ERJ - Earnings call transcript Q3 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the audio conference call that will review Embraer’s Third Quarter 2021 Results. Thank you for standing by. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions to participate will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded and webcasted at ri.embraer.com.br. forward-looking not statements occurred. includes circumstances events call have which conference statements about or or This and the Embraer on performance. and events its based current trends has these expectations projections forward-looking about future and its business statements largely financial financial affecting future forward-looking and risks, and in present. where company among subject other assumptions, and business to economic, is things, markets general political are conditions statements including, These uncertainties other in Brazil the are intended words expects words The may, and statements. continues, will, identify intends, anticipates, to believes, estimates, forward-looking those similar undertakes forward-looking no information, or obligations revise Embraer to update factors. statement future or publicly other any new because of events these of might light circumstances occur. discussed the this risks In forward-looking not events and and uncertainties, call conference on statements. The results company’s substantially from actual differ forward-looking could the those in anticipated Mr. Participants call today’s conference are on Mr. and Francisco President Gomes Neto, CEO; Financial Antonio and and Officer Carlos Procurement; Garcia, Mr. Chief Eduardo Investor Couto, Director Relations. of would to now over I Mr. turn conference to like the Gomes Neto. Sir. ahead, go Please

Francisco Gomes Neto

and hope your today. Good of you morning quarter third and call well Thank thank our you that company. all joining in our for safe. you I all are interest for

results our As in its positive in were expectations to are Antonio's quarter results the our for with for The line results that and company. showing in with later will plan. QX than the cash show generation and see better strategic presentation, coming planning our you tangible continue execution internal

we the Aviation, on to Before in we Commercial go quarter. into nine each segments. more the the third some third highlights touch In our financial I'd like jets details quarter, on of in business delivered

so in for XX year. line aircraft in with have forecast we the delivered And our far XXXX,

Executive EX with of Helvetic Commercial reached this a the aircraft demand front European record. in first the another of this excess further the to this to of on traders hit Aviation, very performed flight portfolio book-to-bill will year. deal business EX Also of in doesn't market. We third X:X. ability first quarter sale of good was through in excess of strategic fighters the XXX positive book-to-bill has we to Airways order X:X and see continued into $X.X Phenom we a jets sold of momentum XXXX the the billion this [ph] In is continue in Phenom include and finance to show a milestone Swiss out and of the order XXXX, firm this quarter family leading with Further at London in XX leading momentum SkyWest for our when even penetration to of of attend NBAA the up Airport. And aircraft. Aviation, within announced XXXE to City front to the airport The revenue-generating airline, allow to on

Embraer jets took as this Finally this XX to in only we reach years growth industry took delivered years Executive the it quarter, the on players rapid rest industry within average that aircraft. our many when milestone, to deliver the showing XXXX the third XX us of

Security. slide, next Defense highlights the the & the we On with from start

aerospace. be demand light continued will Brazilian delivered customers, the During we see in-training plan to Traffic Tucanos to processing an this able our version System, different in updated market for of underlining all which delivered quarter, Management Also aircraft. six the third Atech the unify subsidiary leading we Air Super Brazilian flight jet

weeks we globally. once Services The share a the to production jet matter and Brazilian it ago. continue available. becomes with traffic in-person along to attend & able Air recovery with contract were business event will the And this additional information the commercial KC-XXX and continues its Support regarding MRO recently also We Force negotiate few Europe we

Europe. be program sales fleet, KLM to brand operator the which entire at is including a EXXX-EX several During in support the present with full event, expected its contract Cityhopper largest announcements had EX we for

aviation We third in survey. Product place proud placed the in Support and XXXX are AIN again was that services Surveys also the for Pro-Pilot first

in honored MRO top new as Finally, in years significantly XXXX, grow coming Portugal ranking to we XX was for business subsidiary great with expected our this up. centers of a to a business sign OGMA in with the MRO Europe exciting ramp services

a On Airways with innovation, potential slide, in strong coordination the our Further, platform. subsidiary signed we use with for the a through urban maintenance on the continue progress EVE growth respect and to to next come. years the in multiyear the agreement to make Republic partnerships Beacon's our of ecosystem mobility with EmbraerX in segment

Beacon new to Although, for accelerate EmbraerX a very partnership very of over autonomous announced see Silicon the add agriculture to also currently next not large in and company a the a of years. future financial operations. with customers results, aerial interesting we Valley grow Pyka, opportunity terms few

