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IR Institutional Presentation - May 2013
This document provides an overview of Embraer's business strategy, financial performance, and outlook. Some key points: - Embraer aims to grow organically and through acquisitions while improving margins. Its strategy focuses on product excellence, expanding customer base, and establishing itself in defense. - In 2012, Embraer delivered over 200 aircraft and had revenues of $6.2 billion. Its backlog was $13.3 billion. - For 2013, Embraer forecasts revenues between $5.9-6.4 billion and net orders of 90-95 commercial jets. - Embraer has a broad commercial aircraft portfolio from 70-seat ERJ-145 to 120-seat E
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IR Institutional Presentation - May 2013
- 1. Job Position EMBRAER INVESTORRELATIONS Phone: +55 12 3927 4404 | investor.relations@embraer.com.br | www.embraer.com May/13
- 2. Corporate and BusinessStrategy • Product strategy. • Diversification and expansion of customer base. • Excellence in Customer Experience (ECE). • Market share growth. • Margins improvement. • Product strategy and customer support focus. • Organic growth. • Margins enhancement through the P3E. • Business and revenues diversification. • Establish Embraer as the defense house of Brazil. • Organic growth and acquisitions. 2
- 3. 37 21 19 83 77 1622 4 2 98 126 8 2008 2009 2010 2011 2012 1Q13 165 125 101 105 17 106 2008 2009 2010 2011 2012 1Q13 Aircraft Deliveries Large Jets - Legacy & Lineage Light Jets - Phenom Commercial Jets Executive Jets 3 2013 deliveries estimates • 90 - 95 commercial jets • 25 - 30 executive large jets • 80 - 90 executive light jets
- 4. 6,335 5,498 5,364 5,803 1,086 6,178 20082009 2010 2011 2012 2013 YTD Net Revenues US$ Million 2008: USGAAP 2009-2012: IFRS 4 2013 Outlook: US$ 5.9 – 6.4 Billion
- 5. Revenues Breakdown 5 61% 65%61% 23% 19% 21% 15% 15% 17% 1% 1% 1% 2010 2011 2012 Net Revenues by Segment Net Revenues by Region Commercial Aviation Executive Aviation Others Defense & Security Revenues US$ Billion 5.80 6.185.36 Revenues US$ Billion5.80 6.185.36 13% 20% 24% 33% 25% 31% 13% 17% 14% 15% 11% 3% 9% 11% 14% 5% 9% 5% 12% 7% 9% 2010 2011 2012 North America Brazil Europe Asia Pacific South & Central America Africa & Middle East China
- 6. Firm Order Backlog 6 US$Billion 14.7 12.9 12.4 12.5 13.3 1Q12 2Q12 3Q12 4Q12 1Q13
- 7.
- 8. Embraer Commercial Aviation OVER80 AIRLINES IN MORE THAN 50 COUNTRIES 8
- 9. Product Portfolio capacity: 70to 80 seats range: 2,100 nm (3,900 Km) capacity: 78 to 88 seats range: 2,000 nm (3,700 Km) capacity: 98 to 114 seats range: 2,400 nm (4,500 Km) capacity: 108 to 122 seats range: 2,200 nm (4,100 Km) capacity: 37 seats range: 1,750 nm (3,250 Km) capacity: 50 seats range: 1,550 nm (2,900 Km) capacity: 50 seats range: 2,000 nm (3,700 Km) capacity: 44 seats range: 1,650 nm (3,050 Km) 9
- 10. E-Jets Customer BaseEvolution 10
- 11. 11 E-Jets Family OrderBook – 1Q13 E-JETS Firm orders Deliveries Firm Backlog EMBRAER 170 193 184 9 EMBRAER 175 245 165 80 EMBRAER 190 556 459 97 EMBRAER 195 142 117 25 Total 1,136 925 211
