Good morning, ladies and gentlemen. My name is Guilherme Paiva, and I'm the Head of Investor Relations for Embraer. I want to welcome you to the Fourth Quarter of 2023 and Full Year Earnings Conference Call. Thank you for standing by. The numbers in this presentation contain non-GAAP financial information to facilitate investors to reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you that Eve's results were previously discussed at Eve's conference call. It is important to mention that all numbers are presented in U.S. 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 expressed or implied in this conference call. Except in accordance with applicable rules, the company assumes no obligation to publicly update any forward-looking statements. For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissão de Valores Mobiliários or CVM. At this time, all participants are in a listen-only mode. We'll give later on instructions for the participation in the Q&A session. As a reminder, this conference is being recorded. Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer, and Antonio Carlos Garcia, our CFO. It is my pleasure to now turn the conference call to our CEO, Francisco Gomes. Please go ahead, Francisco.
Good morning and good afternoon to all. Thank you, and welcome to Embraer's Q4 2023 Results Conference Call. In 2023, our commercial activity intensified in all business units, with solid demand in the company's main markets. We also had a great start in 2024, with an important order from American Airlines that has driven our Commercial Aviation book-to-bill ratio above one to one for the year already in Q1. Last year, supply chain delays negatively impacted our business. However, we posted double-digit growth in aircraft deliveries, services, and revenues. The strong increase in sales helped the company's backlog to surpass pre-pandemic levels as it reached $18.7 billion, the highest number recorded in the last six years. And I am confident to say there is still much more upside to be captured in the near future for all business units. In the financial side, we also experienced great results. We registered a 30% increase in adjusted EBIT year-over-year, and we generated more than $300 million in free cash flow in 2023, above our guidance.
I'm pleased and proud to share that Embraer is back to investment-grade rating. All these results are a consequence of the execution discipline the company is focused on. On Eve, we reached important milestones in 2023, like the first prototype assembly. The progress made so far makes us even more confident that Eve is on track to develop the foundations for the global urban air mobility market. Last but not least, safety and quality are priorities in our strategy and are ever present in our culture. I will present now the operational results of our business units in the next slides. In Commercial Aviation, revenues increased an impressive 20% year-over-year to $1.85 billion, because of higher deliveries and product mix. The business unit registered a book-to-bill in excess of one to one point one The highlight was the E2 family, whose deliveries more than doubled from 19 aircraft in 2022 to 39 in 2023. In addition, in Q4, Porter Airlines added a firm order of 25 Embraer E195-E2. Commercial Aviation delivered 64 aircraft in 2023, but registered a positive 1.1% adjusted EBIT margin without services, or basically the same margin as in 2022.
The adjusted margin in Q4 reached 4.6% compared to 4.1% quarter-over-quarter. Executive Aviation registered a book-to-bill in excess of one to one point three , with a strong profitable backlog of $4.3 billion or 11% growth year-over-year. On deliveries, the business unit posted the largest volume in seven years at 115 jets, or 13% more than in 2022. The Phenom 300 was again the world's best-selling light jet, now for 12 consecutive years, and the most delivered twin-engine jet for the fourth consecutive year. Executive Aviation presented a 90% adjusted EBIT margin in 2023, versus 12.2% in 2022, a consequence of product mix and one-time tax benefits. The Q4 adjusted margin ended at 15.7% compared to 19.3% year-over-year. In Defense & Security, revenues reached a significant increase to $550 million, or 25% higher year-over-year, driven by higher C-390 volumes. In 2023, South Korea was in the spotlight with the victory of the C-390 in the public tender, becoming the first customer in Asia. Embraer also firmed two important MOU contract, one with Mahindra in India and one with SAMI in Saudi Arabia, to become partners in the C-390 sales campaigns.
The business unit presented a 5.5% adjusted EBIT margin in 2023, versus 2.4% in 2022. In Q4 2023, the adjusted margin ended at 2.8% compared to 5.3% quarter-over-quarter, due to product mix and baseline contract adjustments. If we move to services and support, in 2023, the business unit experienced solid growth momentum. We announced three new MROs dedicated to executive jets in the U.S. The expansion doubled our maintenance capacity in the country, and it should continue to support the growth of our customer base. The business unit backlog ended 2023 with $3.1 billion, a $400 million growth year-over-year, the highest level on record, reinforcing services' role as one of the main drivers of growth over the next years. We recorded a consistent double-digit adjusted EBIT margin throughout the year, finishing at 15.2% in 2023 versus 12% in 2022. In Q4, we had a 16.7% adjusted margin compared to 5.7% in the same period of the previous year, mainly because of sales, bad debt provisions.
