tax Favorable Jurisdictions (Answer to Advance Tax Ruling Request COSIT n. 575, of December 20, 2017). Nevertheless, we cannot ensure that subsequent legislation or interpretations by the Brazilian tax authorities regarding the definition of a PTR provided by Law No. 9,430, of December 27, 1996, altered by Law No. 11,727 will also apply to a Non-Brazilian Holder on payments of interest on shareholders’ equity. Notwithstanding the above, we recommend that you consult your own tax advisors regarding the consequences of the implementation of Law No. 11,727, Normative Ruling No. 1,037 and Rule 488.
Taxation on Foreign Exchange Transactions, or IOF/Exchange. Pursuant to Decree No. 6,306/07, the conversion into foreign currency or the conversion into Brazilian currency of the proceeds received or remitted by a Brazilian entity from a foreign investment in the Brazilian securities market, including those in connection with the investment by a Non-Brazilian Holder in the common shares and ADSs may be subject to the IOF/Exchange. Currently applicable rate for most foreign currency exchange transactions is 0.38%.
However, currency exchange transactions carried out for the in-flow of resources into Brazil by a 4,373 Holder are subject to IOF/Exchange at (i) 0% rate in case of variable income transactions carried out on the Brazilian stock, futures and commodities exchanges, as well as in the acquisitions of shares of Brazilian publicly held companies in public offerings or subscription of shares related to capital contributions, provided that the issuer company has registered its shares for trading in the stock exchange, and (ii) 0% for the outflow of resources from Brazil related to these type of investments, including payments of dividends and interest on shareholders’ equity and the repatriation of funds invested in the Brazilian market. Furthermore, the IOF/Exchange is currently levied at a 0% rate on the withdrawal of ADSs into shares.
In any case, the Brazilian government may increase the rate at any time, up to 25.0%. However, any increase in rates may only apply to future transactions.
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Tax on Transactions Involving Bonds and Securities, or IOF/Bonds. Pursuant to Decree 6,306/07 the IOF/Bonds may be imposed on any transactions involving bonds and securities, even if the transactions are carried out on a Brazilian stock exchange. The rate of IOF/Bonds applicable to transactions involving common shares and ADS is currently zero. In particular, the IOF/Bond also levies at a zero percent rate on the transfer of shares traded on the Brazilian stock exchange with the purpose of the issuance of depositary receipts to be traded outside Brazil. The Brazilian government may increase the rate of the IOF/Bonds at any time by up to 1.5% per day of the transaction amount, but only in respect of future transactions.
Other Brazilian Taxes. There are no Brazilian federal inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of common shares or ADSs by a Non-Brazilian Holder. Gift and inheritance taxes, however, may be levied by some states of Brazil on gifts made or inheritances bestowed by Non-Brazilian Holders to individuals or entities resident or domiciled within those states in Brazil. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of common shares or ADSs.
Brazilian Tax Reform. In addition to the potential effects already mentioned above about the taxation of dividends and revocation of the interest on shareholder’s equity, the Brazilian Government and Congress have been discussing several different bills and proposed amendments to the Federal Constitution in the context of a comprehensive Brazilian tax reform, which may include the elimination or unification of certain taxes, the creation of new taxes, the increase of existing taxes and contribution rates, the revocation of income tax exemptions on the distribution of profits and dividends and changes relating to interest on net equity. As a result, some of these proposals may significantly change the Brazilian tax system and affect the way we calculate our direct and indirect taxes. At this point we cannot assure if, when and how any of these changes will be implemented and which effects it could have in our operations.
Material U.S. Federal Income Tax Consequences
The following discussion, subject to the limitations and conditions set forth herein, summarizes certain U.S. federal income tax consequences of the purchase, ownership and disposition of Embraer common shares and ADSs. This discussion only applies to beneficial owners of Embraer common shares or ADSs that are “U.S. Holders” (as defined below) that hold common shares or ADSs of Embraer as capital assets (generally for investment purposes). This discussion does not address all aspects of U.S. federal income taxation that may be applicable to a U.S. Holder, including, gift, estate, alternative minimum and Medicare contribution tax consequences, or the tax consequences to U.S. Holders subject to special treatment under U.S. federal income tax law, including:
| • | partnerships and other arrangements classified as partnerships for U.S. federal income tax purposes; |
| • | tax-exempt entities; |
| • | dealers and traders in securities; |
| • | insurance companies; |
| • | certain financial institutions; |
| • | persons who own Embraer common shares or ADSs as part of an integrated investment, including a straddle or conversion transaction, comprising the Embraer common shares or ADSs and one or more other positions for tax purposes; |
| • | U.S. Holders whose functional currency is not the U.S. dollar for U.S. federal income tax purposes; |
| • | persons who actually or constructively own 10% or more of Embraer’s total combined vote or value of its outstanding common shares or ADSs; |
| • | persons subject to special tax accounting rules under Section 451(b) of the Code; |
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| • | persons who acquired Embraer common shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation; and |
| • | persons holding Embraer common shares or ADSs in connection with a trade or business conducted outside the United States of America. |
In addition, there is no discussion herein of state, local, or non-U.S. tax considerations of the ownership and disposition of Embraer common shares or ADSs. The discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing final, temporary, and proposed U.S. Treasury regulations, rulings and other pronouncements of the U.S. Internal Revenue Service, or IRS, and judicial decisions as of the date of this annual report. Such authorities may be repealed, revoked or modified (with possible retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below.
This discussion is also based in part on the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
Shareholders are urged to consult their own independent tax advisors concerning the U.S. federal income tax consequences of the ownership of Embraer common shares and ADSs in light of their particular situations, as well as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, the term “U.S. Holder” means a beneficial owner of Embraer common shares or ADSs representing Embraer common shares for U.S. federal income tax purposes that is (i) an individual who is a citizen or resident of the United States of America, (ii) a corporation (or other entity taxable as a corporation), created or organized in or under the laws of the United States of America, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust (1) that is subject to the supervision of a court within the United States of America and the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code or (2) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. Except where specifically described below, this discussion assumes that Embraer is not a passive foreign investment company, or PFIC, for U.S. federal income tax purposes.
If a partnership (or an arrangement treated as a partnership for U.S. federal income tax purposes) holds Embraer common shares or ADSs, the tax treatment of such partnership and each partner will generally depend upon the status of the partner in such partnership and upon the activities of the partnership. Partnerships that hold Embraer common shares or ADSs, and partners of a partnership holding such common shares or ADSs, are urged to consult their own tax advisors regarding the consequences of the ownership and disposition of Embraer common shares or ADSs.
In general, for U.S. federal income tax purposes, a U.S. Holder who is a beneficial owner of an ADS will be treated as the owner of the underlying Embraer common shares that are represented by such ADS.
Distributions on Embraer Common Shares or ADSs
For U.S. federal income tax purposes, the gross amount of any distributions (including distributions of notional interest charges attributed to shareholders’ equity), other than certain pro rata distributions of ordinary shares, paid to U.S. Holders of Embraer common shares or ADSs (including Brazilian withholding taxes imposed on such distributions) will be treated as a dividend, to the extent paid out of current or accumulated earnings and profits of Embraer as determined under U.S. federal income tax principles. Such a dividend will be includable in the gross income of a U.S. Holder as ordinary income on the date received by the U.S. Holder (or, in the case of ADSs, the depositary). To the extent that the amount of any distribution exceeds Embraer’s current and accumulated earnings and profits for a taxable year (as determined under U.S. federal income tax principles), the distribution will first be treated as a tax-free return of capital to the extent of a U.S. Holder’s adjusted tax basis in the Embraer common shares or ADSs, and thereafter as capital gain. Embraer does not expect to maintain calculations of earnings and profits in accordance with U.S. federal income tax principles, and unless and until such calculations are made, U.S. Holders should assume that a distribution is paid out of earnings and profits and will be treated as a dividend for U.S. federal income tax purposes.
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Dividends paid by Embraer will not be eligible for the dividends-received deduction allowed to certain domestic corporations under the Code.
The amount of any cash distribution paid in reais will be included in a U.S. Holder’s gross income in an amount equal to the U.S. dollar value of the reais calculated by reference to the exchange rate in effect on the date the dividend is received by the U.S. Holder, in the case of Embraer common shares, and by the depositary, in the case of ADSs, regardless of whether the reais are converted into U.S. dollars. If the reais received as a dividend are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the reais equal to their U.S. dollar value on the date of receipt.
Dividends received with respect to the Embraer common shares or ADSs will be treated as foreign source income for U.S. federal income tax purposes and will be “passive category income” for purposes of calculating foreign tax credits in most cases, subject to various limitations. Treasury regulations, which apply to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021 (the “Final Treasury Regulations”), impose significant additional requirements on the foreign taxes (including withholding taxes) for which a foreign tax credit can be claimed. However, IRS guidance issued in 2023 (Notice 2023-55 and Notice 2023-80) that provides temporary relief from the requirements of the Final Treasury Regulations for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). The notices provide that a taxpayer can either elect to credit its qualifying foreign income taxes as of 2023, subject to the foreign tax credit limitation rules, or deduct foreign income taxes in a given year. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year. The rules relating to computing foreign tax credits or deducting foreign income taxes are extremely complex, and U.S. Holders are urged to consult their own independent tax advisors regarding the availability of foreign tax credits with respect to any Brazilian withholding taxes in regards of dividends paid on Embraer’s common shares or ADSs.
Subject to applicable limitations (including an exception for certain hedged positions), the amount of dividends received by certain non-corporate U.S. holders (including individuals) with respect to the Embraer common shares or ADSs may be eligible for a reduced rate of taxation if the dividends represent “qualified dividend income.” Subject to certain exceptions, dividends paid on the Embraer common shares or ADSs will be treated as qualified dividend income if (i) the Embraer common shares or ADSs are readily tradable on an established securities market in the United States of America, (ii) the U.S. Holder meets certain holding period requirements for the common shares or ADSs and (iii) Embraer was not in the year prior to the year in which the dividend was paid (with respect to a U.S. Holder that held Embraer common shares or ADSs), and is not in the year in which the dividend is paid, a PFIC. Under guidance issued by the IRS, the ADSs of Embraer should qualify as readily tradable on an established securities market in the United States of America so long as they are listed on the NYSE. In the case of Embraer common shares held directly by U.S. Holders and not through an ADS, it is not clear whether dividends paid with respect to such shares will represent “qualified dividend income.” U.S. Holders holding Embraer common shares directly and not through an ADS are urged to consult their own independent tax advisors.
Sale, Exchange or Other Taxable Disposition of Embraer Common Shares or ADSs
A U.S. Holder will recognize a taxable gain or loss on any sale, exchange or other taxable disposition of Embraer common shares or ADSs in an amount equal to the difference between the amount realized on the sale, exchange or other taxable disposition and the U.S. Holder’s adjusted tax basis (determined in U.S. dollars) in the Embraer common shares or ADSs. If a Brazilian tax on gains is withheld on the sale or disposition of common shares or ADSs, a U.S. Holder’s amount realized will include the gross amount of the proceeds of such sale or disposition before deduction of the Brazilian tax. See “—Material Brazilian Tax Consequences—Taxation of Gains” for a description of when a disposition may be subject to taxation by Brazil. Such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if the Embraer common shares or ADSs have a holding period of more than one year. Certain non-corporate U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. The deductibility of capital losses is subject to limitations under the Code.
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Any gain or loss recognized by a U.S. Holder from the sale, exchange or taxable disposition of Embraer common shares or ADSs generally will be gain or loss from U.S. sources for U.S. foreign tax credit purposes. Consequently, if a Brazilian withholding tax or capital gains tax is imposed pursuant to a sale of Embraer common shares or ADSs, even if the Brazilian tax is otherwise a creditable tax, U.S. Holders who do not have sufficient foreign source income still might not be able to derive effective U.S. foreign tax credit benefit in respect of such Brazilian withholding tax or capital gains tax. Furthermore, as discussed above, the Final Treasury Regulations impose significant additional requirements on the foreign taxes for which a foreign tax credit can be claimed. However, as discussed above, IRS guidance provides temporary relief from certain of these requirements if the notice is applied consistently to all foreign taxes paid during the relevant taxable year. The rules relating to foreign tax credits, including the amount of foreign income taxes that may be claimed as a credit in any given year, are complex and subject to limitations. U.S. Holders are urged to consult their own independent tax advisor regarding the application of the foreign tax credit rules to their particular circumstances.
Deposits and withdrawals of Embraer common shares in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.
Passive Foreign Investment Company Rules
If, during any taxable year of a non-U.S. corporation, 75% or more of the corporation’s gross income consists of certain types of “passive” income, or the average quarterly value during a taxable year of the “passive assets” of the corporation (generally, assets that generate or are held to generate passive income) is 50% or more of the average quarterly value of all the corporation’s assets, the corporation will be treated as a PFIC under U.S. federal income tax law. For this purpose, passive income generally includes, among other things, dividends, interest, rents, royalties and gains from the disposition of investment assets, subject to various exceptions. If the non-U.S. corporation owns at least 25% (by value) of the stock of another corporation, it will be treated, for purposes of the PFIC tests, as owning its proportionate share of the other corporation’s gross assets and receiving its proportionate share of the other corporation’s gross income. However, if the non-U.S. corporation owns less than 25% (by value) of the stock of another corporation, that stock generally will be treated as a passive asset.
If Embraer were a PFIC for any taxable year during which a U.S. Holders owns common shares or ADSs, gain recognized by the U.S. Holder on a sale or other disposition (including certain pledges) of the common shares or ADSs would be allocated ratably over the U.S. Holder’s holding period. The amounts allocated to the taxable year of the disposition and to any year before Embraer became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax on such amount. Further, to the extent that any distribution received by a U.S. Holder on its common shares or ADSs exceeds 125% of the average of the annual distributions on the common shares or ADSs received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, described immediately above. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment). U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.
Based on its audited financial statements as well as relevant market and shareholder data, Embraer believes that it was not a PFIC for U.S. federal income tax purposes with respect to its 2024 taxable year. However, whether we will be a PFIC in 2025 or any future taxable year will depend on the nature, amount and value of Embraer’s operations, activities, assets and income as of the relevant time of determination. Accordingly, there can be no assurance that Embraer is not a PFIC or will not become a PFIC for 2025 or a future year.
U.S. Holders are urged to consult their own independent tax advisors regarding the potential application of the PFIC rules and related reporting requirements to the common shares or ADSs and the availability and advisability of making an election to avoid the adverse tax consequences of the PFIC rules should Embraer be considered a PFIC for any taxable year.
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Information Reporting and Backup Withholding
In general, payments of dividends on Embraer common shares or ADSs, and payments of the proceeds of the sale, exchange or other taxable disposition of Embraer common shares or ADSs, paid within the United States of America or through certain U.S.-related financial intermediaries to a U.S. Holder are subject to information reporting and may be subject to backup withholding at a current maximum rate of 24% unless the U.S. Holder (i) is a corporation or other exempt recipient or (ii) in the case of backup withholding, provides an accurate taxpayer identification number and certifies that it is not subject to backup withholding. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely provided to the IRS. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed its U.S. federal income tax liability by filing a timely refund claim with the IRS.
In addition, certain U.S. Holders are required to report to the IRS information relating to an interest in the common shares or ADSs, subject to exceptions (including an exception for common shares or ADSs held in accounts maintained by certain financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax returns for each year in which they held an interest in the common shares or ADSs. U.S. Holders are urged to consult their own tax advisors regarding the effect, if any, of this information reporting requirement on their acquisition, ownership and disposition of the common shares or ADSs.
F. Dividends and Paying Agents
Not applicable.
G. Statements by Experts
Not applicable.
H. Documents on Display
We are subject to the periodic reporting and other informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC. You may inspect and obtain copies, at prescribed rates, of reports and other information filed by us with the SEC at its Public Reference Room maintained at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC in the United States of America at 1-800-SEC-0330. You may also inspect and copy this material at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We file our annual report on Form 20-F, including our financial statements, and other reports, including our reports on Form 6-K, electronically with the SEC. These filings are available at www.sec.gov. We also file financial statements and other periodic reports electronically with the CVM at its website, www.cvm.gov.br. Copies of our annual reports on Form 20-F and documents referred to in this annual report and our bylaws will be available for inspection upon request at our principal executive office, located at Avenida Dra. Ruth Cardoso, No. 8,501, 30th floor (part), Eldorado Business Tower, Pinheiros, ZIP Code 05425-070, city of São Paulo, state of São Paulo, Brazil We are exposed to various market risks, primarily related to potential loss arising from adverse changes in interest rates and foreign currency exchange rates.
I. Subsidiary Information
Not required.
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J. Annual Report to Security Holders
Not applicable.
| Item 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We have established policies and procedures to manage sensitivity to interest rate and foreign currency exchange rate risk. These procedures include the monitoring of our levels of exposure to each market risk, including an analysis based on forecast of future cash flows, the funding of variable rate assets with variable rate liabilities, and limiting the amount of fixed rate assets which may be funded with floating rate liabilities. We may also use derivative financial instruments to mitigate the effects of interest rate fluctuations and to reduce our exposure to exchange rate risk. The following sections address the significant market risks associated with our financial activities.
A. Interest Rate Risk
Our exposure to market risk for interest rate fluctuations principally relates to changes in the market interest rates of our U.S. dollar-denominated and real-denominated monetary assets and liabilities, principally our short- and long-term debt obligations. Increases and decreases in prevailing interest rates generally translate into increases and decreases in interest expense. Additionally, the fair values of interest rate-sensitive instruments are also affected by general market conditions.
Our short- and long-term debt obligations totaled US$2,491.1 million as of December 31, 2024 and were denominated in U.S. dollars, Brazilian reais and euros. Of the total amount of debt denominated in U.S. dollars (i.e., US$2,444.2 million), US$2,296.7 million was subject to fixed rates. The remaining floating rate U.S. dollar-denominated debt, or US$147.5 million, which corresponds to 6.0% of our debt denominated in U.S. dollars, was indexed to the SOFR rate or the Securities Industry and Financial Markets Association rate.
Of our US$23.7 million Brazilian real-denominated debt as of December 31, 2024, US$10.7 million bears interest at a variable rate based on the CDI rate and the Brazilian reference rate (taxa referencial), and US$13.0 million bears interest at a fixed rate. Of our US$23.2 million euro-denominated debt as of December 31, 2024, US$1.2 million bears interest at a variable rate based on the Euro Interbank Offered Rate, and US$22.0 million bears interest at a fixed rate.
The table below provides information about our short-term debt obligations as of December 31, 2024, which are sensitive to changes in interest rates and foreign currency exchange rates.
| As of December 31, 2024 | ||||||||||||
| Weighted Average Interest Rate(1) |
Total Amount Outstanding |
Total Fair Value |
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| (%) | (in US$ millions) | |||||||||||
| Short-Term Debt |
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| U.S. dollars (Fixed indexed) |
6.3 | % | 65.0 | 87.2 | ||||||||
| U.S. dollars (Floating indexed) |
4.5 | % | 25.6 | 35.2 | ||||||||
| Euros (Fixed rate) |
4.2 | % | 22.0 | 22.1 | ||||||||
| Euros (Floating indexed) |
4.6 | % | 1.0 | 1.1 | ||||||||
| Reais (Fixed rate) |
4.6 | % | 0.1 | 0.5 | ||||||||
| Reais (Floating indexed) |
6.2 | % | 0.1 | 0.6 | ||||||||
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| Total short-term debt |
113.8 | 146.7 | ||||||||||
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| (1) | The interest rate refers exclusively to the weighted average of our indebtedness (short-term and long-term). It does not represent the indexed rates as of December 31, 2024. |
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The table below provides information about our long-term debt obligations as of December 31, 2024, which are sensitive to changes in interest rates and foreign currency exchange rates:
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||
| Weighted Average Interest Rate(1) |
Total Amount Outstanding |
2026 | 2027 | 2028 | 2029 | 2030 and thereafter |
Total Fair value |
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| (%) | (in US$ millions) | |||||||||||||||||||||||||||||||
| Long-Term Debt |
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| U.S. dollars (Fixed rate) |
6.3 | % | 2,231.7 | 30.0 | 900.0 | 495.6 | 8.9 | 797.2 | 2,271.4 | |||||||||||||||||||||||
| U.S. dollars (Floating indexed) |
4.5 | % | 121.9 | 14.6 | 39.6 | 39.6 | 6.8 | 21.3 | 131.6 | |||||||||||||||||||||||
| Euros (Floating indexed) |
4.6 | % | 0.2 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | |||||||||||||||||||||||
| Reais (Fixes rate) |
4.6 | % | 12.9 | 1.2 | 1.4 | 1.4 | 1.4 | 7.5 | 9.0 | |||||||||||||||||||||||
| Reais (Floating indexed) |
6.2 | % | 10.6 | 3.2 | 0 | 0 | 0.5 | 6.9 | 7.3 | |||||||||||||||||||||||
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| Total long-term debt |
2,377.3 | 49.2 | 941.0 | 536.6 | 17.6 | 832.9 | 2,419.5 | |||||||||||||||||||||||||
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| (1) | The interest rate refers exclusively to the weighted average of our indebtedness (short-term and long-term). It does not represent the indexed rates as of December 31, 2024. |
B. Foreign Exchange Rate Risk
In managing our foreign currency risk, we focus on balancing our non-U.S. dollar-denominated assets against our non-U.S. dollar-denominated liabilities plus shareholders’ equity in relation to our forecasts of future cash flows. Beyond the foreign currency exposure related to our debt obligations as summarized above, we also have other assets and liabilities denominated in currencies other than the U.S. dollar. These monetary assets and liabilities are primarily cash and cash equivalents, financial assets, accounts receivable and payable, dividends and certain other assets and liabilities, and are primarily denominated in Brazilian reais.
In addition, transactions in foreign currencies are translated into the functional currency at the exchange rates at the dates of the transactions. Assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date. Foreign exchange gains and losses resulting from this translation are recognized in profit or loss as foreign exchange gain (loss), net. Customer advances and advances to suppliers for goods or services in foreign currencies are translated to our functional currency on the transaction date, and no subsequent translation is recognized. The effects on these assets and liabilities of the appreciation or devaluation of other foreign currencies against the U.S. dollar result is recorded as foreign exchange gains (losses), net in our financial statements.
Our cash flow exposure comes as a result of the fact that in 2024, 5.3% of our revenues and 13.4% of our total costs were denominated in reais, including payroll expenses in Brazil. Having more real-denominated costs than revenues generates the cash flow exposure. To mitigate such risk and to manage the volatility of cash flows in foreign currency, we enter into derivative instruments in the ordinary course of our business. For additional information, see notes 2.3.5 and 8 to our 2024 audited consolidated financial statements.
133
The table below provides information about our assets and liabilities exposed to foreign currency risk as of December 31, 2024, as well as the derivative transactions outstanding at the same date:
| Financial instruments indexed to currencies other than the U.S. dollar Outstanding Amount by Year of Maturity |
||||||||||||||||||||||||||||
| Total Outstanding Amount |
2025 | 2026 | 2027 | 2028 | 2029 and thereafter |
Total Fair Value |
||||||||||||||||||||||
| (in US$ millions) | ||||||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Cash and cash equivalents and financial investments |
||||||||||||||||||||||||||||
| In Reais |
105.2 | 105.2 | — | — | — | — | 105.2 | |||||||||||||||||||||
| In Euro |
4.3 | 4.3 | — | — | — | — | 4.3 | |||||||||||||||||||||
| In other currencies |
6.4 | 6.4 | — | — | — | — | 6.4 | |||||||||||||||||||||
| Trade accounts receivable |
||||||||||||||||||||||||||||
| In Reais |
29.3 | 29.3 | — | — | — | — | 29.3 | |||||||||||||||||||||
| In Euro |
15.7 | 15.7 | — | — | — | — | 15.7 | |||||||||||||||||||||
| In other currencies |
7.6 | 7.6 | — | — | — | — | 7.6 | |||||||||||||||||||||
| Other assets |
||||||||||||||||||||||||||||
| In Reais |
322.1 | 191.7 | 130.4 | — | — | — | 322.1 | |||||||||||||||||||||
| In Euro |
23.4 | 17.0 | 6.4 | — | — | — | 23.4 | |||||||||||||||||||||
| In other currencies |
4.5 | 4.5 | — | — | — | — | 4.5 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets in Reais |
456.6 | 326.2 | 130.4 | — | — | — | 456.6 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets in Euro |
43.4 | 37.0 | 6.4 | — | — | — | 43.4 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets in other currencies |
18.5 | 18.5 | — | — | — | — | 18.5 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| LIABILITIES |
||||||||||||||||||||||||||||
| Loans |
||||||||||||||||||||||||||||
| In Reais |
23.7 | 0.2 | 4.4 | 1.4 | 1.4 | 16.3 | 17.4 | |||||||||||||||||||||
| In Euro |
23.2 | 23.0 | 0.2 | — | — | — | 23.4 | |||||||||||||||||||||
| Accounts payable to suppliers |
||||||||||||||||||||||||||||
| In Reais |
116.2 | 116.2 | — | — | — | — | 116.2 | |||||||||||||||||||||
| In Euro |
30.7 | 30.7 | — | — | — | — | 30.7 | |||||||||||||||||||||
| In other currencies |
6.5 | 6.5 | — | — | — | — | 6.5 | |||||||||||||||||||||
| Customer advances |
||||||||||||||||||||||||||||
| In Reais |
1,472.3 | 1,228.1 | 244.2 | — | — | — | 1,472.3 | |||||||||||||||||||||
| In Euro |
49.5 | 49.5 | — | — | — | — | 49.5 | |||||||||||||||||||||
| In other currencies |
0.7 | 0.7 | — | — | — | — | 0.7 | |||||||||||||||||||||
| Other accounts payable & accrued liabilities |
||||||||||||||||||||||||||||
| In Reais |
579.3 | 279.3 | 300.0 | — | — | — | 579.3 | |||||||||||||||||||||
| In Euro |
40.9 | 35.7 | 5.2 | — | — | — | 40.9 | |||||||||||||||||||||
| In other currencies |
5.5 | 5.2 | 0.3 | — | — | — | 5.5 | |||||||||||||||||||||
| Taxes and payroll charges payable |
||||||||||||||||||||||||||||
| In Reais |
44.2 | 32.0 | 12.2 | — | — | — | 44.2 | |||||||||||||||||||||
| In Euro |
4.8 | 4.8 | — | — | — | — | 4.8 | |||||||||||||||||||||
| Accrued taxes on income |
||||||||||||||||||||||||||||
| In Reais |
0.4 | 0.4 | — | — | — | — | 0.4 | |||||||||||||||||||||
| In Euro |
8.6 | 8.6 | — | — | — | — | 8.6 | |||||||||||||||||||||
| In other currencies |
5.2 | 5.2 | — | — | — | — | 5.2 | |||||||||||||||||||||
| Contingencies |
||||||||||||||||||||||||||||
| In Reais |
39.1 | 7.0 | 9.9 | 9.9 | 9.9 | 2.4 | 39.1 | |||||||||||||||||||||
| In Euro |
2.0 | 1.4 | 0.2 | 0.2 | 0.2 | — | 2.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities in Reais |
2,283.5 | 1,671.5 | 570.7 | 11.3 | 11.3 | 18.7 | 2,277.2 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities in Euro |
159.7 | 153.7 | 5.6 | 0.2 | 0.2 | — | 159.9 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities in other currencies |
17.9 | 17.6 | 0.3 | — | — | — | 17.9 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total exposure in Reais |
(1,826.9 | ) | (1,345.3 | ) | (440.3 | ) | (11.3 | ) | (11.3 | ) | 18.7 | (1,820.6 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total exposure in Euro |
(116.3 | ) | (116.7 | ) | 0.8 | (0.2 | ) | (0.2 | ) | — | (116.5 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total exposure in other currencies |
0.6 | 0.9 | (0.3 | ) | — | — | — | 0.6 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
For further information, see note 27.1.5 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
134
C. Credit Risk
We may incur losses if counterparties to our various contracts do not pay amounts that are owed to us. In that regard, our primary credit risk derives from the sales of aircraft, spare parts and related services to customers, including the financial obligations related to those sales in the cases where we provide guarantees for the benefit of the providers of finance to the aircraft purchases of our customers. We are also exposed to the credit risk of the counterparties to our financial instruments.
Financial instruments which may potentially subject us to credit risk concentration include (i) financial investments and other financial instruments, (ii) trade accounts receivable, (iii) customer commercial financing and (iv) advances to suppliers. We seek to limit our credit risk associated with cash and cash equivalents by placing the investments we make with those instruments with investment-grade ratings following the guidelines of our financial management policy. With respect to trade accounts receivable and customer commercial financing, we seek to limit our credit risk by performing ongoing credit evaluations. All these customers are currently meeting their commitments with us, are operating within the established credit limits that we assign to them and are considered by management to represent an acceptable credit risk level to us. Advances to suppliers are made only to select, long-standing suppliers. We analyze the financial condition of those suppliers on an ongoing basis with a view to limiting credit risk.
We may also have credit risk related to the sale of aircraft during the period in which their purchasers are finalizing the financing arrangements for their aircraft purchases from us. In order to try to minimize these risks, we continuously monitor customer credit analyses and work closely with financial institutions to facilitate customer aircraft financing.
For further information, see note 27.1.3 to our 2024 audited consolidated financial statements included elsewhere in this annual report.
| Item 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Depositary Fees and Charges
The depositary may charge, and collect from, (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect to share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the deposited securities, and (ii) each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are canceled or reduced for any other reason, US$5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, canceled or surrendered (as the case may be). The depositary may sell (by public or private sale) sufficient securities and property received in respect of share distributions, rights and other distributions prior to the deposit to pay the charge.
135
The following additional charges shall be incurred by ADS Holders, the beneficial owners of, or in, ADSs, by any party depositing or withdrawing shares or by any party surrendering ADSs, to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs pursuant to section 10 of the deposit agreement, whichever is applicable:
| • | a fee of US$0.05 or less per ADS for any cash distribution made pursuant to the deposit agreement; |
| • | a fee of US$1.50 per ADS or ADSs or transfers made pursuant to section 3 of the deposit agreement; |
| • | a fee for the distribution or sale of securities pursuant to section 10 of the deposit agreement, this fee being in an amount equal to the fee for the execution and delivery of ADSs, referred to above which would have been charged as a result of the deposit of the securities (for purposes of section 7 of the deposit agreement treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to ADS holders entitled thereto; |
| • | an aggregate fee of US$0.05 per ADS per calendar year (or portion thereof) for the services performed by the depositary in administering the ADSs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders as of the record date or record dates set by the depositary during each calendar year and shall be payable at the sole discretion of the depositary by billing such holders or by deducing such charge from one or more cash dividends or other cash distributions); and |
| • | a fee for the reimbursement of those fees, charges and expenses as are incurred by the depositary and/or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable laws, rules or regulations (which fees and charges shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions), including, without limitation, any amounts charged by any governmental authorities or other institutions such as the Brazilian Clearing and Depository Corporation (Companhia Brasileira de Liquidação e Custódia) or the B3 S.A. – Brasil, Bolsa, Balcão, the stock exchange on which the shares are registered for trading. |
We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary, except:
| • | stock transfer or other taxes and other governmental charges (which are payable by holders or persons depositing shares); |
| • | SWIFT, cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or holders delivering shares, ADSs or deposited securities (which are payable by such persons or holders); and |
| • | transfer or registration fees for the registration or transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities (which are payable by persons depositing shares or holders withdrawing deposited securities.; |
These charges may at any time and from time to time be changed by agreement between us and the depositary.
136
Depositary Payments for the Year Ended December 31, 2024
According to our contractual arrangements with J.P. Morgan, in 2024, J.P. Morgan paid us a gross amount of US$1.3 million in connection with investor relations related expenses of Embraer incurred in 2024.
137
Part II
| Item 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
No matters to report.
| Item 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
A. Material Modifications to the Rights of Security Holders
Not applicable.
B. Material Modifications or Qualifications of the Rights of Holders of Registered Securities
Not applicable.
C. Material Changes to the Amount of Assets Securing Registered Securities
Not applicable.
D. Changes to Trustees or Paying Agents for any Registered Securities
Not applicable.
E. Use of Proceeds
Not applicable
| Item 15. | CONTROLS AND PROCEDURES |
A. Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required financial disclosure.
Under the supervision and with the participation of our management, including our principal executive officers and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2024. Based on this evaluation, our principal executive officers and principal financial officer have concluded, together with management, that our disclosure controls and procedures were effective as of December 31, 2024.
Our management performed additional analysis as deemed necessary to ensure that our consolidated financial statements as of and for the year ended December 31, 2024 were prepared in accordance with IFRS Accounting Standards. Accordingly, our management believes that the consolidated financial statements included in this annual report present fairly, in all material respects, our financial position, results of operations, and cash flows of the periods presented in accordance with IFRS Accounting Standards.
138
B. Management’s Annual Report on Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with IFRS Accounting Standards. Our internal controls over financial reporting include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS Accounting Standards and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Effective internal control over financial reporting cannot, and does not, provide absolute assurance of achieving our control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In this context, our management, with the participation of the chief executive officer and chief financial officer, under the oversight of our Audit Committee, assessed the effectiveness of our internal controls over financial reporting as of December 31, 2024 based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of December 31, 2024, our internal controls over financial reporting were effective.
C. Attestation Report of the Registered Public Accounting Firm
Our independent registered public accounting firm, KPMG Auditores Independentes Ltda., or KPMG, who audited the consolidated financial statements included in this annual report, issued an audit report expressing its opinion on the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2024. KPMG’s report appears on page F-3 of this annual report.
D. Changes in Internal Controls Over Financial Reporting
Our risks and internal controls department periodically evaluates our internal controls for the main cycles, documenting the processes used in each cycle, identifying opportunities and suggesting improvements for the existing control mechanisms. There was no change in our internal controls over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
| Item 16. | [RESERVED] |
| 16A. | Audit Committee Financial Expert |
Our board of directors has determined that Mr. João Cox Neto, a member of our statutory Audit, Risks and Ethics Committee is an “audit committee financial expert” as defined by current SEC rules. For a discussion of the role of our audit, risks and ethics committee, see “Item 6. Directors, Senior Management and Employees—C. Board Practices—Audit, Risks and Ethics Committee.”
