Hello, good afternoon, ladies and gentlemen. Welcome to the Embraer 2017 review. We're glad we're all here today to attending this event. We will start with our 2016 financial results and the 2017 outlook. The first part of the event will be broadcast. Today with us, we have Mr. Paulo Cesar de Souza e Silva, our President and CEO; Mr. Jose Filippo, our Chief Financial Officer; and myself Eduardo Couto, I'm the Head of Investor Relations. Before we start, just as a reminder, 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 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 on this conference call might not occur. The Company's actual results could differ substantially from those anticipated in the forward-looking statements. With that, I would like to turn the conference over to Mr. Jose Filippo. Filippo, you can start.

Okay, thank you, Eduardo and welcome again to attending our conference. As usual, we'll going to go to the presentation of the 2016 results and 2017 estimates and then we'll be entering the Q&A session. So starting the presentation, starting page three with the corporate financial highlights for 2016. Considering only the recurring results, the Company had a positive year meeting all the guidance. For the year 2016, total revenues amounted to $6.2 billion, the adjusted EBIT of $499 million with 8% EBIT margin. Total investments were $630 million and net cash flow was a consumption of $359 million. And finalizing the financial results, we closed 2016 with a backlog of $19.6 billion, adjusted net income of $291 million and then earnings per ADS of $1.58. Our net debt position as of December 31, 2016 was $575 million. Moving to next page, page four, regarding Commercial Aviation highlights, we delivered a total of a 108 aircraft in 2016 including the E-Jet number 1,300 which was an E195 to our Chinese customer, Tianjin Airlines. With that, we have accumulated firm orders of more than 1,700 aircrafts since the entry into service of the E-Jet family. In terms of the E2 program, first commercial activities we reached 275 firm orders of the total of 690 commitments and in relation to the development, the E190-E2 still on test flight campaign with 40% completed with the entry into service scheduled for the first half of 2018. And as of last year, we proudly had the rollout of the first E195-E2 scheduled to enter into service in 2019. And finalizing the highlights of Commercial Aviation, regarding our service activities, our Pool Parts program has reached over 50% of all the ERJ customers and 65% of E-Jet customers. Next page, page five, moving to Executive Jets…

Okay, we're going to start the question-and-answer section. If you are on the phone, you can also ask a question, just press star one in your phone. We will start with the audience first. So if you are here in the audience and you want to ask a question, just raise your hand, we have a couple of mikes in the room. Thank you.

Hi, good afternoon, everyone. Bruno Amorim from Santander. So my question relates to the Commercial Aviation division. If I'm not mistaken, you have 175 firm orders in the backlog still and you plan to deliver 100 aircraft this year. So if you go ahead with your plan, you deliver 100 and you receive no order this year, let's say, you still have 75 left for the next few years. So what does it imply in terms of the risk that in the transition to the E2, you would eventually not maintain the current level of deliveries in upcoming years?

Hello everyone, good afternoon. So thank you for coming and joining us for this session. So the Commercial Aviation, so you are talking about E1 only, right?

Yes.

Yes, so we will start to deliver E2 next year. So we have to look at our combined numbers. So, from next year on, 2018 and on, so there will be E2s as well. So we have to add that to that number. The E2 program is on time. So we're flying with the fourth aircraft now. So we're not anticipating any delays at this stage on the contract, so we're on time. So we should deliver the first two between January and June next year. So, we're of course building up our backlog for the future. John Slattery will talk more about that when he presents on the Commercial Aviation. So we feel that we will have a smooth transition from E1 to E2 in the next year. So when we look back years ago and looking into the future, so we could see a huge gap. So now, of course, we know already that we were able to close these gaps and I'm sure that going forward also, so we're going to have a good transition. We have announced recently the 190 launch for the Norwegian company Wideroe and as of yesterday evening or this morning, so we have announced that Azul in Brazil will be the launch customer for the E2 195. So all-in-all, definitely there is more pressure next year which is the year that we're going to do this transition, but we feel that we will do a good one.

Thank you and all that's set, so is it fair to say that you're basically for the next year is you delivering around 100 aircrafts or is there a real reason that next year it's going to be around 100.

So we don't know yet. So we're at this stage, so we cannot affirm whether or not we will do that. What we know is that we're in quite important engagement, important campaign, whether or not we're going to close, so we don't know, but there is a strong activity going on now.

