Q3 2024 Embraer SA Earnings Call

November 8, 2024

Unknown Executive, Antonio Garcia, Guilherme Paiva

This meeting is being recorded.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Good morning, ladies and gentlemen, and thanks for standing by. This conference call will be conducted in English, so please let me say a short announcement for Portuguese speakers.

Speaker Change: This conference will be held originally in English. To listen to the translation in Portuguese, press the Interpretation button on the platform and select the desired language.

Speaker Change: To improve the quality of the broadcast in Portuguese, click also to disable the original audio on the Zoom platform.

Guilherme Paiva: My name is Guilherme Paiva and I'm the head of investor relations and M&A for Embraer. I want to welcome you to our third quarter of 2024 earnings conference call.

Guilherme Paiva: The numbers in this presentation contain non-GAAP financial information to facilitate investors to reconcile EAVS financial information in GAAP standards to Embraer's IFRS.

Guilherme Paiva: We remind you that Yves' results were discussed at Yves' conference call last Monday, on November 4th.

Guilherme Paiva: It is important to mention that all numbers are presented in U.S. dollars as it is our functional currency.

Guilherme Paiva: This conference call may include statements about future events based on Embraer expectations and financial market trends.

Guilherme Paiva: Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call. Except in accordance with the applicable rules, the company assumes no obligation to publicly update any forward-looking statements.

Guilherme Paiva: For detailing financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissão de Valores Mobiliários, or CVM.

Speaker Change: At this time, all participants are in a listen-only mode. We will give instructions later on for participation in the two question and answer sessions.

As a reminder, this conference is being recorded.

Speaker Change: 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.

Speaker Change: This conference call will have three parts. In the first part, top management will present the company's Q3 results.

Speaker Change: 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. It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomez. Please go ahead, Francisco.

Francisco Gómez: Thank you, Yogi. Good morning and good afternoon to all. Welcome to Embraer's third quarter 2024 results conference call.

Francisco Gómez: Today, we update our 2024 guidance to reflect both opportunities and risks for our operations.

Francisco Gómez: In financials, we reiterate our $6.2 billion midpoint of the range revenue guidance for the full calendar year.

Francisco Gómez: We are happy to increase our adjusted EBIT margin interval to 9.5% and our free cash flow generation to $300 million or higher.

Francisco Gómez: In operations, we reiterate our 125 to 135 delivery guidance for Executive Aviation in 2024.

Francisco Gómez: However, we reduce our commercial aviation guidance from 72 to 80 jets to 70 to 73 aircraft because of supply chain problems.

Francisco Gómez: In Q3, Embraer revenues increased more than 32% year-over-year, helped by executive aviation and defense and security, both up more than 65%.

Francisco Gómez: In the first nine months of 2024, overall company revenues increased 24% compared to the same period in 2023.

Francisco Gómez: The highlight was defense and security, with an increase of 56%, followed by executive aviation with 41%, service and support with 16%, and commercial aviation with 12%.

Francisco Gómez: Our continuous efforts to improve efficiency and profitability led our adjusted operating margin to improve to 17.6% during Q3.

Francisco Gómez: Even if we exclude for the 150 million from the Boeing arbitration agreement, our adjusted operating margin was up to 8.7% in the quarter.

Francisco Gómez: If we look at the year to date period, our adjusted operating margin improved year on year to 10.8%.

Francisco Gómez: Even if we exclude the Boeing-related monies, our adjusted operating margin expanded year-on-year to 7.2% during the first nine months of the year.

Our firm order backlog reaches $22.7 billion in Q3.

Francisco Gómez: supported by a robust year-to-date book-to-bill ratio higher than 2 to 1. In late September, Fitch Ratings upgraded Embroidery Ratings from BB plus to BBB minus with a stable outlook.

Francisco Gómez: I'm happy to announce that our company is rated investment grade by two out of the three leading U.S. rating agencies.

Francisco Gómez: Our rating with MODIS remains one notch below investment grade, but now with a positive outlook.

Francisco Gómez: We delivered for a total of 57 aircraft in this third quarter or 33% higher year on year.

Francisco Gómez: So far, the total number for 2024 currently stands at 128 aircraft, or 22% higher than the same period for 2023.

Francisco Gómez: We also delivered two C390 Millennium in defense during the quarter and a total of three tactical cargo planes for the first nine months of the year.

We still face several supply chain challenges.

Francisco Gómez: This year, we reinforced our supply chain organization by enforcing our team capability, introducing digital tools and artificial intelligence, and expanding our presence with more employees closer to our most critical suppliers.

Francisco Gómez: All these initiatives aim to address the ongoing obstacles and help us to further improve the efficiency of our global supply chain capacity management.

Francisco Gómez: I will now move on to the operation results highlights by business units in the next few slides.

Francisco Gómez: In Commercial Aviation, we highlight the order of eight E192s to Virgin Australia.

Francisco Gómez: This order reflects the strong ability of our E2JET family to operate in several markets and provides a viable option to complement the airline's larger narrowbodies and to replace its smaller, long-serving aircraft.

Francisco Gómez: We also did the first delivery of three U-95A2s to lot Polish airlines, Lizard, Stru, Azura.

Francisco Gómez: Loss became the first operator of our brand new, at that time, E-Jet family, E-170s, more than 20 years ago.

Francisco Gómez: Revenues increased 11.4% year-on-year during the quarter. The adjusted EBITDA margin for the quarter declined from 0 to minus 5% year-on-year.

because of supply chain delays, product and customer mix.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Francisco Gómez: In the nine months of 2024, the adjusted EBIT margin was minus 2.3% compared to minus 1.3% in the nine months of 2023. We currently are in campaigns for more than 200 commercial aircraft in different continents.

