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spk06: Good morning, ladies and gentlemen. Thank you for waiting. Welcome to Embraer's teleconference for the presentation of the financial results for the second quarter of 2023. At this time, all participants will follow this teleconference as listeners. We will soon provide instructions for the participation of the Q&A session. If there is a need for assistance, please use the Q&A button on the platform. It is important to mention that the information related to the results of IVE was discussed at the IVE conference. We also inform that all numbers are presented in US dollar, because it is the company's functional currency. In addition, the numbers of this presentation contain non-GAAP financial information, to make it easier for investors to reconcile IVE's financial information in GAAP standards with EMBRAER's IFRS rules. We remind you that this conference is being recorded and broadcasted by the website ri.embraer.com.br. This teleconference includes prospective statements or statements about events or circumstances that did not occur. Embraer based these prospective statements largely on its expectations and current projections about future events and financial trends that affect businesses and their future financial performance. These prospective statements are subject to risks, uncertainties and assumptions, including, among other things, economic general conditions, business policies in Brazil and other markets where the company is present. The words believe, can, will, estimate, continue, anticipate, intend, wait and similar terms are destined to identify expectations. Embraer does not assume any obligation to update publicly or review any estimates as a result of new information, future events or other factors. In view of the inherent risks and uncertainties, such estimates, events and predictions about the future may not occur. The real results and Embraer's performance may differ substantially from those previously published as Embraer's expectations. Participating today in this teleconference are Francisco Gomes Neto, President and CEO, Antônio Carlos Garcia, Executive and Financial Vice President, and Leonardo Shinohara, Director of Relations with Investors. At this moment, we pass the floor to Francisco, who will start the presentation of the company's results. Please, Francisco, you may proceed.
spk02: Good morning and thank you all for participating in our results teleconference in the second quarter of 2023. The aircraft deliveries reached 47 jets in the quarter. um forte aumento de 47% em relação ao segundo trimestre do ano passado. A receita cresceu significativamente, 57% na aviação comercial e 42% na aviação executiva. Mesmo com o alto número de aviões entregues, a carteira de pedidos permaneceu estável em 17,3 bilhões de dólares, com um ótimo desempenho de vendas de jatos executivos. conseguimos reduzir e alongar o prazo médio de nossas dívidas. E nossas projeções operacionais e financeiras para o ano, guidance, permanecem inalteradas. Nos próximos slides, apresentamos os destaques de nossas unidades de negócio. Na aviação comercial, registramos um expressivo crescimento de receita de 57%. e 70% de aumento no resultado operacional em relação ao mesmo trimestre do ano anterior. A margem EBITDA ajustada aumentou de 4,9% para 5,3% ano a ano. Anunciamos recentemente novos operadores na Ásia, Scouts de Singapura, SKS da Malásia e Royal Jordânia do Oriente Médio. Na Europa, anunciamos um novo pedido da Binter, que totaliza agora 16 jatos E2. No mercado norte-americano, American Airlines anunciou um pedido firme de 7 novos jatos E175E1. Este é um sinal importante, pois mostra que a situação de escassez de pilotos está melhorando nos Estados Unidos, com novos pedidos de E175E1, um segmento importante para Embraer. Também tivemos, no início do terceiro trimestre, vendas adicionais de US$ 700 milhões de clientes não divulgados. A aviação executiva continua com fortes book-to-bill de 2 para 1, a margem EBITDA ajustada de 8,8%, comparada a 9,5% no mesmo período do ano anterior. Anunciamos neste trimestre um acordo muito relevante com a NetJets de até 250 opções de jatos Praetor 500, juntamente com um amplo contrato de serviços e suporte avaliado em 5 bilhões de dólares. Nosso portfólio está muito bem posicionado. O backlog vem crescendo trimestre a trimestre e, importante, com disciplina de preço. Na defesa, o atraso de novos contratos e o reconhecimento de receitas impactaram as margens. A margem EBITDA ajustada caiu de 16,9% para menos 4,1%. Esperamos uma recuperação