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Edited Transcript of EMBR3.SA earnings conference call or presentation 14-Mar-19 1:30pm GMT

Q4 2018 Embraer SA Earnings Call

Sao Paulo Mar 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Embraer SA earnings conference call or presentation Thursday, March 14, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Eduardo Siffert Couto

Embraer S.A. - Head of IR

* Nelson Krahenbuhl Salgado

Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR

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Conference Call Participants

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* Jeffrey Joseph Molinari

Cowen and Company, LLC, Research Division - Research Associate

* Myles Alexander Walton

UBS Investment Bank, Research Division - Research Analyst

* Petr Grishchenko

Barclays Bank PLC, Research Division - Fixed Income Analyst

* Victor Mizusaki

Banco Bradesco BBI S.A., Research Division - Research Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the audio conference call that will review Embraer's fourth quarter 2018 results. Thank you for standing by. (Operator Instructions) As a reminder, this conference is being recorded and webcast 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 the 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 obligations 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 in this conference call may not occur. The company's actual results could differ substantially from those anticipated in any forward-looking statements.

Participants on today's conference call are Mr. Nelson Salgado, Executive Vice President, Finance and Investor Relations; and Mr. Eduardo Couto, Director of Investor Relations.

I would now like to turn the conference over to Mr. Nelson Salgado. Please go ahead, sir.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [2]

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Good morning, everyone. Thanks for joining our call. We start on Slide 4 with a summary of the most recent events related to Embraer and Boeing strategic partnership. After a few months of some uncertainty and speculation, we're very glad that the transaction was approved by the vast majority of our international and local shareholders, with 96.8% of shareholders affirming of the votes at the extraordinary shareholders meeting held on February 26. Before the general assembly, we had signed the contracts with Boeing on January 24 and we had the golden share go ahead on January 10. The deal is still subject to approval from antitrust authorities and satisfaction of other customary conditions. The closing is expected at the end of 2019, subject to all approvals being obtained in a timely manner. We believe this transaction will bring a lot of value to our customers, shareholders and employees, and Embraer will continue to keep the market informed as we advance in the transaction.

Now moving to the next slide, Slide 5. We start with business highlights. First on Commercial Aviation. In 2018, we delivered 90 E-Jets, including the E-Jet number 1,500, which is a very important milestone for the E-Jets. There are not many aircraft -- or commercial aircraft in the industry that reached this level of [profitability]. As far as sales of [CAT,] we had a very strong year in 2018, especially in the last quarter. We have sold 207 new firm orders including large orders from important customers like American, Azul, Republic, SkyWest, United and others. With that, our book-to-bill relative to 2018 was better than 2, which is very good, and we [further effect] that have in our backlog ahead.

Moving to the E2 performance. You may remember that the first E190-E2 was delivered in Widerøe in April, after having received the triple certification from ANAC, EASA and FAA. And the operation is going very, very well. The fleet that we delivered has reached and accommodated 98.5% of schedule reliability and 99.5% completion rates, which are outstanding figures for this part of operation of (inaudible).

In terms of the E2 development program, the program continues to advance as planned. We expect to have certification for the E195-E2 in the first half of 2019, with first delivery to large customer until the third quarter 2019. The development of the E175-E2 progressed as well. In 2019, we will be assembling the first prototype of the E175-E2.

Moving on to Slide 6. We talk about Executive Jets highlights. We delivered 91 Executive Jets in 2018, 64 light jets and 27 large jets. We are very proud to report that in 2018 our Phenom 300 was again the most delivered light jet in the industry. That's for the seventh consecutive year in a row, exceptional results for our Phenom 300. Regarding new products, we launched the new Praetor 500 and Praetor 600 at NBAA 2018. Those 2 planes are the most disruptive and technologically advanced midsize and super-midsize jets. They have unprecedented range in their segments, 3,250 nautical miles for the Praetor 500 and 3,900 nautical miles for the Praetor 600. They are also the best-in-class in cabin altitude, cabin design and has an ultra-quiet interior. It is important to highlight that the new Praetor 600 already concluded the flight test campaign with results that exceeds the requirements and specifications, and the program is on course for first delivery starting in the second half of 2019. It's also important to say that the program sold out for 2019 and there has been a huge demand from customers for these new [products]. Finally, as far as customer support is concerned, Embraer was rated #1 in pro pilot and #2 in AIN customer support surveys, reinforcing the commitment Embraer has in supporting its customers with excellence.

