Embraer S.A. Announces its 1st Quarter Results

São José dos Campos, April 29, 2013 – (BM&FBOVESPA: EMBR3, NYSE: ERJ). The Company’s operating and financial information is presented, except where otherwise stated, on a consolidated basis in United States dollars (US$) in accordance with IFRS. The financial data presented in this document as of and for the quarters ended March 31, 2012 (1Q12), December 31, 2012 (4Q12) and March 31, 2013 (1Q13), are derived from the unaudited financial statements, except where otherwise stated.

REVENUES AND GROSS MARGIN
As a result of the lower number of aircraft deliveries and product mix, 1Q13 Revenues decreased to US$ 1,085.9 million, compared to US$ 1,152.1 million in 1Q12. During 1Q13, the mix of products and revenues from the different business segments, coupled with the wage increase at the end of 2012, contributed to a lower gross margin profile. Furthermore, during 1Q13, the Company had a non-recurring payroll expense resulting from the annual settlement between the labor union and the Company, which was finalized in February 2013. Considering that the annual salary adjustment occurs in September of each year and that the 6.25% adjustment was slightly above the wage increase provided in September 2012, the Company paid approximately US$ 6 million related to the retroactive amount for the period from September 2012 to February 2013. The majority of this amount was accounted for under direct labor (approximately $5 million), therefore affecting the gross margin for the period, with the remainder being accounted for under Operating expenses, for labor related to Administrative, Selling and Research expenses. These effects were partially offset by a more favorable exchange rate, as well as the Brazilian Government’s stimulus package and as a result the 1Q13 gross margin totaled 22.2%, compared to 23.1% in 1Q12.

EBIT
EBIT and EBIT margin in 1Q13 were US$ 39.6 million and 3.6%, respectively, compared to EBIT margin of 7.4% in 1Q12. It is important to mention that a portion of the operating expenses, primarily labor in Brazil, are Real denominated and the previously mentioned 6.25% increase in wages impacted these expenses. Furthermore, this wage increase was offset by the stimulus package implemented in Brazil, as well as the appreciation of the US Dollar against the Real (during 1Q13, the average US Dollar to Real exchange appreciated 12.9% when compared to 1Q12). Research expenses in 1Q13 was US$ 5.4 million higher than in 1Q12 and totaled US$ 21.4 million, in line with the 2013 outlook of US$ 100 million provided by the Company. Selling expenses reached US$ 108.1 million and remained stable when compared to 1Q12. Administrative expenses for 1Q13 decreased to US$ 53.3 million when compared to the US$ 70.6 million for 1Q12. The previously mentioned stimulus package and more favorable exchange rate, as well as the Company’s specific efforts to reduce its Administrative expenses, all contributed to this important reduction.
Other operating (expense) income, net totaled negative US$ 18.4 million in 1Q13, compared to positive US$ 13.6 million in 1Q12, which also contributed to the lower EBIT margin in 1Q13. This change of approximately US$ 32 million comes primarily as a result of the significantly lower contractual fines charged from customer due to cancelations during the period (approximately US$15 million less than in 1Q12), due to the lower level of executive jet cancellations, as well as a non-recurring provision of approximately US$ 9 million that the Company made during the 1Q13. This provision is related to an outstanding labor lawsuit, for which the Company has already made settlements and is awaiting final outcome of a dispute for the total amount due, hence the provision which covers all potential expenses related to this process. This lawsuit is still on-going and there is no cash impact to the Company until a final outcome is reached and there is no way of predicting when this may occur.

Considering the typically lighter Revenues and Operating profit generation of the first quarter, which is 2

1st Quarter 2013 Results in IFRS
expected as part of the Company’s normal business cycle, the Company re-affirms its 2013 Revenues and Margin Guidance provided to the market in February.

NET INCOME
Net income attributable to Embraer and Earnings per ADS, for 1Q13, were US$ 30 million and US$ 0.1651, respectively. The Net margin reached 2.8%, compared to 9.1% in 1Q12 and the tax rate for 1Q13 was 7%. The difference in Net income comes primarily as a result of the lower operating income, coupled with a higher Income tax expense for the period, which totaled US$ 2.3 million in 1Q13, compared to an Income tax income of US$ 27.6 million in 1Q12, as a result of deferred income taxes generated on non-monetary assets.

