EMBRAER DAY NYSE

JANUARY 2019

NELSON SALGADO – CFO

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.
4
|

UPDATE
STRATEGIC PARTNERSHIP

This information is property of Embraer and cannot be used or reproduced without written permission.
 EMBRAER / BOEING PARTNERSHIP
THE STRATEGIC PARTNERSHIP INCLUDES:
CREATION OF THE COMMERCIAL AVIATION JOINT VENTURE (OWNERSHIP: 20% EMBRAER / 80% BOEING)
CREATION OF THE KC-390 JOINT VENTURE (OWNERSHIP: 51% EMBRAER / 49% BOEING)
CREATION OF LONG TERM OPERATIONAL CONTRACTS RELATED TO ENGINEERING SERVICES, INTELLECTUAL PROPERTY,
R&D, SITES ACCESS, SUPPORT AND SUPPLY CHAIN

This information is property of Embraer and cannot be used or reproduced without written permission.
5 INVESTOR RELATIONS
 MAIN SITES OVERVIEW
FINAL ASSEMBLY SITES INDUSTRIAL SITES
São José dos Campos Melbourne São José dos Campos Gavião Peixoto EAST

Évora Eugênio de Melo Botucatu (BOT)

This information is property of Embraer and cannot be used or reproduced without written permission.
(EGM)

Gavião Peixoto Jacksonville

ELEB

NEW EMBRAER COMMERCIAL JV

6 INVESTOR RELATIONS
 TRANSACTION RATIONALE
PARTNERSHIP COMBINES BOEING’S SALES, MARKETING AND PROCUREMENT CAPABILITIES WITH EMBRAER’S LONG
HISTORY OF INNOVATION AND COST EFFICIENT DEVELOPMENT
• BETTER EQUIPS BOTH PARTIES TO ADDRESS THE EVOLVING GLOBAL COMPETITIVE LANDSCAPE

STRENGTHENS THE E-JET PLATFORM AND UNLOCKS ITS FULL POTENTIAL

• LEVERAGES BOEING’S GLOBAL SUPPLY CHAIN, CUSTOMER BASE AND SALES NETWORK
• ENHANCES CUSTOMER VALUE PROPOSITION WITH MARKET LEADING 70 - 130 SEAT OFFERING

MORE EFICIENT EXECUTIVE JET AND DEFENSE OPERATIONS

This information is property of Embraer and cannot be used or reproduced without written permission.
• FOCUSED EXECUTION AND FINANCIAL CAPACITY FOR FUTURE INVESTMENTS
• RETAINS END-TO-END ENGINEERING AND OPERATIONAL CAPABILITIES ENHANCED BY THE PARTNERSHIP WITH BOEING
• FORMATION OF JOINT VENTURE TO ACCELERATE KC-390 SALES OUTSIDE OF BRAZIL
• STRONG BALANCE SHEET WITH FCF SUPPLEMENTED VIA MANDATORY DIVIDEND PAYOUTS FROM COMMERCIAL AVIATION,
ACCORDING TO THE DIVIDEND POLICY

SIGNIFICANT VALUE CREATION AND ENHANCED RETURN OF CAPITAL

• POTENTIAL REVENUE SYNERGIES DRIVEN BY CONSOLIDATED PORTFOLIO AND CUSTOMER ACCESS
• EXPECTED COSTS SYNERGIES DRIVEN BY SUPPLY CHAIN, ENGINEERING, MANUFACTURING, AND VERTICAL INTEGRATION
• SPECIAL DIVIDEND (APPROX. $1.6BN) TO EMBRAER’S SHAREHOLDERS, SUBJECT TO CONFIRMATION OF CERTAIN ELEMENTS,
INCLUDING THE RESULTS AT THE END OF THE FISCAL YEAR
7 INVESTOR RELATIONS
 KEY OPPORTUNITIES FOR EMBRAER
• PROCUREMENT AND SUPPLY CHAIN OPTIMIZATION THROUGH LEVERAGING BOEING’S
PURCHASING VOLUME AND SCALE
COST • EFFICIENCIES FROM COMBINED SALES, MARKETING, CUSTOMER SUPPORT, SERVICE FOOTPRINT
SYNERGIES
• ENHANCED VERTICAL INTEGRATION AND STRENGTHENED MANUFACTURING CAPABILITIES