Francisco Gómez: We expect the profitability of our commercial aviation division to improve in Q4 2024 and beyond, despite the strong competition in the segment.

Francisco Gómez: In Executive Aviation, the top line expanded 65% year-on-year in Q3, supported by higher volumes and product mix.

Francisco Gómez: Revenues for the current year are now at 1.1 billion, or circa 40% higher than the same period in the previous one.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Demonstrating growing performance.

Francisco Gómez: good sales momentum and sustainable demand across our business jets portfolio. The adjusted EBIT margin for executives improved from 10.7% in Q3'23 to 16.3% in Q3'24, helped by more ad profit deliveries.

Francisco Gómez: The adjusted EBT margin for the first nine months of the year moved up from 4.0% in 2023 to 12.5% in 2024. In defense and security, there were three main highlights during the quarter.

Francisco Gómez: First, the deliveries of the first C-29 Millennium to Hungary, and the seventh, one, to the Brazilian Air Force.

Francisco Gómez: Second, the signing of the order for nine units from the Netherlands and Austria. And third, the brand new orders for six to twelve A29 Super Tucanos from Paraguay and Uruguay.

Francisco Gómez: The recent cited orders under Pionet, the 1.5 billion increase in the company's backlog in Q3.

Francisco Gómez: Revenues for the division increased 65% year-on-year in Q3 and 56% year-on-year in the nine months of 2024.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Francisco Gómez: Turning to profitability, the adjusted EBIT margin declined from 15.6% in Q3'23 to 7.2% in Q3'24.

Francisco Gómez: because of product and customer mix and supply chain delays as well.

Francisco Gómez: For the year, the adjusted EBT margin was 0.8% in the first nine months of 2024, compared to 7.2% in the same period of 2023.

Francisco Gómez: In service and support, the division continued to be one of the main drivers of profitable growth for the company.

with higher revenues and profitability.

Francisco Gómez: Revenue grew 16% year-on-year during the quarter, while the adjusted EBITDA margin recorded a solid 3.9 percentage points gain.

Francisco Gómez: The business unit announced a $70 million investment in a new MRO center in Fort Worth, Texas, which aims to expand our maintenance service network to support the growing customer fleet of eJets in North America.

Francisco Gómez: Finally, our eVTOL business continues to progress in its development process.

Francisco Gómez: The company unveiled its full-scale prototype in July, and it's now moving forward with a battery installation and lifter production to get ready for its first flight in early 2025.

Francisco Gómez: Yves also completed an additional $236 million secured loan, which will help to support the development and industrialization of its Yves Tall.

Francisco Gómez: and Boer remains confident in Yves' business outlook as its majority shareholder with an 83% equity stake.

Francisco Gómez: We expect our EVTOL certification by ENAC in Brazil and FAA in the U.S. in 2027.

Francisco Gómez: I will now hand it over to Antonio to give you further details about the financial results. And then I will be back with closing remarks.

Speaker Change: Let's now move to slide 10 in the presentation and start with deliveries.

Antonio: The highlight of the quarter was Executive Aviation, which delivered 22 light jets and 19 medium jets.

41 jets for the quarter was an impressive

Antonio: 46% increase year-on-year and the first material positive results from our production leveling plan.

Antonio: which goals is to have a more stable production pace throughout the year despite supply chain delays. Meanwhile, commercial aviation delivers increased 6% versus a year ago.

Antonio: In this quarter, our E2 family represented 75% of total deliveries in our E1 jet family de-balanced to 85%.

Antonio: It is important to mention our Commercial Aviation Division is facing significant supply chain delays, mainly in D2 assembly lines.

Antonio: In defense, we are pleased to have delivered two C-300 Millennium Aircrafts to Brazil and Hungary.

Antonio: The global fleet in operation now totals 10 aircrafts among Brazil, Portugal and Hungary. It is important to remind you, C390 are not included in our 2024 deliveries guidance.

You'd like the 11th, please.

The company continues to break records.

Antonio: The 22.7 billion accretive and solid backlog reducing Q3 is almost 10% higher quarter-on-quarter and more than 25% higher year-on-year with growth in all divisions.

Antonio: The highlight for the quarter goes to defense and security, whose 3.6 billion backlog increased almost 70% quarter-on-quarter and year-on-year and reflect the new contracts for 9290 Millennium and Super Tocanas.

Antonio: Service and Support also moved up 12%, supported by the new contracts in Defense and Commercial Aviation.

Antonio: The backlog for commercial aviation with 374 aircraft's firming orders and executive aviation with a record pace of business jets delivered during the quarter declined slightly.

Antonio: Moving on to revenues, the strong pace of deliveries led our top line to reach almost $1.7 billion in Q3, or 13% higher quarter-on-quarter and 32% higher year-on-year.

On a year-to-date basis, our revenues have now topped

4.1 billion or 24% higher.

Antonio: or close to 800 million more than 3.3 billion recorded in the same period of 2023.

Antonio: The total nine-month revenue represents about 65% of the midpoint of our 2024 guidance of $66.4 billion.

Antonio: If we look at the pie chart on the right, we can see Executive Aviation with 32% of the company's revenue.

higher almost seven percentage points year-on-year.

Driven by the increase in deliveries.

Antonio: Meanwhile, defense contributes with 13% of total revenue versus 10% a year ago.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio: In the opposite side, commercial aviation declined 5 percentage points to 28% of company revenues in Q3-Q24 compared with the same quarter last year.

year on year.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio: Next slide please. On EBITDA and EBIT, we continue to capture the benefits of diligent cost and expense control and the efficiency program.

Antonio: We generated $357 million in adjusted EBITDA in Q3-Q24 with a 21.1% margin.