- 12. Worldwide Distribution 12 0% 10% 20% 30% 40% 50% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 E-Jets CustomerBase by Business Model (% of E-Jets Fleet+Backlog) Firm Orders Commercial Jets – Net Orders Market Share Considering Accumulated Net Orders 70-120 Seats Jets 23% 35% 42% Backlog Europe & CIS Middle East & Africa Latin America North America Asia Pacific & China 40% 29% 4% 10% 6% Low Cost Carriers Regional Airlines Network Airlines 7% 14% 7% 26% 16% 37% 7% 17% 32% 20% 24%
- 13. E-Jets Deployment helping airlinesto be more efficient 13
- 14. Embraer Market Forecast(2012-2031) North America 840 32% North America 2,195 32% Latin America 315 12% Latin America 670 10% Europe 580 22% Europe 1,460 22% Russia / CIS 155 6% Russia / CIS 445 7% Africa 80 3% Africa 210 3% Middle East 105 4% Middle East 305 4% Asia Pacific 210 8% Asia Pacific 505 7% China 340 13% China 1,005 15% Projected Deliveries- Jets Market Segment (Seats) 2010–2019 Deliveries 30-60 60 61-90 1,015 91-120 1,550 30-120 2,625 Market Segment (Seats) 2012–2031 Deliveries 30-60 405 61-90 2,625 91-120 3,765 30 - 120 6,795 • Scope Clauses relaxation allowing 80-seater aircraft as a natural growth of RJ50s in the US • Right-sizing of narrow-body operations • Regional aviation development in Emerging Markets • Acceleration of replacement of old & inefficient jets Around 6,795 jet deliveries (30-120 seats) in the next 20 years (US$ 315 bi) 14
- 15. Competition 61-120 seats– New Scenario 15
- 17. Embraer Executive Jets MORETHAN 600 AIRCRAFT IN-SERVICE WORLDWIDE 17
- 18. Product Portfolio 18 Large Aircraft Model Phenom100 Phenom 300 Legacy 450 Legacy 500 Legacy 600 Lineage 1000 Seats / Range up to 8 occupants/ 1,178 nm up to 11 occupants/ 1,971 nm 7 to 9 passengers/ 2,300 nm 8 to 12 passengers/ 3,000 nm 13 to 14 passengers/ 3,400 nm 13 to 19 passengers/ 4,500 nm Entry Light Mid-light Mid-size Ultra-large Super mid-size Certified: 2008 Certified: 2009 Under development Certified: 2001 Certified: 2008 Ultra-long range Competitors • Cessna - Mustang/M2 • HondaJet • Cessna - CJ2+/CJ3/CJ4 • Bombardier - Learjet 40XR/70 • Bombardier - Learjet 45XR/75 • Cessna - XLS+/Latitude • Bombardier - Learjet 85 • Cessna - Sovereign • Gulfstream – G150 • Bombardier - CL605/GL5000 • Dassault – Falcon2000LXS/ 900LX • Gulfstream - G350/G450 • Airbus - ACJ 318/319/320 • Boeing – BBJ/BBJ2/BBJ3 Legacy 650 13 to 14 passengers/ 3,900 nmCertified: 2010 • Bombardier - GL6000/GL7000/ GL8000 • Gulfstream – G500/G550/G650 • Dassault – Falcon 7X • Bombardier - CL300/CL850 • Cessna – X/Longitude • Dassault - Falcon 2000S • Gulfstream - G280
- 19. Market Share Others Hawker-BeechEmbraer Gulfstream Dassault Cessna Bombardier Deliveries share(units)Revenues share (US$ - based on B&CA list prices) Market Revenues 2012: US$ 17.7 billion Embraer Revenues: US$ 1.3 billion Market Deliveries 2012: 663 units Embraer Deliveries: 99 units 19
- 20. Economic Indicators 20 2.189 - 500 1.000 1.500 2.000 2.500 Q3 2001 20022003 2004 2005 2006 2007 2008 2009 2010 2011 2012 USCorporateProfits(Billionsofdollars) U.S. Corporate Profits 5,9 7,0 7,2 7,0 7,2 7,7 8,2 8,8 9,6 10,1 8,6 10,1 10,8 11,0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Million North America Europe Asia-Pacific Latin america Middle East Africa Worldwide HNWI Population New record levels
- 21. 2013-22 Market Forecast- World Deliveries Previous forecast 21
- 22.