nos próximos trimestres. Temos várias campanhas de vendas ganhando força e esperamos fazer novos anúncios neste segundo semestre. Em serviços de suporte, nossa receita acumulada no ano subiu 13% e atingiu 666 milhões de dólares. A margem EBIT do segundo trimestre aumentou de 12,5% para 15,7% em relação ao mesmo período do ano anterior. Assinamos um acordo com a empresa chinesa Lanzhou Aviation Group para a conversão de 20 e-jets para cargueiros. Esse é um movimento importante que mostra Embraer voltando ao mercado chinês. No próximo slide, algumas atualizações sobre os números e marcos alcançados pela Yves. Anunciamos a primeira fábrica em Taubaté e também uma joint venture com a japonesa Nidec. maior fabricante mundial de motores elétricos, para desenvolvermos sistemas de propulsão elétrica para o setor aeroespacial. A carteira de pedidos da IVE totaliza agora 2.850 cartas de intenção de compra, que estão avaliadas em 8,6 bilhões de dólares, a maior do setor. A empresa possui 28 clientes de IVE TOLS em 14 diferentes países. Our Vice-President of Services and Support, Johan Bordet, was appointed as the new CEO of IVE, with the goal of leading the next phase of the company. I now pass the word to António for more details on the financial results, and I'll be back with the final considerations.
spk01: Thank you, Francisco, and good morning to everyone. Tivemos mais um trimestre sólido, com quase todos os indicadores melhorando, quando comparados ao primeiro trimestre deste ano e ao segundo trimestre de 2022. Slide 8, vamos às entregas. A Embraer entregou 47 jatos no segundo trimestre. with 17 commercial and 30 executive yachts, representing an increase of 47% in relation to the second quarter of last year and more than three times the deliveries of the first quarter of this year. We are pleased to announce that our commercial segment, the deliveries of the E2 continue to rise. We had seven E2 deliveries in the quarter, an increase of 40% in relation to the first quarter and more than 100% in relation to the second quarter of 2022. The demand for Z-2 aircraft continues to grow worldwide. Deliveries in executive aviation also continue to grow. The 30 aircraft delivered were above the level of delivery in the second quarter in the last seven years. Com isso, confirmamos a nossa projeção de entregas nas unidades de negócio aviação comercial e aviação executiva para o ano de 2023. Slide 9. Nossa carteira de pedidos firme encerrou o trimestre em 17,3 bilhões de dólares, estável em relação aos últimos três trimestres. Na aviação executiva, segue forte a demanda pelas aeronaves Fino e Preto da Embraer, since the B2B accumulated in 2023 reached 2 to 1. This stability in our order portfolio is aligned with our growth and profitability projection, generating a solid and reliable cash flow that strengthens our balance. Moving on to revenue, we ended the second quarter with approximately US$1.3 billion in liquid revenue. 273 million dollars or 27% above the same period in the previous year. The revenue accumulated in the year is above 2 million dollars, with all four business units registering an increase in the first quarter of 2023 compared to the first quarter of 2022, and with more than 60% of the revenue still to be made in the second quarter of this year. as we continue to be committed to delivering more aircraft and services to our customers. Slide 10. The adjusted EBIT in the second quarter was US$100 million and the adjusted EBIT was US$149 million, both better than the second quarter of 2022. As margens percentuais de EBITDA e EBITDA ajustadas ficaram levemente abaixo no segundo trimestre do ano passado, devido à não recorrência de vários itens pontuais positivos que tivemos no início de 2022. Reafirmamos nossas projeções de margem EBITDA e EBITDA ajustadas para 2023. Slide 11. O fluxo de caixa livre, excluindo a IVE, foi negativo de 11 milhões de dólares no segundo trimestre. Basicamente, ponto de equilíbrio. Lembrando que no ano passado tivemos uma entrada de caixa relativa a um desinvestimento na Europa, que beneficiou nosso fluxo de caixa livre no segundo trimestre de 2022. Neste ano, já tínhamos previsto o uso de capital de giro para a formação de estoque necessário de modo a atender às nossas demandas Passing to investments, we invested US$56 million in research and development and US$25 million in CAPEX. The total was US$80 million in the second quarter, as well as in the first quarter. Most of it was to finance the development of the initiative to convert jets to cargo ships and invest in additional capacity of our service