Antonio: Meanwhile, the adjusted EBIT in the quarter was $298 million for a 17.6% margin.

However, there was an important 150 million contribution.

from the Boeing Agreement.

which prop it up

both margin by circa 900 basis points for the period.

Unknown Executive, Antonio Garcia, Guilherme Paiva

If we look

and the results for the quarter.

Antonio: Ex-Boeing Agreement, the EBITDA margin improved 60 basis points year-on-year from 11.6 to 12.2, while EBITDA margin improved almost 100 basis points from 7.8 to 8.7, supported by higher profitability and effective aviation and service and support.

On to slide 13 now, please.

Antonio: We generated 241 million in adjusted pre-cash flow because of the higher numbers of aircraft deliveries and advanced customer payments.

Year-to-date, our free cash flow was negative $320 billion.

Antonio: However, it should turn into positive by year-end because of the historical concentration of deliveries in commercial aviation and down payments in defense programs during the last quarter of the year.

Antonio: Moving to investment, and again, without ease, we spent $42 million in research and development during the quarter, $59 million in CapEx, and a net $10 million in pool programs, for a total of $111 million, compared to $103 million a year ago.

Antonio: Our capital allocation continues to be focused on segments with higher returns as follows.

Antonio: Executive Aviation, 90 million to increase our production capacity in line with our recent backlog growth.

Antonio: Service and Support, $90 million in our subsidiary, Ogma, for the maintenance service for a pre-tweeted engine.

Antonio: Service and support $70 million to expand our MRO footprint to service commercial aviation clients in North America.

Antonio: Our Adjusted Net Income was positive $221 million. For the quarter, it supported a 13.1% adjusted margin.

Antonio: If we exclude the Boeing agreement, our adjusted net income was $122 million for a 7.2% margin compared to $33 million and 3.6% margin a year ago.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Slide 14, going to our liability management plan in 30-4-24.

Antonio: We continue our initiatives to extend the duration, reduce the cost of our debts.

Antonio: Therefore, we have a very solid cash balance and no relevant debt to be paid back during the next two and a half years.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio: The company has materially deleveraged its balance sheet over the past three years, and we are happy to highlight our net debt to EBITDA leverage ratio declined to 1.3 times in Q3 2024, as shown in the top right corner of the slide.

Unknown Executive, Antonio Garcia, Guilherme Paiva

I want to mention.

Antonio: are seeking 700 million BTD ex-Boeing agreement over the past 12 months.

which is now

Antonio: Almost 25% higher than the 560 million generated in 2023. The liability and cash management strategy is strongly contributed to the credit rating rate upgrades by Fitch.

Antonio: from BBB plus to BBB minus with a stable outlook in late September. Consequently, both Thunder Imports and Fitch currently rate the company as an investment grade company.

In a nutshell, we remain focused.

Antonio: on Generating Cash, Reducing our Debt Levels, Lowering the Cost of our Debt, and Improving our Credit Metrics.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Last but not the least, let's talk about our guidance.

We present our update 2020 for guidance and slide 50.

Antonio: We update the guidance focusing on companies efficiency in considering the overall performance of all business units.

Antonio: From a financial perspective, we still feel very comfortable with our current 6 to 6.4 billion revenue estimate for the full year.

Antonio: This is a benefit of having different business units, where the strength of service and defense helps to offset some missing deliveries in commercial aviation, for example.

Antonio: More importantly, the company has been able to operate more efficient than expected.

Antonio: with cost control that can be seen by SG&A expenses for example.

Antonio: Thus, we have a revised upwards or adjusted bit margin by 250 base point.

Antonio: from our previous 6.5 to 7.5 range to our new 9 to 10 percentage point estimate.

Antonio: We highlighted the Boeing agreement money circa 125% net without taxes or with taxes and final office accounted for 200.

of 250 base points change.

Meanwhile, the One Tax Credit Benefit

Antonio: mentioned in the Q2 earnings release accounted for a balance of 50 base points.

Antonio: Therefore, the company was able to maintain its margin guidance stable after the adjustment for these extraordinary events, despite all reduction of five aircrafts delivered in commercial aviation segment for the year.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio: 80 aircraft to 70-73 deliveries to reflect our most updated accurate estimate consider the risk from supply chain constraints.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio: Our 2024 guidance for free cash flow generation increases from $220 million or higher to now $300 million or higher.

Antonio: The changes reflect monies from Boeing agreement, the loss of around five previously mentioned aircrafts in commercial aviation guidance, and the forecasted down payment from recently signed defense contracts.

Antonio: From an operation perspective, we feel comfortable to reiterate our 125 to 135 guidance for executive aviation.

Antonio: Despite the ongoing supply chain challenge we face on a daily basis.

Antonio: We continue to work steadfastly to accomplish our production plan with safety and quality and to reach our new 2024 Financial Operational Guidance. We are also on track to deliver for C309 Millennials.

is scheduled for this year.

Antonio: Looking forward, it is important to mention, we still see double-digit growth for aircraft deliveries, revenue, and EBIT in 2025 and beyond.

notwithstanding the current operational challenges.

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

Francisco Gómez: Thank you, Antonio. We delivered another solid quarter for our shareholders.

Francisco Gómez: Despite all the challenges we continue to face in our supply chain.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Francisco Gómez: I am especially proud of the hard work of our almost 20,000 employees, whose contributions helped us reiterate our 2024 revenue guidance and, even better, revise upwards our adjusted EBIT margin and free cash flow estimates for the year.

Speaker Change: Aussie, Aussie, Aussie, Oi, Oi, Oi, I would like to give a warm welcome to Virgin Australia as a new operator of our E2 family, and the first in Oceania.

Speaker Change: We believe the world's most fuel-efficient single-wire aircraft will offer outstanding comfort.

