ir institutional presentation - november 2013
DESCRIPTION
TRANSCRIPT
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
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
3721 19
83 77
16 22 14
2
98126
52
2008 2009 2010 2011 2012 9M13
165
125101 105
58
106
2008 2009 2010 2011 2012 9M13
Net Revenues
US$ Million
2008: USGAAP 2009-2012: IFRS
4
2013 Outlook: US$ 5.9 – 6.4 Billion
6,3355,498 5,364
5,803 6,178
3,931
2008 2009 2010 2011 2012 9M2013
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
12.4 12.5 13.3
17.1 17.8
3Q12 4Q12 1Q13 2Q13 3Q13
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
1,360+
1,360+
2011-3Q2013
Source: Embraer (Sep/2013 - Scheduled Airlines and Leasing Co.)
11
E-Jets Family Order Book – 3Q13
E-JETS Firm orders Deliveries Firm Backlog
E170 192 186 6
E175 315 175 140
E190 560 482 78
E195 145 123 22
E175-E2 100 - 100
E190-E2 25 - 25
E195-E2 25 - 25
Total 1,362 966 396
Worldwide Distribution
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
60-120 Seats Jets
Backlog
Europe & CIS
Middle East & Africa
Latin America
North America
Asia Pacific & China
Low Cost Carriers
Regional Airlines
Network Airlines
18%
28%54%
13%
5%
20%
14%
48%
7%4%
10%
8%
71%
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
Competitive Scenario 61-120 Seats
15
17
Right Capacities to Match Market Demand
70
80
90
100
110
120
130
+1 row
same
+3 rows
20%
20%
97 Seats DC
106 Seats SC E190-E2
118 Seats DC 132 Seats SC
E195-E2
80 Seats DC 88 Seats SC
E175-E2
18
E2 New Features – Not Just a Re-engine
E175-E2 E190-E2 & E195-E2
New Wing
More efficient, high aspect
ratio metallic wing. Raked
wing tip.
Improved Avionics
4 larger 13”x10” displays
and touchscreen controls
Main Landing Gear
Enabling larger engines.
Gear doors for improved
fuel efficiency
Optimized Wing/Engine
Different wing and engine combinations for E175-E2 and E190/195-E2
New Engines
Larger fan diameter and
improved fuel efficiency
19 >>
Range
E190-E2
E195-E2
E175-E2
Range (NM)
Full PAX (SC), LRC, typical
reserves, 100 nm alternate 1, 920 1,920
E175 E175-E2
2,350 2,800
E190 E190-E2
2,000 2,000
E195 E195-E2
>>
20
E-Jets & E-Jets E2 Pilot Commonality
Highest Commonality among
E-Jets E2 models (AAA)
Fewer than 3 days transition
training between the two E-Jet
generations
Full Flight Simulator or High-
Level Flight Training Device
Not required
21
Main Suppliers
New Generation
Power Plant
Improved Avionics Flaps and Slats Actuation
Systems; AMS
Horizontal Stabilizer
Actuation System Wheels & Brakes;
APU; Electrical System Fly-by-wire
Primary Flight Controls
Aft fuselage segments,
rudder and elevators
Vertical and horizontal
stabilizers
Ailerons and Spoilers
22
Fuel Burn Improvements
Fuel Burn per Seat
E175-E2 (80 seats) vs. E175 (76 seats)
E190-E2 (97 seats) vs. E190 (97 seats)
E195-E2 (118 seats) vs. E195 (106 seats)
-16%
-23%
-16%
0%
-5%
-10%
-15%
-20%
-25%
Target values for 600 nm sector; Dual Class configuration;
23
New Competitive Scenario
180+
160
140
120
100
80
SSJ95/100
MRJ90 ARJ21
CRJ900
CRJ1000
CRJ700
Capacity
(Single Class)
737-7 MAX A319neo
A320neo
737-8MAX
CS100
CS300
E175-E2
E190-E2
E195-E2
24
Applications & Market Size
20-Year Market Forecast (70 to 130-seat Jets) - 6,400 Deliveries*
Most efficient “hub feeder”
Lower cost-per-seat than current Turboprops
Efficient complement to narrowbody operations
New market developer
Capacity growth for current E-Jet operators
Similar cost-per-seat to A320neo and 737-8 Max
Low Cost operation in mid-density markets
E190-E2
E195-E2
E175-E2
* Embraer market forecast
Embraer investment on research, development and CAPEX for the
E-Jets E2 family will be US$ 1.7 billion