Moving now to Slide 7, Defense & Security highlights. Starting here with the KC-390 joint venture. As we have mentioned -- have been mentioning, the KC-390 joint venture is an integral part of the strategic partnership with Boeing, and it creates now the unlock global sales potential and promotes new markets for the KC-390.

Important to highlight that the KC-390 program is in a very special moment of its life wherein in 2019, we finished a long period of almost 10 years in product development and moved into a new phase where the KC-390 is being in serial production, contributing [$95 million] for revenues and results in [additioning]. The program has already received its certification from the Brazilian Civil Aviation Agency. And the flight test campaign with 2 prototypes now exceeds 2,000 hours of flight. The first delivery to the Brazilian Air Force is expected to hold [some EBITDA] in '19 and we have already aircraft #4 to 9 under different stages of assembly to be delivered to the Brazilian Air Force in the next years.

Regarding the Super Tucano, we delivered 9 aircraft in 2019 and we got a new orders for another 12 aircraft, which is a very good result for the Super Tucano. As far as new opportunities, the Consortium Águas Azuis, formed by Embraer and thyssenkrupp, was shortlisted in the Brazilian Navy Corvette Class Program. And in this program, Embraer will provide combat management and system integration. And finally, regarding services, it was a record year in terms of sales for defense services, which is something we believe is very important.

Moving now to financial results. Starting at Slide 9, we show our backlog. Embraer ended 2018 with a backlog of USD 16.3 billion. Important to highlight that in the fourth quarter of 2018, our backlog grew $2 billion. We believe this is an important milestone and reverses the trend of reduction of backlog that we've been observing in the last 2 years. That increase in backlog was led by Commercial Aviation sales, sales that we had announced mostly in -- at the Farnborough Air Show and [were turned into different] contracts in the last quarter of 2018 as we have anticipated. But also, here, new orders from -- for the Praetor aircraft, which, as I mentioned to you, the aircraft is sold out for some period and it's already helping us to accumulate some backlog.

Moving to Slide 10. We show the deliveries, which we already mentioned. So in Commercial Aviation, we delivered 90 planes, right at the middle of our guidance, which was from 85 to 95. In Executive Jets, we delivered 91 planes, 64 light aircraft and 27 large, in line with our revised outlook for -- which was exactly 91 aircraft. In Executive Jets, we had lower deliveries in 2018, mostly driven by the announcement of the new Praetors in -- in NBAA 2019. This aircraft, we will start to deliver in the second half of 2019. And also, the lower deliveries, they are a result of our continued discipline in terms of prices which, on the other hand, that already started to reflect positively in the results of Executive Jets as I will mention later on.

In Slide 11, we show net revenues. We reached net revenues of $5.071 billion in Embraer as a whole. These revenues are -- is mostly in line with the revised guidance we presented at the Analyst Day, which was $5.1 billion. It is important to mention that our revenues were affected by lower deliveries in Commercial, (inaudible) the 95 deliveries, and Executive as I mentioned before. But also by the cost base revision that we had to do with the KC-390 and that affected both our EBIT but also our revenues regarding the KC-390 and our [Defense & Security].

Next slide, Slide 12, we show SG&A expenses. We continue to show an backward trend in SG&A, finishing 2018 at about USD 485 million (sic) [USD 487 million], broken by $183 million in G&A and $304 million in selling expenses. This continued reduction is partially driven by our cost-cutting program called Passion for Excellence launched in 2019, but generally reflects the cautiousness of the company regarding the (inaudible) cost.

Moving to operating results at Slide 13. We reported 2018 adjusted EBIT of USD 224 million, implying an EBIT margin of 4.4%. These numbers are slightly above our revised guidance of approximately $200 million and 4% EBIT margin.

Breaking our margins by business. We have in 2018, 6.5% EBIT in Commercial Aviation, 1.5% EBIT in Executive Aviation, minus 9.1% EBIT in Defense and 12.5% in sales and services.

EBIT margin by business. Commercial and Defense presented a decline in 2018 versus 2017. In the case of Defense, results were affected by the accident with the KC-390, the incident in the -- and we adjusted for part of that. But there was an additional cost that was recorded in the last quarter of $40 million, which we did not adjust. If it was not by this cost, Defense would have been almost breakeven despite from the difficulties last year. Very important to mention that our margins in Executive [have recorded] to be complete. Gross margin has grown almost 500 bps comparing 2017 to 2018. In 2017, we have a gross margin of 12%. And 2018, the gross the margin was 17%. This is clearly the evidence of our cost discipline and how we are working to really start driving for more profit. We expect these trends to continue in the next year.