Speaker Change: The lowest noise emissions and fuel burn in its class and higher performance to complement the fleet of one of the largest Australian airlines.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: The joint purchase for 1969 Millennium by the Netherlands and Austria will allow both nations, as well as current and future operators, to cooperate with other NATO nations.

Speaker Change: They should benefit from synergies in areas like training, logistics, and future growth of the platform.

Speaker Change: We welcome the two newest members of the growing group of the most efficient and modern military tactical transport aircraft.

Our company remains very well positioned for the future.

Speaker Change: Especially with a nine-year-high $22.7 billion backlog and the steady progress seen in our operational and financial indicators, underpinned by our solid strategy plan.

Speaker Change: To finish, I'd like to thank you all again for your interest and confidence in our company. We are optimistic about year-end results and very confident about our future.

Speaker Change: We continue working hard and embracing the foundation of our culture that is safety first and quality always.

Let's now move to the Q&A session of the call.

Unknown Executive, Antonio Garcia, Guilherme Paiva

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

Speaker Change: We highlight again this conference call is being conducted in English with translation to Portuguese.

Please, let me say a short announcement for Portuguese speakers.

Speaker Change: This conference is being made in English. To listen to the translation in Portuguese, press the Blue Platform Interpretation button and select the Portuguese language.

Speaker Change: After selecting the language on the Interpretation button, click on Disable Original Audio on the platform to improve the quality of the broadcast in Portuguese.

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Speaker Change: When your name is announced, please press star then 6 on the phone or make sure that your microphone is on and start your question.

We will also answer 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, we request to ask just one question per call.

Neto, Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Our first question comes from Andrea Ferreira with Bradesco BPI. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hi, good morning, congrats on the results and thank you for taking my question.

Speaker Change: Just one quick one here. About the commercial aircraft guidance, I guess the revision is, of course, I mean, related to the ongoing supply chain issues.

Speaker Change: But does it mean that the supply chain got worse, or is it just more of a course adjustments? And just a follow up on this.

Speaker Change: Is it more so the supply chain issues or maybe did the lower guidance have a component of mix or just, you know, operational issues related to bunched up deliveries for the later later half of the year? Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Francisco Gómez: Thank you, Andrea. Francisco speaking. Thank you for your question. Again, this delay has to do with the supply chain only.

Francisco Gómez: In average, we have seen improvements in the supply chain, but we're still facing challenges with a specific group of components, mainly engines and the structural parts.

Francisco Gómez: And there's no other reason, no reason of mix or labor or other topics. It's basically due to supply chain and basically with the E2 aircraft.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Perfect, thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you. The next question comes from Lucas Macchiori.

Unknown Executive, Antonio Garcia, Guilherme Paiva

with BTG Factual. Please...

Unknown Executive, Antonio Garcia, Guilherme Paiva

Go ahead.

Thank you. Hey, guys. Morning. What's going on?

hear your thoughts on on margins actually so

Francisco Gómez: If you could give us any color on why the the I mean the weaker margin on commercial I know I mean probably volumes, but if there's anything else there any comments on if this should kind of a ramp up better for next use and also

Francisco Gómez: on Executive Aviation. If you guys think this high, very strong margins on Executive Aviation, if you guys think this is sustainable 4 to 4, maybe 25 as well. I mean, any color on that would be helpful, guys. Thank you.

Francisco Gómez: Thank you, Luca, for the question. Antonio speaking here. Nice to talk to you. In regards to commercial aviation, we have a combination of facts.

Francisco Gómez: In Q3, it is a mix of Mori 2s instead of U1s.

Francisco Gómez: First point, and also the customer make, which is not favorable for the margin results.

Francisco Gómez: And it's basically highly concentrated in Q3, a part of the, I would say, lower volume that should be offset in Q4, I would say. Our expectation continues to be a

lower single-digit margin for commercial aviation.

Francisco Gómez: The case does not change, it's just really a bit quieter in regards to specific performance and customer.

Francisco Gómez: for Executive VHES, we have some good guys in the quarter.

Francisco Gómez: And a lot of output that we need also to see on this case, I would say, I do not see 16% happening in Q4, but a lower team margin is going to be our pace for Q4 and the years beyond.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thanks. Thanks, Antonio. Super helpful. Great to talk to you again. Thank you. Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: The next question comes from Marcelo Malta with J.P. Morgan. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hi everyone, thank you for taking my question. Regarding the recent defense orders from Czech Republic, you know, if we look at the document that was published,

Speaker Change: by the government from Czech Republic. I mean, they talk about a contract that has a high value. I mean, we were talking about potentially being, you know, over $400 million. So just trying to understand here if it is related to services of the if the aircraft that they are buying, you know, they have a much higher average price and potentially higher margin than the rest. And also they comment about a very strong down payment for these orders. So any color that you can give on that front, that will be very helpful. Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thanks Marcelo, Antonio speak here. I would say it's true what is written there but it's not as it was mentioned. I would say it's a big amount of money but it's not only defense is also going to

to the service piece that we are going to...

to put in the backlog on Q4.

Speaker Change: I would say as long as we have the money in our bank account, that's why

Speaker Change: When we set the new guidance for cash flow, $300 million or better, it's because of it. We do not have already received it. If you receive everything that was written in the contract, then probably we have still an upside on the free cash flow guidance.

Perfect. Super clear. Thank you, Antonio.

Thank you. Welcome.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Brent.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Good morning. Good morning. Can you hear me?

Yes.

Speaker Change: Hi, good morning guys, Steve Trent from Citi and thank you very much for taking my question.

you guys

Speaker Change: Roughly the two-thirds or thereabouts of your aero structures work in-house which

Speaker Change: seems considerably higher than your competitors in a good way. Do you see any opportunity at all?