139
16B. |
Code of Ethics
|
16C. |
Principal Accountant Fees and Services |
Principal accountant fees and services |
Year ended December 31, |
|||||||
2024 |
2023 |
|||||||
(in US$ thousands) |
||||||||
Audit Fees |
3,860.8 |
3,588.3 |
||||||
Audit-Related Fees |
318.5 |
295.2 |
||||||
Tax Fees |
— |
70.7 |
||||||
All Other Fees |
3.2 |
28.3 |
||||||
Total |
4,182.4 |
3,982.5 |
||||||
16D. |
Exemptions from the Listing Standards for Audit Committees |
16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
16F. |
Change in Registrant’s Certifying Accountant |
16G. |
Corporate Governance |
16H. |
Mine Safety Disclosure |
16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
16J. |
Insider Trading Policies |
16K. |
Cybersecurity |
• |
our chief executive officer (CEO); |
• |
our chief financial officer (CFO); |
• |
our CISO; |
• |
the vice president of Embraer defense and security; |
• |
our legal director and DPO; and |
• |
the vice-president of engineering. |
Part III
| Item 17. | FINANCIAL STATEMENTS |
We have responded to Item 18 in lieu of responding to this item.
| Item 18. | FINANCIAL STATEMENTS |
Our audited consolidated financial statements, together with the reports of the Independent Registered Public Accounting Firms thereon, are filed as part of this annual report and are located following the signature page hereof.
| Item 19. | EXHIBITS |
| * | Filed herewith. |
147
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| EMBRAER S.A. | ||
| By: | /s/ FRANCISCO GOMES NETO | |
| Name: | Francisco Gomes Neto | |
| Title: | President and Chief Executive Officer | |
| By: | /s/ ANTONIO CARLOS GARCIA | |
| Name: | Antonio Carlos Garcia | |
| Title: | Executive Vice President, Financial and Investor Relations | |
Date: March 31, 2025
Page |
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F-2 |
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F-6 |
||
F-8 |
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F-9 |
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F-10 |
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F-11 |
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F-12 |
| F-12 | ||||
| F-13 | ||||
| F-24 | ||||
| F-25 | ||||
| F-26 | ||||
| F-26 | ||||
| F-27 | ||||
| F-27 | ||||
| F-29 | ||||
| F-30 | ||||
| F-30 | ||||
| F-31 | ||||
| F-33 | ||||
| F-35 | ||||
| F-37 | ||||
| F-38 | ||||
| F-38 | ||||
| F-39 | ||||
| F-40 | ||||
| F-41 | ||||
| F-42 | ||||
| F-42 | ||||
| F-43 | ||||
| F-45 | ||||
| F-47 | ||||
| F-49 | ||||
| F-50 | ||||
| F-58 | ||||
| F-60 | ||||
| F-60 | ||||
| F-61 | ||||
| F-62 | ||||
| F-63 | ||||
| F-63 | ||||
| F-63 | ||||
| F-64 | ||||
| F-67 | ||||
| ASSETS |
Note |
12.31.2024 |
12.31.2023 |
|||||||
| CURRENT |
||||||||||
| Cash and cash equivalents |
5 | 1,563.0 | 1,629.2 | |||||||
| Financial investments |
6 | 639.7 | 521.7 | |||||||
| Trade accounts receivable |
7 | 320.8 | 217.6 | |||||||
| Derivative financial instruments |
8 | 13.2 | 17.5 | |||||||
| Customer financing |
9 | 12.2 | 8.4 | |||||||
| Contract assets |
30.2 | 622.7 | 509.1 | |||||||
| Inventories |
10 | 2,936.1 | 2,636.0 | |||||||
| Income tax and social contribution |
142.0 | 203.0 | ||||||||
| Other assets |
11 | 262.7 | 312.9 | |||||||
| |
|
|
|
|||||||
6,512.4 |
6,055.4 |
|||||||||
| |
|
|
|
|||||||
| NON-CURRENT |
||||||||||
| Financial investments |
6 | 348.3 | 170.0 | |||||||
| Trade accounts receivable |
7 | 2.0 | 3.4 | |||||||
| Customer financing |
9 | 20.2 | 54.4 | |||||||
| Contract assets |
30.2 | 1.4 | 2.4 | |||||||
| Deferred income tax and social contribution |
23.1 | 174.0 | 137.7 | |||||||
| Other assets |
11 | 173.4 | 141.3 | |||||||
| Investments |
43.7 | 28.2 | ||||||||
| Property, plant and equipment |
14 | 1,941.3 | 1,770.7 | |||||||
| Intangible assets |
15 | 2,502.9 | 2,331.0 | |||||||
| Right of use |
104.7 | 88.0 | ||||||||
| |
|
|
|
|||||||
5,311.9 |
4,727.1 |
|||||||||
| |
|
|
|
|||||||
| TOTAL ASSETS |
11,824.3 |
10,782.5 |
||||||||
| |
|
|
|
|||||||
| LIABILITIES |
Note |
12.31.2024 |
12.31.2023 |
|||||||
| CURRENT |
||||||||||
| Trade accounts payable |
17 | 966.3 | 787.0 | |||||||
| Trade accounts payable - Supplier finance arrangements |
18 | 43.3 | 37.6 | |||||||
| Lease liability |
20.1 | 19.2 | 13.8 | |||||||
| Loans and financing |
19 | 113.8 | 127.1 | |||||||
| Other payables |
21 | 359.8 | 332.3 | |||||||
| Contract liabilities |
30.2 | 2,563.4 | 1,919.0 | |||||||
| Derivative financial instruments |
8 | 71.9 | 85.7 | |||||||
| Taxes and payroll charges payable |
22 | 45.8 | 42.6 | |||||||
| Income tax and social contribution |
124.7 | 195.6 | ||||||||
| Unearned income |
17.9 | 10.2 | ||||||||
| Provisions |
24.1 | 90.2 | 114.7 | |||||||
| |
|
|
|
|||||||
4,416.3 |
3,665.6 |
|||||||||
| |
|
|
|
|||||||
| NON-CURRENT |
||||||||||
| Lease liability |
20.1 | 92.6 | 82.2 | |||||||
| Loans and financing |
19 | 2,377.3 | 2,759.3 | |||||||
| Other payables |
21 | 161.2 | 55.4 | |||||||
| Contract liabilities |
30.2 | 721.2 | 621.9 | |||||||
| Derivative financial instruments |
8 | 31.9 | 39.5 | |||||||
| Taxes and payroll charges payable |
22 | 9.2 | 18.3 | |||||||
| Income tax and social contribution |
23.4 | 3.2 | 5.1 | |||||||
| Deferred income tax and social contribution |
23.1 | 450.3 | 304.7 | |||||||
| Unearned income |
12.8 | 17.7 | ||||||||
| Provisions |
24.1 | 203.7 | 173.5 | |||||||
| |
|
|
|
|||||||
4,063.4 |
4,077.6 |
|||||||||
| |
|
|
|
|||||||
| TOTAL LIABILITIES |
8,479.7 |
7,743.2 |
||||||||
| |
|
|
|
|||||||
| SHAREHOLDERS’ EQUITY |
||||||||||
| Share capital |
28.1 | 1,551.6 | 1,551.6 | |||||||
| Treasury shares |
28.3 | (28.2 | ) | (28.2 | ) | |||||
| Revenue reserves |
28.4 | 1,624.3 | 1,280.1 | |||||||
| Share-based payment |
49.3 | 44.8 | ||||||||
| Other comprehensive loss |
(257.2 | ) | (152.7 | ) | ||||||
| Result in transactions with non controlling interest |
135.8 | 90.9 | ||||||||
| |
|
|
|
|||||||
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY |
3,075.6 |
2,786.5 |
||||||||
| Non-controlling interests |
269.0 | 252.8 | ||||||||
| |
|
|
|
|||||||
| TOTAL EQUITY |
3,344.6 |
3,039.3 |
||||||||
| |
|
|
|
|||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
11,824.3 |
10,782.5 |
||||||||
| |
|
|
|
|||||||
Note |
12.31.2024 |
12.31.2023 |
12.31.2022 |
|||||||||||
| REVENUE |
31 | 6,394.7 |
5,268.5 |
4,540.4 |
||||||||||
| Cost of sales and services |
31 | (5,241.6 | ) | (4,358.9 | ) | (3,628.2 | ) | |||||||
| |
|
|
|
|
|
|||||||||
| GROSS PROFIT |
1,153.1 |
909.6 |
912.2 |
|||||||||||
| Administrative expenses |
31 | (198.9 | ) | (204.9 | ) | (184.9 | ) | |||||||
| Selling expenses |
31 | (309.7 | ) | (314.7 | ) | (274.4 | ) | |||||||
| Expected credit (losses) reversal |
(21.1 | ) | 10.2 | (17.4 | ) | |||||||||
| Research expenses |
(55.0 | ) | (90.3 | ) | (110.0 | ) | ||||||||
| Other income |
32 | 266.1 | 170.7 | 110.5 | ||||||||||
| Other expenses |
32 | (162.7 | ) | (176.3 | ) | (555.0 | ) | |||||||
| Share of profit (loss) of investments accounted for under the equity method |
(4.3 | ) | 10.2 | 8.5 | ||||||||||
| |
|
|
|
|
|
|||||||||
| OPERATING INCOME (LOSS) BEFORE FINANCIAL RESULT |
667.5 |
314.5 |
(110.5 |
) | ||||||||||
| Financial income |
33 | 311.1 | 128.6 | 166.5 | ||||||||||
| Financial expenses |
33 | (415.6 | ) | (321.9 | ) | (290.0 | ) | |||||||
| Foreign exchange gain (loss), net |
34 | (6.0 | ) | (0.5 | ) | 28.2 | ||||||||
| |
|
|
|
|
|
|||||||||
| INCOME (LOSS) BEFORE INCOME TAX |
557.0 |
120.7 |
(205.8 |
) | ||||||||||
| Income tax |
23.3 | (202.4 | ) | 43.6 | 2.3 | |||||||||
| |
|
|
|
|
|
|||||||||
| INCOME (LOSS) FOR THE YEAR |
354.6 |
164.3 |
(203.5 |
) | ||||||||||
| |
|
|
|
|
|
|||||||||
| Attributable to : |
||||||||||||||
| Owners of Embraer |
352.5 | 164.0 | (185.4 | ) | ||||||||||
| Non-controlling interests |
2.1 | 0.3 | (18.1 | ) | ||||||||||
| Earnings (loss) per share – basic and diluted in US$ |
29 | 0.48 | 0.22 | (0.25 | ) | |||||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| INCOME (LOSS) FOR THE YEAR |
354.6 |
164.3 |
(203.5 |
) | ||||||||
| ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS |
||||||||||||
| Remeasurement of post-employment benefit, net of tax |
4.9 | (4.5 | ) | 7.2 | ||||||||
| Listing expenses |
— | — | 135.7 | |||||||||
| ITEMS THAT ARE OR MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS |
||||||||||||
| Financial instruments - Cash flow hedge, net of tax |
(24.7 | ) | 7.3 | 4.2 | ||||||||
| Financial instruments measured at FVOCI |
0.2 | — | — | |||||||||
| Translation adjustments |
(94.7 | ) | 33.3 | (30.6 | ) | |||||||
| |
|
|
|
|
|
|||||||
| OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX EFFECTS |
(114.3 |
) |
36.1 |
116.5 |
||||||||
| |
|
|
|
|
|
|||||||
| TOTAL COMPREHENSIVE INCOME(LOSS) |
240.3 |
200.4 |
(87.0 |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Attributable to: |
||||||||||||
| Owners of Embraer |
248.0 | 201.0 | (207.4 | ) | ||||||||
| Non-controlling interests |
(7.7 | ) | (0.6 | ) | 120.4 | |||||||
Revenue reserves |
Other comprehensive (loss) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note |
Capital |
Treasury shares |
Share-based payment |
Government grants |
Legal reserve |
For investment and working capital |
Result in transactions with non-controlling
interest |
Retained earnings |
Post- employment benefit |
Cumulative translation adjustment |
Financial instruments |
Total |
Non- controlling interest |
Total equity |
||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
1,551.6 |
(28.2 |
) |
37.4 |
49.0 |
204.4 |
1,048.1 |
(26.7 |
) |
— |
(48.7 |
) |
(117.6 |
) |
(1.4 |
) |
2,667.9 |
107.1 |
2,775.0 |
|||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Loss for the year |
— | — | — | — | — | — | — | (185.4 | ) | — | — | — | (185.4 | ) | (18.1 | ) | (203.5 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | — | — | — | — | 7.2 | (33.4 | ) | 4.2 | (22.0 | ) | 138.5 | 116.5 | ||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Total of comprehensive loss |
— |
— |
— |
— |
— |
— |
— |
(185.4 |
) |
7.2 |
(33.4 |
) |
4.2 |
(207.4 |
) |
120.4 |
(87.0 |
) | ||||||||||||||||||||||||||||||||||||||||||
| Share-based remuneration |
— | — | 2.9 | — | — | — | — | — | — | — | — | 2.9 | — | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||
| Result in transactions with non controlling interest |
— | — | — | — | — | — | 104.1 | — | — | — | — | 104.1 | 29.3 | 133.4 | ||||||||||||||||||||||||||||||||||||||||||||||
| Allocation of profits: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Absorption of reserves by loss for the year |
— | — | — | — | — | (185.4 | ) | — | 185.4 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| 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 |
|||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Net income for the year |
— | — | — | — | — | — | — | 164.0 | — | — | — | 164.0 | 0.3 | 164.3 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | — | — | — | — | (4.5 | ) | 34.2 | 7.3 | 37.0 | (0.9 | ) | 36.1 | ||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Total of comprehensive loss |
— |
— |
— |
— |
— |
— |
— |
164.0 |
(4.5 |
) |
34.2 |
7.3 |
201.0 |
(0.6 |
) |
200.4 |
||||||||||||||||||||||||||||||||||||||||||||
| Share-based remuneration |
— | — | 4.5 | — | — | — | — | — | — | — | — | 4.5 | 0.5 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||
| Capital contribution |
— | — | — | — | — | — | — | — | — | — | — | — | 9.5 | 9.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Result in transactions with non controlling interest |
— | — | — | — | — | — | 13.5 | — | — | — | — | 13.5 | — | 13.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Allocation of profits: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends |
— | — | — | — | — | — | — | — | — | — | — | — | (13.4 | ) | (13.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Reserve for investments and working capital |
— | — | — | — | — | 164.0 | — | (164.0 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| 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 |
|||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Net income for the year |
— | — | — | — | — | — | — | 352.5 | — | — | — | 352.5 | 2.1 | 354.6 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | — | — | — | — | 4.9 | (84.9 | ) | (24.5 | ) | (104.5 | ) | (9.8 | ) | (114.3 | ) | |||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Total of comprehensive income |
— |
— |
— |
— |
— |
— |
— |
352.5 |
4.9 |
(84.9 |
) |
(24.5 |
) |
248.0 |
(7.7 |
) |
240.3 |
|||||||||||||||||||||||||||||||||||||||||||
| Share-based remuneration |
— | — | 4.5 | — | — | — | — | — | — | — | — | 4.5 | 0.6 | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise Warrants |
— | — | — | — | — | — | — | — | — | — | — | — | 5.1 | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Capital contribution |
2.3.1(ii) | — | — | — | — | — | — | — | — | — | — | — | — | 65.6 | 65.6 | |||||||||||||||||||||||||||||||||||||||||||||
| Result in transactions with non controlling interest |
2.3.1 | (ii) | — | — | — | — | — | — | 44.9 | — | — | — | — | 44.9 | (47.4 | ) | (2.5 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Allocation of profits: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal reserve |
— | — | — | — | 2.6 | — | — | (2.6 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends |
— | — | — | — | — | — | — | (8.3 | ) | — | — | — | (8.3 | ) | — | (8.3 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Reserve for investments and working capital |
— | — | — | — | — | 341.6 | — | (341.6 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| At December 31, 2024 |
1,551.6 |
(28.2 |
) |
49.3 |
49.0 |
207.0 |
1,368.3 |
135.8 |
— |
(41.1 |
) |
(201.7 |
) |
(14.4 |
) |
3,075.6 |
269.0 |
3,344.6 |
||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
Note |
12.31.2024 |
12.31.2023 |
12.31.2022 |
|||||||||||
| OPERATING ACTIVITIES |
||||||||||||||
| Income (loss) for the year |
354.6 | 164.3 | (203.5 | ) | ||||||||||
| ADJUSTMENT TO NET INCOME FOR ITEMS NOT AFFECTING CASH |
||||||||||||||
| Depreciation and amortization expenses |
243.6 | 241.7 | 210.3 | |||||||||||
| Realization of government grants |
— | — | (0.5 | ) | ||||||||||
| Realization of contribution from suppliers |
15 | (30.2 | ) | (29.8 | ) | (21.1 | ) | |||||||
| EVE transaction |
— | — | 239.2 | |||||||||||
| Losses (reversal) of impairment losses of inventories |
7.0 | (4.8 | ) | (16.5 | ) | |||||||||
| Adjustment to fair value - Financial investments |
19.3 | (0.4 | ) | (1.7 | ) | |||||||||
| Expected credit losses (reversal) |
21.1 | (10.2 | ) | 17.4 | ||||||||||
| (Gain) loss on disposal of fixed assets and investments (1)
|
6.2 | (29.3 | ) | 41.1 | ||||||||||
| Income tax and social contribution |
23.3 | 202.4 | (43.6 | ) | (87.5 | ) | ||||||||
| Accrued interest |
174.6 | 189.7 | 201.0 | |||||||||||
| Interest on marketable securities, net |
(18.1 | ) | (7.0 | ) | (9.8 | ) | ||||||||
| Share of (profit) loss of investments accounted for under the equity method |
4.3 | (10.2 | ) | (8.5 | ) | |||||||||
| Foreign exchange (gain) loss, net |
34 | 8.7 | 7.1 | (24.8 | ) | |||||||||
| Other provisions |
55.4 | (7.3 | ) | 38.7 | ||||||||||
| Others 2
|
5.2 | 10.9 | 19.6 | |||||||||||
| CHANGES IN ASSETS |
||||||||||||||
| Financial investments |
(117.7 | ) | 22.9 | 181.3 | ||||||||||
| Derivative financial instruments |
(41.5 | ) | 21.2 | (5.6 | ) | |||||||||
| Accounts receivable |
(159.3 | ) | (4.6 | ) | (1.1 | ) | ||||||||
| Contract assets |
(114.1 | ) | (4.6 | ) | 75.2 | |||||||||
| Customer financing |
25.1 | 6.6 | (87.5 | ) | ||||||||||
| Inventories |
(370.2 | ) | (287.1 | ) | (294.3 | ) | ||||||||
| Other assets |
(49.4 | ) | (112.4 | ) | 10.5 | |||||||||
| CHANGES IN LIABILITIES |
||||||||||||||
| Trade accounts payable and Trade accounts payable - Supplier finance arrangements |
204.8 | 50.2 | 257.6 | |||||||||||
| Other payables |
24.1 | 69.1 | (19.2 | ) | ||||||||||
| Contract liabilities |
748.1 | 576.8 | 450.8 | |||||||||||
| Taxes and payroll charges payable |
(58.2 | ) | 98.6 | 39.1 | ||||||||||
| Unearned income |
2.9 | 2.8 | (15.0 | ) | ||||||||||
| Income tax and social contribution paid |
23.1 | (101.2 | ) | (120.8 | ) | (50.2 | ) | |||||||
| Interest paid |
20.1 | (176.3 | ) | (172.8 | ) | (183.7 | ) | |||||||
| |
|
|
|
|
|
|||||||||
| NET CASH GENERATED IN OPERATING ACTIVITIES |
871.2 |
617.0 |
751.3 |
|||||||||||
| |
|
|
|
|
|
|||||||||
| INVESTING ACTIVITIES |
||||||||||||||
| Acquisition of property, plant and equipment |
14 | (200.4 | ) | (238.7 | ) | (136.2 | ) | |||||||
| Proceeds from sale of property, plant and equipment |
12.2 | 19.3 | 5.4 | |||||||||||
| Additions to intangible assets |
15 | (265.8 | ) | (192.1 | ) | (119.8 | ) | |||||||
| Additions to investments in subsidiaries and affiliates, net of cash acquired |
(18.3 | ) | (24.0 | ) | (0.4 | ) | ||||||||
| Investment sale |
— | 41.2 | 158.2 | |||||||||||
| Proceeds from sale of financial investments |
49.5 | 60.2 | (17.6 | ) | ||||||||||
| Acquisition of financial investments |
(238.0 | ) | (58.8 | ) | — | |||||||||
| Proceeds from (disposal of) loan granted |
60.5 | (60.5 | ) | — | ||||||||||
| Dividends received |
0.6 | 5.8 | 0.9 | |||||||||||
| |
|
|
|
|
|
|||||||||
| NET CASH USED IN INVESTING ACTIVITIES |
(599.7 |
) |
(447.6 |
) |
(109.5 |
) | ||||||||
| |
|
|
|
|
|
|||||||||
| FINANCING ACTIVITIES |
||||||||||||||
| Proceeds from loans and financing |
20.1 | 775.2 | 2,000.7 | 145.4 | ||||||||||
| Repayment of loans and financing |
20.1 | (1,155.3 | ) | (2,331.9 | ) | (961.8 | ) | |||||||
| Capital increase |
— | 9.5 | — | |||||||||||
| Dividends and interest on own capital |
— | (13.4 | ) | — | ||||||||||
| Receipt in the offering of subsidiary shares |
65.6 | — | 207.0 | |||||||||||
| Costs in the offering of subsidiary shares |
(2.4 | ) | — | (47.9 | ) | |||||||||
| Lease payments |
20.1 | (18.8 | ) | (13.6 | ) | (11.9 | ) | |||||||
| |
|
|
|
|
|
|||||||||
| NET CASH USED IN FINANCING ACTIVITIES |
(335.7 |
) |
(348.7 |
) |
(669.2 |
) | ||||||||
| |
|
|
|
|
|
|||||||||
| DECREASE IN CASH AND CASH EQUIVALENTS |
(64.2 |
) |
(179.3 |
) |
(27.4 |
) | ||||||||
| Effects of exchange rate changes on cash and cash equivalents |
0.9 | (10.0 | ) | 4.4 | ||||||||||
| Cash and cash equivalents at the beginning of the year |
5 | 1,626.3 | 1,815.6 | 1,838.6 | ||||||||||
| |
|
|
|
|
|
|||||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR |
5 | 1,563.0 |
1,626.3 |
1,815.6 |
||||||||||
| |
|
|
|
|
|
|||||||||
(1) |
Fixed assets comprise property, plant and equipment, intangible, right of use. |
(2) |
This line item aggregates non-controlling interests and (gain) and loss on shareholding, presented as separate line items in prior years. This change was made to simplify the disclosure. |
1. |
OPERATIONS |
| • | To design, build and market aircraft and aerospace materials and related accessories, components and equipment; |
| • | To perform and carry out technical activities related to the manufacturing and maintenance of aerospace materials; |
| • | To contribute training technical personnel as necessary for the aerospace industry; |
| • | To engage in and provide services for other technological, industrial, commercial, and service activities related to the aerospace industry; |
| • | 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; |
| • | To conduct other technological, industrial, commercial and services activities related to the defense, security, and energy industries. |
2. |
BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES |
| • | The currency that most influences the prices of goods and services; this is the currency in which the sales price of the Company’s goods and services are expressed and settled. |
| • | The currency that most influences the costs of providing goods or services, i.e., the currency in which the Company’s costs are normally expressed and settled. |
| • | The currency of the country whose competitive forces and regulations most influence the Company’s business. |
| • | The currency in which the Company largely obtains funds for financial operations and in which it normally receives for its sales and accumulates cash. |
| • | Classification of liabilities as current or non-current (amendments to IAS1). |
| • | Non-current liabilities with covenants (amendments to IAS1). |
| • | Lease liability in a sale and leaseback (amendments to IFRS16). |
Interest (%) |
||||||||||||||||||
Entity |
2024 |
2023 |
Country |
Core activities |
||||||||||||||
Directly 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 | ||||||||||||
Indirectly 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 | % | Netherlands | Pilot, mechanic and crew training | ||||||||||||
Embraer CAE Training Services (U.K.) Limited |
51 | % | 51 | % | United Kingdon |
Pilot, mechanic and crew training | ||||||||||||
Embraer CAE Training Services, LLC |
51 | % | 51 | % | USA | 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 | ) | 83.7 | % | 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 | ) | 83.7 | % | 89.4 | % | Brazil | Eve subsidiary with operations in Brazil. | ||||||||||
Eve UAM, LLC. |
(ii | ) | 83.7 | % | 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 | % | 76.6 | % | United Kingdon |
|
Retail trade of computer products, maintenance, repair and related services | |||||||||
Tempest Serviços de Informática S.A. (“Tempest”) |
(i | ) | 100 | % | 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 | ||||||||||||
| (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) | The reduction in the interest share to 83.7% was mainly driven by the issuance of 27,218,588 new shares by Eve Holding, following a capital contribution of US$ 95.6, and the cancelation of 8,296,470 warrants. Embraer Aircraft Holding contributed US$ 30 and received 7,500,000 shares, while other investors contributed US$ 65.6 in total and received 19,718,588 shares. As a result, the Company’s interest in Eve Soluções de Mobilidade Aérea Urbana Ltda. and Eve UAM, LLC., subsidiaries of Eve Holding, decreased by the same proportion. Out of US$ 47.4 result in transaction with non-controlling interest , US$ 45.6 is attributed to this transaction and the corresponding transaction costs. |
| • | The contractual rights to the cash flows from the asset expire; or |
| • | Transfers the contractual rights to receive cash flows on a financial asset in a transaction in which: substantially all the risks and benefits of ownership of the financial asset or the Company neither transfers nor keeps substantially all the risks and benefits of ownership of the financial asset and does not have control over the financial asset. |
| • | It is held within a business model whose objective is to hold assets to collect contractual cash flows; and |
| • | Its contractual terms give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
| • | Assets held within a business model whose purpose is achieved both through the receipt of contractual cash flows and by selling of financial assets; and |
| • | Its contractual terms generate, on specific dates, cash flows that are related only to payments of principal and interest on the outstanding principal. |
| • | The current financial policy and the objectives set for portfolio management, which includes assessing whether the strategy focuses on contractual interest income, maintaining a determined interest rate profile, the relationship between the duration of the financial assets and related liabilities, expected cash outflows, or the realization of cash flows through the sale of underlying financial assets. |
| • | How the portfolio performance is assessed and reported to Management. |
| • | Risks that affect the performance of the business model and how they are managed. |
| • | The frequency, volume and timing of assets sales in prior periods, the reasons for such transactions and future expectations. |
| Class of assets |
Estimated useful life | |
| Buildings and improvements |
30 to 60 years | |
| Installations |
5 to 25 years | |
| Machinery and equipment |
10 to 35 years | |
| Furniture and fixtures |
5 to 30 years | |
| Vehicles |
5 to 10 years | |
| Aircraft |
5 to 51 years | |
| Computers and peripherals |
2 to 10 years | |
| Tooling |
10 to 25 years | |
| Exchange pool program assets |
27 to 32 years |
| • | The customer simultaneously obtains and uses the benefits resulting from the Company’s performance as it is delivered. |
| • | The Company’s performance results in the creation or enhancement of assets under the customer’s control as those assets are developed or enhanced. |
| • | The entity’s performance does not generate an asset with significant alternative use, and the Company has an enforceable right to receive payment for work completed to date, in the event of termination of the contract for the convenience of customers. |
3. |
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS |
| • | Gross expected cash flow: |
| • | Growth rates: |
| • | Discount rates: |
| • | Foreign exchange rate US$/Brazilian Reais (“R$”): |
4. |
ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE |
| • | Entities are required to classify all income and expenses into five categories in the statement of profit or loss, namely the operating, investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly defined operating profit subtotal. Entities’ net profit will not change. |
| • | Management defined performance measures are disclosed in a single note in the financial statements. |
| • | Enhanced guidance is provided on how to group information in the financial statements. |
| • | Lack of exchangeability (amendments to IAS21 and IFRS 1). |
| • | Classification and measurement of financial instruments (amendments to IFRS7 and IFRS9). |
| • | Contracts referencing nature-dependent electricity (amendments to IFRS7 and IFRS9). |
| • | Annual improvements to IFRS Accounting Standards - volume 11. |
| • | IFRS19 - Subsidiaries without public accountability: disclosures. |
5. |
CASH AND CASH EQUIVALENTS |
12.31.2024 |
12.31.2023 |
|||||||
| Cash and banks |
494.0 | 330.3 | ||||||
| Cash equivalents |
||||||||
| Private securities (i) |
87.7 | 130.1 | ||||||
| Fixed deposits (ii) |
981.3 | 1,168.8 | ||||||
| |
|
|
|
|||||
| 1,069.0 | 1,298.9 | |||||||
| |
|
|
|
|||||
1,563.0 |
1,629.2 |
|||||||
| Bank overdraft |
— | (2.9 | ) | |||||
| |
|
|
|
|||||
| Liquid cash and cash equivalents |
1,563.0 |
1,626.3 |
||||||
| |
|
|
|
|||||
| (i) | Applications in Bank Deposit Certificates (CDBs) and Private Securities Repurchase Agreements issued by financial institutions in Brazil. |
| (ii) | Fixed term deposits in dollars issued by financial institutions. |
6. |
FINANCIAL INVESTMENTS |
12.31.2024 |
12.31.2023 |
|||||||
| Public securities (i) |
66.5 | 66.6 | ||||||
| Private securities (ii) |
99.9 | 146.4 | ||||||
| Structured notes (iii) |
133.2 | — | ||||||
| Investment funds (iv) |
125.2 | 27.4 | ||||||
| Fixed-term deposit (v) |
468.2 | 350.5 | ||||||
| Others (vi) |
95.0 | 100.8 | ||||||
| |
|
|
|
|||||
988.0 |
691.7 |
|||||||
| |
|
|
|
|||||
| Current |
639.7 | 521.7 | ||||||
| Non-current |
348.3 | 170.0 | ||||||
| (i) | Debt securities issued in US$ 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$ 87.1 and structured notes subject to the credit risk of two financial institutions (concurrently) in the amount of US$ 46.1. |
| (iv) | Embraer Multi-Strategy Equity Investment Fund in the amount of US$ 22.0 (2023: US$ 27.4) and portfolio managed by PNC Bank in the amount of US$ 103.2 (2023: nil). |
| (v) | Fixed-term deposits in US$ issued by financial institutions. |
| (vi) | Refers mainly to the investment in shares of the Republic Airways Holdings (“Republic Airways”). |
7. |
TRADE ACCOUNTS RECEIVABLE |
Note |
12.31.2024 |
12.31.2023 |
||||||||||
| Foreign customers |
293.8 | 201.7 | ||||||||||
| Accounts receivable due from related parties |
13 | 7.1 | 2.1 | |||||||||
| Domestic customers |
34.1 | 27.0 | ||||||||||
| |
|
|
|
|||||||||
335.0 |
230.8 |
|||||||||||
| Expected credit losses |
(12.2 | ) | (9.8 | ) | ||||||||
| |
|
|
|
|||||||||
322.8 |
221.0 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
320.8 | 217.6 | ||||||||||
| Non-current |
2.0 | 3.4 | ||||||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Beginning balance |
(9.8 |
) |
(12.6 |
) |
(30.7 |
) | ||||||
| (Additions)/Reversals |
(5.5 | ) | (1.8 | ) | 1.0 | |||||||
| Write-off |
2.6 | 4.6 | 17.0 | |||||||||
| Foreign exchange variation |
0.5 | — | 0.1 | |||||||||
| |
|
|
|
|
|
|||||||
| Ending balance |
(12.2 |
) |
(9.8 |
) |
(12.6 |
) | ||||||
| |
|
|
|
|
|
|||||||
8. |
DERIVATIVE FINANCIAL INSTRUMENTS |
| • | 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 (Note 26.1). 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. |
| • | Purchase of sell and buy currency options: in order to protect cash flows for wage expenses and corresponding labor charges 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. |
| • | 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 under the discounted cash flow model. Future cash flows are estimated based on future exchange rates observed at the reporting period and future contractual rates, then discounted at current market rates. |
| • | Eve Holding issued warrants to grant holders the right, but not the obligation, to purchase shares of Eve Holding (NYSE: EVEX). Changes in the fair value are recognized in profit or loss as financial results. |
| Purpose |
Risk |
Instrument |
Notional |
Settlement date |
12.31.2024 |
12.31.2023 |
||||||||||||||||
| Cash flow hedge designated as hedge accounting |
(17.6 |
) |
8.9 |
|||||||||||||||||||
| |
|
|
|
|||||||||||||||||||
| Payroll expenses settled in Brazilian reais |
Exchange rate | 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 | — | 2024 | — | 8.9 | ||||||||||||||||
| Zero-cost collar derivative financial instruments, with purchase of put options at the exercise price of R$5.42 and sale of call options at the weighted average exercise price of R$6.73 | 456.6 | 2025 | (17.6 | ) | — | |||||||||||||||||
| |
|
|
|
|||||||||||||||||||
| Others derivatives not designated as hedge accounting |
(73.0 |
) |
(116.6 |
) | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||||
| Export |
Exchange rate |
Non-Deliverable forwards to exchange euro currency debt to US dollar currency. |
— | 2024 | — | (0.1 | ) | |||||||||||||||
| Export |
Exchange rate |
Non-Deliverable forwards to exchange euro currency debt to US dollar currency. |
60.0 | 2025 | 2.5 | — | ||||||||||||||||
| Equity |
Share price: ticker EMBR3 |
|
Equity swap | — | 2024 | — | 8.5 | |||||||||||||||
| Equity (i) |
Share price: ticker EMBR3 |
|
Equity swap | 53.9 | 2025 | 10.5 | — | |||||||||||||||
| Equity (ii) |
Share price: ticker EVEX |
|
Private warrants | 14.2 | 2027 | (7.0 | ) | (14.0 | ) | |||||||||||||
| Equity (ii) |
Share price: ticker EVEX |
|
Public warrants | 8.2 | 2027 | (4.0 | ) | (11.3 | ) | |||||||||||||
| Equity (iii) |
Share price: ticker EVEX |
|
Strategic warrants | 32.5 | 2027 | (75.0 | ) | (99.7 | ) | |||||||||||||
| |
|
|
|
|||||||||||||||||||
(90.6 |
) |
(107.7 |
) | |||||||||||||||||||
| |
|
|
|
|||||||||||||||||||
Assets |
||||||||||||||||||||||
| Current | 13.2 | 17.5 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
||||||||||||||||||||||
| Current | (71.9 | ) | (85.7 | ) | ||||||||||||||||||
Non-current |
(31.9 | ) | (39.5 | ) | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||||
Net derivative financial instruments |
(90.6 |
) |
(107.7 |
) | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||||
| (i) | In April 2024, the Company entered into 18-month swap contracts with Banco Santander S.A. Under these contracts, the Company will receive the price variation on 3,290,230 shares issued by Embraer (EMBR3) and will pay CDI plus 0.80% p.a. on the notional amount. |
| (ii) | Refers to the 8,203,407 (2023: 11,499,879) public warrants and 14,250,000 (2023: idem) private warrants issued by Eve Holding with a strike price of US$ 11.50 (eleven dollars and fifty cents) per share. The exercise period for these warrants will expire on the date that occurs first: May 9, 2027, the date set by the issuer to redeem all warrants or liquidation of the issuer. |
| (iii) | Refers to the 32,522,536 (2023: 37,422,536) strategic warrants units issued by Eve Holding under the following conditions: |
| • | Penny warrants: 20,522,536 (2023: 20,422,536) units with an exercise price of US$0.01 (one cent) per share. The fair value measurement of this instrument considers the fair value of the EVEX share minus the exercise price. Furthermore, when 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. |
| • | Market warrants: 12,000,000 (2023: 17,000,000) units with an exercise price of US$15.00 (fifteen dollars) per share. The Black-Scholes pricing model is used to measure the fair value of these financial instruments. In July 2024, 5,000,000 units with an exercise price of US$11.50 (eleven dollars and fifty cents) were extinguished as a result of the capital contribution made to Eve Holding. See further information in Note 2.3.1. |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Changes in fair value |
||||||||||||
| Gain hedging reserve |
— | 7.4 | — | |||||||||
| (Loss) gain cost of hedging reserve |
(17.6 | ) | 1.6 | 2.3 | ||||||||
| Deferred tax |
6.0 | — | — | |||||||||
| Reclassification to profit or loss |
||||||||||||
| Fair value |
(8.9 | ) | (2.5 | ) | 1.2 | |||||||
| Other reclassifications |
(4.2 | ) | 0.8 | 0.7 | ||||||||
| |
|
|
|
|
|
|||||||
| Total reported in other comprehensive income |
(24.7 |
) |
7.3 |
4.2 |
