Income Taxes

9 Months Ended

Sep. 30, 2025

Income Taxes

Income Taxes

The Company was previously consolidated under the income tax return of the EAH consolidated tax group. For financial reporting purposes of the Company, income tax was calculated using a separate return methodology. Under this method, the Company prepared the financial statements as if it would file separate returns with tax authorities. As a result, the Company’s deferred tax balances and effective tax rate as a stand-alone entity would likely differ significantly from those calculated in the actual consolidated return with Embraer.

Following the 2025 Registered Direct Offering, Embraer owns less than 80% of the Company’s outstanding common stock, which under the U.S. tax code, resulted in a tax deconsolidation from EAH. The Company will now begin to file separate tax returns. The tax deconsolidation also terminated the Tax Sharing Agreement (“TSA”) between EAH and the Company and effectuates the Tax Receivable Agreement (“TRA”) between the two parties (collectively, “the Tax Agreements”), which was entered into on May 9, 2022.

Per the terms of the Tax Agreements, for periods in which the Company’s inclusion in the EAH consolidated tax group decreases the tax liability of EAH, tax benefits generated by the Company that are realized by EAH will be recorded in an off-book register and will apply to offset future payments due from the Company to EAH under the TSA. If any tax benefits that have accumulated during the period in which the Company was a member of the EAH consolidated tax group have not been applied to offset payments under the TSA at the time the Company ceases to be a member of the consolidated tax group, such uncompensated tax benefits can be used to offset amounts payable by the Company to EAH under the TRA.

Pursuant to the TRA, the Company will in certain circumstances be required to pay 75% of the net income tax savings realized to EAH as a result of increases in tax basis in the assets or certain of its subsidiaries resulting from the Pre-Closing Restructuring and tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

Under the separate return methodology, tax loss carryforwards and valuation allowances were reflected in the condensed consolidated financial statements. Upon tax deconsolidation, the tax loss carryforwards and valuation allowance conclusions continue to be appropriate. Finally, under applicable law, the Company will not be permitted to join the filing of a U.S. consolidated federal income tax return with other Embraer subsidiaries for the five-year waiting period.

For the three months ended September 30, 2025 and 2024, the Company recognized income tax expense of $1.2 million and $0.4 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company recognized income tax expense of $1.1 million and of $1.4 million, respectively. Income tax expense relate to operations in the Brazilian tax jurisdiction.