On Eve, the company had several significant achievements, like the selection of important suppliers and the start of assembly of its first full-scale prototype. We also conducted a successful test of its urban air traffic management software in the U.K. On the financial side, the company consumed less cash than expected in 2023. The next 12 months will be important for Eve. The company expects to perform the first test flight of its full-scale prototype, and plans to start preparing its manufacturing facility for production. I will now hand it over to Antonio, our CFO, to give you further details on the financial results, and I will be back with closing remarks.
Thank you, Francisco, and good morning and good afternoon to everyone. I'm glad and proud to share with you our 2023 achievements, driven by the continuous focus on business efficiency and innovation. We also reached our 2023 guidance for all financial indicators, net revenue, adjusted EBIT and EBITDA, and free cash flow, despite a miss in commercial and the Executive Aviation aircraft deliveries because of supply chain constraints. Moving to slide number nine on deliveries. Executive Aviation delivered 49 business jets in Q4, and a total of 115 aircraft in 2023. The light jet segment was 12% higher year-over-year, and reached the largest volume for the company in the past seven years. Additionally, medium jets registered a 14% annual growth. Meanwhile, Commercial Aviation delivered 25 aircraft in Q4, and a total of 64 jets in 2023, for 12% year-over-year growth. In 2023, Embraer supplied 181 aircraft, including two military C-390 jets. The total represents an increase of 13% when compared to the 160 jets in 2022.
This shows an improvement in the supply chain situation year-over-year, but we continued to face some delays, which have negatively impacted our operational results and delivery guidance. The company continues working to mitigate the seasonality in production and deliveries over the upcoming quarters. M oving to slide 10. The company's backlog rose by $1.2 billion in 2023, a 7% increase year-over-year, and reached a total of $18.7 billion, the highest number recorded since first quarter 2018. Executive Aviation ended 2023 with a resilient $4.3 billion backlog for a $400 million or 10% growth year-over-year. The backlog for Defense & Security increased $100 million or 4% year-over-year, with the victory of the C-390 Millennium in South Korea. It is also important to highlight the aircraft was selected by the third of three NATO countries, and this negotiation for eleven aircraft have not yet been incorporated into our backlog, which represents a significant upside potential for the upcoming quarters. In Commercial Aviation, the business unit backlog reached 298 aircraft in Q4, for an $8.8 billion total, a $200 million, or 2% growth year-over-year.
It does not consider yet the E175 E1 units sold to American Airlines in the first quarter of 2024. The Service & Support backlog reached another historical record at $3.1 billion, with a $500 million or 19% growth year-over-year. Our top line reached almost $2 billion in Q4 and raised the yearly total to a $5.3 billion for a 16% growth rate year-over-year. Therefore, I'm happy to share that we met the low end of our $5.2 billion-$5.7 billion guidance range for revenues. Looking at the right chart, in 2023, Commercial Aviation represented more than 35% of the revenue. Executive and Service & Support, close to 27% each, and Defense around 10%. Slide 11. The fourth quarter had an excellent performance in terms of adjusted EBITDA, with $253 million and margins of 12.8%. Meanwhile, in 2023, we ended with a $562 million total and 10.7% margin, meeting guidance for the year, driven by volumes, enterprise and tax efficiencies. Slide 12. In Q4 2023, adjusted EBIT was $182 million, and adjusted EBIT margin was 9.2%. Therefore, for 2023, adjusted EBIT reached $350 million, and adjusted EBITDA margin was 6.6%, in line with guidance.
This represented an $80 million increase year-over-year because of higher volumes across all business units and other operational income. Consequently, reported EBIT for the year, which includes M&A results, totaled $340 million for a 6% margin. Looking at the right chart, Executive Aviation and Service & Support were responsible for almost 90% of EBIT generated during the year, driven by higher volumes and double-digit margins. Meanwhile, Defense & Security represented 7% and Commercial Aviation, 5%. In slide 13, in Q4, if we exclude Eve, we had an adjusted free cash flow generation of $684 million, or $100 million higher year-over-year. For 2023, we achieved $318 million, compared to $540 million year-over-year because of investment and non-recurring items. We surpassed the guidance of under $50 million or more because of the improvement in working capital. If we move to investments, in Q4, $54 million were allocated to research and development, and $60 million to CapEx, for a $114 million total invested, compared to $94 million in Q4 2022, if we exclude Eve.