||||||||
| |
|
|
|
|
|
|||||||
9. |
CUSTOMER FINANCING |
12.31.2024 |
12.31.2023 |
|||||||
| Aircraft |
21.4 | 41.0 | ||||||
| Spare parts |
31.1 | 29.8 | ||||||
| |
|
|
|
|||||
52.5 |
70.8 |
|||||||
| Fair value adjustment |
(11.4 | ) | (4.6 | ) | ||||
| Expected credit losses |
(8.7 | ) | (3.4 | ) | ||||
| |
|
|
|
|||||
32.4 |
62.8 |
|||||||
| |
|
|
|
|||||
| Current |
12.2 | 8.4 | ||||||
| Non-current |
20.2 | 54.4 | ||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Beginning balance |
(3.4 |
) |
(24.0 |
) |
(5.7 |
) | ||||||
| (Additions)/Reversal |
(5.3 | ) | 20.6 | (18.3 | ) | |||||||
| |
|
|
|
|
|
|||||||
| Ending balance |
(8.7 |
) |
(3.4 |
) |
(24.0 |
) | ||||||
| |
|
|
|
|
|
|||||||
| Year |
||||
| 2026 |
7.5 | |||
| 2027 |
7.2 | |||
| 2028 |
2.0 | |||
| Thereafter |
3.5 | |||
| |
|
|||
20.2 |
||||
| |
|
|||
10. |
INVENTORIES |
12.31.2024 |
12.31.2023 |
|||||||||||||||||||||||||||||||||||
Gross book value |
Write-down for
obsolescence |
Write-down for
market value |
Net book value |
Gross book value |
Write-down for
obsolescence |
Write-down for
market value |
Net book value |
|||||||||||||||||||||||||||||
| Raw materials |
1,302.6 | (84.6 | ) | — | 1,218.0 | 1,118.9 | (81.7 | ) |
— | 1,037.2 | ||||||||||||||||||||||||||
| Work in process |
840.9 | — | — | 840.9 | 774.9 | — | — | 774.9 | ||||||||||||||||||||||||||||
| Spare parts |
476.5 | (38.2 | ) | (0.9 | ) |
437.4 | 477.6 | (34.3 | ) | (1.4 | ) |
441.9 | ||||||||||||||||||||||||
| Finished goods |
(i | ) | 76.8 | — | — | 76.8 | 61.6 | — | — | 61.6 | ||||||||||||||||||||||||||
| Held by third parties |
112.2 | (4.5 | ) | — | 107.7 | 97.5 | (1.3 | ) | — | 96.2 | ||||||||||||||||||||||||||
| Advances to suppliers |
39.1 | — | — | 39.1 | 25.4 | — | — | 25.4 | ||||||||||||||||||||||||||||
| Inventory in transit |
163.2 | — | — | 163.2 | 155.7 | — | — | 155.7 | ||||||||||||||||||||||||||||
| Consumption materials |
58.4 | (5.4 | ) | — | 53.0 | 51.7 | (8.6 | ) | — | 43.1 | ||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
3,069.7 |
(132.7 |
) |
(0.9 |
) |
2,936.1 |
2,763.3 |
(125.9 |
) |
(1.4 |
) |
2,636.0 |
|||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (i) | The following aircraft were held in the finished goods inventory: |
| • | December 31, 2024: one Phenom 100 , three Phenom 300 , one Praetor 500 , and two Praetor 600 . |
| • | December 31, 2023: three Phenom 300 , one Praetor 500 , and two Praetor 600 . |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Beginning balance |
(1.4 |
) |
(5.7 |
) |
(1.0 |
) | ||||||
| Additions |
— | (0.6 | ) | (5.9 | ) | |||||||
| Disposals |
0.1 | — | 1.2 | |||||||||
| Reversals |
0.4 | 4.9 | — | |||||||||
| |
|
|
|
|
|
|||||||
| Ending balance |
(0.9 |
) |
(1.4 |
) |
(5.7 |
) | ||||||
| |
|
|
|
|
|
|||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Beginning balance |
(125.9 |
) |
(126.1 |
) |
(150.9 |
) | ||||||
| Additions |
(52.9 | ) | (50.5 | ) | (38.4 | ) | ||||||
| Disposals |
11.5 | 13.5 | 54.0 | |||||||||
| Reversals |
33.9 | 37.5 | 8.6 | |||||||||
| Foreign exchange gain (loss) |
0.7 | (0.3 | ) | 0.6 | ||||||||
| |
|
|
|
|
|
|||||||
| Ending balance |
(132.7 |
) |
(125.9 |
) |
(126.1 |
) | ||||||
| |
|
|
|
|
|
|||||||
11. |
OTHER ASSETS |
Note |
12.31.2024 |
12.31.2023 |
||||||||||
| Taxes recoverable |
11.1 | 154.0 | 130.6 | |||||||||
| Prepaid expenses |
76.6 | 66.5 | ||||||||||
| Other debtors |
54.0 | 60.9 | ||||||||||
| Costs to comply with contractual obligations |
39.9 | — | ||||||||||
| Court-mandated escrow deposits |
32.5 | 39.0 | ||||||||||
| Loan with a joint operation |
23.8 | 22.4 | ||||||||||
| Advances to employees |
18.6 | 18.0 | ||||||||||
| Guarantee deposits |
12.8 | 11.8 | ||||||||||
| Advances for services to be rendered |
1.6 | 3.7 | ||||||||||
| Collateralized accounts receivable |
1.1 | 2.9 | ||||||||||
| Loans granted |
— | 60.5 | ||||||||||
| Other credits to related parties |
1.1 | 3.7 | ||||||||||
| Others |
20.1 | 34.2 | ||||||||||
| |
|
|
|
|||||||||
436.1 |
454.2 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
262.7 | 312.9 | ||||||||||
| Non-current |
173.4 | 141.3 | ||||||||||
12.31.2024 |
12.31.2023 |
|||||||||||
| Tax Credits - Court Decisions |
(i | ) | 50.6 | — | ||||||||
| ICMS (State Value-added Tax) and IPI (Excise Tax) |
42.8 | 56.0 | ||||||||||
| Income tax and social security on net income withheld |
20.1 | 7.0 | ||||||||||
| PIS (Social Integration Program) and COFINS (Contribution for Social Security) |
14.0 | 34.7 | ||||||||||
| Value added tax |
13.4 | 4.6 | ||||||||||
| Reintegra (Special regime for exporters) |
6.0 | 16.6 | ||||||||||
| Advance service tax (ISS- Service tax) |
5.3 | 6.3 | ||||||||||
| Others |
1.8 | 5.4 | ||||||||||
| |
|
|
|
|||||||||
154.0 |
130.6 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
87.6 | 72.9 | ||||||||||
| Non-current |
66.4 | 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 was recognized 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 these tax credits. In addition, the favorable outcome has led to the reversal of the provision previously recognized regarding this matter. |
12. |
INVESTMENTS |
12.31.2023 |
Gain (loss) by equity method (profit or loss) |
Cumulative translation adjustment |
Dividends |
Addition |
12.31.2024 |
|||||||||||||||||||||||
| MSW Multicorp 2 Fundo de Investimento em Participações |
1.7 | 0.9 | (0.9 | ) | — | 1.1 | 2.8 | |||||||||||||||||||||
| Xmobots Holding S.A. |
(i | ) | — | (1.3 | ) | (4.4 | ) | — | 25.7 | 20.0 | ||||||||||||||||||
| Fundo de Investimento em Participações Aeroespacial Multiestratégia |
3.3 | 0.5 | (1.1 | ) | (0.6 | ) | 0.1 | 2.2 | ||||||||||||||||||||
| Nidec Aerospace, LLC. |
5.6 | (6.5 | ) | — | — | 3.9 | 3.0 | |||||||||||||||||||||
| Águas Azuis Construção Naval SPE Ltda. |
17.6 | 2.1 | (4.0 | ) | — | — | 15.7 | |||||||||||||||||||||
| Centimfe - Centro Tecnologico da Industria de Moldes e Ferramentas Especiais |
— | — | — | — | — | — | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
28.2 |
(4.3 |
) |
(10.4 |
) |
(0.6 |
) |
30.8 |
43.7 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
12.31.2022 |
Gain (loss) by equity method (profit or loss) |
Cumulative translation adjustment |
Dividends |
Disposal |
Addition |
12.31.2023 |
||||||||||||||||||||||
| MSW Multicorp 2 Fundo de Investimento em Participações |
— | 0.9 | 0.8 | — | — | — | 1.7 | |||||||||||||||||||||
| Xmobots Holding S.A. |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Fundo de Investimento em Participações Aeroespacial Multiestratégia |
7.8 | (0.4 | ) | (0.2 | ) | (5.8 | ) | — | 1.9 | 3.3 | ||||||||||||||||||
| Nidec Aerospace, LLC. |
— | (0.3 | ) | — | — | — | 5.9 | 5.6 | ||||||||||||||||||||
| Águas Azuis Construção Naval SPE Ltda. |
4.5 | 10.0 | 0.6 | — | (1.5 | ) | 4.0 | 17.6 | ||||||||||||||||||||
| Centimfe - Centro Tecnologico da Industria de Moldes e Ferramentas Especiais |
— | — | — | — | — | — | — | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
12.3 |
10.2 |
1.2 |
(5.8 |
) |
(1.5 |
) |
11.8 |
28.2 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (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, through 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. |
| • | Economic Risks: potential losses from fluctuations in market conditions (price of products, exchange rate and interest). |
| • | Operational risk: potential losses resulting from the emergence of new technologies or failure of current processes. |
| • | Credit risk: potential losses that might occur if a third party (customer) becomes unable to meet its obligations, and |
| • | Liquidity risk: financial inability to meet financial obligations. |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||||||||||||||||||||||
Non-controlling interest |
Non-controlling interest |
Non-controlling interest |
||||||||||||||||||||||||||||||||||
| Entity |
% |
Equity |
Income (loss) |
% |
Equity |
Income (loss) |
% |
Equity |
Income (loss) |
|||||||||||||||||||||||||||
| Embraer CAE Training Services, LLC |
49.0 | % | 34.3 | 5.4 | 49.0 | % | 29.0 | 5.4 | 49.0 | % | 33.1 | 5.8 | ||||||||||||||||||||||||
| Embraer CAE Training Services (NL) B.V. |
49.0 | % | 9.3 | 0.2 | 49.0 | % | 9.4 | (0.2 | ) | 0.0 | % | — | — | |||||||||||||||||||||||
| EVE Holding Inc. |
16.3 | % | 34.1 | (2.3 | ) | 10.6 | % | 11.0 | (9.9 | ) | 10.3 | % | 20.1 | (15.4 | ) | |||||||||||||||||||||
| OGMA - Indústria Aeronáutica de Portugal S.A. |
35.0 | % | 42.7 | (0.5 | ) | 35.0 | % | 46.0 | 0.8 | 35.0 | % | 43.5 | (6.8 | ) | ||||||||||||||||||||||
| Tempest Serviços de Informática S.A. |
— | — | (0.4 | ) | 23.4 | % | 7.2 | 4.7 | 39.0 | % | 10.0 | (0.4 | ) | |||||||||||||||||||||||
| Visiona Tecnologia Espacial S.A. |
49.0 | % | 12.9 | (0.3 | ) | 49.0 | % | 14.5 | (0.5 | ) | 49.0 | % | 14.4 | (1.3 | ) | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
133.3 |
2.1 |
117.1 |
0.3 |
121.1 |
(18.1 |
) | ||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Listing Expenses |
100.0 | % | 135.7 | — | 100.0 | % | 135.7 | — | 100.0 | % | 135.7 | — | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
269.0 |
2.1 |
252.8 |
0.3 |
256.8 |
(18.1 |
) | ||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
OGMA |
EVE |
Embraer CAE Training Services, LLC |
||||||||||||||||||||||||||||||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
12.31.2024 |
12.31.2023 |
12.31.2022 |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||||||||||||||||
| Total assets |
351.3 | 289.5 | 253.5 | 304.2 | 230.1 | 291.0 | 96.7 | 83.4 | 78.8 | |||||||||||||||||||||||||||
| Total liabilities |
229.3 | 158.0 | 129.1 | 95.0 | 126.1 | 95.9 | 26.6 | 24.2 | 11.2 | |||||||||||||||||||||||||||
| Shareholders’ equity |
122.1 | 131.5 | 124.4 | 209.2 | 104.0 | 195.1 | 70.0 | 59.2 | 67.6 | |||||||||||||||||||||||||||
| Revenue |
314.0 | 250.1 | 216.5 | — | — | — | 33.4 | 29.3 | 26.9 | |||||||||||||||||||||||||||
| Net income (loss) for the year |
(1.5 | ) | 2.3 | (19.5 | ) | 1.6 | (96.2 | ) | (308.5 | ) | 10.9 | 11.0 | 11.8 | |||||||||||||||||||||||
13. |
RELATED PARTIES |
| • | 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. |
| • | 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; (vi) export financing; and (vii) warranty customer service. |
| • | 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. |
| • | Major customer for Defense & Security products (through the Brazilian Air Force, Brazilian Army, and Brazilian Navy). |
| • | Source of research and development financing through technology development institutions ( Financiadora de Estudos e Projetos |
| • | Export credit agency (through the BNDES), and |
| • | Source of short-term and long-term financing and a provider of asset management and commercial banking services (through Banco do Brasil). |
12.31.2024 |
||||||||||||||||||||||||||||||||||||
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. |
— | 1.1 | 511.8 | — | — | — | — | — | 12.1 | |||||||||||||||||||||||||||
| Banco Nacional de Desenvolvimento Econômico e Social – BNDES |
— | — | — | — | 463.8 | — | — | — | (34.9 | ) | ||||||||||||||||||||||||||
| Comando da Aeronáutica (Brazilian Air Force) |
5.7 | — | — | 251.7 | — | 15.0 | 51.0 | (7.4 | ) | — | ||||||||||||||||||||||||||
| Embraer Prev - Soc. Previdência Complementar |
— | — | — | — | — | — | — | (16.0 | ) | — | ||||||||||||||||||||||||||
| Exército Brasileiro (Brazilian Army) |
0.1 | — | — | 10.5 | — | — | 9.0 | (0.1 | ) | — | ||||||||||||||||||||||||||
| Ez Air Interior Limited |
— | 23.8 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Governo Brasileiro - Bonds (Brazilian government -Bonds) |
— | 66.5 | — | — | — | — | — | — | 2.6 | |||||||||||||||||||||||||||
| Governo Brasileiro - Structured Notes |
— | 87.1 | — | — | — | — | — | — | 1.8 | |||||||||||||||||||||||||||
| Marinha do Brasil (Brazilian Navy) |
— | — | — | 1.0 | — | — | 5.5 | (2.6 | ) | — | ||||||||||||||||||||||||||
| Nidec Aerospace, LLC |
1.3 | — | — | — | — | — | — | 1.3 | — | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
7.1 |
178.5 |
511.8 |
263.2 |
463.8 |
15.0 |
65.5 |
(24.8 |
) |
(18.4 |
) | ||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
12.31.2023 |
||||||||||||||||||||||||||||||||||||
|
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. |
— | 3.7 | 282.7 | — | — | — | — | — | 15.0 | |||||||||||||||||||||||||||
| Banco Nacional de Desenvolvimento Econômico e Social – BNDES |
— | — | — | — | 627.7 | — | — | — | (20.2 | ) | ||||||||||||||||||||||||||
| Caixa Econômica Federal |
— | — | 0.1 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Comando da Aeronáutica (Brazilian Air Force) |
2.1 | — | — | 305.8 | — | — | 71.9 | 8.8 | — | |||||||||||||||||||||||||||
| Embraer Prev – Sociedade de Previdência Complementar |
— | — | — | — | — | 0.3 | — | (17.3 | ) | — | ||||||||||||||||||||||||||
| Exército Brasileiro (Brazilian Army) |
— | — | — | 6.6 | — | — | 8.9 | 0.1 | — | |||||||||||||||||||||||||||
| Ez Air Interior Limited |
— | 22.4 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| FINEP |
— | — | — | — | — | — | — | — | (0.1 | ) | ||||||||||||||||||||||||||
| Governo Brasileiro – Bonds |
— | 66.6 | — | — | — | — | — | — | 2.6 | |||||||||||||||||||||||||||
| Marinha do Brasil (Brazilian Navy) |
— | — | — | 2.4 | — | — | 3.8 | (1.3 | ) | — | ||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
2.1 |
92.7 |
282.8 |
314.8 |
627.7 |
0.3 |
84.6 |
(9.7 |
) |
(2.7 |
) | ||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
12.31.2022 |
||||||||
|
Financial results |
Operating results |
|||||||
| Banco do Brasil S.A. |
6.2 | — | ||||||
| Banco Nacional de Desenvolvimento Econômico e Social – BNDES |
(6.3 | ) | — | |||||
| Comando da Aeronáutica (Brazilian Air Force) |
— | 29.6 | ||||||
| Embraer Prev – Sociedade de Previdência Complementar |
— | (9.7 | ) | |||||
| Exército Brasileiro (Brazilian Army) |
— | 2.1 | ||||||
| Financiadora de Estudo e Projetos – FINEP |
(0.4 | ) | — | |||||
| Governo Brasileiro – Bonds (Brazilian government -Bonds) |
2.5 | — | ||||||
| Marinha do Brasil (Brazilian Navy) |
— | (1.4 | ) | |||||
| |
|
|
|
|||||
2.0 |
20.6 |
|||||||
| |
|
|
|
|||||
| (*) | As of December 31, 2024, the amount comprises the balances presented in financial investments US$ 153.6 (2023: US$ 66.6) and in other assets US$ 24.9 (2023: US$ 26.1). |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||
| Short-term benefits |
(i | ) | 9.3 | 8.5 | 8.5 | |||||||||||
| Share based payment |
(ii | ) | 9.3 | 2.7 | (1.0 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
| Total remuneration |
18.6 |
11.2 |
7.5 |
|||||||||||||
| |
|
|
|
|
|
|||||||||||
| (i) | Includes wages, salaries, profit sharing, bonuses, and indemnities, as well as the compensation of external members engaged in the statutory advisory committees. |
| (ii) | As per Note 8, derivative instruments are contracted to protect cash flows from fluctuations in Embraer’s share price. The amounts presented in this Note do not include the results obtained with such derivative instruments. |
14. |
PROPERTY, PLANT AND EQUIPMENT |
12.31.2024 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1.3 | — | 64.7 | 1.5 | 0.6 | — | 8.2 | 17.3 | — | 47.8 | 101.6 | 243.1 | |||||||||||||||||||||||||||||||||||||||
| Disposals |
(0.8 | ) | — | — | (6.8 | ) | (0.7 | ) | (0.3 | ) | — | (1.0 | ) | (1.2 | ) | — | (20.4 | ) | — | (31.2 | ) | |||||||||||||||||||||||||||||||
| Reclassifications* |
— | 17.1 | 4.0 | 66.0 | 0.5 | — | 16.9 | 0.5 | 6.3 | — | 36.4 | (94.4 | ) | 53.3 | ||||||||||||||||||||||||||||||||||||||
| Translation adjustments |
— | (2.6 | ) | (0.5 | ) | (4.7 | ) | (0.4 | ) | (0.3 | ) | — | (1.4 | ) | — | — | (12.4 | ) | (4.1 | ) | (26.4 | ) | ||||||||||||||||||||||||||||||
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| At December 31, 2024 |
9.5 |
683.2 |
92.2 |
852.8 |
41.2 |
11.9 |
21.4 |
108.4 |
646.2 |
19.1 |
840.8 |
124.2 |
3,450.9 |
|||||||||||||||||||||||||||||||||||||||
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| 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 |
— | (18.9 | ) | (1.9 | ) | (27.7 | ) | (2.3 | ) | (0.5 | ) | (0.2 | ) | (3.2 | ) | (23.0 | ) | — | (17.4 | ) | — | (95.1 | ) | |||||||||||||||||||||||||||||
| Disposals |
— | — | — | 5.6 | 0.6 | 0.3 | — | 1.0 | 0.7 | — | 6.1 | — | 14.3 | |||||||||||||||||||||||||||||||||||||||
| Interest on capitalized assets |
— | (1.1 | ) | — | — | — | — | — | — | — | — | — | — | (1.1 | ) | |||||||||||||||||||||||||||||||||||||
| Translation adjustments |
— | 1.1 | 0.2 | 3.8 | 0.3 | 0.2 | — | 1.2 | (0.1 | ) | — | 7.0 | — | 13.7 | ||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| At December 31, 2024 |
— |
(235.1 |
) |
(41.1 |
) |
(421.5 |
) |
(29.7 |
) |
(8.7 |
) |
(4.7 |
) |
(94.7 |
) |
(428.4 |
) |
(19.1 |
) |
(226.6 |
) |
— |
(1,509.6 |
) | ||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| 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 December 31, 2024 |
9.5 | 448.1 | 51.1 | 431.3 | 11.5 | 3.2 | 16.7 | 13.7 | 217.8 | — | 614.2 | 124.2 | 1,941.3 | |||||||||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||
12.31.2022 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2021 |
10.2 |
656.9 |
88.4 |
727.8 |
46.5 |
12.0 |
23.7 |
116.4 |
672.2 |
18.5 |
712.5 |
35.2 |
3,120.3 |
|||||||||||||||||||||||||||||||||||||||
| Additions |
— | 1.2 | — | 23.3 | 1.5 | 0.4 | — | 3.3 | 7.2 | — | 70.1 | 29.2 | 136.2 | |||||||||||||||||||||||||||||||||||||||
| Disposals |
— | (4.2 | ) | — | (19.9 | ) | (5.0 | ) | (0.4 | ) | (19.2 | ) | (3.7 | ) | (56.2 | ) | — | (31.0 | ) | — | (139.6 | ) | ||||||||||||||||||||||||||||||
| Reclassifications* |
— | 3.6 | 0.5 | (2.1 | ) | (0.1 | ) | 0.1 | — | (0.6 | ) | (7.4 | ) | — | (27.2 | ) | (11.7 | ) | (44.9 | ) | ||||||||||||||||||||||||||||||||
| Translation adjustments |
— | (1.7 | ) | (0.5 | ) | (4.8 | ) | (0.2 | ) | (0.2 | ) | — | (0.4 | ) | (0.2 | ) | — | (15.0 | ) | (1.2 | ) | (24.2 | ) | |||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| 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 |
|||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Accumulated depreciation |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
— |
(183.2 |
) |
(34.8 |
) |
(394.0 |
) |
(30.1 |
) |
(9.5 |
) |
(22.9 |
) |
(107.7 |
) |
(416.5 |
) |
(18.5 |
) |
(215.5 |
) |
— |
(1,432.7 |
) | ||||||||||||||||||||||||||||
| Depreciation |
— | (18.4 | ) | (2.6 | ) | (26.2 | ) | (3.2 | ) | (0.5 | ) | (0.1 | ) | (3.3 | ) | (23.4 | ) | — | (13.9 | ) | — | (91.6 | ) | |||||||||||||||||||||||||||||
| Disposals |
— | 2.4 | — | 14.5 | 3.7 | 0.3 | 18.7 | 3.3 | 42.9 | — | 11.3 | — | 97.1 | |||||||||||||||||||||||||||||||||||||||
| Reclassifications* |
— | 3.0 | 0.7 | 5.5 | 0.2 | — | — | 0.7 | 7.5 | — | 0.3 | — | 17.9 | |||||||||||||||||||||||||||||||||||||||
| Interest on capitalized assets |
— | (1.1 | ) | — | — | — | — | — | — | — | — | — | — | (1.1 | ) | |||||||||||||||||||||||||||||||||||||
| Translation adjustments |
— | 0.5 | 0.1 | 3.8 | 0.2 | 0.2 | — | 0.4 | 0.1 | — | 6.5 | — | 11.8 | |||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| 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 |
) | ||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Net |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
10.2 | 473.7 | 53.6 | 333.8 | 16.4 | 2.5 | 0.8 | 8.7 | 255.7 | — | 497.0 | 35.2 | 1,687.6 | |||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||
| (*) | Non-cash transactions: reclassifications between property, plant and equipment and inventories. |
15. |
INTANGIBLE ASSETS |
Internally developed |
Acquired from third party |
|||||||||||||||||||||||||||||||||||||||
Others |
||||||||||||||||||||||||||||||||||||||||
Commercial |
Executive |
Defense & Security |
Service & Support |
eVTOL |
Others |
Software |
Goodwill |
Others |
Total |
|||||||||||||||||||||||||||||||
| Intangible cost |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,311.3 |
1,603.4 |
145.9 |
31.0 |
42.4 |
14.4 |
301.6 |
23.8 |
9.0 |
3,482.8 |
||||||||||||||||||||||||||||||
| Additions |
41.0 | 60.2 | 39.6 | 8.1 | 109.4 | 2.0 | 5.5 | — | — | 265.8 | ||||||||||||||||||||||||||||||
| Disposals |
— | — | (0.4 | ) | — | — | — | (13.6 | ) | — | (0.7 | ) | (14.7 | ) | ||||||||||||||||||||||||||
| Reclassifications * |
9.5 | — | — | — | — | — | — | — | — | 9.5 | ||||||||||||||||||||||||||||||
| Interest on capitalized assets |
— | — | — | — | 2.9 | — | — | — | — | 2.9 | ||||||||||||||||||||||||||||||
| Translation adjustments |
— | — | (2.0 | ) | — | — | (2.2 | ) | (1.7 | ) | (4.6 | ) | — | (10.5 | ) | |||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At December 31, 2024 |
1,361.8 |
1,663.6 |
183.1 |
39.1 |
154.7 |
14.2 |
291.8 |
19.2 |
8.3 |
3,735.8 |
||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated amortization |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
(119.8 |
) |
(697.9 |
) |
(52.8 |
) |
— | — |
(4.8 |
) |
(274.0 |
) |
— |
(2.5 |
) |
(1,151.8 |
) | |||||||||||||||||||||||
| Amortization |
(57.7 | ) | (52.4 | ) | (4.5 | ) | — | — | (1.4 | ) | (8.8 | ) | — | (0.7 | ) | (125.5 | ) | |||||||||||||||||||||||
| Amortization of contribution from suppliers |
18.7 | 11.5 | — | — | — | — | — | — | — | 30.2 | ||||||||||||||||||||||||||||||
| Disposals |
— | — | — | — | — | — | 12.5 | — | 0.7 | 13.2 | ||||||||||||||||||||||||||||||
| Reclassifications |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Interest on capitalized assets |
— | (1.4 | ) | — | — | — | — | — | — | — | (1.4 | ) | ||||||||||||||||||||||||||||
| Translation adjustments |
— | — | 0.6 | — | — | 0.3 | 1.3 | — | 0.2 | 2.4 | ||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At December 31, 2024 |
(158.8 |
) |
(740.2 |
) |
(56.7 |
) |
— |
— |
(5.9 |
) |
(269.0 |
) |
— |
(2.3 |
) |
(1,232.9 |
) | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Intangible, net |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,191.5 | 905.5 | 93.1 | 31.0 | 42.4 | 9.6 | 27.6 | 23.8 | 6.5 | 2,331.0 | ||||||||||||||||||||||||||||||
| At December 31, 2024 |
1,203.0 | 923.4 | 126.4 | 39.1 | 154.7 | 8.3 | 22.8 | 19.2 | 6.0 | 2,502.9 | ||||||||||||||||||||||||||||||
| (*) | Non-cash transactions: reclassifications between intangible assets and inventories. |
Internally developed |
Acquired from third party |
|||||||||||||||||||||||||||||||||||||||
Others |
||||||||||||||||||||||||||||||||||||||||
Commercial |
Executive |
Defense & Security |
Service & Support |
eVTOL |
Others |
Software |
Goodwill |
Others |
Total |
|||||||||||||||||||||||||||||||
| 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 | 42.4 | 3.1 | 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 |
42.4 |
14.4 |
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 | — | 2.2 | 48.9 | 22.3 | 8.7 | 2,246.5 | ||||||||||||||||||||||||||||||
| At December 31, 2023 |
1,191.5 | 905.5 | 93.1 | 31.0 | 42.4 | 9.6 | 27.6 | 23.8 | 6.5 | 2,331.0 | ||||||||||||||||||||||||||||||
12.31.2022 |
||||||||||||||||||||||||||||||||||||||||
Internally developed |
Acquired from third party |
|||||||||||||||||||||||||||||||||||||||
Commercial |
Executive |
Defense & Security |
Service & Support |
Others |
Development |
Software |
Goodwill |
Others |
Total |
|||||||||||||||||||||||||||||||
| Intangible cost |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
1,234.2 |
1,405.8 |
55.8 |
— |
4.6 |
11.8 |
310.6 |
21.4 |
169.6 |
3,213.8 |
||||||||||||||||||||||||||||||
| Additions |
40.4 | 48.6 | 13.7 | 9.0 | — | — | 4.1 | — | 4.0 | 119.8 | ||||||||||||||||||||||||||||||
| Disposals |
— | — | — | — | — | — | (1.6 | ) | — | (5.3 | ) | (6.9 | ) | |||||||||||||||||||||||||||
| Reclassifications |
(0.2 | ) | 90.2 | 62.0 | — | — | (11.8 | ) | (10.1 | ) | — | (157.7 | ) | (27.6 | ) | |||||||||||||||||||||||||
| Translation adjustments |
— | — | 0.9 | — | — | — | (1.0 | ) | 0.9 | — | 0.8 | |||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| 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 |
||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated amortization |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
(80.1 |
) |
(617.4 |
) |
(43.9 |
) |
— |
(1.8 |
) |
(3.6 |
) |
(234.2 |
) |
— |
(19.4 |
) |
(1,000.4 |
) | ||||||||||||||||||||||
| Amortization |
(31.6 | ) | (42.9 | ) | (2.4 | ) | — | (0.6 | ) | — | (25.6 | ) | — | (0.6 | ) | (103.7 | ) | |||||||||||||||||||||||
| Amortization of contribution from suppliers |
10.2 | 10.9 | — | — | — | — | — | — | — | 21.1 | ||||||||||||||||||||||||||||||
| Disposals |
— | — | — | — | — | — | 1.6 | — | 1.1 | 2.7 | ||||||||||||||||||||||||||||||
| Reclassifications |
20.4 | (12.2 | ) | (5.2 | ) | — | — | 3.6 | 4.1 | — | 17.0 | 27.7 | ||||||||||||||||||||||||||||
| Interest on capitalized assets |
— | (1.4 | ) | — | — | — | — | — | — | — | (1.4 | ) | ||||||||||||||||||||||||||||
| Translation adjustments |
— | — | (0.4 | ) | — | — | — | 1.0 | — | — | 0.6 | |||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| At December 31, 2022 |
(81.1 |
) |
(663.0 |
) |
(51.9 |
) |
— |
(2.4 |
) |
— |
(253.1 |
) |
— |
(1.9 |
) |
(1,053.4 |
) | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Intangible, net |
||||||||||||||||||||||||||||||||||||||||
| At December 31, 2021 |
1,154.1 | 788.4 | 11.9 | — | 2.8 | 8.2 | 76.4 | 21.4 | 150.2 | 2,213.4 | ||||||||||||||||||||||||||||||
| At December 31, 2022 |
1,193.3 | 881.6 | 80.5 | 9.0 | 2.2 | — | 48.9 | 22.3 | 8.7 | 2,246.5 | ||||||||||||||||||||||||||||||
16. |
IMPAIRMENT OF NON-FINANCIAL ASSETS |
| • | Future cash flows were projected for a period between 11 and 31 years, depending on the characteristics of the CGU, and discounted at the weighted average cost of capital (“WACC”) rate, being equivalent to the estimated pre-tax rate of 11.4% (2023: 9.9%). Cash flows do not include perpetuity. |
| • | Part of the future cash flows were budgeted in reais and converted to dollars based on the exchange rate on September 30, 2024, of R$ 5.4481. The devaluation of the Brazilian Reais against the dollar in the nine-month period ended on September 30, 2024, of 12.53% did not have a significant impact on future cash flows. |
17. |
TRADE ACCOUNTS PAYABLE |
12.31.2024 |
12.31.2023 |
|||||||
| Foreign suppliers |
492.5 | 420.4 | ||||||
| Domestic suppliers |
190.7 | 175.7 | ||||||
| Risk partners |
283.1 | 190.9 | ||||||
| |
|
|
|
|||||
966.3 |
787.0 |
|||||||
| |
|
|
|
|||||
18. |
TRADE ACCOUNTS PAYABLE – SUPPLIER FINANCE ARRANGEMENTS |
12.31.2024 |
12.31.2023 |
|||||||
| Suppliers subject to supplier finance arrangement (i) |
78.5 | 58.9 | ||||||
| Suppliers have received payment from the bank(ii) |
43.3 | 37.6 | ||||||
| (i) | These balances are presented as Trade accounts payable. |
| (ii) | These balances are presented as Trade accounts payable – Supplier Finance Arrangements. |
19. |
LOANS AND FINANCING |
| Purpose of the loan (Unaudited) |
Currency |
Interest rate - % |
Maturity |
12.31.2024 |
12.31.2023 |
|||||||||||||||||||
| Property, plant and equipment |
||||||||||||||||||||||||
| US$ | SIFMA | 2025-
|
20.0 | 20.5 | ||||||||||||||||||||
| Guaranteed Notes |
||||||||||||||||||||||||
| US$ | 5.40% p.a. | 2027 | 533.2 | 532.9 | ||||||||||||||||||||
| US$ | 6.95% p.a. | 2028 | 491.9 | 491.2 | ||||||||||||||||||||
| US$ | 7.00% p.a. | 2030 | 761.7 | 760.3 | ||||||||||||||||||||
| Working capital |
||||||||||||||||||||||||
| R$ | CDI + 2.60% p.a. | 2026 | 3.3 | 4.3 | ||||||||||||||||||||
| Euro | 3.96% p.a. a 4.52% p.a. | 2024-
|
22.0 | 30.7 | ||||||||||||||||||||
| Euro | Euribor 1M + 1.40% p.a. | 2025 | — | 2.9 | ||||||||||||||||||||
| Euro | Euribor 12M + 1.31% p.a. | 2024-
|
1.2 | 2.3 | ||||||||||||||||||||
| US$ | SOFR 6M + 0.50% p.a. | 2025 | 10.7 | 22.4 | ||||||||||||||||||||
| US$ | SOFR 6M + 2.60% | 2027 | (i | ) | — | 102.4 | ||||||||||||||||||
| US$ | 4.35% p.a. a 4.50% p.a. | 2024-
|
26.0 | 25.2 | ||||||||||||||||||||
| US$ | SOFR 6M + 0.75% p.a. | 2024-
|
66.8 | 57.6 | ||||||||||||||||||||
| Export financing |
||||||||||||||||||||||||
| US$ | 5.92% p.a. | 2026 | 30.5 | 30.5 | ||||||||||||||||||||
| US$ | 5.49% p.a. | 2027 | 372.7 | 401.0 | ||||||||||||||||||||
| US$ | 5.44% p.a. | 2028 | (ii | ) | — | 170.0 | ||||||||||||||||||
| US$ | 4.99% p.a. | 2028 | (ii | ) | — | 30.5 | ||||||||||||||||||
| US$ | SOFR 12M + 1.77% | 2028 | (i | ) | — | 165.8 | ||||||||||||||||||
| Projects |
||||||||||||||||||||||||
| R$ | 4.55% p.a. | 2026-
|
13.0 | 13.2 | ||||||||||||||||||||
| R$ | TR + 2.20% p.a. | 2029-
|
7.4 | — | ||||||||||||||||||||
| US$ | 5.30% p.a. a 5.77% p.a. | 2027-
|
69.8 | 12.7 | ||||||||||||||||||||
| US$ | SOFR 3M + 3.90% p.a. | 2028 | 50.0 | — | ||||||||||||||||||||
| US$ | 5.69% p.a. | 2029-
|
0.9 | — | ||||||||||||||||||||
| Others |
||||||||||||||||||||||||
| US$ | 10.50% p.a. | 2028 | 10.0 | 10.0 | ||||||||||||||||||||
| |
|
|
|
|||||||||||||||||||||
| Total |
2,491.1 |
2,886.4 |
||||||||||||||||||||||
| |
|
|
|
|||||||||||||||||||||
| Current |
113.8 | 127.1 | ||||||||||||||||||||||
| Non-current |
2,377.3 | 2,759.3 | ||||||||||||||||||||||
| (i) | In March 2024, the Company early settled these loans. |
| (ii) | In December 2024, the Company made the full early settlement of the contract with BNDES due in 2028 for the total amount of US$ 202.2 . No additional costs were incurred on this amount to make the advance payment. |
| 2026 |
49.4 | |||
| 2027 |
941.3 | |||
| 2028 |
537.0 | |||
| Thereafter |
849.6 | |||
| |
|
|||
2,377.3 |
||||
| |
|
20. |
SUPPLEMENTAL CASH FLOW INFORMATION |
|
Loans and financing |
Lease liabilities |
Other debts |
Total |
|||||||||||||
| At December 31, 2023 |
2,886.4 |
96.0 |
— |
2,982.4 |
||||||||||||
| Proceeds |
762.1 | — | 13.1 | 775.2 | ||||||||||||
| Payments |
(1,142.2 | ) | (18.8 | ) | (13.1 | ) | (1,174.1 | ) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Cash flow from financing activities |
(380.1 |
) |
(18.8 |
) |
— |
(398.9 |
) | |||||||||
| Others |
||||||||||||||||
| Interest payment |
(176.3 | ) | — | — | (176.3 | ) | ||||||||||
| Interest expense |
171.7 | 5.8 | — | 177.5 | ||||||||||||
| Exchange rate variation and conversion adjustments |
(10.6 | ) | (9.1 | ) | — | (19.7 | ) | |||||||||
| Addition - Lease Liabilities |
— | 38.3 | — | 38.3 | ||||||||||||
| Disposals - Lease Liabilities |
— | (0.4 | ) | — | (0.4 | ) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| At December 31, 2024 |
2,491.1 |
111.8 |
— |
2,602.9 |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Current |
113.8 | 19.2 | ||||||||||||||
| Non-current |
2,377.3 | 92.6 | ||||||||||||||
| |
|
|
|
|||||||||||||
2,491.1 |
111.8 |
|||||||||||||||
| |
|
|
|
|||||||||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Non-cash investing transactions |
||||||||||||
| Addition of fixed assets without monetary outflow |
42.7 | — | — | |||||||||
| Additions to property, plant and equipment by transfer of aircraft inventories |
16.9 | — | — | |||||||||
| Write off on Property, plant and equipment by transfer to pool parts inventory |
36.4 | (15.6 | ) | (27.2 | ) | |||||||
21. |
OTHER PAYABLES |
12.31.2024 |
12.31.2023 |
|||||||||||
| Share-based payment plans |
26.1 | 156.5 | 45.4 | |||||||||
| Provisions related to payroll |
123.6 | 123.0 | ||||||||||
| Provision for employee profit sharing |
72.3 | 66.2 | ||||||||||
| Other accounts payable |
55.7 | 54.7 | ||||||||||
| Contractual obligations |
(i | ) | 33.1 | 24.0 | ||||||||
| Facility accounts payable |
23.1 | 8.5 | ||||||||||
| Non-controlling purchase options - EVE |
20.0 | 24.0 | ||||||||||
| Royalties to be paid to the Brazilian Air Force |
15.0 | 7.7 | ||||||||||
| Dividends payable |
9.2 | 0.9 | ||||||||||
| Accounts payable company acquisition |
(ii | ) | 5.8 | — | ||||||||
| Commission payable |
3.1 | 10.4 | ||||||||||
| Insurance |
2.5 | 4.9 | ||||||||||
| Recourse and non-recourse debt |
1.1 | 2.9 | ||||||||||
| Non-controlling purchase options - Tempest |
— | 15.1 | ||||||||||
| |
|
|
|
|||||||||
521.0 |
387.7 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
359.8 | 332.3 | ||||||||||
| Non-current |
161.2 | 55.4 | ||||||||||
| (i) | Represents amounts recorded regarding contractual obligations assumed by the Company in contracts with customers mainly related to commercial concessions and costs to obtain contracts. |
| (ii) | Refers to the balance payable for the acquisition of Coqueiro (Note 2.3.1) and Xmobots (Note 12.2) of US$ 1.7 and US$ 4.1, respectively. |
22. |
TAXES AND PAYROLL CHARGES PAYABLE |
12.31.2024 |
12.31.2023 |
|||||||||||
| INSS (social security contribution) |
(i | ) | 22.9 | 32.8 | ||||||||
| IRRF (withholding tax) |
11.9 | 13.8 | ||||||||||
| Value added tax (“VAT”) |
9.0 | 0.3 | ||||||||||
| PIS and COFINS |
0.9 | 0.7 | ||||||||||
| IPI (manufacturing tax) |
0.9 | 1.3 | ||||||||||
| Taxes refinancing program |
0.1 | 0.3 | ||||||||||
| Service tax (“ISS”) |
1.5 | 1.7 | ||||||||||
| FGTS (government employee severance indemnity fund) |
4.6 | 4.6 | ||||||||||
| Social Security |
0.6 | 1.2 | ||||||||||
| Others |
2.6 | 4.2 | ||||||||||
| |
|
|
|
|||||||||
55.0 |
60.9 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
45.8 | 42.6 | ||||||||||
| Non-current |
9.2 | 18.3 | ||||||||||
| (i) | The Company filed judicial and administrative claims questioning certain social contribution issues including levy of social contribution on 1/3 of vacation and other compensation payments, and the right not to pay social security contributions according to the system established by Law 12.546/2011 in the year of 2018 for one of its subsidiaries. The amount involved and respectively provisioned is US$ 7.2 (2023: US$ 18.2). The reduction noted in 2024 is mainly due to the payment of certain periods related to the levy of Social Security Contributions on 1/3 of vacation. |
23. |
INCOME TAXES |
12.31.2024 |
