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spk17: Good morning, ladies and gentlemen, and thanks for standing by. This conference call will be conducted in English, but please let me stay as for announcement for Portuguese speakers. This conference will be held originally in English. To listen to the simultaneous translation in Portuguese, press the button Interpretation of the Cataphone and serve the desired language. My name is Gui Paiva, and I'm the head of universal 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 to reconcile EVE's financial information and GAAP standards to Embraer's IFRS. We remind you that EVE's results will be discussed at EVE's conference call today at 9.30 a.m. New York time. It is important to mention that all numbers are presented in US dollars as it is our functional currency. 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 extracted 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. For detailed financial information, the company encourages revealing publications filed by the company with the Brazilian Covistão de Valores Valdiridários, or CVM. 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. Participants on today's conference call are Francisco Gomes-Depto, 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 management will present the company's Q1 results. 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 to our President and CEO, Francisco Gomes. Please go ahead, Francisco.
spk14: Good morning and good afternoon to all. Thank you and welcome to Embraer's first quarter 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 markets. Historically, Q1 is seasonally our weakest quarter. 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. These operational changes should help the company to increase efficiency, productivity, and post better financial results next year and years ahead. Our backlog reaches 21.1 billion, which is the highest level over the past seven years. In commercialization, American Airlines placed an order in March for 90 E175s with 43 additional purchases in rights. The news demonstrated the still strong potential of this aircraft model in the US market. Speaking of potential, we currently have concrete sales campaigns for more than 200 aircrafts across the world for both our E1 and E2 jet families, and also more concrete sales opportunities for our D-Chance aircraft. We also kept 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 to 11% in Q1-24 compared to a year ago. The strong financial results of the company allowed us to reduce our gross debt without age by an additional $276 million during the quarter, a total reduction of $754 million over the past year. Consequently, our gross debt to ABTDI ratio is now below five terms. 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 back log rose $2.3 billion, or plus 26% quarter over quarter, and reached $11.1 billion with a -to-view ratio above one for the whole year. The American Airlines order reinforced the capability of our E175 model, and more importantly, the partnership between both companies. Embraer and leading company Azura delivered the second E195-E2 to Royal Jordanian, the first E2 operator in the Middle East. As active aviation, the back log registered a sequential increase of $300 million and ended Q1 with $4.6 billion, or plus 7% quarter over quarter, and a strong -to-1 -to-view for the quarter, or plus 7% quarter over quarter, and a strong -to-1 -to-view for the quarter. We recorded our first set of firm orders from NetJet, whose deliveries will begin in 2025. In total, NetJet has purchased rights for 250 aircraft over the next 14 years. In the fashion security, we hosted the first Embraer defense day in the U.S. with the C390 Millenium and A29 Super Tucano. The event included a diverse guest list of government authorities, military officials, prospects, and partners. In early 2024, Embraer and Mahindra signed an AVOU to jointly pursue the sale of the C390 Millenium to the Indian Air Force. The first Hungarian C390 successfully completed its maiden flight. The aircraft continues to receive international recognition on the back of its remarkable operational performance and capabilities. We should note that the division reported lower -over-year revenues because of supply chain delays and business seasonality. In service and support, revenue grew 12% compared to the same period last year, with solid double-digit profitability. The business year backlog maintained the historical 3.1 billion record, reaching in Q423 with a 10% plus in-bate margin. Another important step for our services division was the induction of the first price-trivening GPS-1100 engine in Ogma, our MRO in Portugal. The run path should last four years, and we expect revenues to reach close to 500 million in 2028. Last but not least, EV, our EV top business, is on track to achieve important milestones in 2024. We have already selected now more than 90% of its component suppliers, and we successfully concluded a Yuba Air Trust Management Trial. The company is on track to accomplish the next development steps, first prototype assembly conclusion, initial test, and the definition of its certification basis. We also began the definition of our EV-TOL factory configuration. All in, we estimate EV 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.