unit. About the liquid results, Nossos resultados líquidos ajustados foram de 58 milhões, 12 milhões a mais que no segundo trimestre do ano passado e 147 milhões melhor do que no primeiro trimestre deste ano. É importante destacar que o resultado líquido reportado foi impactado negativamente pela marcação contábil a mercado das Warrants da IVE, no valor total de 53 milhões de dólares. Our adjusted liquid margin was 4.5%, equal to the second quarter of 2022. Slide 12. As we saw in this slide, I have the pleasure of sharing with you the purchase offer of more than US$ 500 million of our bonds, debt titles. This cash offer was aimed at restructuring our debt, strengthening our asset balance and reducing our passive in general. As recently announced, we issued a new bond worth US$ 750 million, with a seven-year term in July 2023. We used these resources to increase our median debt period from three to five years. The positive impact of this debt management plan can be observed at the end of the slide. The position of liquidity of 2.3 billion with IVE, strengthened by the restructuring of our debt, combined with the future free cash flow, will allow us to cover all obligations with earnings until beyond 2028. Our liquid debt, excluding IVE, at the end of the second quarter was 1.459 billion dollars, as shown in the central upper part of the slide. This is slightly higher than the first quarter due to the increase in cash outputs related to the capital of interest mentioned above. Our leverage index, shown in the upper right corner, is 3 times higher, a improvement compared to 4.7 times in the same period last year. É importante ressaltar que os resultados positivos de nossas unidades de negócio é o que nos permitiu executar nosso plano de gestão de dívidas. A Embraer está agora muito bem posicionada para avançar nos próximos anos. Com isso, encerro minha apresentação e devolvo a Francisco para suas considerações finais. Muito obrigado pela atenção.
spk02: Obrigado, Antônio. The results of the second quarter show that we are progressing consistently in our journey to improve financial performance and deliver sustainable growth in the near future. There are several sales campaigns in progress, mainly in commercial aviation and defense. We are confident in sharing new orders in the coming quarters. as well as better results and in line with our guidance for the year. In addition, the aircraft positions in the production line with deliveries in 2024 and 2025 are practically full, both for commercial aviation and for executive jets, which will result in a sustained growth of our revenue and profitability. Once again, thank you for your interest and trust in our company.
spk06: Thank you. We will now begin the Q&A session. We ask those interested in asking questions to raise their hand at any time on the platform. When you have your name announced, activate your microphone. For everyone to have a chance to participate, we ask the participants to ask only one question at a time. Our first question comes from Mr. Lucas Laje, from XP. Please, Mr. Lucas, your microphone is already free.
spk07: Thank you, good morning, for taking my question. I have a point here regarding the delivery dynamics, thinking about 2023, but if we look at the guidance of 65 to 70 aircraft in the commercial, I would like to understand if there was already the premise of adding new orders for this year, or if the orders announced by Envoy can imply any upside for this number looking at the dynamics in the second semester. And still in relation to deliveries, if you see any risk for deliveries in the second semester due to the problems reported by Bretton Whitney in relation to turbines. I understand that the problems do not specifically affect the turbines that are used in E2, but if you see any risk in relation to the supply chain as a whole that could have an impact on Embraer's deliveries in the second semester. So, these are the two points, thinking about the dynamics for 2023. Thank you.
spk02: Good morning, Lucas. It's Francisco here. Thank you for the questions. Regarding the new sales, will they impact 2023? In 2023, we already have the SDOTs fully defined for this year, and PW is well equated. There is a delay in deliveries, which is happening with some suppliers, due to the growth of production from last year to this year, we see that they have improved the deliveries, but with the growth they are not delivering everything we need at the time we need it, so there is a delay. but this delay should not impact the deliveries in 2023. Perfect.
spk07: Thank you, Francisco.
