Q1 2024 Embraer SA Earnings Call

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[music].

This meeting is being recorded.

Operator: Good morning, ladies and gentlemen, and thanks for standing by. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. This conference will be held originally in English. To listen to the simultaneous translation in Portuguese, press the Interpretation button on the platform and select the desired language.

Good morning, ladies and gentlemen, and thanks for spending by this conference call will be conducted in English.

Let me say as Ford announcements, where Portuguese speakers.

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Guilherme Aiva: My name is Guilherme Aiva, and I'm the head of investor relations for Embraer. I want to welcome you to our first quarter of 2024 earnings conference call. The numbers in this presentation contain non-GAAP financial information to facilitate investors in reconciling EADS financial information in GAAP standards to Embraer's IFRS. We remind you that EAVS results will be discussed on an EAVS conference call today at 9: 30 a.m. New York time. It is important information that all numbers are presented in US dollars, as it is our functional currency.

Good Pilot: My name is a good pilot and I'm the head of Investor Relations for Embraer I want to welcome Neil Clar first quarter of 2024 earnings Conference call.

Good Pilot: The numbers in this presentation contains non-GAAP financial information to facilitate investments to reconcile <unk> financial information in GAAP standards to Embraer.

Good Pilot: Flores.

Good Pilot: We remind you that <unk> results will be discussed at at <unk> Conference call today at 930, a M New York time.

Good Pilot: It is important information that all numbers are presented in U S dollars as it is our functional currency.

Guilherme Aiva: This conference call may include statements about future events based on Embraer's expectations and financial market trends. Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call. Unless, in accordance with the applicable rules, the company assumes no obligation to public update any forward-looking statement. For detailed financial information, the company encourages revealing publications filed by the company with the Brazilian Comisso de Valores Mobiliario, or CVM.

Good Pilot: This conference call May include statements about future events.

Good Pilot: On an breyer's expectations and financial market trends.

Good Pilot: Such statements are subject to uncertainties that may cause actual results to differ from those extracted or implied in this conference call.

Good Pilot: Except in accordance with the applicable rules the company assumes no obligation to publicly update any forward looking statements.

Good Pilot: For a detailed financial information the company encourages revealing publications filed by the company with the Brazilian corporates, telling you about all of these will be the obvious for CGM.

Guilherme Aiva: At this time, all participants are in a listen-only mode. We'll give instructions later on for participation in the two Q&A sessions. As a reminder, this conference call is being recorded. The participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, Antonio Carlos Garcia, Chief Financial Officer, Luis Harrison, Corporate Communications Director, and myself. This conference call will have three parts. In the first part, top managers will present the company's Q1 results.

Good Pilot: At this time all participants are in a listen only mode. We will give you instructions later on for participation, but so Q&A sessions.

Good Pilot: As a reminder, this conference call is being recorded for.

Speaker Change: Participants on today's conference call are Francisco Gomes Battle.

Speaker Change: And seal the Embraer Antonio Carlos Garcia, Chief Financial Officer.

Speaker Change: Luis Harrison corporate communications director and myself.

Speaker Change: The conference call, we have three parts in the first part up managers will present, the company's Q1 results in the second part we will host a Q&A session only for investors and last but definitely not least we will host a Q&A session only for the press.

Guilherme Aiva: In the second part, we'll host a Q&A session only for investors. And last but definitely not least, we'll host a Q&A session only for the press. It is my pleasure to now turn the conference call over to our President and CEO, Francisco Gomez. Please go ahead, Francisco.

Speaker Change: It is my pleasure to now turn the conference call to our President and CEO Francisco Gomes.

Francisco Gomes Neto: Please go ahead Francisco.

Francisco Gomes Neto: Good morning and good afternoon to all. Thank you and welcome to Embraer's first Quartet 2024 results conference call. Our commercial activity in 2024 continues to be strong in all business units, as we see solid demand in the company's main market. Historically, Q1 is seasonally our weakest quarter.

Francisco Gomes Neto: Good morning, and good afternoon to all.

Francisco Gomes Neto: Thank you and welcome with Dwayne Breaux Yeah.

Francisco Gomes Neto: First quarter 'twenty to 'twenty four results conference call.

Francisco Gomes Neto: Our commercial activity 'twenty 'twenty four continuous to be strong in all business units.

Francisco Gomes Neto: We see solid demand in the companies may markets.

Francisco Gomes Neto: However, in 2024, our revenues were up 25% compared to a year ago, and our deliveries increased 67%, helped by our production leveling initiative. Speaking of production leveling, we expect further improvement as the year progresses. And more importantly, in 2025.

Francisco Gomes Neto: Historically Q1 is.

Francisco Gomes Neto: Our weakest quarter, however into eight to 24, our revenues were up 25% compared to.

Francisco Gomes Neto: Two a year ago.

Francisco Gomes Neto: Our deliveries increased at 67% helped by our production leveling initiatives.

Francisco Gomes Neto: <unk> production level, we expect further improvement as the year progresses, and more importantly into MQ25.

Francisco Gomes Neto: These operational changes could help the company to increase efficiency, productivity, and post better financial results next year and in the years ahead. Our backlog reached $21.1 billion, which is the highest level in the past seven years. In Commercial Aviation, American Airlines placed an order in March for 90 E-175s, with 43 additional purchases right. The news demonstrated the still strong potential of this aircraft model in the U.S. market. Speaking of potential, we currently have concrete sales campaigns for more than 200 aircraft across the world for both our E-1 and E-2 jet families, and also more concrete sales opportunities for our D-chain aircraft.

Francisco Gomes Neto: These operational changes could help the company to increase efficiency productivity and both better financial results next year and years ahead.

Francisco Gomes Neto: Our backlog reached at 21 quite 1 billion, which is the highest level over the past 70 years.

Francisco Gomes Neto: In commercial Aviation America less places an order in March.

Francisco Gomes Neto: Nike you want 70 fives.

Francisco Gomes Neto: 43 additional purchases of rights.

Francisco Gomes Neto: The newest demonstrated the fewer stronger potential of this aircraft model in the U S markets.

Francisco Gomes Neto: <unk> potential we currently have concrete sales gain banks for more than 200 aircraft across the world.

Francisco Gomes Neto: Both our E. One and E. Two jets fans and nozzle more concrete figures opportunities for all of <unk> aircraft.

Francisco Gomes Neto: We also maintained the good momentum in executive aviation with strong sales across all our aircraft. We recorded the highest Q1 in terms of sales, deliveries, and revenues for the division over the past 80 years. Sales and support continue to be a pillar of profitability and one of our main growth drivers; its revenues increased 12% in Q1 2024 compared to a year ago. The strong financial results of the company allowed us to reduce our gross debt without each by an additional $276 million during the quarter, a total reduction of $764 million over the past year. Consequently, our gross debt to EBITDA ratio is now below five thirds.

Francisco Gomes Neto: We also get the greater momentum in executive aviation with the strong sales across all our aircraft.

Francisco Gomes Neto: We recorded the highest Q1 in terms of sales deliveries and revenues for the division over the past 80 years.

There was no support continued to be a beta of profitability and one of our main growth drivers.

Francisco Gomes Neto: <unk> revenues increased 12% in Q1 24 compared to a year ago.

Francisco Gomes Neto: These strong financial results of the company, allowing us to reduce our gross debt without each by additional $276 million during the quarter.

A total reduction of semi hard and a $54 million over the past year.

Francisco Gomes Neto: Consequently, our gross debt to EBITDA ratio is now below five turns.

Francisco Gomes Neto: It is important to mention that when we consider all the risks and opportunities for the company, we feel comfortable and reiterate our 2024 operational and financial guidance. I will now present the operational results by business units in the next few slides. In commercial aviation, the backlog rose 2.3 billion, or plus 26% quarter over quarter, and Richard. $11.1 billion, with a book-to-bill ratio above one for the whole year.

Francisco Gomes Neto: It is important to mention that when we consider all the risks and opportunities for the company, we feel comfortable and reiterate our 2020 for operational and financial guidance.

Speaker Change: I will now present, the operational results by business units. The next few slides.

Speaker Change: In commercial aviation the backlog rose to <unk>, 3 billion or plus 26% quarter over quarter.

Richard: Hey, Richard.

Richard: And Larry <unk> 1 billion with a book to Bill ratio above one for the whole year.

Francisco Gomes Neto: The American Alliance order reinforces the capability of our E175 model and, more importantly, the partnership between both companies. Embraer, a leaving company Azura, delivered the second E195-E2 to Royal Jordanian, the first E2 operator in the Middle East. Executive Aviation's backlog registered a sequential increase of $300 million and ended Q1 with $4.6 billion, or plus 7% quarter over quarter, and a strong two-to-one book-to-view for the quarter. We recorded our first set of firm orders from NetJet, whose deliveries will begin in 2025.

Richard: The American airlines or the reinforced that the capability of our <unk> 75 model and more importantly, the partnership between both companies.

Speaker Change: And Brad Thank you.

Speaker Change: Leasing company is zoro deliberate the second <unk> 95 to two <unk> the first <unk> operator in the Middle East.

Speaker Change: It is active aviation the backlog the registered <unk>.

Speaker Change: So increase of 300 million and ended Q1, with four 6 billion or plus 7% quarter over quarter.

Speaker Change: And a strong two to one book to bill for the quarter.

Speaker Change: We recorded our fourth fab.

Speaker Change: From merchants with deliveries will begin in 2025 and two.

Francisco Gomes Neto: In total, NETJS has purchased rights for 250 aircraft over the next 14 years. In defense and security, we hosted the first Embraer Defense Day in the U.S., with the C-39 Millennium and A-29 Super Tucano. The event included a diverse guest list of government authorities, military officials, prospects, and partners.

