Embraer : Quartely Earnings Release

HIGHLIGHTS

Embraer delivered 33 commercial jets and 36 executive jets (24 light / 12 large) in 4Q18, and in 2018 delivered 90 commercial jets and 91 executive jets (64 light / 27 large);

The Company's firm order backlog increased to US$ 16.3 billion at the end of 4Q18, including contracts of the Services & Support segment, up from the US$ 13.6 billion reported at the end of 3Q18;

Revenues in 4Q18 were US$ 1,670.9 million and for fiscal year 2018 were US$ 5,071.1 million, in line withthe Company's revised outlook of US$ 5.1 billion disclosed on January 16, 2019;

Adjusted EBIT and adjusted EBITDA excluding special items were US$ 42.5 million and US$ 108.1 million, respectively, in 4Q18, yielding adjusted EBIT margin of 2.5% and adjusted EBITDA margin of 6.5%. Adjusted EBIT and adjusted EBITDA exclude a US$ 61.3 million special item in 4Q18 related to an impairment in the Executive Jets segment;

For 2018, adjusted EBIT and adjusted EBITDA were US$ 223.8 million and US$ 473.7 million, respectively, excluding US$ 188.5 million in total special items. The Company's 2018 adjusted EBIT margin was 4.4% and adjusted EBITDA margin was 9.3%, below the initial outlook published in early 2018 but in line with the updated guidance published in mid-January 2019;

4Q18 Net loss attributable to Embraer shareholders and Loss per ADS were US$ (18.1) million and US$ (0.10), respectively. Adjusted net loss (excluding deferred income tax and social contribution and special items) for 4Q18 was US$ (6.6) million, with Adjusted loss per ADS of US$ (0.04). Embraer reported adjusted net loss in 2018 of US$ (54.2) million, for an adjusted loss per ADS of US$ (0.30);

Embraer generated Free cash flow of US$ 422.0 million in 4Q18, finishing 2018 with an adjusted free cash flow usage of US$ 127.5 million, slightly better than the updated outlook from mid-January. The Company finished the year with total cash of US$ 3,207.8 million and total debt of US$ 3,647.7 million, yielding net debt of US$ 439.9 million versus net debt of US$880.5 million at the end of 3Q18;

The Company reaffirms all aspects of its 2019 guidance disclosed to the market on January 16, 2019.

MAIN FINANCIAL INDICATORS1in millions of U.S dollars, except % and earnings per share data

(1)	(1)	(1)	(2)	(2)
3Q18	4Q17*	4Q18	2017*	2018
Revenue	1,151.7	1,731.0	1,670.9	5,859.4	5,071.1
EBIT	45.4	62.7	(18.8)	341.9	35.3
EBIT Margin %	3.9%	3.6%	-1.1%	5.8%	0.7%
Adjusted EBIT	45.4	117.2	42.5	398.2	223.8
Adjusted EBIT Margin %	3.9%	6.8%	2.5%	6.8%	4.4%
EBITDA	104.8	150.3	46.8	657.3	285.2
EBITDA Margin %	9.1%	8.7%	2.8%	11.2%	5.6%
Adjusted EBITDA	104.8	204.8	108.1	713.6	473.7
Adjusted EBITDA Margin %	9.1%	11.8%	6.5%	12.2%	9.3%
Adjusted Net Income (Loss)2	(29.1)	76.5	(6.6)	312.9	(54.2)
Adjusted earnings per share - ADS basic	(0.1586)	0.4169	(0.0360)	1.7045	(0.2955)
Net income (loss) attributable to Embraer Shareholders	(21.3)	39.8	(18.1)	264.0	(178.2)
Earnings (losses) per share - ADS basic (US$)	(0.1161)	0.2166	(0.0986)	1.4381	(0.9710)
Adjusted Free Cash Flow	(166.4)	402.2	422.0	364.6	(127.5)
Net debt	(880.5)	(310.4)	(439.9)	(310.4)	(439.9)
(1) Derived from unaudited financial information.
(2) Derived from audited financial information.
* Restated 2017 results for new accounting rules (IFRS 15 and

IFRS 9)