spk01: Just to complete what Francisco said, even with this restriction on the supply chain, we don't have an upside. We would have a portfolio to provide even more, but we already did the guidance thinking about the restrictions on the supply chain. So, if this improves, we may have some upside, but the number is already very fair based on that.
spk07: Of course. Thank you, Antônio.
spk06: Our next question comes from Mr. Gabriel Rezende, from Itaú BBA. Please, Mr. Gabriel, your microphone is already free.
spk05: Thank you and good morning, Francisco. Good morning, Antônio. I wanted to ask a question about the backlog. You made a disclosure on page 6 of the release with the backlog break in the last few weeks. And when we look at this break, we notice a more or less stable trend for the service segment and the defense segment, an increase in the executive segment's backlog, in line with what you just commented about a super strong booktube in the executive segment, plus an acceleration in the commercial backlog. I just wanted to understand how you see this trend moving forward. How can we think about these different divisions of yours, the backlog in the next few months, and we should observe, for example, a greater acceleration of commercial order entries in the detriment of the other segments. Thank you.
spk02: Good morning, Gabriel. Thank you for the question, and you kind of answered the question. We have already communicated an order here, without opening the client, but it will be disclosed at the end of Q3, But an important order for the commercial is 700 million dollars. And several campaigns in progress. So, without a doubt, we expect an acceleration of the growth of the commercial and defense backlog this second semester.
spk05: Perfect, thank you.
spk06: Our next question comes from Mr. Marcelo Mota, from JP Morgan. Please, Mr. Marcelo, your microphone is already free.
spk04: Good morning, thank you for the question. I wanted to know if you could comment a little about the margin outlook. We have already seen the executive commercial at very strong levels now in the second quarter and with this delivery increasing, improving throughout the second quarter. If you see any upside risk for this margin and when we look at the BIDA margin guidance, again, the second quarter, a margin Good morning, Marcelo. Good morning, Antônia.
spk01: uh Terminando o ano com double digit de margem. A comercial ficando no mid single digit. Tem muito mais avião E2 para fornecer no segundo semestre. A defesa recuperando, ficando perto do higher single digit. E serviço no mid things, que a gente fala aí, entre 10% a 15% de margem. Quer dizer, hoje, aos olhos de hoje, a gente não vê um grande risco, mas também não vem um grande potencial. Acho que o o que a gente passou pro ano, ele tá muito bem calibrado, tá? E imagina que o qualquer surpresa a gente vai tá informando vocês, eu espero que positiva durante o mês de novembro, mas aos olhos de hoje, eu acho que o está muito bem preparado de seis vírgula quatro a sete vírgula quatro pra fechar o ano, tá? Sem grandes riscos e com alguma oportunidade.
spk04: Perfect. Thank you very much, Antônio. Good morning. Thank you, Marcel.
spk06: Our next question comes from Alberto Valeri from UBS. Please, Alberto, your microphone is already free.
spk00: Thank you for taking my question, Antônio, Francisco. I wanted to go back to the point of the backlog, which people ask us a lot here. When do you think you'll put the NetJets orders in? When will it become firm? And the price too, we saw the competitors, especially in business aviation, increasing the price in the last two years, Embraer with the table a little flatter than the competitors. Do you see any space for an increase in price in this segment? Thank you.
spk02: Hi, Alberto, thank you very much for the question. About NetChat, the options are exercised year by year and will start in 2025. So, from there, we will see the impact, when they exercise the order of the year, the impact on the backlog. Regarding the price, our staff has shown a very good discipline, very important in terms of prices. And that's why we see a good evolution on the executive margin. And they are taking advantage of all business opportunities. Of course, it depends on the mix of fleet or retail, it varies a little. But they have had a very important focus to improve the margins of airplanes.
spk00: Perfect, thank you very much.
spk02: Thank you, Alberto.
spk06: Our next question comes from André Ferreira, from Bradesco BBI. Please, André, go ahead. Hi, good morning, guys.
spk03: Congratulations on the result. Thank you for taking my question. If we look at the stock levels here, they didn't fall much, three against three, despite a relevant improvement in deliveries. I would like to understand if this is related to a maintenance of production rate, thinking of a strong delivery perspective for the second semester. Thank you.
