NYSE:EVEX EVE Q2 2024 Earnings Report $64.09 +1.46 (+2.33%) Closing price 04/15/2025 04:00 PM EasternExtended Trading$63.52 -0.58 (-0.90%) As of 04:00 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Zillow Group EPS ResultsActual EPS-$0.13Consensus EPS -$0.13Beat/MissMet ExpectationsOne Year Ago EPSN/AZillow Group Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AZillow Group Announcement DetailsQuarterQ2 2024Date8/6/2024TimeBefore Market OpensConference Call DateTuesday, August 6, 2024Conference Call Time8:00AM ETUpcoming EarningsEVE's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled at 9:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by EVE Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 6, 2024 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day, and welcome to the Eve Holding, Inc. 2nd Quarter 20 24 Earnings Call. All participants will be in listen only mode. After today's remarks, there will be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:25I would now like to turn the conference over to Lucio Alworth, Head of Investor Relations. Please go ahead. Speaker 100:00:31Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at Yves. And I wanted to welcome everyone to our Q2 2024 earnings conference call. Our CEO, Johan Bordet and CFO, Edouard de Cote are joining me on this call today. Speaker 100:00:49And after their prepared remarks, we're going to open the call for questions, at which point Luis Valentini, our Chief Technology Officer, will also join us for more technical questions. We did prepare a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the rollout of our 1st full scale prototype and that's on our website at ir. Eveairmobility.com. So please feel free to download it and follow along. Let me first say that this presentation includes forward looking statements or statements about events or circumstances that have not yet occurred. Speaker 100:01:28These are largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These 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 believe, 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 statement because of new information, future events or other factors. With that, the future events and circumstances discussed in this presentation may not occur and actual results could differ substantially from those anticipated in our forward looking statements. Speaker 100:02:26With that, I will now turn the presentation over to our CEO. Johan? Speaker 200:02:33Thanks, Lucio. Good morning and thank you for joining the call today. We had a very special and exciting Q2. We continue to advance in our program and we reached a very important milestone. As we had anticipated before, we completed the assembly of our prototype and rolled it out to the hangar for the first time in early July. Speaker 200:02:53This is a traditional ceremony to present a new aircraft to the public, the press and investors. As a reminder, this is a full scale engineering prototype without cabin nor cockpit made of composite materials that will be piloted remotely. This prototype will be used to validate and improve the accuracy of previous subscale and computer models. It will also be served to build on the several rigs that we have for different individual components. We will now start a series of ground tests before moving to hover and full transition flight tests. Speaker 200:03:31We expect these tests to initiate later this year and they will be performed at the same Embraer facilities in Gama Peixoto also known and called GPX in the state of Sao Paulo. GPX offers a parallel infrastructure for test flight that was specially and specifically designed to test Embraer prototype aircraft. In parallel, we continue to down select suppliers and sign binding contracts. These define technical specification for the component and commercial aspect with volume, unit prices and aftermarket support conditions. Just last month, we selected KeyRD, LATICO Air, RALC and Altek. Speaker 200:04:16As a reminder, we had selected earlier in the year KAI for the pilots, Assituri for the wings, Truzeit for the pilots and sector and also FACC for the tail section of our V Thaw. We have now completed the selection of what we call the flight critical component suppliers for our aircraft and will continue to work on defining the non critical partners. Few slides, we will show some pictures of the rollout event and the aircraft itself. These show the full scale of our prototype, which by the way will closely resemble to the commercial version. As we mentioned before, our e vehicle will have similar dimension to most widely used helicopters so that it fits the helipads and also carry the same number of passengers. Speaker 200:05:11One interesting fact is that the prototype is made of multiple composite panels that are easily detachable, removable. This will allow us to have an easy access to the internal electric and electronic components and facilitate any operation that we may need to be done during the flight test campaign. We always had safety and simplicity in mind when defining the lift plus cruise configuration for our retail. With these fixed components, we believe that our aircraft will have many advantages that will allow operators to be profitable with lower maintenance and operating costs and higher availability for their emissions. This simpler design also will benefit to the certification campaign. Speaker 200:05:58Lastly, our commercial eVTOL will have Embraer's 5th generation fly by wire system. This is a proven technology that has been successfully improving safety and passenger comfort in some of the Embraer commercial