12.31.2023 |
|||||||||||
| Temporary differences |
(i | ) | 228.2 | 165.9 | ||||||||
| Tax loss carryforwards |
85.2 | 1.1 | ||||||||||
| Functional currency effect of the non monetary assets |
(ii | ) | (559.0 | ) | (316.5 | ) | ||||||
| Gains not realized |
38.4 | 33.0 | ||||||||||
| Derivatives / Hedge Accounting |
2.4 | 1.1 | ||||||||||
| Effect of differences in fixed asset |
(71.1 | ) | (55.1 | ) | ||||||||
| Other differences between basis: account x tax |
(iii | ) | (0.4 | ) | 3.5 | |||||||
| |
|
|
|
|||||||||
| Deferred tax assets (liabilities), net |
(276.3 |
) |
(167.0 |
) | ||||||||
| |
|
|
|
|||||||||
| Total deferred tax asset |
174.0 | 137.7 | ||||||||||
| Total deferred tax liability |
(450.3 | ) | (304.7 | ) | ||||||||
(i) |
Temporary differences include non-deductible provisions, accelerated amortization of incentivized expenses with research and development, foreign exchange rate gains or losses included in income tax calculation in cash basis and other differences which will be included or excluded from the tax basis when realized for tax purposes. |
| (ii) | The income tax and social contribution tax basis of Embraer are impacted by fluctuations in the exchange rate, since tax assets and liabilities are held in Brazilian Reais at their historical value and the accounting basis is in dollars (functional currency), as well as income tax expenses/revenues recorded in profit or loss. This item reflects the effect of these fluctuations. |
| (iii) | Refers to differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, such as adjustments to contract revenues, leases and right of use, impairment, among others. |
From the statement of income |
Other comprehensive income |
Total |
||||||||||
| At December 31, 2021 |
(458.9 |
) |
50.7 |
(408.2 |
) | |||||||
| |
|
|
|
|
|
|||||||
| Temporary differences |
(44.8 | ) | — | (44.8 | ) | |||||||
| Tax loss carryforwards |
9.5 | — | 9.5 | |||||||||
| Functional currency effect of the non-monetary assets |
100.3 | — | 100.3 | |||||||||
| Gains not realized |
6.1 | — | 6.1 | |||||||||
| Effect of differences in fixed asset |
(17.6 | ) | — | (17.6 | ) | |||||||
| Derivatives / Hedge Accounting |
1.3 | 1.3 | ||||||||||
| Differences between basis: account x tax |
32.0 | (1.1 | ) | 30.9 | ||||||||
| |
|
|
|
|
|
|||||||
| At December 31, 2022 |
(372.1 |
) |
49.6 |
(322.5 |
) | |||||||
| |
|
|
|
|
|
|||||||
| Temporary differences |
55.0 | — | 55.0 | |||||||||
| Tax loss carryforwards |
(15.5 | ) | — | (15.5 | ) | |||||||
| Functional currency effect of the non-monetary assets |
112.3 | — | 112.3 | |||||||||
| Gains not realized |
12.2 | — | 12.2 | |||||||||
| Effect of differences in fixed asset |
(16.1 | ) | — | (16.1 | ) | |||||||
| Derivatives / Hedge Accounting |
0.2 | 0.2 | ||||||||||
| Other differences between basis: account x tax |
4.5 | 2.9 | 7.4 | |||||||||
| |
|
|
|
|
|
|||||||
| At December 31, 2023 |
(219.5 |
) |
52.5 |
(167.0 |
) | |||||||
| |
|
|
|
|
|
|||||||
| Temporary differences |
62.3 | — | 62.3 | |||||||||
| Tax loss carryforwards |
84.1 | — | 84.1 | |||||||||
| Functional currency effect of the non-monetary assets |
(242.5 | ) | — | (242.5 | ) | |||||||
| Gains not realized |
5.4 | — | 5.4 | |||||||||
| Effect of differences in fixed asset |
(16.0 | ) | — | (16.0 | ) | |||||||
| Derivatives / Hedge Accounting |
(4.7 | ) | 6.0 | 1.3 | ||||||||
| Other differences between basis: account x tax |
(0.6 | ) | (3.3 | ) | (3.9 | ) | ||||||
| |
|
|
|
|
|
|||||||
| At December 31, 2024 |
(331.5 |
) |
55.2 |
(276.3 |
) | |||||||
| |
|
|
|
|
|
|||||||
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||
| Income (loss) before income tax |
557.0 | 120.7 | (205.8 | ) | ||||||||||||
| |
|
|
|
|
|
|||||||||||
| Income tax and social contribution at the nominal Brazilian enacted tax rate - 34% |
(189.4 |
) |
(41.0 |
) |
70.0 |
|||||||||||
| |
|
|
|
|
|
|||||||||||
| Tax on profits of overseas subsidiaries |
(i | ) | (120.8 | ) | (8.2 | ) | (76.8 | ) | ||||||||
| Transfer Pricing and Thin Capitalization |
— | (1.5 | ) | (2.6 | ) | |||||||||||
| Functional currency effect of the non-monetary assets |
(326.1 | ) | 132.4 | 134.4 | ||||||||||||
| Research and development tax incentives |
3.4 | 16.6 | 4.0 | |||||||||||||
| Currency effect of the result |
359.5 | (140.7 | ) | (116.4 | ) | |||||||||||
| Equity in the earnings of subsidiaries |
(1.4 | ) | 3.8 | 2.7 | ||||||||||||
| Non-reconized DTA on tax losses carryfoward |
5.9 | (40.4 | ) | (125.4 | ) | |||||||||||
| Diferent tax rates in subsidiaries |
81.1 | 110.5 | 33.2 | |||||||||||||
| Others |
(ii | ) | (14.6 | ) | 12.1 | 79.2 | ||||||||||
| |
|
|
|
|
|
|||||||||||
(13.0 |
) |
84.6 |
(67.7 |
) | ||||||||||||
| |
|
|
|
|
|
|||||||||||
| Income tax and social contribution income (expense) benefit as reported |
(202.4 |
) |
43.6 |
2.3 |
||||||||||||
| |
|
|
|
|
|
|||||||||||
| Current income tax and social contribution expense as reported |
(90.4 | ) | (109.0 | ) | (84.5 | ) | ||||||||||
| Deferred income tax and social contribution income (expense) benefit as reported |
(112.0 | ) | 152.6 | 86.8 | ||||||||||||
| Effective rate |
-36.3 | % | 36.1 | % | -1.1 | % | ||||||||||
(i) |
In line with the rules on Taxation on Universal Basis (Brazilian Law 12,973 and Brazilian Normative Instruction 1,520, both from 2014), Embraer 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 recognized in the financial statements of the respective subsidiaries. |
(ii) |
Refers substantially to adjustments such as exclusions of Reintegra |
24. |
PROVISIONS AND CONTINGENT LIABILITIES |
Note |
12.31.2023 |
Additions |
Usages |
Reversals |
Interest |
Translation adjustments |
12.31.2024 |
|||||||||||||||||||||||||
| Product warranties |
73.2 | 51.7 | (33.4 | ) | (12.5 | ) | — | (0.1 | ) | 78.9 | ||||||||||||||||||||||
| Provision of third-party materials |
28.6 | 23.8 | (8.0 | ) | — | — | — | 44.4 | ||||||||||||||||||||||||
| Provision for contractual obligations |
— | 43.7 | — | — | — | — | 43.7 | |||||||||||||||||||||||||
| Provisions for labor, taxes and civil claims |
24.1.1 | 58.4 | 11.5 | (14.4 | ) | (8.1 | ) | 6.4 | (12.7 | ) | 41.1 | |||||||||||||||||||||
| Post retirement benefits |
25.1 | 48.0 | 1.2 | — | (8.3 | ) | 5.3 | (11.8 | ) | 34.4 | ||||||||||||||||||||||
| Taxes |
35.8 | 13.4 | (11.4 | ) | (1.2 | ) | — | (7.8 | ) | 28.8 | ||||||||||||||||||||||
| Others |
44.2 | 37.2 | (42.1 | ) | (15.6 | ) | — | (1.1 | ) | 22.6 | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
288.2 |
182.5 |
(109.3 |
) |
(45.7 |
) |
11.7 |
(33.5 |
) |
293.9 |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Current |
114.7 | 90.2 | ||||||||||||||||||||||||||||||
| Non-current |
173.5 | 203.7 | ||||||||||||||||||||||||||||||
12.31.2024 |
12.31.2023 |
|||||||||||
| Tax related |
(i | ) | ||||||||||
| IRRF |
— | 11.2 | ||||||||||
| PIS and COFINS |
3.2 | 2.6 | ||||||||||
| Social security contributions |
1.6 | 2.0 | ||||||||||
| Import taxes |
0.6 | 0.7 | ||||||||||
| IOF |
3.3 | 3.7 | ||||||||||
| Others |
1.6 | 1.5 | ||||||||||
| |
|
|
|
|||||||||
10.3 |
21.7 |
|||||||||||
| Labor related |
||||||||||||
| Class action 1379/1991 |
(ii | ) | — | 0.1 | ||||||||
| Reintegration |
(iii | ) | 12.5 | 17.5 | ||||||||
| Overtime |
4.7 | 6.3 | ||||||||||
| Dangerousness |
1.4 | 1.7 | ||||||||||
| Insalubrity |
8.3 | 3.2 | ||||||||||
| Indemnity |
2.6 | 3.4 | ||||||||||
| Third parties |
0.4 | 0.6 | ||||||||||
| Others |
0.8 | 3.7 | ||||||||||
| |
|
|
|
|||||||||
30.7 |
36.5 |
|||||||||||
| Civil related |
||||||||||||
| Indemnity |
0.1 | 0.2 | ||||||||||
0.1 |
0.2 |
|||||||||||
| |
|
|
|
|||||||||
41.1 |
58.4 |
|||||||||||
| |
|
|
|
|||||||||
| Current |
8.5 | 8.4 | ||||||||||
| Non-current |
32.6 | 50.0 | ||||||||||
(i) |
The following discloses certain tax issues administratively or judicially, the most relevant of which are: |
| • | 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 final favorable decision. In view of this decision, the provision was reversed. |
| • | Compensation of Programa de Integração Contribuição para o Financiamento da Seguridade Social non-cumulative regime. |
| • | Withholding of 11% social contribution to the Instituto Nacional do Seguro Social |
| • | Import tax resulting from differences regarding the tax classification of certain products. |
| • | Tax assessment to claim Imposto Sobre Operações Financeiras |
| (ii) | Labor cases related to the class actions filed by the São José dos Campos Metalworkers’ Union (“SJK Union”), which represents the replaced employees, claiming wage adjustments and productivity payments on salaries for the months of November and December 1990. In May 2023, the Company and the SJK Union ratified an agreement to settle the case in the amount of US$ 4.3, which was paid in the same month. The labor cases related to the class action have been closed. The class action will remain ongoing for a period of one year from the date of the agreement, so that any questions raised by the replaced employees can be assessed. |
(iii) |
Amount refers to labor lawsuits from former employees claiming reintegration with the Company. |
| Tax group |
12.31.2024 |
12.31.2023 |
||||||||||
| ISS |
(i | ) | 72.3 | 73.4 | ||||||||
| Social Security |
(ii | ) | 56.6 | 66.2 | ||||||||
| PIS e COFINS |
(iii | ) | 30.2 | 39.0 | ||||||||
| Others |
(iv | ) | 13.4 | 16.4 | ||||||||
| |
|
|
|
|||||||||
| Total |
172.5 |
195.0 |
||||||||||
| |
|
|
|
|||||||||
| (i) | Tax assessment by the municipality of São José dos Campos to collect Services Tax (Brazilian “ISS”) allegedly due in the period from July 1, 2010 to July 1, 2015. In July 2024, the Company received an unfavorable decision in the administrative sphere with the maintenance of the assessment related to the ISS and maintained the discussion of the debt in the Judicial Sphere. |
| (ii) | Legal process that aims to recognize the Company’s right to collect the Social Security Contribution on Gross Revenue in the manner provided for by Law No. 12,546/2011 in the period from July to December 2017. |
| (iii) | Non-approved compensations requests, relating to various administrative processes at different stages. |
| (iv) | ICMS-DIFAL (Brazilian VAT) and other charges. |
25. |
POST-RETIREMENT BENEFITS |
Note |
12.31.2024 |
12.31.2023 |
||||||||||
| Post-employment health care benefit plans in Brazil |
25.1.1 | 31.6 | 46.1 | |||||||||
| Other post-employment benefit plans offered abroad |
(i | ) | 2.8 | 1.9 | ||||||||
| |
|
|
|
|||||||||
| Post-retirement benefits |
34.4 |
48.0 |
||||||||||
| |
|
|
|
|||||||||
| (i) | Refers to the post-employment pension and medical benefits sponsored by Embraer Aircraft Holding, Inc. and the pension plan offered by Embraer Aviation International - EAI. |
12.31.2024 |
12.31.2023 |
|||||||
| Balance at beginning of year |
46.1 |
34.2 |
||||||
| Current service cost |
0.1 | 0.1 | ||||||
| Interest expense |
3.9 | 3.8 | ||||||
| Remeasurement losses (gains): |
||||||||
| Experience loss |
1.2 | 3.9 | ||||||
| (Gain) loss due to change in financial assumptions |
(4.5 | ) | 2.8 | |||||
| Gain due to change in demographic assumptions |
(4.5 | ) | — | |||||
| Benefits paid |
(1.3 | ) | (1.7 | ) | ||||
| Translation adjustments |
(9.4 | ) | 3.0 | |||||
| |
|
|
|
|||||
| Balance at end of year |
31.6 |
46.1 |
||||||
| |
|
|
|
|||||
| • | Discount rate: based on the rates of long-term Brazilian government bonds linked to inflation. |
| • | Health Care Cost Trend Rate: reflects the impact of increased costs associated with the introduction of new technologies, medications, and usage above the country’s official inflation. |
| • | Aging factor: reflects the rise in the cost of the plan due to aging population. |
| • | Mortality table: the RP-2000 Combined Healthy Generational table is used, which indicates the mortality rates by age group and gender. |
| • | Turnover: consider the Embraer Experience Table 2024. On December 31, 2023, the measurement of the obligation considered the T-3 Service Table made available by the Society of Actuaries. |
| • | Retirement probability: an estimate of the probability of retirement by age group. |
12.31.2024 |
12.31.2023 |
|||||||
| Discount rate |
7.45% p.a. | 5.47% p.a. | ||||||
| Health care cost trend rate: medical inflation |
3% p.a. | 5% p.a. | ||||||
| Aging factor |
3% p.a. | 3% p.a. | ||||||
Increase |
Reduction |
|||||||
| Effect on the discount rate |
3.6 | (4.4 | ) | |||||
| Effect on medical inflation |
(4.3 | ) | 3.6 | |||||
26. |
SHARE-BASED PAYMENT |
12.31.2023 |
12.31.2024 |
|||||||||||||||||||||||||||||||||||||||||||||||
| Date of grants |
Date of acquisition of rights (i) |
Fair value at date of grant R$ (ii) |
Quantity granted |
(-) Quantity canceled and other adjustments |
(-) Quantity paid or advanced |
(=) Total of shares |
Fair value of liability - US$ (iii) |
Quantity granted |
(-) Quantity canceled and other adjustments |
(-) Quantity paid or advanced |
(=) Total of shares |
Fair value of liability - US$ (iii) |
||||||||||||||||||||||||||||||||||||
| 03.12.2019 |
03.12.2024 | 19.30 | 1,349,153 | (238,777 | ) | (945,407 | ) | 164,969 | 0.8 | — | — | (164,969 | ) | — | — | |||||||||||||||||||||||||||||||||
| 03.24.2020 |
03.24.2025 | 16.95 | 1,633,741 | (516,702 | ) | (775,825 | ) | 341,214 | 1.4 | — | (1,404 | ) | (168,061 | ) | 171,749 | 1.5 | ||||||||||||||||||||||||||||||||
| 03.18.2021 |
03.18.2024 | 11.29 | 2,181,442 | (221,420 | ) | — | 1,960,022 | 9.0 | — | — | (1,960,022 | ) | — | — | ||||||||||||||||||||||||||||||||||
| 03.11.2022 |
03.11.2025 | 17.61 | 2,292,434 | (253,350 | ) | — | 2,039,084 | 6.1 | — | — | — | 2,039,084 | 17.3 | |||||||||||||||||||||||||||||||||||
| 09.05.2022 |
09.05.2027 | 13.69 | 13,621,919 | (10,544 | ) | (2,722,275 | ) | 10,889,100 | 9.9 | — | — | (2,722,275 | ) | 8,166,825 | 45.6 | |||||||||||||||||||||||||||||||||
| 11.18.2022 |
11.18.2026 | 12.58 | 4,494,033 | 36,415 | (906,090 | ) | 3,624,358 | 4.0 | — | — | (906,090 | ) | 2,718,268 | 18.6 | ||||||||||||||||||||||||||||||||||
| 03.09.2023 |
03.09.2026 | 16.35 | 3,471,772 | (112,750 | ) | — | 3,359,022 | 4.5 | — | — | — | 3,359,022 | 18.6 | |||||||||||||||||||||||||||||||||||
| 09.13.2023 |
09.13.2027 | 18.55 | 1,802,095 | (30,335 | ) | — | 1,771,760 | 0.7 | — | (9,935 | ) | (352,366 | ) | 1,409,459 | 4.3 | |||||||||||||||||||||||||||||||||
| 08.02.2024 |
08.02.2028 | 22.43 | — | — | — | — | — | 4,088,971 | (99,386 | ) | — | 3,989,585 | 8.3 | |||||||||||||||||||||||||||||||||||
| 03.14.2024 |
03.14.2027 | 22.95 | — | — | — | — | — | 2,537,146 | — | — | 2,537,146 | 6.4 | ||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total |
30,846,589 |
(1,347,463 |
) |
(5,349,597 |
) |
24,149,529 |
36.4 |
6,626,117 |
(110,725 |
) |
(6,273,783 |
) |
24,391,138 |
120.6 |
||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| (i) | Generally, the settlement of granted plans occurs on the date of acquisition of rights. Advances are made on an exceptional basis on each anniversary of the grant date for some plans. |
| (ii) | Refers to the fair value on the grant date. The fair value of the share on the grant date is determined based on the average price of the last 30 trading sessions of the EMBR3 share on B3. |
| (iii) | The fair value of the share used to measure the fair value of the liability is determined based on the average price of the last 10 trading sessions of the EMBR share on B3. When applicable, dividends effectively distributed, including interest on equity, are added to the fair value of the share. This amount added to the applicable labor charges is presented as accounts payable (Note 21). |
27. |
FINANCIAL INSTRUMENTS |
12.31.2024 |
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 |
5 | 1,561.9 | — | — | 1.1 | — | 1,563.0 | — | 1.1 | — | 1.1 | |||||||||||||||||||||||||||||||||
| Financial investments |
6 | |||||||||||||||||||||||||||||||||||||||||||
| Public securities |
66.5 | — | — | — | — | 66.5 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Private securities |
76.5 | — | 23.4 | — | — | 99.9 | — | 23.4 | — | 23.4 | ||||||||||||||||||||||||||||||||||
| Structured notes |
— | — | 133.2 | — | — | 133.2 | — | 133.2 | — | 133.2 | ||||||||||||||||||||||||||||||||||
| Investment funds |
— | — | 21.9 | 103.3 | — | 125.2 | — | 125.2 | — | 125.2 | ||||||||||||||||||||||||||||||||||
| Fixed-term deposit |
468.2 | — | — | — | — | 468.2 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Others |
— | — | 95.0 | — | — | 95.0 | — | — | 95.0 | 95.0 | ||||||||||||||||||||||||||||||||||
| Trade accounts receivable, net |
7 | 322.8 | — | — | — | — | 322.8 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Derivative financial instruments |
8 | — | — | 13.2 | — | — | 13.2 | — | 13.2 | — | 13.2 | |||||||||||||||||||||||||||||||||
| Other assets |
109.9 | — | — | — | — | 109.9 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Customer financing |
9 | 32.3 | — | 0.1 | — | — | 32.4 | — | — | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
2,638.1 |
— |
286.8 |
104.4 |
— |
3,029.3 |
— |
296.1 |
95.1 |
391.2 |
|||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Liabilities |
||||||||||||||||||||||||||||||||||||||||||||
| Loans and financing |
19 | 2,491.1 | 2,566.1 | — | — | — | 2,491.1 | 1,835.5 | 730.6 | — | 2,566.1 | |||||||||||||||||||||||||||||||||
| Trade accounts payable |
17 | 966.3 | — | — | — | — | 966.3 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Trade accounts payable-Supplier finance arrangements |
18 | 43.3 | — | — | — | — | 43.3 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Accounts payable |
125.3 | — | — | — | — | 125.3 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Derivative financial instruments |
8 | — | — | 86.2 | 17.6 | — | 103.8 | 4.0 | 99.8 | — | 103.8 | |||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
3,626.0 |
2,566.1 |
86.2 |
17.6 |
— |
3,729.8 |
1,839.5 |
830.4 |
— |
2,669.9 |
|||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
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 |
5 | 1,629.2 | — | — | — | — | 1,629.2 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Financial investments |
6 | |||||||||||||||||||||||||||||||||||||||||||
| 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 | — | 350.4 | ||||||||||||||||||||||||||||||||||
| Others |
— | — | 100.8 | — | — | 100.8 | — | — | 100.8 | 100.8 | ||||||||||||||||||||||||||||||||||
| Trade accounts receivable, net |
7 | 221.0 | — | — | — | — | 221.0 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Derivative financial instruments |
8 | — | — | 8.5 | 9.0 | — | 17.5 | — | 17.5 | — | 17.5 | |||||||||||||||||||||||||||||||||
| Other assets |
121.6 | — | — | — | — | 121.6 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Customer financing |
9 | 41.6 | — | 21.2 | — | — | 62.8 | — | 12.4 | 8.8 | 21.2 | |||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
2,185.1 |
— | 199.2 | 359.5 | — | 2,743.8 | — | 449.1 | 109.6 | 558.6 | |||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Liabilities |
||||||||||||||||||||||||||||||||||||||||||||
| Loans and financing |
19 | 2,886.4 | 2,812.3 | — | — | — | 2,886.4 | 1,843.0 | 969.3 | — | 2,812.3 | |||||||||||||||||||||||||||||||||
| Trade accounts payable |
17 | 787.0 | — | — | — | — | 787.0 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Trade accounts payable-Supplier finance arrangements |
18 | 37.6 | — | — | — | — | 37.6 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Accounts payable |
118.5 | — | — | — | 15.1 | 133.6 | — | — | 15.1 | 15.1 | ||||||||||||||||||||||||||||||||||
| Derivative financial instruments |
8 | — | — | 125.1 | 0.1 | — | 125.2 | 11.3 | 113.9 | — | 125.2 | |||||||||||||||||||||||||||||||||
| |
|
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|
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|
|
|
|||||||||||||||||||||||||
3,829.5 |
2,812.3 | 125.1 | 0.1 | 15.1 | 3,969.8 | 1,854.3 | 1,083.2 | 15.1 | 2,952.6 | |||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
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 | ) | 2.4 | |||||
| |
|
|
|
|||||
| At 12.31.2023 |
109.6 |
15.1 |
||||||
| |
|
|
|
|||||
| Reversal |
— | (16.8 | ) | |||||
| Exchange variation |
— | (3.3 | ) | |||||
| Fair value adjustment |
(14.5 | ) | 5.0 | |||||
| |
|
|
|
|||||
| At 12.31.2024 |
95.1 |
— |
||||||
| |
|
|
|
|||||
| • | Average market multiple. |
| • | Discount for lack of marketability. |
| December 31, 2024 |
Increase |
Probable scenario |
Decrease |
|||||||||
| Growth rate (6% change) |
96.5 | 95.0 | 93.4 | |||||||||
| Discount rate (1% change) |
97.1 | 95.0 | 92.9 | |||||||||
Expected credit losses rate |
||||||||||||||||||||
Commercial Aviation |
Executive Aviation |
Defense & Security |
OGMA |
Others |
||||||||||||||||
| Not due |
1.25 | % | 0.31 | % | 0.01 | % | 0.12 | % | 1.65 | % | ||||||||||
| Up to 90 days |
2.32 | % | 0.74 | % | 0.03 | % | 0.29 | % | 3.84 | % | ||||||||||
| From 91 to 180 days |
55.88 | % | 14.83 | % | 0.36 | % | 2.61 | % | 10.05 | % | ||||||||||
| More than 180 days |
100.00 | % | 48.52 | % | 0.86 | % | 4.69 | % | 38.38 | % | ||||||||||
Past due |
Expected credit losses |
Total |
||||||||||||||||||||||
Not due |
Up to 90 days |
From 91 to 180 days |
Over 180 days |
|||||||||||||||||||||
| At December 31, 2024 |
||||||||||||||||||||||||
| Commercial Aviation |
176.2 | 9.8 | 9.9 | 5.6 | (9.1 | ) | 192.4 | |||||||||||||||||
| Defense & Security |
14.0 | 0.3 | 2.2 | 12.0 | (0.5 | ) | 28.0 | |||||||||||||||||
| Executive Aviation |
45.8 | 5.7 | 0.5 | 0.1 | (1.6 | ) | 50.5 | |||||||||||||||||
| OGMA |
23.9 | 4.9 | 2.3 | 3.2 | (0.5 | ) | 33.8 | |||||||||||||||||
| Others |
14.4 | 3.5 | 0.4 | 0.3 | (0.5 | ) | 18.1 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total accounts receivable |
274.3 |
24.2 |
15.3 |
21.2 |
(12.2 |
) |
322.8 |
|||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| At December 31, 2023 |
||||||||||||||||||||||||
| Commercial Aviation |
90.9 | 4.5 | 0.3 | 0.3 | (6.4 | ) | 89.6 | |||||||||||||||||
| Defense & Security |
35.5 | 3.6 | 0.3 | 1.2 | (0.4 | ) | 40.2 | |||||||||||||||||
| Executive Aviation |
37.6 | 3.1 | 0.4 | 0.1 | (1.8 | ) | 39.4 | |||||||||||||||||
| OGMA |
29.6 | 0.9 | 0.1 | 1.1 | (1.0 | ) | 30.7 | |||||||||||||||||
| Others |
19.6 | 1.5 | 0.1 | 0.1 | (0.2 | ) | 21.1 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total accounts receivable |
213.2 |
13.6 |
1.2 |
2.8 |
(9.8 |
) |
221.0 |
|||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Book value |
Total |
Less than one year |
One to three years |
Three to five years |
More than five years |
|||||||||||||||||||
At December 31, 2024 |
||||||||||||||||||||||||
Loans and financing |
2,491.1 | 3,107.6 | 216.5 | 1,275.6 | 699.2 | 916.3 | ||||||||||||||||||
Trade accounts payable |
966.3 | 966.3 | 966.3 | — | — | — | ||||||||||||||||||
Trade accounts payable - Supplier finance arrangements |
43.3 | 43.3 | 43.3 | — | — | — | ||||||||||||||||||
Lease liabilities |
111.8 | 111.8 | 19.2 | 29.0 | 27.7 | 35.9 | ||||||||||||||||||
Accounts payable |
125.3 | 125.3 | 100.1 | 22.3 | 0.4 | 2.5 | ||||||||||||||||||
Derivative financial instruments |
103.8 | 103.8 | 71.9 | 31.9 | — | — | ||||||||||||||||||
Total |
3,841.6 |
4,458.1 |
1,417.3 |
1,358.8 |
727.3 |
954.7 |
||||||||||||||||||
Fixed Rate |
Floating indexed |
Total |
||||||||||||||||||||||
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||||||||||||
Cash, cash equivalents and financial investments |
2,463.3 | 96.56 | % | 87.7 | 3.44 | % | 2,551.0 | 100.00 | % | |||||||||||||||
Loans and financing |
2,331.7 | 93.60 | % | 159.4 | 6.40 | % | 2,491.1 | 100.00 | % | |||||||||||||||
12.31.2024 |
12.31.2023 |
|||||||
| Accounts payable |
||||||||
| Brazilian Reais |
15.0 | 23.6 | ||||||
| U.S. dollar |
104.7 | 102.3 | ||||||
| Euro |
5.3 | 6.7 | ||||||
| Other currencies |
0.3 | 1.0 | ||||||
| |
|
|
|
|||||
| 125.3 | 133.6 | |||||||
| |
|
|
|
|||||
| Loans and financing |
||||||||
| Brazilian Reais |
23.7 | 17.5 | ||||||
| U.S. dollars |
2,444.2 | 2,833.0 | ||||||
| Euro |
23.2 | 35.9 | ||||||
| |
|
|
|
|||||
| 2,491.1 | 2,886.4 | |||||||
| |
|
|
|
|||||
| Trade accounts payable |
||||||||
| Brazilian Reais |
116.2 | 93.7 | ||||||
| U.S. dollars |
812.9 | 645.1 | ||||||
| Euro |
30.7 | 42.0 | ||||||
| Other currencies |
6.5 | 6.1 | ||||||
| |
|
|
|
|||||
| 966.3 | 787.0 | |||||||
| |
|
|
|
|||||
| Trade accounts payable supplier finance |
||||||||
| Brazilian reais |
20.4 | 18.4 | ||||||
| U.S. dollars |
22.9 | 19.2 | ||||||
| |
|
|
|
|||||
| 43.3 | 37.6 | |||||||
| |
|
|
|
|||||
| Derivative financial instruments |
||||||||
| Brazilian reais |
17.8 | 0.1 | ||||||
| U.S. dollars |
86.0 | 125.0 | ||||||
| Euro |
— | 0.1 | ||||||
| |
|
|
|
|||||
| 103.8 | 125.2 | |||||||
| |
|
|
|
|||||
| Total (1) |
3,729.8 | 3,969.8 | ||||||
| |
|
|
|
|||||
| Cash and cash equivalents and financial investments |
||||||||
| Brazilian reais |
105.2 | 132.7 | ||||||
| U.S. dollars |
2,435.1 | 2,165.9 | ||||||
| Euro |
4.3 | 12.7 | ||||||
| Other currencies |
6.4 | 9.6 | ||||||
| |
|
|
|
|||||
| 2,551.0 | 2,320.9 | |||||||
| |
|
|
|
|||||
| Trade accounts receivable: |
||||||||
| Brazilian reais |
29.3 | 26.7 | ||||||
| U.S. dollars |
270.2 | 171.1 | ||||||
| Euro |
15.7 | 19.2 | ||||||
| Other currencies |
7.6 | 4.0 | ||||||
| |
|
|
|
|||||
| 322.8 | 221.0 | |||||||
| |
|
|
|
|||||
| Customer and commercial financing |
||||||||
| Brazilian reais |
18.9 | 24.2 | ||||||
| U.S. dollars |
13.5 | 38.6 | ||||||
| |
|
|
|
|||||
| 32.4 | 62.8 | |||||||
| |
|
|
|
|||||
| Other assets |
||||||||
| Brazilian reais |
22.7 | 21.8 | ||||||
| U.S. dollars |
81.6 | 86.4 | ||||||
| Euro |
5.3 | 12.5 | ||||||
| Other currencies |
0.3 | 0.9 | ||||||
| |
|
|
|
|||||
| 109.9 | 121.6 | |||||||
| |
|
|
|
|||||
| Derivative financial instruments |
||||||||
| Brazilian reais |
10.7 | 17.5 | ||||||
| Euro |
2.5 | — | ||||||
| |
|
|
|
|||||
| 13.2 | 17.5 | |||||||
| |
|
|
|
|||||
| Total (2) |
3,029.3 | 2,743.8 | ||||||
| |
|
|
|
|||||
| Net exposure (1 - 2): |
||||||||
| Brazilian reais |
6.3 | (69.6 | ) | |||||
| U.S. dollars |
670.3 | 1,262.6 | ||||||
| Euro |
31.4 | 40.3 | ||||||
| Other currencies |
(7.5 | ) | (7.4 | ) | ||||
| • | Holding the transactions to maturity. |
| • | Using the average market projections indicated through market curves (currencies and interest rates) from B3, as well as data available from an independent source (Bloomberg), for the indicators: DI (Interbank Deposit Rate), SOFR (Secured Overnight Financing Rate), EURIBOR (Euro Interbank Offered Rate) and exchange rates. |
| • | In the absence SIFMA (Security Industry/Financial Market Association) projection disclosure, using the variation in the SOFR projection as a reference, due to the positive correlation between the two indicators. |
| • | Due to the lack of disclosure of TR (Reference Rate) projections, we used the TBF (Financial Basic Rate) curve made available by B3 to calculate the TR projection. |
| • | Applying Monte Carlo simulation to project stock prices. |
|
Reasonably Possible Gains (Losses) ² |
||||||||||||
Amount exposed at 12.31.2024 ¹ |
Profit or loss |
Equity |
||||||||||
| Interest rates risk |
||||||||||||
| DI |
||||||||||||
| Cash equivalents and financial investments |
87.7 | 16.2 | — | |||||||||
| Loans and financing |
(3.3 | ) | (0.6 | ) | — | |||||||
| EURIBOR |
||||||||||||
| Loans and financing |
(1.2 | ) | 0.2 | — | ||||||||
| SIFIMA |
||||||||||||
| Loans and financing |
(20.0 | ) | 2.6 | — | ||||||||
| SOFR |
||||||||||||
| Loans and financing |
(127.5 | ) | 16.7 | — | ||||||||
| TR |
||||||||||||
| Loans and financing |
(7.4 | ) | (0.3 | ) | — | |||||||
| Exchange rate risk |
||||||||||||
| BRL |
||||||||||||
| Cash, cash equivalents and financial investiments |
105.2 | (3.3 | ) | — | ||||||||
| Other assets |
264.4 | (8.2 | ) | — | ||||||||
| Loans and financing |
(23.7 | ) | 0.7 | — | ||||||||
| Other liabilities |
(401.1 | ) | 12.5 | — | ||||||||
| Derivative instruments |
(17.6 | ) | — | 6.3 | ||||||||
| EURO |
||||||||||||
| Derivative instruments |
2.5 | — | — | |||||||||
| Market risk |
||||||||||||
| EMBR |
||||||||||||
| Derivative instruments |
10.5 | 0.5 | — | |||||||||
| EVEX |
||||||||||||
| Derivative instruments: warrants |
(86.0 | ) | (1.7 | ) | — | |||||||
| (1) | The amounts exposed at December 31, 2024, consider: DI – 12.15%; EURIBOR – 2.85%; SIFMA – 3.62%; SOFR – 4.49%; TR – 2.05%; US$/BRL exchange rate of R$6.19 and EURO/US$ of US$1.04; EMBR3 of R$56.19 and EVEX of US$5.44. |
| (2) | The reasonably possible scenario considers: DI – 14.40%; EURIBOR – 2.46%; SIFMA – 3.14%; SOFR – 3.90%; TR – 2.14%; US$/BRL exchange rate of R$6.00 and EURO/US$ of US$1.04; EMBR3 of R$65.88 and EVEX of US$5.66. |
28. |
SHAREHOLDERS’ EQUITY |
| • | no shareholder or group of shareholders, Brazilian or foreign, may exercise votes representing more than 5% of the quantity of shares into which the Company’s share capital is divided; and |
| • | the group of foreign shareholders may not exercise, at each meeting of the General Assembly, a number of votes greater than of the total votes that can be exercised by the Brazilian shareholders present. |
12.31.2024 |
||||
| Income for the year attributed to owners of Embraer determined in millions of R$ |
1,918.9 |
|||
| Accumulated losses absorption |
(1,593.1 | ) | ||
| Constitution of the legal reserve |
(16.3 | ) | ||
| Replenishment of government grants reserve |
(103.8 | ) | ||
| |
|
|||
| Calculation basis for dividend distribution |
205.7 |
|||
| |
|
|||
| Minimum mandatory dividend (25%) in R$ |
51.4 | |||
| Minimum mandatory dividend (25%) in US$ |
8.3 | |||
| Weighted average number of shares outstanding |
734,632,806 | |||
| Dividends per share in units of US$ |
0.011 | |||
29. |
EARNINGS PER SHARE |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Profit (loss) attributable to owners of Embraer |
352.5 | 164.0 | (185.4 | ) | ||||||||
| |
|
|
|
|
|
|||||||
352.5 |
164.0 |
(185.4 |
) | |||||||||
| |
|
|
|
|
|
|||||||
| Weighted average number of shares outstanding |
734,632,806 | 734,632,806 | 734,632,806 | |||||||||
| Basic and diluted earnings (loss) per share - U.S. dollar |
0.48 | 0.22 | (0.25 | ) | ||||||||
30. |
REVENUE FROM CONTRACTS WITH CUSTOMERS |
| 12.31.2024 |
||||||||||||||||||||||||||||
|
North America |
Latin America, except Brazil |
Asia Pacific |
Brazil |
Europe |
Others |
Total |
||||||||||||||||||||||
| Aircraft |
2,942.5 | 132.0 | 64.3 | 197.2 | 639.5 | 27.5 | 4,003.0 | |||||||||||||||||||||
| Long-term contracts - aircraft and development |
— | 79.4 | 59.3 | 154.8 | 357.9 | 9.8 | 661.2 | |||||||||||||||||||||
| Others |
2.5 | — | — | 23.0 | 18.0 | — | 43.5 | |||||||||||||||||||||
| Service |
582.7 | 50.0 | 102.3 | 109.6 | 324.4 | 60.2 | 1,229.2 | |||||||||||||||||||||
| Spare Parts |
253.5 | 5.8 | 30.3 | 46.8 | 97.7 | 23.7 | 457.8 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3,781.2 |
267.2 |
256.2 |
531.4 |
1,437.5 |
121.2 |
6,394.7 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 12.31.2023 |
||||||||||||||||||||||||||||
|
North America |
Latin America, except Brazil |
Asia Pacific |
Brazil |
Europe |
Others |
Total |
||||||||||||||||||||||
| Aircraft |
2,539.6 | 53.6 | 20.2 | 130.6 | 529.0 | 27.2 | 3,300.2 | |||||||||||||||||||||
| Long-term contracts - aircraft and development |
0.8 | — | 67.1 | 123.4 | 266.0 | — | 457.3 | |||||||||||||||||||||
| Others |
4.2 | — | — | 5.2 | 21.7 | — | 31.1 | |||||||||||||||||||||
| Service |
487.7 | 34.1 | 94.0 | 128.7 | 220.6 | 56.5 | 1,021.6 | |||||||||||||||||||||
| Spare Parts |
250.0 | 10.5 | 23.2 | 65.8 | 93.4 | 15.4 | 458.3 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3,282.3 |
98.2 |
204.5 |
453.7 |
1,130.7 |
99.1 |
5,268.5 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 12.31.2022 |
||||||||||||||||||||||||||||
|
North America |
Latin America, except Brazil |
Asia Pacific |
Brazil |
Europe |
Others |
Total |
||||||||||||||||||||||
| Aircraft |
2,150.8 | 20.2 | — | 114.5 | 474.3 | 82.3 | 2,842.1 | |||||||||||||||||||||
| Long-term contracts - aircraft and development |
— | — | — | 163.2 | 148.9 | 0.3 | 312.4 | |||||||||||||||||||||
| Others |
1.4 | — | — | 8.9 | 1.7 | — | 12.0 | |||||||||||||||||||||
| Service |
428.8 | 24.6 | 81.2 | 158.4 | 193.6 | 46.2 | 932.8 | |||||||||||||||||||||
| Spare Parts |
276.7 | 8.2 | 19.7 | 60.2 | 65.9 | 10.4 | 441.1 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
2,857.7 |
53.0 |
100.9 |
505.2 |
884.4 |
139.2 |
4,540.4 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Note |
12.31.2024 |
12.31.2023 |
||||||||||
| Contract Assets - Third Parties |
360.9 | 196.7 | ||||||||||
| Contract assets - Related parties |
13 | 263.2 | 314.8 | |||||||||
| |
|
|
|
|||||||||
| Contract assets |
624.1 |
511.5 |
||||||||||
| |
|
|
|
|||||||||
| Current |
622.7 | 509.1 | ||||||||||
| Non-current |
1.4 | 2.4 | ||||||||||
Note |
12.31.2024 |
12.31.2023 |
||||||||||
| Advances from customers - Aircraft and Defense long-term contracts |
2,999.4 | 2,252.8 | ||||||||||
| Advances from customers - Related parties |
13 | 65.5 | 84.6 | |||||||||
| Deferred revenue with multiple elements |
219.7 | 203.5 | ||||||||||
| |
|
|
|
|||||||||
| Contract liabilities |
3,284.6 |
2,540.9 |
||||||||||
| |
|
|
|
|||||||||
| Current |
2,563.4 | 1,919.0 | ||||||||||
| Non-current |
721.2 | 621.9 | ||||||||||
31. |
EXPENSES BY NATURE |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||
| Cost of sales and services |
(5,241.6 | ) | (4,358.9 | ) | (3,628.2 | ) | ||||||||||
| Administrative |
(198.9 | ) | (204.9 | ) | (184.9 | ) | ||||||||||
| Selling |
(309.7 | ) | (314.7 | ) | (274.4 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
