Embraer S.A. (NYSE:ERJ) Q2 2023 Results Conference Call August 14, 2023 9:00 AM ET

Company Participants

Francisco Gomes Neto - President and CEO

Antonio Carlos Garcia - Chief Financial Officer

Leonardo Shinohara - Director of Investor Relations

Conference Call Participants

Kristine Liwag - Morgan Stanley

Myles Walton - Wolfe Research

Ron Epstein - Bank of America

Marcelo Motta - JPMorgan

Cai von Rumohr - TD Cowen

Unidentified Company Representative

Good morning, ladies and gentlemen. And welcome to the Audio Conference from Embraer's Financial Results for the Second Quarter of 2023. Thank you for standing by. The numbers of this presentation contain non-GAAP financial information to facilitate investors to reconcile Eve's financial information and GAAP standards to Embraer IFRS. We remind you that EVve results were discussed in Eve’s teleconference. It's important to mention that all numbers are presented in US dollars as it is our functional currency. At this time, all participants are in listen only mode. Later we will conduct a question-and-answer session and instructions to participate will be given at that time. Should you require assistance during the conference, please use the Q&A button on the platform. As a reminder, this conference is being recorded and webcasted at ri.embraer.com.br.

This conference call includes forward-looking statements or statements about events or circumstances which have not occurred. Embraer has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the business and its future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions including, among other things, general economic, political and business conditions in Brazil and in other markets where the company is present. The words believes, may, will, estimates, continues, anticipates, intends, expects and similar words are intended to identify forward-looking statements. Embraer undertakes no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed on this conference call might not occur. The company's actual results could differ substantially from those anticipated in the forward-looking statements. Participants on today's conference calls are Francisco Gomes Neto, President and CEO; Antonio Carlos Garcia, Chief Financial Officer; and Leonardo Shinohara, Director of Investor Relations. I would like now to turn the conference over to Francisco, who will proceed with the first remarks. Please go ahead, Francisco.

Francisco Gomes Neto

Good morning. And thank you all for joining our second quarter 2023 results call today. Aircraft deliveries reached 47 jets in the quarter, a strong increase of 47% compared to the second quarter last year. Revenue grew significantly, 57% in Commercial and 42% in Executive. Even with the higher deliveries, backlog remains stable at $17.3 billion with strong sales performance in Executive Aviation. We have been able to reduce and extend the duration of our debts. Our operational and financial guidance for the year remain unchanged. On the next slides, highlights of our business units. In Commercial Aviation, we reported a strong revenue growth of 57%, as mentioned before, and an EBIT increase of 70% compared to the same quarter last year. Adjusted EBIT margin increased from 4.9% to 5.3% on a year-on-year basis. We announced recently new operators in Asia, Scoot from Singapore, SKS from Malaysia and Royal Jordanian in the Middle East. In Europe, the new order from Binter, totaling now 16 E2 jets. In the US market, American Airlines announced a [firm] order of seven new E175-E1 jets. This is an important highlight as it shows that pilot shortage situation is improving in the US, with new orders for E175-E1s an important segment for Embraer. We also have additional firm sales of $700 million from undisclosed customers in the beginning of the third quarter. Executive Aviation continues with a strong book-to-bill of 2:1. Adjusted EBIT margin at 8.8% compared to 9.5% in the same period last year. We announced this quarter a very relevant deal with NetJets of up to 250 Praetor 500 jet options, along with a comprehensive services and support agreement valued at $5 billion. Our portfolio is very well positioned with a backlog growing quarter-over-quarter with a resilient price discipline.