executive and military aircraft and we have access to it. This in my view is yet another competitive advantage that EVE has and it will become eventually clear to investors over time. Now moving on to the Slide 6, it shows the next steps of our test campaigns for our engineering prototype. We will now start ground tests to validate thrust, energy consumption, sound, vibration and other tests before to move to the actual flight test campaign. Speaker 200:06:45As we always done, we will approach the test campaign very conservatively and only move forward with the minimal risk. We will initially perform the hover flight tied up to the ground and gradually increase power and height. Then we will move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally and only then we will move to the full transition flights. The next couple of slides show a bit more of the engineering infrastructure that we are accessing at the Ganon Peixoto and the JPX facilities. Speaker 200:07:26Again, this is where Embraer manufactures and tests most of its commercial, executive and military aircraft and it's the home of the largest runway in the Southern Hemisphere and the 4th largest in the world. This is a state of the art facility with all the necessary infrastructure for test flight and has been available to EVE Air Mobility. In fact, this is where our prototype was built and will be tested and it's the houses of custom built brakes that is mounted on a truck. We drive it down the runway to mimic what is the real life aerodynamic track, vibration or other performance criteria, which we will test with different configuration. We'll also validate and refine our computer models and ultimately improve the design of the motor propeller rigs of our aircraft. Speaker 200:08:19At the same time, we have another high-tech flux that will be the nerve center for the remote flying testing phase of our prototype. The truck is equipped with all the necessary equipment for the pilots. Our first prototype will be remote control along with different teams to constantly monitor different telemetry variables of the aircraft. Our prototype has also been fitted with several strategically placed cameras that will also feed real time images to the team in the truck. Now getting to Slide 9, we can see the latest addition to our component suppliers list, which we will start using with the first 5 or 6 conforming prototypes. Speaker 200:09:01So far, in 2024, we announced several suppliers: APCC to provide the control surface and Ocunard Assituri for the wings, Cruzeit for the pilot control interceptor or the joystick as we call it sometimes. And we also have signed with Thales for the sensors, Honeywell for the guidance and navigation and lastly Recaro Aero for the seats. In the Q1 of 2024, we added KAI for the pylons to this list and now we have added QRD for the polycarbonate windows, lathe coater for the doors, Rauch and Altek for the fuselage components. With these additions, we have completed the selection of our primary component suppliers. We have been using a best of breed approach to bring suppliers with experience in aviation and certification. Speaker 200:09:54Importantly, they will also support us in the certification campaign and throughout the EV total lifecycle. Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in unit prices as we reach higher EV toll volumes of production. This will provide economies of scale as we increase our outlook. We still have a few suppliers to select, but these are the non critical for the aircraft performance, whether they are off the shelf components such as the ELT or the PHF or optional like the skids or landing gears, lights and so forth. And when I look at this list, I'm very confident on the high level of safety, certification and performance of our eVTOL. Speaker 200:10:42Now on Slide 10, our total pre order backlog stands at 2,900 aircraft for a value of a total of US14.5 billion dollars based on the list price. These are non binding letters of intent from 30 different customers spread over 13 countries and different businesses from the main line to regional airline to helicopter operators, ride sharing platform and leasing companies. We also have NOIs for Vector, our UTM software from 16 different customers and believe that this reflects the market leading value proposition we bring to our customers. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the many challenges ahead of urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. And because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best in class services to eVTOLs operators. Speaker 200:11:46We have also secured contracts with 12 different customers for the maintenance, repair and overhaul, what we call also the MRO, that could bring up to $1,200,000,000 of in revenue for EVE over the 1st 5 years of operation. Now I would like to invite our CFO, Edu, to go over our financials along with the milestone checklist. Speaker 300:12:12Thanks, Johan. Now move to Slide 11. IVE is a preoperational company developing its eVTOL and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development. With that said, I want to highlight some of our numbers. Speaker 300:12:31Yves invested 36,000,000 during the Q2 2024 in our program development as R and D activities continue to speed up with more headcounts and higher engagement from suppliers. The majority was invested in our eVTOL aircraft and a smaller portion in service and support and the urban air traffic management software. We also deployed $5,000,000 in SG and A during the quarter, which was which has been reasonably stable as we continue to control