Speaker Change: M&A or otherwise to pick that number up a little bit or do you think on a long-term basis, you know, two-thirds is a Good level, you know when you look at the where we are in the cycle. Thank you

Speaker Change: Hello Steve, it's nice to talk to you and thanks for the question. I would say we are I would say highly verticalized on our infrastructure business.

Speaker Change: For sure is also a piece that is really under severe pressure outside or

company here.

Speaker Change: I would say we always do make or buy analysis, but we do not see M&A as an alternative for us in this regard. If you could insource additional parts, it is okay, but I would say it is not something that we are putting a lot of energy right now to look for that.

Speaker Change: Appreciate that and I will stick to your one question guide. So, so thank you very much for the time. Take care. Thanks, Steven.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thank you. The next question comes from Miles Walton with Wolf. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Miles Walton: Okay, I think I got this. Good morning, Antonio, Francisco, Guilherme. Can you hear me? Good morning. Yes. Awesome. So, I wanted to go to new product investment, if I could, and in the context of the financials that you're putting up,

It looks like executive is is sort of

Miles Walton: lights out in terms of your performance over the near term and over the medium term. And similarly, you're having struggles financially in the commercial side with

Miles Walton: and relatively captive markets in the 175 and obviously competitive markets in the E2. Does that inform where you're going to put the next dollar investment? And if you can't make profit in six years in commercial aviation,

Speaker Change: There's a lot of speculation that you'd go further and deeper into that market, but the financials, at least looking backward, would tell me that's probably not a good idea. Does that resonate with you, Francisco?

Well, thanks. Thanks for the question.

Speaker Change: You know, I think this is the beauty of having different business, right?

Speaker Change: I mean, in one period, one business is good, other one is not as good, and then other period is the opposite.

Speaker Change: I think the period where we are living now, we are seeing a very good performance with our executive aviation, our business aviation, and not as good as in commercial.

Speaker Change: Remember that our most profitable area is services, and in services, almost 40% of the service revenue comes from commercial jets. On the other hand, yes, we see...

Speaker Change: Good perspective for the new ones, still be ones for the next 10 years, but the e-tools, if you look at the, from what is happening in the market, since 2023, we added five new customers for the e-tools. Oh, customers.

Speaker Change: Customers ask for example, Scooting Singapore showcasing our aircraft in Asia-Pacific. Why is Jordania doing the same in the Middle East?

Speaker Change: Luxair and Lod Polish, I mean Europe, Lod Polish is considering to replace almost the entire fleet.

You know, Mexicana in Mexico, I mean.

Speaker Change: joining, joining Porter. So we are, we see good perspectives for the tours as well in the future. And then we will see the commercial aviation coming back to good performance as well, as Antonio said, to meet the middle digits.

Speaker Change: in terms of EBIT, but with a very strong contribution for our safety and support performance as well. And Maio, just to complete the answer here, what we are capturing, the new backlog, a new contract for commercial aviation.

Speaker Change: We have a different margin profile than we have with the old contracts.

Speaker Change: I'd say migration right now from old backlog contracts to new ones. I would say that's why

Speaker Change: We are confident to the mid-single-digit margin, the mid-term, I would say, in the next three years.

Speaker Change: our trip right now that we are foreseeing. And again, big part of it is already embedded in our backlog. Okay, just one clarification. You mentioned fourth quarter commercial aviation margins would get better. Are they going to be positive in the fourth quarter?

Speaker Change: Absolutely, we see for the whole year a lower single-digit margin between 2% to 3%, that's more or less what you see today. And the mix for Q4 delivery is much more favorable.

That's more or less

Miles Walton: confirming what I just told you right now, that some new content we have in our backlog that's accurate even for a much better margin apart of the operations that we do have more volumes in queue for. Okay, and also, Maus, if you look at the past years,

Miles Walton: The commercial aviation, with all the difficulties, has delivered positive results. That is the same we expect for this year and years ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Welcome.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Next question comes from Lucas Laghi with XP Inc. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Good morning everyone, thank you for the question. Antonio, you mentioned the three points of non-recurring items in the adjusted guidance for EBIT margins this year that would imply an adjusted level of six to seven percent, right, on a recurring basis. I mean, now that we're heading into the end of the year and look and more closely monitoring

What 2025 will look like?

Speaker Change: I mean is this six to seven percent range a good reference to have in mind for next year's profitability as a starting point? I mean and not trying to have a number not to have a figure but I mean you mentioned the profitability improvement expectations for commercial in the upcoming quarters. I mean what should we have in mind

Speaker Change: as profitability drivers for the next years for the other divisions as well. I mean, trying to compare what should we expect in 2025 onwards compared to the six to seven percent range reference that we would imply for this year's profitability on a recurring basis.

Thank you guys.

Speaker Change: Thank You Lucas and Antonio speaking here I hope you change your report getting out from the neutral to the positive. We for sure the margin we are seeing right now is

Speaker Change: far below our ambition in this group here. What you should see for the future that I will ask Gui to explain about this year. If you see our backlog, we are growing in all divisions.

Speaker Change: on the defense servicing and executive faster than commercial aviation. We do see the industry

Speaker Change: a business unit in lower teens margin in the coming years.

Speaker Change: That's accurate for a higher number and with the improvement on the commercial aviation.

We do see

Speaker Change: I would say the overall company margin moving up to a higher single digit or even closer to a lower double digit. That's the future. For the current one, I just want to give to explain you about the no recruiting items that we just reported today.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hey Lucas, thanks for the call and good morning. So if you look at our guidance, we increased by 250 basis points, both the low and the high end versus where we were before.

Speaker Change: The move is fully explained by the BA monies that we received and also the one-time tax credits that we reported in Q2.