• SHARED ENGINEERING RESOURCES TO STREAMLINE DEVELOPMENT AND INNOVATION

This information is property of Embraer and cannot be used or reproduced without written permission.
• REINFORCES THE E-JETS’ POSITION AS GLOBAL MARKET LEADER AND PROVIDES ACCESS TO
NEW MARKETS AS PART OF A BROADER PORTFOLIO OFFERING
POTENTIAL
REVENUE • NEW PARTNERSHIP TO UNLOCK THE GLOBAL SALES POTENTIAL OF THE KC-390 WITH
SYNERGIES INCREASED ACCESS TO THE U.S. AND OTHER INTERNATIONAL MARKETS

• LEVERAGE BOEING’S SALES & MARKETING, GLOBAL REACH AND AFTERMARKET SUPPORT

ESTIMATED ANNUAL COST SYNERGIES:

$150 MILLION AT COMMERCIAL AVIATION + $50 MILLION AT EXECUTIVE JETS AND DEFENSE
8 INVESTOR RELATIONS
 NEW TERMS: DEC 17 VS. JUL 5 ANNOUNCEMENTS
ENTERPRISE VALUE FOR 100% OF THE COMMERCIAL AVIATION JV
DEC 17
JUL 5
+US$0.51BN
BOEING TO ACQUIRE 80% STAKE IN
4.75 5.26 THE COMMERCIAL AVIATION JV AT
US$ BN US$ BN AGGREGATE VALUE OF US$4.2 BILLION

PROCEEDS NET OF SEPARATION COSTS ESTIMATED AT ~US$3 BILLION

This information is property of Embraer and cannot be used or reproduced without written permission.
• ANY POTENTIAL REDUCTION IN TAX COSTS TO BE SHARED BY EMBRAER AND BOEING EQUALLY

EMBRAER WILL HAVE PUT OPTION PROTECTION FOR ITS 20% REMAINING STAKE
• AT DEAL PRICE ADJUSTED BY US INFLATION DURING THE 10-YEAR LOCKUP PERIOD
• AT FAIR MARKET VALUE AFTER 10 YEARS

KC-390 JV
• EMBRAER WILL OWN A 51% STAKE AND BOEING WILL OWN A 49% STAKE IN THE KC-390 JV
• KC-390 JV TO PROMOTE NEW MARKETS AND APPLICATIONS FOR THE KC-390 MULTI-MISSION AIRCRAFT
• EMBRAER AND BOEING TO COLLECTIVELY MAKE CASH AND ASSET CONTRIBUTIONS INTO THE KC-390 JV
• PROCUREMENT SYNERGIES IN THE KC-390 SERIES PRODUCTION
9 INVESTOR RELATIONS
 CARVE OUT DETAILS: NET ASSET VALUE
COMMERCIAL JV NUMBERS, BASED ON 2Q18 EMBRAER FINANCIALS

Total Operating Assets Total Operating Liabilities Shareholder’s Equity

(Net Asset Value)

3.5 1.4 2.1

This information is property of Embraer and cannot be used or reproduced without written permission.
– =
US$ BN US$ BN US$ BN

Note: all debt related to commercial aviation business will be transferred with the equivalent amount in cash (Commercial JV net debt at closing = 0)

10 INVESTOR RELATIONS
 PARTNERSHIP ECONOMICS ESTIMATED NET
VALUE OF
US$ BILLION COMMERCIAL
AVIATION OF
LESS ESTIMATED NET ~US$4.5BN
$28.6/ADR $5.7/ADR TRANSACTION
LESS PROCEEDS OF ~$24.5/ADR
$22.8/ADR ~$7/ADR ~US$3BN
$1.1
$0.4
~$16/ADR
~$1.2
$1.1

This information is property of Embraer and cannot be used or reproduced without written permission.
$5.26 IF BELOW US$1.2BN,
LOWER TAX TO BE SHARED
$4.2 50% BOEING/ 50% EMBRAER
~$3.0 ~$3.0