Speaker Change: Total net Jessica, especially the rights for 250 aircraft over the next 14 years.

Speaker Change: In the fast in security, we hosted the first Ambarella DFAST date in the U S with a CPA 19, millennial and a 29 Super Tucano.

Speaker Change: <unk> included a diverse guest list of government authorities military officials prospects and partners early Betsy 24, Embraer in Mahindra finance.

Francisco Gomes Neto: In early 2024, Embraer and Mahindra signed an MOU to jointly pursue the sale of the C390 Millennium to the Indian Air Force. The first Hungarian C319 successfully completed its maiden flight. The aircraft continues to receive international recognition on the back of its remarkable operational performance and capability. However, we should note the division reported lower year-over-year revenues because of supply chain delays and business seasonality.

Speaker Change: <unk> you could jointly pursue the sale of the Citron actually related to the India Air Force.

Speaker Change: The FERC Hungarian CPA 19 successfully completed its maiden flight.

Speaker Change: The aircraft continues to receive international recognition on the back of its remarkable operational performance and capabilities.

Speaker Change: We should note the division reported lower year over year revenues because of supply chain delays and business seasonality.

Francisco Gomes Neto: In service and support, revenue grew 12% compared to the same period last year, with solid double-digit profitability. The business unit backlog maintained the historical 3.1 BIDA record, which is in Q4 23 with a 10% plus EBIT margin. Another important step for our services division was the introduction of the first Pratt & Whitney GTF1100 engine in AGMA, our MRO in Portugal. The ramp-up should last four years, and we expect revenues to reach closer to $500 million in 2028.

Speaker Change: And substantial parts revenue grew 12% compared to the same periods last year.

Speaker Change: Solid double digit profitability.

Speaker Change: The business Yankee backlog and maintain their historical three won't be the record reached in Q4, 23 retail, 10% plus EBIT margin.

Speaker Change: Another important step for our services Division was being <unk> of the first brought to Ethernet GTS living hazard engineer in augment our MRO in Portugal.

Speaker Change: The ramp up should last for years, and we expected revenues to reach closer to 500 million in 2028.

Francisco Gomes Neto: Last but not least, EVIE, our top business, is on track to achieve important milestones in 2024. We have already selected more than 90% of its component suppliers, and we successfully concluded a Uber Air Traffic Management trial. The company is on track to accomplish the next development steps. First, the conclusion of the prototype assembly, initial tests, and the definition of the certification basis. We also began the definition of our eVTOL factory configuration. All in, we estimate it should have a total cash consumption between $130 and $170 million in 2024. I will now hand it over to Antonio, our CFO, to give you further details about the financial results. And then I will be back with closing remarks. Thank you.

Speaker Change: Last but not least our EBIT pulp business is on track to achieve important milestones in 2024.

Speaker Change: Already selected now more than 90% of its component suppliers and we successfully concluded.

Speaker Change: <unk> Air traffic management trial.

Speaker Change: The company is on track to accomplish the next development steps first prototype Assembly conclusion initial debt ended the finish off and certification basis.

Speaker Change: We also began the definition of our <unk> factory configuration.

Speaker Change: All in we estimate it should have a total cash consumption between one 130 <unk> hundred 70 immediate in 'twenty 'twenty four.

Speaker Change: I will now hand, it over to Antonio <unk>, our CFO to give you further details about the financial results and then ill be back with closing remarks.

Antonio Carlos Garcia: Thank you, Francisco. Good morning and good afternoon to everyone.

Antonio: Thank you Francisco.

Antonio: And good afternoon to everyone.

Antonio Carlos Garcia: I would like to highlight our operational performance in Q1, despite the historical seasonality. Total delivery revenue margins were higher than the same period in 2023, and the company's cash consumption was better than a year ago. Our focus in Q1 was on business and financial efficiency. We want to lay down an important stepping stone to put us in a comfortable position to achieve our four-year goal.

Antonio: I would like to highlight our operational performance in Q1, despite the historical seasonality.

Antonio: Total deliveries revenue and margins were higher than the same period inkjet totaled to 83.

Antonio: And the company's cash consumption was better than a year ago.

Antonio: Our focus in Q1 was on business and financial efficiency.

Antonio: We went through late though an important status stance.

Antonio: To put us in a comfortable position to achieve our full year guidance, even with all the ongoing supply chain constraints, we continue to deal with.

Antonio Carlos Garcia: Even with the ongoing supply chain constraints we continue to deal with. Let's now move to slide nine in the presentation. Deliveries. Executive Aviation delivered 18 jets in Q1, for an increase of 125% versus a year ago and the highest Q1 level in the last eight years. The light jet segment was 83% higher year over year with 11 channels delivered, while the median jets were more than tripled during the period with seven freighters delivered.

Antonio: Let's now move which is slide nine in the presentation.

Antonio: Deliveries.

Antonio: Executive Aviation delivered 18 jets in Q1.

Antonio: For an increase of 125 of profits.

Antonio: Versal and year ago, and the highest Q1 level of the last eight years. The light jet segment was 83% the higher year over year with a level funerals delivered.

Antonio: The median jets will more than triple during the period with seven freighters delivered.

Antonio Carlos Garcia: Meanwhile, commercial aviation deliveries were flat at seven aircraft in Q1, compared to the same quarter of 2023, with four E1s and three E2s required. In defense, we should note there were no C309 deliveries in the first quarter of 24 and 23.

Antonio: Meanwhile, commercial aviation deliveries were flat at seven aircrafts in Q1 compared to the same quarter of 2023.

Antonio: Wish you for <unk> and <unk> aircrafts.

Antonio: In Defence, we should note there were no secret here that night deliveries in the first quarter of 84 to 83.

Antonio Carlos Garcia: We continue to work steadfastly to accomplish our production plan and reach the milestone in our defense and security programs, which includes four C390 million deliveries scheduled for the year. It is important to mention the company has developed and is currently implementing a production leveling plan to mitigate business seasonality. The plan should help the company to deliver less volatile financial results throughout the year in the near to medium term future. Slide 10, please. The company registered a strong total backlog of $21.1 billion at the end of Q1, for an increase of 30% quarter over quarter and the highest number recorded over the past seven years. Rookie Forward

Antonio: We continue to work steadfastly to accomplish our production plan and.

Antonio: And the reach the milestones are defensive she created the programs, which includes four our CTO handout $90 million. It delivers is schedule for the year.

Antonio: It is important to mention the company has developed and is currently implementing a production level implant should mitigate the business seasonality.

Antonio: The plan should help the company to deliver less volatile financial results throughout the year in the near to medium term future.

Speaker Change: Slide 10 please.

Speaker Change: The company has Easter and a strong total backlog of $21 1 billion at the end of Q1.

Speaker Change: Third an increase of 13% quieted a required.

Speaker Change: And the highest number recorded over the past seven years looking forward.

Antonio Carlos Garcia: Our current backlog is accurate due to our financial projections. The backlog for commercial aviation reached more than 380 aircraft in Q1, and it is valued at $11.1 billion, or $2.3 billion higher than the last quarter. Meanwhile, Executive Aviation ended with a solid $4.6 billion backlog, or 7% higher quarter-over-quarter, helped by the inclusion of the first Praetor 5 and the firm orders from NetJet. We should note NETJET has other 246 options not included in the current backlog.

Speaker Change: Our current backlog is as accurate <unk> financial projections there.

Speaker Change: The backlog for our commercial aviation reached more than 300 at eight aircrafts in QL and idiots valued at a level, two 1 billion or $2 3 billion higher than the last quarter.

Speaker Change: Meanwhile, Executive aviation ended with a solid $4 6 billion backlog are 7% higher quarter over quarter.

Speaker Change: Helped by the inclusion of the first breakthrough <unk> female artist for on that yet.

Speaker Change: We should note net jets pass other children. The 46 options not included in the core its backlog.

Antonio Carlos Garcia: The backlog for service and support is finished, stable at $3.1 billion in Q1. Meanwhile, for defense and security, it decreased marginally by 4% quarter over quarter to $2.4 billion. Again, we should, there are 11 C390 aircraft and three tender offers, one whose contract hasn't been signed yet; it does include it in your backlog. Moving on to revenues, our top line reached almost 900 million in Q1, or 180 million higher year over year for a 25% growth rate. If you look at the right chart, service and support represented around 41 percent of revenue in Q1, followed by executive close to 27, commercial aviation more 22, and defense at around 9 percent. Next slide.

Speaker Change: The backlog for service and support the finished stable at $3 1 billion in Q1.

Speaker Change: While for defense and security.

Speaker Change: The decrease it marginally by 4% quarter over quarter to <unk> 4 billion.

Speaker Change: Again, we should there are 11 feature that <unk> creates a three tender offers one host.

Speaker Change: <unk>, having been signed and yet it does included E. Our backlog.

Speaker Change: Moving on to our revenues our top line reached almost 900 of that meeting queue up.

Speaker Change: <unk> hundred 80 million higher year over here for up to 85, 8% growth rate.

Speaker Change: If you look at the right charts.

Speaker Change: So support to represent that around 41% revenue in Q1, followed by executive across your trade seven commercial aviation from R 22, and the phase at around 9%.

Speaker Change: Next slide.

Antonio Carlos Garcia: We generated $47 million in adjusted EBITDA in Q1, with a 5.2% margin driven by higher aircraft delivery compared to the same period last year and better consolidated gross margin. Meanwhile, adjusted EBIT amounted to $7 million for an adjusted EBIT margin of 0.8%, and reported EBIT for the quarter was negative 4 million for a negative 0.4% margin. Both figures were better than the first quarter, 23, supported by higher volumes and a better mix, especially in executive and service and support.

Speaker Change: We generated 47 million in adjusted EBITDA late Q1, we saw five 2% margin driven by higher aircraft deliveries compared to the same period of last year and better consolidated gross margin.

