SAO JOSE DOS CAMPOS, Brazil, Aug. 11 /PRNewswire-FirstCall/ -- Embraer (BOVESPA: EMBR3; NYSE: ERJ), the world's leading manufacturer of commercial jets up to 110 seats, recorded in the second quarter of 2006 net sales of US$1,020.9 million and net income of US$139.1 million, equivalent to diluted earnings per ADS of US$0.75. The firm order backlog as of June 30, 2006 totaled US$10.2 billion.
During the second quarter of 2006, Embraer concluded its capital restructuring, considered to be one of the most important events since the Company was privatized in 1994. Embraer believes that the restructuring provides the foundation for its growth sustainability and enhances its ability to finance expansion programs through the capital markets. In addition, the new capital structure strengthens management relationship with shareholders and is based on the adoption of the highest level of corporate governance standards. Therefore, as of June 5, 2006 Embraer common shares started trading on the Novo Mercado segment of the BOVESPA under the ticker symbol "EMBR3," and its ADRs started trading on the NYSE under the symbol "ERJ," with each ADR of the Company representing four common shares.
Other highlights of the second quarter of 2006 include the expansion of our executive aviation product portfolio with the launch of the ultra-large business jet Lineage 1000, the sale of 50 Phenom 100 very light jets to JetBird, and the certification of the EMBRAER 195, the largest commercial airliner ever built by Embraer.
Our firm order backlog remained stable at US$10.2 billion at June 30, 2006, including US$1.25 billion firm orders for the executive aviation business. In addition, firm orders for the recently launched Phenom 100 and Phenom 300 reached more than 235 units at the end of the quarter, a strong indicator of the market acceptance of our new business jets, and the EMBRAER 170/190 order book totaled 455 firm orders and 442 options.
A total of 36 aircraft were delivered during the second quarter of 2006, contributing to a net revenue of US$1,020.9 million, compared to 30 deliveries and a net revenue of US$812.4 million in the same period last year. Nevertheless, the learning curve of the EMBRAER 190 and EMBRAER 195 and the appreciation of the real continue to impact our gross margin, which totaled 28.2% at the end of the second quarter of 2006, compared to 31.4% in the same period last year.
Despite the appreciation of the real against the U.S. dollar, income from operations reached US$134.9 million, representing a 36.4% increase compared to income from operations for the same period last year. This increase is mainly due to the recognition of US$57.0 million in research and development revenue related to an agreement reached between Embraer and Kawasaki Heavy Industries Ltd. (KHI), in which Embraer will start assembling the EMBRAER 190 and EMBRAER 195 wings in order to meet the growing demand for these types of aircraft.
Higher operating results led to an increase in net income and net margin, which totaled a record US$139.1 million and 13.6% in 2Q06 compared to US$83.0 million and 10.2% in 2Q05, respectively.
It is important to note that during 2Q06 net cash(1) increased by US$224.4 million to US$526.9 million, a strong indicator of the Company's high level of liquidity.
(1) Net cash = Cash and cash equivalents + Temporary cash investments -
Loans
Income Statement Highlights
The following table presents items of Embraer's consolidated income statement for the three months ended June 30, 2005 and 2006 (2Q05 and 2Q06) and for the three months ended March 31, 2006 (1Q06).
(Unaudited)
Income Statement 1Q06 2Q05 2Q06
In US$ million, except % and earnings per ADS
Net Sales 808.3 812.4 1,020.9
Gross Profit 231.9 255.3 288.3
Gross Margin 28.7% 31.4% 28.2%
Selling, general administrative,
other expenses (145.7) (119.9) (152.9)
Research and development (49.7) (26.1) 12.9
Employee profit sharing - (10.4) (13.4)
Income from operations 36.5 98.9 134.9
Operating margin 4.5% 12.2% 13.2%
Net financial income (expenses) 32.0 (1.1) 26.9
Foreign exchange gain (loss), net 1.3 (1.0) (4.2)
Other non-operating income (expense),
net 3.6 (1.4) 10.3
Income before income taxes 73.4 95.4 167.9
Income tax expense (8.0) (14.0) (25.7)
Minority interest (0.1) 1.6 (3.1)
Net income 65.3 83.0 139.1
Net margin 8.1% 10.2% 13.6%
Earnings per ADS - basic 0.3730 0.4758 0.7532
Earnings per ADS - diluted 0.3713 0.4733 0.7500
For a full version of this press release visit http://www.embraer.com/
Conference Call Information
Embraer will hold a conference call to review its 2Q06 Results in US GAAP on August 14, 2006.
English (US GAAP) Portuguese (BR GAAP)
10:00 am (NY Time) 8:00 am (NY Time)
11:00 am (SP Time) 9:00 am (SP Time)
Dial-in Numbers Dial-in Number
(1-800) 860-2442 (+55) 11-4688-6301
(1-412) 858-4600 Code: Embraer
Code: Embraer
Replay Number Replay Number
(+55) 11 4688-6225 (+55) 11 4688-6225
Code: 909 Code: 865
The conference call will also be broadcast live over the web at http://www.embraer.com/