(5,750.2 |
) |
(4,878.5 |
) |
(4,087.5 |
) | |||||||||||
| |
|
|
|
|
|
|||||||||||
| Expenses by nature: |
||||||||||||||||
| General manufacturing costs |
(i | ) | (4,463.6 | ) | (3,632.1 | ) | (2,997.2 | ) | ||||||||
| Depreciation |
(115.5 | ) | (109.8 | ) | (106.6 | ) | ||||||||||
| Amortization |
(128.1 | ) | (131.9 | ) | (103.7 | ) | ||||||||||
| Personnel expenses |
(814.4 | ) | (774.5 | ) | (669.3 | ) | ||||||||||
| Marketing and sales expenses |
(70.9 | ) | (81.0 | ) | (64.1 | ) | ||||||||||
| Services rendered by third parties |
(83.7 | ) | (79.8 | ) | (74.5 | ) | ||||||||||
| Miscellaneous |
(ii | ) | (74.0 | ) | (69.4 | ) | (72.1 | ) | ||||||||
| |
|
|
|
|
|
|||||||||||
(5,750.2 |
) |
(4,878.5 |
) |
(4,087.5 |
) | |||||||||||
| |
|
|
|
|
|
|||||||||||
| (i) | Refers to costs of materials and general manufacturing expenses and provision service. |
| (ii) | Refers mainly to expenses with insurance, taxes and fees. |
32. |
OTHER INCOME AND OTHER EXPENSES |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||||||
| Other operating income: |
||||||||||||||||
| Recovery of expenses |
(i | ) | 150.0 | — | — | |||||||||||
| Tax credits |
41.4 | 29.9 | — | |||||||||||||
| Royalties |
25.1 | 19.8 | 10.4 | |||||||||||||
| Defense billing tax |
— | 14.9 | — | |||||||||||||
| Sale of interest in subsidiary |
— | 36.6 | — | |||||||||||||
| Reversal for contingencies |
16.7 | 1.0 | — | |||||||||||||
| Revenue from contractual fines |
11.3 | 8.7 | 17.8 | |||||||||||||
| Other sales |
9.9 | 9.1 | 12.8 | |||||||||||||
| Reimbursement of expenses |
8.8 | 18.8 | 5.2 | |||||||||||||
| Reversal of Environmental Provision |
1.2 | — | — | |||||||||||||
| Taxes on other revenues |
(14.2 | ) | (12.5 | ) | (15.5 | ) | ||||||||||
| Sale/Rental of Fixed Assets |
— | 8.0 | 68.6 | |||||||||||||
| Others |
15.9 | 36.4 | 11.2 | |||||||||||||
| |
|
|
|
|
|
|||||||||||
266.1 |
170.7 |
110.5 |
||||||||||||||
| |
|
|
|
|
|
|||||||||||
| Other operating expense: |
||||||||||||||||
| Corporate projects |
(75.5 | ) | (70.3 | ) | (78.2 | ) | ||||||||||
| Expenses system project |
(23.6 | ) | (20.3 | ) | (12.7 | ) | ||||||||||
| Provision for contingencies |
(13.3 | ) | (1.7 | ) | (7.4 | ) | ||||||||||
| Flight safety standards |
(6.3 | ) | (5.9 | ) | (3.6 | ) | ||||||||||
| Aircraft maintenance and flights costs - fleet |
(5.5 | ) | (7.8 | ) | (6.6 | ) | ||||||||||
| Expense contractual fines |
(5.4 | ) | (0.5 | ) | — | |||||||||||
| Taxes on other sales |
(5.2 | ) | (4.4 | ) | (2.0 | ) | ||||||||||
| Training and development |
(3.4 | ) | (3.8 | ) | (2.0 | ) | ||||||||||
| Royalties |
(2.0 | ) | (1.1 | ) | (1.0 | ) | ||||||||||
| Warrants |
(1.9 | ) | — | (158.2 | ) | |||||||||||
| Product modification |
(1.9 | ) | (2.4 | ) | (2.3 | ) | ||||||||||
| Tax fines |
(1.1 | ) | — | — | ||||||||||||
| Listing expenses - EVEX |
— | — | (135.7 | ) | ||||||||||||
| Restructuring expenses |
— | — | (36.9 | ) | ||||||||||||
| Environmental provision |
— | (1.3 | ) | (0.5 | ) | |||||||||||
| Disposal of fixed assets |
— | (9.8 | ) | (81.4 | ) | |||||||||||
| Others |
(17.6 | ) | (47.0 | ) | (26.5 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
(162.7 |
) |
(176.3 |
) |
(555.0 |
) | |||||||||||
| |
|
|
|
|
|
|||||||||||
| (i) | Refers to the reimbursement of expenses incurred by the Company for the carve-out project with Boeing, as Note 24.2.5. |
33. |
FINANCIAL INCOME AND FINANCIAL EXPENSES |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Financial income: |
||||||||||||
| Interest on cash and cash equivalents and financial investments |
98.8 | 105.8 | 43.8 | |||||||||
| Derivative financial instruments |
88.0 | — | 5.3 | |||||||||
| Warrants: adjustment to fair value |
78.1 | — | 107.4 | |||||||||
| Interest on receivables |
43.1 | 13.7 | 4.2 | |||||||||
| Financial structuring |
— | 8.3 | — | |||||||||
| Long-term incentives - phantom shares |
— | — | 5.0 | |||||||||
| Adjustment to fair value of Financing to customers |
— | 0.4 | 0.2 | |||||||||
| Taxes over Financial revenue |
(5.0 | ) | (3.2 | ) | (2.1 | ) | ||||||
| Others |
8.1 | 3.6 | 2.7 | |||||||||
| |
|
|
|
|
|
|||||||
| Total financial income |
311.1 |
128.6 |
166.5 |
|||||||||
| |
|
|
|
|
|
|||||||
| Financial expenses: |
||||||||||||
| Interest on loans and financing |
(191.7 | ) | (213.7 | ) | (204.6 | ) | ||||||
| Long-term incentives - phantom shares |
(113.2 | ) | (31.4 | ) | — | |||||||
| Warrants: adjustment to fair value |
(42.6 | ) | (29.6 | ) | (44.6 | ) | ||||||
| Adjustment to fair value of Financing to customers |
(31.0 | ) | — | — | ||||||||
| Other interest and banking operations |
(19.9 | ) | (14.8 | ) | (12.5 | ) | ||||||
| IOF - (tax on financial transactions) |
(1.5 | ) | (12.2 | ) | (2.1 | ) | ||||||
| Interest on taxes, social charges and contributions |
(0.9 | ) | (7.3 | ) | (6.8 | ) | ||||||
| Financial restructuring costs |
— | (3.2 | ) | (12.1 | ) | |||||||
| Others |
(14.8 | ) | (9.7 | ) | (7.3 | ) | ||||||
| |
|
|
|
|
|
|||||||
| Total financial expenses |
(415.6 |
) |
(321.9 |
) |
(290.0 |
) | ||||||
| |
|
|
|
|
|
|||||||
34. |
FOREIGN EXCHANGE, NET |
12.31.2024 |
12.31.2023 |
12.31.2022 |
||||||||||
| Tax credits |
(39.8 | ) | 10.8 | 3.4 | ||||||||
| Trade accounts receivable and contract assets |
(45.7 | ) | 11.8 | 41.6 | ||||||||
| Cash and cash equivalents and financial investments |
0.9 | (10.0 | ) | 4.4 | ||||||||
| Others assets |
(14.9 | ) | 8.9 | (12.3 | ) | |||||||
| Contract liabilities |
4.4 | (0.3 | ) | — | ||||||||
| Loans and financing |
3.6 | (0.4 | ) | 0.3 | ||||||||
| Provisions |
40.3 | (14.5 | ) | (6.5 | ) | |||||||
| Taxes and charges payable |
9.7 | (3.2 | ) | (1.4 | ) | |||||||
| Other payables |
3.4 | (1.0 | ) | (6.6 | ) | |||||||
| Suppliers |
19.8 | (7.5 | ) | (1.0 | ) | |||||||
| Provisions for contingencies |
9.6 | (4.3 | ) | (2.1 | ) | |||||||
| Others liabilities |
— | 2.6 | 5.0 | |||||||||
| |
|
|
|
|
|
|||||||
| Foreign exchange |
(8.7 |
) |
(7.1 |
) |
24.8 |
|||||||
| |
|
|
|
|
|
|||||||
| Derivative financial instruments |
2.7 | 6.6 | 3.4 | |||||||||
| |
|
|
|
|
|
|||||||
| Foreign exchange gain (loss), net |
(6.0 |
) |
(0.5 |
) |
28.2 |
|||||||
| |
|
|
|
|
|
|||||||
35. |
RESPONSIBILITIES AND COMMITMENTS |
36. |
OPERATING SEGMENTS |
• |
E-Jets 175 E1: aircraft with 70 to 90 seats. |
• |
E-Jets E2: aircraft with 88 to 146 seats. |
• |
Supply of structural parts and hydraulic systems and production of agricultural crop-spraying aircraft. |
• |
Development and certification of eVTOLs, creation of a maintenance and service network for eVTOLs and creation of an air traffic control system for eVTOLs (UAM Business), through Eve Air Mobility. |
• |
Development and manufacturing of electrical propulsion systems for aeronautical use, including vertical take-off and landing vehicles and fixed-wing aircraft. |
• |
Cybersecurity solutions, including specialized cybersecurity diagnostics, architecture and implementation services, as well as software and technical products for controlling and defending environments. |
| 12.31.2024 |
||||||||||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated* |
Total |
|||||||||||||||||||||||||
| Revenue |
2,208.6 | 720.9 | 1,762.7 | 1,636.5 | 66.0 | 6,394.7 | — | 6,394.7 | ||||||||||||||||||||||||
| Cost of sales and services |
(2,008.9 | ) | (590.9 | ) | (1,407.7 | ) | (1,179.0 | ) | (55.1 | ) | (5,241.6 | ) | — | (5,241.6 | ) | |||||||||||||||||
| Gross profit |
199.7 |
130.0 |
355.0 |
457.5 |
10.9 |
1,153.1 |
— |
1,153.1 |
||||||||||||||||||||||||
| Operating income (expense) |
(144.5 | ) | (85.4 | ) | (149.0 | ) | (187.5 | ) | (67.3 | ) | (633.7 | ) | 148.1 | (485.6 | ) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating income (loss) before financial result |
55.2 |
44.6 |
206.0 |
270.0 |
(56.4 |
) |
519.4 |
148.1 |
667.5 |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 12.31.2023 |
||||||||||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated* |
Total |
|||||||||||||||||||||||||
| Revenue |
1,846.8 | 515.4 | 1,408.2 | 1,417.6 | 80.5 | 5,268.5 | — | 5,268.5 | ||||||||||||||||||||||||
| Cost of sales and services |
(1,698.3 | ) | (429.6 | ) | (1,134.8 | ) | (1,039.0 | ) | (57.2 | ) | (4,358.9 | ) | — | (4,358.9 | ) | |||||||||||||||||
| Gross profit |
148.5 |
85.8 |
273.4 |
378.6 |
23.3 |
909.6 |
— |
909.6 |
||||||||||||||||||||||||
| Operating income (expense) |
(124.6 | ) | (57.5 | ) | (146.6 | ) | (163.4 | ) | (55.9 | ) | (548.0 | ) | (47.1 | ) | (595.1 | ) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating income (loss) before financial result |
23.9 |
28.3 |
126.8 |
215.2 |
(32.6 |
) |
361.6 |
(47.1 |
) |
314.5 |
||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 12.31.2022 |
||||||||||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated* |
Total |
|||||||||||||||||||||||||
| Revenue |
1,543.9 | 412.6 | 1,244.4 | 1,266.7 | 72.8 | 4,540.4 | — | 4,540.4 | ||||||||||||||||||||||||
| Cost of sales and services |
(1,382.3 | ) | (326.9 | ) | (953.2 | ) | (912.5 | ) | (53.3 | ) | (3,628.2 | ) | — | (3,628.2 | ) | |||||||||||||||||
| Gross profit |
161.6 |
85.7 |
291.2 |
354.2 |
19.5 |
912.2 |
— |
912.2 |
||||||||||||||||||||||||
| Operating income (expense) |
(145.5 | ) | (76.4 | ) | (141.5 | ) | (203.4 | ) | (386.4 | ) | (953.2 | ) | (69.5 | ) | (1,022.7 | ) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating income (loss) before financial result |
16.1 |
9.3 |
149.7 |
150.8 |
(366.9 |
) |
(41.0 |
) |
(69.5 |
) |
(110.5 |
) | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(*) |
Unallocated items from operating income (expense) include certain corporate demands not directly related to the operating segments. In 2024, it mainly includes the reimbursement of expenses received as a result of the arbitration (Note 32). |
| 12.31.2024 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| North America |
1,615.6 | 0.1 | 1,330.3 | 835.1 | 0.1 | 3,781.2 | ||||||||||||||||||
| Europe |
440.8 | 384.6 | 204.1 | 408.0 | — | 1,437.5 | ||||||||||||||||||
| Asia Pacific |
29.0 | 60.2 | 35.3 | 131.7 | — | 256.2 | ||||||||||||||||||
| Latin America, except Brazil |
95.4 | 81.2 | 36.7 | 53.9 | — | 267.2 | ||||||||||||||||||
| Brazil |
0.3 | 181.9 | 156.3 | 127.0 | 65.9 | 531.4 | ||||||||||||||||||
| Others |
27.5 | 12.9 | — | 80.8 | — | 121.2 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
2,208.6 |
720.9 |
1,762.7 |
1,636.5 |
66.0 |
6,394.7 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2023 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| North America |
1,489.4 | 1.0 | 1,054.1 | 737.8 | — | 3,282.3 | ||||||||||||||||||
| Europe |
293.8 | 304.9 | 226.9 | 305.1 | — | 1,130.7 | ||||||||||||||||||
| Asia Pacific |
— | 67.1 | 20.1 | 117.3 | — | 204.5 | ||||||||||||||||||
| Latin America, except Brazil |
32.2 | — | 21.4 | 44.6 | — | 98.2 | ||||||||||||||||||
| Brazil |
4.2 | 141.9 | 85.7 | 141.4 | 80.5 | 453.7 | ||||||||||||||||||
| Others |
27.2 | 0.5 | — | 71.4 | — | 99.1 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
1,846.8 |
515.4 |
1,408.2 |
1,417.6 |
80.5 |
5,268.5 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2022 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| North America |
1,234.7 | 2.9 | 914.1 | 706.0 | — | 2,857.7 | ||||||||||||||||||
| Europe |
234.9 | 194.0 | 212.6 | 242.8 | 0.1 | 884.4 | ||||||||||||||||||
| Asia Pacific |
— | 3.6 | — | 97.3 | — | 100.9 | ||||||||||||||||||
| Latin America, except Brazil |
— | 1.4 | 20.0 | 31.6 | — | 53.0 | ||||||||||||||||||
| Brazil |
2.4 | 210.2 | 87.8 | 132.1 | 72.7 | 505.2 | ||||||||||||||||||
| Others |
71.9 | 0.5 | 9.9 | 56.9 | — | 139.2 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
1,543.9 |
412.6 |
1,244.4 |
1,266.7 |
72.8 |
4,540.4 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2024 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| Aircraft |
2,199.8 | — | 1,762.7 | — | 40.5 | 4,003.0 | ||||||||||||||||||
| Long-term contracts - aircraft and development |
— | 661.2 | — | — | — | 661.2 | ||||||||||||||||||
| Others |
8.8 | 16.5 | — | 17.9 | 0.3 | 43.5 | ||||||||||||||||||
| Service |
— | 42.2 | — | 1,172.0 | 15.0 | 1,229.2 | ||||||||||||||||||
| Spare Parts |
— | 1.0 | — | 446.6 | 10.2 | 457.8 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
2,208.6 |
720.9 |
1,762.7 |
1,636.5 |
66.0 |
6,394.7 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2023 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| Aircraft |
1,834.1 | 13.2 | 1,408.2 | — | 44.7 | 3,300.2 | ||||||||||||||||||
| Long-term contracts - aircraft and development |
— | 457.3 | — | — | — | 457.3 | ||||||||||||||||||
| Others |
12.7 | — | — | 17.7 | 0.7 | 31.1 | ||||||||||||||||||
| Service |
— | 41.3 | — | 956.3 | 24.0 | 1,021.6 | ||||||||||||||||||
| Spare Parts |
— | 3.6 | — | 443.6 | 11.1 | 458.3 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
1,846.8 |
515.4 |
1,408.2 |
1,417.6 |
80.5 |
5,268.5 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2022 |
||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total |
|||||||||||||||||||
| Aircraft |
1,540.6 | 26.0 | 1,244.4 | — | 31.1 | 2,842.1 | ||||||||||||||||||
| Long-term contracts - aircraft and development |
— | 312.4 | — | — | — | 312.4 | ||||||||||||||||||
| Others |
3.3 | 6.5 | — | 1.4 | 0.8 | 12.0 | ||||||||||||||||||
| Service |
— | 59.5 | — | 838.1 | 35.2 | 932.8 | ||||||||||||||||||
| Spare Parts |
— | 8.2 | — | 427.2 | 5.7 | 441.1 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
1,543.9 |
412.6 |
1,244.4 |
1,266.7 |
72.8 |
4,540.4 |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 12.31.2024 |
||||||||||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated |
Total |
|||||||||||||||||||||||||
| Property, plant and equipment |
625.7 | 177.5 | 465.3 | 656.8 | 16.0 | 1,941.3 | — | 1,941.3 | ||||||||||||||||||||||||
| Intangible assets |
1,202.9 | 126.3 | 923.1 | 39.2 | 211.4 | 2,502.9 | — | 2,502.9 | ||||||||||||||||||||||||
| Right of use |
4.2 | 4.2 | 14.4 | 80.3 | 1.6 | 104.7 | — | 104.7 | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
1,832.8 |
308.0 |
1,402.8 |
776.3 |
229.0 |
4,548.9 |
— |
4,548.9 |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 12.31.2023 |
||||||||||||||||||||||||||||||||
|
Commercial Aviation |
Defense & Security |
Executive Aviation |
Services & Support |
Other Segments |
Total reportable Segments |
Unallocated |
Total |
|||||||||||||||||||||||||
| Property, plant and equipment |
544.9 | 176.1 | 447.5 | 594.0 | 8.2 | 1,770.7 | — | 1,770.7 | ||||||||||||||||||||||||
| Intangible assets |
1,191.4 | 92.9 | 905.2 | 31.0 | 82.6 | 2,303.1 | 27.9 | 2,331.0 | ||||||||||||||||||||||||
| Right of use |
4.5 | 5.0 | 16.1 | 60.9 | 1.5 | 88.0 | — | 88.0 | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
1,740.8 |
274.0 |
1,368.8 |
685.9 |
92.3 |
4,161.8 |
27.9 |
4,189.7 |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 12.31.2024 |
||||||||||||||||||||
|
North America |
Europe |
Asia Pacific |
Brazil |
Total |
||||||||||||||||
| Property, plant and equipment |
449.1 | 398.5 | 76.4 | 1,017.3 | 1,941.3 | |||||||||||||||
| Intangible assets |
279.1 | 73.8 | — | 2,150.0 | 2,502.9 | |||||||||||||||
| Right of use |
72.0 | 15.0 | 1.4 | 16.3 | 104.7 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
800.2 |
487.3 |
77.8 |
3,183.6 |
4,548.9 |
|||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 12.31.2023 |
||||||||||||||||||||
|
North America |
Europe |
Asia Pacific |
Brazil |
Total |
||||||||||||||||
| Property, plant and equipment |
399.2 | 336.1 | 69.6 | 965.8 | 1,770.7 | |||||||||||||||
| Intangible assets |
158.5 | 55.3 | — | 2,117.2 | 2,331.0 | |||||||||||||||
| Right of use |
63.0 | 3.2 | 2.1 | 19.7 | 88.0 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
620.7 |
394.6 |
71.7 |
3,102.7 |
4,189.7 |
|||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
37. |
SUBSEQUENT EVENTS |
| • | US$ 253.0: this amount includes a partial rep urchase of notes bearing interest of 5.40% p.a. with maturity in 2027. It comprises US$ 250.0 in principal and US$ 3.0 in premium expenses. |
| • | US$ 158.0: this includes a partial rep urchase of notes bearing interest of 6.95% p.a. with maturity in 2028. This amount comprises US$ 150.0 in principal, US$ 1.0 in interest, and US$ 7.0 in premium expenses. |
Exhibit 1.1
BYLAWS OF
EMBRAER S.A.
ARTICLE I
NAME, PRINCIPAL PLACE OF BUSINESS, PURPOSE AND DURATION
Section 1 - Embraer S.A. (the “Company”) is a corporation governed by these Bylaws and the applicable law.
PARAGRAPH 1 - The Company was incorporated as a federal mixed-capital company (sociedade de economia mista) pursuant to an authorization under Decree-Law No. 770, of August 19, 1969, and was privatized in accordance with Law No. 8,031, of April 12, 1990, and Public Notice No. PND-A-05/94-EMBRAER issued by the Executive Committee of the Brazilian Privatization Program, published in the Official Gazette, Part 3, on April 4, 1994, pages 5,774 to 5,783.
PARAGRAPH 2 - Considering that the Company has joined the Novo Mercado of B3 S.A.– Brasil, Bolsa Balcão (“Novo Mercado” and “B3”, respectively), the Company, its shareholders, including controlling shareholders, directors, officers and members of the fiscal council, when convened, are required to comply with the Novo Mercado Regulations (“Novo Mercado Regulations”).
PRINCIPAL PLACE OF BUSINESS
Section 2 - The Company shall have its principal place of business and headquarters in the City of São José dos Campos, State of São Paulo, and may incorporate companies and open branches and other offices as well as appoint agents or representatives anywhere in Brazil or abroad.
CORPORATE PURPOSE
Section 3 - The corporate purpose of the Company is as follows:
I.Design, build and market aircraft, equipment, materials, systems, software, accessories and components for the aerospace, defense, security, energy and other industries that require complex, integrated systems to support their operations;
II. Carry out other technological, industrial, commercial and service activities related to the aerospace, defense, security, energy or other industries that require complex, integrated systems to support their operations;
III. Contribute to the training of technical personnel needed for the industries listed in the items above; and
IV. Engage in the generation of electrical energy for self-consumption with the possibility of selling surplus.
PRINCIPLES
Section 4 - The organization and operation of the Company shall be guided by the following principles:
I. the securities of the Company shall be traded on domestic and/or international capital markets in compliance with all applicable legal requirements and the requirements of the supervisory institutions of such markets, in order to raise the necessary capital for the growth of the Company as well as preservation of its competitiveness and continuing existence; II. all shares of the capital stock of the Company shall be common shares; III. with respect to the resolutions passed by the Shareholders’ Meetings:
a) no shareholder or group of shareholders, whether Brazilian or foreign, may exercise voting rights in excess of 5% of the shares of the capital stock; and
b) foreign shareholders and groups of foreign shareholders, in the aggregate, may not exercise voting rights in excess of two-thirds (2/3) of all voting rights held by the Brazilian shareholders in attendance;
IV. with due regard for the provisions of Section 56 hereof, no majority group may be formed in advance of the Shareholders’ Meetings under shareholders’ agreements that regulate the exercise of voting rights, so as to create blocks holding voting rights in excess of the individual limit established in letter “a” of item III of this Section;
V. the resolutions and acts by the bodies of the Company listed in Section 9 hereof shall be subject to a veto right of the Brazilian Federal Government; and
VI. the Company shall not issue profit-sharing bonds (partes beneficiárias).
SECTION 5 - The duration of the Company shall be for an indefinite period of time.
Article II
CAPITAL STOCK AND SHARES
CAPITAL STOCK
SECTION 6 - The capital stock of the Company, which is fully subscribed and paid in, is five billion, one hundred and fifty-nine million, six hundred and seventeen thousand, fifty-two reais and fortytwo cents (R$ 5,159,617,052.42), divided into seven hundred forty million, four hundred sixtyfive thousand, forty-four (740,465,044) registered common shares, one of which shall be a Golden Share (Section 9), and all of which with no par value.
PARAGRAPH 1 - At all times the capital stock of the Company shall be divided into common shares only, no preferred shares being permitted.
PARAGRAPH 2 - The single Golden Share of the Brazilian Federal Government shall be entitled to all prerogatives attached thereto for as long as such Golden Share is owned by the Brazilian Federal Government (pursuant to Section 8 of Law No. 9,491/97).
SECTION 7 - According to Section 168 of Law No. 6,404/76, the capital stock of the Company may be increased up to one billion (1,000,000,000) common shares, by a resolution of the Board of Directors, irrespective of any amendment to these Bylaws.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 1 - It is incumbent on the Board of Directors to establish the price and the number of shares to be issued, as well as the time and terms of payment; provided, however, that a subscription to be paid in kind shall be contingent on approval of the relevant appraisal report by the Shareholders’ Meeting, as required by law.
PARAGRAPH 2 - Within the limit of the authorized capital, the Board of Directors may:
a) resolve on the issuance of warrants, including when attributed as an additional advantage to subscribers of shares or debentures convertible into shares;
b) in accordance with the plan approved by the Shareholders’ Meeting, grant stock options to the members of management and employees of the Company or its controlled companies, without the shareholders having preemptive rights of purchase with respect to such shares; and
c) approve an increase of the capital stock by way of capitalization of earnings or reserves, with or without a stock dividend.
PARAGRAPH 3 - In the event of an issuance of shares in connection with an increase of the capital stock, where such shares will be placed through a sale on a stock exchange or a public offering, the preemptive rights of the existing shareholders may be excluded or the time limit for exercise of such rights may be reduced.
PARAGRAPH 4 - The provisions of this Section shall also apply to an issuance of convertible debentures or warrants, unless these securities are offered as an additional advantage to subscribers of shares or convertible debentures.
FORM OF SHARES
Section 8 - All shares of the Company shall be in book-entry form and shall be held in deposit accounts in the name of their owners with a financial institution authorized to operate by the Brazilian Securities Commission (Comissão de Valores Mobiliários, “CVM”), as selected by the Board of Executive Officers.
PARAGRAPH 1 - Such registrar of the book-entry shares shall charge directly to the Company the cost of its services.
PARAGRAPH 2 - Such registrar shall control the number of shares owned by Brazilian and foreign individuals and legal entities, with due regard for the provisions of Paragraph 2 of Section 10 hereof.
GOLDEN SHARE OF THE BRAZILIAN FEDERAL GOVERNMENT
SECTION 9 - The Golden Share confers on the Brazilian Federal Government veto powers over the following matters:
I. change in the name of the Company or its corporate purposes;
II. modification and/or use of the Company’s logo; III. creation of and/or changes in military programs involving the Federative Republic of Brazil or otherwise;
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
IV. technological training of third parties in connection with military programs;
V. discontinuance of a supply of spare parts to service military aircraft;
VI. transfer of a controlling interest in the Company;
VII. any amendments to: (i) the provisions of this Section, Section 4, the leading paragraph of Section 10, Sections 11, 14 and 15, item III of Section 18, Paragraphs 1 and 2 of Section 27, item X of Section 33, item XII of Section 41 and Article VII; and (ii) the rights conferred by these Bylaws on the Golden Share.
PARAGRAPH 1 - The conduct of a public offering for the purchase of the Company’s shares, as referred to in Section 56 hereof, shall require the prior approval of the Brazilian Federal Government as the owner of the Golden Share.
PARAGRAPH 2 - Subject to the provisions of Law No. 6,404/76 and Section 18, item III, of these Bylaws, the matters listed in this Section shall fall be subject to the decision- making authority of the Board of Directors of the Company and shall comply with the following procedures: I. the matter shall be subject to resolution by the Board of Directors.
II. if the matter is approved by the Board of Directors, the Chairman of the Board shall notify the director elected by the Brazilian Federal Government to either exercise his or her veto right or express his or her approval, within a period of 30 days from receipt of such notice.
III. upon expiration of the period mentioned in item II above, a new meeting of the Board of Directors shall be convened: (i) to reconsider the resolution, if the Brazilian Federal Government exercised its veto right; or (ii) to confirm the resolution, if the Brazilian Federal Government expressed its approval or failed to voice an opinion within the period referred to above; and.
IV. if the resolution is confirmed by the Board of Directors, the matter shall be submitted to the Shareholders’ Meeting for approval, where so required by applicable legislation, at which time the Brazilian Federal Government may yet again exercise its veto power under this Section.
PARAGRAPH 3 - Without prejudice to the procedure defined in Paragraph 2 above, all matters to be acted on by the Board of Directors that are subject to veto by the Brazilian Federal Government, as holder of the Golden Share, shall also be communicated in advance by the Company to the Ministry of Economy by notice given concurrently with the notice mentioned in item II above, and the Ministry of the Economy shall reply within 30 days from receipt of the notice referred to in item II above.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
Article III
SHAREHOLDERS
BRAZILIAN SHAREHOLDERS
SECTION 10 - For the purposes of these Bylaws, the following are deemed as Brazilian shareholders (“Brazilian Shareholders”):
I - individuals born or naturalized in Brazil, residing in Brazil or abroad;
II - legal entities organized under Brazilian private law and having their management based in in Brazil; provided that such entities:
a) do not have a foreign controlling shareholder or parent company, unless the latter falls under letter “b” of this item I; and;
b) are controlled either directly or indirectly by one or more individuals referred to in item I;
III - investment funds or investment clubs organized under the laws of Brazil and having their management based in Brazil; provided that their administrators and/or majority of its quota holders are individuals or entities as mentioned in items I or II.
PARAGRAPH 1 - The Company shall keep a registry of its Brazilian Shareholders and Foreign Shareholders, as defined in this Section and Section 11 hereof.
PARAGRAPH 2 - A Brazilian Shareholder shall be required to show evidence to the Company and the registrar of its book-entry shares that such Brazilian Shareholder meets the requirements of this Section, and only after such evidence is produced shall the name of such Brazilian Shareholder be entered on the registry of Brazilian Shareholders.
FOREIGN SHAREHOLDERS
SECTION 11 - For the purposes of these Bylaws, foreign shareholders (“Foreign Shareholders”) shall be individuals, legal entities, investment funds or investment clubs and any other organizations not encompassed by the provisions of Section 10 hereof, as well as those that fail to provide evidence that they meet the requirements for registration as Brazilian Shareholders, according to Paragraph 2 of Section 10 hereof.
SHAREHOLDER GROUPS
SECTION 12 - For the purposes of these Bylaws, two or more shareholders of the Company shall be deemed to form a group of shareholders (each a “Shareholder Group”) if:
I - such shareholders are parties to a voting agreements, either directly or through a parent company, a controlled company or a company under common control;
II – one shareholder is directly or indirectly a controlling shareholder or parent company of the other shareholder(s);
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
III – such shareholders are companies directly or indirectly controlled by the same person or entity, or the same group of persons or entities, who may or may not be shareholders themselves; or IV – such shareholders are companies, associations, foundations, cooperatives and trusts, investment funds or portfolios, pools of rights or any other form of organization or undertaking having the same administrators or managers, or having administrators or managers that are companies directly or indirectly controlled by the same person or entity, or the same group of persons or entities, who may or may not be shareholders themselves.
PARAGRAPH 1 – In the case of investment funds having a common administrator, only those funds with policies on investments and exercise of voting at Shareholders’ Meetings, according to the relevant Bylaws, that fall under the discretionary duties of such common administrator shall be deemed to form a Shareholder Group.
PARAGRAPH 2 – For the purposes of these Bylaws, holders of securities issued under the Company’s Depositary Receipts program shall not be considered a Shareholder Group, they meet any of the criteria set forth in this article and its paragraphs.
PARAGRAPH 3 – A Shareholder Group shall be considered to be a foreign group (“Foreign Shareholder Group”) whenever one or more of its members is a Foreign Shareholder.
PARAGRAPH 4 - In addition to the provisions of the caput and preceding paragraphs of this article, only any shareholders or Shareholder Groups that are represented by the same agent, administrator or representative at any time shall be considered part of the same Shareholder Group in a given Meeting, when such agent, administrator or representative is representing a common interest (and, for these purposes, it will be presumed to represent a common interest when representing shareholders who hold, directly or indirectly, interest equal to or greater than 10% of the capital stock of the other shareholder, or shareholders who have a common investor who holds a stake equal to or greater than 10% of the capital stock of the shareholders in question).
PARAGRAPH 5 – In the case of a shareholders’ agreement that regulates the exercise of voting rights, all signatories thereto shall be deemed to be members of the same Shareholder Group, according to the terms of this Section, for the purpose of limitation of number of votes, as referred to in Section 14 hereof.
OBLIGATION TO DISCLOSE
SECTION 13 – Every shareholder or Shareholder Group is required to disclose, by notice to the Company and the stock exchanges on which the securities of the Company are traded, any negotiation of securities through which its direct or indirect equity interest regarding the type or class of shares representing the capital stock of the Company increases or decreases by five percent (5%), ten percent (10%), fifteen percent (15%) and so on successively.
PARAGRAPH 1 - The same requirement applies to the holders of convertible debentures and warrants carrying rights to acquire shares in the amounts mentioned in this Section.
PARAGRAPH 2 - A violation of the provisions of this Section shall result in the imposition of the penalties described in Section 16 below.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
VOTING RIGHTS
SECTION 14 - Each common share shall be entitled to one vote on the resolutions adopted at the Shareholders’ Meetings, subject to the following limitations:
I - no shareholder or Shareholder Group, whether Brazilian or foreign, may cast votes in excess of 5% of the number of shares in which the Company’s capital stock is divided;
II - the Foreign Shareholders, in the aggregate, may not cast, at each Shareholders’ Meeting, votes in excess of two-thirds (2/3) of the number of votes that may be cast by the Brazilian Shareholders in attendance.
SOLE PARAGRAPH - Any votes that exceed the limits established in this Section shall not be computed with respect to the resolutions of the Shareholders’ Meetings.
SECTION 15 - For purposes of the provision of item II of Section 14, after a Shareholders’ Meeting is called to order:
I - the Chairman of the Meeting shall determine, based on the Shareholder Attendance List, and shall announce to the Meeting (as required by Section 22, Paragraph 3 below), the total number of votes that may be cast by the Brazilian Shareholders and the Foreign Shareholders in attendance, with due regard for the provisions of items I and II of Section 14; and;
II - if the total votes of the Foreign Shareholders exceed two-thirds (2/3) of the votes that may be cast by the Brazilian Shareholders, then the number of votes of each Foreign Shareholder shall be reduced on a pro rata basis from the excess percentage, so that the total votes of the Foreign Shareholders do not exceed the limit of 40% of the total votes that may be cast at such Shareholders’ Meeting.