IFRS

1Adjusted Net Income (loss) is a non-GAAP measure, calculated by adding Net Income attributable to Embraer Shareholders plus Deferred income tax and social contribution for the period, in addition to adjusting for non-recurring items. Under IFRS for Embraer's Income Tax benefits (expenses) the Company is required to record taxes resulting from unrealized gains or losses due to the impact of changes in theRealto US Dollar exchange rate over non-monetary assets (primarily Inventory, Intangibles, and PP&E). The taxes resulting from gains or losses over non-monetary assets are considered deferred taxes and are presented in the consolidated Cash Flow statement, under Deferred income tax and social contribution, which was US$ (21.7) million in 4Q17, US$ (49.8) million in 4Q18 and US$ (7.8) million in 3Q18. Adjusted Net Income (loss) also excludes the net after-tax special items of US$ (58.4) million in 4Q17 and US$ (61.3) million in 4Q18. There were no special items recognized in 3Q18.

São Paulo, Brazil, March 14, 2019- (B3: EMBR3, NYSE: ERJ). The Company's operating and financial information is presented, except where otherwise stated, on a consolidated basis in United States dollars (US$) in accordance with IFRS. The financial data presented in this document as of and for the quarters ended December 31, 2018 (4Q18), September 30, 2018 (3Q18) and December 31, 2017 (4Q17), are derived from the unaudited financial statements, except annual financial data and where otherwise stated.

REVENUES AND GROSS MARGIN

During 4Q18, Embraer delivered 33 commercial and 36 executive aircraft (24 light jets and 12 large jets), for a total of 90 commercial and 91 executive aircraft (64 light and 27 large) delivered in 2018. Deliveries ofcommercial jets were within the Company's stated guidance range of 85 to 95 deliveries for 2018, whileexecutive jet deliveries were below guidance of 105 to 125 total jet deliveries for the year. Global market conditions for executive jets, although gradually improving, continued to recover more slowly than expected.In addition, Embraer's increased focus on improving profitability and price preservation, as well as the recent launch of the new midsize/super midsize executive jets (Praetors), which will begin delivering in 2019, led the Company to adopt a more cautious approach toward deliveries in 2018. In 2017, total commercial jet deliveries totaled 101 aircraft and total executive jet deliveries totaled 109 aircraft (72 light and 37 large).

Consolidated revenues of US$ 1,670.9 million in 4Q18 represented a 3.5% year-over-year decline, with revenue growth in the Commercial Aviation and Services & Support segments offset by declines in theCompany's remaining segments. For the full year 2018, Embraer's consolidated revenues totaled US$ 5,071.1 million versus US$ 5,859.4 million reported in 2017, driven by lower deliveries in the Commercial Aviation and Executive Jets segments as well as lower revenues in the Defense & Security segment, which was negatively impacted by the cost base revision for the KC-390 contract in 2Q18, resulting from the incident involving prototype 001 in May 2018. These declines were only partially offset by 6.4% revenue growth in the Services & Support segment, which finished 2018 with US$ 980.8 million in revenues.

The Company's reported gross margin of 14.1% in 4Q18 represented a decline compared to the 20.0% reported in 4Q17, driven principally by lower gross margin in Commercial Aviation on unfavorable mix and in the Defense & Security segment on additional cost base revisions on the KC-390 development contract. Forfiscal year 2018, Embraer's grossmargin was 15.1%, representing a decline from the 18.7% reported in 2017mainly due to lower gross margin in the Company's Commercial Aviation and Defense & Security segments.

The Executive Jets segment reported an increase of more than 500 basis points in its gross margin for 2018 as compared to 2017, while the Services & Support segment had relatively stable gross margins in 2018.

EBIT AND ADJUSTED EBIT

EBIT and EBIT margin as reported in 4Q18 were US$ (18.8) million and -1.1%, respectively, down from EBIT of US$ 62.7 million and EBIT margin of 3.6% in 4Q17. For the full year, EBIT as reported in 2018 was US$ 35.3 million as compared to US$ 341.9 million in 2017, yielding as-reported EBIT margins of 0.7% in 2018 and 5.8% in 2017.