spk02: Thank you, Francisco. Good morning and good afternoon to everyone. I would like to highlight our operational performance in Q1, despite the historical seasonality. Total delivers, revenue, and marrings were higher than the same period in 2016. We were in Q1 in 1983, 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 set of milestones to put us in a comfortable position to achieve our three-year guidance, even with the ongoing supply chain constraints we continue to deal with. Let's now move to slide nine in the presentation. Delivers. Executive aviation delivered 18 jets in Q1 for an increase of 125 percent versus a year ago and the highest Q1 level of the last eight years. The light jet segment was 83 percent higher year over year with 11 panels delivered, while the Q1 was delivered the median jets one more than triple during the period with seven panels delivered. Meanwhile, commercial aviation delivers were flat at seven aircrafts in Q1 compared to the same quarter of 2023, which is for Q1 and three E2 aircrafts. In the sense, we should note there were no C-309 delivers in the first quarter of Q4 and 23. We continue to work steadfastly to accomplish our production plan and reach the milestones in our defense and security programs, which includes four C-390 million deliveries scheduled for the year. It is important to The company has developed and is currently implementing a production leveling plan to mitigate the business seasonality. The plan should help the company to deliver less volatile financial results throughout the year in the near to midterm 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 percent quarter over quarter and the highest number recorded over the past seven years. Looking forward, our current backlog is accurate to our financial projections. The backlog for commercial aviation reached more than 308 aircrafts in Q1 and it is valid 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 percent higher quarter over quarter, helped by the inclusion of the first paper 500 firm orders from NetJet. We should note NetJet has other 246 options not included in the current backlog. The backlog for service and support is finished stable at 3.1 billion in Q1, while for defense and security it decreased marginally by 4 percent quarter over quarter to 2.4 billion. Again, we should note there are 11 C-390 aircrafts in three tender offers, one whose contract having been signed yet is included in our backlog. Moving on to revenues, our top line reached almost 900 million Q1 or 180 million higher year over year for a 25 percent growth rate. If you look at the right chart, service and support represented around 41 percent revenue in Q1, followed by executive, post-287, commercial aviation from our 22, and net sales at around 9 percent. Next slide. We generated 47 million in adjusted investment in Q1. We saw 5.2 percent margin driven by higher aircrafts delivered compared to the same period last year and better consolidated growth margin. Meanwhile, adjusted the B2 was 7 million for an adjusted B2 margin of 0.8 percent. Reported A-BIT for the quarter was negative 4 million for a negative 0.4 percent margin. Both figures were better than the first quarter 23, supported by our volumes better mixed especially in executive and service and support. Looking at the right chart, we can see executive aviation and service and support generated positive A-BIT during the quarter, while commercial and the first presented negative results because of limited volume supply chain delays and more aircrafts in the early stage of ascending. Slide 12, please. In Q1, if we exclude EES, we had an adjusted free cash flow consumption of 346 or 53 million better in Q1 23, driven by customer advance payments. The Q1 cash consumption is basically due to the increase in inventories to support higher deliveries in the upcoming quarters. This takes place throughout the year and we have our 220 million or higher guidance for the cash generation in 2024. Moving to investment and again without the EES, 47 million were allocated to research and development, 28 million to COPEX and a net of 15 million to the PUL program in Q1 for a 90 million total compared to 82 million a year ago. We highlight our capital location continues to be focused on segments with higher returns, which projects such as exponential for production capacity in executive aviation and service and support. Our adjusted net income was negative 13 million for the quarter on a negative 1.4 percent adjusted margin. Historically, the first quarter of the year is the weakest because of the business seasonality. The post-eval report, the net income is driven by the -to-mark valuation of the easy words around 30 million. Next slide, going to our liability management plan. In first quarter to 24, we reduced our gross debt without using by 276 million dollars only during the quarter and by a more sizable 754 million dollars 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 a billion in first quarter to 24. However, on a sequential basis, our net debt activity leverage ratio increased 0.4 times to 1.8 times as shown in the top right corner. This variance is expanded by the seasonality of the business. Our almost 2.4 billion liquidity position allowed us to cover our debt obligation 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.
