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Job Position
EMBRAER INVESTOR RELATIONS Phone: +55 12 3927 4404 | [email protected] | www.embraer.com
May/13
Corporate and Business Strategy
• 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
3721 19
83 77
16 224
2
98126
8
2008 2009 2010 2011 2012 1Q13
165
125101 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
6,3355,498 5,364
5,803
1,086
6,178
2008 2009 2010 2011 2012 2013 YTD
Net Revenues
US$ Million
2008: USGAAP 2009-2012: IFRS
4
2013 Outlook: US$ 5.9 – 6.4 Billion
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 6.18 5.36
Revenues US$ Billion 5.80 6.18 5.36
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
Firm Order Backlog
6
US$ Billion
14.712.9 12.4 12.5 13.3
1Q12 2Q12 3Q12 4Q12 1Q13
7
Embraer Commercial Aviation
OVER 80 AIRLINES IN MORE THAN 50 COUNTRIES
8
Product Portfolio
capacity: 70 to 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
E-Jets Customer Base Evolution
10
11
E-Jets Family Order Book – 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
Worldwide Distribution
12
0%
10%
20%
30%
40%
50%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
E-Jets Customer Base 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%
E-Jets Deployment helping airlines to be more efficient
13
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
Competition 61-120 seats – New Scenario
15
Embraer Executive Jets
MORE THAN 600 AIRCRAFT IN-SERVICE WORLDWIDE
17
Product Portfolio
18
Large
Aircraft Model
Phenom 100
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 nm Certified: 2010
• Bombardier - GL6000/GL7000/
GL8000
• Gulfstream – G500/G550/G650
• Dassault – Falcon 7X
• Bombardier - CL300/CL850
• Cessna – X/Longitude
• Dassault - Falcon 2000S
• Gulfstream - G280
Market Share
Others Hawker-Beech Embraer
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
Economic Indicators
20
2.189
-
500
1.000
1.500
2.000
2.500
Q3
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US
Co
rpo
rate
Pro
fits
(B
illio
ns
of d
olla
rs)
U.S. Corporate Profits
5,9
7,0 7,2 7,0 7,27,7
8,28,8
9,610,1
8,6
10,110,8 11,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Millio
n
North America Europe Asia-Pacific Latin america Middle East Africa
Worldwide HNWI Population
New record levels
2013-22 Market Forecast - World Deliveries
Previous forecast
21
2013-22 Market Forecast
22
Business Jets Pre-owned Market 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
% o
f ac
tive
fle
et
Un
its
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
Service Center Network
24
Embraer Service Center (5)
Authorized Service Center (62)
12 new centers worldwide in 2012
OVER 52 ARMED FORCES IN 50 COUNTRIES
Embraer Defense & Security
26
Embraer Defense & Security, partners and affiliated companies
Embraer Defense & Security
UAV’s Satellite Land Systems Radar
27
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
Brazil: 99
Colombia: 25
Dominican Republic: 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
1,600Medium-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
EMBRAER KC-390
• A new 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
A1-M F-5M A-4
Brazilian Navy A-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
505Medium-term
Long-term
Short-term
Ref. dec/12
31
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
SISFRON Integrated Borders Monitoring System
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
Comm9% UAV
12%
SW20%
Sensors59%
Satellite Estimate: US$ 400 Million
Participation in the first Brazilian Geostationary Satellite
Ref. dec/12
33
New Business
•SisGAAz (“Blue Amazon” Integrated Management
System)
•Security of Critical Infrastructure
•Public Security (sporting events, cities, states)
2020
Revenues Breakdown Evolution
2012
34
2013 Outlook
2013 Consolidated Outlook
Net Revenues
EBIT EBITDA US$ 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
Deliveries: 80 to 90 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
2013 Investment Outlook
TOTAL INVESTMENTS: US$ 580 Million
Research US$ 100 Million
Development US$ 300 Million
CAPEX US$ 180 Million
38
Net Revenues / SG&A Expenses
Net Revenues - US$ Million SG&A Expenses - US$ Million
Selling Expenses G&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
7175
59
75
108
53
1Q12 2Q12 3Q12 4Q12 1Q13
170
218
179 193
161
2013 YTD: 161
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
(76) (50)(163)
(50)
(69)
157
(30)
439
(83)
(40)
(65)(55) (58)
(75)(68)
(174)
27
(138)
202
(201)
1Q12 2Q12 3Q12 4Q12 1Q13
Net Income / Free Cash Flow
Net Income - US$ Million Free Cash Flow - US$ Million
Net Margin Net 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
74% 78% 83% 84% 85%
26% 22% 17% 16% 15%
4.2
6.1 6.05.8
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 Billion Total Debt 1Q13 Total Cash 1Q13 US$ 2.56 Billion
301 290
123
309
98
1Q12 2Q12 3Q12 4Q12 1Q13
2,6522,530 2,585
2,157
2,510
1Q12 2Q12 3Q12 4Q12 1Q13
Inventories
44
US$ Million
2008: USGAAP 2009-2012: IFRS
Investments
45
21
6845
100
300
180
RESEARCH DEVELOPMENT CAPEX
2013 Outlook: US$ 580 Million
2013 Outlook 2013 YTD
US$ Million 2013 YTD: 134
EPADS and Pay Out
46
2.142.57
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$
Local
Shareholders
28%
International
Shareholders
72%
727,204,643 Voting Shares
Ownership Structure
47
31/12/2012
NYSE
50%
BM&F
BOVESPA
50%
Sustainability Initiatives
Brazilian Alliance for 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
P3E - Lean Results
50
E-Jets Final Assembly Line Transformation
E-Jets Wing Junction Line Transformation
Performance Indicators2008
(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/c32 1.7 0.76
Overtime
(% of work hours)10 1.5 0
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
Cost: US$ 21.4 mi
Benefit: US$ 200.7 mi
“Boa Ideia” Program Evolution
52
Forward Looking Statement
This presentation 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