Pete Skibitski from Drexel Hamilton. I was wondering if you could talk about the big beat to the Defense revenue guidance in the fourth quarter, maybe talk about what the drivers are and maybe quantify them to the extent that you're able to?

Yes, maybe the fourth quarter, in Defense you have to see the year because sometimes specific events -- because of the lowest level for revenues of the Company, special events may interfere, we have specifically delivered four Super Tucanos to the Mali Republic in the end of the year and those contracts, they were different, they were not priced over construction it was like a delivery that we avoided -- as we deliver further impacted but I think we should see in a yearly basis rather than the quarter, but I think that it tends to be like the guidance we said that its going to be from $0.8 billion to $0.9 billion in next year, it tends to be more distributed.

And just one follow-up, you gave us the 2016 segment operating margins. Just directionally, how should we think about 2017 for the three main segments?

Its low-double digits for Commercial, like I said and mid-single digit for both the others.

Hi, Josh Milberg for Morgan Stanley. Just going back to your initial question on the delivery level and also the transition to the E2, I think recently you've talked about potential sources of incremental demand, one of those being U.S. carriers looking to replace 50 to 70 seaters and another source of potential demand being startup airlines in China being required actually by regulations to add regional aircraft and I was just hoping you could update us on your view on those potential sources of demand?

Okay, thank you. So I'll make just a few comments on that and then I'll leave it with John to elaborate more on that because that is in his presentation. So this gives us a complex, so it's a huge dynamic that's going on now in both sides, China and also in the U.S., but we continue to see very strong opportunities in these two markets. So having said, I will leave it with John to elaborate.

Thank you, Turan Quettawala from Scotia Bank. My question was regarding the restructuring that you sort of working through right now. Can you give us a sense of how much of the savings are already in 2016 numbers and how much should we expect sort of incremental savings to come through in 2017?

Thanks Turan for the question. In terms of the cost savings, the mission 200 that we launched last year, the implementation so far has been super good and on schedule I would say, maybe even faster than we previously thought. From the $200 million, we should capture around $100 million because we have some offset like the stronger currency, the wage increase that we had last year, but from this $100 million that we should capture, around one-third was captured last year already in the fourth quarter and two-thirds will be captured throughout this year.

If I may add, Turan, possibly the plan that we have, the big piece of the plan, the larger piece will come from the headcount reduction which we achieved. As you know, we recorded a provision for the dismissal and everything else in terms of the costs of -- for example travel expenses and consultancies, they are in the budget. So all the managers of the Company already have this target and they have to comply with the targets that they have for 2017 because it's already considered in the budget for 2017.

Yes, I may add also one more word on that, so we will not stop in this initiative that we launched last year, the $200 million mission. So we will continue, so new initiatives will come in order to make our Company more efficient on the cost side. Of course, we're working out on the revenue side through this new business unit on services that over time we will deliver more revenue. The business jet market also I believe that may improve from now on. I think we have reached the bottom already. So there is an upside now for the business going forward. If you look at what's going on in the west, in the economies and so I believe that the worst is over. So the combination of a little bit more revenue and more efficiencies right in the cost side, so we believe that we can get additional margins going forward.

If I may ask a follow-up quickly, on the Commercial Aviation side with the E2 coming into production and deliveries next year, can you talk a little bit about how much of the losses you're expecting on the E2 next year when the first units are delivered and maybe or just a number sort of maybe across the whole program, how much of a loss are you expecting on that?

I don't know yet. Of course, any wrap up of course of a new program, so you have additional costs right at the beginning, but I can't say now how much that would be. So it's already embedded in our plans because we start already to manufacture the E2 this year. So by June, July so we will start manufacturing aircraft for the deliveries of next year. So, already the cost is embedded in 2017 and that you have now our guidance here for 2017 in terms of margins so on so forth, so it's not bad.

And Turan just to complement, I think most of the deliveries in 2018 will still be on the E1 and something that you have to take into account as well is that even for 2017, we will require of course the remaining working capital for the starting of the production of the E2. We estimate something around like $280 million to $300 million, it's already included in the guidance for cash consumption that we hand out.

Let's get to the broadcast question now, so they have a chance.

Can we take a question from the phone, operator?

Okay, here [indiscernible]. Can you please discuss the order pipeline for business jets in the U.S.? Have you seen any change after the election?

For markets?

Yes, executive jet.