corporate expenses to focus our resources on the EBITDA development. Higher development expenses in the Q2 were partially offset by interest revenues and a mark to market gain in our warrants, resulting in a net loss of BRL 36,000,000 in the Q2 of 2024. Now moving to cash flow. Speaker 300:13:26Our operations consumed $31,000,000 in the quarter, up $4,000,000 versus the same period of 2023 due to higher development spending. It's important to highlight that we drew another EUR 14,000,000 from our pre approved credit line with the Brazilian Development Bank during the Q2. And with that, we ended the Q1 with BRL 206,000,000 in cash, down only BRL 16,000,000 from Q1 2024. We still have approximately EUR 38,000,000 available from this line that we expect to access in the upcoming quarters. This is going to continue to help EVE to preserve its cash position. Speaker 300:14:11Now moving to Slide 12, please. In early July, a few days after the end of the second quarter, we announced an additional equity raise of 96,000,000 dollars This private placement included new funds from strategic investors like Embraer, Nidec and Space Florida as well as some financial investors. With this new equity, we managed to attract new investors to our cap table, which in our view sends a strong message as to the soundness of our development program, its competitive advantages and the credibility of our company. At the same time, we continue to enjoy a strong relationship with Embraer, who remains our controlling shareholder with 83% participation at EVE. Considering the new fund, our 2nd quarter pro form a liquidity reached approximately EUR340,000,000 I think this new cash improves what was already a comfortable financial position, considering our commitments to the program in the foreseeable future and secure our operations for multiple years ahead. Speaker 300:15:26As a reminder, we expect to invest around $130,000,000 to $170,000,000 this year and our cash consumption should intensify next year with the assembly of 5 conforming prototypes as previously mentioned and investments in our manufacturing site in Brazil, our Talbotap plant. Now moving to Slide 13. We remain on track to deliver our milestones for 2024 and in fact just checked the assembly of our 1st full scale prototype and presented it publicly a few weeks ago as initially planned. We will now start ground tests in the second half of the year, but we want to call attention to the delivery of Alexi Motors as they are in the critical path for some of our prototype tests in the second half and we are monitoring it closely. In parallel, Brazil Certification Authority, ANAC, concluded its public hearing process in mid March to define the basis of certification. Speaker 300:16:31The agency is now compiling all comments and we expect the basis of certification to be published this year. Lastly, we continue to prepare our 1st EBITDA manufacturing plant in an existing site of Embraer in Brazil in the city of Talbotar. We're also working to secure the necessary funding for the EBITDA industrialization through a long term financing. All our 2024 efforts will consume between $130,000,000 to $170,000,000 throughout this year. It's important to mention that the recent depreciation of the Brazilian currency versus the U. Speaker 300:17:08S. Dollar will help to reduce our cash consumption this year as the majority of our expenses are in the Brazilian currency. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed. Operator00:17:25Thank you. We will now begin the question and answer Our first question comes from Savi Syth from Raymond James. Please go ahead. Speaker 400:17:52Hey, good morning, everyone. I was wondering, you mentioned the electric motors. I was wondering what the kind of the expectation on when those will be delivered. And as you kind of contemplate building those certification conforming prototypes for next year, what do you need to see to before you start building those? Is it anything around the test campaign or what are the factors that will decide when you move forward with that? Speaker 200:18:25Hello, Savi. Thank you for the question. Yes, it was mentioned that now we've done the rollout of the prototype and what we call it the engineering prototype, right, which is different from the conforming prototype, which we'll start building next year. And we'll have 5 to 6 conforming prototype that we'll use with the certification authorities, ANAC, to get the certification, okay? So we did mention that the critical path on the electrical motor and this is for the and we're talking about the engineering prototype, okay? Speaker 200:19:03So that was what we mentioned here. Speaker 400:19:07Sorry, so just wondering when you're expecting the electric motor delivered and if there's anything in the testing that you're doing here with that engineering prototype that will then decide when you start building the conforming prototypes. Speaker 200:19:26Valentini, maybe you asked to explain the process here. Speaker 500:19:31Sure. So good morning. Hi, Savi. Thank you for the question. So we expect the motors to be delivered still in the 2nd semester, which then will allow us to start the flight test campaign, which includes first integration tests of these equipment on the vehicle, so you can think of them as production tests to make sure that everything that is installed on the vehicle works together. Speaker 500:19:57And then from there, we can start actually a flight testing campaign and a ground testing campaign also that is more geared towards developing vehicle features, right? So studying things like noise, vibration characteristics