- 23. Business Jets Pre-ownedMarket Inventory 23 Source: Jetnet and Embraer Analysis, January 2013. 0% 4% 8% 12% 16% 20% 24% 28% 0 500 1000 1500 2000 2500 3000 3500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 %ofactivefleet Units Fleet older than 10 yrs Fleet from 6 to 10 yrs Fleet up to 5 yrs Positions Fleet up to 5 yrs and positions Total fleet % for sale Up to 10 yrs % for sale 12.8% 2425 jets 8.5% 660 jets 2008: Net increase of 1100 a/c 2009: Net increase of 33 a/c 2010: Net decrease of 155 a/c 2011: Net decrease of 140 a/c 2012: Net decrease of 43 a/c 2013: Net decrease of 41 a/c
- 24. Service Center Network 24 EmbraerService Center (5) Authorized Service Center (62) 12 new centers worldwide in 2012
- 26. OVER 52 ARMEDFORCES IN 50 COUNTRIES Embraer Defense & Security 26
- 27. Embraer Defense &Security, partners and affiliated companies Embraer Defense & Security UAV’s Satellite Land SystemsRadar 27
- 28. Embraer Defense &Security Results Não contabiliza as receitas provenientes da OGMA nos anos de 2006 a 2010. Revenues Evolution (US$ Million) EBIT Evolution (%) Backlog Evolution (US$ Billion) CAGR 29% 28
- 29. Brazil: 99 Colombia: 25 DominicanRepublic: 8 Chile: 12 Ecuador: 18 Indonesia: 16 Greystone (TacAir): 1 Mauritania: undisclosed Burkina Faso: 3 Angola: 6 USA: 20 Guatemala: 6 Super Tucano Total Market Forecast: 344 aircraft / US$ 4.1 billion 1,700 840 1,600 Medium-term Long-term Short-term Addressable Market Forecast 2025 (US$ million) Partnership with Boeing to provide weapons integration, increasing capabilities of the aircraft. 29 • Firm orders: more than 210 aircraft • More than 170 aircraft delivered
- 30. EMBRAER KC-390 • Anew tactical military transport and tanker aircraft • First flight in 2014 • Six countries • Letters of intent totalizing 60 aircraft • Agreement with Boeing to share technical knowledge and evaluate markets for joint sales efforts. • The Brazilian Air Force (FAB) and Embraer concluded the Critical Design Review. Brazil (28) Colombia (12) Argentina (6) Chile (6) Portugal (6) Czech Rep. (2) Total Market Forecast 2025: 700 aircraft / US$ 50+ bi Ref. dec/12 30
- 31. A1-MF-5M A-4 Brazilian NavyA-4 12 aircraft 2 prototypes at GPX-CS Brazilian Air Force A-1M 43 aircraft 16 received by Embraer for the modernization Brazilian Air Force F-5M 46 a/c + 11 a/c (2nd batch) 45 already delivered Brazilian Air Force E-99 5 a/c aircraft EMB 145 AEW&C * Considering the market for Tucano modernization Modernization Programs Addressable Market Forecast 2025 (US$ million) Total Market Forecast*: 228 aircraft / US$ 1.5 billion 437 567 505 Medium-term Long-term Short-term Ref. dec/12 31
- 32. SISFRON implementation Embraer Defense& Security has 100% of participation New Portfolio Command and Control Systems Onboard Systems Simulation Systems Electronic Warfare Systems Intelligence Systems Air Traffic Management and Control Systems JV with Elbit/AEL Systems where Embraer Defense & Security has a major participation UAS, simulators and modernization of avionics systems Air, ground and sea surveillance radars Remote sensing Engine and Component Maintenance Overhaul and Modernization Aerostructure Manufacturing and Assembling JV between Embraer Defense & Security (51%) and Telebras Satellite Security of Critical Infrastructure Public Security (sporting events, cities, states) Systems SISFRON SisGAAZ 32
- 33. SISFRON Integrated Borders MonitoringSystem First phase: US$ 420 Million Total estimate: US$ 4 Billion Comprising radars, communication networks, C4I, unmanned air vehicles (UAV) and armored vehicles Brazilian Army Priorities Comm 9% UAV 12% SW 20% Sensors 59% Satellite Estimate: US$ 400 Million Participation in the first Brazilian Geostationary Satellite Ref. dec/12 33
- 34. New Business •SisGAAz (“BlueAmazon” Integrated Management System) •Security of Critical Infrastructure •Public Security (sporting events, cities, states) 2020 Revenues Breakdown Evolution 2012 34
- 35.
