Embraer(ERJ) - 2022 Q3 - Quarterly Report

Material Fact Regarding Financial Restatement Embraer's subsidiary, Eve Holding, will restate its Q2 2022 financial statements due to warrant accounting adjustments, impacting both companies' reported results Announcement of Restatement Embraer S.A. announced that its subsidiary, Eve Holding, Inc., will restate its condensed consolidated financial statements for the quarter ended June 30, 2022, a decision made by Eve Holding's Audit Committee following an internal review - Embraer's subsidiary, Eve Holding, Inc., will restate its financial statements for the quarter ended June 30, 2022, which were prepared under U.S. GAAP[4] - The decision to restate was made by Eve Holding's Audit Committee after an internal review and discussions with its independent auditor, concluding that the previous results should not be relied upon[5] Reason and Impact on Eve Holding, Inc. The restatement is necessary due to an accounting adjustment for certain warrants issued by Eve Holding following its business combination, expected to increase Eve Holding's net loss and additional paid-in-capital by approximately US$87 million for Q2 2022 without affecting liquidity or capital resources - The restatement is required to adjust the accounting of certain warrants issued by Eve Holding, which became exercisable on May 9, 2022, after its business combination with Zanite Acquisition Corp[5] Estimated Financial Impact on Eve Holding (Q2 2022) | Financial Item | Estimated Impact (Q2 2022) (US$) | Nature of Adjustment | | :------------------------- | :------------------------------- | :------------------- | | Net Loss | Increase by ~$87 million | Non-cash expense | | Additional Paid-in-Capital | Increase by ~$87 million | Equity adjustment | - The adjustments are not expected to impact Eve Holding's liquidity, capital resources, or compliance with material agreements[6] Impact on Embraer S.A. Embraer is assessing the impact of Eve Holding's restatement on its own Q2 2022 IFRS financial statements, anticipating a non-cash expense increase of approximately US$82 million related to warrants and a potential additional non-cash expense of US$83 million related to the SPAC transaction - Embraer is currently assessing the impacts of Eve Holding's US GAAP adjustments on its own unaudited interim condensed consolidated financial statements for Q2 2022, which are prepared under IFRS[7] Expected Financial Impact on Embraer (Q2 2022) | Item | Expected Impact on Embraer (Q2 2022) (US$) | Nature | Contra-Entry | | :--------------------------------- | :----------------------------------------- | :------- | :--------------------- | | Non-cash expense (Warrants) | Increase by ~$82 million | Non-cash | Non-current liabilities| | Non-cash expense (SPAC transaction)| Potential increase by ~$83 million | Non-cash | Shareholders' equity | Forward-Looking Statements and Next Steps Embraer intends to restate and republish its Q2 2022 results after completing its analysis, confirming these non-cash adjustments will not affect its liquidity, capital resources, or published 2022 guidance for Adjusted EBIT and EBITDA margins, while an assessment of internal controls is underway - The adjustments are non-cash and will not affect Embraer's liquidity, capital resources, or compliance with material agreements[10] - Embraer's published guidance for 2022 Adjusted EBIT and EBITDA margins remains unchanged, as it does not include Eve Holding's results[10] - The company is assessing whether the restatement indicates a significant deficiency in internal controls, and its Q2 2022 results are subject to modification[11]