[Foreign Language] [Call starts Abruptly] 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 and 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. Participants on today’s conference call are Mr. Paulo Cesar de Souza e Silva, President and CEO; Mr. Jose Filippo, Chief Financial Officer and IRO; and Eduardo Couto, Director of Investor Relations. I will like now to turn the conference over to Mr. Jose Filippo. Please go ahead sir.

Okay, thank you. And welcome and thanks for joining Embraer’s second quarter 2017 earnings results. We’re going to the presentation, then I’ll pass to Paulo Cesar to give some comments and then we’ll be following the Q&A session. So starting the presentation, in page three, regarding and we’ll start with the corporate highlights. In June Embraer attended the Paris show, with its largest presence ever. We showed the actual units for each of our business, the E195 E-2, the KC-390 and the LEGACY 450. The E-2 195 and the KC-390 not only showed the STATIC, but its also Flight demos. Also in corporate highlights, Embraer was awarded by the most innovative company in Brazil for the second consecutive year. Moving to next page, page four, in terms of highlights for Commercial Aviation. We delivered 35 E-JETS in the second quarter, a growth of 35% when compared to 2016. As far as commercial activities, we have now 51 commitments, at the Paris Air Show, being 18 firm orders and 33 purchase rights. In terms of firm orders, we sold 22 planes in the year-to-date. Finalizing commercial aviation highlights, regarding the E-2 development, we advanced five prototypes, one for 195 and four prototypes of 190, which now reaches over a thousand flight hours test and more than 3000 ground test hours. Next page, and page five highlights for Executive Jets. We believe with 24 Executive Jets in the second quarter in 16 light and 8 large aircraft and those deliveries included the deliveries of the Embraer Executive Jet number 1100 to net jet customer. An important milestone of our manufacturing in US was the first flight to the first Legacy 500 assembled in Melbourne. This plane will be delivered to a corporate flight department in Florida this year. And regarding commercial activity,…

Thank you, Filippo. Good morning to all. So thank you for joining us this morning for the call. Few comments I’d like to make. I believe as you can see so we have a very strong quarter. We will continue to see improvements on our cost. So this is the result of the 200 venetian [ph] 200 that we implemented last year. And the more and more so we are seeing the benefits of this program. I'd like to make few comments on the business units, Executive Aviations, I believe we are seeing some improvements. Of course, the market is still under big pressure. However we have seen some signs of improvements on the used markets, there are some stability in prices, no further deterioration in general, in the value of the aircrafts. For us as Embraer, we had a good improvement in cash operation, generation of cash for the business jet unit. So it's more stable, as well and the strategy there, so we adopted for two quarters already of having more discipline in terms of price and size and more value in our business is starting to generating improve the margins. So we can see already that follow up in the next quarters these will be the more - and more evidence. So we will see even more in the next quarters. On the Commercial Aviation. We had soft first half in 2017, two orders were announced. We are seeing very strong sales activity. I'm very confident that we can make big progress in the second half of this year. As you can see the margin in commercial aviation is quite good and we continue to see also commercial aviation the continuation of the E-2 program on time, on budget and we continue to be very bullish that…

Thank you. [Operator Instructions] Our first question comes from the line of Myles Walton of Deutsche Bank. Your line is now open.

Thanks, good morning.

Morning, Myles.

I was hoping you could talk a bit about the order activity, you’re surrounding incrementally positive as it relates to the commercial aviation business, obviously you had about 20 orders in the first half. But any implied orders to get here one times book to bill seems like a pretty higher hurdle, but you can probably - it sounds pretty darn - pretty darn bullish. So can you talk either specifically or about relative geographic areas of strength that you're seeing that could come in close deals that quickly?

Well, it’s a little bit spread out, it’s a little bit spread out. We have in North America, we have our Europe, we have Asia. I wouldn't like to go into the details at this stage. I feel very good on the things that we are involved. Of course, it's not guarantee that we will close them. But with our experience in these markets, I feel very good that we have a very good opportunity here to do one to one in terms of book to bill.

