RI Institutional Presentation December 2011

2

Company HighlightsCompany Highlights

Investment grade rating by Moody’s and S&P.

Strong balance sheet with solid net cash position.

Company established in 1969, privatized in 1994 and listed in USA in 2000.

Sector leader in the Dow Jones Sustainability Index 2011/2012.

Broad customer base in commercial and executive aviation, defense and

security segments.

Global footprint.

Highly experienced management team.

3

Corporate and Business StrategyCorporate 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 through acquisitions.

4

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

LouisvilleMinneapolis

5

Executive Large Jets

Aircraft DeliveriesAircraft Deliveries

Executive Light JetsCommercial JetsPhenom

*

103

133

165

125

73

27 36 3721 19 6

98

126101

243

2006 2007 2008 2009 2010 9M2011

102+*

18*

100*

2011 deliveries estimates

Legacy e Lineage

6

RevenuesRevenues

Guidance 2011: Net Revenues (US$ 5.6 – 5.8 billion)2006-2008: US GAAP2009-2010: IFRS*

**2011: YTDGuidance

US$ Million

55%

20% 11%

14%

Executive aviationCommercial aviation

Aviation services/othersDefense and security

3.760

5.245

6.3355.498 5.364

3.778

2006 2007 2008 2009* 2010* 2011**

89%

71%62%

53%

7%16%

21%

11% 9% 13%

7% 11% 13% 13%1%

4%

2000 2005 2009 2010

7

Revenues by SegmentRevenues by Segment

Commercial aviation

Executive aviation Aviation services/others

Defense and security

Net Revenues

US$ Billion*3.83 5.50 5.362.73

2009-2010: IFRS*

46% 43%

22%13%

24%18%

33%

33%

12%

10%7%

15%

4%

4%11% 13%

6%18% 21% 22%

8% 7% 6% 4%

2007 2008 2009 2010

8

Revenues by RegionRevenues by Region

Latin America

Others

North America

Brazil Asia Pacific

Europe

2009-2010: IFRS*

Net Revenues

US$ Billion*6.33 5.50 5.365.24

9

Firm BacklogFirm Backlog

US$ Billion

14.8

18.820.9

16.6 16.015.6

2006 2007 2008 2009 2010 3Q2011

E-Jets: 60 Airlines from 40 Countries

10

11

Product PortfolioProduct Portfolio

capacity: 70 to 80 seatsrange: 2,100 nm (3,900 Km)




capacity: 37 seatsrange: 1,750 nm (3,250 Km)




12

EE--Jets Customer Base EvolutionJets Customer Base Evolution

60110 112 118

245

343

440

619

764

1018

0

200

400

600

800

1000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-11

Ac

cu

mu

late

d F

irm

Ord

ers

1 2 3 4 9 14 19 28 42 60Customers/Operators

EIS

13

Worldwide DistributionWorldwide Distribution

E-Jets Customer Base by Business Model

(% of E-Jets Fleet+Backlog)

Firm Orders

Commercial Jets Market Share Evolution Worldwide

Considering Accumulated Net Orders

60-120 Seats Jets

41%

32%

27%

44%

12%

26%

6%12%

33%16%

8%

30%13%

Backlog

Europe & CIS

Middle East & Africa

Latin America

North America

Asia Pacific & China

43%

30%

3%

7%5%

Low Cost Carriers

Regional Airlines

Network Airlines

14

EE--Jets DeploymentJets Deployment

World

Right-sizing New Markets Replacement of old Jets

NaturalGrowth

helping airlines to be more efficienthelping airlines to be more efficient

Around 7,225 jet deliveries (30-120 seats) in the next 20 years (US$ 320 bi)

15

Embraer Market Forecast (2011Embraer Market Forecast (2011--2030)2030)

North

America

84032%

North

America

2,35033%

Latin

America

31512%

Latin

America

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

MRJ90

ARJ21

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 3

2'' p

itch

16

110 Seats

Competitive LandscapeCompetitive Landscape

70-90 Seats

100 Seats

EE--Jets: Continuous ImprovementJets: Continuous Improvement

Interior Improvements

Advanced Features

NG FMS

Structural and Prognostics Health

Management (SHM/PHM)

Increased Maintenance Plan

Intervals (750FH/7500FH)

Fuel Burn Improvement Package

External Noise Improvement Package

CPDLC

Steep Climb

Slim seat

Steep Approach

ADSB-out DO-260A

Electronic Flight Bag

(EFB)

2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015

ETOPS 120’ E190

E170/E175 AR

Operational Envelope extension:

-ISA+39 E170/E190- 14,000ft (E190)

17

More than 400 executive jets in operation.

