embraer october 2011 book
DESCRIPTION
TRANSCRIPT
2
Company HighlightsCompany Highlights
Investment grade rating by Moody’s and S&P.Investment grade rating by Moody’s and S&P.
Strong balance sheet with solid net cash position.Strong balance sheet with solid net cash position.
Company established in 1969, privatized in 1994 and listed in USA in 2000.Company established in 1969, privatized in 1994 and listed in USA in 2000.
Sector leader in the Dow Jones Sustainability Index 2011/2012.Sector leader in the Dow Jones Sustainability Index 2011/2012.
Broad customer base in commercial and executive aviation, defense and
security segments.
Broad customer base in commercial and executive aviation, defense and
security segments.
Global footprint. Global footprint.
Highly experienced management team.Highly experienced management team.
3
Global BusinessGlobal Business
Operations in Brazil, USA, Europe and Asia Dual listed in Brazil’s Bovespa (1989) and NYSE (2000)
Melbourne*
Fort Lauderdale
Nashville
USA
Taubaté
Botucatu
Gavião Peixoto
São José dos Campos
Brazil
Évora*
Alverca
Portugal
Le Bourget
Villepinte
France
Harbin
Beijing
China
Singapore
Singapore
Countries of Operation Factories Offices Service Centers Contracted/ Planned Authorized Network* Under construction
One of Brazil’s largest exporters of manufactured goods Diversified customer-base across five continents
Mesa
Windsor Locks
São Paulo
Spare Parts Distribution Centers
Louisville
Minneapolis
4
Executive Large JetsExecutive Large Jets
Aircraft DeliveriesAircraft Deliveries
Executive Light JetsExecutive Light JetsCommercial JetsCommercial Jets
103
133
165
125
4527 36 37
21 19 5
98126
101
2 26
2006 2007 2008 2009 2010 1H2011
PhenomPhenom
**
102+*102+*
18*18*
100*100*
2011 deliveries estimates2011 deliveries estimates
Legacy e LineageLegacy e Lineage
5
Net RevenueNet Revenue
Guidance 2011: Net Revenue - US$ 5.8 billionGuidance 2011: Net Revenue - US$ 5.8 billion
2006-2008: US GAAP2009-2010: IFRS2006-2008: US GAAP2009-2010: IFRS**
**** 2011: YTD Guidance
2011: YTD Guidance
US$ Million
3,760
2,415
5,3645,4986,335
5,245
23.2%
19.2%19.4%20.5%20.5%
21.6%
2006 2007 2008 2009* 2010* 2011**
55%
20% 11%
14%
Executive aviationExecutive aviationCommercial aviationCommercial aviation
Aviation services/othersAviation services/othersDefense and securityDefense and security
Net RevenueNet Revenue Gross MarginGross Margin
6
Firm Order BacklogFirm Order Backlog
Firm Order BacklogFirm Order Backlog Backlog/Revenue (Years)Backlog/Revenue (Years)
US$ Billion
14.818.8 20.9
16.6 15.6 15.8
2.8 3.03.8
3.2 3.0 2.8
2006 2007 2008 2009 2010 2Q2011
7
Revenue BreakdownRevenue Breakdown
Revenue by Segment Revenue by Region
Commercial aviationCommercial aviationExecutive aviationExecutive aviationOthersOthers
Aviation servicesAviation servicesDefense and securityDefense and security North AmericaNorth America
BrazilBrazilEuropeEuropeAsia PacificAsia Pacific
Latin AmericaLatin AmericaOthersOthers
67% 62%53%
14%16%
21%
8% 9% 13%
9% 11% 11%2% 2%2%
2008 2009 2010
6.336.33 5.495.49 5.365.36
Net Revenue
US$ Billion*6.336.33 5.495.49 5.365.36
2008: US GAAP2009-2010: IFRS2008: US GAAP2009-2010: IFRS**
43%
22%13%
18%
33%33%
10%7%
15%
4%11% 13%
18% 21% 22%
7% 6% 4%
2008 2009 2010
E-Jets: 60 Airlines from 40 Countries
9
Product PortfolioProduct Portfolio
capacity: 70 to 80 seatsrange: 2,100 nm (3,900 Km)
capacity: 78 to 88 seatsrange: 2,000 nm (3,700 Km)
capacity: 98 to 114 seatsrange: 2,400 nm (4,500 Km)
capacity: 108 to 122 seatsrange: 2,200 nm (4,100 Km)
capacity: 37 seatsrange: 1,750 nm (3,250 Km)
