André Mazini

André Mazini asked about the performance of the Pratt & Whitney GTF engines used in Embraer's E2 jets (PW1900), comparing them to the issues faced by the A220 fleet using PW1500 engines. He also inquired about the status of the old CVAM (Amazon surveillance system) program, specifically if there are any renewal plans for the Embraer 145 planes involved and Embraer's current participation.

Answer

CEO Francisco Gomes Neto stated that the E2 uses the third-generation PW1900G engine with significant upgrades, and being a lighter aircraft, it places less demand on the engines, resulting in fewer issues compared to competitors. He added that engine performance and durability are improving. Regarding the CVAM program, Francisco Gomes Neto confirmed that Embraer currently has no active projects or initiatives related to it, though they are working on other projects with the Brazilian armed forces.

André Mazini, Equity Research Director at Citi, questioned the performance of Pratt & Whitney GTF engines, specifically asking if the PW1900G engines used in Embraer's E2 jets are experiencing issues similar to the PW1500 engines in the A220 fleet. He also inquired about any renewal plans for the Embraer 145 aircraft used in the SIVAM Amazon surveillance program and Embraer's current involvement in such systems.

Answer

President and CEO Francisco Gomes Neto explained that the E2 uses the third-generation PW1900G engine with significant upgrades and benefits from the E2's lighter aircraft design, resulting in fewer issues compared to competitors. He added that engine performance and durability are expected to improve further. Regarding the SIVAM program, Mr. Neto stated that Embraer currently has no active projects related to it, though they are working on other projects with the Brazilian forces.

Andre Mazini of Citigroup asked if the expansion of the Melbourne, Florida facility would include commercial jet production, drawing a parallel to Airbus's A220 assembly line in the U.S., given the stated focus on executive aviation investment.

Answer

CFO Antonio Garcia confirmed current U.S. investments are for Executive Aviation in Melbourne and Services in Texas. CEO Francisco Neto added that the commercial jet line in Brazil is highly efficient and that Embraer's existing business model, with 40% U.S. content and a significant trade surplus for the U.S., already presents a strong value proposition.

Andre Mazini asked about Vesta's high-level land strategy, specifically the trade-off between maintaining a large land bank (which doesn't generate cash flow) and having too little land (which could jeopardize growth plans), aiming for an optimal land bank size.

Answer

CEO Lorenzo Dominique Berho emphasized Vesta's successful strategy of anticipating land needs in key markets (Monterrey, Guadalajara, Mexico City, Ciudad Juárez, Tijuana, Bajío) to achieve high returns (10%+). He stated Vesta has approximately 90% of the land required for its Route 2030 strategy, focusing on securing land, adding infrastructure, and being ready for future demand.

Andre Mazini asked about Vesta's high-level land strategy, specifically the trade-off between maintaining a large land bank (which doesn't generate cash flow) and ensuring sufficient land for the Route 2030 growth plan.

Answer

CEO Lorenzo Dominique Berho emphasized that Vesta's land strategy is key to its overall approach, building on past success with the Level 3 strategy which yielded over 10% returns on $1.1 billion in development. He highlighted the $1.7 billion investment target for Route 2030, focusing on strategic markets like Monterrey, Guadalajara, Mexico City, Ciudad Juárez, and Tijuana. He stated that securing land, putting infrastructure in place, and being ready for demand is the right approach, noting Vesta has approximately 90% of the land needed for its 2030 strategy.

André Mazini from Citigroup inquired about LPA's investment strategy in Mexico, specifically their stance on light manufacturing versus logistics amid potential U.S. tariff policies. He also questioned whether tenant leasing decisions in LPA's foundational markets are being impacted by tariff-related uncertainty.

Answer

CEO Esteban Gaviria clarified that LPA is currently prioritizing logistics assets in Mexico, its core competency, while remaining selectively constructive on light manufacturing for the long term. Regarding tenant sentiment, Gaviria stated that in their foundational markets of Peru, Colombia, and Costa Rica, which are driven by domestic consumption, tariff concerns are not impacting leasing. In fact, he noted an acceleration in demand, evidenced by significant pre-leasing activity in Peru.

André Mazini asked about LPA's investment strategy in Mexico, specifically regarding its focus on logistics versus light manufacturing amid tariff uncertainty, and questioned if tenant leasing activity in its foundational markets is being impacted by a 'wait-and-see' mode due to these tariffs.

Answer

CEO Esteban Gaviria explained that LPA is prioritizing logistics assets in Mexico, its core competency, while being selective and constructive on light manufacturing for the longer term. He clarified that in foundational markets like Peru, Colombia, and Costa Rica, which are driven by domestic consumption, tariffs are not a factor and leasing activity is actually accelerating, as evidenced by strong pre-leasing at its Callao park in Peru.

The analyst asked about the company's position given the financial struggles of some competitors in North America and whether there is a chance of production reshoring to the U.S. or if Mexico will remain the regional production hub.

Answer

The executive stated that the company's robust financial health is a competitive advantage that makes them a reliable partner for clients. They believe significant reshoring to the U.S. is unlikely due to higher production costs and labor constraints, and that Mexico will remain the production powerhouse for the Americas, as OEMs will be cautious about making costly changes for potentially temporary tariffs.

Inquired about new products with higher margin potential, such as forged aluminum wheels for trucks, and asked if the mentioned operational efficiency improvements were specific to Brazil or occurring in other regions as well.

Answer

The company is gaining share in the EV space and is building its first forged aluminum wheel plant for commercial vehicles in Europe, which will offer higher margins. Operational efficiency gains are global: Brazil benefits from higher demand, North America from increased capacity allowing for better production scheduling (moving from 24/7 to 24/6.5), and Europe is adjusting capacity to meet current demand.