Meanwhile, in 2023, the company invested a total of $326 million, of which $194 million were invested in research and development and $132 million in CapEx, if we exclude Eve, or $82 million higher year-over-year. We should highlight, capital allocation continues to be focused on segments with higher returns, with projects such as expansion of our production capacity in Executive Aviation and Service & Support. About Eve, I would like to remind you that the company reached the necessary milestones to begin the capitalization of product development costs based on IFRS rules in Q3. I would like to finish this slide talking about this important metric for the company, return on invested capital, ROIC. The momentum of in our V-shaped recovery is continuing. Our ROIC reached 8.8% in 2023, more than 200 basis points higher than 2022, and similar to our cost of capital. Looking forward, our expectation is to increase ROIC to the lower teens level. Slide 14, Embraer posted $78 million in adjusted net income in Q4, for a 3.9% adjusted margin, or an 80%+ sequential increase.
Meanwhile, we ended the year with $79 million in the adjusted net income for an adjusted 1.5% margin. Consequently, reported net income for the year, which includes deferred tax income, totaled $164 million for a 3.1% margin. Slide 15, if we move now to our liability management plan, in 2023, we reduced our gross debt by $317 million year-over-year. Thus net debt declined to $781 million in 2023 from $1 billion in 2022. Consequently, we are happy to report a significant reduction in our leverage ratio. In the top right corner, you can see we ended 2023 with a 1.4× net debt to adjusted EBITDA ratio, or 0.9 × below the 2.3 × observed in 2022. Furthermore, we increased the average debt maturity to 4.6 years compared to 3.4 years year-over-year, which has left Embraer in a very comfortable position, with cash of almost $2.4 billion, which has allowed us to cover all obligations beyond 2030. Last quarter, we mentioned we were taking all necessary steps to recover our investment grade status. Today, I'm very pleased and proud to share that Standard & Poor's raised Embraer to investment grade rating, and Moody's to only one notch below investment grade.
And Fitch revised the company's outlook to positive. Slide 16, I almost forget to mention one important thing. It's our 2024 guidance. We forecast Commercial Aviation should deliver between 72-80 aircraft, for an increase of 18% year-over-year using the midpoint of the range if we consider ongoing supply chain constraints. For Executive Aviation, we forecast 125-135 jets, an increase of 13% year-over-year based on the midpoint of the range. If we move to financials, we estimate top line to settle between $6 billion-$6.4 billion, with the midpoint of the range 18% higher than what we generated in 2023. In addition, in order to simplify the process, we are just giving guidance for the Adjusted EBIT margin. We forecast this indicator between 6.5 and 7.5 for the year, which would imply $434 million at the midpoint of the range. Finally, if you move to free cash flow, we estimate $220 million better for the year. We will update or reiterate our guidance quarterly as the year goes by. With that, I conclude my presentation and hand it back to Francisco for his final remarks. Thank you very much.
Thank you, Antonio. I'm proud to say 2023 was a remarkable year for Embraer. It represented the start of a new cycle for the company, a phase focused on sustainable growth to capture our full potential. The continuous focus on business efficiency and innovation, as well as stronger sales efforts, were and will be fundamental to achieve the impressive results in 2023, 2024, and years ahead. In 2024, we will celebrate Embraer's 55th anniversary in a very good shape. We remain very positive about our strategy to grow and generate value for our customers, shareholders, and society through strategic partnerships, business efficiency, innovation, and ESG. With all that said, I am extremely confident about our 2024 guidance and the brilliant future Embraer has. I'd like to thank you all again for your interest and confidence in our company, and end with our company motto: Safety first and quality always in everything we do.
We'll now begin the question and answer session. We ask who is interested in asking question, at any time, please press star then nine in the phone, or press Raise a Hand on the platform, when your name will be announced. Press star six on the phone, or make sure your microphone is on in the platform, and start your question. We will also answer questions sent by the platform chat. To give everyone a chance to participate, we request to ask just one question per call. If you need assistance, please use the Q&A button on the platform. Please hold while we collect questions. The first question comes from Marcelo Motta with JP Morgan. Please go ahead.