capacity: 50 seatsrange: 1,550 nm (2,900 Km)
capacity: 50 seatsrange: 2,000 nm (3,700 Km)
capacity: 44 seatsrange: 1,650 nm (3,050 Km)
10
Commercial Aviation - Order Book 2Q11Commercial Aviation - Order Book 2Q11
Firm Firm OrdersOrders OptionsOptions TotalTotal DeliveriesDeliveries Firm Firm
BacklogBacklog
ERJ 145 Family 890 - 890 890 -
EMBRAER 170 190 32 222 182 8
EMBRAER 175 189 285 474 136 53
EMBRAER 190 519 305 824 349 170
EMBRAER 195 105 36 141 75 30
TOTAL E-JETSTOTAL E-JETS 1.0031.003 658658 1.6611.661 742742 261261
TOTALTOTAL 1.8931.893 658658 2.5512.551 1.6321.632 261261
11
E-Jets Customer Base EvolutionE-Jets Customer Base Evolution
Source: Embraer (Scheduled Airlines and Leasing Co.) DeliveriesDeliveries
1 2 3 4 9 14 19 28 42 60Customers/Operators
60110 112 118
245
343
440
619
764
1003
0
200
400
600
800
1000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-11
Acc
um
ula
ted
Fir
m O
rder
s
12
Worldwide DistributionWorldwide Distribution
Diversified Customers Across 5 Continents
Firm Orders
Commercial Jets Market Share Evolution Worldwide
Considering Accumulated Net Orders
60-120 Seats Jets
15%
18%
35%
17%
15%
12%
6%
26%
12%
44%
16%
8%
30%13%
33%
Backlog
Europe & CISMiddle East & AfricaLatin America
North AmericaAsia Pacific & China
North AmericaAsia Pacific & China
43%43%
30%30%
3%3%
7%7%5%5%
13
E-Jets DeploymentE-Jets Deployment
World
Right-sizing New Markets Replacement of old Jets
NaturalGrowth
14
Nearly 1,000 aircraft with more than 15 years old
World Replacement OpportunitiesWorld Replacement Opportunities
B717-200B737-200
B737-500
F70 F28
F100
DC-9Bae 146 TU-134
YAK-42
737-600
0
50
100
150
200
250
300
350
5 15 25 35 45
Nu
mb
er o
f Air
craf
t
Average Age (years)
(Jets 61-120 seats)
Around 7,225 jet deliveries (30-120 seats) in the next 20 years (US$ 320 bi)
15
Embraer Market Forecast (2011-2030)Embraer Market Forecast (2011-2030)
North
America
84032%
NorthAmerica
2,35033%
Latin
America
31512%
LatinAmerica
6709%
Europe
58022%
Europe
1,67523%
Russia / CIS
1556%
Russia / CIS
4356%
Africa
803%
Africa
1953%
Middle East
1054%
Middle East
3104% Asia
Pacific
2108%
Asia Pacific
6159%
China
34013%
China
97513%
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)
2011 – 2030
Deliveries
30-60 430
61-90 2,670
91-120 4,125
30-120 7,225
• 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
MRJ70
MRJ90ARJ21
E195
E190
E175
E170
SSJ100/95
CS100
CRJ900
CRJ700
60
70
80
90
100
110
120
1600 1800 2000 2200 2400 2600 2800 3000
Range Nominal
Cap
acit
y 32
'' p
itch
16
110 Seats110 Seats
Competitive LandscapeCompetitive Landscape
70-90 Seats70-90 Seats
100 Seats100 Seats
More than 400 executive jets in operation.
18
Product PortfolioProduct Portfolio
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 CJ1+/M2
• Cessna - CJ3/ CJ4• Hawker – PremierIA,
H400XP
• Bombardier - Lear 45XR/60XR
• Cessna - XLS+
• Cessna - Sovereign• Hawker - H900XP
• Bombardier -Challenger 605
• Dassault – Falcon 2000EX/LX
• Gulfstream – G450
• Airbus - A318 Elite
Legacy 650 13 to 14 passengers/ 3,900 nmCertified: 2010
• Bombardier – Global XRS
• Gulfstream – G550• Dassault – F7X
• Bombardier -Challenger 300
• Gulfstream – G200• Hawker – H4000
19
25% 24% 22% 21% 20%
33% 35% 37% 40%33%
7% 7% 7% 6%9%
12% 13% 13% 14%11%
2.7% 3.1% 3.5% 3.3% 14%19% 16% 16% 14% 11%2% 3% 2% 1% 2%
2005 2006 2007 2008 2009%
OEM
Sha
re –
Tot
al u
nits
749 885 1,040 1,154 870
Market ShareMarket Share
OthersHawker-BeechEmbraer Gulfstream
DassaultCessnaBombardier
Deliveries share (units)Revenue share (US$ - based on B&CA list prices)
Market Deliveries 2010: 763 units.