Antonio Carlos Garcia: Look at the right chart; we can see that active aviation and service and support generated positive activity during the quarantine, while commercial and defense presented negative results because of limited volume supply chain delays and more aircraft in the early stage of assembly. Slide it over, please.

Speaker Change: Meanwhile, adjusted EBITDA was $7 million for an adjusted EBIT margin of <unk>, 8%.

Speaker Change: Report to David for the acquired was negative $4 million or a negative 0.4% margin both.

Speaker Change: <unk> figure were better than the first quarter 'twenty three supported by higher volumes better mix, especially in the <unk> service and support Roke and the right chart, we can see executives aviation and service and support to generate that positive EBITDA during the quarter.

Speaker Change: While commercial and defense presented negative results.

Speaker Change: Cause our limited volume supply chain delays and more aircrafts in the early stage of assembly.

Speaker Change: Slide 12 please.

Antonio Carlos Garcia: In Q1, if we exclude ETH, we had an adjusted free cash flow consumption of $346, or $53 million better in Q1 2023, by Customer Advanced Payment. The key one, cash consumption, is basically due to the increase in inventories to support higher deliveries in the upcoming quarter. This cash should be reverted as more deliveries take place throughout the year, and we have firm or 220 million or higher guidance for cash generation in 2024.

Speaker Change: In Q1, if we exclude east we had an adjusted free cash flow consumption of 305, six or $53 million better in Q1 to 83.

Speaker Change: By customer at the buzzer payments. The Q1 cash consumption is basically due to a decrease in inventories to support the higher deliveries in the upcoming quarters.

Antonio Carlos Garcia: Moving to investment, and again, without the, $47 million were allocated to research and development, $28 million to COPEX, and a net of $15 million to the pool program in Q1, for a $90 million total compared to $82 million a year ago. We highlight that our capital allocation continues to be focused on segments with higher returns, such as projects such as expansion of our production capacity and executive aviation and service and support. Our adjusted net income was negative $13 million for the quarter on a negative 1.4% adjusted margin. Historically, the first quarter of the year is the weakest because of business seasonality.

Speaker Change: This cash should be reverted as more deliveries to take place throughout the year and we have trimmed our children to $80 million or higher guidance for the cash generation chip total to 84.

Speaker Change: Each wave estimate and again without the <unk>.

Speaker Change: 47 million award allocated to research and development to AIA to me that your Capex and the net of 50 meter to the pool program in Q1.

Speaker Change: For a 90 million total compared to 82 million a year ago.

Speaker Change: We highlight our capital allocation continues to be focused on segments with higher returns, which projects such as expansion of our production capacity and the <unk> aviation and service and support.

Speaker Change: Our adjusted net income was negative 30 meter project quarter.

Speaker Change: On a negative one 4% adjusted margin.

Speaker Change: Historically, the first quarter because of the year is the weakest because of the business seasonality.

Antonio Carlos Garcia: The positive report net income is driven by the mark-to-mark valuation of the EV warrants at around $30 million. Next slide, we go to our liability management plan. In first quarter 24, we reduced our growth debt by $276 million, only during the quarter, and by a more sizable $750 million versus a year ago, to a total of $2.6 billion. In addition, our net debt declined by $384 million year over year, to a total of $1 billion in the first quarter of 2024. However, on a sequential basis, our net-to-depth BTDA leverage ratio increased by 0.4 tons to 1.8 types, as shown in the top right corner. This variance is explained by the seasonality of the business.

Speaker Change: The positive of reported net income is driven by the mark to market valuation of <unk> was around 30 million.

Speaker Change: Next slide go into our liability management plan.

Speaker Change: In first quarter 'twenty, four we reduced our gross debt without television by $276 million all in during the quarter.

Speaker Change: And by a more sizable 754.

Speaker Change: $4 million versus a year ago.

Speaker Change: To a total of $2 6 billion.

Speaker Change: In addition, our net debt declined by 380, <unk> media year over year to a total of a BD, Inc. First quarter 284.

Speaker Change: However, on a sequential basis, our net debt to <unk> leverage ratio increased zero byte for dense.

Speaker Change: 218 steps as showing did top right corner.

Speaker Change: These various is extended by the seasonality of the business.

Antonio Carlos Garcia: Our almost $2.4 billion liquidity position allowed us to cover our debt obligations beyond 2030 and leave us in a very comfortable position. With that, I conclude my presentation and hand it back to Francisco for his final remarks. Thank you very much. Thank you, Antoine. The Q124 was another great design.

Speaker Change: Our almost $2 4 billion liquidity position allowed us to cover all debt obligations beyond to 2030 and leave us in a very comfortable position.

Speaker Change: With that I conclude my presentation and hand, it back to FERC useful for his final remarks, Thank you very much.

FERC: Thank you Brian.

Francisco Gomes Neto: The Q124 was another step in the right direction, supported by both external factors, like some marginal improvements in our supply chain, and internal ones, like our production leveling initiative. Speaking of production leveling, we recently hosted a conference with our main suppliers to strengthen our partnership and operational plans for 2024 and years ahead. We remain optimistic that supply chain disruption should continue to diminish and improve our ability to deliver more aircraft in the next few years.

FERC: The Q1 'twenty four was another step in the right direction.

Speaker Change: Supported by both external factors.

Speaker Change: Right.

Speaker Change: Marginal improvements in our supply chain.

Speaker Change: An internal ones like our production level initiatives.

Speaker Change: Speaking of production leveling, we recently hosted a conference with our main suppliers.

Speaker Change: Linking our partnership and operational plans for 24 and years ahead.

Speaker Change: We remain optimistic that supply chain disruption.

Speaker Change: Continue to diminish and improve our ability to deliver more aircraft in the next few years.

Francisco Gomes Neto: To finish, I would like to thank you all again for your interest and confidence in our company, and a very special shout out to our friends in Davos. We are very grateful for the partnership and trust. We will continue to focus on operational and business efficiency in 2024, having as the foundation of our culture, safety first, and quality everywhere. Let's now move to the Q&A session of the call.

Speaker Change: To finish I would like to thank you all again for your interest in cost advanced in our company and.

Speaker Change: And a very special shoot all our friends in balance.

Speaker Change: We're very grateful for their partnership interest.

Speaker Change: We continue to focus on operational and business efficiency in 'twenty to 'twenty four.

Speaker Change: Foundation of our culture safety and.

Speaker Change: And quite a few others.

Speaker Change: Now moving to the Q&A session of the call.

Operator: We will now start the question and answer session. The first part of the Q&A session will be exclusively for equity research analysts and investors.

Speaker Change: We will now start the question and answer session.

Speaker Change: The first part of the Q&A session will be exclusively for equity research analysts and investors.

Operator: The second part of the Q&A will be only for the press. As we have mentioned before, this conference call is being conducted in English with simultaneous translation into Portuguese. Please let me say a short announcement for Portuguese speaking people. This conference is being held originally in English. To listen to the simultaneous translation in Portuguese, press the Interpretation button on the platform and select the Portuguese language.

Speaker Change: The second part of the Q&A will be only for the Pratt.

Speaker Change: The highlight again this conference call is being conducted in English.

Speaker Change: Daniel translation to Portuguese.

Speaker Change: Please let me say a short announcements for Portuguese speakers.

Speaker Change: As a company that's simply how does that what is in all major English, but it will be that had this one small thing in Portuguese first journey.

Speaker Change: But it does sound a packer farmer, you celesta and you read you all put together.

Operator: We ask participants interested in asking questions to press star 9 on the phone at any time or press the raise a hand button on the platform. When your name is announced, press star six on the phone or make sure your microphone is on and start your question; they will also answer questions sent via the platform chat. If you need assistance, please use the Q&A button on the platform. To give everyone a chance to participate, we request that you ask just one question per call. Please hold while we collect questions. The first question comes from Kai Von Vermoor with TD Cohen. Please go ahead.

Speaker Change: We ask participants interested in asking questions suppressed star nine and the phone at any time, our press to raise a hand button on the platform.

Speaker Change: When your name is announced.

Speaker Change: Press Star six on the phone or make sure. Your microphone is on and start your question.

Speaker Change: Well also ask your questions sent via the platform chat.

Speaker Change: If you need assistance. Please use the Q&A button on the platform.

Speaker Change: To give everyone a chance to participate.

Speaker Change: Quest to ask just one question for Paul.

Speaker Change: Please hold while we collect question.

Speaker Change: The first question comes from Cai von for more with TD Cowen. Please go ahead.

Cai von: Hello Guy.

Gabriel Cavalcante: Hi, good morning; it's Gabriel from Ita, actually. So one question from our side here, you have just a comment regarding the supply chain issues in the defense business, and they're expecting these issues to improve over the year. But I was just wondering whether the supply issues that impacted the defense business, the specific components that impact your performance in the division, have some overlap with the commercial division as well. So if you could provide a little bit more detail on that, it would be great. Thank you.

Cai von: Hi, good morning.

Cai von: Somebody all his danger from VW actually.

Cai von: So one question from our side here you have just comment regarding the supply chain issues.

Cai von: In the defense business there are expecting these issues to improve along the year, but I was just wondering whether the supply.

Cai von: Issues that impacted the defense business the specific components that back to your performance in the division have some overlap with the commercial debuted in my small so if you could provide a little bit more detail on that it would be great. Thank you.

Speaker Change: Hey, Kevin.

Speaker Change: Thanks.

Speaker Change: Okay.

Francisco Gomes Neto: [inaudible] Hi Gabriel, Francisco speaking here. Yes, I mean, as I said, we saw improvements in the supply chain from 22 to 23, from 23 to 24, but it's still with challenges in a specific component that some are limiting our production this year and also because of the delays; they are delivering the parts, but not on time to help us with the production. And then we have to make adjustments in our production schedule, which affects our productivity.