So, as Antonio mentioned in his previous speech.

Speaker Change: Despite lowering our guidance for commercial aviation by on average five aircraft

Speaker Change: We were still able to achieve the operating margin that we had set forth in the beginning of the year. And looking forward, as we have operating leverage in the company, as we continue to grow our production, we would expect the margin to in the next couple of years to continue to improve.

Speaker Change: And Lucas, if you allow me to complement what my colleagues just said.

Speaker Change: We have very well-structured initiatives in place, such as price discipline in new sales.

Cost Reduction Initiative, Production Lead Time Reduction

Speaker Change: Expense and investment control, production linearity. So all those initiatives combined what Guy just said about deliveries growth, this will result in better financial performance. So this is why we are saying that we expect

Speaker Change: to improve our performance in all the business, including commercial aviation as well.

Unknown Executive, Antonio Garcia, Guilherme Paiva

That's clear. Thank you, guys.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you, Lucas.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hello guys, thank you very much for the call. The first question will be related to the competitive environment.

Speaker Change: We are talking about supply chain issues. So I wanted to get your view on how the whole supply chain issue on the market has been translating to better Opportunities for you guys to gain new orders or price at better margins. Just to get a sense if the clients are moving out for perhaps your competitors moving to Embraer, to E2, or to E1, given the supply chain issues on the competitors.

Speaker Change: and secondly if you allow me Francisco mentioned about the beauty of having a diversified portfolio right you are executive right now doing very well

Speaker Change: Executive to turn, or if it's not on the horizon at all. Thank you very much.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: All right, Daniel, thanks. Thanks for the question. So let's start with the supply chain. As I said before, we see in average

Speaker Change: Supply chain is improving, but you know the aggressive growth of all OEMs is pressurizing the supply chain, right? So again, they are improving average, but we are still struggling with specific components.

Speaker Change: So what do we have done? We have put in place

a new organization in our supply chain area.

Speaker Change: I mean, with more people working very closely to our most critical suppliers, we are implementing a new digital platform to improve the...

Speaker Change: They speed and are curious in their relationship with our suppliers.

Speaker Change: We are implementing also new platforms to help us to manage better the forecasting in the parts, in the parts in our organization. Again, we are doing a lot of things.

Speaker Change: to make our supply chain management globally more robust. We have also put in place a team to

Speaker Change: to manage the global chain capacity. So to make sure that we are monitoring not only this tier one, but tier two and tier three of our suppliers, to make sure that you have a capacity to fulfill with our demands in the future.

Speaker Change: So again, we expect to grow, as Antonio said, double digits again next year. We have been growing a lot in the past three years, but with this better structure.

Speaker Change: and with our experience we have accumulated with the relationship and the performance of our suppliers, we believe our plan for next year will be even more robust than it was for this year.

Speaker Change: And number two, you mentioned about the executive jets. I do not expect.

is up to the jester, going backwards.

Speaker Change: I mean, we see the market, for us, normalizing, but at the high levels. We do see growth in our executive jets and sales and deliveries for the following years.

Speaker Change: Thank you very much, Francisco. If you allow me just to follow up here, just to better understand the first part of your answer. Would you say that your level of conversion in terms of the bids that you guys compete has been increasing given this whole supply chain issue on the on the market affecting your competitors? Or would you say it would be the same? Just trying to separate things here.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: I don't know if I understood your question. Could you repeat it? What do you mean by conversion? If in the bids that you are competing against competitors, if you are seeing that the level of conversion, if you're winning more contracts or not, regarding commercial aviation, even the whole supply chain.

Speaker Change: We are very optimistic with the potential new orders. We are basically sold out until 2026. We have available slots.

Speaker Change: from 2027 onwards. But we have, we are in campaigns for more than 200, 200 aircraft.

So we are very optimistic.

Speaker Change: to fuel our production until the end of the decade for all the units.

Speaker Change: I'm a Commercial Aviation Executive in Defense. So we are in a very positive moment at this point of time in terms of sales opportunities to fuel our production as well as I said before, you know, in the following years.

Speaker Change: and Antonio Garcia, Guilherme Paiva, Guilherme Paiva, Guilherme Paiva, Guilherme Paiva, Guilherme

Francisco Gómez: That is great, Francisco. Thank you very much and have a good day.

Thank you. Welcome, Daniel. Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: The next question comes from Alberto Valerio with UBS. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Mr. Valerio, we cannot hear you.

Can you hear me now?

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Yes, yes, we can. Sorry, sorry. Morning. Morning. Thanks for taking my question, Guilherme, Antonio, Francisco. I have two on my side that left for me.

Speaker Change: It's about the Boeing deal, if you could provide us what would be the tax on this $150 million and the cash out of it.

and the second one looking for 2025.

Speaker Change: Can we consider these deliveries of cases per quarter, two per quarter for next year, 80 maybe for the entire year for next year? And also, I remember that you guys were trying to make a better seasonality on deliveries for commercial and business jets. It looks like business jets work very well.

Speaker Change: commercial, not yet. But how can you look that for for the next year? Thank you.

Speaker Change: Hi Alberto, thanks for the question. On the Boeing monies, you know, as Brazilian corporates we have to pay fully the 43%, which includes fiscal fees and income tax in Brazil. So at the average level we recorded the full $150 million.

Speaker Change: And for the bottom line, we do expect to pay, according to the legislation, initially 34 percent of income tax. But we have to kind of obviously look at all the tax credits and the possibilities that we have at year end when we do our accounting for the full year.

Francisco Gómez: Let me pass it to Francisco to go over the case sheet.

Francisco Gómez: The KC, yes, Alberto, we are planning to grow the production deliveries of KC in 2025, as well as for the other business units. So we actually, we are going to see growth, important growth.