Embraer Deliveries: 145 units.
Market Revenue 2010: $18.2 Bi.
Embraer Revenue: $1.1 Bi.
Market Revenue 2010: $18.2 Bi.
Embraer Revenue: $1.1 Bi.
30% 29% 28% 29% 28%
16% 16% 17% 18% 12%
11% 11% 12% 12% 18%
23% 23% 23% 24% 21%
3.5% 3.9% 4.7% 4.2% 6.4%10% 9% 8% 8% 8%5% 8% 6% 5% 6%
2005 2006 2007 2008 2009
% O
EM S
hare
– T
otal
Rev
enue
s U
S$
$13.2Bi $16.6Bi $19.3Bi $22.2Bi $17.2Bi
2010
763
6.9%
2010
$18.2Bi
19%
27%
7%
22%
21%
6%10%
20%
23%
12%
13%
10%3%
2011-20 Market Forecast World Deliveries2011-20 Market Forecast World Deliveries
More than 10,000 jets: US$ 210 billion over the next 10 years
20
Forecast
-
200
400
600
800
1.000
1.200
1.400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
ULTRA LARGE
ULTRA-LONG RANGE
LARGE
SUPER MID-SIZE
MID-SIZE
MID-LIGHT
LIGHT
ENTRY*
New bizjet deliveries (Units)
21
Business Jets TrafficBusiness Jets Traffic
US/FAA Bizjet Flight ActivityUS/FAA Bizjet Flight Activity
European Bizjet Flight ActivityEuropean Bizjet Flight Activity
2005
2006
2007
20082009
2010
2011
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2005
20062007
20082009
20102011
100
130
160
190
220
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
22
Pre-owned Inventory: RecoveringPre-owned Inventory: Recovering
Business Jets For Sale
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
99 00 01 02 03 04 05 06 07 08 09 10 11
Uni
ts
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
% o
f act
ive
fleet
Fleet up to 5 yrs and positions Positions
Fleet up to 5 yrs Fleet from 6 to 10 yrs
Fleet older than 10 yrs % for sale (per total active fleet)
up to 10 yrs % for sale
Angola
Belgium
Brazil
Niger
France
Gabon
India
Paraguay
Mexico
Peru
Chile
Colombia
Honduras
Uruguay
Argentina
Greece
Italy
Nigeria
EcuadorEquatorial Guinea
Pakistan
Thailand
Dominican Rep.
Panama
United States United Kingdom¹
Kuwait¹
Mauritania
Kenya¹
Togo
Germany
Portugal
Spain
Sweden
Luxembourg
Chad
Libya
Egypt
Tunisia
Canada
Switzerland
Venezuela
Indonesia
Presence in more than 40 countries.
24
Defense and Security PortfolioDefense and Security Portfolio
Advanced Training and Light Attack
Transport of AuthoritiesISR (Intelligence, Surveillance and Reconnaissance)
Modernization Programs Command and Control Systems
Military Tactical Transport
Services
Super TucanoSuper Tucano
25
• Firm orders: 180 aircraft
• Brazil: 99
• Colombia: 25
• Dominican Republic: 8
• Chile: 12
• Ecuador: 18
• Indonesia: 8
• XE Aviation: 1
• Undisclosed: 9
• Deliveries: 156 aircraft
• To be delivered: 24 aircraft
• Prospects:
• Latin America
• South East Asia
• USA
• Africa
•Entering the “Joint Definition Phase”
•Market Forecast 2025: 700 aircraft / US$ 50+ bi
• New tactical military transport aircraft
• Payload: 23 ton / Range: 1400 nm
• Brazil, Chile, Colombia, Portugal, Czech Republic and Argentina signed LOI for up to 60 KC-390 aircraft.
Length: 33.81 m (110.9 ft)
Wingspan: 35.06 m (115.0 ft)
Height: 10.26 m (33.7 ft)
EMBRAER KC-390EMBRAER KC-390
26
27
EMBRAER KC-390 Main Partners SelectedEMBRAER KC-390 Main Partners Selected
Rockwell Collins: Pro Line Fusion avionics.