Well the business jet market, if you look at the numbers of last year, it's still very depressed. So the market last year delivered 648 units and the peak of the business jet market was 2008 with 1,300 aircraft. So having said that, we still see a very large inventory of used business jet, around 12% of the number of aircraft in operation. So that's meaningful, that's a lot, like too many. So we still need to clear this inventory a little bit, have this inventory drop to around 7%, 8% in order to have a more neutral market. So it's going to take a while. However, we believe that the work is over now. So from now on, so we can see gradual improvements, but it's not going to be like a strong improvement. So it's going to be step-by-step, but very -- I'd say small improvements. We believe that we're with a line of products which are state-of-the-art, so the Phenom 300 being the most of delivered aircraft for the fourth year in a row. So that's very important, meaningful and the position of Embraer in customer support also has been such that we have been able to grab a lot of attention and gradually also improve our client base. So all-in-all, so we believe that we can see better results going forward now. The U.S. economy, as we all know here, is going through a process with the new administration which can provide additional growth in the market. So we're seeing what Wall Street is thinking about this new administration, so with stock markets going up and the records and records and we know that business jets, executive jets is very much a linked to both, GDP and the stock market. U.S. market is the largest market in the world for business jets. About 60% of the global market is within the United States. So therefore it's to one more element that can help for this market improve for now.

Okay our next question will come from the phone. Operator, can you open the line and introduce the question please.

Our next question comes from the line of Cai Von Rumohr of Cowen & Company. Your line is now open.

Yes, thank you very much for taking the call. So as you look at 2018, do you feel you will be able to hold your commercial margins as you introduce production of the E2. And secondly, should we look for a lift in business jet margins because I assume this year your production will be down so that you can reduce your inventory of white tails. Thank you.

Can you repeat the first question please. The second is regarding the business jet market right.

So the first part of the question was commercial margins next year as you introduce the E2, do you feel you will be able to hold them or are they likely to come [Technical Difficulty] on business jet margins next year given that [Technical Difficulty] to the white tail and I would guess that would not be an issue next year.

We're hearing very bad, but as long as I understood the question, the first piece was related to the margins for Commercial Aviation for the whole 2017 yes, we think we can have, we can retain that, primarily orders that we had before and we have like Paulo mentioned discipline in terms of cost that we'll be able -- we think we'll be able to retain those margins for commercial. Regarding executive jets, definitely, we expect to have a better margin in 2017. The last quarter of last year, though this is always the best quarter of the year, but you can see there are improvements in the results which reflects what we mentioned before about being more disciplined in terms of the deals, making sure we're not matching the others and that we have quality on each deal that we get into. So we expect to see better, an improvement of margins in executive jets in 2017. If I missed what -- you can repeat, please if we missed anything from the question.

Okay we're going to try to reconnect Kai and maybe we can move in the meantime for the next question also from the phone, operator, can we have the next question form the phone please.

Our next question comes from the line of Darryl Genovesi of UBS. Your line is now open.

So your margins in the fourth quarter were up a lot relative to last year. Can you give us a sense how much of that is your cost cutting program flowing through and how much more there is of that to come in 2018?

Maybe you can give the details of margin per business. Darryl, thanks for the question. We had 12% EBIT margin, consolidated EBIT margin excluding non-recurring items, 14.8% on Commercial Aviation, 9.2% on Executive Jets and 9% on Defense & Security. The cost-cutting plan was launched towards the end of the third quarter and we already captured as I mentioned on the previous question from Turan, we already captured part of the $200 million mission in the fourth quarter. So I think it's tough to quantify the percentage of the margin improvement that comes from cost cutting, but it's a combination of cost cutting, our change I would say in the way on executive jets focusing more on profitability rather than volumes as we have already said. So it's a combination of things, I don't know if--.

I just wanted to add that it's important about the performance of the last quarter as we said, good margins, but this is not what we should replicate for other quarters. Typically that's strongest quarter. I think that in a yearly basis, as we indicated in the guidance range, could be broken by a little bit [indiscernible] low-double digit for Commercial and mid-single digit for Defense and for executive, that will in the blended basis, this will return in the 8% to 9% that we're expecting for the full-year 2017.

And then on free cash flow, based on your guidance today for the $150 million outflow in 2017, within the context of I think about $400 million in development spending, would you expect that free cash flow number to turn positive in 2018?