Speaker Change: two-digit growth in all the four business units we have, commercial, executive, defense, and support and services.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thank you. About the seasonality, can you consider that commercial will also have a better seasonality next year?

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Well, commercial, we are still dealing with the limitation in terms of supply chain.

to grow, we could grow.

further in commercial and even a business yet.

But we are making a very

robust and realistic plan.

Speaker Change: according to our experience with the supply chain. So even then, we are planning to grow two digits in all the business units. And so, especially commercial, as I said before, we are working in a lot of campaigns with more than 200 aircraft, and we expect to see results, you know, within the next six to eight months.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thank you very much, Francisco. Bom dia a todos. You're welcome. Bom dia, Alberto. Talk to you, Alberto.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you.

Speaker Change: The next question comes from Victor Mizuzaki with Bradesco. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hi, congrats for the quarter. I have just one question here. When we take a look on service support revenues, and I mean,

Speaker Change: and then we'll compare it to the quarter of the first. We're going to talk about a big expansion of like $60 million, right?

Speaker Change: My question here is if we can assume that this is basically the ramp up of Augma expansion and I mean if let's say that I mean we're talking about like 60 million dollars per quarter of additional revenues

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: 50% of potential revenues from this expansion. So my question here is if this analysis makes sense and that's why margins in this division is also moving up. Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Antonio Garcia: Thanks Victor, Antonio speaking, thanks for the nice question here. We are going and the revenue side for service and support you are going you already realized

Antonio Garcia: We are up on the revenue side. I would say the ramp up on the Augma operator for the MRO for the engines is

Antonio Garcia: Just 40% off, out of it, on the other side, we are continuing to grow and with the new content. That's why I would say

Antonio Garcia: We do see a peak in revenue for this year, and the margin is going to, I would say, be accurate even with what we are showing here in the accumulated nine months.

Antonio Garcia: That's why your math is a little bit better. Your math is really fits. And please do not forget we're on path for the MRO facility. This year is more causing losses than wins, because we have a pre-operational cost.

Antonio Garcia: But at the end, to answer your question, I do see something like 100 million more for the year of service and support with the margin we have accumulated year to date.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you.

Thank you, Victor.

Unknown Executive, Antonio Garcia, Guilherme Paiva

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

Speaker Change: Now we will start the Q&A session dedicated to the press.

Speaker Change: 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 say a short announcement for Portuguese speakers.

Speaker Change: This conference is being made in English. To listen to the translation in Portuguese, press the Interpretation button on the platform and select the Portuguese language.

Speaker Change: Click also to disable the original audio on the Zoom platform to improve the quality of the broadcast in Portuguese.

Speaker Change: We ask participants interested in asking questions to press the raise a hand button on the platform.

Speaker Change: When your name is announced, please make sure your microphone is on and start your question.

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

Speaker Change: To give everyone a chance to participate, we request to ask just one question.

Please hold while we pull for questions.

Unknown Executive, Antonio Garcia, Guilherme Paiva

The first question comes from Jay Hemmerdinger. Please go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hi there. Thank you so much. John Hemmerdinger from Blake Global. Francisco, can you expand more on the supply chain issues? You mentioned engines and you mentioned some structural components. How bad is the issue still?

Speaker Change: How many engines are you short? What's your expectation for improvement on the problem next year? And what about components? What types of components are in short supply? When is this gonna get significantly better? Do you have anything more you can add?

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thanks for the questions. About specific about engines, we have to recognize that we are increasing the demand for engines a lot this year comparing to last year.

Speaker Change: So the problem is that we are not getting the engines.

is improving.

Speaker Change: from last year to this year, and we expect to continue to improve for next year. The problem is the timing.

Speaker Change: This is why we are still struggling with the deliveries and are reducing our guidance in terms of aircraft for commercial aviation. But we are also having issues with other parts.

Speaker Change: that has been also a bottleneck for us to finalize the aircraft on time according to our plan. But we are now improving our...

Speaker Change: Our planning criteria for next year in order to avoid this kind of, I'd say, last minute surprise.

Speaker Change: But again, I mean, we recognize that you are increasing the demand of French not only us, but all the industry with put more pressure on the on the supplier, right, but things are improving, but not that they're not at the pace we need for for this year.

I hope I answered your question.

Unknown Executive, Antonio Garcia, Guilherme Paiva

You did, thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Welcome.

Unknown Executive, Antonio Garcia, Guilherme Paiva

The next question comes from Cristian Sávaro with Valor.

Please go ahead.

Can you hear me?

Yes, yes, good. Yeah, we can.

Speaker Change: Okay, thank you. My question would be a really straightforward one regarding the U.S. marketing. I mean, they have a new president now and everyone in the market is trying to understand the possible effect.

Speaker Change: on every industry. And my goal is, I mean, do you see any risk in terms of sell to the U.S. or policies that might affect the business for Embraer in the region? I mean, Brazilian President Lula is a really huge promoter in terms of spreading Embraer abroad.

Speaker Change: and he's not actually an ally of Trump. So what's your perspective on it? Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thanks for the question, Christian. Well, at this point of time, we don't see any big risk or big impact for Embraer.

Speaker Change: Let me remind you that Embraer has been in the U.S. for more than 45 years.

Speaker Change: employees. We have in the U.S. almost three billion dollars in assets. We have a production plant in the U.S.

Speaker Change: We have a very important content in our aircraft of U.S.

Speaker Change: products, U.S. equipment. So again, every aircraft we sell, we are helping the U.S. economy as well. So again, because of this

Speaker Change: partnership, this connection, the long-term connection with the U.S., we don't believe that Embraer will suffer with this change. This is our view at this point of time, to make this very clear.

