2005 - 4 q04 results presentation us gaap
TRANSCRIPT
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March 18th, 2005
4Q04 and FY 2004 Earnings Results
EMBRAER
Maurício BotelhoPresident & CEO
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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.
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2004 Highlights
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Net Cash US$ Million
104
222
22
2002 2003 2004
Record Net Revenues and Net Income
Highlights 2004
US$ Million3,440.5
2,143.52,525.8
2002 2003 2004
US$ Million
222.6136.0
380.2
2002 2003 2004
9.0 10.6 10.1
13.2
17.5 17.5
2002 2003 2004
Firm Options
Net Revenues US$ Million
Net Income US$ Million
Net Cash US$ MillionBacklog US$ Billion
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Recovery of the airline sector has been slower than anticipated.
Low Cost and regional airlines are presenting business models that are competitive in the current market environment.
Several airlines acquired 50-to-110 seat jets to optimize their fleets as smaller jets are being used to reduce excess capacity, to serve thinner routes, and to increase frequency.
Airline Industry Highlights
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Commercial Aviation Highlights
Republic Airways orders 23 EMBRAER 170s and 26 options to be operated in the United Express system
Air Canada orders 45 EMBRAER 190s, 15 EMBRAER 175s and places an option for 60 additional aircraft
Hong Kong Express places an order for four EMBRAER 170s through GECAS
Finnair places an order for 12 EMBRAER 170s and eight options convertible into EMBRAER 175s or EMBRAER 190s
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Copa Airlines confirms a firm order for 10 EMBRAER 190s plus an option for 20 aircraft of the same model
US Airways files for Chapter 11 and Embraer reduces its delivery guidance to 145 aircraft
Luxair places a firm order for two ERJ 135s and an option for the same model
Harbin Embraer Aircraft Industry delivers five ERJ 145s to China Southern, the largest airline in China
Commercial Aviation Highlights
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Highlights – Corporate Aviation
Legacy Executive Improvements:
• Increase of operating ceiling to 41,000 feet
• Authorization to operate at London City Airport(LCY)
• Expansion of its landing and takeoff envelope at airports located at up to 8,500 feet above sea level
• New interior configuration
• Revised maintenance plan resulting in a 5% cost reduction
• Addition of wireless fidelity technology (Wi-Fi) offering high-speed data connectivity around the globe
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Embraer, as part of the Lockheed Martin team, wins the Aerial Common Sensor project awarded by the US Army, which will be based on the platform of the ERJ 145. Potential value of the 20-yearprogram is US$ 7 billion.
Highlights – Defense Market
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Groundbreaking of Embraer’s new assembly facility in Jacsksonville, FL. The facility will be dedicated to US Homeland and Defense projects, including ACS.
Initial of the the first EMB 145 AEW&C aircraft to the Greek Air Force, with NATO conditions.
Two EMB 145 MP and one EMB 145 AEW&C were delivered to the Mexican Air Force, including the flight control system.
TAME Línea Aérea from Ecuador, signs an MoU for two EMBRAER 170s, one EMBRAER 190 and four options.
Highlights – Defense Market
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Highlights – Customer Services
Embraer acquires 65% of OGMA, one of the largest MRO facilities in Europe
Expansion of Embraer Aircraft Maintenance Services in Nashville, TN
Hawker Pacific to provide logistic support to the EMB 120 and EMB 110 fleet in Australia and the Pacific region
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The EMBRAER 170 receives CTA, FAA and EASA certification. First deliveries are made to LOT, US Airways and Alitalia.
First flight of the EMBRAER 190 and EMBRAER 195.
The EMBRAER 175 is certified by the CTA and is scheduled to receive certification from the Canadian and European Authorities in the first half of 2005.
Highlights - Industrial
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Results & Performance
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Jet Deliveries
59
96
160 161
131
101
148
1998 1999 2000 2001 2002 2003 2004
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US$ million
Net Revenues and Gross Margin
Annual growth
77% 36% 50% 6% -14% -15% 60%
2,525.82,143.5
3,440.5
1,353.51,837.3
2,762.2 2,927.0
28.2%32.0%
39.6% 39.4% 37.7%
32.0%34.1%
1998 1999 2000 2001 2002 2003 2004
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Revenue by Segment Revenue by Market
Net Revenue by Segment and Market
Brazil8.3%Others
4.2%
Europe11.2%
North America 76.3%Commercial
Aviation; 75.0%
Defense; 10.6%
Customer Services and Others; 7.3%
Corporate Aviation;
7.1%
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US$ Million
Income from Operations
250% 114% 26% 41% -28% -41% 105%
AnnualVariation
543.9
171.7368.0
462.1651.4
469.6264.8
15.8%
12.7%
20.0%
16.7%
22.3%
18.6%
12.3%
1998 1999 2000 2001 2002 2003 2004
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145.3
234.5
320.7 328.4
222.6
136.0
380.2
11.10%
6.3%
8.8%
11.2%10.7%
12.8%
16.7%
1998 1999 2000 2001 2002 2003 2004
Net Income
US$ Million
4,618% 61% 37% 2% -32% -39% 180%
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Balance Sheet
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Suppliers
US$ Million
404.1
540.0
661.4
802.0
556.5
4Q03 1Q04 2Q04 3Q04 4Q04
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US$ Million
Inventories
1,2731,247
1,3901,428
1Q04 2Q04 3Q04 4Q04
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US$ Million
Trade Accounts Receivable
356
465 472
703 686
4Q03 1Q04 2Q04 3Q04 4Q04
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Accounts Receivable Breakdown
166 194 157 189 157
190271 315
514 529
4Q03 1Q04 2Q04 3Q04 4Q04
Others Commercial Airline Market
US$ Million
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Long Term 62%
Short Term 38%
Total Debt of US$ 1,338.7 Million
• Average cost in R$ = 12.4 %p/a
• Average cost in US$ = 5.4% p/a
Indebtedness
Foreign Currency 75%
Brazilian Currency 25%
Long-Term Loan Average Maturity: 3 years and 4 months
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Indebtedness Maturity
1,339
513
200
298
167160
Total Short Term 2006 2007 2008 Beyond2009
US$ million
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US$ Million
Net Cash (Debt) Position
222178
304
220
22
4Q03 1Q04 2Q04 3Q04 4Q04
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Backlog and Delivery Forecast
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ERJ 145 Family Orderbook
103
66
20
17
Firm Backlog
7981237336901Total
618998314684ERJ 145
741142094ERJ 140
1061252123ERJ 135
DeliveriesTotalOptionsFirmDecember/2004
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15---15EMBRAER 175
297
15
155
112
Firm
Backlog
46755427343Total
-352015EMBRAER 195
-385230155EMBRAER 190
46335177158EMBRAER 170
DeliveriesTotalOptionsFirmDecember/2004
EMBRAER 170/190 Orderbook
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9.0 10.110.610.711.46.44.1
17.517.5
13.212.712.7
11.3
1998 1999 2000 2001 2002 2003 2004
Firm Options
Backlog
US$ Billion
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Jet Deliveries Forecast
59
96
160 161
131
101
148 145 145
1998 1999 2000 2001 2002 2003 2004 2005E 2006E
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Projected Deliveries
60%
36%
15%
31%
50%73%
9% 14% 12%
2004 2005E 2006E
ERJ 145 Family EMBRAER 170 Family Corporate Aircraft