Investment will be supported by Embraer’s cash generation and debt
Investments span from 2013 - 2020 with more concentration in 2014 -
2017
25
Program Investment
26
List Prices (US$ Million)
Preliminary Information as of January, 2013 -- US$ 3.3/USGal, 10 years NPV @ 9% rate
Better Fuel Consumption Gain
• E175 E2: US$ 4.8M
• E190 E2: US$ 7.0M
• E195 E2: US$ 6.5M
Maintenance Cost Reduction Gain
• US$ 1.0~1.5M
E175 AR (8E5): 42.9
E190 AR (10E5):47.4
E195 AR (10E5): 50.1
E-Jets
E175-E2 46.8
E190-E2 53.6
E195-E2 60.4
delta: 3.9 M
delta: 6.2 M
delta: 10.3 M
E-Jets E2
Seat Capacity Increase Gain
• E175 E2: US$ 1.6M (4 seats)
• E195 E2: US$ 4.8M (12 seats)
27
E2 Entry into Service
E195-E2 EIS | 2019
E190-E2 EIS | 1H 2018
E175-E2 EIS | 2020
150 Firm Orders
50 Options
100 Purchase Rights
LOIs for 65 Orders
Embraer Executive Jets
MORE THAN 630 AIRCRAFT IN-SERVICE WORLDWIDE
29
Product Portfolio
30
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
31
Economic Indicators
32
U.S. Corporate Profits Worldwide HNWI Population
New record levels
7,0 7,2 7,7 8,2 8,8
9,6 10,1
8,6
10,1 10,8 11,0
11,9
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012M
illio
n p
eop
le
North America Europe Asia-Pacific Latin america Middle East Africa
Business Jets Pre-Owned Market Inventory
33
Source: Jetnet and Embraer Analysis, September 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 Q2 Q3
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
12.9% 2483 jets
8.3% 672 jets
US Corporate profits at record levels
HNWI at record levels
World GDP growth is moderate
Used market inventory leveled off but prices are still an issue
Traffic recovery on track but slower than expected
European markets still at risk; emerging countries slowing down
Market Recovery in Slow Motion
Lack of confidence is holding the bizjet market turnaround
USA market dictates the speed of recovery
MILD GROWTH
0
200
400
600
800
1000
1200
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
Deliveries Forecast (units)
9,250 jets and US$ 250 Bi in the next 10 years
Units US$
2014-2023 Market Forecast
900 4,2
1780
15,8
1140
17,3
920
17,8
1270
31,1
1670
64,7
1345
82,2
225 17,3
Deliveries Revenues
N10YF
Ultra Large
Ultra Long Range
Large
Supermid
Midsize
Midlight
Light
Entry
36
North America 4,530 a/c (49%)
US$ 117 Bi (47%)
Europe, Middle East & Africa 2,330 a/c (25%)
US$ 70 Bi (28%)
Asia Pacific 725 a/c (8%)
US$ 21 Bi (8%)
Latin America 860 a/c (9%)
US$ 15 Bi (6%)
China 805 a/c (9%)
US$ 29 Bi (11%)
2014-2023 Market Forecast by Region
Worldwide 9,250 units
US$ 250 Bi
Service Center Network
37
Embraer Service Center
Authorized Service Center
New Embraer Service Center in São Paulo - Brazil
Nearly 70 service centers worldwide.
OVER 52 ARMED FORCES IN 50 COUNTRIES
Embraer Defense & Security
39
Embraer Defense & Security Integrated Portfolio
Land Systems Radar Satellite
40
UAV’s
Partnerships
Command and Control
Systems
Air Traffic
Management
Control
Systems of Systems
C4I
UAVs
Simulators
Modernization of Avionics
Systems
Land Defense Systems
integration
SISFRON
implementation
MRO
Aero
Structures
Remote
Sensing
Aerial
Surveillance
Radar
Satellite
Geostationary of
Defense and
Communications
(SGDC)
100% 51% 65% 90% 100% 51%
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%
42
Brazil: 99
Colombia: 25
Dominican Republic: 8
Chile: 12
Ecuador: 18
Indonesia: 16
Greystone (TacAir): 1
Mauritania: 2
Burkina Faso: 3
Angola: 6
USA: 20
Super Tucano
Total Market Forecast:
300 aircraft / US$ 3.5 billion
800
2.000
700Medium-term
Long-term
Short-term
Addressable Market Forecast 2020 (US$ million)
Partnership with Boeing to provide weapons integration, increasing capabilities of the aircraft.