Hi, everyone. Good morning. Thank you for taking my question. It is regarding capital structure. When we look at the guidance for 2024, the expected or let's say, the implied EBITDA and the free cash flow generation, we are talking about a net debt to EBITDA that will potentially be below 1×, right? So, what is, let's say, the level of leverage that the company feel comfortable in operate? Does it mean that, you know, you are targeting for zero leverage, or could we see dividends buybacks or, you know, some type of distribution or investment? So, that is the question. Thank you very much.
Morning, Marcelo. Thanks for the question. To be honest, everything below 2×, we are comfortable. The way we are doing it right now is going to be below 1, which implies that assuming that we are going to exhaust our cumulated profit, we should be able to to resume dividend payouts in 2025 onwards. That's the first part, and the other parts we are going to evaluate additional demand for the business units who have a better growth, like Executive and Service & Support, if you have additional needs for investment. At least that's more or less where we are today, but if everything below 2×, we are comfortable to work with, and we need to think how we are going to move forward for the years to come, and how to use this money out.
Perfect. Thank you very much, Antonio.
Marcelo.
The next question comes from Victor Mizusaki with Bradesco BBI. Please go ahead.
Hi, congrats for the results. I have just a quick question here. Think about 2024 and what happened in the fourth quarter, when we take a look on cash flow, and we received a lot of PDPs, and I feel that in this case, you do not have any impact from these new order from American Airlines. So my question is, if it would make sense to assume pre-delivery payments or Embraer will receive PDPs in the first quarter or in the second quarter of this year? Thank you.
Thank you, Victor, for your question. Antonio speaking here. Victor, you know more or less the dynamic of our cash flow. We become a positive last year, just in Q4. There's a lot of moving parts throughout the year. I would say it's too early to say that we are going to be better. Traditionally, when you see in our free cash flow guidance, we always we were able, the last three years, to do better, but for us, it's too early to say, because we do have also other topics ongoing right now. We continues to grow in 2025, and in some of our companies, our factory are producing parts already for 2025 deliveries. Assuming that the volatility we have with the advanced payments, we may see a different behavior, and you all know Q1 is going to be better, but not in the way we should see. That's why I would say, what we agree internally here, as soon as we have a more visibility in regards to the free cash flow, we are going to adapt the guidance and do not wait for the Q4 closing. Summary, what I tell you right now, I would say the free cash flow at least can be higher, can be seen as, I would say, conservative.
Thank you.
Thank you.
The next question comes from Gabriel Rezende with Itaú BBA. Please go ahead.
Thanks, and good morning, Francisco, Antonio, and Guilherme. Just a quick one regarding the supply chain risks. We saw your comments on Brazil Journal's interview, Francisco's interview on Brazil Journal, mentioning that supply chain issues somewhat improved in 2023 versus 2022. I was just wondering how much of these potential issues regarding the supply chain capped your delivery guidance for 2024. So these 80 aircraft in the commercial division, could it be higher if were not for the supply chain issues? And what is the risk that you're seeing for our guidance right now regarding this particular variable?
Thank you, Gabriel. Francisco speaking. Thank you for your question. Well, starting for the last part, yes, both deliveries in the executive and commercial could be higher if we had more parts from the market. But on the other hand, we saw improvements in 2023 in the supply chain in general, and we believe we will see further improvements in 2024. But we still have some bottlenecks, I mean, important components that are limiting our production. We actually made our plan based on the conservative commitments from our suppliers, but even then, we are seeing already some delays in the beginning of the year that, you know, are bringing some challenges in our production flow. But anyway, we are optimistic that, you know, the numbers we put in our guidance will be achieved this year in terms of production.
That's very clear. Thanks, Francisco.
You are welcome.
The next question comes from Myles Walton with Wolfe. Please go ahead.
Apologies. Thanks so much. Antonio, you mentioned CapEx potential investments as a source, an area in executive and in services. The services piece I think I can understand with the expansion of the fleet and capture there. Can you talk about the, the areas of expansion in executive from a CapEx perspective? Is it purely, capacity on the, on the larger aircraft? Is it anticipation of, something else, to come, and maybe put a quantification around it? Thanks.
Good morning, Myles. Thanks for your question. In regards to CapEx for Executive Aviation, we, we are since one and a half years doing some adaptation in our production capacity in order to be more efficient and also to support the growth, and we are continuing to growth with the book-to-bill 1-to-1, 1.3-to-1, what we did already in 2023. Therefore, it's just painting booth completion centers in order to be more lean and avoid too many traveled work for executive, and also to adjust for the capacity. On the MRO side or in the service side, is more expansion on our MRO, I would say organic growth that we are fostering right now. And on top of it, for our new products, is not there yet any type of decision. Decision to be made in 2025, maybe Francisco would comment on the last one.