Is that E-1 or E-2. Obviously the E-1 is where you need to cover a lot of ground for next year in terms of production. But are you seeing the E-2 traction now that you're getting closer to first…

Yeah, that’s beauty of what we are seeing, it’s a combination of E-1, E-2s, and it’s a combination of smaller aircraft and also the bigger one. So it's really a mix. So this is – it is quite positive.

Okay. And just one other one Filippo on cash flow. You know, you're in a pretty good position relative to your full year guidance. You're usually not in quite as good a position halfway through the year. Is there actually you know, applied pressure to your full year targeted guidance or any other - how are you feeling relative to that greater than $150 million burn?

Yes, Myles. I think that you're right, I think we had a very good second quarter. The cumulative year is also something that troubled me in the past. We never saw that situation, that was a combination, but I think that mostly you have to remember that we had some contributions from suppliers in the beginning of the year. But the good of working capital improvement helped. I believe that we at this point we don't have a position to review that in terms of how we see. We do a lot of investments and we made especially in the E-2 program as a second half of the year. But the one piece or better I think we have some space to that improvement there. But again, it's too early to commit with that. But I understand we are well-positioned to really putting place a strategy to benefit in terms of cash generation this year.

Okay. All right, thanks.

Thank you. Our next question comes from the line of Pete Skibitski of Drexel Hamilton. Your line is now open.

Good morning, guys. Just to go further on both those themes, I thought last quarter you talked about your 2018 expectations for commercial deliveries to around 85 to 90 aircraft. Is that no longer the case and what are your expectations, how many of those slots are filled and how many will be E-2s would you expect?

Yes, Pete. We still have the working – still working on 2018 in the following year. As you know 2018 we’ll start the transition off the current model to the new one and [indiscernible] services. So I feel this is important for us to not to review at this point. So we still see some challenges. We - I think sales campaigns are on way, like Paulo mentioned that we are positive the way we see, sort of the different dynamics we see more spread in geographic and those activities. But we feel confident that we can this year will have you a number about the book to do one, that’s what we are working these days, but we still have of course, challenges because of the transition that we have next year.

Okay. Okay. Can I – I don’t know how censored this is, but can I ask about Iran. I mean, I see Airbus and Boeing have locked in commercial deals with Iran, Embraer has not. It was kind of in the press, but then there's also some reports out there that maybe Brazil is not willing to finance any deal with Iran. I wonder if you could just elevate any of that and give us a sense of you know, is Iran completely off the table or not?

Well, of course, Iran is a very important country, very good opportunities there for the manufacturers and then we see this market as an excellent opportunity also for the – our segment. We continue to work with their OPEC office, so of course, as we know Airbus and Boeing has got their approval in general it takes 9 to 11 months, as I understand to go through their process. So already feel we’ve seen this period. So we are we are expecting that though we will prove our request after they have approved and more recently deploying it. So let see, so there is no news as of yet. We continue to be engaged with the opportunities. But of course we have to wait for the clearance of the OPEC office to move forward.

And Pete, just adding, we don’t – it’s an issue of financing, I think the Brazil government is ready to support all the exporters that can sell products to Iran. So is more a question of Paulo said about the clearance from OPEC.

Okay. Okay, that’s very helpful. Thank you very much. And my last question, I kind fear on this theme every quarter in terms of the slope of the potential improvement in free cash flow over the next few years as E-2 development of lines down. Are you confident, is that development spending going to come down pretty linearly over the next few years, as you – as E-2 enter service and does it - does their visibility seem pretty good, free cash flow can then become pretty nicely positive over the next few years?

Yes. And we still work with the same projection. However, just to make sure that we have the interest to service in saving. We started with 190, that we had 195 in 2019 and then to 175 in 2021. So we still have investments to be made in this program. I would say that by 2020 definitely its going to go down because we end up most of the development of the major pieces of this project. But that's exactly the way we used to be. I think we're on track on that and on schedule.