It's still too early. Of course, we don't give guidance for 2018 at this point, but as we already indicated, 2018 is a transition year for the E1 and E2 models. So again it's too early to think about that in terms of our disclosure, but I don't think it's going to be -- it could be better than that. As you know, recent years we trying to be breakeven because it's a very important phase of investment and the learning curve of a new model is always something that we have to go through. So this has to be taken into account what we expect in terms of cash generation for the following years.

Maybe we can take the question from the audience now. If you have a question, please just raise your hand.

Our next question comes from the line of [indiscernible] of Deutsche Bank. Your line is now open.

What is the spot rate you assume for the year?

$3.20, between $3.10 to $3.20 which is more or less at current level, that's our tax for 2017.

Our next question comes from the line of [indiscernible] from Goldman Sachs. Your line is now open.

How much conservatism is there in the margin guidance that you guys gave?

It depends on the dollar. So who knows. Our guidance of course reflects -- there are challenges on the guidance always because that's the way we work but it has to be something that we think it's going to be reasonable and achievable. So I think there is a combination of what we see because we have some orders already booked, but there are still challenges to sell this year which typically we have. It's not different than we have before. I think last year we had a lot of nonrecurring items and lot of impact from the Company that affected the whole the Company, but taking that out, I think the trend is to really be in a situation where we can really achieve those targets in the channels that we have especially because we have this focus on the cost reduction. I think they're already reflecting. They have the impact of the stronger currency is always a headwind that we'll have to face, so I think that's reasonable that we can -- that's what we expect. There is no -- I don't think it's conservative, I think its realistic.

So just how much of contingency there is in this because if you think about it as you said, there's a lot of nonrecurring that won't happen anymore and there's the cost-cutting that should kick-in or at least a good portion of it in 2017. So how much of contingency plan there might be embedded in this guidance so that you can achieve the levels that you're talking about.

I don't think we have much contingency to be accounted in 2017, what we had in 2016 was more like a one-time impact, the typical contingency that we have are related to in term of airlines which we've dealing and its diluted throughout the year, also other like labor contingencies that we always disclose in balance sheet. So there is nothing specific that we can anticipate in 2017.

So let's maybe take one more from the phone. Operator, can we take a question from the phone please?

Our next question comes from the line of Alexandre Falcao of HSBC. Your line is now open.

My question is regarding defense. First on the receivables front, how much you still have to receive from the government and where are we on the program in terms of the KC and some other KC going to -- when it becomes operational, what happens in terms of the pre-operational expenses and how you guys are going to go out to the market, is it going to mean lower margins there. And as Jackson pointed out in the last Embraer Day that you expected to have almost 60% of the revenues being dollar-denominated, U.S. dollar-denominated. Where we on that and what to expect and what's the expectancy of margins for 2017 and specific on Defense? Thank you.

Okay, Alex, let me see if I got all the questions. In terms of receivables from the government, we ended up 2016 with $264 million in receivable that can be compared to $350 million in the end of 2015. So it's been following the schedule as we expected. The development of the program, still have -- this year is an important year, scheduled to enter into service in the first half of 2018 and this is going to be the development program we will stop and we start to build the program it is the concept of the sale of our customer today is through the cost. [indiscernible] the revenues that could be seen in 2018, already starting maybe in the end of this year and then, there's going to be, of course, the learning curve of the program which we don't anticipate any charges. In terms of the revenues, today still 90% of the revenues of Defense are real denominated and this will be changing when we have the [indiscernible] would not be a change in terms of the revenues shifting to dollar-denominated revenues, almost all of them.

And then if you can just -- this bump up in the Defense budget in the U.S., do you think there is opportunities, specifically for the Super Tucano, is there any indication that we're going to see a recurring order there, anything you can share? Thank you.

Of course, we have the Super Tucano with the U.S. Air Force in operation in Afghanistan. The information we have is that the U.S. Air Force is very happy with the performance of the aircraft. So going forward, now of course, so we have to wait and see the opportunities that will arise to us. There are many information already on the press of the need for the U.S. to replace certain aircraft, not only in military like the Super Tucano, but replacement for the A-10 for instance, but also more recently also talk about business jets for training -- final training. So it's another opportunity also, but we have to wait for additional information and see how we can move forward from here. So it's early to say.

Can we take questions from the audience anyone?