Next slide, Slide 14, we will show adjusted EBITDA. Generally speaking, everything that affected the EBIT affected also the EBITDA, right? We closed the year with USD 474 million, implying a margin of 9.3%. This is also in line with our revised guidance.

Moving to net income. We reported a net loss of USD 54 million in 2018, mostly due to the weaker operating results and higher financial expense. That result implies a negative margin of 1.1%.

As far as investments on Slide 16, we spent USD 305 million, broken by $94 million in CapEx and $211 million in R&D. Important to mention that we have important contribution of more than $100 million from suppliers. So that the actual activity we are investing is more in the order of $400 million than $300 million, which means that we are continuing the development of our [Services & Support] as planned, both in Commercial Aviation but also in Executive Aviation that [will be launched later]. But the comparison of those results to previous years show clearly that we are getting to demand off a very strong product development phases that -- phase that we have in the past and you should expect that trend to go on in the future.

Moving to free cash flow at Slide 17. We reported a positive free cash flow generation of $422 million at the fourth quarter, and we ended 2018 with a free cash flow consumption of $128 million, which is better than the revised outlook that we gave, which was better than [consumption] of USD 200 million. Important to highlight here the strong cash flow generation in the fourth quarter, which was better than the fourth quarter 2017, which was also already [good]. Lower investments and accounts receivable were positive highlights in the free cash flow while we ended [up] the year with a higher-than-desired inventory of Executive Jets as we did not deliver as many jets as we would have liked, which means that if we had done so, our cash flow in the fourth quarter would be even stronger.

Moving to indebtedness at Slide 18. We ended 2018 with around $3.2 billion in cash and $3.6 billion in debt, implying a net debt dilution of USD 440 million. Our fourth quarter 2018 net debt of $440 million was significantly better than the third quarter 2018 net debt of $881 million, due to the strong cash generation in the fourth quarter.

Finally, on Slide 19, we show our 2019 outlook that we already presented in Investor Day in January. Important to note that 2019 will be a different year for Embraer because of the [completion] of this (inaudible) which is expected to happen in the end of the fourth quarter. We expect net revenues to increase to $5.3 billion to $5.7 billion, with deliveries of 85 to 95 E-Jets and 90 to 110 business jets.

Important to note that in 2019, we will deliver the first 2 KC-390 to the Brazilian Air Force, and we plan to deliver 10 Super Tucanos. Despite the results that we expect in revenues, as far as operating results, we expect results to be breakeven and that is mainly due to the separation cost that we anticipate that we will record in 2019 to prepare the carve-out of the Commercial Aviation units by the end of the year.

And finally, and very important, as we approved the deal in our general assembly, we committed to paying $1.6 billion in extraordinary dividends to our investors and to start 2020 with an Embraer with no leverage and a $1 billion net cash position at close. These cash targets are very important and will be pursued with all energy during 2019.

With that, we conclude our presentation and we would like to open for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Cai Von Rumohr, Cowen and Company.

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Jeffrey Joseph Molinari, Cowen and Company, LLC, Research Division - Research Associate [2]

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This is Jeff Molinari on for Cai. First question is, what were the adjusted EBIT margins by segment for Q4 and also for the year?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [3]

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We had 2 main adjustments in the EBIT margin. The first one would be...

(technical difficulty)

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Jeffrey Joseph Molinari, Cowen and Company, LLC, Research Division - Research Associate [4]

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Yes. I'm not sure -- I think the line might have cut off. It might just be on my end. But I was -- the question was, what are the margins by segments for Q4 and also for the year?

(technical difficulty)

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [5]

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Yes. We had in the fourth quarter an adjusted margin of 6.5%. And for the full year, as Nelson mentioned, 1.5%. Also important to highlight that the gross margin on Executive Jets, as Nelson mentioned, had a very strong performance, going from 12%, around 12% in 2017, to 17% in 2018. The decrease of more than 500 basis points was not fully translated from the operating margins, given the lower [diluted] but I think was in line with our focus to recover profitability.

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Unidentified Analyst, [6]

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Okay. And you came up with the cash leverage in the -- in Q4 (inaudible) customer region [base]. So can you confirm the amounts of adjustment in Q4?