PARAGRAPH 1 - In the case of Foreign Shareholders and Foreign Shareholder Groups, the limits mentioned above shall be applied jointly and successively.
PARAGRAPH 2 - The Chairman of the Shareholders’ Meeting shall inform the number of votes that may be cast by each shareholder in attendance, after application of the rules in Section 14 and this Section.
SUSPENSION OF RIGHTS
SECTION 16 - The Shareholders’ Meeting may suspend the rights, including the voting rights, of a shareholder that fails to comply with any obligation imposed by law and the regulations issued thereunder, or these Bylaws, including the requirement to evidence Brazilian nationality as per Paragraph 2 of Section 10 hereof.
PARAGRAPH 1 - Such suspension of rights may be acted on by any Shareholders’ Meeting, whether annual or extraordinary; provided that the matter is included in the agenda of the Meeting.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 2 - The shareholders representing at least 5% of the capital stock of the Company may call a Shareholders’ Meeting, where the Board of Directors fails to comply, within eight days, with a request for a Shareholders’ Meeting, indicating the breach of an obligation and the name of the breaching shareholder.
PARAGRAPH 3 - It shall be incumbent on the Shareholders’ Meeting that approves suspension of the political rights of a shareholder to also define, inter alia, the scope and duration of such suspension, provided, however, that no suspension of the statutory rights to oversight and to request information shall be permitted.
PARAGRAPH 4 - A suspension of rights shall cease as soon as the obligation in question is fulfilled.
SHAREHOLDERS’ AGREEMENT
SECTION 17 - The Company shall not file any shareholders’ agreement on the exercise of voting rights that conflicts with the provisions of these Bylaws.
ARTICLE IV
SHAREHOLDERS’ MEETING
AUTHORITY
SECTION 18 - In addition to the duties mentioned in Section 122 and other provisions of Law No. 6,404/76, the Shareholders’ Meeting shall have sole authority to take the following actions:
I. to elect and remove the members of the Board of Directors;
II. to elect and remove the members of the Fiscal Council and to determine their compensation;
III. when required by applicable legislation, to decide on the matters subject to the veto power of the Brazilian Federal Government as holder of the Golden Share, pursuant to Section 9 hereof;
IV. to determine the aggregate annual compensation of the directors and executive officers of the Company;
V. to select the expert firm responsible for appraising the Company and preparing the relevant report in those cases mentioned in Article VIII hereof;
VI. to approve stock option plans for the directors, executive officers and/or employees of the Company or companies controlled by the Company, according to the terms of Section 7, Paragraph 2, letter “b” hereof;
VII. to allocate profit sharing to the directors, executive officers and/or employees of the Company, subject statutory limitations and the human resources policy of the Company; VIII.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
to decide on any allocation of earnings and payment of dividends by the Company, as proposed by the management;
IX. to elect the liquidator as well as the Fiscal Council that will operate during the period of liquidation of the Company; and
X. to dismiss the requirement of conducting a tender offer to delist the Company from the Novo Mercado.
SOLE PARAGRAPH - The resolution referred to in item X of this Section shall be taken by majority vote of the shareholders of outstanding shares attending the Meeting, disregarding blank votes. If the Meeting is convened on first call, shareholders representing at least twothirds (2/3) of total outstanding shares must be in attendance; and, on second call, the Meeting shall be convened with any number of shareholders representing outstanding shares.
CALL
SECTION 19 - The Shareholders’ Meetings shall be called by the Board of Directors or, where provided by law, by the shareholders or the Fiscal Council; provided that notice of the Shareholders’ Meetings shall be given at least 30 days in advance, as counted from first publication of notice. In the event the Meeting is not held, a second notice shall be published at least 15 days in advance.
QUALIFICATION AND REPRESENTATION
SECTION 20 - The shareholders present at a Shareholders’ Meeting shall evidence their qualification as Brazilian Shareholders (Section 10) or Foreign Shareholders (Section 11) by producing a valid identification document or lodging with the Company, no later than 48 hours prior to the time scheduled for the Shareholders’ Meeting, proof furnished by the registrar of book-entry shares or the custodian of any shares, in accordance with Section 40 of Law No. 6,404/76.
PARAGRAPH 1 - The Company shall waive submission of proof of ownership by a holder of book-entry shares whose name appears on the list of shareholders provided by the financial institution acting as registrar.
PARAGRAPH 2 - A shareholder may be represented at a Shareholders’ Meeting by an attorneyin-fact appointed pursuant to Paragraph 1 of Section 126 of Law No. 6,404/76, who shall file the relevant proxy statement at the principal place of business of the Company within 48 hours prior to the time scheduled for the Shareholders’ Meeting.
QUORUM
SECTION 21 – A Shareholders’ Meeting shall be called to order, on first call, upon attendance by shareholders representing at least 25% of the voting capital stock, except where a statute requires a higher quorum; and on second call, with any number of shareholders in attendance.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
SHAREHOLDER ATTENDANCE BOOK
SECTION 22 - Before the proceedings at a Shareholders’ Meeting are opened, the shareholders shall sign the “Shareholder Attendance Book”, informing their name and domicile, number of shares owned, and their qualification as Brazilian Shareholders (Section 10) or Foreign Shareholders (Section 11).
PARAGRAPH 1 - The list of shareholders present shall be closed by the Chairman of the Shareholders’ Meeting once the Meeting is called to order.
PARAGRAPH 2 - The shareholders that arrive at a Shareholders’ Meeting after the attendance list is closed may participate in the meeting, but shall not be entitled to vote on any of its resolutions. Additionally, their shares shall not be counted to determine the total votes attributed to the Brazilian Shareholders and the Foreign Shareholders.
PARAGRAPH 3 - After the list of shareholders is closed, the Chairman of the Meeting shall announce the number of votes that may be cast by each Brazilian Shareholder and each Foreign Shareholder, subject to the provisions of Sections 14 and 15 hereof.
PRESIDING OFFICERS
SECTION 23 - The proceedings of the Shareholders’ Meeting shall be chaired by the Chairman of the Board of Directors or, in his or her absence or impediment, by the Vice Chairman of the Board; in the case of absence or impediment of both of them, a shareholder elected by the Shareholders’ Meeting from among those present shall act as Chairman.
PARAGRAPH 1 - The Secretary of the Shareholders’ Meeting shall be appointed by the Chairman.
PARAGRAPH 2 - The Investor Relations Officer or his or her designee shall necessarily attend all Shareholders’ Meetings in order to provide any clarification and information to the shareholders and the Presiding Officers about the matters comprised within his or her duties under these Bylaws. Notwithstanding the foregoing, it shall be solely incumbent on the Chairman of the meeting, with due regard for the rules established in these Bylaws, to make any decisions concerning the number of votes of each shareholder or the qualification of each shareholder as a Brazilian Shareholder or a Foreign Shareholder.
VOTING
SECTION 24 - With respect to the resolutions of the Shareholders’ Meetings, the votes cast by the Brazilian Shareholders shall be computed separately from those cast by the Foreign Shareholders (Sections 10 and 11), with due regard for the voting limits referred to in Sections 14 and 15 hereof.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
SOLE PARAGRAPH - The Shareholders’ Meeting shall only take action on the matters expressly contemplated in the agenda for the meeting, as set forth in the relevant notice, provided that the approval of matters under a general item contained in the agenda is forbidden.
ARTICLE V
BOARD OF DIRECTORS, BOARD OF EXECUTIVE OFFICERS AND FISCAL COUNCIL
MANAGEMENT OF THE COMPANY
Section 25 - The management bodies of the Company are the Board of Directors and the Board of Executive Officers.
SOLE PARAGRAPH - The Board of Directors is the collegiate decision-making body of the Company, while representation of the Company shall be incumbent on the Executive Officers only.
ACCEPTANCE OF OFFICE
Section 26 - The directors, executive officers and members of the Fiscal Council shall take office by executing an instrument of investiture recorded in the Book of Minutes of the Board of Directors or the Board of Executive Officers, or in the Book of Minutes and Opinions of the Fiscal Council, as the case may be.
PART I
BOARD OF DIRECTORS
COMPOSITION
Section 27 - The Board of Directors shall be composed of at least nine and no more than eleven members, all of whom shall be elected by the Shareholders’ Meeting for a unified two- year term, reelection being permitted, with due regard for the provisions in Paragraphs 1 and 2 below.
PARAGRAPH 1 - The Brazilian Federal Government, as the holder of the Golden Share, is entitled to elect one acting Board member and his or her alternate.
PARAGRAPH 2 - The employees of the Company shall be entitled to elect, by separate vote, two acting Board members and their alternates as follows: one Board member and his or her alternate shall be appointed by the Employee Investment Club of the Company (CIEMB - Clube de Investimentos dos Empregados da Embraer), and one Board member and his or her alternate shall be appointed by the non-shareholder employees of the Company.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 3 - The remaining Board members shall be elected by the other shareholders of the Company, subject to the provisions of Sections 31 and 32 hereof. It shall be incumbent on the Chairman of the Shareholders’ Meeting, when conducting the proceedings related to the election of the members of the Board of Directors, to determine the voting mechanism for election of Board members, as contemplated in this Paragraph (Section 31 or Section 32).
PARAGRAPH 4 - Subject to the leading provision and paragraphs 1 and 2 of this Section, the number of members of the Board of Directors in each term of office shall be determined at the Shareholders’ Meeting held for the election of members of the Board of Directors.
PARAGRAPH 5 - No member of the Board of Directors may hold a position as Executive Officer of the Company.
PARAGRAPH 6 - At least the majority of members must be Independent Members, and the characterization of those appointed to the Board of Directors as independent members must be resolved at the General Meeting that elects them, and they will also be considered as independent, in the event If there is a controlling shareholder, the director(s) elected through the option provided for in art. 141, § 4 of Law No. 6,404/76, observing the provisions of art. 32, §7 of these Bylaws.
PARAGRAPH 7 - If the calculation of the percentage referred to in the preceding Paragraph results in a fractional number of directors, this percentage shall be rounded up to the next whole number.
SECTION 28 - The Board of Directors shall have a Chairman and a Vice Chairman, who shall be elected by the Shareholders’ Meeting immediately after election of the Board members.
SECTION 29 - The replacement of the members of the Board of Directors in the case of absence, impediment, or as a result of a vacancy, shall be conducted as follows:
I. except as provided in items IV, V and VI below, in the event of impediment or vacancy with respect up to two directors, the Board of Directors shall continue to be composed of the remaining members until the end of their terms of office or, at the discretion of the Board of Directors, the remaining members of the Board of Directors shall appoint the substitute(s) that shall serve until the following Shareholders’ Meeting, at which time the replacement(s) shall be elected. In the event of vacancy with respect to more than two directors, the following rules apply: (x) if the vacancy does not refer to the majority of positions, the other members of the Board of Directors may call a Shareholders’ Meeting to elect the substitute(s) or directly appoint the substitute(s), provided that no more than two seats in the Board of Directors may remain vacant; (y) if the vacancy refers to the majority of positions, a Shareholders’ Meeting shall be called to elect their substitutes. In both cases, substitutes shall serve for the remaining terms of office of the substituted directors;
II. in the event of temporary absence or impediment of the Chairman of the Board, his or her duties shall be exercised by the Vice Chairman of the Board on a temporary basis;
III. in the event of a vacancy in the office of the Chairman of the Board of Directors, the Vice Chairman of the Board shall serve as Chairman until the end of the current term of office, and the remaining members of the Board of Directors shall promptly appoint a new Vice Chairman of the Board, who shall hold such position until the following Shareholders’ Meeting, at which time a replacement shall be elected; IV. in the event of impediment of any acting director referred to in Paragraphs 1 and 2 of Section 27, his or her alternate shall serve as acting director until the impediment ceases;
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
V. in the event of a vacancy with respect to any acting director referred to in Paragraphs 1 and 2 of Section 27, his or her alternate shall serve as acting director until the following Shareholders’ Meeting, which shall elect the respective replacement; and
VI. in the event of simultaneous vacancy with respect to both an acting and an alternate director referred to in Paragraphs 1 and 2 of Section 27, the Board shall promptly call a Shareholders’ Meeting to fill the vacant positions.
MEMBERS OF THE BOARD OF DIRECTORS
SECTION 30 - The members of the Board of Directors shall be persons of upstanding reputation and, unless a waiver is given by the Shareholders’ Meeting, may not:
I - hold positions in companies that could be regarded as competitors of the Company; or
II - have or represent interests that conflict with those of the Company.
PARAGRAPH 1 - For purposes of the provision in Section 115 of Law No. 6,404/76, a vote cast by a shareholder for election of a Board member that fails to meet the requirements of this Section shall be deemed an abusive vote.
PARAGRAPH 2 - No member of the Board of Directors may have access to information, participate in Board meetings or cast a vote where such member has or represents interests that conflict with those of the Company.
PARAGRAPH 3 - With regard to the election of the members of the Board of Directors referred to in Paragraph 3 of Section 27 hereof, and irrespective of the election mechanism to be adopted (Section 31 or Section 32), any shareholder who wishes to nominate a slate, in the case of election by slate, or candidate, in the case of adoption of the multiple voting process, who is not a member of the Board of Directors or of the slate indicated by the Board of Directors, shall give written notice to the Company to that effect, no later than 10 days prior to the relevant Shareholders’ Meeting, informing the name, qualification and professional résumés of each such person together with a consent signed by the candidate agreeing to run for office. At least eight days prior to the Shareholders’ Meeting, the Company shall publish a notice to the shareholders informing the shareholders where they can obtain a list of all candidates proposed as provided in this Paragraph and a copy of their qualification and professional résumés.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
ELECTION BY SLATE
SECTION 31 - Except as provided in Section 32 hereof, election of members of the Board of Directors as contemplated in Paragraph 3 of Section 27 shall be conducted according to a slate system, whereby no vote may be cast for an individual candidate.
PARAGRAPH 1 - In the case of an election as referred to in this Section 31, the Board of Directors shall nominate a slate; provided that the management of the Company shall, no later than 30 days prior to the date scheduled for the Shareholders’ Meeting, send to the stock exchange, post on the Company’s website and make available to the shareholders at the Company’s principal place of business, a document containing the names, the qualification and résumés of the candidates for the positions of Board members listed on the slate referred to in this Paragraph.
PARAGRAPH 2 - Any shareholder or group of shareholders may propose another slate for the Board of Directors, subject to the following rules:
a) the proposal shall be notified in writing to the Company no later than 10 days prior to the date of the Shareholders’ Meeting, provided that the same shareholder or group of shareholders may not submit more than one slate;
b) the notice shall indicate the names for the slate and, for members who are not members of the Board of Directors or members of the slate indicated by the Board of Directors, the notice shall indicate the respective qualification and professional résumés, and contain an executed instrument certifying acceptance to run in the election, as well as other information documents required by applicable law;
c) no later than 8 days prior to the date of the Shareholders’ Meeting, the Company shall publish a notice, which shall be posted on the Company’s website, informing the place where the shareholders may obtain a copy of the proposed slate and a copy of the qualification and professional résumés of the candidates.
PARAGRAPH 3 - The name of a same person may appear in two or more slates, including the slate referred to in Paragraph 1.
PARAGRAPH 4 - Each shareholder may only vote for one slate, and all votes shall be computed with due regard for the limitations provided for in Sections 14 and 15 hereof. The candidates in the slate receiving the largest number of votes at the Shareholders’ Meeting shall be elected.
ELECTION BY CUMULATIVE VOTING
SECTION 32 - In connection with the election of the members of the Board of Directors as provided in Paragraph 3 of Section 27, the shareholders representing at least 5% of the voting capital stock may request the adoption of the cumulative voting method, no later than 48 hours prior to the date of the Shareholders’ Meeting.
PARAGRAPH 1 - Promptly upon receiving such a request, the Company shall publish a notice to the shareholders communicating that the election will be conducted according to the method of cumulative voting.
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PARAGRAPH 2 - After the Shareholders’ Meeting is called to order, the Presiding Officers shall determine, based on the Brazilian Shareholders and the Foreign Shareholders that have signed the Shareholder Attendance Book and the number of their shares, the number of votes that each Brazilian or foreign shareholder may cast, subject to the following rules:
a) firstly, the number of votes that each shareholder may cast according to the provision of item I of Section 14 shall be determined, ascribing, to each share that does not exceed 5% of the total of the shares of the Company’s capital stock, the number of votes corresponding to the number of members of the Board of Directors to be elected; and;
b) if the aggregate votes of the Foreign Shareholders exceed two-thirds (2/3) of the aggregate votes of the Brazilian Shareholders, then a percentage reduction factor shall be applied to the votes of each Foreign Shareholder for compliance with the limit set forth in item II of Section 14.
PARAGRAPH 3 - The following persons may be candidates for positions on the Board of Directors:
a) the persons on the slates referred to in Paragraphs 1 and 2 of Section 31; and
b) a candidate that is nominated by any shareholder and is not a member of the proposed slate shall send his or her qualification and professional résumé, the executed instrument certifying his or her acceptance to run in the election and other information and documents required by applicable regulations.
PARAGRAPH 4 - Each shareholder shall have the right to give the votes ascribed to him or her pursuant to Paragraph 2 to a single candidate, or to distribute such votes among several candidates. The members who receive the largest number of votes shall be elected.
PARAGRAPH 5 - Any offices not filled due to a tie vote shall be subject to a new vote, by the same method, adjusted for the number of votes that each shareholder will be entitled to cast given the number of positions to be filled.
PARAGRAPH 6 - Whenever an election is conducted according to the foregoing method, removal of any Board member by the Shareholders’ Meeting shall entail removal of all other members and the holding of a new election; if a vacancy occurs for any other reasons, the subsequent Shareholders’ Meeting shall hold a new election of the entire Board.
PARAGRAPH 7 - Paragraph 4 of Section 141 of Law No. 6,404/76 shall only be applicable if the Company has a controlling shareholder.
AUTHORITY
SECTION 33 - It is incumbent on the Board of Directors:
I. to establish the general business guidelines of the Company;
II. to elect and remove the executive officers of the Company and to establish their duties, subject to the provisions of these Bylaws; III. to designate from among the executive officers of the Company, the officer that will serve as the Investor Relations Officer, pursuant to the regulations issued by the CVM;
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IV. to oversee the performance of the executive officers of the Company, examining at any time the corporate books and documents, and to request information on agreements entered into or about to be entered into, and any other acts; V. to review the quarterly results of the operations of the Company;
VI. to review the management report and the accounts of the Board of Executive Officers, and to make a decision regarding their submission to the Shareholders’ Meeting;
VII. to call on the independent auditors in order to provide clarification on the affairs of the Company, as deemed necessary;
VIII. to call the Annual Shareholders’ Meeting and, where appropriate, the Extraordinary Shareholders’ Meeting;
IX. to approve annual and multiannual budgets, strategic plans, expansion programs and investment programs of the Company, as well as to monitor their implementation;
X. to review the matters subject to the veto power of the Brazilian Federal Government and to submit such matters to the Shareholders’ Meeting for consideration, where required by Law No. 6,404/76;
XI. to issue a prior opinion on any matter to be submitted to the Shareholders’ Meeting; XII. to take action on:
| a) | the issuance of shares of the authorized capital, subject to the provisions of Section 7 and its Paragraph 1; |
| b) | the issuance of warrants and, subject to the provisions of Paragraph 2 of Section 7 and the relevant plan approved by the Shareholders’ Meeting, the grant of stock options referred to therein; |
| c) | acquisition by the Company of shares of its own capital stock to be kept as treasury shares or for subsequent cancellation or disposal; |
XIII. to approve the disposal or encumbrance of fixed assets having a value in excess of one percent (1%) of the Shareholder’s Equity of the Company recorded in the latest consolidated financial statements of the Company released prior to the resolution of the Board of Directors in question, by way of a Standard Financial Statement Form (Formulário Demonstrações Financeiras Padronizadas - DFP) or Quarterly Information Form (Formulário de Informações Trimestrais - ITR), whichever is more recent;
XIV. to take action on the issuance of non-convertible ordinary unsecured debentures by the Company, in compliance with the regulations in force;
XV. to authorize the issuance by the Company of credit instruments for the raising of funds, such as bonds, notes, commercial papers and other instruments, according to usual market practices, and to establish the terms for issuance and redemption of such instruments;
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XVI. to approve (i) the incorporation and termination of directly or indirectly controlled companies, affiliates, consortiums, joint ventures and/or any entities of any nature; (ii) the direct or indirect holding by the Company of an ownership interest in other companies, the sale of such ownership interest (except for companies of the same group of the Company, which resolution is incumbent on the Board of Executive Officers), as well as new capital contributions to such companies;
XVII. to authorize the Company to obtain any loans and borrowings, incur indebtedness, assume debt, provide guarantees, including, for example, security, accommodation, suretyship, expense, advance or credit offer in benefit of third parties, without prejudice to the provisions of item XI of Section 41 below;
XVIII. to create and extinguish operating units of the Company;
XIX. to approve the following policies: (i) appointment of members of the board of directors, its advisory committees and statutory board of executive officers; (ii) risk management; (iii) related party transactions; (iv) securities trading; and (v) compensation and human resources policies of the Company, including criteria for compensation, rights and benefits;
XX. to authorize a transfer of corporate funds to employee associations, charitable, recreational and private pension entities, as well as any donation of corporate funds to a third party;
XXI. to select and remove the Company’s independent auditors;
XXII. to approve the execution of any agreements or transactions of any kind involving, on the one part, the Company and, on the other part:(i) any shareholder of the Company that holds more than 5% of its capital stock; (ii) any directors or executive officers of the Company, or their spouses and relatives up to the 4th degree of kinship; or (iii) any companies controlling, controlled by or under common control or affiliated with any one of the parties referred to in clauses “i” and “ii”;
XXIII. to issue a prior favorable or unfavorable opinion with respect to any tender offer for the shares of the capital stock of the Company, as expressed in a well-reasoned report to be issued no later than 15 days after publication of the notice for such tender offer, covering at least (i) the convenience and timeliness of the tender offer in light of the interests of the Company and the interests of shareholders, including with respect to the price and potential impacts on the liquidity of the shares; (ii) the strategic plans announced by the offeror with respect to the Company; (iii) alternatives in the market to the acceptance of the tender offer; and (iv) other matters that the Board of Directors deems relevant; XXIV.
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with due regard for the provisions of these Bylaws and legislation in force, to provide for the orderly conduct of the proceedings of the Board of Directors, and to approve the internal regulations of the Board of Directors and its Advisory Committees;
XXV. to regulate the activities of the Company and to take responsibility for all matters subject to the exclusive authority of the Shareholders’ Meeting or the Board of Executive Officers;
XXVI. to elect the members of statutory advisory committees of the Board of Directors and their respective coordinators, and approve the internal regulations of the statutory advisory committees of the Board of Directors;
XXVII. to authorize the Company to obtain any loans and borrowings, incur indebtedness, assume debt, provide guarantees, including security, accommodation, suretyship, expense, advance or credit offer in benefit of its controlled companies, special purpose companies and other companies that are directly or indirectly controlled by the Company, duly consolidated in its financial statements, in an amount above one percent (1%) of the Company’s Shareholder’s Equity recorded in the last consolidated financial statements of the Company and disclosed before the date of the relevant resolution taken by the Board of Directors, through the Standardized Financial Statements Form (Formulário Demonstrações Financeiras Padronizadas - DFP) or Quarterly Information Form (Formulário de Informações Trimestrais - ITR), whichever is more recent.
PARAGRAPH 1 - The removal of an Executive Officer shall require an affirmative vote of at least seven Directors.
PARAGRAPH 2 - Subject to any limitations imposed by the Shareholders’ Meeting, the Board of Directors shall determine the compensation of each of its members, each member of the Committees (articles 34 to 37) and each Executive Officer of the Company, taking into account their responsibilities, the time devoted to their duties, their skills, their professional reputation and the market value of their services.
PARAGRAPH 3 - It shall be incumbent on the Chairman of the Board of Directors, in addition to his or her other duties provided for in these Bylaws, to call and preside over the meetings of the Board of Directors and the Shareholders’ Meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 34 - The Board of Directors shall appoint a permanent Strategy and Innovation Committee, a People and ESG Committee and an Audit, Risk and Ethics Committee, which shall have no decision-making or managerial authority, to assist the Board in the performance of its functions.
PARAGRAPH 1 - The Strategy and Innovation Committee and the People and ESG Committee shall be composed of at least three (3) and no more than five (5) members, most of whom shall be independent members of the Board of Directors, provided that the others may be External Members, pursuant to paragraph 3 of Section 37 of these Bylaws.
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PARAGRAPH 2 - The members of the Board of Directors appointed as members of these bodies and the Audit, Risk and Ethics Committee may accumulate the compensation applicable for each position so held.
SECTION 35 - The Audit, Risk and Ethics Committee, an advisory body linked to the Board of Directors, shall perform the functions of an “Audit Committee” for purposes of U.S. legislation, particularly the Sarbanes-Oxley Act.
PARAGRAPH 1 - The Audit, Risk and Ethics Committee shall be composed of at least three (3) and no more than five (5) members, of whom: the majority shall be independent members of the board of directors, at least one (1) shall be an External Member, pursuant to paragraph 3 of Section 37 of these Bylaws, and one (1) shall have recognized experience in corporate accounting issues.
PARAGRAPH 2 - A member of the Audit, Risk and Ethic Committee may meet both the requirements of being an independent member of the Board of Directors with acknowledged experience in corporate accounting matters, or being an External Member with acknowledged experience in corporate accounting matters.
PARAGRAPH 3 - The Audit, Risk and Ethics Committee shall be coordinated by one of the independent members of the Board of Directors who shall be part of such Committee. The activities of the committee coordinator shall be defined in its internal regulations, approved by the Board of Directors.
SECTION 36 - It is incumbent on the Audit, Risk and Ethics Committee, in addition to the duties assigned by applicable legislation and its internal regulations:
a) to make a recommendation to the Board of Directors regarding the selection or replacement of the independent auditors and their compensation;
b) to oversee the work of the independent auditors, and to issue an opinion on the engagement of the independent auditors to render other services to the Company;
c) to take action and adopt measures as required to learn about and verify any claims involving matters related to financial statements, internal controls and independent auditing;
d) to mediate any conflicts and disputes between the management of the Company and the independent auditors;
e) to review quarterly information, interim financial information and financial statements;
f) to monitor the internal audit activities and the activities of the internal controls area of the Company;
g) to review and monitor the Company’s risk exposure; h) to review, monitor and make recommendations to management regarding the correction or improvement of the Company’s internal policies, including the related party transactions policy; and
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i) to have the means to receive and process information regarding non-compliance with legal provisions and regulations applicable to the Company, in addition to internal regulations and codes, including provisions on specific procedures to protect providers of information and the confidentiality of information.
PARAGRAPH 1 - The Company shall publish, in an annual basis, a summary report prepared by the Audit, Risk and Ethic Committee, contemplating the meetings held and the main matters discussed, highlighting the recommendations made by such committee to the Board of Directors;
PARAGRAPH 2 - The officers of the Company and the officers of the Company’s controlled companies, controlling shareholder, if any, affiliates or companies under common control, cannot be members of the Audit, Risk and Ethics Committee.
SECTION 37 - The Board of Directors may create advisory committees to assist the Board of Directors of the Company, such committees to have limited, specific purposes and a defined duration. The Board of Directors shall appoint the members of the advisory committees and shall determine their compensation, subject to the aggregate limit established by the Shareholders’ Meeting.
PARAGRAPH 1 - Each of the Advisory Committees of the Board of Directors will be composed of at least three (3) and no more than five (5) members, most of whom shall be independent members of the Board of Directors, provided that the others may be External Members, pursuant to paragraph 3 hereof.
PARAGRAPH 2 - The members of the Board of Directors appointed to compose the aforementioned bodies may accumulate the compensation applicable for each position so held.
PARAGRAPH 3 - External Members of any of the aforementioned Committees shall meet the following requirements:
a) shall not be a member of the Board of Directors or Board of Executive Officers of the Company or its controlled companies;
b) shall have unblemished reputation and extensive knowledge of the rules applicable to publicly-held companies, as well as the guiding concepts and principles of the highest corporate governance level in the Brazilian Capital Market;
c) shall not be a spouse or relative up to the second degree of (1) members of the management of the Company or its controlled companies or (2) individuals who are employees of the Company or its controlled companies, to the extent that it compromises his or her independence as External Member; and d) shall not hold positions in companies that may be deemed as competitors of the Company or its controlled companies, and shall not have, nor represent, interests that are conflicting with those of the Company or its controlled companies.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 4 - The External Members of all the Committees have the same duties and responsibilities of directors and executive officers, pursuant to Section 160 of Law No. 6,404/76, and shall take office upon execution of the applicable instrument of investiture, which shall acknowledge the requirements for holding each position.
PART II
BOARD OF EXECUTIVE OFFICERS
COMPOSITION
SECTION 38 - The Board of Executive Officers shall be composed of no less than four and no more than eleven executive officers, one of whom will be the Chief Executive Officer. All executive officers shall serve for a term of office of two years, reelection being permitted. The titles and duties of each executive officer shall be assigned by the Board of Directors, which shall designate one officer to serve as the Investor Relations Officer.
PARAGRAPH 1 - During his or her impediment or absence, the Chief Executive Officer shall appoint a substitute among the remaining Executive Officers, who shall then serve in both positions.
PARAGRAPH 2 - In the event of a vacancy in the position of Chief Executive Officer, such position shall be filled on an interim basis by one of the remaining Executive Officers, as designated by the Chairman of the Board of Directors. Such executive officer shall so serve until the following meeting of the Board of Directors, which shall then appoint a new Chief Executive Officer.
PARAGRAPH 3 - During their temporary absences or impediments, the remaining Executive Officers shall be replaced by another Executive Officer to be chosen by the Chief Executive Officer.
PARAGRAPH 4 – In the event of a vacancy in a position of Executive Officer, one of the remaining Executive Officers, as designated by the Chief Executive Officer, shall assume such position in an interim basis, and shall so serve until the following meeting of the Board of Directors.
PARAGRAPH 5 - An Executive Officer who substitutes the Chief Executive Officer or any of the remaining Executive Officers in accordance with this Section shall not be entitled to any additional compensation.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
DUTIES OF THE EXECUTIVE OFFICERS
SECTION 39 - It will be incumbent on the Executive Officers to comply with and ensure compliance with these Bylaws, the resolutions of the Board of Directors and the Shareholders’ Meeting, as well as to perform all acts, within the scope of their authority, which are necessary for the regular conduct of the Company’s business.
PARAGRAPH 1 - It is incumbent on the Chief Executive Officer:
a) to call and preside over the meetings of the Board of Executive Officers;
b) to propose to the Board of Directors the composition of the Board of Executive Officers;
c) to propose to the Board of Directors the duties to be assigned to the other Executive Officers;
d) to guide and coordinate the performance of the other Executive Officers;
e) to oversee the general planning activities of the Company and its controlled companies;
f) to keep the directors abreast of the affairs of the Company and the development of its business; and
g) to carry out such other duties as may be assigned to him by the Board of Directors.
PARAGRAPH 2 - It is incumbent on the remaining Executive Officers to assist and support the Chief Executive Officer in the management of the Company’s business and to perform such functions as may be assigned to them by the Board of Directors, under the guidance and coordination of the Chief Executive Officer.
AUTHORITY AND DUTIES OF THE BOARD OF EXECUTIVE OFFICERS
SECTION 40 - The Board of Executive Officers has authority to perform all acts that are required to achieve the purposes of the Company, subject to the applicable provisions of law and these Bylaws, and to the resolutions of the Shareholders’ Meeting and the Board of Directors.
SECTION 41 – In addition to any other functions provided for by law and these Bylaws, it is incumbent on the Board of Executive Officers:
I. to comply with and ensure compliance with these Bylaws and the resolutions of the Board of Directors and the Shareholders’ Meeting;
II. to prepare and submit to the Board of Directors, on an annual basis, the Company’s business plan and general budget, in addition to its strategic plan and the annual revisions thereof, as well as see to the implementation of the foregoing;
III. to propose to the Board of Directors the basic guidelines for the business of the Company;
IV. to submit on an annual basis, to the Board of Directors, for review, the Management Report and the accounts of the Board of Executive Officers, together with an opinion of the independent auditors, as well as a proposal for allocation of the earnings for the preceding fiscal year; V. to appoint and remove the directors and officers of the controlled companies of the Company, and to appoint and remove the managers of its operating units;
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VI. to prepare on an annual basis the Action and Target Plan for each Board of Executive Officers, and to submit such Plans, together with the performance and results thereof, to the Board of Directors during its regular meetings;
VII. to submit to the Board of Directors and the Fiscal Council a detailed quarterly economic and financial balance sheet of the Company;
VIII. to authorize the opening, relocation or closing of offices, branches, premises or other establishments of the Company, in Brazil and abroad;
IX. to propose to the Board of Directors the incorporation and termination of controlled companies of the Company, in Brazil and abroad, and other acts set forth in Section 33, item XVI of these Bylaws, as well as to approve the direct or indirect holding by the Company of an ownership interest in other companies and the sale of such ownership interest, in both case for companies of the same group of the Company;
X. to prepare and submit to the Board of Directors the compensation policies of the Company and its controlled companies;
XI. to authorize the Company to obtain any loans and borrowings, incur indebtedness, assume debt, provide guarantees, including security, accommodation, suretyship, expense, advance or credit offer in benefit of its controlled companies, special purpose companies and other companies directly or indirectly controlled by the Company, duly consolidated with the Company in its financial statements, up to the amount of one percent (1%) of the
Stockholders’ Equity recorded in the last consolidated financial statements of the Company and disclosed before the date of the relevant resolution taken by the Board of Directors, through the Standardized Financial Statements Form (Formulário Demonstrações Financeiras Padronizadas) (DFP) or Quarterly Information Form (Formulário de Informações Trimestrais) (ITR), whichever is more recent; and
XII. to submit to the Board of Directors, for review, all matters subject to a veto by the Brazilian Federal Government as the holder of the Golden Share, pursuant to Section 9 and item III of Section 18 hereof.
REPRESENTATION OF THE COMPANY
SECTION 42 - The Company shall be validly bound whenever represented by two Executive Officers, by the signature of one Executive Officer and one attorney-in-fact, or by two attorneys-in-fact acting within the scope of their respective powers.
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PARAGRAPH 1 - The acts for which these Bylaws require prior authorization of the Board of Directors shall only be valid once such requirement is satisfied.
PARAGRAPH 2 - The Company may be represented by a single Executive Officer, who may grant powers of attorney for the purposes listed below, or a single attorney-in-fact in the performance of the following acts:
I. receipt of discharge of the amounts due to the Company;
II. issuance, trading, endorsement and discount of trade bills related to the Company’s sales;
III. representation of the Company in stockholders’ meetings of companies in which the Company holds an equity interest;
IV. granting of powers of attorney for representation of the Company in judicial or administrative proceedings;
V. representation of the Company in judicial and/or administrative proceedings, except for performance of acts involving waiver of rights; and
VI. performance of administrative acts, including before public offices, government-controlled companies, boards of trade, labor courts, INSS (National Social Security Institute), FGTS (Severance Pay Fund) and their collecting banks, and similar entities.
PARAGRAPH 3 - The Board of Directors may authorize the performance of specific acts whereby the Company will be bound by the signature of a single Executive Officer or a single duly appointed attorney-in-fact; and may in addition define authorities and limits for performance of acts by a single representative.
PARAGRAPH 4 - The following rules shall apply to the appointment of attorneys-in-fact:
I. all powers of attorney shall be granted by the Chief Executive Officer or his or her substitute, acting together with another Executive Officer, and shall have a defined scope and term, except for powers for representation in judicial or administrative proceedings, in which case the term may be indefinite; and
II. a power of attorney for performance of an act that requires prior authorization of the Board of Directors may only be granted after such authorization, which shall be mentioned in the power of attorney.
PART III
FISCAL COUNCIL
SECTION 43 - The Fiscal Council of the Company shall operate on a permanent basis and shall be composed of at least three (3) and no more than five (5) members and an equal number of alternate members, who may be shareholders or non-shareholders, shall reside in Brazil, shall be elected by the Shareholders’ Meeting, and shall have such duties as are provided for by law.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 1 - The rules in Section 31 hereof for election of the members of the Board of Directors of the Company shall apply to election of the members of the Fiscal Council, to the extent that such rules are pertinent and do not conflict with the provisions of this Section.
PARAGRAPH 2 - The Shareholders’ Meeting shall appoint the Chairman and the Vice Chairman of the Fiscal Council from among its elected members.
PARAGRAPH 3 - If, in accordance with the terms of Section 56 hereof, the Company comes under the control of a controlling shareholder or a parent company, as defined by law, the minority shareholders, as long as they represent in the aggregate 10% or more of the outstanding shares, shall have the right to elect, in a separate vote, one committee member and his alternate.
PARAGRAPH 4 - The compensation of the members of the Fiscal Council shall be determined by the Shareholders’ Meeting that elects such members, in compliance with applicable statutory requirements and limitations and with due regard for their experience, background and reputation.
SECTION 44 - The Fiscal Council shall hold regular meetings every calendar quarter to examine the interim balance sheet and other financial statements prepared from time to time by the Company; provided that the Fiscal Council may hold extraordinary meetings whenever called by the Chairman, on his own initiative or at the request of any its members.
PARAGRAPH 1 - Extraordinary meetings shall be called by written notice containing the agenda for the meeting, as well as an indication of the meeting’s place, date and time.
PARAGRAPH 2 - A meeting of the Fiscal Council may be called to order upon attendance by at least three (3) members or alternates, and the Fiscal Council shall pass its resolutions by a majority vote of the members in attendance.
SECTION 45 - The legal provisions and these Bylaws regarding the Fiscal Council shall be regulated in its internal regulations, which shall be approved by the Fiscal Council.