18

19

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




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• HondaJet

• Cessna - CJ2+/CJ3/CJ4• Hawker - PremierIA/400XP• Bombardier - Learjet 40XR• SyberJet - SJ30

• Bombardier - Learjet 45XR• Cessna - XLS+/Latitude• Hawker 750

• Bombardier - Learjet 60XR/85• Cessna - Sovereign• Hawker - H900XP• Gulfstream – G150

• Bombardier - CL605/GL5000• Dassault - Falcon 2000/900LX• Gulfstream - G350/G450

• Airbus - ACJ 318/319/320• Boeing – BBJ/BBJ2/BBJ3• SSJ VIP/ ARJ21B / An-148VIP

Legacy 650 13 to 14 passengers/ 3,900 nmCertified: 2010

• Bombardier - GL XRS• Gulfstream – G500/G550/G650• Dassault – Falcon 7X

• Bombardier - CL300/CL850• Cessna - X/Ten• Dassault - Falcon 2000S• Gulfstream - G200/G280• Hawker - H4000

20

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

% O

EM

Sh

are

–T

ota

l u

nit

s

749 885 1,040 1,154 870

Market ShareMarket Share

OthersHawker-BeechEmbraer Gulfstream

Dassault

Cessna

Bombardier

Deliveries share (units)Revenues share (US$ - based on B&CA list prices)

Market Deliveries 2010: 763 units.

Embraer Deliveries: 145 units.

Market Revenues 2010: $18.2 Bi.

Embraer Revenues: $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

Sh

are

–T

ota

l R

ev

en

ue

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%

21

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 RANGELARGE

SUPER MID-SIZE

MID-SIZE

MID-LIGHT

LIGHT

ENTRY*

New bizjet deliveries (Units)

20122012--21 Market Forecast World Deliveries21 Market Forecast World Deliveries

11,275 jets US$ 260 billion over the next 10 years��

North America

EMB >170 a/cEMEA

EMB >150 a/c

Asia PacificEMB ~20 a/c

BrazilEMB 90 a/c

Latin AmericaEMB ~100 a/c

20122012--21 Market Forecast and21 Market Forecast and

Embraer Actual Fleet DistributionEmbraer Actual Fleet Distribution

22

5,265 a/c (47%)US$ 109 Bi (42%)

905 a/c (8%)US$ 16 Bi (6%) 550 a/c (5%)

US$ 8 Bi (3%)

3,415 a/c (30%)US$ 88 Bi (34%)

1,690 a/c (15%)US$ 48 Bi (18%)

23

Business Jets TrafficBusiness Jets Traffic

US/FAA Bizjet Flight Activity

European Bizjet Flight Activity

20052007

20062004

2008

2009

2010

130

140

150

160

170

180

190

200

210

220

230

Jan

Feb

Mar

Apr

May Ju

n

Jul

Aug

Sep Oct

Nov

Dec

2011

2005

2007

2006

2004

20082009

2010

25

30

35

40

45

50

55

60

Jan

Feb

Mar

Apr

May Ju

n

Jul

Aug

Sep Oct

Nov

Dec

2011

24

PrePre--owned Inventory: Recoveringowned Inventory: Recovering

Business Jets 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.