DRS Defense: cargo handling and aerial delivery system (CHS/ADS).
ELEB: landing gears.
Liebherr-Aerospace: environmental and cabin pressure control systems.
Esterline: autothrottle system.
Messier-Bugatti-Dowty: wheels, brakes, landing gear extension and retraction system, and nose wheel
steering manifold.
IAE: V2500 engine.
BAE Systems: fly-by-wire flight control systems (computers and electronics).
Goodrich: primary flight control system (electro-hydrostatic actuators, electro-backup hydrostatic
actuators, actuator electronics, and electrical controls).
Acquisition of Atech Negócios em Tecnologias S.A. (50%)
C4I Systems
Commercial Agreement
Small UAV
Acquisition of OrbiSat da Amazônia S.A radar´s division
Remote sensing and surveillance radars (ground, air and maritime)
Elbit /AEL joint-venture to form a new company with Embraer Defense and Security majority participation
UAS, simulators and modernization of avionics systemsHarpia
Acquisitions and PartnershipsAcquisitions and Partnerships
29
Brazilian Army PrioritiesBrazilian Army Priorities
SISFRONIntegrated Borders Monitoring System
Estimate: US$ 4 Billion
Comprising radars, communication networks, C4I, unmanned air vehicles (UAV) and armored vehicles
Comm9% UAV
12%
SW20%
Sensors59%
Revenue by Region - 2010Revenue by Region - 2010
Developed Market
19%
Emerging Market
81%
Europe 16%
North América 3%
Latin America 33% Asia Pacific/ Africa 21%
Brazil 27%
8.0%8.0%
Current OutlookCurrent Outlook New OutlookNew Outlook
US$ 465 millionUS$ 465 million~11%~11%
2011 Outlook Revision2011 Outlook Revision
US$ 420 millionUS$ 420 million
Net RevenuesNet Revenues
EBITEBIT
EBIT marginEBIT margin
US$ 5.6 billionUS$ 5.6 billion
7.5%7.5%
US$ 5.8 billionUS$ 5.8 billion~4%~4%
US$ 610 millionUS$ 610 millionEBITDAEBITDA
EBITDA marginEBITDA margin 11.0%11.0% 12.0%12.0%
US$ 700 millionUS$ 700 million~15%~15%
ResearchResearch
DevelopmentDevelopment
US$ 90 million US$ 90 million
US$ 210 millionUS$ 210 million
CAPEXCAPEX US$ 200 millionUS$ 200 million
33
2011 Outlook Revision2011 Outlook Revision
Current OutlookCurrent Outlook
US$ Million
YTD Outlook
38
83 7190
160200
Research Development CAPEX
US$ 160 millionUS$ 160 million
New OutlookNew Outlook
US$ 90 million US$ 90 million
US$ 200 millionUS$ 200 million
Financial Results Financial Results
IFRSIFRS
35
Net Revenues / SG&A ExpensesNet Revenues / SG&A Expenses
Net Revenues - US$ Million
Net RevenuesNet Revenues Gross MarginGross Margin
SG&A Expenses - US$ Million
Selling ExpensesSelling Expenses G&A ExpensesG&A Expenses
1,3581,044
1,970
1,0561,359
22.4%24.3%
16.8%
20.5%20.2%
2Q10 3Q10 4Q10 1Q11 2Q11
94 89106 94
49 53
6157
64
109
2Q10 3Q10 4Q10 1Q11 2Q11
142142
167167 173173
143143 151151
Guidance 2011 - Net Revenue: US$ 5.8 billionGuidance 2011 - Net Revenue: US$ 5.8 billion
36
Income from Operations / EBITDAIncome from Operations / EBITDA
EBITEBIT EBIT MarginEBIT Margin
Income from Operations - US$ Million
EBITDAEBITDA EBITDA MarginEBITDA Margin
EBITDA - US$ Million
EBIT: US$ 465 million EBIT Margin: 8%
EBIT: US$ 465 million EBIT Margin: 8%2011 Outlook -2011 Outlook - EBITDA: US$ 700 million
EBITDA Margin: 12% EBITDA: US$ 700 million
EBITDA Margin: 12%2011 Outlook -2011 Outlook -
66
132
94
122106
9.0%
6.4%
6.7% 8.9% 7.8%