This a going lowest to some of are quarter regarding the level start XXXX with reduction excellence. sharing we in since reached enterprise highlights inventory the last months. We XX XX%

increase the further on reduction an end. in also you. X.X% XX% give the it operational I a lead detail of aircraft. of our now terms time production financial In Thank I results, to and in will and of return we to Antonio reached of the hand efficiency, over will

Antonio Carlos Garcia

increase a Francisco, good start This is in year. We backlog XX% six of is the third ended and like I and the you, our quarter-over-quarter quarter consecutive morning Thank to this everyone. up $XX.X second with would backlog. months with billion.

segment. Looking at each

book-to-bill orders activity in reached and orders in We and XXXX. to fit and has in XX In firm us a gives jets. This SkyWest, prior our the Aviation of summary, level. not our continues Executive strong levels also firm In from for a confidence to total ratio Support sales commercial from increase. Commercial Backlog good across record Aviation quarter backlog X:X. are with plans business continue our quarter's with this XX entire year Services portfolio backlog profitability sales grew bringing working seen have will a another since growth excess & third revenue

deliveries, at during nine Sales recovery showing in XX delivered period a XX light quarter, deliveries the EXs. Aviation represents commercial XX increase The and over XX, we Commercial year. quarter to the were large executive last XX% a third a Of period. third the quarter. increase the for jets delivered a in deliveries the a very same perform Moving at our well -- jets nine Aviation deliveries aircraft jets, third and the in XXX% of of markets. the increase last same aircraft over seven period to jets increase continued were were XXXX. XX compared Executive core year. for XX XX XX% total XX Year-to-date XX, deliveries. In Year-to-date a total to

reaching deliveries and aircraft Aviation between this by to to jets XX continue executive XX of aircraft Commercial the between XXXX XX We expect these year. trends positive the jets of to with end XX

Turning to net revenue.

compared a was growth higher from to all up solid mix Commercial net also main of more commercial quarter XXXX. was XX% and defense our revenue of posted net Executive was our Services Aviation Third the a Support was units revenue XX% driven and posted growth revenue third Super We revenue Tucanos. while in year. billion, services. to million, increase advances up from revenue same had favorable of quarter growth, to last Year-to-date $X.X due due last as executive Defense deliveries, the and programs was year-to-date business quarter deliveries revenue the Aviation by growth expanded $XXX & year. deliveries. to higher due

fourth quarter we to to expect XXXX billion strong between $X this end expect year and remain We to in $X.X revenue. billion revenues

XXXX. period Looking the compared in or million SG&A to to over Year-to-date SG&A. same XX% quarters. continues favorably was the at trend SG&A seven last down $XX

of As down of and increased sales nine customer XXXX, percentage engagements. XX.X% a percentage revenue, points. a to first SG&A seven demo full in-person at was and activities, was Selling due expenses months X.X% year-to-date compared market up in the flights to

customers. is is levels, selling more to ways levels -- to far effective Although, our up, reach focus trend expenses the XXXX cost sorry, due on below XXXX our

X.X%, half seven percentage level equal of of were administrative of a revenue XX.X% of less was year-to-date this last same the than average XX and the the XXXX. to quarter, period expenses expenses selling General quarters. the in As

of apply SG&A three G&A at this As focused principles remain of It's efficiencies our held in we lean to steady quarters functions. year. important each highly on SG&A the a revenue, and reinforce, to percentage X% has

EBIT to EBITDA. on Moving and

by margin the for very performance We encouraged company. in are improvement continued the

was driven our a at robust was deliveries $XXX adjusted basis, third business margin Support EBIT & similar X.X%, EBIT year-to-date year. contract at EBITDA to improvement to adjusted In same million compared was from compared at Commercial quarter the for year. X.X% X.X% a Defense margin EBITDA quarter, adjusted a loss in also Super compared $XX resulting XX.X% consistent in above $XXX the adjusted to was mix $XXX adjusted was of and loss margins by a our discipline our as million, Executive with price improved adjusted in with profitability. from And was were margin percentage XXXX. deliveries. at million & On good Services and X.X%, EBIT both positive prior of XX% and year and at dollar follows. points last service was million, Tucanos Security EBIT the X.X% was are For on over KC a X.X% on of at higher nine with last XXXX. Aviation consolidated performance. Aviation segment, improving mix. the quarter up adjusted both Year-to-date and basis, EBITDA