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [7]

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Yes, we had an impact of around $40 million in the fourth quarter in Defense but was not adjusted. So in the end, we had the Executive margins, around 9% in Defense for the full year. But excluding this $40 million, margins would be slightly negative, around 1%, 2%, so close to breakeven for Defense. I'm talking about operating margin in Defense for the full year 2018.

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Unidentified Analyst, [8]

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Okay. And my last question here, I wanted to confirm your guidance for 2019. You say breakeven margin but does this number include the -- it's a portion of cost. So I don't know if you can disclose the exact amount or the expected costs (inaudible)?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [9]

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We are not disclosing that value because it's -- we are learning about this [cost] as we go deep in the planning, right? But we think we are confident to say that our margins after the cost will be breakeven as we mentioned in the guidance.

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Operator [10]

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Our next question comes from Myles Walton, UBS.

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Myles Alexander Walton, UBS Investment Bank, Research Division - Research Analyst [11]

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I apologize if the same question was asked because there was a little bit of a block in the call, I think, for a bit there. But I wanted to ask...

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [12]

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(inaudible)

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Myles Alexander Walton, UBS Investment Bank, Research Division - Research Analyst [13]

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The executive impairment charge and what the source of that was? And also on the KC-390, the extra cost, can you just clarify where the costs are coming from? Was it a design change or something that kind of is now behind you?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [14]

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Okay. Myles, regarding the Executive Jets, the extra cost comes from the impairments of some R&D expenses that we had to amortize regarding the Lineage program. Sales have been slow and in line with the [accounting]. That said, (inaudible) values around [USD 61 million].

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [15]

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Let me add, Nelson, (inaudible) it's related to the Lineage platform, which is the [legacy] platform -- a [rich] platform that we had. So it has nothing to do with our new platform. It was 100% related to the Lineage platform.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [16]

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Yes, with results in line with our strategy of focusing in our new platform that we have been mentioning [lately]. And the charge on Defense, first, we have the [$127 million] but we record (inaudible) which has been set apart here, right? But we have another charge of $140 million related to insurance that we recognized in the fourth quarter, which we did not set apart. And that leading the results to this minus 9% EBIT that we showed. But that, as we mentioned, we will have essentially close to minus 1 or 2 if that had not happened as well.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [17]

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(inaudible) if I may add now, it's still related from (inaudible) to the incident that we lost that account, number one. So that was an insurance charge that brought an additional [$40 million] charge in the fourth quarter.

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Myles Alexander Walton, UBS Investment Bank, Research Division - Research Analyst [18]

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Okay. And then you are in production phase up to unit 9 for the KC-390 and so I just want to make sure that the cost, the write-offs you're taking now, they are not related to the recurring cost of those aircraft? They're related to the development cost, is that right?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [19]

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Yes. It's just charges related to product development and more specifically consistent with the incident that we had last year.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [20]

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I think it's important to add that we are now going through a transition phase on the KC as we move from the development to the serial production. And then we expect that have -- that will have positive impacts on the Defense margin going forward because the development, especially in the last 2 years, we had some additional cost and cost base revisions but we don't see on the serial production. So it's very important the KC goes through its transition and starts serial production.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [21]

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Serial production is a more stable phase (inaudible), although fair to comment that (inaudible) to serial production. We have a learning curve to face. So margins in the initial production will not be representative of the margins that we will get once we move forward and deliver.

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Operator [22]

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The next question comes from Petr Grishchenko, Barclays.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [23]

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This is Petr Grishchenko with Barclays. So first, can you please discuss where you are on the -- in the regulatory approval front? What's the -- what was the initial feedback from various antitrust regulators?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [24]

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Yes, I think we can say that the process is really, really well. It's not a simple process. But there's nothing that we could highlight here. It's [developing] -- the process is moving [on] and we've already started that in our (inaudible) .

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [25]

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Okay. And maybe additional question. When do you plan to file with HSR in the U.S.?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [26]

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I'm almost certain that we have done that already. We can confirm that to you and get back to you, but I'm very positive that we have done that already.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [27]

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Okay. And my second question on the backlog. I mean, it seems that, looking at 175, the E2, like, can you maybe provide any color on when you expect the backlog to go there? Also, it seems like -- obviously, E190-E2's backlog declined by roughly maybe 30 aircraft this year. So I'm wondering, can you also provide a color on that aircraft as well?