COMMERCIAL AVIATION RETAINED 20% STAKE 80% STAKE ASSUMED TAX NET PROCEEDS +
BASE PURCHASE PRICE IN COMMERCIAL JV IN COMMERCIAL PAYMENT AND NET PROCEEDS RETAINED 20% STAKE
(100% STAKE) (EXCLUDING SYNERGIES) AVIATION SOLD SEPARATION COSTS (INCL. SYNERGIES)

11 INVESTOR RELATIONS
 POTENTIAL USE OF PROCEEDS
US$ BILLION
~$1.0 BN AT CLOSE
NET CASH

LESS APPROXIMATELY
~$16/ADR ~$7.5/ADR ~US$1.6BN IN
Less: EXTRAORDINARY
$7.1/ADR DIVIDENDS
~$1.4

This information is property of Embraer and cannot be used or reproduced without written permission.
~$8.5/ADR

~$3.0

~$1.6

CASH RETENTION POTENTIAL DISTRIBUTION

NET PROCEEDS
($1BN NET CASH) TO EMBRAER SHAREHOLDERS

12 INVESTOR RELATIONS
 SIGNIFICANT VALUE FOR SHAREHOLDERS

STRONGER UPSIDE FROM ROBUST

SPECIAL
EXECUTIVE AND STAKE IN BALANCE
DISTRIBUTION TO
DEFENSE COMMERCIAL SHEET AT CLOSE
SHAREHOLDERS
BUSINESSES AVIATION
~$1.0 BILLION NET

This information is property of Embraer and cannot be used or reproduced without written permission.
BENEFIT FROM CASH POSITION
PROCUREMENT
SYNERGIES, SCALE +
SYNERGIES AND MORE
~$1.6 BILLION TO AND BOEING’S EXISTING BONDS
EFICIENT OPERATIONS
IMMEDIATELY MARKETING TRANSFER TO
WITH HIGHER MARKET
UNLOCK CAPABILITY COMMERCIAL JV
PENETRATION FROM
SHAREHOLDER VALUE KC-390 JV + +
(100% CONSOLIDATED ABILITY TO MONETIZE CAPITAL STRUCTURE
AT EMBRAER) IN THE LONG TERM TO SUPPORT NEW
AT FMV GROWTH INITIATIVES

13 INVESTOR RELATIONS
 TRANSACTION TIMELINE
TRANSACTION STILL SUBJECT TO APPROVALS FROM SHAREHOLDERS AT AN EXTRAORDINARY MEETING
AND ANTITRUST AUTHORITIES

IF ALL APPROVALS ARE OBTAINED ON TIME THE TRANSACTION WOULD CLOSE AT THE END OF 2019

2018 2019
DEC JAN FEB … AUG … DEC

This information is property of Embraer and cannot be used or reproduced without written permission.
GOLDEN SHARE
ANALYSIS 10TH

GOLDEN SHARE
APPROVAL

SHAREHOLDERS
MEETING
ANTI-TRUST ANALYSIS AND DEAL
CARVE OUT CLOSE

*Tentative timeline subject to change

14 INVESTOR RELATIONS
15
EMBRAER OUTLOOK

This information is property of Embraer and cannot be used or reproduced without written permission.
 2018 OUTLOOK
REVISION
COMMERCIAL EXECUTIVE DEFENSE & SERVICES &
AVIATION AVIATION SECURITY SUPPORT

NET REVENUES 5.4 – 5.9

2.3 – 2.45
1.35 – 1.5 0.8 – 0.9
0.9 – 1.0
US$ BILLION 5.1 1.1 0.6

This information is property of Embraer and cannot be used or reproduced without written permission.
105 - 125
DELIVERIES 85 - 95
91

EBIT* EBITDA* FCF INVESTMENTS

270 - 355 540 – 650 (100) 50 Research
US$ MILLION 200 480
550 300 Development
(200) 200 Capex