costs net a Fit million non-business-related total loss net shows related ongoing per are on costs, for ADS. below and of Grow the This expenses $X.XX Adjusted Additional margin interrogation next enterprise EBITDA of arbitration quarter. adjusted company our explain is EBIT costs was average. efficiencies. and initiatives and income $X business slightly other the slide to These income improvements segment the margin or for results our

a top level income cost improve, on net impact corporate providing growth leverage is and earnings. grows, trailing trending will as efficiencies. on line driven financial basis, revenue negative And and positive our additional Although by XX-month our up primarily fixed

flow and I'd investment recovery. highlight to cash flow. remarkable like on first Moving to cash our

better more the quarter. sales the our sales flow On and adjusted $XXX quarter inventory cash payments associated flow cash production of years the in down time a given $XX was planning positive and basis, and executive seasonality generated the which third commercial management, Third adjusted XX cash strong million, flow first the our free negative a positive flow led More in year-to-date million. cash than efficient have and the the free quarter, we to free with positive business. was during was

were time last negative, where is far this than Although this better we year.

flow quarter, these the to trends we Looking cash to fourth positive continue. expect

opportunity So are $XXX the free or XXXX better. today taking our positive to cash million we flow guidance to increase

history positive line top our cost free recovery, one We are and aerospace very our year capital Embraer happy downturn also not that but cash worst after of only in emphasize the initiatives. only generates the working flow, results

Now to investments.

cash. the in year-to-date the both is liquidity with next need year. and and the future, quarter important million our $XX This shows balance quarters. This third cash ended in prior We to preserve increase we our Our cash $XXX position. the $X.X slide it cash were with slight to two billion and quarter total to last investment the a with from because equivalents invest in shows need line million continue

Our months debt three from was debt balance Both billion decreased of net with $X.X $X.X at ago. billion. are slight

Our decreased average X.X to to years. maturity debt

We to and generate fourth beyond. cash in to expect quarter continue the

net decrease. our And So interest reduce and income. have we course, cash, expenses of generating and improve a metrics. credit levels, our will on net We level naturally debt remain debt on leverage lower our positive focused our impact reducing

remarks, Guidance to Finally, in you hand as or Thank presentation remain much. free remarks. earlier back increasing we Francisco I With in final unchanged. his flow very my cash that mess and it positive are my I other better. hurdles for to mentioned guidance conclude our

Francisco Gomes Neto

Thanks Antonio.

The quarter our in results third year-to-date and our strategy. confidence reinforce

the All for flow shows, on proved in the improving was X.X%. last the EBITDA discipline have SG&A sales updated to the momentum company, recovery During also adjusted performance. focus full our of that projects just from seen be not combined we and nine last element company's expenses net a The plan. year down key and have positive with means, free In gains up guidance top the the on deliveries, XX% good in higher and cash the XX% line executing months year the the only a but and year of profitability. revenue efficiency strategic long-term of at top focus

practice, we also journey. our making on ESG progress Regarding are

energy announced from we to be by in include new sustainable our commitments own XXX% XXXX operations quarter which flights. our in sources This in fuel using carbon-neutral ESG renewable aviation

as developing We work note products emission net based sustainable in will have hydrogen. electrification, XXXX, with to propulsion suppliers such to final innovation. industry the technologies on together hybrid achieve the zero by whole A aviation carbon regarding in a

excellence the on in country and creating to work executing a in It innovation our all of finance most for and and and most recognition Valor thank This an team company. disruptive prestigious plan. passion among company those is focus quarter as newspaper largest technology. all of innovative great make by the sectors. interest Economico and Brazil, we engineering, incredible confidence Embraer, awarded sustainable were for all face who to in strategic technologies our Thanks their our your We for in and you the

Operator

[Operator comes Mr. Instructions] MetLife Our Josh. with from with you [indiscernible] One first proceed. please may Morgan question Milberg Josh Florence moment Stanley.