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [28]

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Well, is the decline that you're talking about the 30 planes? Sorry, I missed it.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [29]

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No. I mean, the old backlog on 190-E2s, right? It was 74 jets, the firm order backlog, and then I think now it's 43.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [30]

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It's close to the (inaudible), I think, that we make.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [31]

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No, (inaudible)

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [32]

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(inaudible) if it's those E190s, it's the 24 planes from JetBlue that we removed from backlog after the campaign that we had in the middle of last year.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [33]

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Well, I was referring to the second generation.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [34]

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The second generation?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [35]

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Give us a sec.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [36]

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Sir, can you hear me? I'm not sure if you can hear me.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [37]

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Yes, we can hear you okay.

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Petr Grishchenko, Barclays Bank PLC, Research Division - Fixed Income Analyst [38]

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Yes. So my question...

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [39]

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Yes, we had a couple of planes that were removed from the backlog. The most important or relevant ones, as I mentioned, were JetBlue for the new one. For the E2, we had aircraft from India that we removed. And also, the E175-E2 from SkyWest that we will be (inaudible) change. We had to remove the order, but the order is still in place. So there's no change in the order book, only adjustment in the backlog. So those are the main changes.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [40]

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The contract is still in place but there is some conditionality in the contract with the changes, (inaudible), yes, [we will remove this] from the backlog.

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Operator [41]

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The next question comes from Victor Mizusaki, Bradesco BBI.

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Victor Mizusaki, Banco Bradesco BBI S.A., Research Division - Research Analyst [42]

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Just want to ask a question here. With regards to revenues in Services & Support, can you break down how much will stay with Embraer and how much will be transferred to the JV?

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [43]

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Yes, we had roughly around $1 billion. So around $400 million with Embraer and around $600 million goes with the...

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [44]

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Commercial Aviation.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [45]

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With the Commercial Aviation.

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Victor Mizusaki, Banco Bradesco BBI S.A., Research Division - Research Analyst [46]

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And the thing about margins (inaudible)?

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [47]

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We had margins around 12% for the consolidated Service & Support business. The Executive and Defense are slightly lower than that and Commercial is slightly higher. But it's not a huge difference. Like Executive and Defense, it's mid to high single. And in Commercial, it's more like a mid to high teens. So it's not a big difference.

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Operator [48]

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(Operator Instructions) The next question comes from Cai Von Rumohr, Cowen.

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Jeffrey Joseph Molinari, Cowen and Company, LLC, Research Division - Research Associate [49]

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This is Jeff Molinari on for Cai. Sorry for the interruption before. I think I lost connection. And I wanted to follow up with another question here on free cash flow. What are your expectations for free cash flow in 2019 excluding separation and tax cost? Will it be positive?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [50]

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So we have not opened yet that information. For (inaudible) the result has been consolidated (inaudible) which will allow us to pay $1.6 billion in extraordinary dividend. Then start (inaudible) 2020 [$1.0 billion] in net cash. However, I think we can mention that we expected a strong cash flow generation in 2019 which, if you just configure the amount of assets that we ended up in inventory in 2018, we expect the net debt to grow in 2019 and that will help a lot with the cash flow because the outflow associated with the production of the net debt has already been incurred.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [51]

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But if I may add now. So it's important to say that we have already sold more than $100 million of these carryover inventory. So we're confident that the additional inventory on business jets will be reduced throughout this year.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [52]

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Yes. The additional [amounts to] $100 million.

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Eduardo Siffert Couto, Embraer S.A. - Head of IR [53]

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Yes.

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Jeffrey Joseph Molinari, Cowen and Company, LLC, Research Division - Research Associate [54]

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That's helpful. And if I may with one quick follow-up. You offered some initial expectations for 2020 at your Investor Day, January. Do those still stand or is there anything you can add to that?

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [55]

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Yes. And as I mentioned, as a result of that, we see that as a conservative estimate. But for now, I think it's [too early] to see if we are going [to change that].

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Operator [56]

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This concludes today's question-and-answer session. I would like to turn the floor back to Mr. Nelson for his closing remarks.

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Nelson Krahenbuhl Salgado, Embraer S.A. - VP of Strategy, Institutional Relations & Interim Executive VP of Finance and IR [57]

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Okay. Thank you for attending our call. Thank you very much. Bye.

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Operator [58]

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That concludes Embraer's audio conference for today. Thank you very much for your participation. Have a good day.