The reported quarterly and annual results include several special items that impacted operating results in both the current and year-ago periods. Regarding the quarterly results comparison, 4Q18 operating income included a US$ 61.3 million impairment charge in the Executive Jets segment, while 4Q17 operating results included a net negative non-recurring impact of US$ 54.5 million, comprised of 1) US$ 3.1 million in expenses related to taxes on remittances for payments following the FCPA investigation, 2) US$ 8.7 million of impairments in the Defense & Security segment, 3) US$ 54.2 million of impairments in the Executive Jets segment, and 4) a positive impact of US$ 11.5 million from special items related to Republic Airways.

Excluding these special items, 4Q18 adjusted EBIT and EBIT margin were US$ 42.5 million and 2.5%, respectively. This compares to 4Q17 adjusted EBIT of US$ 117.2 million and adjusted EBIT margin of 6.8%. The reduction in quarterly adjusted EBIT and adjusted EBIT margin is due to a combination of the aforementioned decline in gross margin and lower revenues leading to a decline in fixed cost absorption.

Full year 2018 results included a non-recurring net negative impact of US$ 188.5 million, as outlined in the table below, related to cost base revisions in 2Q18 resulting from the incident with the KC-390 and an impairment in the Executive Jets segment in 4Q18. The Company's reported operating results in 2017 alsoincluded several special items, which had a net negative impact of US$ 56.3 million. Excluding these items, Embraer reported adjusted EBIT of US$ 223.8 million in 2018, yielding an adjusted EBIT margin of 4.4%. This compares with adjusted EBIT of US$ 398.2 million and adjusted EBIT margin of 6.8% in 2017. TheCompany's lower revenues, in large part driven bylower aircraft deliveries, led to lower fixed cost absorption during 2018, thus resulting in lower adjusted EBIT margin. The adjusted EBIT and adjusted EBIT margins for2018 were below the Company's guidance for 2018 of US$ 270 -355 million and 5.0-6.0%, respectively, aspreviously announced in January prior to Embraer's analyst and investor event on January 16, 2019.

in millions of U.S.dollars

ADJUSTED EBIT RECONCILIATION

(1) 4Q17*

(2) 2017*

(1) 1Q18

(1) 2Q18

(1) 3Q18

(1) 4Q18

(2) 2018

Operating profit (loss) before financial income (EBIT) Provision for voluntary redundancy scheme

62.7 -

341.9

26.4

(17.7)

45.4

(18.8)

35.3

Impact of penalty provision

Expenses related to KC-390 cost base revision Non-recurring items related to Republic Airways Impairment loss Defense and security business Impairment loss Executive Jet businessAdjusted EBIT

3.1 -

6.4 10.2

(11.5)

(23.2)

8.7

Adjusted EBIT Margin %

54.2117.26.8%

8.7 54.2398.26.8%

- - - - - -26.42.7%

-

- 127.2

-

-

-109.58.7%

- - - - - -45.43.9%

- - - - - 61.342.52.5%

- - 127.2

- - 61.3223.84.4%

• (1) Derived from unaudited financial information.

• (2) Derived from audited financial information.

* Restated 2017 results for new accounting rules (IFRS 15 and IFRS 9)

Administrative expenses for 4Q18 were US$ 52.5 million, slightly up from the US$ 49.0 million reported in 4Q17, and for fiscal year 2018 administrative expenses totaled US$ 182.6 million compared to 2017 administrative expenses of US$ 179.1 million. Selling expenses increased from US$ 85.7 million in 4Q17 to US$ 88.2 million in 4Q18, while for the full year selling expenses declined, from US$ 315.9 million in 2017 to US$ 304.2million in 2018, on efficiencies gained principally in the Company's Services & Support segment. Research expenses of US$ 17.5 million in 4Q18 were flat compared to the prior year's period, and wereslightly lower for the full year in 2018 at US$ 46.1 million compared to US$ 49.2 million in 2017.