Unidentified Analyst

I questions. for Hello, everyone. congratulations Thanks is have and my the results. question for regarding taking two cost. One

that? regarding strategy Or regarding is the issue regarding for terms supply shortage of is the inventories other any expecting any in quarters. that on targets year. everyone are leverage And of next you the suffering one coming the in If

back We to Thank you. level? to are Xx the expecting

Antonio Carlos Garcia

the just XXXX, to for shortage are keep say what industry are will Maybe to suppliers. our doing from daily I being for to we we the arrive the you also basis, we see by repeat up have may some we for up time able why with moment. going some have but with guidance. But know the shortage, the we we And do issues on these With risks when still that, part we they for a would we we our confirmation some shortage. partners affected building your for And extent are shortage whole where So, also understand. give our the regards to -- in more we because And that? especially first days are range not planning we especially this of second a a question, cautiously material -- year. - follow is production to confirmed. material, year, regards was we next associated next Could not is that's I

Francisco Gomes Neto

next leverage, It's the a year? about leverage Antonio, we reach times three to expect if of

Antonio Carlos Garcia

year or are EBITDA confident level we year better. And And confident four to our that will the we are planning. next We at below say, you. that we to remind one And I year XX. year or the even we this reach net and no that, per just are to at next to should ago year maybe four three. we having going going would more debt lead were less close Thank doubts slightly slightly around this three. be are That's

Unidentified Analyst

much. so you Thank Perfect.

Operator

next Josh Stanley. comes Milberg from The Morgan question with

Josh Milberg

a for I the months you hoping, book-to-bill Hey, and that strong I congrats being developments the environment. touch landscape, the second with about the you at mentioned and if executive the see, competitor could longer you're the any that executive that We've questions you suggesting everyone. And backlog, on as Vegas Thank gotten perspective business. And pricing pose from it little and your that. a in meaningful threat recent starters wanted just for Thank you good input term? bit several some if could you call, question, had talk to results. exhibition, competitive get moves, the Las upward on good was seeing the to would I but folks could a on industry you. and be some product on mentioned

Francisco Gomes Neto

Josh. you thank Well,

– of is is XXXX. industry right? jet jet the year-over-year all for business I X% this is good really for us been a So, business I really reach for growing mean, – us. And surprise to mean, good year, all this likely us in industry the has of

as team which helped well, has result mean, before. good good are I discipline a this been in out and first with We with said showing well, so enjoying market the have us. in XXXX, – until very prices, believe a We do executive. our doing sold we I quarter

XXX, Phenoms, We Vegas, best – think the so to the well do of and believe have doing and market. But in a the very we XXX. we a the pre-pandemic the Las in from – We but Phenom are products that mean, do portfolio do I to our demand XXXX in great levels competition, seller, the with have to the average with of goes growth regard continues of the operators one XXX very XXXX believe XXX we we went landing be growth also the doing far, great Phenom to soft the that have onwards, we with a believe in digit. market. well I executive have

Josh Milberg

how starts helpful. false that's that number And the industry there industry issue your one in If this That's good I recent the soft been much commercial And in to of Okay. a years. you more side. question course a on squeeze you because performance COVID has an of there's in performance. of seen just hear sort is boosting landing, the see of overall might

a hear little and seeing delivery XXXX you're have campaigns you. point? scenario your the been to wanted at Thank Just evolving bit this how how there about,

Francisco Gomes Neto

the It's above Okay. jet. still executive

I to this right? We ever, wealth one is X% of that that are – believe economic buyers we have say, market. be And is X% this been levels the global also this nearly recovery. mean, We normal the the also that, indicators and already fleet of levels that back we mean, because -- other pre-owned reasons to has the XXX% only the the normal reasons right? our new growth, are a support to aircraft level. in of -- the optimistic levels, of on market below landing, liquidity, Regarding this we double the activity, the the in service. operation. levels growing are that market lowest the fundamental different used wealth are EXXX the for COVID, – I'd the other And not are also commercial, there in market and but one, in fleet first-time soft first-time market good in the the and that. with not users right? also It's I the And are

America in intelligence scope-compliant EXXX-EX the today. there indicated market our over aircraft has in next North to in that production aircraft the is our XXX only and So years replaced are XX be

triple-digit And the also, a COX sales for I our strong a aircraft number is good So could discussions. also, post-COVID we a category. position, to we the from the in rightsizing actively that, EXs. perspectives benefit of EX. commercial mean, EX have that have put we say I going activity. good environmentally-friendly as very increased have under our in this reduction, environment, pressure most aircraft And

So because the for of we also that the with -- next with Aviation really years. are Commercial optimistic