MONETARY BALANCE SHEET ACCOUNTS AND OTHER MEASURES
The Company’s Net cash position for the period decreased by US$ 210.5 million, reaching US$ 98.2 million, due to less operating net cash in 1Q13 than in 4Q12. The decrease in Net cash comes mainly as a consequence of an increase in the Company’s Inventories and PP&E, which were partially offset by an increase in Trade accounts payable and Advances from customers.

Considering the above, Net cash used by operating activities in 1Q13 was negative US$ 369.6 million. As the Company expects to meet its 2013 aircraft delivery and revenue guidance, which will lead to a decrease in Inventories, Operating cash flow is expected to improve through the remainder of the year.
in millions of U.S.dollars

Additions to PP&E totaled US$ 50.4 million in 1Q13. Total PP&E includes spare parts pool programs, aircraft under lease or available for lease and CAPEX. In 1Q13 CAPEX accounted for US$ 44.9 million of the US$ 50.4 million in additions to PP&E. The Company also added a total of US$ 67.6 million to Intangible assets in 1Q13, related to all investments made for product development throughout 1Q13, and there were no contributions from suppliers during the period. The following table outlines the detailed investments in PP&E and R&D.

million in 4Q12. This increase comes primarily from an increase in Long-term loans, which reached US$ 2,092.2 million in 1Q13, compared to US$ 1,730.2 million in 4Q12. Short-term loans increased US$ 34 million and totaled US$ 370.3 million in 1Q13. Furthermore, as a consequence of the increase in total debt, the Company’s total cash position also increased US$ 185.5 million and totaled US$ 2,560.7 million in 1Q13.

Considering the Company’s current debt profile, the average loan maturity reached 5.1 years and is in line with the Company’s business cycle. Furthermore, the cost of Dollar denominated loans decreased slightly from 6.1% to 6% p.a. and the cost of Real denominated loans increased from 4.7% to 5.3% p.a. The Adjusted EBITDA to financial expenses (gross) ratio decreased

1st Quarter 2013 Results in IFRS
in 1Q13, compared to 4Q12, from 7.49 to 6.83. As of 1Q13, 36.5% of total debt was denominated in Reals.

Embraer’s cash allocation management strategy continues to be one of its most important tools to mitigate exchange rate risks. By balancing cash allocation in Real and Dollar denominated assets, the Company attempts to neutralize its balance sheet exchange rate exposure. Of total cash at the end of 1Q13, 58% was denominated in other currencies (primarily US dollars).

OPERATIONAL BALANCE SHEET ACCOUNTS
Inventories increased by US$ 353.4 million and totaled US$ 2,510.3 million in 1Q13, as the Company expects to experience some growth in the number of deliveries in the following quarters. Trade accounts receivable remained stable and totaled US$ 542.9 million. On the other hand, Trade accounts payable grew US$ 153 million, to US$ 911.7 million, and Advances from customers increased US$ 195.3 million, totaling US$ 1,194.9 million, and combined, these increases contributed to partially offset the negative impact of the increase in Inventories on the Company’s working capital requirements. Intangible increased US$ 56.7 million during 1Q13, totaling US$ 1,015.5 million, primarily due to investments made in aircraft program development, mainly the Legacy 450 & 500. Property, plant and equipment and Customer and commercial financing remained relatively stable and totaled US$ 1,786.9 million and US$ 96.4 million, respectively.

TOTAL BACKLOG
During 1Q13, Embraer delivered a total of 17 commercial and 12 executive aircraft. Considering all deliveries, as well as firm orders obtained during the period, the Company’s firm order backlog increased to US$ 13.3 billion at the end of 1Q13. The following chart presents the Company’s backlog evolution through 1Q13.

1st Quarter 2013 Results in IFRS
SEGMENT RESULTS
1Q13 Revenues mix by segment varied when compared to 1Q12, as a result of a higher participation from the Defense & Security, Executive Aviation and Others segments, which represented 23.2%, 16.1% and 1.8% of total Revenues for the period, respectively. This increase was compensated by the lower participation in total Revenues from the Commercial aviation segment, which represented 58.9%. Consistent with the Company’s diversification strategy, the Defense & Security and Executive aviation segments continued to present growth when compared to 1Q12 and consequently are expected to represent a larger portion of total Revenues in 2013 when compared to 2012, in line with the Company Guidance.

From 1Q13 onwards, the Company will post its Revenue breakdown considering the Commercial aviation, Executive aviation, Defense & Security and Others businesses only. Aviation services revenues will no longer be broken out for each of the business units and they will be included in the total of each business segment’s total Revenue for each period. Such change better reflects the Company’s strategy and management, once services are included as part of the overall Revenues in each of the Company’s main business units.