Speaker Change: Hi, Gabriel Francisco speaking here.

Francisco Gomes Neto: Yes, I mean as I said we.

Francisco Gomes Neto: We see.

Francisco Gomes Neto: Improvements in there.

Francisco Gomes Neto: Our supply chain from.

Francisco Gomes Neto: We saw from 'twenty to 'twenty, two 'twenty three to 'twenty for quite a few weeks.

Francisco Gomes Neto: Challenges in this business the key components.

Francisco Gomes Neto: Some are really busy.

Francisco Gomes Neto: Production in the year.

Francisco Gomes Neto: Awesome.

Francisco Gomes Neto: Because they believe they are.

Francisco Gomes Neto: Delivering the parks, but not on time to help us with the production and then we have to make adjustments in our production schedule.

Francisco Gomes Neto: Effects.

Francisco Gomes Neto: Our productivity and.

Francisco Gomes Neto: In some cases, we can risk deliveries as well. But we made our plan for this year based on the plan that we discussed a lot with the suppliers. So again, we are confident that the delivery, the aircraft, we announced in the guidance for this year will be on time. That's valid for all the aircraft. Francisco, just to complete, Gabriel...

Francisco Gomes Neto: In some case with your risk.

Francisco Gomes Neto: Deliveries as well.

Francisco Gomes Neto: It remains our plan for this year based on the well.

Francisco Gomes Neto: The plan that we discussed this a lot with the suppliers. So again, we have confidence that.

Francisco Gomes Neto: With delivery.

Francisco Gomes Neto: The aircraft, we we announced that in the guidance.

Francisco Gomes Neto: Okay.

Francisco Gomes Neto: On the aircraft.

Unknown Executive: And Francisco, just to complete, Gabriel, for the defense especially, there is, I would say, not an overlap in regards to the specific parts for the C390. There are different parts or, in some cases, suppliers, and we just have, I would say, a concentration in Q1 with less receiving parts for defense, and also, the mix of contracts will cause less revenue and impact our margins, especially in Q1, but it is nothing that concerns us because This Is Korea.

Francisco Gomes Neto: Just to compete for the face, especially there is I would say naphtha overlap you guys too.

Francisco Gomes Neto: The specific parts for the C 390.

Francisco Gomes Neto: Different parts or in some cases suppliers.

Francisco Gomes Neto: We just have I would say a concentration in Q1.

Francisco Gomes Neto: Less.

Francisco Gomes Neto: We are receiving parts for defense and also the mix of cough cold calls less revenue and impact our margins, especially in Q1, but it is nothing that would concern us for this fiscal year.

Francisco Gomes Neto: Okay.

Francisco Gomes Neto: That's perfect. Thank you.

Speaker Change: That's perfect. Thank you.

Speaker Change: Thank you.

Myles Alexander Walton: The next question comes from Miles Walton with Wolf, please.

Speaker Change: The next question comes from Myles Walton with Walsh.

Myles Alexander Walton: Please go ahead.

Myles Alexander Walton: Thanks. Good morning.

Myles Alexander Walton: Thanks, Good morning.

Francisco Gomes Neto: Francisco, could you elaborate a little bit on the sales campaigns for the 200 aircraft you mentioned, both E1s and E2s? And I guess there are a couple of questions, if you could give us some color on one, about the geographic dispersion of those campaigns. And the other question is, in the case of the E2s, are these customers looking to fulfill capacity needs that aren't being satisfied by Boeing and Airbus? Do you see that sort of opening emerging, or are these more expansions of customers that you would have otherwise anticipated, even if Boeing and Airbus had capacity? Thanks.

Myles Alexander Walton: Francisco could you elaborate a little bit on the sales campaigns for the 200 aircrafts you mentioned, both <unk> and I guess a couple of questions. If you could give us some color on one is the geographic dispersion of those campaigns and the other is in the case of the E. Twos are these customers are looking to fulfill.

Myles Alexander Walton: <unk> needs that aren't being satisfied by Boeing.

Myles Alexander Walton: Boeing and Airbus do you see that sort of opening emerging or are.

Myles Alexander Walton: Or are these more expansion of customers that you would have otherwise anticipated even ask Boeing and Airbus had capacity. Thanks.

Francisco Gomes Neto: Thank you, Miles, for the questions. We have campaigns in all the regions, and I will be clear with you. I mean other regions, South America, North America, Europe, and Asia Pacific.

Speaker Change: Thanks miles.

Speaker Change: Question.

Speaker Change: We had a campaign.

Speaker Change: Other regions.

Speaker Change: To be clear with you.

Speaker Change: Other regions, South America, North America, Europe, and Asia Pacific with.

Francisco Gomes Neto: With the good opportunities, I can't disclose the details of the ongoing campaigns, but as I said, it's more than 200 potential sales. And yeah, this is a combination of different factors. You know, I mean, the E2, as we have said, it's a perfect solution to complement the operations of bigger narrow buys. So we see now today the first flight of our customer, good, in Singapore where they are going to use the eTools to open new routes and to increase the frequency of flights. And we see that in many different regions as well.

Speaker Change: We did win opportunities.

Speaker Change: I can't disclosure details of ongoing campaign, but as I said.

Speaker Change: More than 200 potential sales.

Speaker Change: Yes. This is a combination of different factors no M&A too.

Speaker Change: So we we have said.

Speaker Change: Perfect solution to complement the operation itself.

Speaker Change: Bigger.

Speaker Change: Narrow bodies. So we've seen our today is the first flight.

Speaker Change: Our customer base.

Speaker Change: In Singapore.

Speaker Change: They're going to use the tools to opening new Ross and we receive frequency of suites, and we see that being any different.

Speaker Change: We just.

Speaker Change: Well. So again, we are very easy, but we are very optimistic with the perpetual sales off.

Unknown Executive: So again, we are very, it's not easy, but we are very optimistic about the potential sales of eTools in 2024. What else? Miles, you ask him, please.

Speaker Change: In 2024.

Speaker Change: What else semi miles you proactively will repeat.

Myles Alexander Walton: Francisco, just more. Are you seeing these campaigns build demand because of the lack of supply offered by Boeing and Airbus? Or, or is that not a major factor in how these campaigns are playing out?

Speaker Change: For instance, or just more are you seeing these campaigns build.

Speaker Change: Demand because of the lack of supply offered by Boeing and Airbus.

Speaker Change: Or.

Speaker Change: Or is that not a major factor in how these campaigns are playing out.

Francisco Gomes Neto: Okay, again, as I said, it's a combination of factors. And for sure, I mean, the fact that we have what production got available already from 2026 onwards. This is a... can help the airlines to add capacity sooner to their fleets.

Speaker Change: Again as I said, it's a combination of factors and for sure I mean, the fact that we have.

Speaker Change: I mean.

Speaker Change: Production.

Speaker Change: Payable.

Speaker Change: Our rent from 'twenty to 'twenty six Illinois. This is.

Speaker Change: Can help the airlines to add.

Speaker Change: Capacity sooner to there please.

Francisco Gomes Neto: Yeah, that's where I was going. It's surprising you still have that availability given the absence of supply barrels.

Speaker Change: Yes, that's why I was giving its surprising you still have that availability given the absence of supply everybody else. Just one quick follow up if I could the arbitration timing with Boeing is that still on track for this quarter. Thanks, so much.

Francisco Gomes Neto: Thank you, Miles. Yes, we expect this to end in the first half of this year, so we should be cool, but it's not in our hands. It's a decision by the Tribunal in New York, but we expect this to end no later than the middle of this year. Perfect. Thanks again.

Myles Alexander Walton: Just one quick follow-up question if I could: the arbitration timing with Boeing is that still on track for this quarter? Thanks so much. Oh, thank you, Miles. Yes, we expect this.

Speaker Change: Oh, Thanks, and while yes, we expect this to end.

Speaker Change: In the first half of this year, so we should be close, but it's not in our hands He said adhesion.

Speaker Change: Of the.

Speaker Change: Detroit muted thrive.

Speaker Change: But we expect this to ethanol.

Speaker Change: Later than mid of.

Speaker Change: This year.

Speaker Change: Perfect. Thanks again.

Speaker Change: Youre welcome.

Speaker Change: Okay.

Operator: Thank you. The next question comes from Kai Von Bremore with TD Cohen. Please go ahead. Kai, your microphone seems to be on mute, ticket, please unmute on your end.

Cai von: The next question comes from Cai von <unk> with TD Cowen. Please go ahead.

Cai von: Kai your microphone seems to be.

Cai von: On mute.

Cai von: If you could please on mute on your hand.

Operator: The next question comes from Ron Epstein with Bank of America. Please go ahead. Hey, good morning, everyone.

Cai von: The next question comes from Ron Epstein with Bank of America. Please go ahead.

Ron Epstein: Yeah, Hey, good morning, everyone.

Ron Epstein: For the World.

Ron Epstein: A couple of quick questions can you talk a little bit more just about supply chain in general and where you are seeing constraints still.

Ron Epstein: Both on commercial and defense.

Unknown Caller: Well, Rom, as we said before, we see, I mean, improvements in average in our supply chain, but we still have some challenges with specific products in terms of volume. And I'll go.

Ron Epstein: Well, Rob asked every we said before we see.

Ron Epstein: Improvements in average in our supply chain.

Ron Epstein: But we feel with some challenges.

Ron Epstein: With this specific products in terms of volume.

Ron Epstein: Although.

Francisco Gomes Neto: Now, on-time delivery. We have a lot of suppliers improving, but still, some suppliers with difficulty delivering the parts we need on time. And this again brings us more difficulty in our production. As you know, we are working on this production leveling initiative where we want to better distribute the production and delivery throughout the year. So, we will still have difficulties in 2024.