Josh Milberg

at And not, the I very in -- just this a EX, with mean, add any of way, angle, given on here. you're ESG prices -- point, this I the saying kind of EX, to just lack they that even the alternatives sort are mean does to I mean, angle that and point a from your pose oil of being standpoint? having where threat

Francisco Gomes Neto

repeat please you that, please? Could

Josh Milberg

the view demand EX friendly the any a environmentally Well, today, I there aircraft threaten your and just driver highlighting oil are of sort of EX question does EX I last-generation not alternatives? high of making just because the in in raise you're that, way the for being no was that and just point mean, prices wanting the to

Francisco Gomes Neto

new we in we one So, EXs. are is parallel of short the mean, But in alternatives. generation working think, new have perspective the term is them. turboprop I I the still for

the aircraft approved half we have next stronger for second seen well And that a project. business of be continue year. plan going that customers everything interest We by for -- is on from to And

Josh Milberg

Wonderful.

Francisco Gomes Neto

the with -- as EXXX-EX well.

continue working have to that we project. So

Josh Milberg

Okay. perspective. appreciate the all Really

Antonio Carlos Garcia

point here, And regards in just XXXX. for planning to one to the complement

be above something it speech, XX in sold aircraft year jets. slightly next for And we saw my that. like commercial You XX something -- should

see give less to to next the Just to it's suppliers, year. ourselves perspective, as give you or number confirming the with you a with where but customer, more a we just

Josh Milberg

appreciate Really it. visibility. good That’s Okay.

Francisco Gomes Neto

Josh. you, Thank

Operator

question comes Ron next of Our of Bank from America. Epstein

Ron Epstein

couple questions. A morning, guys. of Good Hey.

So the was quarter flow cash good. clearly in the

the in Now, lumpy. been past, it's

better cash flow consistent cash how this So, think basis, a flow more a Is thing? one-time we of or going should this mean, on about forward? trend I more a towards is

Antonio Carlos Garcia

this Hello, Antonio you is Ron, your speaking. question. Thank for

we flow are recovery first That's the a more free or say, million say, previously, mentioned our see, EBIT I sustainable be coming telling say, us. less, $XXX for should should a would we to of I on show the would As XX% cash right we cash less here base. in perspective, mid-term the disclosing the generation it’s assuming debt I projects now. that that be more flow, beginning. are would we able the It's or growth falling the more for And and years. are I

the business. even would I quite in on say into legacy and products, are, diligent investment generation new highly details for We focused more cash for

not New need we to business company the alternatives business we find have here. in the compromise legacy to

Francisco Gomes Neto

complement if And Ron, Francisco it’s to allow now. me that. speaking

on work the reduce working the to capital continue actions inventory, also of in our to We to reduce to turnover and inventories the our increase operations.

that we cash of all to make combined in believe So us growth with this good with performance the continue activities generation. will will these

Ron Epstein

got think we should notional you the efficiency as you it, when where how it. Is think Got margins, think about go could investors? we could through a programs? there EBITDA about target those like work about as And

Antonio Carlos Garcia

and it's to with we see already date long-term in us. the X.X between close it less should we do planning. to That are year-to-date. numbers, to long not XX a that but say those sure mean Ron I more ourselves for does for XX, or but are no-brainer, good would run sign happy It's be, we our

Ron Epstein

Okay.

So to a XX potentially on range were maybe to go. of depending things that's and range we reasonable think how if even higher XX a

Antonio Carlos Garcia

slowing of XXXX, the the down, to of more say jets. it's back going it's but value monetize, Aviation We recovery take because let's to the Absolutely. recovery coming see the in do Commercial commercial XXXX longer

Ron Epstein

terms just thinking Got you could how commercial seeing then on we do that on think of it, so do appear know As yet I that XXXX, sales it, asking campaigns front the it. that. order activity really haven't year broadly, And an front, sense got a activity? from about E-Jets? in you on I'm got start not But for you the jet have guided XXXX front, you XXXX, maybe for how for you are and what -- could

Francisco Gomes Neto

before rebound US I answer think quick see for I of flights, the the next as Ron good the because we as in the opportunities Well, years in we in market well. perspectives the said good domestic the for very before, in EXs EXXX-EXs, have

of said As EX mentioned good increasing for our working are first this rightsizing I Helvetic the our happening also in before, mean, good this from things we lot next a I This in position pressure the are we year commercial City. post-COVID, a campaigns. house a onwards. we of experience that many I in our Airways believe London EX environment, this in puts position. put

products. with optimistic are those We

Ron Epstein

Got it.