Well, thank you very much, Antonio. Just to complement Antonio's answer, in terms of new products, we are investing on innovation. We are investing on seven innovation verticals, you know, in order to close the technology gaps, to be ready to go for a new program in the next future. We are also making, you know, as we do all the time, in market studies, in product studies, you know, in order to be prepared for our next steps for Embraer. For now, we have a very young and competitive portfolio of products developed in the you know less than 10 years. We are in a good moment. We want to sell those products and improve our financial performance. So that's what we're doing. But again, we are investing in. We have a good investment in new technologies we call innovation verticals.
Okay. Thank you. I'll stick to one.
Thank you.
The next question is coming from a telephone number with the end of 1339. We ask for you to introduce yourself before asking the question. Please go ahead.
Yes, thanks so much, Cai von Rumohr. So in your guide, what is the relative mix within commercial, you know, between E1s and E2s and deliveries for 2024, and also in biz jets between lights and mediums? And also, if you think about, most biz jet makers make more money on the larger jet, and it looks like yours is reversed. Is there any opportunity for the profitability of the medium biz jets to improve? Thank you.
Hello, Cai, Antonio speaking. Thanks for your question. That's always very nice. For the commercial jets for 2024, we are targeting 60% E2 and 40% E1 in the mix. Okay? For the Executive Aviation, it's more or less light jets around 55%-45% to mid-sized jets. I would say, because we are seeing a margin expansion for Executive Aviation, but percentage-wise, our margin is much better than in light jets, the mid-sized jets. However, where we are going much more than the in the mid-sized jets, that's why I would say we should be able to get some margin improvement, but not as the same we have in the light jet. For the mid-sized jet, we do have more competition. That's why I would say, in order to keep our, our guidance to the market, we are being a little bit conservative. I would say same margin, but with much more dollars to come with the expansion production for the mid-sized jets. Thank you.
Thank you very much.
The next question comes from Jordan Lyonnais with Bank of America. Please go ahead. Excuse me, sir. We cannot hear you. If you could please unmute your phone.
Sorry about that. Could you hear me now?
Yes, thank you.
Okay. Great, thank you. Sorry, could you talk a little bit more about the read-through on the United and the American orders for the 175s? Should we look at this as a new replacement opportunity for RJs?
Yes, sure. So, I mean, this new order shows to us that the market of regional jets in the U.S. is recovering. I mean, although the pilot shortage situation is not resolved, the market is recovering, and this was the first important movement, and this will be very important for us to have a healthy mix of aircraft between E1s and E2s in the following years. So as E1s continue to be, you know, the workforce in the regional aviation in the U.S.
Francisco, just to complement, the United issue was just a repositioning 20 units to Embraer, which just does not mean it's a new backlog. But for sure, we do have interest from the other players in positions for E1, even that our big competitor were saying that the regional market is dead, but is, as you can see, not as dead, as more alive than we all believe. And the orders, they are just confirming what we were saying in the last years.
Great, thank you.
The next question comes from Jay Singh with Citi. Please go ahead.
Hey, thanks for taking my question. It's Jay from Citi. My first question is, do you guys have any updates on the E2 sales campaign in and out of the U.S.?
Well, we cannot disclose about sales campaigns, but what I can tell you that, yes, we are working. We are in conversations with potential customers of E2s in the U.S.
All right, awesome! Thanks. And, my second question is, regarding Eve, what are your thoughts on the certification process? You know, really considering that the FAA is probably under a little bit of pressure right now regarding recent commercial airlines incidents. Just any color on that would be great. Thanks.
You asking about the Eve certification, is that right?
Yep. That's right.
Okay. We are having important progress on Eve, on Eve development. I mean, the key suppliers are already defined for the product. We are progressing well in the assembling of the first prototype, the POC to scale 1-to-1, that we expect to fly, I mean, any end of this year, beginning of next year. So we are committed for the entry into service of the Eve, our eVTOLs, until the end of 2026.
Awesome. Thanks so much.
You are welcome.
The next question comes from Fernanda Recchia. Please go ahead.
Hello. Good morning. Thank you for taking my question. A quick one from my side. Could you please provide us an update on the arbitrage process with Boeing? Thank you.
Well, we expect a resolution in the first half of this year.