Unknown Executive, Antonio Garcia, Guilherme Paiva

[inaudible]

Speaker Change: , , , , , , , , , , , , , ,

Thank you. The next question.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Okay.

Speaker Change: This concludes the question and answer session in English for the press.

Speaker Change: 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.

Now, we will start the Q&A session in Portuguese.

Speaker Change: We ask journalists interested in asking questions to press the raise hand button at any time and when your name is announced, activate your microphone and ask your question.

Speaker Change: We will also answer written questions sent through the platform chat.

Speaker Change: If you need assistance, please ask via the Q&A button on the platform.

Speaker Change: So that everyone has the chance to participate, we ask you to ask a question at a time.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: The first question is from João Soarima with O Globo. Please, go ahead.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Buon Dio, Buon Dio John

Speaker Change: Congratulations for the results. Thank you for accepting my question. I would like you to comment a little on the KC390's business campaign. How is it going?

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Holland, Austria and, more recently, the Czech Republic. And there are many other campaigns going on.

Guillermo Pion

Speaker Change: We usually say that it is a best in class for that segment. It is having a very good acceptance, growing a lot, especially in Europe. In Asia, we also made the sale last year of South Korea. Anyway, we are very optimistic about the sales and growth of this aircraft for the next few years.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thank you. The next question comes from Cristian Sávaro, with economic value. Please, you may proceed.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hi, guys. Well, since you've switched to Portuguese, I'll do another one. Guys, can you comment a little bit about your perspective regarding FENAC? We talked a lot about this fund, the airlines were waiting for it a lot. I keep thinking about how this should reflect for you, if you have an upside in the future, in terms of if this can help the company in some way, if you see a window to increase even orders by airlines here in Brazil. Thank you.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Cristian, thank you. You have the right to ask as many questions as you want.

Speaker Change: We see with very positive eyes FENAC advancing and being available to support the airlines.

Speaker Change: I think we need healthy and growing airlines, the market is growing.

Speaker Change: More airports in Brazil, more passengers, so we will need strong airlines and more planes.

Speaker Change: And as the government has the expectation of improving connectivity, not only among the big...

Speaker Change: We understand that our plane fits perfectly in this strategy. Our plane has an ideal size, it is very efficient.

Speaker Change: And we expect that the airlines will see it this way. Azul already sees it this way. We hope the others will do the same.

Speaker Change: So, we are very positive with the scenario as a whole. Not only FENAC, which is part of it, but...

Speaker Change: the arrival of more airports, and this government wanting to improve connectivity between smaller cities in the country.

Speaker Change: Perfect. But just a follow-up. Do you have a vision of when this will actually become money for the industry? Like, when the airlines will actually have access in the conversations that you have with the government? Is it possible for us to have an estimate?

Speaker Change: I don't know why Embraer is not directly involved in this. We follow it, because it is in our interest to follow it, but we are not directly involved in this process, so I have no way of answering this question for you, Cristian. Okay, thank you, guys.

Unknown Executive, Antonio Garcia, Guilherme Paiva

they got.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Thank you. Our next question comes from the chat and is from Ricardo Meyer.

Speaker Change: Why is the slide of the C390 operators meeting bringing the flags of Morocco, United Arab Emirates and Chile? Are they potential customers?

Ricardo Mayer do site airway

Unknown Executive, Antonio Garcia, Guilherme Paiva

Look, I think, Ricardo, that these are...

Speaker Change: A country that is interested in airplanes. Some of these cases we are following closely, others not. But I understand that this is a country that is interested and nothing more at this moment.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Specifically, in the Middle East, we have had a lot of contacts there, trying to explore opportunities for rent. And other countries, I think it's more, as I said before, it's more a case of their interest in our product, which is very positive.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Obrigada. A próxima pergunta vem de Jesse Nascimento, com Vale 360 Aninhos.

Por favor, pode prosseguir.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: Hello, excuse me, good morning everyone, good morning Francisco, Antonio, everyone who is joining us.

Speaker Change: How do you intend to enter this vacuum and have opportunities for the sale of aircraft?

Speaker Change: ...which is a market where Embraer has expanded the shares of commercial aircrafts and also, taking advantage of the fact that we are talking about the American market, you commented...

on air.

Speaker Change: and the Trump election, how can this affect the defense actions since Embraer seeks to expand this market also in the United States?

Unknown Executive, Antonio Garcia, Guilherme Paiva

Thank you for the question. First, about Boeing. We follow...

Speaker Change: ...the events by the media, but we have our own strategy.

Speaker Change: and that we have been following with a lot of discipline, and that has been bringing these good results that we are seeing until today. And we will continue like this. Look...

Speaker Change: our strategy and following what is happening around us. About the United States, I reinforce what I said before, Embraer has a long-term partnership

There are more than four decades for the United States.

Speaker Change: And not only in aviation, not only in commercial, but also in executive, a large part of our sales happens in the American market, in commercial as well. We have about 2,000 planes currently flying in the United States.

Speaker Change: And the defense, without a doubt, is a great potential for our aircraft, the C-390, in the future. And it is a work that we have been doing to be able to introduce this aircraft in the United States. And by the partnership of so many years, by the contribution that Embraer also brings to the American market, in terms of products and equipment,

Speaker Change: We don't see any negative impact at the moment, on the contrary, we hope to further strengthen our partnership with the United States.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Obrigada

We conclude the Q&A session for the conference in Portuguese.

We have one last question in English.

Unknown Executive, Antonio Garcia, Guilherme Paiva

We have one last question in English from Carl Schwarz.

Unknown Executive, Antonio Garcia, Guilherme Paiva

Speaker Change: What will be the total investment needed on EVE up to certification and delivery start?

Unknown Executive, Antonio Garcia, Guilherme Paiva

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