of the vehicle during transition between hover and cruise flight and things like that. So the arrival of the motors will allow us to complete these production tests that I'm calling for this engineering prototype and also move on to complete this engineering flight test campaign, which as we have been saying brings more maturity to the vehicle definitions, so that we can start the testing with the conforming prototypes with more confidence and more efficiency towards certification. With respect to how that connects to the building of the conforming prototypes, We are basing the building and the definitions of the conforming prototypes much more on the relationship and the work that has been going now with the suppliers, so that we are moving ahead in parallel with the development of the conforming prototypes, while we are developing this engineering prototype. So we don't expect to have a change at this moment in the path and in the pace of the development of the conforming prototypes with this challenge on the delivery of the motors. Speaker 500:21:24We are still moving ahead. And then once the vehicle the engineering vehicle flies, we can bring the learnings into the conforming prototypes. But again, just emphasizing that these are parallel paths. Speaker 400:21:37Very helpful. Thank you. And if I might, just on the Edu's comments on liquidity, and I think the release had multiple years of liquidity sufficient. So in terms of the step up next year, it doesn't seem like it's a big step up even though you're doing a lot more of building and testing. Is that a fair comment, Edu? Speaker 300:22:02That's correct, Savi. We may have a higher cash burn next year. It shouldn't be that higher than this year, especially because we have a couple of, I would say, positive things like the recent depreciation of the Brazilian currency against the dollar, right? It helps us because the majority of our expenses are in Brazilian reais and we face stronger dollar that that translates in lower cash burning dollar term. So we have a couple of positives that may help. Speaker 300:22:36And despite the higher activity next year, as you mentioned, I don't believe the cash consumption will be significantly higher. Of course, we're still working on the numbers, and we're going to come with more details as we go towards the end of this year. But I think your assumption is reasonable. Speaker 400:22:55All right. Thank you. Operator00:22:58The next question comes from Andres Sheppard from Cantor Fitzgerald. Please go ahead. Speaker 600:23:05Hey, good morning, everyone. Thanks for taking our questions and congratulations on the quarter. And Johan, it was great seeing you at Farm Bureau a few weeks ago. Thank you, Otis. Speaker 200:23:15Thank you. Speaker 100:23:16Just a quick question. I was hoping maybe you can give us Speaker 600:23:19a little bit more color regarding kind of the test flights that you're going to be initiating in the second half of this year. Wondering if you can maybe walk us through the timeline there, kind of what those tests how you anticipate those tests ramping up? And then maybe in addition to that, just remind us again the plans to assemble the additional up to 5 prototypes, the ones that will be certification and compliance. Yes, exactly. Thank you. Speaker 600:23:49Sure. Speaker 200:23:51And then I'll pass it on to having the CTO with us here. He will give you more insight obviously, what was going to be the next step. So Valentini? Speaker 500:23:59Sure. Thank you for the question, Andres. So the idea is to have a gradual opening of what we call the flight envelope of the vehicle. So we'll start running hover flight tests. These are important for us to balance and to improve the accuracy of our models with respect to things like the power needed to maneuver the vehicle and hover, the power needed and the controllability features for failure cases that might happen while the vehicle is in flight. Speaker 500:24:40It will also include ground tests on things like the interference, the electromagnetic interference between the systems of the vehicle since we're dealing with high voltage power systems. This is very important that is well is very well figured out of the vehicle. So with these ground tests and then initiating the hover flight test, we will gradually move on to what Johan referred to as partial transition, which means that we will start including forward speeds of increasing amplitude until we get to the transition and complete the transition between hover and cruise flight, at which time you remember the rotors of our vehicle will be turned off and the vehicle will fly as a fixed wing airplane, right. So during this transition, there are characteristics of flight that we need to make sure that are well understood and again are well captured by our models and our solutions. For the vehicle in cruise flight, there are also learnings that we expect to have from this vehicle, but this is a more well known flight condition coming from the previous history of Embraer Airplanes and the use, for example, of the fly by wire technology that Johan mentioned that we have the advantage of use coming from Embraer. Speaker 500:26:06So that's the concept of the ground and flight test campaign that we have scheduled. With respect to the conforming prototypes you mentioned, then those also have some development in the sense that the vehicles will not be exactly the same as this engineering prototype as was mentioned earlier. So since we had to freeze the design to build this prototype, the conforming prototypes still went through some evolution that this engineering