Perfect. And just a follow-up. Looking at your statement, we can reach close to $300 million that you already reporting in expenses for carve-in and carve-out. Should the discussion be close to this number? I know you could not give any call, any guidance on this, but at least, if we look at your financial statement, we can see close to $300 million.
Fernanda, this is Antonio speaking. It would be great if they paid the same cost we have, but it's not in our hands to take this decision. If you ask me personally, I would see more than that, but it's not. The decision is not in our hands, and we don't know if we're going to win or lose. That's why it's difficult to give you any type of forecast.
Exactly. And just to complement, and we are not counting on that money in any of our projections, Fernanda.
Perfect. Thank you very much.
Our next question is from the chat. Please hold while we get the question. The next question is from Lucas Barbosa. Hi, Antonio, Francisco, and Guilherme. Thanks for taking my question, and congratulations for the result. My question is regarding business jets. How are you seeing the entrance of new orders today? For new orders, is there any niche market that the company is focusing more on, such as corporate flight departments and fractionals? And any visibility of how full the backlog of the competition is looking like? Thank you.
Well, thank you for the question, Lucas. I mean, we are very happy with the performance of our sales, performance of our business jet. I mean, as we mentioned in the opening, I mean, our backlog today is at $4.3 billion. The book-to-bill, we ended the year at a 1.3 to one, even with high deliveries in the Q4. And I think we have a healthy mix in our sales. I mean, 1/3, more or less. I mean, 1/3 for corporate flight departments, 1/3 for fractionals, 1/3 for individuals. And we have a great portfolio of products. I mean, just launched the Phenom 100EX, and the Praetors that are gaining more and more the preference of the customers. So we are really happy and comfortable with the sales of our business jet, and we are confident we will have another great year of sales in that business unit.
The next question comes from Kristine Liwag with Morgan Stanley. Please go ahead.
Hi, this is Gabby on for Kristine. Good morning. So I was just wondering if you could provide some color on how the GTF MRO at OGMA is progressing, and if you can just give an idea of how much revenue and margin will be in 2024. Thank you.
Can you please repeat the questions, the question?
Yeah. I was wondering if you can provide some color on how the GTF MRO at OGMA is progressing, and if you can also provide color on how much revenue OGMA, the GTF MRO at OGMA, will provide in 2024, as well as any color on margins would be great.
Okay, I will start, and then Antonio can help me to complement. Now it's clear. Well, GTF program is moving very well. I mean, the first delivery is planned for April, or the following the program. And that program will be very important for the OGMA's and Embraer's growth, that the program will help us to more than double OGMA's revenue in the next two years, I would say. And this will be a very, very important factor of growth for OGMA and for Embraer. Antonio, would you like to add something about the margin as well?
Yeah, just in regards to the revenue side, we are more or less forecasting around $40 million additional revenue for this year on the GTF. But assuming that we are on the, the ramp up, we are not foreseeing any type of positive margin this year. It's even like, negative impact because we are starting right now. But low, I would say in the long term, we do see a higher single-digit margin for this business.
Okay, great. Thank you.
The next question comes from Myles Walton with Wolfe. Please go ahead.
Thanks. Antonio, just a, another quick one if I could. From a free cash flow conversion of EBITDA, I think 50%, five zero percent, has been sort of your target level, and obviously you're guiding below that in 2024. I realize you said it was conservative to start, but is five zero percent still the right level to think about over the medium term? Thanks.
Yeah, Miles, thank you for the question. You are totally right. That is more or less what we are targeting currently, minimum 50% of EBITDA. What we are facing in the backlog is not a surprise maybe for you. It's the volatility that we are facing throughout the year. That's why we are guiding 220+, because it's really hard. For example, last year we got a big amount of money in the last week of the year. That's why we prefer to be conservative. But internally, we are targeting a 50% on EBITDA, even in our long-term planning. That's the minimum basis that we are looking for.
Okay. One quick one, if I could. Francisco, the E2 ETOPS certification, was that preventing you from competing in any competitions? And does that open up new competitions that you see in the nearer term?
You mean the E2 certification?
The ETOPS certification for Europe, for the E2.
No, no, I think we are moving well with the ETOPS certification, and this will help us actually to improve the competitiveness of our E2s, and you know, to be more successful in the sales campaign we are working on, not only on Europe, but also as well as in other regions.
Okay, got it. Thank you.
You're welcome.
Thank you all very much. This concludes today's question and answer session. That does conclude Embraer's conference for today. Thank you very much for your participation, and have a good day.