25

Embraer Defense and SecurityEmbraer Defense and Security

Light attack and advanced

training

Light attack and advanced

trainingTransport of authoritiesTransport of authorities

Modernization programsModernization programs Tactical military transportTactical military transportServices

ISR (Intelligence, Surveillance and Reconnaissance)

ISR (Intelligence, Surveillance and Reconnaissance)

Embraer Defense and Security, partners and affiliated companies

System of SystemsSystem of Systems

UAV’sUAV’s

RadarRadar

HARPIA

26

Revenues Evolution (US$ Million)

1.1 1

1.5

3.2 3.33.5

0

1

2

3

4

2006 2007 2008 2009 2010 3T11

US

$ (B

illio

n)

6.3

12.4 12.211.4

13.4

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010

(%)

670499505346227

9%

8%7%

6%

12.6%

0

100

200

300

400

500

600

700

800

2006 2007 2008 2009 2010U

S$

(Mill

ion

)0%

3%

6%

9%

12%

15%

Par

tici

pat

ion

(%

)

GAGR31%

Embraer Defense and Security ResultsEmbraer Defense and Security Results

EBIT Evolution (%) Backlog Evolution (US$ Billion)

27

Super TucanoSuper Tucano

28

Firm orders: 180 aircraft

Brazil: 99

Colombia: 25

Dominican Republic: 8

Chile: 12

Ecuador: 18

Indonesia: 8

Greystone (TACAir): 1

Undisclosed: 9

Deliveries: 156 aircraft

Addressable Market Forecast 2020 (US$ million)

Pursuing USAF Light Air Pursuing USAF Light Air

Support competitionSupport competitionTotal Market Forecast: 300 aircraft

US$ 3.5 billion

Medium-term2,000 Short-term

800

Long-term700

EMBRAER KCEMBRAER KC--390390

29

• A new tactical military transport and tanker aircraft

• First flight in 2014

• Six countries

• Letters of intent totalizing 60 aircraft

Brazil (28)

Colombia (12)

Argentina (6)

Chile (6)

Portugal (6)

Czech Rep. (2)

Total Market Forecast 2025:

700 aircraft

US$ 50+ bi

A1-MF-5M A-4

Brazilian Navy A-4

12 aircraft

Two prototype at GPX-CS

Brazilian Air Force A-1M

43 aircraft

Five received by Embraer for the modernization

Brazilian Air Force F-5M

46 a/c + 11 a/c (2nd batch)

44 already deliveredTotal Market Forecast*: 234 aircraft

US$ 1.6 billion

Addressable Market Forecast 2025 (US$ million)

Short-term527

Medium-term505

Long-term567

* Forecast considering the market for F-5 and Tucano modernization

Modernization ProgramsModernization Programs

30

New PortfolioNew Portfolio

31

HARPIA

Command and Control Systems

Onboard Systems

Simulation Systems

Electronic Warfare Systems

Intelligence Systems

Air Traffic Management and Control Systems

Command and Control Systems

Onboard Systems

Simulation Systems

Electronic Warfare Systems

Intelligence Systems

Air Traffic Management and Control Systems

JV with Elbit/AEL Sistemas where EmbraerDefense and Security has a major participation

UAS, simulators and modernization of avionics systems

JV with Elbit/AEL Sistemas where EmbraerDefense and Security has a major participation

UAS, simulators and modernization of avionics systems

Air, ground and sea surveillance radars

Remote sensing

Air, ground and sea surveillance radars

Remote sensing

Security of Critical Infrastructure

Public Security (sporting events,

cities, states)

Airport Management

Systems

SISFRON

SisGAAZ

ServicesServices

Engine and Component Maintenance

Overhaul and Modernization

Aerostructure Manufacturing and Assembling

System of SystemsSystem of Systems

UAV’sUAV’s

RadarRadar

32

Brazilian Army PrioritiesBrazilian Army Priorities

Comm

9% UAV

12%

SW

20%

Sensors

59%

SISFRON

Integrated Borders Monitoring System

Estimate: US$ 4 Billion

Comprising radars, communication networks, C4I, unmanned air vehicles (UAV) and armored vehicles

Satellite

Estimate: US$ 400 Million

Participation in the first Brazilian Geostationary Satellite

Security of Critical Infrastructure

Public Security (sporting events, cities, states)

Airport Management Systems

Satellite

Diversify Markets and Customer BaseDiversify Markets and Customer Base

33

Transport

4%

Light Attack and Combat

9%

KC-390

34%

Radar, C4I, UAV, MRO

18%

New Business14%

Sisfron, Satellite

10%

Services

11%2020

New BusinessAirport Management Systems

SisGAAz (“Blue Amazon” Integrated Management System)