Ron Epstein: Now the on time delivery.

Ron Epstein: We have a lot of.

Ron Epstein: <unk> is improving.

Ron Epstein: Steel supply is really difficult to deliver the box really long time and these again.

Ron Epstein: Bringing to us.

Ron Epstein: More difficult in our production as you know we are working this production laterally.

Ron Epstein: Initiatives that we want to to better distribute the production and delivery throughout the year.

Ron Epstein: We still have difficult in 2024.

Ron Epstein: Expect.

Ron Epstein: But again in line with our best to deliver the guidance and we expect that even more improvements in 2025 in years ahead from our supply chain for both sides commercial and defense.

Francisco Gomes Neto: And we expect, but again, in line with our plans to deliver the guidance, and we expect even more improvements in 2025, in the years ahead from our supply chain for both sides, commercial and defense. Can you guys speak broadly to how you're thinking about product development and new products? Sure. Well, I mean, we fully understand all the excitement caused by recent media speculation. I mean, I'd like to note that.

Speaker Change: Got it got it and then maybe one more follow on if I can just can you guys speak broadly to how you're thinking about product development and new products.

Speaker Change: Sure.

Speaker Change: We fully understand it all the excitement caused by recent.

Speaker Change: Media speculation.

Speaker Change: A.

Speaker Change: And Andy.

Speaker Change: Right.

Francisco Gomes Neto: The level, the high level of market confidence in our company, right? Because of the achievements driven by engineering excellence, you know, our enterprise efficiency, and our customer-centric philosophy. And we are, of course, always looking at future options, you know, our business. But, however, as I said before, we are now in our Harvard season. So we are focusing on selling and delivering the current, existing portfolio of products that is very modern and competitive. So we don't have a concrete plan to develop or launch an aerobody or other aircraft in the next few years.

Speaker Change: Ed.

Speaker Change: The level of the high level of market confidence in our company.

Victor Mizusaki: Thank you. The next question comes from Victor Mizusaki with Bradesco BBI. Please go ahead.

Speaker Change: Because of the achievement driven by engineering excellence and a lot of our enterprise efficiencies and our customer centric philosophy.

Speaker Change: We are of course, we are always looking at future auctions.

Speaker Change: Our business, but however, as I said before we have.

Speaker Change: We are now in our harvest season, so we are focusing on selling and home delivery.

Speaker Change: The existing portfolio of products that is very modern and competitive so we don't have.

Speaker Change: Great.

Speaker Change: To develop or launcher narrow body or the aircraft in the next few years.

Speaker Change: Great perfect. Thank you so much.

Speaker Change: Oh, you are very welcome Rong.

Speaker Change: Thank you. The next question comes from Victor <unk> Zaki with Pat <unk> BPI. Please go ahead.

Francisco Gomes Neto: Hi, I have two questions here. The first one is that apparently some guys from Mahindra were visiting Embraer in Brazil. So I don't know if you can give us some update on the negotiations. And second, when we take a look at the press release, there's a comment about provisions for Badatti service and support. So maybe you can comment a little bit if it's a kind of specific situation or there's something more to come in the second quarter. Thank you.

Speaker Change: Hi.

Victor Mizusaki: Two questions here.

Victor Mizusaki: The first one.

Zaki: Apparently congrats from my anger over recently, Brian, Brazil, So doughnuts kind of give us some update on the negotiations.

Zaki: Second.

Zaki: And with the coming from the press release, there was a comment about provisions for bad debt service and support.

Zaki: So maybe you can comment on it'll be kind of a specific situation.

Brian: Or is there something more to come in the second quarter. Thank you.

Antonio Carlos Garcia: All right, Victor. I'll start with question number one, and then Antonio will help us with question number two. Yes, we had a very exciting visit last week to our facilities in Brazil by the Mahindra CEO and three other members of this team, where we had an opportunity to better know each other and talk about the next steps in this MTA process in India to sell, you know, from 40 to up to 80 and 59 to the Indian Air Force. So we believe we have a good partnership with them and we will work best to convince the customer that our products are the best ones for the Indian Air Force.

Speaker Change: Alright, Victor is factored to the question one and then our partner will help US we did it was a question too.

Victor: Yes, we didn't have.

Victor: A very exactly visit last week to our facilities.

Victor: In the in Brazil of the Mahindra CEO and a few other members of his team, where we had opportunity to better know each other and talk about the next steps on this.

Speaker Change: Thank you.

Speaker Change: Office, you need yet to sell from 42.

Speaker Change: Grew up to 80 <unk> Air Force. So we believe we have.

Speaker Change: A good partnership with them and we do our best to convince the customer that our products is the best one for the JF ones.

Antonio Carlos Garcia: Antonio, you can help us with a second. Yeah, good morning, Victor. So this is a very simple question.

Speaker Change: You can help us with the second yes, good morning.

Antonio Carlos Garcia: Good morning, Victor. So, very simple here. We just built up three million, which you want for the bed-deck provisions. Just Q1 was a little bit higher concentration over due payment, and it's not one specific customer, it's a bunch of customers who just apply the accounting methodology. I do not see it as being a trend for the future, but probably half of it is going to be refunded next quarter already.

Speaker Change: So.

Speaker Change: Very simple here, we just be about $3 million. Thank you well for the bad debt provision is just.

Speaker Change: Q1 was a leader.

Speaker Change: The higher concentration of overdue payments is not the one specific customer as a bank of course, we just apply the accounting methodology.

Speaker Change: M a C.

Speaker Change: Being trained.

Speaker Change: The future probably half of it is going to be a rebid next clients are ready to visa.

Antonio Carlos Garcia: This is not concerning us right now. Thank you. Thank you.

Speaker Change: Optical segments right now.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Marcelo Garaldi Motta: The next question comes from Marcelo Motta with J.P. Morgan. Please go ahead.

Speaker Change: The next question. The next question comes from Marcelo Motta with Jpmorgan. Please go ahead.

Marcelo Garaldi Motta: Hi everyone. Thanks for getting the question. It's regarding the defense. Do you guys have any updates regarding, you know, the conversion of orders from the Netherlands, Austria, and the Czech Republic? I mean, you guys also mentioned in the deliveries and backlog report from the first quarter that there are ongoing orders from India and Asia Pacific that are not incorporated into the backlog yet. Could you please give us more color on, you know, maybe the size, potential size of these orders and, you know, or maybe expectations for defense backlog for the coming quarters or year-end? Thank you very much. Oh, hi Marcelo. Thanks for the question. Yes, we do

Marcelo Garaldi Motta: Hi, everyone. Thanks for getting the question.

Marcelo Garaldi Motta: Regarding the defense.

Marcelo Garaldi Motta: Do you guys have any.

Marcelo Garaldi Motta: Updates regarding the conversion of the orders from Nederland, Austria, Czech Republic, I mean, you guys also mentioned on the deliveries.

Marcelo Garaldi Motta: And backlog report from the first quarter, you know that there are.

Marcelo Garaldi Motta: Ongoing orders from Asia Pacific that are not incorporated to backlog yet could you. Please give us more color on maybe the size potential cycle disorders, and in or maybe expectations for defense backlog.

Marcelo Garaldi Motta: Mineral for the coming quarters or year end. Thank you very much.

Francisco Gomes Neto: Hi Marcelo, thanks for the question. Yes, we do have a high expectation to sign an important contract in defense. We will do it here. You know already that we have been selected in the past two years. We expect to sign during this year. And in parallel, we are working on other new campaigns, either for the A-29, the Super Tucanos, and the C-29. We also expect 2024 to be a good year in terms of sales, not only in commercial but in defense as well. And, you know, taking the opportunity in Executive Aviation, we keep a very good momentum in sales as well. So again, this year, we are very optimistic in terms of sales in all of our businesses.

Ohio Marcellus: Ohio Marcellus. Thanks for the question, Yes, we will have our highest big patients.

Speaker Change: The sign.

Speaker Change: Important contracts in defense.

Speaker Change: This year.

Speaker Change: The wassa.

Speaker Change: You know already that we have to be selected.

Speaker Change: The past two years, we expect to sign a duty this year and then part of that and we are working in the new campaign.

Speaker Change: Either for the 80 2090 stupid to Carlos and the <unk>.

Speaker Change: We also expect the.

Speaker Change: Mainly to the for it to be a good year in terms of sales not only in commercial but.

Speaker Change: We finished as well.

Speaker Change: We're taking the opportunity and there is active aviation we.

Speaker Change: A very good momentum in sales as well so again this year.

Speaker Change: We are very optimistic in terms of sales in all of our business.

Speaker Change: Perfect. Thank you very much.

Stephen Trent: The next question comes from Stephen Trent. Please go ahead. Mr. Trent, your microphone seems to be muted. Hello, I'm sorry. Can you hear me?

Speaker Change: The next question comes from Stephen Trent.

Stephen Trent: Please go ahead.

Stephen Trent: Mr. Trent your Microsoft seems to be muted Hello, I'm, sorry can you hear me.

Stephen Trent: Hello, I'm sorry. Can you hear me? Good morning, everybody.

Francisco Gomes Neto: I'm sorry about that. Thank you for taking my question. I also had a sort of a follow-up on the defense side. I know that, excuse me, Brazil's Air Force and Sweden have a solid relationship with the GRIPPEN fighter and other cooperation, and I was wondering if you might just give us some high-level color about, you know, how Embraer might be working with GRIPPEN and what opportunities you could see from the new technology. Thank you.

Stephen Trent: Yes, yes, we can.

Stephen Trent: Good morning, everybody I'm, sorry about that.

Stephen Trent: And thank you for taking my question.

Stephen Trent: I also had a <unk>.