Antonio Carlos Garcia

today. we margin the business are the Commercial and the would don't because adjusting, we are without above But already like want it's of we this to do units have numbers. just the because the we And corporation you order come issuance. to I the give do the above disclose you that that you But a arbitration as in those in EBITDA the say, XX%. way want information central structuring if to today company. important we to handled by affecting are Aviation math, XX% see I not And without this of know the try are some costs we Ron, still -- back are without mention margin in already costs we QX we and you to we integration

Ron Epstein

then it, one question may. got maybe Got got if And last it, I it. just

around the On does there's -- Where new a a platform. of that lot of potential new the discussion been turboprop, maybe stand? a

Francisco Gomes Neto

very I mean I And suppliers for going next I product. as the seeing that from a as everything in by also customers the interest half business we said very approval plan before year. and investors Ron of second also mean Well are strong well is

of the product So – are very also product. we optimistic this development new of this with

Ron Epstein

it. it. Got Thank you very Got much.

Francisco Gomes Neto

Ron. welcome, You’re

Operator

Mizusaki next Bradesco from comes BBI. Our question with Victor

Victor Mizusaki

Hi.

questions I here. results. the First two solid congrats for have

is one related in to saw first I deposits, a right? The quarter. warranty material we the mean third increase

know happened sense second in than Commercial for in When take if deliver and what the we with XXXX a next this look more So booked I aircraft? year maybe try we delivers is take that XXXX. BRL write-off some audit deposits happen XX compare the could if year, a estimate of to that the to mean mean the the can I'd I like make to that could for aircraft at million. third company to it delivers of quarter. write-off we related we if the what company us see question commercial could And provisions. warranty figures XX

don't I So know you. can Thank if you give details. additional

Antonio Carlos Garcia

Victor. question. for Hello, Thanks your

from to answer the say start Let's the side. provision

as will have That's sure delivered. the – that do restrictions order for going And we in today. a the to get materials more next that above space would we assuming say, are the to especially in adjustment movements that the We we But continues now. XXXX did in is issue. soon are we we to months have chance we call. automotive some It's are like fulfill we give discuss back The and situation do able suppliers are guidance in right selling picking that be starting XX. It above But have our we to coming why come but and material as obsolete are sold an cost. are first in I a and QX. not shortage our we big to that competitive, make picking right seeing – not guide let's up we will industry up our be be a we see say, we we now to different that seeing may XX are

Victor Mizusaki

if Okay. Thank And quick one. may just I Antonio you. a

Boeing. expense any kind You process update mentioned this you with the give arbitration of matter? some Can on with

Antonio Carlos Garcia

not would that's cost. we I allowed continue could in the year we in why we and a I are process what too to a able not be less are – Or going more math think. it's you are to way years tell we adjusting or detail the much but arbitration. I important and say take unfortunately year Yes, to different can the give you for do two next and are kind of But more the

Victor Mizusaki

you. Thank Okay.

Antonio Carlos Garcia

Welcome.

Operator

question Motta Marcelo with comes next The from JPMorgan.

Marcelo Motta

Hi, questions. everyone. well. Thanks for taking Two as the questions

digital First regarding I and that we any going. know EVE provide fact the could the is if all material you mean guys negotiation the business. update

wondering the continue And growth, regarding if So might the feel leading that. how you any have been show continue strong second negotiations lower-than-expected & be a is just very to conclusion segment margin. have a the mean question bottleneck that or to I guys solid to about anything there Support. for Services

several quarter. during agreements announced You the

wondering, provide just revenue some how could add if been us much in or how in guys can new line how or have midterm. those revenues to grow much the adding this they on much could agreements So expectations you

Francisco Gomes Neto

Thank you, questions. the Marcelo for

grow area, in have good -- both can also It's The one, our I But enjoying not operation Support further. right. partners we About are we that cannot in are with aircraft relevant the executive informed one ongoing. market keep commercial will market, operation. to the I tell you you regarding have we of and first Embraer plans of area our to the yes, EVE, is non-Embraer The & but this mean, aircraft of comment what doing Services return that very business. company only further second well. in And market. our is negotiations yes, any the with developments aircraft

multi-billion will the in our to signed Pratt for contract. & and in the area revenues maintenance engine triple Portugal. Embraer important call, we Portugal in allow Whitney us a previous the in this with well. an as And years help this will as we that service contract -- have GTF grow the had said next We we almost operation It's

area. grow perspective So, again, a opportunities very to Support Services and & our good

Antonio Carlos Garcia

Two-digit growth.