spk14: Thank you, Antoine. 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 initiatives. 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 will continue to diminish and improve our ability to deliver more aircraft in the next few years. 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 Dallas. We are very grateful for their partnership interest. We continue to focus on operational and business efficiency in 2024, having as foundation of our culture safety first and quality always. Let's now move to the Q&A session of the call.
spk13: 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. The second part of the Q&A will be only for the press. We highlight again this conference call is being conducted in English with simultaneous translation to Portuguese. Please let me say a short announcement for Portuguese speakers. We ask participants interested in asking questions to press star 9 in the phone at any time or press the raise your hand button on the platform. When your name is announced, press star 6 on the phone or make sure your microphone is on and start your question. We 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 to ask just one question per call. Please hold while we collect questions. The first question comes from Kai von Ruhmohr with TD Cohen. Please go ahead.
spk09: Hello, Kai. Hi, good morning. It's Gabriel Hizenga from Itaú, actually. So one question from our site here. You have just commented regarding the supply chain issues in the defense business and they're expecting these issues to improve along the year. But I was just wondering whether the supply issues that impacted the defense business, the specific components that impacted 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.
spk14: Hi, Gabriel. Francisco speaking here. Yes, I mean, as I said, we did see improvements in the supply chain from, we saw from 22 to 23, 23 to 24, but it's still with challenges in the specific components that some are emitting our production in the 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 that affects our productivity and in some cases, putting 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 in delivery, the aircraft we announced in the guidance in this month. How about the aircraft?
spk02: That's 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 it just has I would say a concentration in Q1 with less receiving parts for the defense and also the mix of contracts will cause less revenue and impact to our margins, especially Q1, but there is nothing that concerns us for this fiscal year.
spk09: That's perfect. Thank you.
spk13: Thank you. The next question comes from Miles Walton with Wolfe. Please go ahead.
spk04: Thanks. Good morning. Francisco, could you elaborate a little bit on the sales campaigns for the 200 aircraft you mentioned, both E1s and E2s? 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 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 expansion of customers that you would have otherwise anticipated even if Boeing and Airbus had capacity? Thanks.
spk14: Thanks, Miles, for the questions. We had a campaign in all the regions, to be clear with you. I mean, all the regions, South America, North America, Europe, Asia Pacific. With the good opportunities, I can't disclose the details of 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, is a perfect solution to complement the operations of bigger narrowbys. So we see now today is the first flight of our company, Scut, in Singapore, that they are going to use the E2s to open new routes and to increase the frequency of flights. And we see that in many different regions as well. So again, we are very, it's not easy, but we are very optimistic with the potential sales of E2s in 2024. What else, Miles, you wanted please, we'll repeat.
spk04: Francisco, just more, are you seeing these campaigns build demands because of the lack of supply offered by Boeing and Airbus or is that not a major factor in how these campaigns are playing out?
spk14: Okay, again, as I said, it's a combination of factors. And for sure, I mean, the fact that we have, I mean, it's a lot of production that's available already from 2026 onwards. This is, can help the airlines to add their competitive sooner to their base.
spk04: Yeah, that's where I was going. It's surprising you still have that availability given the absence of supply everywhere 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.
spk14: Thank you, Miles. Yes, we expect this to end in the first half of this year. So we should be too, but it's not in our hands. It's a decision of the, that's why it's reviewing in New York, but we expect this to end, you know, no later than the middle of this year.
spk04: Perfect,
spk14: thank you. You're welcome.
spk13: Thank you. The next question comes from Kai Von Broumore with Hedy Cohen. Please go ahead. Hi, your microphone seems to be on mute. If you could please unmute on your end. The next question comes from Ron Epstein with Bank of America. Please go ahead.
spk05: Hey, good morning, everyone. A couple quick questions. Can you talk a little bit more just about supply chain in general and where you are seeing constraints still, both on commercial and in defense?
spk14: Well, Ron, as we said before, we see improvements in average in our supply chain, but we're still with some challenges in the specific products in terms of volume. And also, you know, the on-time delivery. We have a lot of suppliers improving, but still suppliers with difficulties to deliver the parts we need on time. And this again, this bring to us more difficulties in our production. As you know, we are working this production leveling initiative that we want to better distribute the production and delivery throughout the year. So we still have difficulties in 2024 and we expect, but again, in line with our bank to deliver the guidance and expect even more improvements in 2025 in years ahead from our supply chain for both sides, commercial and defense.