2Q10 3Q10 4Q10 1Q11 2Q11
166131
197156 153
12.2% 12.5%
10.0%14.8% 11.3%
2Q10 3Q10 4Q10 1Q11 2Q11
37
Net Income / Free Cash FlowNet Income / Free Cash Flow
Net Income - US$ Million Free Cash Flow - US$ Million
Net IncomeNet Income Net MarginNet Margin
96105123126
57
7,1%
10,0%
6,2%12,1%
4,2%
2Q10 3Q10 4Q10 1Q11 2Q11
(38)
(126)
193
(66)
220
2Q10 3Q10 4Q10 1Q11 2Q11
38
Indebtedness Profile / Net CashIndebtedness Profile / Net Cash
Indebtedness Maturity Net Cash - US$ Million
Long-termLong-term Short-termShort-term
Loans Average Maturity (Years)Loans Average Maturity (Years)
95% 90%
22%6%
87%94%
78%
13%10%5%
5.0
5.7
6.36.1
5.8
2Q10 3Q10 4Q10 1Q11 2Q11
652 618692
505406
2Q10 3Q10 4Q10 1Q11 2Q11
Total Debt 2Q11: US$ 1.72 BillionTotal Debt 2Q11: US$ 1.72 Billion Total Cash 2Q11: US$ 2.13 BillionTotal Cash 2Q11: US$ 2.13 Billion
10th anniversaries: NYSE Euronext listing.
Presence in China, Singapore and GPX.
10th anniversaries: NYSE Euronext listing.
Presence in China, Singapore and GPX.
40
Embraer elected for the 3rd consecutive year, one
of the best companies to work for in Brazil.
Embraer elected for the 3rd consecutive year, one
of the best companies to work for in Brazil.
2010 Accomplishments2010 Accomplishments
Embraer selected as Gold Class
on the DJSI and also on the ISE.
Embraer selected as Gold Class
on the DJSI and also on the ISE.
41
Lean Results: E-Jets Final Assembly Lean Results: E-Jets Final Assembly Line TransformationLine Transformation
“Dock” layout - 2008 Assembly Line – 2009 Assembly Line – 2011
0
0
68
8
4
Mar/11 (10ac/month)
00,21,51,510Over time (% of work hours)
001,7732Number of non-conformity per a/c
688995106212Work in process (US$mi)
78101218Cycle time (days)
445612Number of positions
Out/11 (12ac/month)
June/2010 (8ac/month)
Sep/2009 (10ac/month)
July/2009 (10ac/month)
May/2008 (15ac/month)
Performance indicators
0
0
68
8
4
Mar/11 (10ac/month)
00,21,51,510Over time (% of work hours)
001,7732Number of non-conformity per a/c
688995106212Work in process (US$mi)
78101218Cycle time (days)
445612Number of positions
Out/11 (12ac/month)
June/2010 (8ac/month)
Sep/2009 (10ac/month)
July/2009 (10ac/month)
May/2008 (15ac/month)
Performance indicators
42
Automation Initiatives 2010Automation Initiatives 2010
Automation initiatives continues in 2011…
43
Sustainability InitiativesSustainability Initiatives
Brazilian Alliance for Bio-fuel
Reforestation Projects
ISO 14001 and OHSAS 18001 Certifications
Sustainability InitiativesSustainability Initiatives
1st ethanol powered aircraft in the World
IpanemaIpanemaRecycling
Corporate ValuesGreener Technology
Social Activities
44
723,665,044 Voting Shares723,665,044 Voting Shares
Ownership StructureOwnership Structure
June, 2011
PREVI11.1%
BNDESPAR5.5%
BM&FBOVESPA OTHERS24.2%
BLACK ROCK5.1%
THORNBURG INVESTMENT
6.7%
OPPENHEIMER FUND'S8.6%
NYSE OTHERS32.8%
GRUPO BOZANO
6.0%
NYSE53.1% 46.9%
BM&FBOVESPA
45
Investors’ ReturnInvestors’ Return
Pay OutPay OutEPADSEPADS
2006-2008: US GAAP2009-2010: IFRS2006-2008: US GAAP2009-2010: IFRS**
2.11 2.64
2.14 2.57
1.83
53% 68% 52%
26% 34%
2006 2007 2008 2009* 2010*
EPADS and Pay Out Dividend Yield (%)
2.012.91
4.34
3.28
2.23
2006 2007 2008 2009 2010
47
Forward Looking StatementForward 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.