prototype didn't go through, right. So they have slightly different characteristics, which will then require some development in ground and flight testing also. But then we expect to quickly move to the certification flight test campaign, which will be geared towards showing compliance with the certification requirements of both AMAC and FAA initially, then expanding to other authorities in the world. Speaker 500:27:08So these will so this test campaign will be made using 5 vehicles. We might add more vehicles if we think that is beneficial to the project overall, but initially, we are expecting to do that with 5 vehicles that will start being produced and flown next year. Speaker 600:27:33Got it. That's super helpful. I appreciate all that color. Maybe just a quick follow-up certification. So obviously ANEC has been kind of the primary type certification that you've been targeting in concurrent with the FAA. Speaker 600:27:53But my question is, with all the recent developments in the UAE, I'm wondering if that maybe has changed some of your type certification plans or if you're how you're thinking about that market? Is that a certification that you'll pursue as well now? And if so, how do you see that process unfolding? Thank you. Speaker 500:28:19Sure. So that's a good point. It doesn't change the process of certification, the way that we have established in the sense that AMAC being the primary certification authority gears us towards defining requirements and then defining how to show compliance with these requirements, 1st and foremost. What we do with ANAC in this case, as Embraer has done in the past, but is most even more important this time around, is to align what requirements will be applicable to the eVTOL certification and ANAC and also Eve is supporting that very ANAC has been very active in seeking alignment and understanding, and as much as they feel that they are comfortable with harmonizing those requirements with other authorities in the world. So by doing that, they steer a certification basis that is more closely acceptable for validation by other authorities in the world. Speaker 500:29:29So our path has been that from the beginning, which is to build this basis with ANAC, try to make it such that is as common as we can with other authorities. So that once we receive the type certificate from INAC, we have, let's say, a more clearly paved way towards getting this validation from other authorities. And then that includes the UAE and other authorities that we have mentioned previously of markets that are of interest to Eve. So, and just summarizing, UAE or other authorities, we expect them to be very well captured, so to speak, by this process of building a basis with AMAK that is well aligned with other authorities in the world. Speaker 600:30:18Wonderful. Thank you so much. Really appreciate it. Congrats on the quarter again. I'll pass it on. Speaker 500:30:24Thank you. Speaker 200:30:25Thanks, Chris. Operator00:30:27The next question comes from Austin Moller from Canaccord. Please go ahead. Speaker 700:30:33Hi, good morning and great to see you at Farnborough, Johan. My first question, just on the battery. So the battery is being supplied by BAE. I know they've done some work providing those for industrial vehicles and buses. But I was just wondering what is the production volumes look like for the cells within the batteries being provided by BAE? Speaker 700:31:04Are they being built at a production volume each year that could enable a strong manufacturing supply chain going out the gate? And what does that look like? If you could just tell us a little bit more. Speaker 200:31:22All right, Austin. Thank you so much for your question. Yes, PAE is definitely the suppliers that want the bidding process and simply because, as you mentioned, I mean, they have more than 8,000 EVs running around the world, especially most of the coaches and buses that you have in the major cities around the world are actually made by BAE. The batteries are made by BAE. So they do have an extensive experience and how the reliability and production. Speaker 200:31:52They are using most of the OEM or EBITDALL using the same cells, right? So they're not different. This one is also Molysell. There's the cylindrical cells that you're using and this is the one that we elected with BAE and I'll let you know Valentini explain whether the benefit of this obviously. But when we signed those contracts and we've done this since last year, we've signed 21 contract of the PSA and VAE was 1 the first one and it does cover the ramp up of production. Speaker 200:32:28So we make sure that they have the ability to ramp up production as we go, as we sail and deliver those EBITDA. And we're confident they've been doing. And then also they've been looking at derisking their operations, so which is quite important for us, right, when it comes to production sites. It's not only capacity, but also making sure that something happened to one site, then they have a backup production site, okay? So we're actually in line. Speaker 200:32:58And yes, Valentini, if you want to mention a bit more detail on the technology used there. Speaker 500:33:05Sure. So we're using cells that are not specific to our project, right? I mean these have similar cells being used by other eVTOL manufacturers as been publicly stated and also ourselves that are used in other applications in the world such as power tools and other things. So with respect to the production volume, as Johan mentioned, we don't believe that there is a question there. We believe that BAE will supply the batteries for us as we have the production