spk05: Got it, got it. And then maybe one more follow on if I can. Can you guys speak broadly to how you're thinking about product development in new products?
spk14: Sure. Well, I mean, we fully understand all the excitement caused by recent media speculation. I mean, it highlights, you know, the level, the high level of marketing confidence in our company, right? Because of the achievements driven by engineering excellence, you know, our enterprise technicians and our customer-centric philosophy. And we are, of course, we are always looking at future options in all our business. But however, as I said before, we have, we are now in our harvest season. So we are focusing on selling and on delivering the current, existing portfolio products that is very modern and competitive. So we don't have concrete plans to develop or launch an aerobody or other aircraft in the next
spk05: few years. Great. Perfect. Thank you so much.
spk14: Oh, you are very welcome. Thank
spk13: you. The next question comes from Victor Mizuzaki with Bradesco BBI. Please go ahead.
spk06: Hi, I have two questions here. The first one, apparently, some guys from Mahindra were recently in Brazil. So I don't know if you can give us some updates on the negotiations. And second, when we take a look on the press release, there's a comment about provisions for bad acting service and reports. So maybe you can comment a little bit if it's a kind of a specific situation or there's something more to come, less important. Thank you.
spk14: All right, Victor, I started with the question one and then Antonio will help us with the question two. Yes, we didn't have a very exciting visit last week to our facilities in Brazil of the Mahindra CEO and three other members of the team where we had the opportunity to get to know each other and talk about the next steps on this in-game process in India to sell from 40 to up to 80, 69 to the India Air Force. So we believe we have a good partnership with them and we were back to convince the customers that our products is the best one for the India Air Force. Antonio, you can help us with the second.
spk02: Yeah, good morning, Victor.
spk14: So
spk02: very simple here. We just give that three million which was for the back desk provisions. Just Q1 was a little bit higher concentration of the due payments and it's not one specific customer, it's a bunch of customers who just applied the accounting methodology. I do not see it being trained for the future but probably half of it is going to be re-bred next quarter already, Victor. Not to concern us, but I know.
spk07: Thank you. Thank you.
spk13: The next question comes from Marcelo Mota with JPMorgan. Please go ahead.
spk10: Hi everyone. Thanks for getting the question. It's regarding the defense. I mean do you guys have any updates regarding the conversion of the orders from Ireland, Austria, Czech Republic? You guys also mentioned on the deliveries and backlog report from the first quarter. There are ongoing orders from India, Asia Pacific that are not incorporated to backlog yet. Could you please give us more color on maybe the size, potential size of the orders and maybe expectations for the defense backlog for the coming quarters or year end? Thank you very much.
spk14: Oh, hi Marcelo. Thanks for the question. Yes, we will have high expectations to sign important contracts in defense during this year. 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 in the in all the new campaigns either for the 829, the Super Tucanos and the C29. We also expect 2024 to be a good year in terms of sales not only in commercial but in defense as well and I know taking the opportunity and as activity 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 business.
spk07: Perfect. Thank you very much.
spk13: The next question comes from Stephen France. Please go ahead. Mr. France, your microphone seems to be muted.
spk01: Hello, I'm sorry. Can you hear me?
spk14: Yes, yes we can.
spk01: Good morning everybody. 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 Griffin 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 Griffin and what opportunities you could see from the new technology. Thank you.
spk14: Well, thank you Stephen for the question. Well, we do have a partnership with you know to help them to sell Griffin not only in Brazil but outside Brazil and then they do help us to sell the city name. So we have been working together and Sweden is one of our potential markets that we have been working on. So but we don't have any other information than that. In regards to sales of Griffin, this is whether you want to start directly.
spk01: Great, appreciate that. And just a quick follow-up, you know, any high level color how you guys are feeling about your supply of engineers in terms of hiring and retaining those people. Thank you.