Speaker Change: Sort of a follow up on the defense side I know that.

Speaker Change: Excuse me Brazil's Air Force and Sweden.

Speaker Change: On have a solid relationship with with the Griffin fighter.

Speaker Change: And other cooperation.

Speaker Change: And I was wondering if you might just give us some high level color.

Speaker Change: About.

Speaker Change: Hi, Embraer might be working.

Speaker Change: With with Griffin and and what opportunities you could see from.

Speaker Change: The new technology. Thank you.

Francisco Gomes Neto: Thank you, season four, for the questions. Well, we do have a partnership with T.O.P., you know, to help them to sell gripping content, not only in Brazil but outside Brazil. And they do help us to sell the C29. So we have been working together. And Next reading is one of our potential markets that we have been working on, so we don't have any other information than that. In regard to sales of gripping, this is better you ask Saab directly.

Speaker Change: Thank you Peter for the Beckman.

Peter: Well, we don't have a partnership with.

Peter: Scott.

Speaker Change: Oh God to help them to sell we've been not only in Brazil, but outside Brazil.

Speaker Change: Then in May to help us to sell the <unk>, who have been working together.

Speaker Change: I mean, it's really is the one off of our potential markets that we have been working on.

Speaker Change: So why do we don't have any other information than that.

Speaker Change: The guidance things up really this is better you ask the fab or directly.

Stephen Trent: Great, appreciate that. And just a quick follow up, you know, any high level of color on how you guys are feeling about your supply of engineers in terms of hiring and retaining those people. Thank you.

Speaker Change: Great I appreciate that and just.

Speaker Change: A quick follow up.

Speaker Change: Any high level color Hao.

Speaker Change: You guys are feeling about your supply of engineers.

Speaker Change: In terms of hiring and retaining.

Speaker Change: Those people thank you.

Francisco Gomes Neto: Thank you again, Stevie. Again, we have been working very hard on those topics that are, you know, talent retention is one of the main focus of Embraer, not only engineering but the entire company. And again, we have a lot of new programs for engineers to work on in the future. We have improved our communication process. We have a lot of things to help us to retain our talents within the company. I don't know if Andresa, our VP of HR, would like to add some more information on that because we have been personally involved in this topic.

Speaker Change: Thank you again, assuming again, we have been working very hard on those topics that is.

Speaker Change: The Delek irritation basically one of the.

Speaker Change: The main focus of Ingrid knutsen.

Speaker Change: Good morning engineering, but the entire company.

Speaker Change: And again, we have a.

Speaker Change: A lot of our new programs, what engineers working on in the future we have.

Speaker Change: Improving our communication process, we have had in the rfps.

Speaker Change: To help us to regain our our tenants it within their companies I don't have a greater our V. P. H Shah would like to add some more information on that because we have to be personally bullish in this topic.

Unknown Executive: Hello, everybody. Good morning.

H Shah: Hello, everybody good morning, Thanks Francesco.

H Shah: As you said, we're working very hard on that.

H Shah: We have a lot of initiatives, especially internally my name from co chair.

H Shah: Sure <unk>.

H Shah: Things that make our engineers are not only engineered all of our employees.

H Shah: We.

H Shah: Consider it.

H Shah: Keith and brands and we also have been granted as a great place to work.

Speaker Change: And this also helps to retain.

Speaker Change: Our employees.

Unknown Executive: Thanks, Francisco. So, as you said, we're working very hard on that. We have a lot of initiatives, especially internally by means of culture, the future of work, things that make our engineers, and not only engineers, but all our employees, consider keeping Embraer. And we also have been recognized as a great place to work. And this also helps to retain our employees. Thanks for the questions, Steve.

Speaker Change: Oh, thanks for the question.

Speaker Change: Thank you.

Speaker Change: Thank you.

Lucas Teixeira Barbosa: Thank you. The next question comes from Lucas Barbosa of Santander. Please go ahead.

Speaker Change: Thank you. The next question comes from Lucas Barbosa with Santander. Please go ahead.

Lucas Teixeira Barbosa: Good morning, Francisco, Antonio, Gui, thanks for taking my questions and congratulations on the results. So my question is looking a little bit longer term at the commercial aviation division. Embraer has deliveries to be made with better pricing conditions in the future, a higher mix of E1s given the AA, American Airlines order, and a cost structure that is leaner than in recent years. So my question is, with all of those positive drivers, where can commercial aviation margins stabilize at in the future?

Lucas Teixeira Barbosa: Good morning, Francisco Carnegie Thanks for taking my questions and congratulations for the results. So my question is looking a little bit longer term at the commercial aviation Division Embraer has deliveries to be done with better pricing conditions in the future a higher mix of <unk>, given the a a or American airlines order.

Speaker Change: And the cost structure that is leaner than in several past years. So my question is with all of those positive drivers.

Speaker Change: Work in commercial aviation margins stabilize that in the future. Thank you very much.

Unknown Executive: Thank you very much.

Speaker Change: Good morning, and thanks for the question this is <unk>.

Unknown Executive: Good morning and thanks for the question. This is Agip Iva. So, look, the points you mentioned are all correct. We don't provide official guidance for individual divisions of the company. But if you look in the past, Commercial Aviation was able to sustain margins in the double-digit territory in the mid-teens.

Speaker Change: So look the <unk>.

Speaker Change: Concentration are all correct, we don't provide official guidance for individual divisions of the company, but if youre looking at the past commercial aviation.

Speaker Change: To sustain margins in the double digit territory in the mid teens.

Unknown Executive: That is far away from where we are now, but we're confident that in the next few years.

Speaker Change: That is far away from where we are now live with both of them that in the next two years.

Unknown Executive: In the next few years, we should see margins continue to improve in that direction.

Speaker Change: Should see margins continuing to improve towards that direction.

Lucas Teixeira Barbosa: Super clear. Thank you very much and have a great day. Thank you.

Speaker Change: So pretty clear thank you very much and have a great team.

Speaker Change: Thank you.

Christine LeWob: The next question comes from Christine with Morgan Stanley. Please go ahead. Ms. LeWob, your microphone seems to be on mute.

Speaker Change: The next question comes from Cristina <unk> with Morgan Stanley. Please go ahead.

Speaker Change: Okay.

Cristina: Mr. Rob your microphone seems to be on mute.

Christine LeWob: Oh, hello, can you hear me? Yes. Okay. Hey, good morning, Francisco, Antonio, and Guy. Sorry about that.

Cristina: Hello can you hear me.

Speaker Change: Yes, yes.

Cristina: Hey, good morning, Francisco Antonio <unk>, sorry about that.

Christine LeWob: Maybe Francisco, on competitive dynamics, Airbus continues to lose money on the E220. And you know, they are aspirationally aiming to break even at 160 per year. But they're continuing to see pressure from labor costs in Canada and their supply chain. Can you talk about what this means for the pricing environment for the E2? And how has the pricing environment for E2 changed over the past few years since COVID? Are you seeing any improvement?

Cristina: Maybe francisco and competitive dynamics.

Francisco Gomes Neto: Airbus continues to lose money on the 820 and you know they are aspirational Lee breakeven at 160 per year, but they are continuing to see pressure from labor costs in Canada, and as well as their supply chain can you talk about what this means for the pricing environment for the EU and how it has been.

Francisco Gomes Neto: The pricing environment for the EPA changed over.

Francisco Gomes Neto: Over the past few years since Covid are you seeing any improvement.

Francisco Gomes Neto: Cristina, thanks for the question. A good question, by the way.

Cristina: We have a precedent.

Speaker Change: For the question good question by the way.

Francisco Gomes Neto: Well, when we have free competition in the market, the result is pressure on prices, which benefits the customers, right? In the case of Embraer, I mean, even with tough competition, we have been profitable in our commercial aviation. In the past year, the past year, the past two years, we've been profitable, commercialization, without services, and we don't sell our aircraft below cost. So what we have done, we have tried to offer competitive prices to our customers to show the value of our products. That our product, we believe that we do have the most efficient aircraft in that category.

Speaker Change: Well, what why do we have.

Speaker Change: Our free competition in the market. The result, this pressure on the price.

Speaker Change: Which benefits the customer trends.

Speaker Change: It gives a February Ed I mean, even with the.

Speaker Change: These tough competition, we have been profitable in our commercial aviation.

Speaker Change: In the past year, the past years, the best two years, we'd be profit profitable the commissioner without services.

Speaker Change: We don't sell our aircraft are below cost. So a lot that we have done we have tried to offer competitive prices to our customers to show the value of our products that we've got a we believe that we do have the most efficient aircraft in that in that category and we continue.

Francisco Gomes Neto: And we continue to work on reducing our internal costs now with Kaizen programs, with cost reduction initiatives, involving many engineers in the organization. So again, we have prepared ourselves for this competition, but without selling products below our cost. So again, we expect this year to be profitable in commercial aviation without service. If we had service, we could even improve the profit of our commercial business.

Speaker Change: Work on our reduce our internal costs now with with guys any programs.

Speaker Change: Cost reduction initiatives involving men engineers in the organization. So again you have.

Speaker Change: We set ourselves for this competition, but without selling products below our costs. So again, we expected again this year to be profitable in commercial aviation without service.

Speaker Change: <unk> service that we either improve the process of our commercial business.

Christine LeWob: Thanks, Francisco. And if I could tack another one on, I mean, following up on Miles' question, there is a shortage of aircraft globally, and Boeing continues to struggle with production, and Airbus can't meet all the demand out there either. Now, the E-2 is a very attractive aircraft. I actually flew it recently from Paris to Zurich.

Speaker Change: Thanks, Francisco antibody tagged another one and following up on miles question.

Speaker Change: There is a shortage of aircraft globally and Boeing continues to struggle of production and Airbus can't meet all the demand out there either now the <unk> is a very attractive aircraft actually fluid recently from Paris Zurich.