43
• 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
• Partnership with Boeing to share technical knowledge and to
market and sell the KC-390 in certain markets
• The Brazilian Air Force (FAB) and Embraer concluded the
Critical Design Review in the first quarter of 2013.
Brazil
(28)
Colombia
(12)
Argentina
(6)
Chile
(6)
Portugal
(6)
Czech Rep.
(2)
Total Market Forecast 2025:
700 aircraft / US$ 50+ bi
Ref. April13
44
A1-M F-5M A-4
Brazilian Navy A-4
12 aircraft
2 prototypes at GPX-CS
Brazilian Air Force A-1M
43 aircraft
18 received by Embraer for the modernization
Brazilian Air Force F-5M
46 a/c + 11 a/c (2nd batch)
46 delivered
Brazilian Air Force E-99
5 a/c aircraft EMB 145 AEW&C
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
45
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
46
New Business
• SisGAAz (“Blue Amazon” Integrated Management System)
• Security of Critical Infrastructure
• Public Security (sporting events, cities, states)
2020
Revenues Breakdown Evolution
2012
47
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%
49
50
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
51
Net Revenues / SG&A Expenses
Net Revenues - US$ Million SG&A Expenses - US$ Million
Selling Expenses G&A Expenses
53
2013 YTD: 3,931
1,402
1,898
1,086
1,5571,288
3Q12 4Q12 1Q13 2Q13 3Q13
170
218
161 163 175
2013 YTD: 499
111
143
108121
59
75
5354
112
51
3Q12 4Q12 1Q13 2Q13 3Q13
Income from Operations / EBITDA
Income from Operations - US$ Million EBITDA - US$ Million
EBIT EBIT Margin EBITDA EBITDA Margin
54
2013 YTD: 251 / 6.4%
228
40
135101
76
7.2%
12.0%
3.6%
8.7%
5.9%
3Q12 4Q12 1Q13 2Q13 3Q13
2013 YTD: 460 / 11.7%
168
310
100
204156
12.0%16.3%
9.2%
13.1%12.1%
3Q12 4Q12 1Q13 2Q13 3Q13
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
55
* Net of Financial assets adjustment
2013 YTD: 78 / 2.0%
65
123
30
(5)
53
4.7%6.5%
2.8%
-0.3%
4.1%
3Q12 4Q12 1Q13 2Q13 3Q13
(163)(50)
(30)
439
(83)
186
102
(50) (125)(106)
(58)
(75)(68) (60) (80)
(138)
202
(201)
2
(84)
3Q12 4Q12 1Q13 2Q13 3Q13
2013 YTD: (283)
Indebtedness Profile / Net Cash/Debt
Indebtedness Maturity Net Cash/Debt - US$ Million
Long-term Short-term
Loans Average Maturity (Years)
56
85%94%
17% 16%
83% 84%96%
15%6%
4%
6.05.8
5.15.4
6.3
3Q12 4Q12 1Q13 2Q13 3Q13
123
309
9858
(20)
3Q12 4Q12 1Q13 2Q13 3Q13
US$ 2.19 Billion Total Debt 3Q13 Total Cash 3Q13 US$ 2.17 Billion
Inventories
57
US$ Million
2,585
2,157
2,510 2,523
2,780
3Q12 4Q12 1Q13 2Q13 3Q13
Investments
58
49
2013 Outlook: US$ 580 Million
2013 Outlook 2013 YTD
US$ Million 2013 YTD: 389
Contracted CAPEX (mainly for Defense & Security Programs)
183145
100
300
180
61
RESEARCH DEVELOPMENT CAPEX
EPADS and Pay Out
59
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%
729,783,443 Voting Shares
Ownership Structure - 2Q13
60
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
62
P3E - Lean Results
63
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%
64
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
65
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.
67