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Third Quarter 2007 Results
November 12, 2007
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.
Third Quarter 2007 - Summary
• Deliveries have shown improvements since the beginning of the year, as a result of actions taken regarding the supply chain and industrial process. On the 1Q07 25 aircraft were delivered, on the 2Q07 36 aircraft were delivered and 3Q07 deliveries came to 47 jets, bringing the total of 108 jets up to the end of 3Q07;
• In the beginning of 3Q07, Embraer started an internal plan to improve its entrepreneurialexcellence and optimize its processes called Programa de Excelência Empresarial Embraer (P3E);
• The third shift implementation is almost completed and on the Company view, man/hour labor costs, overtime work and training costs it will be gradually reduced;
• During 3Q07 the Company achieved the production of 13 aircraft per month of theEMBRAER 170/190 family and keeps moving towards its goal of producing 14 aircraft of that family per month by the end of the year.
• Backlog reached record high of US$17.2 billion;
• During 3Q07, Embraer signed a contract for the sale of 20 E-Jets to Air France / KLM group;
Third Quarter 2007 - Summary
• The first experimental Phenom 100 aircraft performed its maiden flight during thethird quarter and reached an important step on its development process.
• Phenom family has accumulated more than 500 Firm Orders;
• On 3Q07 an extraordinary event related to a favorable decision to the Company in regard to a tax dispute over the calculation basis of the Brazilian COFINS tax, resulted in the reversal of a provision in the amount of US$ 156.6 million, recorded in the “Other operating income (expense), net”. When we analyze the operating results without the extraordinary event, we get to an income from operations of US$ 73.7 million that represents an operating margin of 5.2% for the period, an increase when compared to 2Q07 when the income from operations was US$ 31.2 million and an operating margin of 2.8%. This improvement can be partially explained by the higher number of deliveries combined with the results of the internal plan to optimize some of the processes of the Company.
• Regarding recent news reports issued by the press concerning BRA TransportesAéreos, Embraer informs that it is carefully following the subject, as it unfolds, and that any developments which may arise will not have a negative effect on delivery forecasts previously disclosed by the Company.
Third Quarter 2007 - Summary
• Embraer announced that it will file with the U.S.Securities and Exchange Commission an amended annual report on Form 20-F/A to restate its financial statements for the years ended December 31, 2004, 2005 and 2006 included in itsForm 20-F for the year ended December 31, 2006 and filed with the SEC, on April 23, 2007.The restatement will reflect certain adjustments previously disclosed in Embraer’s report on Form 6-K submitted to the SEC on August 15, 2007, whichincluded Embraer’s results for the six-month period ended June 30, 2007.
Results & Performance
Jet Deliveries
30
37
25
36
47
3Q06 4Q06 1Q07 2Q07 3Q07
Net Revenues and Gross Margin
US$ million
877
1,060
832
1,110
1,428
24.5%22.7%
21.8% 21.8%
26.2%
3Q06 4Q06 1Q07 2Q07 3Q07
Net Revenue by Segment
3Q06 3Q07
Defense and
Government
1%
Executive
Aviation 21%
Customer
Services and
Others 14%
Commercial
Aviation 64% Executive
Aviation 15%
Defense and
Government
4%Commercial
Aviation 69%
Customer
Services and
Others 12%
EBIT
52
84
1531
230
7,9%
2,8%
1,9%
6,0%
16,1%
3Q06 4Q06 1Q07 2Q07 3Q07
Income f rom Operations EBIT Margin
EBITDA
US$ Million
6792
34 51
247
17.3%
4.6%4.1%
7.6% 8.7%
3Q06 4Q06 1Q07 2Q07 3Q07
Ebitda Ebitda Margin
Net Income
US$ Million
124
26
62
195
67
11.5%
7.0%
3.1%
6.1%
13.6%
3Q06 4Q06 1Q07 2Q07 3Q07
Net Income Net Margin
Inventories
US$ Million
1,8822,047
2,3172,621 2,681
3Q06 4Q06 1Q07 2Q07 3Q07
Net Cash (Debt) Position
US$ Million
507
416
217
128
450
3Q06 4Q06 1Q07 2Q07 3Q07
Loans
Total Debt of US$ 1,803.2 Million
• Average cost in R$ = 7.93%p/a
• Average cost in US$ =Libor + 1.63% p/a
Long-Term Loan Average Maturity: 3 years and 7 months
Short
Term
39%
Long
Term
61%
Brazilian
Currency
46%
Foreign
Currency
54%
Loans Maturity
US$ million
706
346
543
10966 1.803
33
Total Short-
term
2008 2009 2010 2011 after
2011
Backlog and Delivery Forecast
ERJ 145 Family Order Book
51
51
-
-
FirmBacklog
8641,046131915Total
682864131733ERJ 145
7474-74ERJ 140
108108-108ERJ 135
DeliveriesTotalOptionsFirm
Orders
EMBRAER 170/190 Family Order Book
42101176552EMBRAER 195
420
292
60
26
Firm
Backlog
2921,468756712Total
99823432391EMBRAER 190
46242136106EMBRAER 175
137286123163EMBRAER 170
DeliveriesTotalOptionsFirm Orders
Backlog
US$ Billion
14.8 15.0 15.6 17.2
14.918.2 18.2
22.924.3
13.3
3Q06 4Q06 1Q07 2Q07 3Q07
Firm Options
Jet Deliveries Forecast
* Includes 15/20 Phenom 100
130141148
101
131
161160
195/205
165/170
2000 2001 2002 2003 2004 2005 2006 2007E 2008E*
108
Investor RelationsPhone: + 5512 [email protected]