Right. Thanks so much, guys.

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

Yes. Thank you very much. So what is your lead time on E-1s for delivery in 2018. I mean, I assume you still have slots to sell. When do you have to sell them or you know and if you don't because I assume you do 15 to 20 E-2s you really kind of locked in to doing under 100 planes?

Well, as Filippo mentioned, so we have to work for 2018, so we don't have yet the final, final numbers. We have lead time of about nine months that we can work, give or take. So it's not a key piece number of miles depending on the type of aircraft we can go a little bit more aggressive. So we feel good that we still have right time this year to close more deals and take the commissions to deliver this aircraft next year.

Got it. Can you give us you know, you mentioned you know that the pickup in demand and really if we go back to earlier in the year there was not a lot of interest. What's changed?

And always the dynamics of the market in general right, so you have airlines that they have needed to upgrade the fleet, replace old aircraft. So we have orders that are start-ups like in Asia, big Asia. So you have airlines that want to replace these smaller jets. So it's a combination and there is not the only one reason, I think it depends on the region, depends on the type of the airline and the needs of the airline.

Thank you. And can you refresh our memory in terms of your rough margin targets for the three businesses for the full year?

Hey, Cai, we don't give guidance for margin for specific business units, but in some call this, I think the commercial aviation like low double-digits in terms of the commercial aviation and defense maybe mid single digit is what could be an information for you.

For bus jet also mid-single digit?

Yes.

And you had mentioned Filippo that next year you know, you have the transition to the E-2, so I assume you know, if deliveries are flattish to down there's more pressure on commercial. Can you just talk directionally about what should we look. I would assume for example by the executive jets would be considerably stronger because you would be building closer to the delivery rate and the market might be stronger. But any color you could offer would be great?

Yes, again, I think it's too early for us to give the guidance for next year. But as we’ve been saying related to next year maybe we should think about of course is the lower level of delivery is expected for commercial aviation with historical average. I think we can be more like in the high single digit, but its - I think - it's not a moment now to anticipate how executive jets will work. We believe that with some sentiment about the positive over market that we can have some improvement and that can partially - it's not improved by cost. We believe that executive jets definitely is going to be a better year next year compared to the previous one. And that will help too to be in that level. So this is what I can really - can say at this point. But sometimes close to the end of the year we will be releasing more specific information about next year's expectations.

Thank you very much.

Thank you. Our next question from the line of Alberto Valero [ph] Citibank. Your line is now open.

Hi. Thanks for taking my questions. Today and this from one of your competitors, that this is to be - can be used for longer and new rules, rules that no enough for Boeing and Airbus and to long source there is by regional jets. Are you seeing the same potential for E-2?

Yes, I think the E-2, the 195 E-2 has a - we have announced there an extended range where we have to 2600 nautical miles. So this is an obstacle where maybe 98% the narrow [indiscernible]. So I think we are in very good shape in this regard and with excellent economics, therapeutic operational costs. So we are definitely very bullish.

Thank you very much. And [indiscernible] consulting charters regarding what feature we have, complaining about serious pricing?

As we announced already back in December of last year, so asked the Brazilian government to go to their WTO [ph] and challenge the Canadian programs and help us to support our case against Bombardier. We are always looking to have a level field in the development and financing of aircraft, financing of aircraft. We already dealt with that many years ago, among all the manufacturers and we have a program that is being working very well. But regard to the development, so we are not happy at all with the situation and that we have to be sure that everybody will be operating in the field. So the Brazilian government is supporting Embraer and we are supporting the Brazilian government of course in using these action. And hopefully these will be beneficial for us.

Okay. Thank you very much for the answers.

Sure.

Thank you. Our next question comes from the line of Amorim Bruno [ph] of Santander. Your line is now open.