Hi this is Bruno from Santander, I have a follow-up question on the executive division. You have mentioned that going forward, you intend to focus on profitability rather than on increasing deliveries, so volume is not your main focus right now, but your guidance implies a similar level of deliveries -- similar number of deliveries versus last year. So how should we look at it. How can you improve profitability if you are not decreasing the number of deliveries this year. Thank you.

If you look at our guidance last year, in February, our guidance was for 150 aircraft of business jet, then in August, so we decided to drop to 119 if I'm not mistaken, so it was a big adjustment. So what we're seeing now is that with this level so we're able to improve our margins and we already have a good indication from the fourth quarter because from August when we decided to drop the level of aircraft being offered in the market, we closed many deals already from August to November/December especially to November and we could already see some improvements in margin. So going forward now with this view that the market can also improve a little bit from the bottom of 648 aircraft last year. So we believe we can keep this more or less the same number and still have a margin improvement.

So, but what does this improvement in the fourth quarter come from, is it the market that is improving or is it something that Embraer specifically is doing?

Both, there was more in terms of pricing, in terms of not putting too much pressure in market share. So it was a combination of cost reduction a little bit and a more improvement also in price of aircraft.

Anyone else from the audience with a question? Otherwise we move to the phone back to the operator, do you have questions on the phone?

Our next question comes from the line of Derek Spronck of RBC Capital Markets. Your line is now open.

Just turning back to business jets again. How is the mix right now between the Phenom and the Legacy 450, 500. Are you getting the orders that you anticipated in the pricing on the Legacy? And when we look at 2017, how do you think the mix will be between those two aircraft types?

So as I said, the Phenom 300 was the most delivered aircraft last year. The 450, 500, there's a growing interest in these aircrafts now. So we start to deliver back in 2015. We're now manufacturing -- both assembling -- in the U.S. in our factory in Melbourne for the -- we delivered the first one, 500, back in December that was manufactured in Melbourne. So going forward now and we're seeing more and more interest in the 450, 500. So I do believe that 2017 will be a year that we will see a greater interest in these aircrafts.

Okay and just moving on quickly to the E175-E2, do you think that the scope clause changes from [Technical Difficulty] to allow the higher weight aircraft on the regional jet side, what are your plans there? I mean, if there aren't scope clause changes in the future, do you plan on manufacturing both the current generation E175 and the new E2 175?

The current 175 is a very efficient aircraft, so question about that. So if you look at the number of orders that we have got in the last year, so it's 80% market share versus the CRJ-900, so we do believe that with the modifications that we did in the wingtip and other improvements and getting a fuel burn reduction of about 6%, that was crucial in order to get this order. So we have done a very efficient E1. The difference to 175 E2 is about another maybe 6% or so. However, we have this scope clause in the U.S.. So there is almost nothing that we can do to change the scope clause in the United States as a manufacturer. So it's really very, very challenging. Even for the airlines, it's quite challenging to negotiate scope clause for this type of aircraft. However, the 76 market is not only the U.S., so there is a market also outside the U.S. and we have to be ready and pay attention for the competition that is developing also an efficient 76-seater like Mitsubishi for instance; so going forward, so we can't afford to monitor a little bit the U.S. market and continue with the E1. We have a good advantage in this regard, I'd say because we can have in the same line of the jet, a hybrid line, so we can manufacture both E1 and E2s in the same line with the same level of efficiency, so for a while, so we can do that and whenever the scope clause change in the future, if it does, so we would be ready also to deliver the E2 175. So we'll see how the market will develop, but in our view, so we're doing very well in both like in this regard and we have decided to postpone one year the 175 E2 and now its 2021 which I think was a good thing to do since we have this scope clause topic in the U.S. now.

That's great color, if you were to manufacture both concurrently on a hybrid line, would it put any pressure on margins or how material would that cost be or would you be able to manage that?

No, we're not anticipating any pressure on margins. Of course, we're not yet in this step, but we're taking the necessary steps to be as efficient as we're nowadays. So we believe that we will keep the same margins--

Can you comment on your cost cut what percentage was allocated to executive and what percentage was allocated to commercial. And a second question, in the past if I'm not mistaken, you were using tradings in the market for executive segment, so how is this trading evolving right now, do you continue to do this as a market practice. And also you mentioned about your inventories, were inventories for the executive segment higher than usual or not, just to understand if you're sort of change your strategy of carrying more this aircraft in your inventories instead of selling them to third parties as a trading. Thank you.