PARAGRAPH 1 - It shall be incumbent on the Chairman of the Fiscal Council to convey to all members of the Fiscal Council the communications received from the management bodies of the Company and its independent auditors, and to forward to such management bodies any requests received from its members.
PARAGRAPH 2 - The members of the Fiscal Council shall exercise their functions in the interest of the Company, regardless of whether they have been elected by a group or a class of shareholders.
PARAGRAPH 3 - In light of the illegality of the act in question and based on a well- grounded decision, the Fiscal Council may refuse to comply with a request for provision of information, clarification or special financial statements, or for determination of any specific fact.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PART IV
MEETINGS OF THE MANAGEMENT BODIES
INTERVAL OF MEETINGS
SECTION 46 - The Board of Directors of the Company shall meet, on a regular basis, eight times a year, according to a schedule to be announced during the first month of each fiscal year by the Chairman of the Board of Directors, provided, further, that extraordinary meetings may be held whenever necessary.
CALL
SECTION 47 - The directors and executive officers of the Company shall be called to attend the meetings of the relevant bodies by personal written notice given at least three business days in advance by letter, e-mail or any other means that permits acknowledgement of receipt by the recipient.
PARAGRAPH 1 – Such notice shall be accompanied by a list of the matters to be discussed and considered during the meeting, as well as all required supporting documentation.
PARAGRAPH 2 – The meetings of the management bodies may be called to order, irrespective of notice, whenever all members are in attendance.
PARAGRAPH 3 – In case of duly justified urgency, the Chairman of the Board of Directors may call meetings, pursuant to paragraph 1 of this Section, in which case, the meeting shall only be called to order with the attendance of at least two-thirds (2/3) of its members.
QUORUM AND VOTING REQUIREMENT
SECTION 48 - The meetings of the management bodies may only be called to order and resolve matters if a majority of the relevant members are in attendance; Directors or Officers shall be deemed to be present at a meeting if they participate via telephone conference, video conference, telepresence, e-mail or any other means of communication that allows identification of such Directors or Officers. In this case, Directors and Officers shall be deemed to be in attendance for purposes of quorum and voting, and their vote shall be deemed valid for all legal purposes and shall be included in the minutes of the meeting.
SECTION 49 - Except as otherwise expressly provided in these Bylaws, the resolutions at the meetings of the management bodies shall be passed by a majority vote of the members in attendance.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
ARTICLE VI
FINANCIAL STATEMENTS AND
DISTRIBUTION OF INCOME
FISCAL YEAR AND FINANCIAL STATEMENTS
SECTION 50 - The fiscal year of the Company shall begin on January 1 and shall end on December 31 of each year.
PARAGRAPH 1 - At the end of each fiscal year, the Board of Executive Officers shall prepare the following financial statements, in accordance with the applicable provisions of law:
I. balance sheet;
II. statement of changes in shareholders’ equity;
III. income statement;
IV. statement of changes in financial position; and
V. statement of cash flows.
PARAGRAPH 2 - Together with the financial statements for the fiscal year, the Board of Directors shall submit to the Annual Shareholders’ Meeting a proposal for allocation of the net income of the Company, subject to the provisions of these Bylaws and applicable law.
MANDATORY DIVIDEND
SECTION 51 - The shareholders shall be entitled to receive each fiscal year, as a mandatory dividend, a percentage equivalent to 25% of the net income for the year, as adjusted according to the following rules:
I - the net income for the fiscal year will be reduced or increased by the following amounts:
a) the amounts allocated to the legal reserve; and
b) the amounts allocated to a contingency reserve for anticipated losses, and reversal of any such reserve established in a preceding year;
II - payment of dividend pursuant to item I above may be capped at the amount of the net income realized during the year, provided that the difference is recorded in an unrealized revenue reserve;
III - profits recorded in the unrealized revenue reserve, once realized and to the extent not offset by losses in subsequent years, will be added to the first dividend to be paid after realization.
PARAGRAPH 1 - The dividend provided for in this Section shall not be mandatory for a given fiscal year if the Board of Directors informs the Shareholders’ Meeting that such dividend is not consistent with the financial condition of the Company; The Fiscal Council shall issue an opinion on such information and the managers of the Company shall submit to CVM, within five days after the Shareholders’ Meeting, an explanation justifying the information conveyed to the Shareholders’ Meeting.
PARAGRAPH 2 - Any income that fails to be distributed pursuant to Paragraph 1 shall be recorded in a special reserve and, to the extent not offset by losses in subsequent years, shall be paid as a dividend as soon as the financial condition of the Company so permits.
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PARAGRAPH 3 - In accordance with prevailing income tax regulations, during each fiscal year, the Board of Directors may pay or credit interest on shareholders’ equity, contingent on a subsequent confirmation by the Annual Shareholders’ Meeting that will review the financial statements for the year.
PARAGRAPH 4 - Interest on shareholders’ equity shall be applied against any dividends declared by the Company.
INVESTMENT AND WORKING CAPITAL RESERVE
SECTION 52 - The Company shall maintain an Investment Reserve towards which up to 75% of the adjusted net income for the year may be applied by a proposal of the Board of Directors in order to: (i) secure funds for investments in fixed assets, without prejudice to retention of earnings pursuant to Section 196 of Law No. 6,404/76; (ii) increase working capital; or (iii) carry out a redemption or purchase of shares of the Company’s capital stock or make payment to dissenting shareholders.
PARAGRAPH 1 - Subject to the applicable statutory limitation, such reserve may not exceed 80% of capital stock.
PARAGRAPH 2 - According to a proposal of the Board of Directors, the Shareholders’ Meeting may at any time declare a dividend to be paid with funds standing to the credit of the reserve referred to in this Section, or apply the balance thereof, in whole or in part, to an increase of the capital stock, including by way of a stock dividend.
INTERIM DIVIDENDS
SECTION 53 - The Board of Directors may approve the preparation of semi-annual balance sheets and may declare interim dividends. The Board may also prepare balance sheets and distribute dividends in shorter periods, provided that all dividends paid during the semi- annual period of each fiscal year do not exceed the capital reserves of the Company.
SOLE PARAGRAPH - The Board of Directors may declare dividends to be paid out of retained earnings or an earnings reserve shown in the latest annual or semi-annual balance sheet.
PROFIT SHARING
SECTION 54 - The Shareholders’ Meeting may grant profit sharing to the directors and executive officers of the Company, subject to applicable statutory limitations.
PARAGRAPH 1 - Profit sharing may only be granted with respect to a fiscal year in which the mandatory dividend referred to in Section 51 hereof is paid to the shareholders.
28
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 2 - Whenever the Company pays an interim dividend based on earnings recorded in a semi-annual balance sheet, in an amount equal to at least 25% of the net income for the period calculated pursuant to Section 53 hereof, the Board of Directors may approve payment of profit sharing to the directors and executive officers with respect to such semi-annual period, contingent on subsequent confirmation by the Shareholders’ Meeting.
ARTICLE VII
PROTECTION MECHANISM
MONITORING OF EQUITY INTERESTS
SECTION 55 In addition to the provisions of Paragraph 2 of Section 8 and Paragraph 2 of Section 10 hereof, and without prejudice to the remaining provisions of these Bylaws, the Company, through a working group coordinated by the Investor Relations Officer, shall monitor changes in the equity interests in the Company held by its shareholders, in order to prevent and, as the case may be, report any breach of these Bylaws and applicable rules and regulations, pursuant to Paragraph 1 below, as well as recommend to the Shareholders’ Meeting imposition of the penalties provided for in Section 16 hereof.
PARAGRAPH 1 - If at any time, the Investor Relations Officer detects a breach of any restriction as to the limit of shares owned by a single shareholder or Shareholder Group, the Investor Relations Officer shall immediately report such fact: (i) to the Chairman of the Board of Directors; (ii) to the Board Member elected by the Brazilian Federal Government, as holder of the Golden Share; (iii) to the Chief Executive Officer; (iv) to the members of the Fiscal Council; (v) to B3; and (vi) to CVM.
PARAGRAPH 2 – The Investor Relations Officer may require the shareholders or Shareholder Groups of the Company to disclose their direct and/or indirect capital structure as well as the composition of their direct and/or indirect tranche of control stock and, as the case may be, the corporate and business groups to which they belong, de facto or de jure.
TENDER OFFER IN THE EVENT OF PURCHASE
OF SUBSTANTIAL INTEREST OR SALE OF CONTROLLING INTEREST
SECTION 56 - Any shareholder or Shareholder Group that purchases or becomes the holder for any reason of: (i) 35% or more of the total outstanding shares of the Company; or (ii) other rights, including under a usufruct or trust by will (fideicomisso), related to outstanding shares of the Company that represent more than 35% of the capital stock (an “Acquiring Shareholder”) shall, within 15 days after such acquisition or event that resulted in ownership of shares or rights in excess of the foregoing limit, submit to the Brazilian Federal Government, as the holder of the Golden Share, through the Ministry of Economy, a request to conduct a tender offer for all outstanding shares of the Company, subject to the provisions of applicable regulations, the rules issued by the B3 and the provisions of this Section.
29
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 1 - The Brazilian Federal Government, as the holder of the Golden Share, may accept or refuse such request for a tender offer, at its sole discretion. If the request is accepted, the Acquiring Shareholder shall carry out the tender offer within 60 days from the approval, in the manner described in this Section. If the request is denied, the Acquiring Shareholder, within 30 days after being informed of the denial, shall sell all the shares that exceed the aforementioned limit.
PARAGRAPH 2 - The Acquiring Shareholder shall provide the Chief Executive Officer of the Company with a copy of all the documents related to the request for a tender offer delivered to or sent by the Brazilian Federal Government.
PARAGRAPH 3 - During the period from the request for a tender offer until a positive or negative reply from the Brazilian Federal Government, the Acquiring Shareholder may not acquire or dispose of any shares or convertible securities of the Company.
PARAGRAPH 4 - The price at which each share of the Company may be purchased in the tender offer cannot be less than the result obtained by applying the following formula:
TO Price = Value of Share + Premium
where:
“TO PRICE” corresponds to the purchase price for each outstanding share of the Company in the tender offer provided for in this Section.
“VALUE OF SHARE” corresponds to the highest value among: (i) the highest unit quotation obtained for the shares issued by the Company during the 12-month period prior to the tender offer among values recorded on any stock exchange on which such shares were traded; (ii) the highest price paid by the Acquiring Shareholder, during the 36-month period prior to the tender offer, for a share or tranche of shares issued by the Company; (iii) an amount equivalent to 14.5 times the Average Consolidated EBITDA of the Company (as defined below) reduced by the consolidated net indebtedness of the Company, divided by the total number of outstanding shares; and (iv) an amount equivalent to 0.6 times the backlog of the Company, according to the latest information disclosed by the Company, reduced by the consolidated net indebtedness of the Company, divided by the total number of outstanding shares.
“PREMIUM” corresponds to 50% of the Value of Share.
“CONSOLIDATED EBITDA OF THE COMPANY” is the consolidated operating profit of the Company before net financial expenses, income tax and social contribution, depreciation, depletion and amortization, based on the audited consolidated financial statements for the most recent full fiscal year of the Company already audited and published.
“AVERAGE CONSOLIDATED EBITDA OF THE COMPANY” is the arithmetic average of the Consolidated EBITDAs of the Company for the two most recent full fiscal years.
PARAGRAPH 5 - For the purposes of Paragraph 4 above, in the case of shares represented by depositary certificates (including shares covered by a Depositary Receipts program), the quoted price of each share shall be determined by the division: (i) of the quoted price of the relevant depositary certificate in the market in which it is traded; by (ii) the number of shares represented by such certificate.
30
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 6 - A tender offer as mentioned in the leading paragraph of this Section shall not preclude another shareholder of the Company from carrying out a competing tender offer, pursuant to applicable regulations.
PARAGRAPH 7 - The Acquiring Shareholder shall comply with any requests or requirements that may be made by CVM, within the time periods prescribed by applicable regulations.
PARAGRAPH 8 - The tender offer shall necessarily follow the principles and procedures listed below, in addition to those expressly contemplated in Section 4 of CVM Instruction No. 361, of March 5, 2002, and in the Novo Mercado Regulations, where applicable:
I. be addressed to all shareholders of the Company, without any distinction;
II. be carried out through an auction to be conducted on B3;
III. be made so as to assure equal treatment to all shareholders, providing them with adequate information on the Company and the offeror, as well as with elements necessary to support a careful and independent decision as to acceptance of the tender offer;
IV. be irrevocable and not subject to any changes after publication of the public notice for the offer, pursuant to CVM Instruction No. 361/02;
V. be launched at a set price calculated according to the provisions of this Section, be paid upfront, in Brazilian currency, as consideration for the purchase of shares of the Company in the tender offer; and
VI. be supported by an appraisal report of the Company prepared by a firm of recognized international standing, independence, and expertise in economic and financial appraisal of public companies, prepared in accordance with the criteria listed in Section 8 of CVM Instruction No. 361/02, with due regard for the criteria in Paragraph 4 above as regards the minimum price for the offer.
PARAGRAPH 9 - In the event the Acquiring Shareholder fails to meet the obligations imposed by this Section, including as regards compliance with time limits: (i) to request the authorization of the Brazilian Federal Government to conduct the tender offer; (ii) to conduct the tender offer; or (iii) to meet any requests or requirements made by CVM, then the Board of Directors of the Company shall call an Extraordinary Shareholders’ Meeting, at which the shareholder or Shareholder Group in question shall be barred from voting, to take action on the suspension of shareholder’s rights with respect to such shareholder or Shareholder Group, as provided in Section 16 hereof.
PARAGRAPH 10 - For purposes of determining the percentage of 35% of the total outstanding shares of the Company, as mentioned in the leading paragraph of this Section, any involuntary percentage increases in ownership interests resulting from a cancellation of treasury shares shall be disregarded.
31
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
ARTICLE VIII
REGISTRATION AS A PUBLICLY-HELD COMPANY AND NOVO MERCADO
SECTION 57 - The voluntary delisting from the Novo Mercado segment may occur: (i) regardless of any tender offer, in the event of dismissal approved by the shareholders’ meeting of the Company, pursuant to Section 18, item X, of these Bylaws, or (ii) in the absence of such dismissal, if preceded by a tender offer that complies with the procedures set forth in the regulation enacted by CVM on tender offers for delisting as a publicly-held company and with the following requirements:
I. the offered price shall be fair, and, therefore, the Company may request a new appraisal, pursuant to Section 4-A of Law No. 6,404/76; and
II. shareholders holding more than one-third (1/3) of the outstanding shares shall accept the tender offer or expressly agree with the delisting from the Novo Mercado segment without carrying out the sale of shares.
PARAGRAPH 1 – For the purposes of this Section 57, outstanding shares are only the shares whose holders expressly agree to delist from the Novo Mercado segment or qualify for the tender offer auction, pursuant to the regulation enacted by CVM applicable to tender offers of publicly-held companies for delisting.
PARAGRAPH 2 – If the quorum mentioned in the paragraph above is reached: (i) those who accepted the tender offer cannot be submitted to an apportionment in the sale of their equity interest, subject to the procedures of dismissal of the limits set forth in the regulation enacted by CVM applicable to tender offers; and (ii) the offeror shall purchase the remaining outstanding shares within one (1) month from the date of the auction, for the final tender offer price, adjusted until the date of effective payment, pursuant to the tender offer notice and applicable regulation, which shall occur within fifteen (15) days from the date of exercise of this option by shareholders.
SECTION 58 - The tender offer for the delisting of the Company or category conversion at CVM’s registry shall be carried out at a fair price, in accordance with the applicable legal and regulatory rules.
SECTION 59 - Subject to the provisions of these Bylaws and without prejudice to the provisions of Section 56 above, the direct or indirect sale of control of the Company, in a single transaction or a series of successive transactions, shall be agreed upon under the condition that the purchaser undertakes to carry out a tender offer for the shares issued by the Company and held by the other shareholders, subject to the terms of and within the time limits set forth in the regulations in force and the Novo Mercado Rules, so that the holders of such shares receive the same treatment as that accorded to the seller.
SECTION 60 - A single tender offer of shares may be conducted for more than one of the purposes contemplated in this Article VIII, the Novo Mercado Regulations or the regulations issued by CVM, provided that the procedures of the various types of tender offer can be harmonized and there is no loss to the offerees, and provided, further, that CVM gives its consent, where required by applicable law.
32
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
SECTION 61 - The Company or the shareholders responsible for a tender offer under these Bylaws, the Novo Mercado Regulations or the regulations issued by the CVM may ensure the conduct thereof through any shareholder, a third party or, as the case may be, the Company. The Company or the shareholder, as the case may be, shall not be released from the obligation to carry out a tender offer its completion in compliance with the applicable rules.
ARTICLE IX
ARBITRATION
SECTION 62 - The Company, its shareholders, directors, executive officers and members of the fiscal council, including effective and alternate members, if any, agree to settle by arbitration, to be conducted by the Market Arbitration Panel (Câmara de Arbitragem do Mercado), pursuant to its regulation, any disputes among them arising from or in relation to the condition of issuer, shareholders, directors, executive officers and members of the fiscal council, in particular, pursuant to the provisions of Law No. 6,385, Law No. 6,404/76, the Bylaws of the Company, the rules issued by the National Monetary Council, the Central Bank of Brazil and CVM, as well as other rules applicable to the operation of the capital markets in general, in addition to the provisions contained in the Novo Mercado Regulations, other B3 regulations and the Novo Mercado Participation Agreement.
PARAGRAPH 1 – The provisions of this Section shall not apply in the event of disputes or disagreements related to or deriving from the Golden Share held by the Brazilian Federal Government or the rights and prerogatives thereof, under the law or these Bylaws, which shall be submitted to the jurisdiction of the central courts of the judicial district of the City of Brasília (Federal District).
PARAGRAPH 2 – The investiture of directors, executive officers and members of the fiscal council, including effective and alternate members, is contingent on the execution of the investiture instrument, which shall set forth that they are subject to the arbitration clause set forth in this Section 62.
ARTICLE X
Section 63 - The Company may enter into agreements with, or approve indemnity policies covering the members of, the Board of Directors, Fiscal Council, Board of Executive Officers and committees of the Company or its controlled companies, as well as the employees of the Company or its controlled companies (“Beneficiaries”), by which the Company agrees to bear or reimburse certain expenses, costs and damages effectively incurred by the Beneficiaries, during or after the period of their relationship with the Company, related to arbitration, judicial or administrative proceedings, involving acts carried out in the regular exercise of the Beneficiaries’ duties, as of the date of their investiture or beginning of the employment relationship with the Company, as applicable.
33
This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
PARAGRAPH 1 – Without prejudice to other events set forth in agreements or indemnity policies approved by the Board of Directors, the Company shall not make disbursements in favor of Beneficiaries based on these agreements or indemnity policies in the following cases:
I. acts performed outside the regular exercise of the Beneficiaries’ duties;
II. acts performed by Beneficiaries in bad faith, intentionally, with gross fault or upon fraud;
III. acts performed by Beneficiaries in their own interest or the interests of third parties, to the detriment of the corporate interest of the Company; or
IV. indemnifications resulting from the action for damages provided in Section 159 of Law No. 6,404/76 or reimbursement for losses provided in Section 11, paragraph 5, item II, of Law No. 6,385/76.
PARAGRAPH 2 – The indemnity agreements or policies shall be adequately disclosed and provide for, without limitation:
I. the applicable terms and conditions;
II. mechanisms to identify and handle conflicts of interest; and
III. the procedure to be adopted in the decision-making process about the execution of indemnity agreements by the Company and the payment of amounts by the Company.
PARAGRAPH 3 – In the cases that, after a final and unappealable judgment is rendered, it is confirmed that the act practiced by a Beneficiary is not indemnifiable pursuant to the indemnity agreement or policy approved by the Board of Directors, any amounts paid by the Company relating to this act based on the Beneficiary’s obligations set forth in these indemnity agreements or policies shall be returned by the Beneficiaries.
As approved by the Extraordinary General Shareholders’ Meeting on May 17th , 2024.
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This is a free translation of Embraer S.A. bylaws. If there is any inconsistency or ambiguity between the English version and the Portuguese version of this bylaws, the Portuguese version shall prevail.
EXHIBIT 2.5
DESCRIPTION OF SECURITIES REGISTERED
UNDER SECTION 12 OF THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Capitalized terms used but not defined herein have the meanings given to them in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 to which this Exhibit 2.5 is an exhibit (the “Annual Report”)
As of December 31, 2024, Embraer S.A. (“we,” “our” or the “Company”) had the following series of securities registered pursuant to Section 12 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”):
| Table |
Title of each class: |
Trading Symbol |
Name of each exchange on which registered |
|||
| I | Common shares, without par value | — | New York Stock Exchange* | |||
| II | American Depositary Shares (evidenced by American Depositary Receipts), each representing four common shares | ERJ | New York Stock Exchange | |||
| * | Not for trading purposes, but only in connection with the trading on the New York Stock Exchange of American Depositary Shares representing those common shares. |
| I. | Common Shares |
Set forth below is certain information concerning our authorized and issued share capital and a brief summary of certain significant provisions of our bylaws and Brazilian corporate law. This description does not purport to be complete and is qualified by reference to our bylaws (an English translation of which we have filed with the SEC) and to Brazilian corporate law.
A copy of our bylaws is attached to our Annual Report as Exhibit 1.1. We encourage you to read our bylaws and the applicable sections of our Annual Report for additional information.
Share Capital
As of the date of our Annual Report, we had a total authorized capital of 1,000,000,000 shares, of which 740,465,044 common shares were issued, including one special “golden share” held by the Brazilian government, and 733,566,139 common shares are outstanding. The golden share provides the Brazilian government with veto rights in certain specific circumstances. Our common shares are publicly traded in Brazil on the B3, under the ticker symbol EMBR3.
There have been no significant changes in percentage ownership by any major shareholder in the past three years. As of December 31, 2024, we had over 75,400 holders of common shares, including common shares in the form of ADSs. As of December 31, 2024, an aggregate of 17,226 ADSs were held by 140 record holders, including The Depository Trust Company in the United States.
Changes to our Share Capital
Our bylaws authorize the issuance of up to 1,000,000,000 common shares by a resolution of the board of directors, irrespective of any amendment to our bylaws and of shareholder approval.
Each of our shareholders has a general preemptive right to subscribe for shares in the event of any capital increase, or securities convertible into shares, in proportion to its shareholding, except in the event of the grant and exercise of any option to acquire shares of our capital stock. For additional information on the preemptive rights assigned to our shareholders, see “—Preemptive Rights.”
The golden share entitles the Brazilian government to veto any proposed change in the bylaws relating to the rights afforded to the golden share, among other things. For additional information on the golden share, see “—Voting Rights—Golden Share”.
1
Our bylaws provide that our capital stock shall be divided exclusively into common shares.
Changes to rights granted to common shares under our bylaws would generally require an amendment to our bylaws. Under the Brazilian Corporate Law, an amendment to our bylaws requires shareholder approval in a shareholders’ meeting. Changes to our bylaws would generally require approval by a simple majority vote of holders of common shares, except for matters that require the approval of shareholders representing at least one-half of the issued and outstanding voting shares or for matters subject to the approval of our golden share. For additional information on qualified quorum matters and on voting rights relating to the golden share, see “—Voting Rights—Qualified Quorum Matters” and “—Voting Rights—Golden Share,” respectively.
Voting Rights
Each common share is generally empowered with one vote at the general shareholders’ meeting. Pursuant to our bylaws and the B3 listing agreement in connection with the listing of our shares on the Novo Mercado listing segment of B3, we cannot issue shares without voting rights or with restricted voting rights.
The Brazilian Corporate Law and our bylaws require that all our shareholders’ meetings be called by publication of a notice in a newspaper of general circulation in the city where our headquarters are located, in a summarized form and with simultaneous disclosure of the full text of the documents on the page of the same newspaper online, which must provide digital certification of the authenticity of the documents kept on the page issued by a certifying authority accredited by the Brazilian Public Key Infrastructure (ICP-Brazil), currently the O Vale in São José dos Campos, at least 30 days prior to the meeting. In addition, publications are made in another newspaper of general circulation in São Paulo, where the São Paulo Stock Exchange is located, currently the Valor Econômico. The quorum to hold a shareholders’ meetings at first call is the presence of shareholders representing at least 25% of the common shares (except for meetings convened to amend our bylaws or to waive the public tender offer required for delisting from Novo Mercado, which require a quorum of at least two-thirds of the common shares at first call); and at second call the meeting can be held with the presence of any number of shareholders.
According to our bylaws, in order to attend a shareholders’ meeting, a shareholder must show the evidence of ownership of the shares it intends to vote by showing an identification document and a proof of share ownership. Our shareholders may be represented at shareholders’ meetings by a proxy, issued within a one-year period prior to the meeting to (1) one of our directors or officers, (2) a lawyer or (3) a financial institution. Notwithstanding the above, the CVM decided on November 4, 2014 that shareholders that are legal entities may be represented at shareholders’ meetings by their legal representatives or by a duly appointed attorney-in-fact, pursuant to the bylaws and related corporate instruments of the legal entities and pursuant to the Brazilian Civil Code. Investment funds must be represented by their administrator.
Alternatively, the shareholders might participate in a shareholders’ meetings through a remote voting mechanism, which is regulated by CVM Resolution No.80, as amended, and aims to facilitate the participation of shareholders in general meetings either through the vote or through the submission of proposals and candidates for the election of members of the board of directors or fiscal council. For this purpose, this regulation provided the following:
| • | the remote voting ballot, through which shareholders may exercise their right to vote prior to the date the shareholders’ meeting is held; |
| • | the possibility of inclusion of candidates and proposals of deliberation of minority shareholders in that bulletin, with due observance of certain percentages of equity interest, in order to facilitate shareholders’ participation in shareholders’ meetings; and |
| • | the deadlines, procedures and ways of sending this bulletin, which may be forwarded by the shareholder: (a) to the custodian (if the shares held by the shareholder are kept at a centralized deposit) or; (b) to the book-entry agent of the shares issued by the company (if such shares are not kept at a centralized deposit); or (c) directly to the company. |
According to the Brazilian Corporate Law, the common shares are entitled to dividends in proportion to their share of the amount available for distribution. For additional information on payment of dividends on our shares, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy” of our Annual Report. In addition, upon any liquidation of the company, the common shares are entitled to return of capital in proportion to their share of our shareholders’ equity.
2
According to the Brazilian Corporate Law, neither our bylaws nor actions taken at a shareholders’ meeting may deprive a shareholder of the following rights:
| • | the right to participate in the distribution of profits; |
| • | the right to participate equally and proportionally in any remaining residual assets in the event of liquidation of the company; |
| • | preemptive rights in the event of issuance of shares, convertible debentures or warrants, except in some specific circumstances under Brazilian law described in “—Preemptive Rights;” |
| • | the right to supervise our management in accordance with Article 109 of the Brazilian Corporate Law; and |
| • | the right to appraisal rights in the cases specified in the Brazilian Corporate Law, which are described in “—Redemption and Right of Withdrawal.” |
Qualified Quorum Matters
Under the Brazilian Corporate Law, the approval of shareholders representing at least one-half of the issued and outstanding voting shares is required for the matters described below:
| • | reducing the mandatory distribution of dividends; |
| • | changing our corporate purpose; |
| • | merging into or consolidating with another company, subject to the conditions set forth in the Brazilian Corporate Law; |
| • | transferring all of our shares to another company or receiving shares of another company in order to make the company whose shares were transferred a wholly owned subsidiary of the other company, known as a merger of shares (incorporação de ações); |
| • | participating in a centralized group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein; |
| • | conducting a spin-off; |
| • | dissolving or liquidating us; |
| • | canceling any ongoing liquidation of us; or |
| • | creating preferred shares with greater privileges than the existing shares or changing a priority, preference, privilege or condition of redemption or amortization of preferred shares. |
In the event of the last item described above, the approval of shareholders representing the majority of issued and outstanding shares of the affected class would also be required. Our bylaws currently provide that our capital stock shall be divided exclusively into common shares and the only special class is our golden share. For additional information on the golden share, see “—Golden Share.”
Limitations on the Voting Rights of Certain Holders of Common Shares
Our bylaws provide that, at any shareholders’ meeting, no shareholder or group of shareholders, including brokers acting on behalf of one or more holders of ADSs, may exercise votes representing more than 5% of the quantity of shares into which our capital stock is divided. Votes that exceed this 5% threshold will not be considered. For additional information on the limitations on the voting rights of certain holders of common shares, see “Item 10. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares—Limitations on the Voting Rights of Certain Holders of Common Shares” of our Annual Report.
3
Limitations on the Voting Rights of Non-Brazilian Shareholders
In accordance with the edital (invitation to bid) issued by the Brazilian government in connection with the privatization of Embraer in 1994, voting participation of non-Brazilian holders of Embraer common shares was limited to 40% of Embraer common shares votes at a shareholders’ meeting.
Our bylaws provide that, at any shareholders’ meeting, non-Brazilian shareholders and groups of non-Brazilian shareholders may not exercise voting rights representing more than two-thirds of the total votes of all of the Brazilian shareholders present at the meeting. The total number of votes that may be exercised by Brazilian shareholders and by non-Brazilian shareholders will be assessed after giving effect to the 5% voting limitation described above in “—Limitations on the Voting Rights of Certain Holders of Common Shares.” Votes of non-Brazilian shareholders that exceed this two-thirds threshold will not be considered. If the total vote of non-Brazilian shareholders at any shareholders’ meeting exceeds two-thirds of the votes that may be exercised by the Brazilian shareholders present at such meeting, the number of votes of each non-Brazilian shareholder will be proportionately reduced so that the total vote of non-Brazilian shareholders does not exceed two-thirds of the total votes that can be exercised by Brazilian shareholders present at the shareholders’ meeting.
For additional information on the limitations on the voting rights of non-Brazilian shareholders, see “Item 10. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares—Limitations on the Voting Rights of Non-Brazilian Shareholders” of our Annual Report.
Golden Share
The golden share is held by the Federative Republic of Brazil. The golden share is entitled to the same voting rights as the holders of common shares. In addition, the golden share entitles the holder thereof to veto rights over the following corporate actions:
| • | change of our name and corporate purpose; |
| • | modification and/or application of our logo; |
| • | creation and/or alteration of military programs (whether or not involving Brazil); |
| • | development of third-party skills in technology for military programs; |
| • | discontinuance of the supply of spare parts and replacement parts for military aircraft; |
| • | transfer of our control; |
| • | any amendments to the list of corporate actions over which the golden share carries veto rights, including the right of the Brazilian government to appoint one acting member to our board of directors and the right of our employees to appoint two acting members to our board of directors and to the rights conferred to the golden share; and |
| • | changes to certain provisions of our bylaws pertaining to voting restrictions, rights of the golden share and the mandatory tender offer requirements applicable to holders of 35% or more of our outstanding shares. |
The matters listed above are subject to prior approval by our board of directors, followed by prior notices to the Brazilian government and to the Brazilian Ministry of Finance. Within 30 days from the notice, the Brazilian government, as holder of the golden share, may exercise its veto rights. After such period or the pronouncement from the Brazilian government, the board of directors shall meet. In case of rejection of the Brazilian government, the board of directors shall reconsider the previous resolution. In case of approval or in the absence of a response from the Brazilian government within the 30-day period, the previous resolution will be ratified and will be deemed to have been approved by our board of directors. In certain cases, pursuant to our bylaws or applicable law, the matter must be subject to approval at a shareholders’ meeting, and the Brazilian government shall also be entitled to exercise its veto rights related to that matter.
4
Shareholders’ Agreement
Our bylaws prohibit any shareholder or group of shareholders from exercising voting control over us.
Redemption and Right of Withdrawal
The Brazilian Corporate Law provides that, under limited circumstances, a shareholder has the right to withdraw from the company and to receive payment for his shares. This right of withdrawal may be exercised by dissenting shareholders if at least half of voting shares outstanding authorize us to:
| • | reduce the mandatory distribution of dividends; |
| • | change our corporate purpose; |
| • | merge into or consolidate with another company, subject to the conditions set forth in the Brazilian Corporate Law; |
| • | transfer all of our shares to another company or receive shares of another company in order to make the company whose shares were transferred a wholly owned subsidiary of the other company, known as a merger of shares (incorporação de ações); |
| • | acquire control of another company at a price which exceeds the limits set forth in the Brazilian Corporate Law; |
| • | participate in a centralized group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein; or |
| • | conduct a spin-off that results in (i) a change of our corporate purposes, except if the assets and liabilities of the spun-off company are contributed to a company that is engaged in substantially the same activities, (ii) a reduction in the mandatory dividend or (iii) any participation in a centralized group of companies, as defined under the Brazilian Corporate Law. |
In addition, if the entity resulting from a merger, merger of shares (incorporação de ações), as described above, or a consolidation or a spin-off of a listed company fails to become a listed company within 120 days of the shareholders’ meeting at which this decision was taken, the dissenting shareholders may also exercise their right of withdrawal.
The dissenting shareholders may exercise the right of withdrawal only in relation to the shares held on the date that is the earliest between the date of the publication of the first call notice for the shareholders’ meeting that approved the resolution giving rise to the right of withdrawal, or the date of publication of the material fact in relation to such resolution.
The Brazilian Corporate Law contains provisions that restrict withdrawal rights and allow companies to redeem their shares at their economic value, subject to certain requirements. As our bylaws currently do not provide that our shares would be redeemable at their economic value, our shares would be redeemable at their book value, determined on the basis of the last statement of financial position approved by the shareholders. If the shareholders’ meeting giving rise to withdrawal rights occurs more than 60 days after the date of the last approved statement of financial position, a shareholder may demand that its shares be valued on the basis of a new statement of financial position that is as of a date within 60 days of such shareholders’ meeting.
According to the Brazilian Corporate Law, in events of consolidation, merger, merger of shares (incorporação de ações), participation in a group of companies, and acquisition of control of another company, the right to withdraw does not apply if the shares in question meet certain tests relating to market liquidity and float. Shareholders would not be entitled to withdraw their shares if the shares are a component of a general stock index and shares held by persons unaffiliated with the controlling shareholder represent more than half of the outstanding shares of the relevant type or class. According to CVM Resolution No. 78, the applicable general stock index is the Ibovespa, of which we are a component.
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Preemptive Rights
Each of our shareholders has a general preemptive right to subscribe for shares in the event of any capital increase, or securities convertible into shares, in proportion to its shareholding, except in the event of the grant and exercise of any option to acquire shares of our capital stock. A period of at least 30 days following the publication of notice of the issuance of shares or securities convertible into shares is allowed for exercise of the right, and the right is negotiable. According to the Brazilian Corporate Law and our bylaws, the board of directors may, in its discretion, eliminate the preemptive rights of the shareholders in the event that we issue shares, debentures convertible into shares, or subscription warrants that will be offered either through a stock exchange or in a public offering, or through an exchange of shares in a public offering, the purpose of which is to acquire control of another company, as established by law.
In the event of a capital increase by means of the issuance of new shares, holders of ADSs, or of common shares, would, except under the circumstances described above, have preemptive rights to subscribe to any class of our newly issued shares. However, a holder may not be able to exercise the preemptive rights relating to the common shares underlying the ADSs unless a registration statement under the Securities Act is effective with respect to those shares to which the rights relate or an exemption from the registration requirements of the Securities Act is available. For further information on the risks related to our preemptive rights, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Our Common Shares and ADSs—Holders of our ADSs might be unable to exercise preemptive rights with respect to the common shares” of our Annual Report.
Dividends and Dividend Policy
Amounts Available for Distribution
At each annual shareholders’ meeting, the board of directors is required to recommend how net profits for the preceding fiscal year are to be allocated. For purposes of the Brazilian Corporate Law, net profits are defined as net income after income taxes and social contribution taxes for the fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to employees’ and management’s participation in our profits, determined under IFRS. In accordance with the Brazilian Corporate Law and our bylaws, the amounts available for dividend distribution are the amounts determined under IFRS in our parent company financial statements. The amount for distribution is equal to our net income after taxes less (or plus):
| • | any amounts allocated from the net income after taxes to the legal reserve, and |
| • | any amounts allocated from the net income after taxes to a contingency reserve for anticipated losses or the reversion of the reserve constituted on previous fiscal years. |
We are required to maintain a legal reserve, to which we must allocate 5% of net profits for each fiscal year until the amount for the reserve equals 20% of our capital stock. However, we are not required to make any allocations to our legal reserve in respect of any fiscal year in which the legal reserve, when added to our other established capital reserves, exceeds 30% of our capital stock. Net losses, if any, may be charged against the legal reserve. As of December 31, 2024, the balance of our legal reserve was US$207.0 million, which was equal to 13.3% of our capital stock as of such date.
The Brazilian Corporate Law also provides for two additional, discretionary allocations of net profits that are subject to approval by the shareholders at the annual meeting. First, a percentage of net profits may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years. Any amount so allocated in a prior year must be either reversed in the fiscal year for which the anticipated loss was forecasted if the loss does not in fact occur, or written off in the event that the anticipated loss occurs. Second, the amount for distribution may be limited to the fiscal year’s net profit already realized, and the difference between the amounts shall be allocated to an unrealized revenue reserve. Under the Brazilian Corporate Law, unrealized revenue is defined as the sum of:
| • | price-level restatement of statement of financial position accounts; |
| • | the share of equity earnings of affiliated companies; and |
| • | profits from installment sales to be received after the end of the next succeeding fiscal year. |
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According to our bylaws and subject to shareholder approval, our board of directors may allocate to an investment and working capital reserve up to 75% of our parent company adjusted net income after taxes. The reserve may not exceed 80% of our capital stock. The purpose of the investment and working capital reserve is to make investments in fixed assets or increase our working capital. The balance of the investment and working capital reserve may be used:
| • | in the deduction of accumulated losses, whenever necessary; |
| • | in the distribution of dividends, at any time; |
| • | in the redemption, withdrawal, purchase or open market repurchase of shares, as authorized by law; and |
| • | to increase our capital, including by means of an issuance of new shares. |
We may also grant a participation in our net income to our management and employees. However, the allocation to the investment and working capital reserve or the participation of our management and employees cannot reduce the mandatory distributable amount, as discussed below.