Other operating income (expense) net as reported in 4Q18 was expense of US$ 96.5 million compared to an expense of US$ 132.6 million in 4Q17. For 2018, other operating income (expense) net in 2018 was US$ 199.4 million of expense versus US$ 210.4 million of expense in 2017. Most of the special items mentioned above are recognized in this line item of the income statement. Excluding these non-recurring impacts, other operating income (expense) net in 4Q18 was an expense of US$ 35.2 million compared to US$ 78.1 million of expense in 4Q17. For the full year other operating income (expense), net excluding special items was an expense of US$ 138.1 million, representing an improvement compared to the expense (excluding special items) of US$ 154.1 million registered in 2017.

NET INCOME

Net income (loss) attributable to Embraer shareholders and Earnings (Loss) per ADS for 4Q18 were US$ (18.1) million and US$ (0.10) per share, respectively, bringing total 2018 Net income (loss) attributable to Embraer shareholders and Earnings (Loss) per ADS to US$ (178.2) million and US$ (0.97) per share, respectively.

Adjusted net income (loss), excluding deferred income tax and social contribution and excluding the total after-tax impacts of the special items described above, was US$ (6.6) million in 4Q18 as compared to US$ 76.5 million in 4Q17. For the full year, adjusted net income (loss) excluding deferred income tax and social contribution and excluding the total after-tax impact of special items was US$ (54.2) million in 2018 and US$ 312.9 million in 2017. Adjusted net income (loss) attributable to Embraer shareholders was negatively impacted by lower operating results in addition to higher net financial expenses. The higher net financial3

expenses are largely due to our current net debt position and lower financial income from our cash and equivalents, in addition to higher net financial expenses recognized on the Company's residual valueguarantee (RVG) portfolio. Adjusted earnings (loss) per ADS excluding special items was US$ (0.04) in 4Q18 (versus US$ 0.42 in 4Q17) and US$ (0.30) in 2018 (versus US$ 1.70 in 2017).

MONETARY BALANCE SHEET ACCOUNTS AND OTHER MEASURES

Embraer finished fiscal year 2018 with a net debt position of US$ 439.9 million, compared to the net debt position of US$ 880.5 million at the end of 3Q18. The Company'slower net debt position is a result of theCompany's significantfree cash flow generation during 4Q18 in addition to the payment of debt during the period, as explained further below. Embraer's total loans position at the end of 2018 was US$ 3,647.7 million, declining US$ 374.9 million from the total loans position reported at the end of 3Q18.

in millions of U.S.dollars

* Net debt = Cash and cash equivalents + Financial investments short-term and long term - Loans short-term and long-term ** Restated 2017 results for new accounting rules (IFRS 15 and IFRS 9)

(1) Derived from unaudited financial information.

(2)Derived from audited financial information.

Adjusted net cash generated by operating activities net of adjustments for financial investments was US$ 568.8 million in 4Q18 and adjusted free cash flow for the quarter was US$ 422.0 million. This compares to adjusted net cash generated in operating activities net of financial investments of US$ 603.6 million and adjusted free cash flow of US$ 402.2 million in 4Q17. The principal factor explaining the higher free cash flow generation in 4Q18 was lower capex and development spending as compared to 4Q17. In 2018, adjusted free cash flow was US$ (127.5) million, compared to adjusted free cash flow of US$ 364.6 million in 2017, with the reduction in free cash flow for the year due to lower operating results and higher inventory levels, followingthe Company's more cautious approachto executive jet deliveries leading to a number of finished aircraft ininventory at the end of 2018. Adjusted Free cash flow for 2018 finished better than the Company's revised guidance for a free cash flow usage of US$ (200) million, updated at Embraer's investor event in mid-January,and was slightly below the Company's original guidance for a usage of US$ (100) million announced at thebeginning of 2018.

in millions of U.S.dollars

IFRS 4Q17 * 2017* 1Q18 2Q18 3Q18 4Q18 2018

Net cash generated (used) by operating activities (1)

Adjustment for non-recurring cash impacts

Adj. Net cash generated (used) by operating activities

585.418.2603.6

961.7

(311.0)

133.7

(74.7)

568.8

316.8

92.01,053.7

-(311.0)

-133.7

-(74.7)

-568.8

-316.8

Net additions to property, plant and equipment

Additions to intangible assets

Adjusted Free Cash Flow

(430.9)

(166.3)

