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Monday, August 4, 2008

Embraer Has Banner Quarter

Embraer recorded second quarter 2008 (2Q08) net sales of $1,635.0 million and net income of $134.4 million, equivalent to diluted earnings per ADS of $0.7427. In addition, it introduced two new executive jet programs and rolled out its Phenom 300 Very Light Jet.Net revenues for 2Q08 totaled $1,635.0 million, a 47.3 percent increase over the $1,110.0 million in net revenues for 2Q07, owing to the increase in deliveries. The increased operating income resulted in growth in net income, which totaled $134.4 million in 2Q08, compared to $67.3 million in 2Q07. The net margin increased to 8.2 percent in 2Q08, compared to 6.1 percent in 2Q07.
For the quarter ended June 30, 2008, the company maintained its high level of liquidity, and its net cash position was $524.2 million.
Embraer delivered 52 aircraft during 2Q08, an increase of 44.4 percent compared to 36 deliveries in the second quarter of 2007 (2Q07), closing out the semester with a record 97 jets delivered. This result represents a 59 percent increase over the 61 airplanes delivered during the first semester of 2007. Embraer reaffirms its estimate of delivering 195 to 200 jets in 2008, tending toward the higher figure, as well as 10 to 15 Phenom 100 jets.
Embraer's firm order backlog on June 30, 2008, reached a record high of $20.7 billion, including sales to the Executive Aviation market, the backlog for which is currently around $6.0 billion. The ERJ 170/190 jet family backlog accumulated a total of 847 firm orders and 827 options.
The gross margin for 2Q08 totaled 21.9 percent, representing an increase over the 21.5 percent gross margin for 2Q07, despite the impact of the 16.4 percent decrease in the exchange rate (R$/US$) on the portion of the company's cost stated in 'reais'. This increase in the gross margin comes from a higher number of deliveries in 2Q08, compared to 2Q07, and productivity gains achieved since the improvement of the company's industrial processes started in mid-2007. The increase in gross margin, from 20.4 percent for 1Q08 to 21.9 percent in 2Q08, is attributed to the same reasons as above and the reduction of overtime work on the production lines.
Income from operations reached $113.2 million in 2Q08, a significant increase over the $31.2 million recorded for the same period last year. The operating margin was 6.9 percent in 2Q08, representing an increase over the 2.8 percent for 2Q07 and also an increase over the operating margin of 3.6 percent for 1Q08.

Q2 Highlights
MLJ, MSJ
Embraer formally introduced its new Embraer midsize and Embraer midlight executive jet programs. The Embraer midsize and Embraer midlight jets have been named the Legacy 500 and the Legacy 450, respectively, forming the Legacy family, along side the successful Legacy 600, already in operation. An estimated $750 million will be invested in research and development for the new models, which will enter service in the second semester of 2012 and 2013, respectively.

Phenom Rollout
Embraer finished assembling the first Phenom 300 jet at its Gaviao Peixoto plant in Sao Paulo, Brazil. The rollout preceded a series of ground tests to be conducted in preparation for the jet's first flight. Two weeks after the event, the Phenom 300 successfully took to the air on its maiden flight, starting its flight test campaign. It is expected to enter service in the second semester of 2009.

Embraer Expands U.S. Operations to Production
Embraer announced that it plans to invest an estimated $50 million to establish a new facility in the United States dedicated to its executive jet business. The new 150,000-square-foot, state-of-the-art facility will house a final assembly line, the first for Embraer in the U.S, capable of producing both the Phenom 100 and Phenom 300 executive jet models, and will have a paint shop and a delivery and customer design center.

ERJ 145 Gains Russian Certification
Embraer received final approval from Russia's Interstate Aviation Committee (IAC) for the 37- to 50-seat ERJ 145 regional jet family, comprised of the 37-seat ERJ 135, the 44-seat ERJ 140, and the 50-seat ERJ 145. These regional jets now have the way open to operate in all of the CIS, which, besides Russia, includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Ukraine, and Uzbekistan.

ERJ 190/195 Certification in China
Embraer received certification from the Civil Aviation Administration of China (CAAC) for operating the ERJ 190 and ERJ 195 jets in mainland China.

New Customers
Embraer signed a contract with TRIP Linhas Aereas for the sale of five ERJ 175 jets. The deal also includes options for 10 more, plus purchase rights for another 15. It also sold two ERJ 190s to the Brazilian Government for transporting official personnel. The aircraft will be configured specifically for this purpose and will be operated by the Special Transportation Group (Grupo de Transporte Especial - GTE) of the Brazilian Air Force (Forca Aerea Brasileira - FAB), which serves the President of the Republic, Ministries, Presidential Departments, and officials from the Legislative and Judiciary Branches.

Joins Global Compact
Embraer has formally joined the Global Compact program developed by the United Nations (UN) for the purpose of mobilizing the international business community to adopt basic values for its business practices in the areas of human rights, labor relations, environmental protection, and anti-corruption.
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