plan for. Speaker 500:33:40And just I just wanted to bring quickly a point with respect to us selecting BAE. As Johan mentioned, they have a pretty significant experience with their electric vehicles in batteries and electric vehicles in operation today. So that brings a vision and an experience of the life cycle of the products, which is very important. So we talk very much about certification of these batteries, thermal runaway containment and the containment of propagation, things like that. And these are very important for the safety of the vehicle. Speaker 500:34:17But it's also very important that the characteristics of Operator00:34:21the battery in operation on the hands of the Speaker 500:34:24operators are very well known and how to treat occurrences with these products in the field are very well known. So BAE has over the years built experience and knowledge about these products in operation, which we believe that brings quite a bit of maturity to our product. And they also have quite a bit of experience in aeronautical developments from previous projects, right? So we believe that this combination of being an aeronautical aviation company with the history and knowledge that they have of these batteries in operation will bring the maturity level of solution in our vehicle up for the start of entry the start of operations at the entry into service. Speaker 700:35:16Excellent. And just a follow-up, depending on where your first launch customers are once you get to serial manufacturing stage and you're certified, do you expect to provide aftermarket support from day 1 in one specific geography? Or do you expect to provide aftermarket support at all of Embraer's MRR facilities right from the beginning? Speaker 200:35:46We're actually looking at all possible scenarios. One thing is for sure is that Eve will be the face to the customer. This is the way that we build up with our partners, with the suppliers, but also this is a wish from the customers. I think it has to do with the fact that we're really breaking ground on the new segments and they want to make sure that the OEM is engaged and will guarantee the operational cost and also the availability. So different models are open to us, how we're going to be making the space to the customer available, whether it's going to be own MRO of EVE or using the Embraer footprint, which obviously is very large, which more than 70 80 authorized subacenters around the world with the own operator or even an authorized one. Speaker 200:36:34And or the yes, that will be the model that we'll be using, right? Operator00:36:47The next question comes from Connor Walters from Jefferies. Please go ahead. Speaker 800:36:53Hi, guys. Congrats on the progress in the quarter and thanks for taking my question. Maybe just to go back on liquidity. As of the Q1, you indicated that the 280,000,000 that you had at the time was sufficient to support operations well into 2025. So curious on the rationale for the equity raise in the quarter? Speaker 300:37:12Yes. I think we had this opportunity, right, to bring new partners, new investors, right, was a very, I would say, very selected and interesting group. We brought the strategic investors like Nidec, right, which is a partner in the program as well. Embraer, our controller, also invested. Space Florida. Speaker 300:37:37We also brought some additional financial investors. So I think it was an opportunity to raise additional capital, right, the almost $100,000,000 that we raised. With that, we have now even stronger liquidity that, as you said before, we had sufficient resources until the end of 2025 with these additional equity raise and some long term finances, right, that we are discussing, we believe we have resources for multiple years now, probably that will get us into 2027. So I think it was an opportunity that show up. It's important, right, as a pre operational company to have a very strong liquidity. Speaker 300:38:23Now I think we have probably the longest runway among all EBITDAO manufacturers, right? And I think that gives us comfort to continue to advance the program at full speed that we're doing without having to worry about the resources. Right now, we have plenty of funds to get the certification and start to deliver the EBITDAOs and we thought this additional capital made sense in that context. Speaker 800:38:51Okay, got it. That's very helpful. And maybe just to go back to your commentary about a modest step up in burn into 2025. Is there any way that you can frame the cadence for quarterly cash burn over maybe the next 4 quarters as we think about you progressing through these next few milestones? Speaker 300:39:10As I said, right, we this year, we're going to be around the $130,000,000 to $170,000,000 probably a little closer to the $130,000,000 than the $170,000,000 because we have this tailwind, right, of the weaker Brazilian currency against the dollar that will help us. Despite the higher the increasing headcounts and the additional prototypes, we have this positive. The expenses, they are going to probably they are going to continue to go up. As I mentioned to Savi, I don't think it's a big step up. We're still working on the detailed budget for 2025. Speaker 300:39:54I believe we're going to have more color on that as we get closer to the end of this year. But as I said, we are anticipating some increase next year. We also have the initial investments on the manufacturing plant in Talbotang, Sao Paulo in Brazil that will give us the capacity for the initial EBITDA delivers. So there will be an increase. I don't think it's a big one, but we're still working