Security of Critical InfrastructurePublic Security (sporting events, cities, states)

Services

11%

Modernization30%

Radar, C4I, UAV,

MRO

25%

Light Attack9%

ISR

9%

KC-390

16%

Revenues Breakdown EvolutionRevenues Breakdown Evolution

2011

34

OutlookOutlook

2011 Outlook2011 Outlook

US$ 465 million

Net Revenues

EBIT

EBIT margin

US$ 5.6 – 5.8 billion

8.0% - 8.3%

US$ 700 millionEBITDA

EBITDA margin 12.0% - 12.5%

36

Research

Development

US$ 90 million

US$ 160 million

CAPEX US$ 200 million

37

2011 Outlook2011 Outlook

OutlookOutlook

US$ Million

YTD Outlook

59 72

10990

160

200

Research Development CAPEX

Financial Results IFRSFinancial Results IFRS

38

39

Net Revenues / SG&A ExpensesNet Revenues / SG&A Expenses

Net Revenues - US$ Million

Net Revenues Gross Margin

SG&A Expenses - US$ Million

Selling Expenses G&A Expenses

Guidance 2011 - Net Revenues: US$ 5.6 - 5.8 billion

1,044

1,970

1,0561,359 1,364

21.2%22.4%

24.3%

16.8%

20.5%

3Q10 4Q10 1Q11 2Q11 3Q11

89106

94109

53

6157

64 69

103

3Q10 4Q10 1Q11 2Q11 3Q11

142

167173 172

151

40

Income from Operations / EBITDAIncome from Operations / EBITDA

EBIT EBIT Margin

Income from Operations - US$ Million

EBITDA EBITDA Margin

EBITDA - US$ Million

EBIT: US$ 465 millionEBIT Margin: 8.0% - 8.3%

2011 Outlook -EBITDA: US$ 700 millionEBITDA Margin: 12.0% - 12.5%

2011 Outlook -

132

94106

124

66

9.1%

7.8%8.9%6.7%

6.4%

3Q10 4Q10 1Q11 2Q11 3Q11

131

197

156 153188

12.5% 10.0%

14.8%

11.3%

13.8%

3Q10 4Q10 1Q11 2Q11 3Q11

41

Net Income / Free Cash FlowNet Income / Free Cash Flow

Net Income - US$ Million Free Cash Flow - US$ Million

Net Income Net Margin

126 123105 96

2

12.1%

6.2%

10.0%

7.1%

0.1%

3Q10 4Q10 1Q11 2Q11 3Q11

(112)

(38)

(126)

193

(66)

3Q10 4Q10 1Q11 2Q11 3Q11

42

Indebtedness Profile / Net CashIndebtedness Profile / Net Cash

Indebtedness Maturity Net Cash - US$ Million

Long-term Short-term

Loans Average Maturity (Years)

90% 87%

6% 5%

74%95%

94%

26%13%10%

4.5

5.0

5.76.36.1

3Q10 4Q10 1Q11 2Q11 3Q11

Total Debt 3Q11: US$ 1.8 Billion Total Cash 3Q11: US$ 2.0 Billion

618692

505406

193

3Q10 4Q10 1Q11 2Q11 3Q11

43

InvestorsInvestors’’ ReturnReturn

Pay OutEPADS

2006-2008: 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

44

723,665,044 Voting Shares723,665,044 Voting Shares

Ownership StructureOwnership Structure

September, 2011

PREVI

10.6%

BNDESPAR

5.5%

BM&FBOVESPA

OTHERS

24.3%

BLACK ROCK

5.1%

THORNBURG

INVESTMENT

6.8%

OPPENHEIMER

FUND'S

8.7%

NYSE OTHERS

32.9%

GRUPO

BOZANO

6.0%

NYSE

53.5%

BM&F

BOVESPA

46.5%

46

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

IpanemaRecycling

Corporate ValuesGreener Technology

Social Activities

47

Lean Results: ELean Results: E--Jets Final Assembly 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

48

Automation Initiatives 2010Automation Initiatives 2010

Automation initiatives continues in 2011…

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.

RI Institutional Presentation December 2011

Business

Transcript of RI Institutional Presentation December 2011