spk01: André, good morning. Antônio speaking. André, part of the question you already answered. We are in my speech there. 60% of the supplies will happen in Q3 and Q4. This is a point that... And we are already adding stock for next year. So, the growth of Embraer is above 20% and next year too, around 20%. Thank you very much. for next year, a bigger production still, where we hope to finish with the solutions. You will see a much stronger Q1 than you saw this year. And apart from that, we have another aircraft still in stock that must be provided as soon as we close the defense contracts. So, we have this recovery in the second semester, where I hope to see the box coming back according to what we predicted.
spk09: Perfect, very clear. Thank you.
spk06: Our next question comes from Felipe Nielsen from Citi. Please, Mr. Felipe, your microphone is already free.
spk09: Hi guys, good morning, thank you for taking my question. I think my colleagues commented well about some of the points I had. There is one that was left here, about the margin of defense. You comment on the release that it was due to some delay in receipt recognition. I wanted to understand more or less what that was, why it happened. If you could give us a little more color, thank you.
spk01: Felipe Bondeiro, Antônio, aliás, é um prazer ter o Citibank na conferência em português. Muito obrigado pela pergunta. Nós tivemos vários efeitos pontuais em... In February, in the second quarter, and it's important to highlight that material delays also affect defense. So we received much less material than we expected in Q2, which means we received less by the percent of completion, which is the defense modality, so 0.1, 0.2. We expected to make some supplies in Q2, and it ended up being postponed to Q3 and Q4. And besides that, we had base correction of current contracts, adjustment of accounts between Gross Margin and EBIT, which gave this impact. But nothing that we can't recover during the year. It was really a punctual adjustment in the second quarter. com reflexo agora em Q3 e em Q4. Então, coisas pontuais aí. E o faturamento é muito pequeno, que aconteceu em Q2. Quando você faz um ajuste muito grande, você tem a impressão que o negócio está indo mal. A gente vê muito pelo contrário. A defesa deve adicionar muito valor a Embraer nos próximos anos.
spk09: Perfeito. Muito obrigado. Prazer estar aqui também. Valeu.
spk06: Our next question comes from Lucas Macchiore from BTG Pactual. Please, Mr. Lucas, your microphone is already free.
spk08: Hello guys, good morning, thank you for the call. I wanted to get an update on the commercial front, Francisco, Antônio, if you could talk a little bit about how the campaigns are. We had a good expectation there regarding China, after the certification of E2. including the visit of state representatives. I would like to know how the commercial prospect is going in China and also in India, which ended up being a market that was quite explored at the Paris fair by Embraer's competitors. I would like to know how Embraer is planning to participate in that market, which seems to be quite big. So, commercial update of China and India, please, guys. Thank you.
spk02: Lucas, thank you very much for your question. Well, China, we have a very large focus on that market, because we see a market with a very large potential for Embraer. Our planes, both the E190 and the 195E2, are a perfect complement for local manufacturers. The AirJ-21 from Comac, it goes up to 80-100 seats. and their other model, the C-909, goes above 150 seats. So, in this 100 to 150 seat gap is exactly where our planes enter and can greatly improve the efficiency of Chinese air traffic. We have advanced initiatives to do business with Chinese airlines. In Paris Airshow, we announced an important movement, which was not the sale of aircraft, but it was this agreement for the conversion of 20 passengers to cargo planes. So we are moving in China, we are talking to potential partners, we are working in line with a bilateral agreement between the Brazilian government and the Chinese government. We hope to have good news in this second semester. In India, We are also advancing in contacts with potential clients. I'm going there next week to participate in the B20 group and also visit some clients. There are many opportunities there for our military aircraft, for the C390, to understand a little also the market of commercial aviation, the opportunities we have for our two planes. So, basically, this is a quick update of China and India.
spk08: Cool. Thank you, Francisco. See you later.
spk06: We have concluded the Q&A session and Embraer's results conference. Thank you very much for your participation and have an excellent day.
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