on the detailed numbers. Speaker 300:40:22And I hope at some point later this year, we're going to come with a figure for the cash burn in 2025. Speaker 800:40:33Okay, great. Thanks so much. I'll leave it there. Operator00:40:37Our next question comes from Sheila Kahyaoglu from Jefferies. Please go ahead. Speaker 900:40:43Thank you so much. Sorry, Connor and I are tag teaming as I'm at the airport. So, he got my cash questions in. And I just maybe do want to ask about orders. You haven't had vehicle orders, but you got, a big chunk of maintenance orders that you guys highlighted in the script. Speaker 900:41:00So, maybe can you talk about how we should expect that or should we expect more maintenance orders? You gave that $1,200,000,000 over the next 5 years. Can you talk a little bit about how you expect that transition to revenue? Thank you. Speaker 200:41:18Yes. Yes, yes. I'd love to. Yes, thank you. Yes, as a matter of fact, I mean, you did mention it, we're 2,900 vehicles sold through the LOI. Speaker 200:41:28I think this is really the diversity of our customer base is it tells a lot of how they are comfortable with the model that we're providing to them. They really trust that we have the right solution. Like I've been always saying, it's not only the vehicle, but it's also the service support. We didn't mention it. There was a question about what would be the MRO network that we will have. Speaker 200:41:49We will be the face of the customer. The UATM also is very important, at least for the scale up, right? So it's something that we're thinking about. We don't want to substitute only a few helicopters. We really want to make it a segment, a new segment and create new opportunities for operators. Speaker 200:42:06So service and support is definitely a big chunk. Yes, dollars 1,200,000,000 up to you. It's over a period of 5 years. We'll have to define them when the times is correct with the customers was the scope. We're being very conservative when it comes to the initial scope and those LOIs when it comes to service and support. Speaker 200:42:27It's basically maintenance and also the spare parts, what we call in the flat oil program. But we expect that as we get closer and we get to the conversion of those LOI, then we'll be able to discuss more depth what will be the scope of the services that will go along with the firm order, okay? So this is a process that we're right now. I think the priority for us with all those customers is to get a list of 5 to 6 strategic customers around the world. Obviously, because of the being primary certification, ANAC and also with this bilateral agreement that they have with FAA, we can expect our launch customer to be in Brazil and also in the United States. Speaker 200:43:16Right now, we're defining the ecosystem per city, all right. So it's the network creating a network and a growing network per city. And so then obviously, it will come along with the service and support. So that's what we expect working on right now as to get the firm orders. It doesn't have to be this year. Speaker 200:43:41The priority is always making sure that we have the ecosystem ready. But over the next 12 months, we should be having something about the firm order. Speaker 400:43:53Got it. Thank you. Speaker 200:43:54Okay. Thanks, Sheila. Appreciate it. Operator00:43:58The next question comes from Cai von Rumohr from Cowen. Please go Speaker 1000:44:03ahead. Yes. Thanks so much. So, Itu, you said you have the funds to get to 2027. Maybe when do you expect to begin getting PDPs on the planes? Speaker 1000:44:17And secondly, are there any financial requirements on your part or advances that you expect as a result of your MRO agreements? Speaker 300:44:28Yes. I may start here and maybe Johan can add. But in terms of the PDPs, as Johan mentioned, right, we are now working very closely with all these LOIs and customers that we have to make sure we select the ones that will be the launch customers, and we can convert those LOIs into firm orders. Those discussions are happening right now, and we expect to start to convert that in the next 12 months. So that will translate into initial deposits, right? Speaker 300:45:00And PDPs, additional pre delivery payments that we're going to receive prior to the delivery of the aircraft. So that will be an extra source of funds for the company in the months and years ahead. We also have, as I mentioned before, advanced discussions for long term finance, right, for our manufacturing facility in Brazil and even for R and D expenses. So we are feeling very comfortable and with our funds, right? Not only the equity raise we recently did, but these PDPs and as I said, these additional long term finance that we may get. Speaker 300:45:42And that gives us a runway until 2027 as I mentioned. Speaker 1000:45:49Terrific. Thank you. And then Valentini, we're getting closer to get definition by the FAA and others in terms of what's going to be required to get your design and other designs certified. Now that we have a little bit more visibility there, could you comment at all in terms of the difficulty of certifying a tiltrotor, which is what the other guy most of the other guys have and a lift cruise design, which seems like inherently a little safer in the sense that basically you can fly with the rotors and you can fly with the pusher prop? Speaker 500:46:33Yes. Hi, Kai. Thank you for the question. We the reason why we went for a lift plus cruise configuration is that we believe that configuration that has tilting rotors or tilting mechanisms in general brings complexities in 2 main fronts. One is certification as