Francisco Gomes Neto

earlier next growth two-digit Yes, the years. related for five

Marcelo Motta

Perfect. Thanks much. very

Operator

next The Goldman from comes Poponak question with Noah Sachs.

Noah Poponak

Hi. Good morning everyone.

Francisco Gomes Neto

Noah. Hi,

Noah Poponak

commentary that lead year do The out what is first the how quarter on case? delivery sustainable that sold a what around being of to executive the that deliveries, being on basis? XXXX, into of you time level sold -- next at be And want

Francisco Gomes Neto

the the question. said, as XXXX mean, quarter lot we Noah, out through for a are I first well, sold actually. thanks I

a in job market. doing good enjoying great is team So the this our momentum

do growth for we So, average onwards. new the as crisis the many next is fleet in mean, be a production I to XXXX, we demand reasons, this we pre-owned we for two-digit soft believe year. landing year, believe there are this closer the but users are said a and market. to of still the are said I And next before, would coming growth, buyers from another one-digit still And plan new the growth that it pre in XXXX working that wealth -- normal before, growth. I with because and of as

is this the on view executive market. So our

Noah Poponak

Okay.

in you're planning So growth units versus XXXX double-digit for XXXX?

Francisco Gomes Neto

Correct.

Noah Poponak

in Can have -- you just quarter? you it happen you but number tell us know what exact that that to be do the to I number have two, over executive book-to-bill helpful? if you the in would on the happen was precise said

Francisco Gomes Neto

X:X As book-to-bill. I excess in said of it's before, the

Noah Poponak

EBITDA? as to And opposed cash to That's target EBIT EBITA flow or to E-B-I-T-A the confirm Okay. just conversion XX%. referring you're

Antonio Carlos Garcia

first the commercial. for beginning Noah, results operating EBIT XX%

beginning, quotation. EBITDA. to call first we we today the with short-term are merging in I EBIT generate But regards not a in what XX% see do upside For

Noah Poponak

cash free to EBIT? X-X, flow XX%,

Antonio Carlos Garcia

billion number we I Yes, generate to in three size was Yes. have going to issue we being higher interest I next $X enough, able call. compensate a for able the to years still because ago cost interest. of We you give company business two, billion are I'm That's revenue. in order this say, $XX And you company. having would be a being why revenue. promise time still Today these this metrics. the to for guys, the refine I our But

Noah Poponak

Great. Okay.

Okay. much. Thanks so

Antonio Carlos Garcia

you. Thank

Operator

comes question with and Jack Ayers next The Cowen Company. from

Jack Ayers

today. provide good following question. just of Hey guess your just guess here margin we like margin I could you the how sequentially up expanding deliveries for looks Like Cai to This commentary I about it the guide for it from if previously jet think talk Jack for QX by sort QX in a segment. QX. I implies on is margin on Thanks is your biz guide QX. biz QX EBITDA morning. framework defense or implies jet about think improving

just what moving If quarter be you would would around this great. provide the provide and was the backlog around pieces and could if that then sort on just book-to-bill margin And could be backlog helpful. specifically color Thanks. you defense key there commercial some of

Antonio Carlos Garcia

your Thanks Jack for question.

year. also say at close I same Services KC. effects at end less Then EBITDA at want potential. still & QX we margin would point. If we have EBITDA happen more force Commercial saying first Executive We keep QX. you I to at say here a Support to air would XX contract because have the see driven say of in are or contract level. are have we guidance. or going improve EBIT That's EBIT is with negotiating today We still Aviation for That's to We the Aviation of is we XX% margin breakeven. to with guidance our we some by and upside because don't to the less high that the the the of the EBITDA or the we may that see end are year-to-date why do our decided the it either on the cautious risks to this we level. delivery do more guidance going because of But I challenge and EBITDA the have highly same current are do

today in Commercial. that XX no US booked a new the and contracts commercial the we defense. added year. For say but quarter would In in SkyWest are sure much the backlog. QX have end we In moment we challenge fiscal added just to do here the on a high to this stands the Defense this up on I backlog regards we we better end the have In in