Speaker Change: What prevents customers from committing to more firm orders I mean that said right. You are sold out through the end of 2020, but whats preventing them for committing for the slots and 27 and beyond.

Christine LeWob: I mean, what prevents customers from committing to more firm orders? I mean, that said, right, you are sold out through the end of 2026. But you know, what's preventing them from committing to the slots in 27 and beyond?

Francisco Gomes Neto: Another good question. Cristina, I think, you know, there was a wave of customers buying bigger aircraft. But now, I think we see more and more opportunities for this. We call it the small network. I mean, we too can fly for up to six hours. You know, and It is very efficient and very quiet. And it's perfect for if the airline wants to offer a higher frequency of flights to the passengers, also to explore routes.

Speaker Change: Another good impressive facility.

Speaker Change: I think it out there.

Speaker Change: A week.

Speaker Change: Uh huh.

Speaker Change: Customers wave of customers buying bigger aircraft, but they are.

Speaker Change: Now, let me I think we see more and more opportunities for this recall small narrow body I mean, how are we to comprise up to six hours.

Speaker Change: Oh and.

Speaker Change: It is a very efficient very quiet.

Speaker Change: It's perfect for for.

Speaker Change: If the airline and wants to offer a higher frequency of a flight to the passengers although two to explore routes.

Francisco Gomes Neto: I mean, until the demand is big enough to fill a big narrowbody, I think the A2 is a perfect solution. And we see more and more customers now. I mean, we see the interest growing more and more in that segment of small narrowbody that will, for sure, benefit our industry.

Speaker Change: And to the demand.

Speaker Change: <unk>.

Speaker Change: It's big enough to fuel.

Speaker Change: A big a narrow body I think it's I think they do as a part of the solution and we see more and more customer now I mean, we see the interest growing more and more in that segment of small narrow body.

Speaker Change: Sure benefit our intuition.

Christine LeWob: Great. Thank you for the color. Thanks, Christine.

Christine LeWob: Great, thank you for the color.

Speaker Change: Great. Thank you for the color.

Speaker Change: Thanks Christine.

Noah Popernak: Thank you very much. The next question comes from Noah Popernak with Goldman Sachs. Please go ahead.

Speaker Change: Thank you very much. The next question comes from Noah <unk> with Goldman Sachs. Please go ahead.

Noah: Hi, good morning, everyone.

Noah: Good morning.

Noah: Good morning.

Noah Popernak: What, um, what unit growth are you planning for based on demand backlog, and how full the skyline is in the medium term in commercial?

Noah: What what unit growth.

Noah: Are you planning for.

Noah: Based on demand backlog helpful. The skyline is.

Noah: In the medium term in commercial.

Noah Popernak: Could you please repeat the questions? I have difficulty and it is very difficult to understand here. Yes.

Speaker Change: Could you. Please repeat the question I have difficult very difficult to understand yet.

Speaker Change: Yes can you hear me okay.

Speaker Change: Yes, yes.

Noah Popernak: Yeah, I'm wondering, from the starting point of 2024, you know, given you have to set the system, the production system in motion pretty far in advance, and delivery production and deliveries are still pretty far below pre-pandemic in commercial, I'm wondering how you're triangulating all of the inputs you have to decide where you should take production over the next two or three years in commercial.

Speaker Change: Yes, I am wondering from from the starting point of a <unk>.

Speaker Change: 2024, given you have to.

Francisco Gomes Neto: Okay, now I got your question. Thank you.

Speaker Change: Set the satcom system production system in motion.

Speaker Change: Pretty far in advance.

Speaker Change: And delivery production deliveries are still pretty far below pre pandemic.

Speaker Change: Commercial.

Speaker Change: I'm wondering how you're triangulating all of the inputs you have to decide where you should take production.

Speaker Change: Over the next two or three years in commercial.

Francisco Gomes Neto: Well, this year we are planning commercial aviation deliveries between 72 in each aircraft. And we, as I said before, we are working on a lot of Sales Campaigns for the Future. Next year, we expect to grow the production of commercial jets, which should be, you know, very close to the three-digit production. I mean, in the commercial jets.

Speaker Change: Okay <unk>. Thank you.

Speaker Change: Route this year, we we.

Speaker Change: We are planning and commercial aviation deliveries between 70 to 88 aircrafts.

Speaker Change: And we as I said before we are working in a lot of.

Speaker Change: Sales campaigns for the future next year.

Speaker Change: Expect to grow the production of <unk>.

Speaker Change: Commercial jets, we should be.

Where it goes back to the three digits.

Francisco Gomes Neto: Reduction I mean, the commercial jets, and we expect to get that.

Speaker Change: Hawk production with a small growth in the years ahead, so again.

Francisco Gomes Neto: And we expect to keep that level of production with small growth in the years ahead. So, again, we believe that, you know, next year, 25, 26, we'll be back to production levels, pre-pandemic levels, which will bring our commercial aviation to an even better profitability performance. Sponsored ADR We are very optimistic about the production growth and the leaders of commercialization as well.

Francisco Gomes Neto: We believe the ethanol next year, either as a 20.

Francisco Gomes Neto: 25, 26, we'll be back to the production levels pre pandemic levels, which will bring our commercial aviation to work even better.

Francisco Gomes Neto: Profitability.

Francisco Gomes Neto: Performance. So again, we are okay.

Speaker Change: We are optimistic with avid production growth in deliveries off commercial aviation as well.

Noah Popernak: Okay, great. Appreciate that detail. And then at executive, obviously, the deliveries are up a lot year over year in the quarter, obviously, it's off a low base, but have you had resolution of supply chain issues at executives such that the year can be more level loaded as you go through the year or is, You know, is there an implication that there's upside to the full year, right?

Speaker Change: Okay, Great I appreciate that detail and then.

Noah Popernak: At executive obviously, the deliveries are up a lot year over year in the quarter, obviously, it's off a low base, but.

Speaker Change: Have you had resolution of supply chain issues and executive such that the.

Noah Popernak: Year, it can be more level loaded as you go through the year.

Noah Popernak: Or or is it.

Noah Popernak: Is there an implication that there is upside to the full year range.

Francisco Gomes Neto: Oh, you know, we had some difficulties last year. I mean, external with suppliers, but internal as well because we were ramping up production a lot. But I know since then, we have approved a lot of investments in our plans to increase production capacity either in Brazil or in the U.S. So with that, we expect, you know, we are planning growth this year and an even more important growth in 2025 and years ahead. Because of this, I mean, investments we are implementing this year to help us to increase production from 2025 onwards in the executive jet. Okay.

Speaker Change: No we don't.

Noah Popernak: We had some.

Francisco Gomes Neto: Some difficult last year.

Francisco Gomes Neto: The external with suppliers, but the interim as well because we were rough being up a lot.

Francisco Gomes Neto: Production.

Francisco Gomes Neto: But there are no <unk> net we have.

Francisco Gomes Neto: <unk> had a lot of investments.

Francisco Gomes Neto: In our plants to increase production capacity, either in Brazil and in the U S.

Francisco Gomes Neto: So without that we expect and what we are planning a groups this year.

Francisco Gomes Neto: Even more important.

Francisco Gomes Neto: Growth in.

Francisco Gomes Neto: In 2025 in years ahead because of this.

Francisco Gomes Neto: I mean investments, where we are implementing this year to help us to increase production from 'twenty to 'twenty five onwards.

Speaker Change: As exited James.

Speaker Change: Okay great.

Noah Popernak: All right, thanks very much.

Speaker Change: Alright, thanks very much.

Speaker Change: You are welcome.

Operator: Thank you all very much. This concludes the question and answer session for Equity Research Analysts and Investors. Now we will start the Q&A section dedicated to the press. First, we will answer questions in English, and then we will answer questions in Portuguese. We will also answer questions sent via the platform chat. Please let me make a short announcement for Portuguese speakers. This conference is being held originally in English. To listen to the simultaneous translation in Portuguese, press the Interpretation button on the platform and select the Portuguese language.

Speaker Change: Thank you all very much. This concludes the question and answer session for equity research analysts and investors.

Operator: Now, we'll start the Q&A section dedicated to depressed.

Operator: First we will answer questions in English and then we will answer questions in Portuguese.

Operator: We'll also answer questions sent via the platform chat.

Operator: Please let me see a short announcements for Portuguese speakers.

Operator: <unk> had is that about what isn't all maintain bliss.

Operator: You'll get a telephone simo, turning put together that Sonya what they'll interpret us on the path of pharma is an extraordinary drama Portuguese.

Operator: We ask participants interested in asking questions to press the raise a hand button on the platform. When your name is announced, please make sure your microphone is on and start your question. If you need assistance, please use the Q&A button on the platform. To give everyone a chance to participate, we request that you ask just one question. Please hold while we collect questions. Our first question comes from the chat is from Richard Schumann, a freelance aviation reporter. Hello Francisco,

Operator: We ask participants interested in asking questions suppressed the raise a hand button on the platform.

Operator: When your name is announced please make sure your microphone is on and start your question.

Operator: If you need assistance. Please use the Q&A button on the platform.

Operator: To give everyone a chance to participate we request to ask just one question.

Operator: These hold while we collect questions.

Operator: Our first question is from the chat.

Operator: Chat.

Operator: S <unk>.

Operator: From Richard Sherman Sherman, a freelance aviation reporter.

Richard Schumann: Hello Francisco.

Richard Schumann: Obviously, you are very happy with the large order from American for 990 E-175. But how do you rate the chances of Embraer to win E2 orders from U.S. customers? They seem to favor larger aircraft.

Richard Schumann: Obviously, you were very happy with the large order from American for four 990 E. Cert E 170 fives.

