Conference Call 4Q13
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Transcript of Conference Call 4Q13
Cargo do ApresentadorEARNINGS RESULTS
4th QUARTER & FY 2013
February 26, 2014
Forward Looking StatementThis 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.
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Financial Highlights
The Company met its 2013 outlook for Net Revenues, Margins and Aircraft Deliveries.
Total firm order backlog reached US$ 18.2 billion, its highest level in five years.
Net Revenues reached US$ 6,235 million in 2013 and US$ 2,304 million in 4Q13, representing the highest ever quarterly revenues for the Company.
2013 EBIT and EBIT Margin were US$ 713 million and 11.4%.
2013 EBITDA and EBITDA Margin were US$ 1,004 million and 16.1%.
Free Cash Flow was US$ 213 million and Net Cash reached US$ 429 million in 2013.
As part of Embraer’s ongoing liability management, the Company completed an exchange offer of Notes extending their maturity until 2023.
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Corporate Highlights
Embraer listed for the 4th consecutive year on the Dow Jones Sustainability Index and also on the ISE in Brazil.
Embraer was awarded and recognized by many renowned publications and institutions as one of the best companies in Brazil and abroad in several categories.
Embraer joined the World Economic Forum Partnering Against Corruption Initiative (PACI), a global, multi-industry, multi-stakeholder anti-corruption initiative.
Delivery of 90 E-Jets in 2013 of which 32 were in 4Q13.
349 new E-Jets (E1&E2) were sold in 2013, reaching 1,427 aircraft and a customer base of 65 airlines in 45 countries.
Highlights
Embraer launched the E-Jets E2 Program which to date have reached 200 firm orders plus 200 options.
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Highlights
Delivery of the 1,000th E-Jet production aircraft to Republic Airlines, which is being operated on behalf of American Eagle.
Embraer received American Airlines’ order for up to 150 E175 jets (60 firm plus 90 options).
Saratov Airlines became the first Russian E-Jet operator with two E195.
Air Costa (India) placed a firm order for 50 E-Jets E2 plus 50 options of the E190-E2 and E195-E2 models. (1Q14)
Delivery of 119 executive jets in 2013 (90 light jets and 29 large jets). 53 jets delivered in 4Q13.
Phenom family surpassed 470 aircraft deliveries to 29 countries.
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Highlights
Legacy 450 first flight in December 2013. EIS expected in 2015.
Legacy 500 reached more than 1,100 hours in flight test campaign. EIS is scheduled for first half of 2014.
Phenom 300 was the most delivered executive jet in the industry in 2013.
Expansion of authorized service center network with six new facilities added in 2013, totaling six wholly-owned and 70 authorized service centers.
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Highlights
Embraer Executive Jets won the second place ranking for the second consecutive year in the product support survey from Aviation International News (AIN).
Launch of the new Lineage 1000E.
First China-assembled Legacy 650 was delivered to first client.
In 2013, Bradar delivered seven Saber M60 low altitude surveillance radars to the Brazilian Armed Forces which now has 22 in operation. It also signed a contract to supply one Sentir M20 radar to the Brazilian Army.
In the air traffic segment, Atech signed a contract to implement the SAGITARIO system in several regions of Brazil.
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Highlights
Defense & Security revenues grew 15% in 2013 and reached US$ 1.2 billion.
Visiona signed contract for the Geostationary Defense and Strategic Communication Satellite.
Embraer Defense & Security finished adapting the hangar of the Jacksonville, Florida plant to start production of the Super Tucano. First delivery for the USAF LAS Program scheduled for mid 2014.
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Highlights
Embraer Defense & Security delivered the second modernized A-1 (A-1M) fighter jet to the Brazilian Air Force and performed the first flight of the two-seater prototype.
KC-390 development program ongoing with the beginning of production of parts for assembly of the first prototype, which will fly for the first time in late 2014.
Delivery of the final three Super Tucanoaircraft to the National Air Force of Angola.
21 19 16
77
90
22 29
98
126
83
2009 2010 2011 2012 2013
125
101 105 10690
2009 2010 2011 2012 2013
Aircraft Deliveries
Large Jets - Legacy & Lineage
Light Jets - Phenom
Commercial Jets Executive Jets
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2013 deliveries estimates • 90 - 95 commercial jets• 25 - 30 executive large jets• 80 - 90 executive light jets
67%13%
20%
12.5 13.3
17.1 17.8 18.2
4Q12 1Q13 2Q13 3Q13 4Q13
Firm Order Backlog
12
US$ Billion
Commercial Aviation
Defense & Security
Executive Aviation
5,498 5,3645,791 6,167 6,235
2009 2010 2011 2012 2013
Net Revenues
13
2013 Outlook: US$ 5.9 – 6.4 Billion
US$ Million
Revenues Breakdown