Jack Ayers

increasing how year. about And about is follow-up function really XXXX Got then like guess you're as cash off should it. it. that And What full guide like I this XXXX just think volume that of we a it a cash to your just deliveries? and looks of for cash Got base? growing

Antonio Carlos Garcia

of we guidance not now. are But see our pre-pandemic say purchasing still $XXX continue have right doing we year don't are to would seeing do should improving below able $XXX range -- delivery but it's this by $XXX to to million for I have itself, give not back driven likely only $XXX we million. in say right management the million between between improve Yes, regards efficient be we everything you to to level because but would level next I with that that million potential I a we keep the we capital to now. coming working are to -- pre-pandemic the we inventory figure this assuming

Jack Ayers

you so Thank Great. much.

Antonio Carlos Garcia

Okay.

Operator

comes BLUE Niemeyer Management. with Asset from question next The Matthias

Matthias Niemeyer

Hi. Good afternoon.

next I I my been one, the on working a one into part offsetting some big addressed, the on of to see think just trying recent questions hand. have about forces again, capital piggybacking year as just but most think

increases some right potential now to You lot inventories would we're have your costs. working in upside on a seeing a next fairly of the And of low be year, levels you extent imagine deliveries and input in inventory bit drag I a that can see capital.

other liabilities. hand, seeing On you're the better contracted

again, So dynamics pull perhaps different working and push understand to the just capital. trying of your

offset if inventories again work? just bit can comment kind forward. on of think on could other a little you your be by you. that Thank expectations going If And you

Francisco Gomes Neto

to is meet share this doing. Matthias. good those activities are with to Thanks a And opportunity – we other you the question, for

plan important to accounts our we the started this So on the year, company have, turns sales improving focused on period, revenue our potential Last company. almost And portfolio. first before, in of cost also, the aircraft, of our to of increase program product all, to is five-year do I the And to focusing our through, the to the the said reduce went portfolio the of initiatives on focus focus on we existing of as we an inventories. of rightsizing and of products. existing double receivable, important this

the triple our four turns We of almost target years. inventory in to next turnover to have three the the

as again, mean, more to of reduce of improve to before. then of from growth cost that onwards, activities these So, with SG&A expense, period the either to specifically company, the I reduce the a the to profitability going products, responsibly, the stated all the well more that rightsizing generation expect as the we'll XXXX the and manage financial company by in our performance Antonio cash in we expect we

Antonio Carlos Garcia

crisis to Just you – inflation Brazil or mode here. much me obtained. today is know in if complete continue We in with about how Matthias, ask we worldwide high inflation the

we and or the would We to we are to – we say, costs in to any backing our pass-through. contracts run order continue have. back I offset may deviation production in regards in additional have efficiencies

Matthias Niemeyer

you very Perfect. Thank much.

Operator

from comes question with next Fabiancic The Nicolas Jefferies.

Nicolas Fabiancic

the and the on you call Thank guys results. for congratulations Hi.

recovery, us any Just agencies incredible strong rating on notable seem there's a here, actually have quick agencies. strong three that sense. to investment After here results, the on make back think one We Doesn't to the you the grade. these that path it's to still outlook. negative

wanted I sustainability-linked on things corporate a plans, And latest How of And about potential you mentioned coming to new the in focus those fit of expenses gross with timing the conversations would seen around them interest thinking issuance agenda of specifically lot So then, debt. with mentioned. Clearly, like Brazilian just guys ESG you wondering a on what's market the reducing XX-year? and management, guys with bonds. agencies. liability into maybe we've opportunistically that doing to back of ask terms ESG and the sort level the

you something that you. guys already starting that about? is think So Thank to are

Antonio Carlos Garcia

for the the thanks Fitch. I just We Nicolas, with start question. take, rating. for example,

notch The sure, one the already to management. going of That's investment the going And liability report investment week, the XXXX, they last year, we are that are hope the I believe provided to are universal And the it in this new grade grade. They information, put it's probably was And end back are most our we XXXX. below question. trend. do changed stable. negative. We with attendance positive get first in my for we

for our already level. ESG to green also We be maturity refinance to are go a in discussing bond. and increase debt basis debt market our will bond, bonds for QX these be agenda. length the will That's the the And and

Operator

Thank you This concludes for conference That much good for very audio conclude today's have session. Embraer's does a your question-and-answer day. participation and today.

Embraer (ERJ) 5 Nov 212021 Q3 Earnings call transcript