spk14: Thank you again Stephen. Again, we have been working very hard on those topics that is, you know, the 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 working on in the future. We have improved our communication process. We have a lot of things and you know to help us to retain our talents within the company. I don't know, Andrea, our VPHR would like to ask some other information because we have to be personally involved in this topic.
spk12: Hello everybody. Good morning. Thanks Francisco. So as I 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, all our employees are considered to keep in Embraer. And we also have been granted as a great place to work. And this also helps to retain our employees.
spk07: Thank you for the questions, Steve. Thank you.
spk13: The next question comes from Lucas Barbosa with Santander. Please go ahead.
spk15: Good morning Francisco, Antonio, thanks for taking my questions and congratulations to 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 E1s given the AA or American Airlines order and a cost structure that is linear than in several past years. So my question is with all of those positive drivers, where can commercial aviation margins stabilize that in the future? Thank you very much.
spk16: Good morning and thanks for the question. This is Guy Paiva. So look, the points you mentioned are all correct. We don't provide official guidance for individual divisions of the company. But if we look in the past, commercial aviation was able to sustain margins in the double digit territory in the mid-teens. Obviously that is far away from where we are now, but if we're confident that in the next few years we should see margins continue to improve towards that direction.
spk15: So thank you. Thank you very much and have a great day.
spk07: Thank you.
spk13: The next question comes from Christine Duov with Morgan Stanley. Please go ahead. Ms. Duov, your microphone seems to be on mute.
spk11: Hello, can you hear me?
spk13: Yes. Okay, good morning
spk11: Frances Goh, Antonio and Guy. Sorry about that. Maybe Frances Goh on competitive dynamics, Airbus continues to lose money on the E220 and you know, they're aspirationally break even at $160 per year, but they're 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 E2 and how has the pricing environment for the E2 changed over the past few years since COVID? Are you seeing any improvement?
spk14: Well, Christine, thanks for the question. Good question, by the way. Well, when we have a free competition in the market, the result is pressure on the price with which benefits the curtains, right? In case of Embraer, I mean, even with the competition, we have been profitable in our commercial aviation. In the past year, the past year, the past two years, we've been profitable, the commercial aviation without services and we don't sell our aircrafts 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 we, our product, we believe that we do have the most efficient aircraft in that category and we continue to work on reducing our internal costs. Now with the Kaizen programs, with cross production 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 again this year, to be profitable in commercial aviation without service. If we had service, we even improve the profit of our commercial business.
spk11: Thanks Francisco. And if I could attack another one, and 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 E2 is a very attractive aircraft. I actually flew it recently from Paris to Zurich. 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 for the slots in 27 and beyond?
spk14: Another good question. I think, you know, there was a wave of customers buying bigger aircraft, but now, I mean, I think we see more and more opportunities for this, we call small narrow body. I mean, our E2 can fly up to six hours, you know, and it's very efficient, very quiet, and it's perfect for, if the airline wants to offer higher frequency flights to the passengers, also to explore routes, I mean, until the demand is big enough to fill a big narrow body. I think the E2 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 narrow body that will for sure benefit our E2.
spk11: Great. Thank you for the call.
spk13: Thanks,
spk14: Christine.
spk13: Thank you very much. The next question comes from Noah Popanak with Goldman Sachs. Please go ahead.
spk07: Hi, good morning, everyone.
spk03: What unit
spk08: growth are you planning for based on demand backlog, how full the skyline is in the medium term in commercial?
spk14: Could you please repeat the question? I have a difficult to understand here.
spk08: Yeah, can you hear me okay? Yes. Yeah, I'm wondering from the starting point of 2024, you know, given you have to, you know, set the production system in motion pretty far in advance, you know, and delivery, production 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.
spk14: Okay, now I got your question. Thank you. Well, this year we are planning in commercial aviation deliveries between 72 and 80 aircrafts. And we, as I said before, we are working in a lot of sales campaigns for the future. Next year, we expect to grow the production of commercial jets, which will be, you know, very close back to the three digits production, I mean, in the commercial jets. 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, the 25, 26, we'll be back to the profitability performance. So again, we are very optimistic with the production growth in the leaders of commercial vision as well.