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20% 24% 29%
25%31% 22%
17%
14% 21%11% 3%
8%11% 14%6%
9% 5% 9%7% 9% 5%
2011 2012 2013
65% 61%53%
19% 21%27%
15% 17% 19%
1% 1% 1%
2011 2012 2013
Net Revenues by Segment Net Revenues by Region
Commercial Aviation
Executive Aviation Others
Defense & Security
Revenues US$ Billion 5.79 6.18 6.24
Revenues US$ Billion5.79 6.18 6.24
North America Brazil
Europe
Asia Pacific
South &
Central America
Africa &
Middle East
China
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Net Revenues
Net Revenues - US$ Million Net Revenues - R$ Million
2013: 6,235 2013: 13,636
3,913
2,157
3,240 2,944
5,296
4Q12 1Q13 2Q13 3Q13 4Q13
1,898
1,086
1,5571,288
2,304
4Q12 1Q13 2Q13 3Q13 4Q13
305374 419
480
191
198
261
279
454
211
9%11% 12% 12%
11%
2009 2010 2011 2012 2013
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Expenses / Net Revenues
US$ Million
Selling ExpensesG&A Expenses
SG&A Expenses
295
215250 256
154
106
111 117
258
120
4Q12 1Q13 2Q13 3Q13 4Q13
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SG&A Expenses
SG&A Expenses - US$ Million SG&A Expenses - R$ Million
378
449
321373361
2013: 1,433
Selling ExpensesG&A Expenses
2013: 664
143
108121 112
75
5354
51
113
52
4Q12 1Q13 2Q13 3Q13 4Q13
165
218
161 163175
392318
612
713
379
11.4%9.9%
5.5%7.3%6.9%
2009 2010 2011 2012 2013
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EBIT: US$ 530 – 610 Million
EBIT Margin: 9.0% – 9.5%2013 Outlook:
Income from OperationsUS$ Million
9.1%
566
EBIT EBIT MarginExcluding AMR effect
40135
76
228
463
12.0%
3.6%
8.7%5.9%
20.1%
4Q12 1Q13 2Q13 3Q13 4Q13
79285
173
469
1,068
12.0%
3.7%
8.8%5.9%
20.2%
4Q12 1Q13 2Q13 3Q13 4Q13
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Income from Operations
Income from Operations - US$ Million Income from Operations - R$ Million
2013: 713 / 11.4% 2013: 1,606 / 11.8%
316 723
13.7% 13.7%
EBIT EBIT MarginExcluding AMR effect
611 557
891
609
1,004
11.1% 11.4%9.6%
14.4%16.1%
2009 2010 2011 2012 2013
13.8%
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EBITDA: US$ 770 – 900 Million
EBITDA Margin: 13.0% – 14.0% 2013 Outlook:
US$ Million
EBITDA
857
EBITDA EBITDA MarginExcluding AMR effect
638
201
427 359
1,253
16.3%
9.3%
13.2%12.2%
23.7%
4Q12 1Q13 2Q13 3Q13 4Q13
310
100204
156
544
16.3%
9.2%
13.1% 12.1%
23.6%
4Q12 1Q13 2Q13 3Q13 4Q13
17.3%17.2%
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EBITDA
EBITDA - US$ Million EBITDA - R$ Million
2013: 1,004 / 16.1% 2013: 2,239 / 16.4%
397 909
EBITDA EBITDA MarginExcluding AMR effect
330
112
348
465
342
8.5% 6.2%
1.9%
5.6% 5.5%
2009 2010 2011 2012 2013
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Net MarginNet Income
Net IncomeUS$ Million
254
62
(10)
119
607
6.5%
2.9%
-0.3%
4.0%
11.5%
4Q12 1Q13 2Q13 3Q13 4Q13
123
30
(5)
53
265
6.5%
2.8%
-0.3%
4.1%
11.5%
4Q12 1Q13 2Q13 3Q13 4Q13
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Net Income
Net Income - US$ Million Net Income - R$ Million
2013: 342 / 5.5% 2013: 778 / 5.7%
Net MarginNet Income
2.57
1.83
0.62
1.92 1.88
26%34%
116%
26%26%
2009 2010 2011 2012 2013
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EPADS and Pay Out
EPADS Pay Out
US$
2,445
2,1982,288
2,1572,287
2009 2010 2011 2012 2013
25
InventoriesUS$ Million
4Q12 1Q13 2Q13 3Q13 4Q13 2013
Net cash generated (used) by operating activities* 438 (83) 186 102 761 967
Additions to property, plant and equipment (163) (50) (125) (106) (156) (438)
Additions to intangible assets (75) (68) (60) (80) (109) (317)
Free Cash Flow 201 (201) 2 (84) 496 213
(50)(125) (106)
438
(83)
186102
761
(163) (156)
(75)(68) (60) (80)
(109)
201
(201)
2
(84)
496
4Q12 1Q13 2Q13 3Q13 4Q13
Free Cash Flow
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2013: 213
* Net of Financial assets adjustment
US$ Million
265
193
100
300
180
75
RESEARCH DEVELOPMENT CAPEX
Investments
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2013 Outlook: US$ 580 Million
2013 Outlook2013
US$ Million Total Investments
534 580
94% 96%
16% 15%
84% 85%96%
6% 4% 4%
5.8
5.1 5.4
6.3 6.2
4Q12 1Q13 2Q13 3Q13 4Q13
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Indebtedness Profile / Net Cash
Indebtedness Maturity Net Cash/Debt - US$ Million
Long-term Short-termLoans Average Maturity (Years)
US$ 2.19 BillionTotal Debt 4Q13 Total Cash 4Q13 US$ 2.62 Billion
309
9858
(20)
429
4Q12 1Q13 2Q13 3Q13 4Q13
2014 OUTLOOK
EBITDA Margin 13.0% – 14.0%
2014 Consolidated Outlook
Net Revenues
EBITDA
US$ 6.0 – 6.5 Billion
US$ 780 – 910 Million
EBIT Margin 9.0% – 9.5%
EBIT US$ 540 – 620 Million
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Free Cash Flow Positive Low Double Digits
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Net Revenues
Net Revenues US$ 3.20 – 3.40 Billion
Deliveries: 92 to 97 E-jets
Other Revenues US$ 100 Million
US$ 1.50 – 1.70 Billion
Net Revenues US$ 1.20 – 1.30 Billion
2014 Business Units Outlook
80 to 90 light jets 25 to 30 large jets
Deliveries:
2014 Investment Outlook
TOTAL INVESTMENTS: US$ 650 Million
Research US$ 80 Million
Development US$ 320 Million
CAPEX US$ 250 Million
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