Otherwise, the reserved amounts, except for the contingency reserve and the unrealized revenue reserve that exceeds our capital stock must be used to increase our capital or be distributed as a cash dividend.
The amounts available for distribution may be further increased by a reversion of the contingency reserve for anticipated losses constituted in prior years but not realized, or further increased or reduced as a result of the allocations of revenues to or from the unrealized revenue reserve. The amounts available for distribution are determined on the basis of financial statements prepared in accordance with the Brazilian Corporate Law method. We have not established a contingency reserve.
Revenue reserves are established in accordance with Brazilian corporate law and our bylaws. These reserves are calculated and recorded based on earnings determined as if Brazilian reais were the presentation currency. Dividend distributions are also determined in accordance with Brazilian laws and regulations and are determined as if Brazilian reais were the presentation currency.
As of December 31, 2023, taking into account the presentation currency in Brazilian reais, as determined by such laws and regulations, we had accumulated losses attributable to the owners of the Company in the amount in reais equivalent to US$329.1 million and due to those recorded losses, we did not distribute nor pay dividends in the fiscal years ended December 31, 2023.
In the year ended December 31, 2024, we fully offset our accumulated losses against our income for the year attributable to the owners of the Company in an amount of R$1,593.1 million. As such as of December 31, 2024, we net income distributable as dividends (after accounting for accumulated losses absorption, constitution of the legal reserve and replenishment of the government grants reserve) in an amount of R$205.7 million, equivalent to US$33.2 million. For further information, see note 28.5 to our 2024 audited consolidated financial statements in our Annual Report.
Mandatory Distribution
The Brazilian Corporate Law generally requires that the bylaws of each Brazilian corporation specify a minimum percentage of the amounts available for distribution by the corporation for each fiscal year that dividends must be distributed to shareholders, also known as the mandatory distributable amount. Under our bylaws, the mandatory distribution is based on a percentage of adjusted net income, not lower than 25%, and not on a fixed monetary amount per share. The Brazilian Corporate Law, however, permits a publicly held company to suspend the mandatory distribution of dividends if the board of directors and fiscal council report presented at the shareholders’ meeting indicate that the distribution would be inadvisable in view of Embraer’s financial condition. This suspension is subject to approval of holders of common shares. In this case, the board of directors shall file a justification for the suspension with the CVM. Profits not distributed by virtue of the suspension will be attributed to a special reserve and, if not absorbed by subsequent losses, will be paid as dividends as soon as the financial condition of the corporation permits the payments.
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Payment of Dividends
We are required by the Brazilian Corporate Law and by our bylaws to hold an annual shareholders’ meeting by the end of the fourth month after the end of each fiscal year at which, among other things, the shareholders have to decide on the payment of an annual dividend. The payment of annual dividends is based on our parent company financial statements prepared under IFRS for the relevant fiscal year. Brazilian companies, including us, are permitted to make a special distribution to shareholders referred to as interest on shareholders’ equity, which may be distributed in lieu of dividends as part of the mandatory distributable amount. Payments of interest on shareholders’ equity are treated as a tax-deductible expense for IRPJ and CSLL purposes. Under the Brazilian Corporate Law, dividends generally are required to be paid within 60 days following the date the dividend was declared, unless a shareholders’ resolution sets forth another date of payment, which, in either case, must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends (or payments of interest on shareholders’ equity) in respect of its shares, after which the amount of the unclaimed dividends reverts to the Company.
The Brazilian Corporate Law allows a company to pay interim dividends out of preexisting and accumulated profits determined under IFRS for the preceding fiscal year or semester, based on financial statements approved by its shareholders. According to our bylaws, the shareholders may declare, at any time, interim dividends based on the preexisting and accumulated profits, provided that the mandatory dividend has already been distributed to the shareholders. Our bylaws also permit us to prepare financial statements semiannually and for shorter periods. Our board of directors may approve the distribution of dividends calculated with reference to those financial statements, even before they have been approved by the shareholders. However, the dividends cannot exceed the amount of capital reserves.
In general, shareholders who are not residents of Brazil must register with the Central Bank to have dividends, sales proceeds or other amounts with respect to their shares eligible to be remitted outside of Brazil. The common shares underlying our ADSs will be held in Brazil by Banco Itaú S.A., as custodian and agent for the depositary (the “Custodian”), which will be the registered owner on the records of the registrar for our shares. Our current registrar is Itaú Corretora de Valores S.A. The depositary electronically registers the common shares underlying our ADSs with the Central Bank and, therefore, is able to have dividends, sales proceeds or other amounts with respect to these shares eligible to be remitted outside Brazil.
Payments of cash dividends and distributions, if any, will be made in Brazilian currency to the Custodian on behalf of the depositary, which will then convert the proceeds into U.S. dollars and will cause the U.S. dollars to be delivered to the depositary for distribution to holders of ADSs. Under current Brazilian law, dividends paid to shareholders who are not Brazilian residents, including the holders of ADSs, will not be subject to Brazilian withholding income tax, except for dividends declared based on profits generated prior to December 31, 1995. For additional information on Brazilian taxes, see “Item 10. Additional Information—10E. Taxation—Material Brazilian Tax Consequences” of our Annual Report.
History of Dividend and Interest on Shareholders’ Equity Payments and Dividend Policy
Law No. 9,249, dated December 26, 1995, as amended, provides for distribution of interest on shareholders’ equity as an alternative form of payment to shareholders and treats those payments as a deductible expense for purposes of calculating Brazilian corporate income tax and social contribution on net profits. These distributions may be paid in cash. The interest is limited to the daily pro rata variation of the TJLP (long term interest rate) and cannot exceed the greater of:
| • | 50% of net income (after the deduction of social contribution on net profits, but before taking into account the provision for corporate income tax and the amounts attributable to shareholders as net interest on shareholders’ equity) for the period in respect of which the payment is made; or |
| • | 50% of the sum of retained profits and profit reserves as of the beginning of the period in respect of which the payment is made. |
Any payment of interest on shareholders’ equity to holders of ADSs or common shares, whether or not they are Brazilian residents, is subject to Brazilian withholding income tax at the rate of 15% or 25% if the beneficiary is resident in a tax haven jurisdiction, that is, a country or location that does not impose any income tax or which imposes the tax at a maximum rate of less than 20%, or in which the domestic legislation imposes restrictions on the disclosure of the shareholding composition or the ownership of the investment. For additional information on Brazilian taxes, see “Item 10. Additional Information—10E. Taxation—Material Brazilian Tax Consequences” of our Annual Report. The amount paid to shareholders as interest on shareholders’ equity, net of any withholding tax, may be included as part of any mandatory distributable amount.
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Under Brazilian law, we are obligated to distribute to shareholders an amount sufficient to ensure that the net amount received by them, after payment by us of applicable Brazilian withholding taxes in respect of the distribution of interest on shareholders’ equity, plus the amount of declared dividends, is at least equal to the mandatory distributable amount. When we distribute interest on shareholders’ equity, and that distribution is not accounted for as part of the mandatory distribution, Brazilian withholding tax will apply. All payments to date were accounted for as part of the mandatory distribution.
No dividends nor interest on shareholders’ equity were approved, and no such payments were made, in the years ended December 31, 2023 and 2022. At our annual general meeting to be held on April 29, 2025, our shareholders will vote the proposal for dividend distribution in amount of R$51.4 million equivalent to US$8.3 million, with respect to profits generated in the year ended December 31, 2024. For additional information, see “—Mandatory Distribution” above and note 28.5 to our 2024 audited consolidated financial statements in our Annual Report.
Brazilian Corporate Law and our bylaws require us to establish revenue reserves, which must be calculated and recorded based on financial statements in Brazilian reais, which is our presentation currency, instead of financial statements in U.S. dollar, which is our functional currency. Additionally, dividend distributions must align with financial statements in Brazilian reais. As of December 31, 2023, accumulated losses attributable to controlling shareholders of the Company amounted to R$1,593.1 million. As of December 31, 2024, income for the year attributable to controlling shareholders of the Company amounted to R$1,918.9 million.
We also have a government grants reserve, which was formed under article 195-A of the Brazilian Corporate Law. This reserve includes the appropriation of the portion of accumulated profits resulting from government incentives received by us, which cannot be distributed to shareholders in the form of dividends. The government grants reserve is recognized in our income statement under the same expense item to which the grant refers, and it is not included in the calculation basis for mandatory dividends.
Our legal reserve corresponds to an annual allocation of 5% of our net income for the year and cannot exceed 20% of the share capital or 30% in the sum of this reserve and capital reserves pursuant to the Brazilian Corporate Law and our bylaws.
Our reserve for investments and working capital has the purpose of: (i) ensuring resources for investments in permanent assets without prejudice to profit retention under the terms of article 196 of Law No. 6,404 of December 15, 1976; (ii) reinforcing our working capital plans; (iii) being used in the context of redemption, reimbursement or acquisition of shares in the Company’s capital stock and (iv) being distributed to the Company’s shareholders.
We intend to declare and pay dividends and/or interest on shareholders’ equity, as required by the Brazilian Corporate Law and our bylaws. Our board of directors may approve the distribution of dividends and/or interest on shareholders’ equity, calculated based on our semiannual or quarterly financial statements. The declaration of annual dividends, including dividends in excess of the mandatory distribution, requires approval by the vote of the majority of the holders of our common shares. The amount of any distributions will depend on many factors, including our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and shareholders. Within the context of our tax planning, we may in the future continue to determine it is in our benefit to distribute interest on shareholders’ equity.
Form and Transfer
As our shares are in registered book-entry form, the transfer of shares is governed by the rules of Article 35 of the Brazilian Corporate Law. This article provides that a transfer of shares is effected by an entry made by BTG Pactual Serviços Financeiros S.A. DTVM, also known as the registrar, in its books, by debiting the share account of the transferor and crediting the share account of the transferee. BTG Pactual Serviços Financeiros S.A. DTVM also performs all the services of safe-keeping and transfer of shares and related services for us.
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Transfers of shares by a non-Brazilian shareholder are made in the same way and entered into by that shareholder’s local agent on the shareholder’s behalf except that if the original investment was registered with the Central Bank pursuant to Resolution No. 4,373, the foreign investor must also seek amendment, if necessary, through its local agent, of the electronic registration to reflect the new ownership.
The B3 operates as a central clearing system. A holder of our shares may choose, in its discretion, to participate in this system and all shares elected to be put into this system will be deposited in the custody of the B3 (through a Brazilian institution duly authorized to operate by the Central Bank and having a clearing account with the B3). The fact that those shares are held in the custody of the B3 will be reflected in our register of shareholders. Each participating shareholder will, in turn, be registered in our register of beneficial shareholders maintained by the B3 and will be treated in the same way as registered shareholders.
Disclosure of Significant Interest
Brazilian Requirements
Brazilian law provides that all shareholders or groups of shareholders will be required to disclose, through notice to us and to the stock exchanges on which our securities are traded, the negotiation of securities that results in the shareholder surpassing or decreasing the thresholds of 5%, 10%, 15%, and so on, of participation in a certain class or type of share representative of a company’s capital stock. In addition, our bylaws provide that all shareholders or groups of shareholders will be required to disclose, through notice to us and to the stock exchanges on which our securities are traded, the acquisition of shares that, together with those already held by them, exceed 5% of our capital stock. A violation of these disclosure obligations could result in the suspension of rights, including voting rights, by a resolution of shareholders at a shareholders’ meeting.
Certain U.S. Legal Requirements
In addition, the Exchange Act imposes reporting requirements on shareholders or groups of shareholders who acquire beneficial ownership (as this term is defined under Rule 13d-3 of the Exchange Act) of more than 5% of our common shares. In general, shareholders must file, within five business days after the acquisition, a report of beneficial ownership with the SEC containing the information prescribed by the regulations under the Exchange Act. This information is also required to be sent to us and to each U.S. securities exchange on which our common shares are traded. Shareholders should consult with their own legal advisor regarding their reporting obligations under the Exchange Act.
Mechanism to Promote Dispersed Ownership of Our Shares
Our bylaws contain provisions that have the effect of avoiding concentration of our shares in the hands of an investor or a small group of investors in order to promote more dispersed ownership of our shares. To this end, these provisions place certain obligations on a shareholder or group of shareholders that becomes a holder of 35% or more of our total capital stock, or an Acquiring Shareholder. Not later than 15 days after a shareholder becomes an Acquiring Shareholder, this shareholder must submit a request to the Brazilian government, through the Ministry of Finance, to make a public tender offer to acquire all of our capital stock. The Brazilian government will have full discretion to accept or deny this request. The Acquiring Shareholder may not purchase any additional shares until the Brazilian government provides its opinion on the public offer. If the request is accepted by the Brazilian government, the Acquiring Shareholder must make a public offer for all shares within 60 days of acceptance. The offer must be made in accordance with the CVM and the B3 regulations and the provisions of our bylaws. If the request is denied by the Brazilian government, the Acquiring Shareholder must sell all shares the Acquiring Shareholder owns in excess of 35% of our total capital stock within 30 days. Failure to comply with these provisions will subject the Acquiring Shareholder to the potential suspension of all voting rights inherent to the shares the Acquiring Shareholder holds, if a resolution to this effect is approved at a general meeting of our shareholders called by our management. These provisions are not applicable to shareholders who become holders of 35% or more of our total capital stock in certain transactions specified in our bylaws as, for example, cancellation of our common shares held in treasury.
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The public tender offer must be (i) directed to all of our shareholders, (ii) made through an auction to take place on the B3, (iii) launched at a set price calculated in accordance with the procedure set forth below, (iv) paid upfront, in reais, (v) made so as to assure equal treatment to all shareholders, (vi) irrevocable and not subject to any changes after publication of the bidding offer and (vii) based on a valuation report to be prepared in accordance with the rules set forth in our bylaws and in applicable CVM rules and regulations.
The price to be offered for the shares in the public tender offer will be calculated as follows:
Tender Offer Price = Value of the Share + Premium,
where:
| • | “Tender Offer Price” corresponds to the acquisition price for each share issued by us in the public offering of shares provided hereunder. |
| • | “Value of the Share” corresponds to the greater of: |
| (i) | the highest unit quotation obtained for the shares issued by us during the 12-month period prior to the tender offer among values recorded on any stock exchange on which the shares were traded; |
| (ii) | the highest price paid by the Acquiring Shareholder, during the 36-month period prior to the tender offer, for a share or tranche of shares issued by us; |
| (iii) | the amount equivalent to 14.5 times our Consolidated Average EBITDA, as defined below, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us; or |
| (iv) | the amount equivalent to 0.6 times the amount of our firm backlog orders, according to the last information disclosed by the latter, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us. |
| • | “Premium” corresponds to 50% of the Value of the Share. |
| • | “Consolidated EBITDA” is our consolidated operating profit before net financial expenses, income tax and social contribution, depreciation, depletion and amortization, as assessed based on the audited statements for our most recent complete fiscal year. |
| • | “Average Consolidated EBITDA” is the arithmetic average of our consolidated EBITDA for the two most recent complete fiscal years. |
The launch of a public tender offer does not preclude us or any of our shareholders from launching a competing public tender offer, in accordance with applicable regulations.
| II. | American Depositary Shares |
J.P. Morgan Chase Bank, N.A., as depositary (the “Depositary”), registers and delivers American depositary shares (“ADSs”) of the Company. Each ADS represents four common shares (or rights to receive shares) (the “Shares”, and together with any other securities, cash or property from time to time held by the Depositary in respect or in lieu of deposited Shares, the “Deposited Securities”) of the Company, deposited under the Deposit Agreement dated as of July 20, 2000, as last amended and restated as of November 18, 2019 (as amended from time to time, the “Deposit Agreement”) among the Company, the Depositary and all holders and beneficial owners from time to time of American depositary receipts issued thereunder (“ADRs”).
The Depositary’s office at which the ADSs are administered and its principal executive office are located at 383 Madison Avenue, Floor 11, New York, New York 10017.
We do not treat ADS holders as one of our shareholders and they do not have shareholder rights. Brazilian law governs shareholder rights. The Depositary is the holder of the common shares underlying the ADSs. As a registered holder of ADSs, ADS holders have ADS holder rights. The Deposit Agreement sets out ADS holder rights as well as the rights and obligations of the Depositary. New York law governs the Deposit Agreement and the ADSs.
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The following is a summary of the material provisions of the Deposit Agreement. For more complete information, you should read the entire Deposit Agreement and the form of ADR, both of which are filed as Exhibit 2.1 to the Annual Report. Capitalized terms used and undefined in the description below or in the Annual Report shall have the meaning ascribed to them in the Deposit Agreement.
(1) Issuance of ADRs. The ADRs are issued pursuant to the terms of the Deposit Agreement. Subject to the terms of the Deposit Agreement, the Depositary may so issue ADRs for delivery at the Transfer Office (as defined in the Deposit Agreement) only against deposit of: (a) Shares in form satisfactory to the Custodian; (b) rights to receive Shares from the Company or any registrar, transfer agent, clearing agent or other entity recording Share ownership or transactions. In its capacity as Depositary, the Depositary shall not lend Shares or ADSs.
Every person depositing Shares under the Deposit Agreement represents and warrants that (a) such Shares and the certificates therefor are duly authorized, validly issued and outstanding, fully paid, nonassessable and legally obtained by such person (b) all pre-emptive and comparable rights, if any, with respect to such Shares have been validly waived or exercised, (c) the person making such deposit is duly authorized so to do, (d) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and (e) such Shares (A) are not “restricted securities” as such term is defined in Rule 144 under the Securities Act of 1933 (“Restricted Securities”) unless at the time of deposit the requirements of paragraphs (c), (e), (f) and (h) of Rule 144 shall not apply and such Shares may be freely transferred and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. To the extent the person depositing Shares is an “affiliate” of the Company as such term is defined in Rule 144, the person also represents and warrants that upon the sale of the ADSs, all of the provisions of Rule 144 which enable the Shares to be freely sold (in the form of ADSs) will be fully complied with and, as a result thereof, all of the ADSs issued in respect of such Shares will not be on the sale thereof, Restricted Securities. Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs. The Depositary will not knowingly accept for deposit under the Deposit Agreement any Shares required to be registered under the Securities Act of 1933 and not so registered. The Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate compliance with the requirements of the laws, rules and regulations of the United States, including, but not limited to, Securities Act of 1933 and the rules and regulations promulgated thereunder.
(2) Withdrawal of Deposited Securities. Holders of ADRs will be entitled to withdraw the Deposited Securities at any time subject only to the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933, including (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with any laws or governmental regulations relating to the ADRs or the withdrawal of Deposited Securities. Subject to paragraphs (4) and (5), upon surrender of (i) a certificated ADR in a form satisfactory to the Depositary at the Transfer Office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the Holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the Custodian’s office of the Deposited Securities at the time represented by the ADSs evidenced by this ADR. At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at such other place as may have been requested by the Holder.
(3) Transfers of ADRs. The Depositary or its agent will keep, at a designated transfer office (the “Transfer Office”), (a) a register (the “ADR Register”) for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System, which at all reasonable times will be open for inspection by Holders and the Company for the purpose of communicating with Holders in the interest of the business of the Company or a matter relating to the Deposit Agreement and (b) facilities for the delivery and receipt of ADRs. The term ADR Register includes the Direct Registration System. Title to this ADR (and to the Deposited Securities represented by the ADSs evidenced hereby), when properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer, is transferable by delivery with the same effect as in the case of negotiable instruments under the laws of the State of New York; provided that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this ADR is registered on the ADR Register as the absolute owner hereof for all purposes and neither the Depositary nor the Company will have any obligation or be subject to any liability under the Deposit Agreement or any ADR to any beneficial owner of an ADS, unless such beneficial owner is the Holder hereof. Subject to paragraphs (4) and (5), this ADR is transferable on the ADR Register and may be split into other ADRs or combined with other ADRs into one ADR, evidencing the aggregate number of ADSs surrendered for split-up or combination, by the Holder hereof or by duly authorized attorney upon surrender of this ADR at the Transfer Office properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the ADR Register at any time or from time to time when deemed expedient by it or, in the case of the issuance book portion of the ADR Register, when reasonably requested by the Company solely in order to enable the Company to comply with applicable law or regulations of the CVM. At the request of a Holder, the Depositary shall, for the purpose of substituting a certificated ADR with a Direct Registration ADR, or vice versa, execute and deliver a certificated ADR or a Direct Registration ADR, as the case may be, for any authorized number of ADSs requested, evidencing the same aggregate number of ADSs as those evidenced by the certificated ADR or Direct Registration ADR, as the case may be, substituted.
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(4) Certain Limitations. Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2), the withdrawal of any Deposited Securities, and from time to time in the case of clause (b)(ii) of this paragraph (4), the Company, the Depositary or the Custodian may require: (a) payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (7) of this ADR; (b) the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited Securities and terms of the Deposit Agreement and this ADR, as it may deem necessary or proper; and (c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement and any regulations which the Depositary is informed of in writing by the Company which are deemed desirable by the Depositary, the Company or the Custodian to facilitate compliance with any applicable rules or regulations of the Central Bank or CVM.
The issuance of ADRs, the acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or, subject to the last sentence of paragraph (2), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the ADR Register or any register for Deposited Securities is closed or when any such action is deemed advisable by the Depositary.
(5) Liability for Taxes, Duties and Other Charges. If any tax or other governmental charge shall become payable by or on behalf of the Custodian or the Depositary with respect to the ADR, any Deposited Securities represented by the ADSs or any distribution thereon, such tax or other governmental charge shall be paid by the Holder hereof to the Depositary, and by holding or having held this ADR or any ADSs evidenced hereby, the Holder and all beneficial owners hereof and thereof, and all prior Holders and beneficial owners hereof and thereof, jointly and severally, agree to indemnify, defend and save harmless each of the Depositary and its agents in respect of such tax or other governmental charge. The Depositary may refuse to effect any registration, registration of transfer, split-up or combination hereof or, subject to the first sentence of paragraph (2), any withdrawal of such Deposited Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of Deposited Securities, or may sell by public or private sale for the account of the Holder hereof any part or all of such Deposited Securities, and may apply such deduction or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder hereof remaining liable for any deficiency, and, if appropriate, shall reduce the number of ADSs to reflect any such sales of Shares and shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such tax or other governmental charge. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. Each Holder and beneficial owner of ADSs agrees to indemnify the Depositary, the Company, the Custodian and any of their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained. The obligations of Holders and beneficial owners of ADSs under this paragraph (5) shall survive any transfer of ADSs, any surrender of ADSs, the withdrawal of Deposited Securities and any termination of the Deposit Agreement.
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(6) Disclosure of Interests. Holders and holders of interests in ADSs will be subject to the provisions of the Company’s Articles of Incorporation, to Instruction No. 358/02 of the CVM (“Instruction No. 358/02”) and any other regulations of Brazil or the U.S. securities laws relating to disclosure of interests in Shares. To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose limits on beneficial or other ownership of Deposited Securities, other Shares and other securities and may provide for other rights to enforce such disclosure or limits, Holders and all persons holding ADRs agree to comply with all such disclosure requirements and ownership limitations and to cooperate with the Depositary in the Depositary’s compliance with any Company instructions in respect thereof, and the Depositary will use reasonable efforts to comply with such Company instructions. The Company reserves the right to instruct Holders (and through any such Holder, the beneficial owners of, or in, ADSs evidenced by the ADRs registered in such Holder’s name) to deliver their ADSs for cancellation and withdrawal of the Deposited Securities so as to permit the Company to deal directly with the Holder and/or beneficial owner thereof as a holder of Shares and Holders and beneficial owners agree to comply with such instructions.
(7) Charges of Depositary. The Depositary may charge, and collect from, each person to whom ADRs are issued against deposits of Shares, including deposits in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10)), and each person surrendering ADRs for withdrawal of Deposited Securities, U.S.$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs delivered or surrendered. The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge. The Holders, the beneficial owners of, or in, ADSs, any party depositing or withdrawing Shares or any party surrendering ADSs and/or to whom ADSs are issued are also subject to additional charges, as set forth in the Deposit Agreement. The Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between the Company and the Depositary, except (i) stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares), (ii) SWIFT, cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or Holders), and (iii) transfer or registration fees for the registration or transfer of Deposited Securities on any applicable register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons depositing Shares or Holders withdrawing Deposited Securities). Subject to certain terms and fees, to facilitate the administration of various depositary receipt transactions, including disbursement of dividends or other cash distributions and other corporate actions, the Depositary may engage the foreign exchange desk within JPMorgan Chase Bank, N.A. (the “Bank”) and/or its affiliates in order to enter into spot foreign exchange transactions to convert foreign currency into U.S. dollars (“FX Transactions”). Further details relating to the applicable foreign exchange rate, the applicable spread and the execution of FX Transactions will be provided by the Depositary on ADR.com.
(8) Available Information. The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities and made generally available to the holders of Deposited Securities, are available for inspection by Holders at the offices of the Depositary and the Custodian and at the Transfer Office. The Depositary will distribute copies of such communications (or English translations or summaries thereof) to Holders when furnished by the Company. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the United States Securities and Exchange Commission (the “Commission”). Such reports and other information may be inspected and copied through the Commission’s EDGAR system or at public reference facilities maintained by the Commission located at the date hereof at 100 F Street, NE, Washington, DC 20549.
(9) Execution. This ADR shall not be valid for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. The Depositary’s office is located at 383 Madison Avenue, Floor 11, New York, New York.
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(10) Distributions on Deposited Securities. Subject to paragraphs (4) and (5), and any restrictions imposed by Brazilian law, regulation or applicable permit, to the extent practicable, the Depositary will distribute to each Holder entitled thereto on the record date set by the Depositary therefor at such Holder’s address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such Holder’s ADRs: (a) Cash. Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in this paragraph (10) (“Cash”), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary’s and/or its agents’ fees and expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If the Company shall have advised the Depositary pursuant to the provisions of the Deposit Agreement that any such conversion, transfer or distribution can be effected only with the approval or license of the Brazilian government or any agency thereof or the Depositary shall become aware of any other governmental approval or license required therefor, the Depositary may, in its discretion, apply for such approval or license, if any, as the Company or its Brazilian counsel may reasonably instruct in writing or as the Depositary may deem desirable including, without limitation, Central Bank registration. (b) Shares. (i) Additional ADRs evidencing whole ADSs representing any Shares available to the Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a “Share Distribution”) and (ii) U.S. dollars available to it resulting from the net proceeds of sales of Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash. (c) Rights. (i) Warrants or other instruments in the discretion of the Depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of a distribution on Deposited Securities (“Rights”), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the nontransferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse). (d) Other Distributions. (i) Securities or property available to the Depositary resulting from any distribution on Deposited Securities other than Cash, Share Distributions and Rights (“Other Distributions”), by any means that the Depositary, after consultation with the Company if practicable, may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash. The Depositary reserves the right to utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated above and/or under paragraph (7) hereof. Any U.S. dollars available will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices. All purchases and sales of securities will be handled by the Depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the Depositary shall be solely responsible for.
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(11) Conversion of Foreign Currency. Whenever the Depositary or the Custodian shall receive foreign currency, as a Cash dividend or Other Distribution or as the net proceeds from the sale of securities, property or rights, which, in the judgment of the Depositary can then be converted on a reasonable basis into U.S. dollars which can, at the time of receipt thereof, be transferred to the United States, the Depositary shall, as promptly as practicable, convert or cause to be converted, by sale or in any other manner that it may determine, such foreign currency into U.S. dollars and shall transfer the resulting U.S. dollars (net of its charges and expenses in effecting such conversion) to the United States. Such U.S. dollars shall be distributed as promptly as practicable to the Holders entitled thereto or, if the Depositary shall have distributed any warrants or other instruments that entitle the holders thereof to such U.S. dollars, then to the holders of such warrants or instruments, as applicable, upon surrender thereof for cancellation. Such distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Holders on account of exchange restrictions or otherwise. If such conversion or distribution can be effected only with the approval or license of any government or agency thereof, including without limitation, Central Bank registration, the Depositary shall, at the written request of the Company, unless prohibited pursuant to applicable law or otherwise impracticable in the reasonable opinion of the Depositary, file such application for approval or license, if any, as it shall deem practicable; provided, however that the Depositary shall be entitled to rely upon Brazilian local counsel in such matters, which counsel shall be instructed to act as promptly as possible. The Company shall not be obliged to make any such filing on behalf of the Depositary. If at any time the Depositary shall determine that in its reasonable judgment any foreign currency received by the Depositary is not convertible on a reasonable basis into U.S. dollars transferable to the United States, or if any approval or license of any governmental authority or agency thereof that is required for such conversion is denied or in the opinion of the Depositary is not obtainable at a reasonable cost or within a reasonable period, the Depositary may, subject to applicable laws and regulations, and after consultation with the Company, either distribute the foreign currency (or an appropriate document evidencing the right to receive such foreign currency) to, or hold such foreign currency (without liability for interest thereon) for the respective accounts of, the Holders entitled to receive the same; provided, however, that if requested in writing by a Holder entitled thereto, the Depositary may, in its discretion, distribute the foreign currency, as promptly as practicable. If any such conversion of foreign currency, in whole or in part, can be effected for distribution to some but not all of the Holders entitled thereto, the Depositary shall make such conversion and distribution in U.S. dollars to the extent permissible to the Holders entitled thereto and may either so distribute or hold such balance (without liability for interest thereon) for the respective accounts of, the Holders entitled thereto for whom such conversion and distribution is not practicable; provided, however, that if requested in writing by a Holder entitled thereto and permitted by applicable law, the Depositary may, in its discretion, distribute the foreign currency, as promptly as practicable.
(12) Record Dates. The Depositary may, after consultation with the Company if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company) for the determination of the Holders who shall be responsible for the fee assessed by the Depositary for administration of the ADR program and for any expenses provided for in paragraph (7) hereof as well as for the determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such Holders shall be so entitled or obligated.
(13) Voting of Deposited Securities. As soon as practicable after receipt from the Company of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, the Depositary, upon the written request of the Company, shall mail to Holders a notice stating (a) such information as is contained in such notice and any solicitation materials, (b) that each Holder on the record date set by the Depositary therefor will be entitled, subject to any applicable provisions of Brazilian law, the Company’s Articles of Incorporation and the provisions hereof to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs and (c) the manner in which such instructions may be given. There is no guarantee that Holders and beneficial owners of interests in ADSs generally or any Holder or beneficial owners of interests in ADSs in particular will receive the Voting Notice with sufficient time to enable such Holder or beneficial owner of interests in ADSs to return any voting instructions to the Depositary in a timely manner. Upon receipt of instructions of a Holder on such record date in the manner and on or before the date established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities to vote or cause to be voted the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs in accordance with such instructions. The Depositary will not itself exercise any voting discretion in respect of any Deposited Security.
(14) Changes Affecting Deposited Securities. Subject to paragraphs (4) and (5), the Depositary may, in its discretion, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company. To the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted.
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(15) Exoneration. The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if law, rule or regulation of the United States, Brazil or any other country or jurisdiction or of any other governmental or regulatory authority or stock exchange or the Company’s charter, act of God, war or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or the ADR provides shall be done or performed by it, or (ii) by reason of any exercise or failure to exercise any discretion given it in the Deposit Agreement or the ADR; (b) assume no liability except to perform its obligations (other than those directly related to the handling of Deposited Securities and Cash) to the extent they are specifically set forth in the ADR and the Deposit Agreement without gross negligence or willful misconduct; (c) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities, ADSs or this ADR; (d) in the case of the Company and its agents hereunder (other than the Depositary) be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or the ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; and (e) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, or any other person believed by it in good faith to be competent to give such advice or information.
(16) Resignation and Removal of Depositary; the Custodian. The Depositary may resign as Depositary by written notice of its election to do so delivered to the Company, or be removed as Depositary by the Company by written notice of such removal delivered to the Depositary; such resignation or removal shall take effect upon the appointment of and acceptance by a successor depositary. The Depositary may, after consultation with the Company, appoint substitute or additional Custodians and the term “Custodian” refers to each Custodian or all Custodians as the context requires.
(17) Amendment. Subject to the last sentence of paragraph (2), the ADRs and the Deposit Agreement may be amended by the Company and the Depositary, provided that any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of Holders, shall become effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder of an ADR and beneficial owner of ADSs at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.
(18) Termination. The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and the ADR by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination, subject to certain conditions. After the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and the ADR, except to advise Holders of such termination, receive and hold (or sell) distributions on Deposited Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the date so fixed for termination, the Depositary shall use its reasonable efforts to sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be a segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.
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EXHIBIT 8.1
List of Subsidiaries of Embraer S.A.*
| Name |
Jurisdiction of Incorporation |
|
| Embraer Aircraft Holding, Inc. |
Delaware, U.S.A. | |
| Embraer Aircraft Maintenance Services, LLC |
Delaware, U.S.A. | |
| Embraer Executive Jet Services, LLC |
Delaware, U.S.A. | |
| Embraer Executive Aircraft, Inc. |
Delaware, U.S.A. | |
| Embraer CAE Training Services, LLC |
Delaware, U.S.A. | |
| Embraer Engineering & Technology Center USA, Inc. |
Delaware, U.S.A. | |
| Embraer Defense and Security, Inc. |
Delaware, U.S.A. | |
| Embraer Business Innovation Center, Inc. |
Delaware, U.S.A. | |
| Embraer Aircraft Customer Services, LLC. |
Florida, U.S.A. | |
| EVE Holding, Inc |
Delaware, U.S.A. | |
| EVE UAM, LLC |
Delaware, U.S.A. | |
| ELEB Equipamentos Ltda. |
Brazil | |
| Embraer GPX Ltda. |
Brazil | |
| Embraer Defesa e Segurança Participações S.A. |
Brazil | |
| Atech—Negócios em Tecnologias S.A. |
Brazil | |
| Visiona Tecnologia Espacial S.A. |
Brazil | |
| Yaborã Indústria Aeronáutica S.A. |
Brazil | |
| Fundo de Investimento em Participações Embraer Ventures |
Brazil | |
| Tempest Serviços de Informática S.A. |
Brazil | |
| Coqueiro Par Participações Ltda. |
Brazil | |
| EZS Informática S.A. |
Brazil | |
| Eve Soluções de Mobilidade Aérea Urbana Ltda. |
Brazil | |
| Embraer Aviation International – EAI |
France | |
| Embraer (China) Aircraft Technical Services Co., Ltd. |
China | |
| Embraer Spain Holding Co., SL |
Spain | |
| ECC Investment Switzerland AG |
Switzerland | |
| Embraer Finance Ltd. |
Cayman Islands, BWI | |
| Embraer Overseas Ltd. |
Cayman Islands, BWI | |
| Embraer Portugal, S.A. |
Portugal | |
| Airholding S.A. |
Portugal | |
| OGMA – Indústria Aeronáutica de Portugal S.A. |
Portugal | |
| Embraer Asia Pacific PTE. Ltd. |
Singapore | |
| Tempest Security Intelligence Ltd |
UK | |
| Embraer CAE Training Services (U.K.) Limited |
UK | |
| Visiona International B.V. |
Netherlands | |
| Embraer Netherlands Finance B.V. |
Netherlands | |
| Embraer Netherlands B.V. |
Netherlands | |
| Embraer CAE Training Services (NL) B.V. |
Netherlands | |
| EZ Air Interior Limited |
Ireland |
| * | This list reflects our list of subsidiaries as of December 31, 2024. The list does not include (i) certain joint ventures (see Item 4B of the Annual Report on Form 20-F to which this Exhibit 8.1 is an exhibit and note 2.3.1 to the audited financial statements included in such Annual Report for more information on such joint ventures and entities established in our strategic alliances) and (ii) certain non-material special purpose vehicles. |
EXHIBIT 12.1
CERTIFICATION
I, Francisco Gomes Neto, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Embraer S.A. (the “Company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and to the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: March 31, 2025
| By: | /s/ Francisco Gomes Neto |
|
| Name: | Francisco Gomes Neto | |
| Title: | President and Chief Executive Officer |
EXHIBIT 12.2
CERTIFICATION
I, Antonio Carlos Garcia, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Embraer S.A. (the “Company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and to the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: March 31, 2025
| By: | /s/ Antonio Carlos Garcia |
|
| Name: | Antonio Carlos Garcia | |
| Title: | Executive Vice President and Chief Financial and Investor Relations Officer |
EXHIBIT 13.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Embraer S.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Francisco Gomes Neto, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002, that to the best of my knowledge:
| (i) | the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 31, 2025
| By: | /s/ Francisco Gomes Neto |
|
| Name: | Francisco Gomes Neto | |
| Title: | President and Chief Executive Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 13.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Embraer S.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Antonio Carlos Garcia, Executive Vice-President and Chief Financial and Investor Relations Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002, that to the best of my knowledge:
| (i) | the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 31, 2025
| By: | /s/ Antonio Carlos Garcia |
|
| Name: | Antonio Carlos Garcia | |
| Title: | Executive Vice President and Chief Financial and Investor Relations Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (No. 333-284698 and No. 333-284698-01) on Form F-3 of Embraer S.A. and Embraer Netherlands Finance B.V of our reports dated March 31, 2025, with respect to the consolidated financial statements of Embraer S.A. and the effectiveness of internal control over financial reporting.
/s/ KPMG Auditores Independentes Ltda.
São José dos Campos, Brazil
March 31, 2025