Good morning, everybody. My question is on the defense margins for the rest of the year because we saw a very low or negative margin in the first quarter because of the satellite delay which happened in the second quarter now and we saw improvement in revenues, but not so much in margins. But mid-single digits that was mentioned for the year implies close to 15% margin for the second half of the year in the defense, is that what we should be expecting and what would trigger that since the satellite program has been launched on the second quarter? Thank you.

Yes, Bruno. Of course the launch of the satellite that was captured in the second quarter helped the results of defense in this quarter. We still have to do with some cost associated to the KC-390 development program, although it’s in the end of the development phase and that sometimes can impact. I believe that we should look in the annual basis the defense results, that will be more easy for us to – at least find us some deliveries of Super Tucano’s expected for this year that can impact that. We still think that the target for the mid single that I just mentioned, I think it's the best guess for the year. I think we're still confident that that should be the results for 2017 in defense.

Okay. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Carlos Ross [ph] of JPMorgan. Your line is now open.

Good morning. Thank you. I have one question regarding the study for the potential cost reductions going forward. I'd just like to know if you could provide a little bit more detail on this and whether such cost reductions could help smooth out some results for 2018?

Carlos, we - last year we announced the plan for cost reduction specifically a program what we call the Mission 200 which is primarily focused on the overhead and had cost reductions who would voluntarily dismiss the plan and also some expenses reduction in travel expenses and other general expenses. We get there. The program of the reduction of headcount already - was already concluded in the first quarter of this year. And the other expenses already adjusted and all the leaders of the company have that that budget adjusted for this new standard. I think that opportunities of cost reduction we still have, I don't think we're going to have like a staff like we announced before of a Mission 200 plan, but to portray this, we are having that focus on continuing to prove maybe more like slowly but that's still on. You have to take into account as well that the company has its activity. For the year that we have to deliver aircraft, we have to manufacture and produce aircraft. So it's important that we have the certain level of support for that to happen. So cost reductions too associated to that. But we understand, we've got a level which has efficiency now and that we have a lower level of expenses. And again, I don't believe there's going to be a dramatic drop in the future. But it’s still to be able now I think to do the structure to benefit from the dilution of those costs as we have opportunities for revenue growth. That's basically how we see this. But we continue to see opportunities of efficiencies. This is a permanent problem that we have and that will be capturing whatever opportunity we may have in terms of cost reduction and necessity.

Perfect. Thank you.

Thank you. And our next question comes from the line of Pete Skibitski of Drexel Hamilton. Your line is now open.

Yeah, just to follow up on – or ask another question, kind of qualitatively about 2018. It sounds like commercial deliveries will be down in ‘18. Is it fair to think that defense revenue will be down in ‘18 as well? Just unless satellite revenue and maybe have ramped fully on the KC-390. But that in ‘19 and beyond it kind of start to ramp on the KC-390 and that's you know, maybe kind of a multi-year growth story for you at that point?

No, I don't think so. I don't think so Pete. I think, we don't have the numbers yet for the commercial aviation as what Filippo already indicated, for the defense, we are expecting good activity for the KC-390 and maybe for the Super Tucano as well. So they are two main products of the units. We are seeing very strong activities on the KC-390, a lot of interest in Paris Air Show. We received the visit of 65 delegations and this worldwide tour now, almost worldwide tour also we be showing that the KC-390 has a tremendous acceptance in the market. So we are very right very bullish on discussions that are going on now. And on the business jets as I said, we might have a better year next year than this year. So I believe we have reached the bottom now in the business jets. And we are counting on improvement step by step and not a bit improvement, but we may see a better year in ‘18 than ‘17 for business jets as well.

Okay. Fair enough, I appreciate it. Thank you.

Sure.

Thank you. And I am showing no further questions at this time. I like to hand the call back over to Mr. Jose Filippo for any closing remarks.

Okay. Thank you. And in my name and follow another team here. I’d like to thank you again for participating in this and as usual we – our IR team is open and ready for you to access whatever you need for additional information. So thank you very much and have a nice day.

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