422.0

(76.3) (125.1)402.2

(218.6) (470.5)364.6

(39.7) (80.2)

(31.1) (54.9)47.7

(26.6) (65.0)

(56.6) (154.0)

(90.2) (290.3)

(127.5)

(1) Net of financial investments: 4Q17 132.0, 2017 (244.6), 1Q18 629.5, 2Q18 108.1, 3Q18 302.1 and 4Q18 (248.9)

*	Restated 2017 results for new accounting rules (IFRS 15 and IFRS 9)

Net additions to total PP&E for 4Q18 were US$ 56.6 million, versus US$ 76.3 million in net additions reported in 4Q17. Of the total 4Q18 additions to PP&E, CAPEX amounted to US$ 40.0 million, additions of aircraft available for or under lease was US$ 0.2 million, and additions of pool program spare parts was US$ 16.5 million. For the full year, the Company's CAPEX amounted to US$ 97.8 million in 2018, compared to US$ 179.7 million in 2017. As previously communicated at the Company's investor event in January, Capex for the year was below Embraer's guidance for US$ 200 million of spending.

In 4Q18, Embraer invested a total of US$ 90.2 million in product development, principally related to the development of the E-Jets E2 commercial jet program, which continues to progress according to schedule. Development expenditures net of contributions from suppliers in the quarter were also US$ 90.2 million. Forthe full year, the Company's net developmentexpenditures totaled US$164.8 million, which ended 2018 at alower level then Embraer's initial outlook for spending of US$ 300 million. It is important to note that the lowercapex and development spending levels in 2018 did not negatively impact any of Embraer's ongoing projects,which all continue to progress according to plan.

in millions of U.S.dollars

4Q17	2017	1Q18	2Q18	3Q18	4Q18	YTD18
CAPEX	68.7	179.7	22.8	16.1	18.9	40.0	97.8
Contracted CAPEX (Included in CAPEX)	0.4	4.1	-	1.9	1.8	0.4	4.1
Additions of aircraft available for or under lease	-	14.4	6.0	1.8	2.2	0.2	10.2
Additions of Pool programs spare parts	7.8	43.6	10.9	13.4	5.5	16.5	46.3
PP&E	76.5	237.7	39.7	31.3	26.6	56.7	154.3
Proceeds from sale of PP&E	(0.2)	(19.1)	-	(0.2)	-	(0.1)	(0.3)
Net Additions to PP&E	76.3	218.6	39.7	31.1	26.6	56.6	154.0
4Q17	2017	1Q18	2Q18	3Q18
Additions to intangible	125.1	470.5	80.2	54.9	65.0
Contributions from suppliers	-	(86.0)	(67.0)	(58.5)	-
Development (Net of contributions from suppliers)	125.1	384.5	13.2	(3.6)	65.0
Research	17.5	49.2	9.8	10.1	8.7
R&D	142.6	433.7	23.0	6.5	73.7

in millions of U.S.dollars

4Q18	YTD18
90.2	290.3
-	(125.5)
90.2	164.8
17.5	46.1
107.7	210.9

The Company's total debt decreased US$ 374.9 million to US$ 3,647.7 million at the end of 4Q18 compared to US$ 4,022.6 million at the end of 3Q18. Short-term debt at the end of 4Q18 was US$ 179.3 million and long-term debt was US$ 3,468.4 million.

The average loan maturity of the Company's debt atthe end of 4Q18 was 5.5 years. The cost of Dollar denominated loans at the end of 4Q18 was stable at 5.27% p.a., while the cost ofrealdenominated loans declined to 2.47% p.a. at the end of 4Q18.

Embraer'sEBITDA over the last 12 months (unadjusted EBITDA LTM) to financial expenses (gross) at the end of 4Q18 declined to 1.00 vs. 1.36 at the end of 3Q18. At the end of 4Q18, 8% of total debt was denominated in Reais.

Embraer's cash allocation management strategy continues to be one of its most important tools to mitigateexchange rate risks. By balancing cash allocation in Real and Dollar assets, the Company attempts to neutralize its balance sheet exchange rate exposure. Of total cash at the end of 4Q18, 86% was denominated in US Dollars.