Richard Schumann: But how do you weigh the chances of Embraer to win EQ orders from U S customers.

Richard Schumann: I seem to favor larger aircraft.

Francisco Gomes Neto: Oh, thanks. Thanks for asking thanks for the questions.

Francisco: Oh. Thanks, Thanks, Rob. Thanks for the question, Yes, we are extremely happy with the order of American life Nols.

Francisco Gomes Neto: Yes, we are extremely happy with the order from American Airlines. You know, last March, it was a very important order for us that shows that. Our E175 still has many opportunities, you know, especially in the U.S. market. The E-2s, you know, more recently we have seen the E-2s flying over the U.S. with Porter Airlines. What is flying out to New York, Florida, and California with the ethos? And we, yes, we are in conversation with potential customers in the US.

Francisco Gomes Neto: Oh last March net to us.

Francisco Gomes Neto: How important are they for us that shows that.

Francisco Gomes Neto: We want them to be five SKU had M&A opportunities.

Francisco Gomes Neto: Especially in the U S market.

Francisco Gomes Neto: More recently, we have C. D E twos triangle will be a U S. We report their airlines.

Francisco Gomes Neto: Is flying over to New York, Florida.

Francisco Gomes Neto: We read their issues and we yes, we are any conversation with.

Francisco Gomes Neto: With potential customers in the U S.

Francisco Gomes Neto: I mean, showing how good the aircraft is and how the aircraft can help them to fill the gap between the regional jets and the big narrowbodies. So again, we see opportunities, not only in the U.S., but in many other regions in the world for the ethos.

Francisco Gomes Neto: Showing the.

Francisco Gomes Neto: How good the aircraft is.

Francisco Gomes Neto: And how the aircraft can help them to fill the gap between the regional jets in the begin narrow bodies.

Francisco Gomes Neto: So again, we see.

Francisco Gomes Neto: Opportunities.

Francisco Gomes Neto: Not only at all not only the U S. But in many other regions in the world for the weather issues.

Francisco Gomes Neto: Thank you. The next question comes from the chat with Richard Sherman, the same question. Do you have updates on the initial agreement? Richard Sherman Lanzu for the conversion of E1 jets in China, as announced at the Paris Airshow. No, we don't have any updates to share with you about that program.

Speaker Change: Thank you. The next question comes from the the chat.

Francisco Gomes Neto: Richard Sherman the same questioner.

Francisco Gomes Neto: Do you have updates on the initial agreement.

Francisco Gomes Neto: With.

Francisco Gomes Neto: Richard Sherman Lanzone for the conversion of <unk> in China as announced at the Paris Air show.

Francisco Gomes Neto: No, we don't have any update to share with you about that program at this point in time.

Francisco Gomes Neto: No. We don't have any update to share with you about that program at this point of time.

Francisco Gomes Neto: Yeah.

Francisco Gomes Neto: Thank you. Once again, if you wish to ask a question, please click on the raise a hand button on the platform. The next question comes from Gabriel Araujo. Please go ahead. Hey Francisco, I'm glad you're here. Good morning.

Speaker Change: Thank you.

Francisco Gomes Neto:

Gabriel Cavalcante: Once again.

Gabriel Cavalcante: We wish to ask a question.

Francisco Gomes Neto: Please.

Gabriel Cavalcante: Click on the razor hand button on the platform.

Gabriel Cavalcante: The next question comes from <unk>. Please.

Gabriel Cavalcante: Please go ahead.

Gabriel Cavalcante: Pay for instance go on body.

Francisco Gomes Neto: <unk>.

Gabriel Cavalcante: I was wonder if you could update us on the sales campaigns in Asia, We know India has a big market, China, as well and <unk> been trying to tap into the Chinese market for commercial airplanes. All the campaigns are major R. R.

Gabriel Cavalcante: We're developing especially now that you are flying b.

Gabriel Cavalcante: <unk> and <unk>.

Gabriel Cavalcante: Singapore now.

Gabriel Cavalcante: Gabriel, thanks for the question. Yes, Asia is. In the region, we see great potential for e-tools. You know, last February, we inaugurated a full-flight simulator of e-tools in the region, in Singapore. And this will help us, you know, to pursue more opportunities, say, opportunities in the region. And we are working on sales campaigns in many different countries. So we already have more than 300 aircraft flying over the region. I mean, in China, in Japan, in Australia. And we are working with all those countries, you know, to introduce the E-Tools as well. So it's a good opportunity for us in Asia-Pacific, indeed, for E-Tools.

Gabriel Cavalcante: <unk>, thanks for the breast and yes Asia is.

Gabriel Cavalcante: We the reason we see the biggest potential 40 twos.

Gabriel Cavalcante: We're less the February we inaugurated.

Gabriel Cavalcante: A full price for the first full flight simulator of issues in the region in Singapore and this will help us.

Gabriel Cavalcante: To pursue more opportunities say opportunistic the region and we are working sales campaign. He made in different countries. We have already more than 300 aircrafts flying all over the region I mean in China, Japan, and Australia and.

Gabriel Cavalcante: And we are working all of those countries.

Gabriel Cavalcante: <unk>.

Gabriel Cavalcante: To introduce a D E twos as well so good opportunities for us in Asia Pacific.

Gabriel Cavalcante: This 40 twos.

Francisco Gomes Neto: Thank you. The next question comes from Juliana Rocha, a reporter from RAD, and it also comes from the platform chat. Can you give details on the arbitration proceeding with Boeing? When do you expect it to be over? Well, I mean, this process is not.

Speaker Change: Thank you. The next question comes from Julianna Harsha, a reporter from Brad and it comes also from the platform chat.

Juliana Rocha: Can you give details on the arbitration proceeding with Boeing.

Juliana Rocha: When do you expect it to be over.

Francisco Gomes Neto: Well, I mean, this process is not under our control, but it is the process in the final phase. And let's thank you, you know. A decision still within this first half of 2024.

Speaker Change: Well I mean this process is not under our control.

Francisco Gomes Neto: It is the processes the final phase and we expect and all.

Francisco Gomes Neto: A decision few within this first half of 2024.

Francisco Gomes Neto: Thank you very much. This concludes the question and answer session in English for the press. This Q&A section is now being conducted in Portuguese. To switch to English, please press the interpretation button on the platform and then select English.

Speaker Change: Thank you very much. This concludes the question and answer session in English for the press.

Francisco Gomes Neto: This Q&A section is now being conducted in Portuguese.

Francisco Gomes Neto: Suites to English. Please press the interpretation button on the platform and then select English.

Operator: Now, we will start the Q&A session in Portuguese. We ask journalists interested in asking questions to press the raise hand button at any time. And when you have your name announced, activate your microphone and ask your question. We will also answer written questions sent through the platform chat. If you need assistance, please ask via the Q&A button on the platform. Please wait while we collect the permissions. The first question comes from the chat with Paulo Renato from O Globo Jornal.

Francisco Gomes Neto: I Gotta Muslims any status as Sanjiv said when does it hit Boston and Petrobras.

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Operator: <unk> momentum.

Operator: We have unparalleled equaled the chabad, Mr nominal shadow catch Viscomi, California fossil socket.

Paulo Renato: It's one that Amazon being critical because this could either be app as a perfect the shot to the fun.

Paulo Renato: Does that necessitate Jesse Thanks, Tim put five watt <unk> Q&A napoca fun so far.

Paulo Renato: What are glad gene Quanta Clinton Lewis.

Operator: Yes.

Paulo Renato: A P <unk> <unk>.

Operator: Paolo Hana provision along with them.

Operator: The Director said that he had no intention of launching NarrowBody models, being focused on delivering the current model portfolio. That's it. That's it. At the moment, we are focused on...

Operator: We did a thorough <unk> now put up non plus we picked up some jalan sudden modelo is narrow body is tender for Cabo.

Operator: The data cut did edge modelo that twice a year.

Francisco Gomes Neto: That's it. At the moment, we are focused on selling and delivering the products that we have today, which are modern and very competitive. We continue to study alternatives and new products for the future, but we do not have a concrete plan to develop or launch other large aircraft at this time.

Operator: Ace will make us more.

Francisco Gomes Neto: It goes for God Z wave.

Francisco Gomes Neto: <unk> trigger.

Francisco Gomes Neto: <unk> GA is somewhat dad was removed competitiveness of cooking at home was a facility students will be alternative.

Francisco Gomes Neto: The knowledge cruise before.

Speaker Change: Okay great.

Francisco Gomes Neto: Brett <unk> zebu, Viola with reserve, you'll need to grant the board P existing mines.

Operator: Muito obrigada. A próxima pergunta é de Juliana Rocha. Ela é repórter do Red, reporter from Red.

Francisco Gomes Neto: Winter break adder plasma Paragon patches Julianna harsha.

Operator: Hum.

Juliana Rocha: Hello, Hey, Parker, the rat reported from rent.

Unknown Reporter: Do you intend to continue with the liability management exercises in the next trimesters? Is there a target for leverage?

Juliana Rocha: With respect to <unk> question of what causes the CCG liability management knows plasma to masks.

Juliana Rocha: Additional target Pat Oliver, causing.

Unknown Executive: Sponsored ADR The target for leverage is already within what we imagined, which means gross debt by EBITDA below 5, and liquid debt by EBITDA below 2. So this was already our aspiration, and at the moment, we still don't have plans to go to the market in the next three months. The company's situation is relatively stable for that, and we still think that the interest rate is high, so it's not the time yet to do any market exercise. We are always looking for short-term opportunities. Obrigado por la pregunta.

Speaker Change: Ricardo Gila bareboat.

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Operator: Muito obrigada. We have concluded the Q&A session and the Embraer results conference. Thank you very much for your participation. Have a good day, everyone.

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Operator: Goodbye.