5% - 6% 10% - 11% 300

MARGIN
4% 9%
16 INVESTOR RELATIONS * EXCLUDING SPECIAL ITEM OF US$127MM RELATED TO KC-390 INCIDENT
 PRELIMINARY 2019 OUTLOOK
(100% COMMERCIAL + EXECUTIVE + DEFENSE + SERVICES)

NET REVENUES
US$ BILLION 5.3 – 5.7

DELIVERIES
85 – 95 90 – 110 2 10
E-JETS BIZJETS KC-390 SUPER TUCANO

This information is property of Embraer and cannot be used or reproduced without written permission.
EBIT MARGIN BREAKEVEN EXCLUDING GAIN ON SALE OF JV STAKE
INCLUDING SEPARATION COSTS

DEAL CLOSE APPROX. 1.0 NET CASH

APPROX. 1.6 EXTRAORDINARY DIVIDEND
US$ BILLION

17 INVESTOR RELATIONS
 NEW EMBRAER
2020 PRELIMINARY VIEW
(100% EXECUTIVE + DEFENSE; EXCLUDING 20% STAKE IN COMMERCIAL JV)

NET REVENUES
US$ BILLION 2.5 - 2.8

This information is property of Embraer and cannot be used or reproduced without written permission.
EBIT MARGIN 2% - 5%

FCF* BREAKEVEN

* Does not include dividends from 20% stake at Commercial Aviation JV

18 INVESTOR RELATIONS
 NEW EMBRAER: TOP LINE
(100% EXECUTIVE + DEFENSE; EXCLUDING 20% STAKE IN COMMERCIAL JV)

US$ BILLION
POTENTIAL CATALYSTS FOR
GROWTH BEYOND 2020
• KC-390 JOINT VENTURE
• SUPER TUCANO OPPS.

This information is property of Embraer and cannot be used or reproduced without written permission.
• GROWING SERVICES REVENUES
~$2.8 • LEADERSHIP AT LIGHT/MIDSIZE
~$2.5 BIZJETS
~$2.2 • POTENTIAL BIZJET MARKET
IMPROVEMENT
• NEW DEFENSE PROGRAMS

19 INVESTOR RELATIONS
 NEW EMBRAER: OPERATING MARGIN (%)
(100% EXECUTIVE + DEFENSE; EXCLUDING 20% STAKE IN COMMERCIAL JV)

POTENTIAL CATALYSTS FOR

GROWTH BEYOND 2020
• BIZJET VALUE STRATEGY
• KC-390 FROM DEVELOPMENT TO
PRODUCTION PHASE
~5%

This information is property of Embraer and cannot be used or reproduced without written permission.
• PROCUREMENT AND SCALE GAINS
~2% FROM BOEING PARTNERSHIP
• EMBRAER EFFICIENCY PROGRAM
• ORGANIZATION REDESIGN

~0%

20 INVESTOR RELATIONS
 NEW EMBRAER IS A VALUABLE ASSET

COMMERCIAL EXECUTIVE DEFENSE &

LIQUIDITY
AVIATION JV JETS SECURITY
(100%)
(20%) (100%) (100%)

• LEADERSHIP IN • NEW PORTFOLIO OF • KC-390 JOINT • STRONG CASH

This information is property of Embraer and cannot be used or reproduced without written permission.
REGIONAL MARKET MIDSIZE JETS VENTURE TO OPEN POSITION
• UNIQUE SALES AND • LEADERSHIP IN NEW MARKETS • ZERO LEVERAGE
MARKETING LIGHT SEGMENT • SUPER TUCANO NEW WITH ~$1.0BN IN
PENETRATION • PROCUREMENT OPPORTUNITIES NET CASH
• PROCUREMENT AND GAINS/SYNERGIES • PROCUREMENT • PUT OPTION AT
SCALE GAINS • FOCUS ON VALUE GAINS/SYNERGIES COMMERCIAL JV
• COST SYNERGIES CREATION AND • BRAZILIAN DEFENSE • ABILITY TO RETURN
• VERTICALIZATION PROFITABILITY HOUSE INCREMENTAL CASH
OPPORTUNITIES (NOT MKT SHARE) (NEW PROGRAMS) TO SHAREHOLDERS

21 INVESTOR RELATIONS