2007 - 4 Q06 And Fy2006 Earnings Results Embraer
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March 23, 2007 4Q06 and FY2006 Earnings Results EMBRAER Maurício Botelho President & CEO
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Transcript of 2007 - 4 Q06 And Fy2006 Earnings Results Embraer
March 23, 2007
4Q06 and FY2006 Earnings Results
EMBRAER
Maurício BotelhoPresident & CEO
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.
Strategic Highlights
• With the conclusion of Capital Reorganization Embraer became the first large Brazilian Company with pulverized capital.
• Listing on Novo Mercado segment of the Bovespa, the highest level of Corporate Governance of the Brazilian market.
• Issunace of US$ 400 million guaranteed notes and demand ten times oversubscribed.
Sale of 50 ERJ 145s and 50 EMBRAER 190s to HNA Group, the fourth largest airline company in China.
The first contract involving an E-Jet in mainland China.
Confirms the correctness of Embraer´s vision and its long-term strategy to become an important player in the Chinese market.
Strategic Highlights
2006 Highlights
2006 Highlights
Firm Order Backlog
US$ billion
10.1 10.4
14.8
2004 2005 2006
Firm order backlog increased more than 40% in 2006. The highest in the Company’s history.
US$14.8 Billion
Aircraft Deliveries
Units
148
141
130
2004 2005 2006
• As a result of difficulties with the production ramp-up of the EMBRAER 190 and EMBRAER 195 aircraft, especially those related to their wing assembly Embraer revised its delivery forecast for 2006
• 2007 delivery forecast increased from 150 jets to 165 / 170 deliveries
2006 Highlights
2006 Highlights
In US$ millions
Net Revenues
3,4413,830 3,807
2004 2005 2006
22
360
416
2004 2005 2006
Net Cash
In US$ millions
2006 Highlights
Net Income
In US$ millions
380
446390
2004 2005 2006
Highlights - Commercial Aviation
More than 225 New Firm Orders
Regional US Airways AeroRepublica Finnair
FlyBeRoyal Jordanian Tame
ERJ 145 Family Order Book
(4rd Quarter 2006)
Firm Orders Options Total DeliveriesFirm
Backlog
ERJ 135 108 1 109 108 -
ERJ 140 74 - 74 74 -
ERJ 145 732 132 864 679 53
Total 914 133 1,047 861 53
EMBRAER 170/190 Family Order Book
Firm Orders Options Total DeliveriesFirm
Backlog
EMBRAER 170 157 133 290 128 29
EMBRAER 175 99 136 235 25 74
EMBRAER 190 317 248 565 53 264
EMBRAER 195 46 51 97 3 43
Total 619 568 1,187 209 410
(4rd Quarter 2006)
Launch of the Lineage 1000, an ultra-large business jet based on the platform of the EMBRAER 190.
Highlights – Business Jet Market
Phenom 100 and Phenom 300 have logged more than 350 firm orders.
Deliveries of 5 Super Tucano aircraft for the Colombian government representing the first international delivery of that model
Delivery of seven F-5 BR remodeled aircraft and nine Super Tucano to Brazilian Air Force.
Contracted by the Brazilian Government to develop the LINK-BR2 network data link system .
Highlights – Defense & Government
Highlights – Costumer Services
• Conclusion of EAMS plant expansion in Nashville.
• Creation of three new service centers in the US and one in Europe, and certification of authorized service centers to provide full-service aircraft care.
• Embraer and CAE signed an agreement to form a global training joint venture, to provide pilot and ground crew training to Embraer customers of the Phenom jets.
The EMBRAER 195 aircraft received its certification from CTA and EASA, and first deliveries are made to Flybe and Royal Jordanian Airlines.
The EMBRAER 190 aircraft received type certification from EASA, and the first deliveries are made to Régional(Air France subsidiary) and Finnair.
Highlights – Engineering
Embraer assumed wing assembly of the EMBRAER 190 e EMBRAER 195 aircraft.
Construction of the final assembly hangar and painting shop of the Phenom jets at Gavião Peixoto plant..
First metal part produced for the Phenom jets.
Start of the production of the serial number 1000 aircraft of the ERJ 145 family.
Highlights – Industrial Operations
Results & Performance
Jet Deliveries
160 161
131
101
148141
130
2000 2001 2002 2003 2004 2005 2006
Net Revenue by Segment
2005 2006
Commercial
Aviation64.4%
Defense and
Government 6.0%
Executive
Aviation15.3%
Customer
Services and Others14.3%
Commercial
Aviation70.6%
Defense and
Government 11.1%
Executive
Aviation7.3%
Customer
Services and Others11.0%
2005 2006
Net Revenue by Market
Brazil
7.9%
Europe
14.6%
Others
10.0%
The Americas
Without Brazil67.5%
The Americas
Without Brazil57.2%
Brazil
3.8%
Europe
22.1%
Others
16.9%
Net Revenue
2,5262,144
3,4413,830 3,807
39.4%
28.1%30.2%
34.1%37.7%
2002 2003 2004 2005 2006
Net Revenue Gross Margin
US$ Million
1,084
8941,021
808
28.7% 27.5%28.3%
28.2%
1Q06 2Q06 3Q06 4Q06
Income from Operations
US$ Million
651
470
265
544 508
308
22.3%
18.6%
12.3%13.3%
8.1%
15.8%
2001 2002 2003 2004 2005 2006
Income from Operations Margin
Net Income
US$ Million
328
223
136
380
446390
10.20%
11.6%11.1%11.2%
8.8%
6.3%
2001 2002 2003 2004 2005 2006
Net Income Net Margin
Accounts Receivable
US$ Million
351 346 332 366272
100 136 140 32
4Q05 1Q06 2Q06 3Q06 4Q06
Others Commercial Aviation
US$ Million
Inventories
8801,173
1,428 1,511
2,047
2002 2003 2004 2005 2006
Total Debt US$ 1,349.2 Million
• Average cost in R$ = 9.12% p/a
• Average cost in US$ = Libor + 1,69% p/a
Indebtedness
Loans Average Maturity:4 years and 5 months
Short Term 37%
Long Term 63%
Brazilian
Currency
22%
Foreign
Currency
78%
Indebtedness Maturity
US$ million
503
123
7427
564
58 1,349
Total Short-term
2008 2009 2010 2011 after2011
Net Cash (Debt)
360302
527 507
416
4Q05 1Q06 2Q06 3Q06 4Q06
US$ million
Backlog and Deliveries
Order Backlog
10.7 9.0 10.6 10.1 10.414.8
12.713.2
17.5 17.513.6
15.2
2001 2002 2003 2004 2005 2006
Firm Orders Options
US$ billion
Aircraft Deliveries
10%5%
8%
22% 18%15%
10%
67%77%68%
1%
2006 2007 2008
E-Jets ERJ 145 Family Legacy 600 Lineage 1000 Phenom Jets
E E
130 165/170 195/205
Research & Development Forecast
Previous Actual
US$ Million 2007 2007 2008
Commercial Aviation 54 51 22
Executive Aviation 87 127 90
Technology Development 47 59 61
TOTAL 188 237 173
Defense & Government 21 32 48
Defense & Government R&D are funded by their contracts and are included as Cost of sales and services
PP&E
Previous Actual
US$ Million 2007 2007 2008
Productivity 77 77 52
Production Ramp Up - 104 36
Customer Services - 13 29
TOTAL 77 194 117
US$ Million
Dividends
1.11% 2.75%3.51%YIELD 1.97%
104
68
204187
151
47%50%
54%
63%
39%
2002 2003 2004 2005 2006
Dividends Pay-Out Ratio
5.73%