1st Quarter 2013 Results in IFRS
COMMERCIAL AVIATION
During the first quarter of 2013, Embraer delivered 17 jets to the commercial aviation market. The Company backlog includes an order for 47 E175 jets from Republic Airways Holdings Inc., disclosed on January 24 and confirmed on March 26.

The Company continued the development of the E-Jets improvements to be fully implemented in 2014. For the second generation E-Jets, the Company selected UTC Aerospace Systems to provide the electric power generation, distribution system, wheels, carbon brakes and Pratt & Whitney AeroPower’s APS2600[E] auxiliary power unit. These systems, added to the already selected Pratt & Whitney powerplant and Honeywell Primus Epic 2 integrated avionics system, are important milestones in the program, which is expected to be launched this year and planned to enter service in 2018.

EXECUTIVE AVIATION
The Executive aviation segment delivered 8 light jets and 4 large jets, totaling 12 aircraft in the 1Q13, with a better mix of large jets, when compared to 1Q12, and a slight reduction of 1 unit in total deliveries.

In January, the Hurun Report named the Legacy 650 as the Large-Size Business Jet Star Performer in the Ninth Hurun Best-of-the-Best Awards Ceremony in Shanghai, China. The publication also named the Legacy 500 the Best New Arrival in business jets.

In February, Embraer Executive Jets’ second Legacy 500 made its maiden flight, officially entering the flight test and certification program. The Legacy 500 is the first jet of the category midsize to use a full fly-by-wire

1st Quarter 2013 Results in IFRS
flight control system.
In March, Embraer Executive Jets set three speed records for the light weight class C-1.f Group III (13,225 to 19,842 pounds), when a Phenom 300 flew from the Company’s headquarters at Melbourne International Airport (MLB) in Melbourne, FL, to Daugherty Field (LGB) in Long Beach, CA, with only one fuel stop.

Also in March, FlightSafety International announced that its full flight simulator for the Embraer Executive Jets Legacy 650 aircraft was qualified to Level D by the United States Federal Aviation Administration, Agência Nacional de Aviação Civil in Brazil and European Aviation Safety Agency.

Still in March, Embraer Executive Jets’ third Legacy 500 made its maiden flight, officially entering the flight test and certification campaign of this midsize jet.
In the first quarter of this year, Embraer Executive Jets strengthened the commitment with its Indian clients, signing a Memorandum of Understanding (MoU) with Indamer Pty Ltd to provide maintenance support for the midsize Legacy 500 aircraft, ahead of the jets’ expected entry into service in 2014.

SEC/DOJ INVESTIGATIONS UPDATE
We received a subpoena from the SEC in September, 2010, which inquired about certain operations concerning sales of aircraft abroad. In response to this SEC-issued subpoena and associated inquiries into the possibility of non-compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, we retained outside counsel to conduct an internal investigation on transactions carried out in three specific countries.

Further, the Company has voluntarily expanded the scope of the internal investigation to include two additional countries and has reported on those matters. The investigation remains ongoing and we, through our outside counsel, continue to cooperate fully with the SEC and U.S. Department of Justice, which are the authorities responsible for reviewing the matter. The Company, with the support of our outside counsel, has concluded that it is still not possible to estimate the duration, scope or results of the internal investigation or government’s review. In the event that the authorities take action against us or the parties enter into an agreement to settle the matter, we may be required to pay substantial fines and/or to incur other sanctions. The Company, based upon the opinion of our outside counsel, believes that, there is no basis for estimating reserves or quantifying any possible contingency.

1st Quarter 2013 Results in IFRS
RECONCILIATION OF IFRS AND “NON GAAP” INFORMATION
We define Free cash flow as operating cash flow less Additions to property, plant and equipment, Additions to intangible assets, Financial assets and Other assets. Free cash flow is not an accounting measure under IFRS. Free cash flow is presented because it is used internally as a measure for evaluating certain aspects of our business. The Company also believes that some investors find it to be a useful tool for measuring Embraer’s cash position. Free cash flow should not be considered as a measure of the Company’s liquidity or as a measure of its cash flow as reported under IFRS. In addition, free cash flow should not be interpreted as a measure of residual cash flow available to the Company for discretionary expenditures, since the Company may have mandatory debt service requirements or other nondiscretionary expenditures that are not deducted from this measure. Other companies in the industry may calculate free cash flow differently from Embraer for purposes of their earnings release, thus limiting the usefulness of this measure as a tool for comparing Embraer to other companies in the industry.