- 36. 2013 Consolidated Outlook NetRevenues EBIT EBITDAUS$ 530 – 610 Million US$ 5.9 – 6.4 Billion US$ 770 – 900 Million EBITDA margin 13.0% – 14.0%EBIT margin 9.0% – 9.5% 36
- 37. 37 Deliveries: 80 to90 light jets 25 to 30 large jets Net Revenues Deliveries: 90 to 95 E-jets Net Revenues US$ 3.20 – 3.35 Billion Other Revenues US$ 50 – 100 Million US$ 1.40 – 1.60 Billion Net Revenues US$ 1.25 – 1.35 Billion 2013 Business Units Outlook
- 38. 2013 Investment Outlook TOTALINVESTMENTS: US$ 580 Million Research US$ 100 Million Development US$ 300 Million CAPEX US$ 180 Million 38
- 40. Net Revenues /SG&A Expenses Net Revenues - US$ Million SG&A Expenses - US$ Million Selling ExpensesG&A Expenses 40 2013 YTD: 1,086 1,152 1,715 1,402 1,898 1,086 1Q12 2Q12 3Q12 4Q12 1Q13 108 118 111 143 71 75 59 75 108 53 1Q12 2Q12 3Q12 4Q12 1Q13 170 218 179 193 161 2013 YTD: 161
- 41. Income from Operations/ EBITDA Income from Operations - US$ Million EBITDA - US$ Million EBIT EBIT Margin EBITDA EBITDA Margin 41 2013 YTD: 40 / 3.6% 86 197 101 228 40 7.4% 11.5% 7.2% 12.0% 3.6% 1Q12 2Q12 3Q12 4Q12 1Q13 2013 YTD: 100 / 9.2% 148 265 168 310 100 12.8% 15.5% 12.0% 16.3% 9.2% 1Q12 2Q12 3Q12 4Q12 1Q13
- 42. (76) (50) (163) (50) (69) 157 (30) 439 (83) (40) (65) (55) (58) (75) (68) (174) 27 (138) 202 (201) 1Q122Q12 3Q12 4Q12 1Q13 Net Income / Free Cash Flow Net Income - US$ Million Free Cash Flow - US$ Million Net MarginNet Income Free cash flow Additions to PP&E Net cash generated (used) by operating activities* Additions to Intangible 42 * Net of Financial assets adjustment 2013 YTD: (201)2013 YTD: 30 / 2.8% 105 63 58 123 30 9.1% 3.6% 4.1% 6.5% 2.8% 1Q12 2Q12 3Q12 4Q12 1Q13
- 43. 74% 78% 83%84% 85% 26% 22% 17% 16% 15% 4.2 6.1 6.0 5.8 5.1 1Q12 2Q12 3Q12 4Q12 1Q13 Indebtedness Profile / Net Cash Indebtedness Maturity Net Cash - US$ Million Long-term Short-term Loans Average Maturity (Years) 43 US$ 2.46 BillionTotal Debt 1Q13 Total Cash 1Q13 US$ 2.56 Billion 301 290 123 309 98 1Q12 2Q12 3Q12 4Q12 1Q13
- 44. 2,652 2,530 2,585 2,157 2,510 1Q12 2Q123Q12 4Q12 1Q13 Inventories 44 US$ Million 2008: USGAAP 2009-2012: IFRS
- 45. Investments 45 21 68 45 100 300 180 RESEARCH DEVELOPMENT CAPEX 2013Outlook: US$ 580 Million 2013 Outlook2013 YTD US$ Million 2013 YTD: 134
- 46. EPADS and PayOut 46 2.14 2.57 1.83 0.62 1.92 52% 26% 34% 116% 26% 2008 2009 2010 2011 2012 EPADS Pay Out 2008: USGAAP 2009-2012: IFRS US$
- 47. Local Shareholders 28% International Shareholders 72% 727,204,643 Voting Shares OwnershipStructure 47 31/12/2012 NYSE 50% BM&F BOVESPA 50%
- 49. Sustainability Initiatives Brazilian Alliancefor Bio-fuel Reforestation Projects ISO 14001 and OHSAS 18001 Certifications 1st ethanol powered aircraft in the World Ipanema Recycling Corporate Values Greener Technology Social Activities 49
- 50. P3E - LeanResults 50 E-Jets Final Assembly Line Transformation E-Jets Wing Junction Line Transformation Performance Indicators 2008 (15 ac/month) 2009 (10 ac/month) 2012 (10 ac/month) Number of positions 12 5 4 Cycle time (days) 18 10 8 Work in Process (US$ Mi) 212 95 68 Number of non- conformity per a/c 32 1.7 0.76 Overtime (% of work hours) 10 1.5 0
- 51. P3E Results Kaizen -E-Jets Cycle Reduction Cost of Non Quality Reduction 57% 51 40% reduction on the production cycle 40% 44% reduction on CNQ
- 52. Cost: US$ 21.4mi Benefit: US$ 200.7 mi “Boa Ideia” Program Evolution 52
- 53. Investor Relations Phone: +5512 3927 4404 investor.relations@embraer.com.br www.embraer.com
- 54. Forward Looking Statement Thispresentation includes forward-looking statements or statements about events or circumstances which have not occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: general economic, political and business conditions, both in Brazil and in our market. The words “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “expects” and similar words are intended to identify forward-looking statements. We undertake 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 presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. 54