spk08: Okay, great. Appreciate that detail. And then at executives, 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 in executives such that the year can be more level loaded as you go through the year? Or, you know, is there an implication that there's upside to the four year range?
spk14: No, we had some difficult last year, I mean, external with suppliers, but internal as well, because we were ramping up a lot the production. But I know since then, we have a lot of investments in our plants to increase the production capacity, either in Brazil and in the US. So we actually expect, you know, we are paying a gross this year, and 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 executives.
spk07: Okay, great. All right, thanks very much. You're welcome.
spk13: Thank you all very much. This concludes the question and answer session for equity research analysts and investors. Now, we will start a 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 see a short announcement for Portuguese speakers. 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 to ask just one question. Please hold while we collect questions. Our first question is from the chat. It is from Richard Schumann, Schumann, a freelance aviation reporter. Hello, Francisco. Obviously, you are very happy with the large order from American for for 1990 E175s, but how do you rate the chances of Embraer to win E2 orders from US customers? They seem to favor larger aircraft.
spk14: Oh, thanks. Thanks for the questions. Yes, we are extremely happy with the order of American Airlines, you know, last March. That was a very important order for us that shows that our E175s still have many opportunities, you know, especially in the US market. The E2s, you know, more recently, we have seen the E2s flying over the US with the Porter Airlines. Porter is flying, you know, to New York, Florida, to California with the E2s. And we, yes, we are in conversation with potential customers in the US, 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 narrowbys. So again, we see opportunities, not only in the US, but in many other regions in the world for the E2s.
spk13: Thank you. The next question comes from the chat from Richard Sherman, the same questioner. Do you have updates on the initial agreement with Richard Sherman Lanzhou for the conversion of E1 jets in China as announced at the Paris Air Show?
spk14: We don't have any update to share with you about that program at this point of time.
spk13: Thank you. Once again, if you wish to ask a question, please click on the raise your hand button on the platform. The next question comes from Gabriel Araujo. Please go ahead.
spk03: Hey Francisco and Barrio, good morning. I was wondering if you could update us on the recent things in Asia. We know India has a big market, China as well. Ibar has been trying to tap into the Chinese market for commercial airplanes, how the things in Asia are developing, especially now that you are flying the E2 in Singapore now.
spk14: Oh Gabriel, thanks for the question. Yes, Asia is the reason we see a big potential for E2s. Last February, we inaugurated a full flight simulator of E2s in the region, in Singapore, and this will help us to pursue more opportunities in the region. We are working in sales campaigns in many different countries. We have already more than 300 aircraft flying over the region, I mean in China, in Japan, in Australia, and we are working all those countries to introduce the E2s as well. So good opportunities for us in Asia Pacific indeed for E2s.
spk13: Thank you. The next question comes from Juliana Rocha, a reporter from Redd, and it comes also from the platform chat. Can you give details on the arbitration proceeding with Boeing? When do you expect it to be over?
spk14: Well, I mean this process is not under our control, but it is the process in the final phase, and we expect a decision still within this first half of 2024.
spk13: 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. Please press the Q&A button on the platform. The first question comes from the chat of Paulo Renato from the Global newspaper. The director said that he does not intend to launch Narrowbody models, being focused on delivering the current models. Is that
spk14: it? 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 do studies on alternatives and new products for the future, but we do not have the time to develop or launch other large aircraft at this time.
spk13: Thank you very much. The next question is from Juliana Rocha, she is a reporter from Red. Do you intend to continue with the layability management exercises in finance? Is there a target for leverage?
spk02: Thank you for the question. The target for leverage is already within what we imagined, which means gross debt below 5% and liquid debt below 2%. This was our aspiration. At the moment we do not have plans to go to the market in the next few months. The company's situation is relatively stable for that and we still think the interest rate is high, so it is not the time to do any market exercise. But always looking at the short-term opportunities. Thank you for the question.
spk13: Thank you very much. We have concluded the Q&A session and the Endraé results conference. Thank you very much for your participation. Have a good day.
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