you mentioned, but I'll start with the other, which is a consistency of operation. Speaker 500:47:03By having more systems and more actuation, more sensors, there are more areas and more components that can become sources of disruption to the operation of the vehicles in service, right. So that was one aspect that weighed very heavily and that comes I think very much from the experience of Embraer with their airplanes into service, knowing how important it is that these vehicles have a consistency of operation into the hands, right, and into the fields. And so serving the business model of the operators. So that was one point. But going back to the certification for example, one of the things that we usually do with authorities is to determine what is a most critical condition in flight in which you have to show compliance with requirements so that all other conditions are covered, right? Speaker 500:48:07So you don't have to do every single, let's say, maneuver in every single point of the flight envelope and every single configuration. You sort of have like a define what is an umbrella and show compliance in these most critical cases. If you have a more complex flight profile with more complex mechanisms, sometimes determining what is this most critical condition is more difficult. So this makes your flight test campaign longer, for example, because you cannot take credit of determining what is the single condition that you have to show compliance with, but you have to be adding other conditions. You have to be discussing this with the authorities. Speaker 500:48:50So we believe that the complexity of the flight profile brings also more discussion and more uncertainty to the certification path. And so that was the other aspect that weighed in our decision for going to the lift plus cruise configuration. Speaker 1000:49:09Terrific. Thank you very much. And then, Johan, when you put it all together, do you have a rough target? Obviously, you can't know exactly, but a rough target in terms of when you might achieve certification and when you might see entry into service? Speaker 200:49:30Thank you, Cai. Yes, it's been well been now 11 months, almost a year on the job. So yes, getting a good grasp of the challenges that we have. As we mentioned from the beginning and I'm going back 2017, the schedule is very challenging, right, of certification into the service. But we remain confident that we can be succeed. Speaker 200:49:54And simply because we're first of all, we're differentiated when it comes with the vast aeronautical experience and we have access of the Embraer resources. We're using the proven method. I think what Juan Tini has explained in details how cost effective and successful the certification process and also the preparation for the e tranche service that we're bringing and the expertise from Embraer, but also we're building our own expertise from all the con ops that we've done with our customers. So service and support, air traffic management and training is something we're familiar with. The third one that we'd say that is an advantage or let's say that we're making good progress and it is evidenced by the full scale product that we just announced. Speaker 200:50:36And then we also have done multiple wind tunnel tests. So yes, I think we're at the point where there's the main challenges now with a few suppliers. We're right now in a joint definition phase. And we're it's always and since the very beginning for everyone creating this segment, all the OEM, it's all this pushing the limit and looking on the size, the weight and the power and always the trade off that you look you got to look at. We want to have make sure that we have a robust and reliable vehicle that will also be profitable for the operation of our customers. Speaker 200:51:13So there like I said, there are many challenges, but all the good reason I just mentioned, Maxis believe that we're going to be we're on the 2026 enter the service. Speaker 1000:51:26Okay, great. Thank you so much. Speaker 200:51:30Excellent, Kai. Operator00:51:31This concludes our question and answer session. I would like to turn the conference back over to Lucio Oldworth for any closing remarks. Speaker 100:51:40Thanks, Jason, and thanks to everyone who joined the call today. As you can see, we accomplished several important milestones. Speaker 400:51:48This meeting is no longer being transcribed. This meeting is no longer being recorded. Speaker 100:51:53So we're going to continue updating you on our progress throughout the next few quarters and we look forward to meeting you in the upcoming events we're going to attend. As always, if you have any questions, please don't hesitate to reach out to me or to my team. Thanks and have a good day. Operator00:52:09The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreRemove AdsPowered by Conference Call Audio Live Call not available Earnings Conference CallEVE Q2 202400:00 / 00:00Speed:1x1.25x1.5x2xRemove Ads Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Lantheus Earnings HeadlinesZillow Group price target lowered to $87 from $98 at CitiApril 16 at 2:09 AM | markets.businessinsider.comZillow Group to Announce First-Quarter 2025 Results May 7April 15 at 4:05 PM | prnewswire.comWhy "Made in America" could cost millions their jobPresident Trump promised tariffs will bring jobs home... that factories will soon be full again... and that American workers will thrive. But buried in the fine print is a dark truth... 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There are 11 speakers on the call. Operator00:00:00Good day, and welcome to the Eve Holding, Inc. 2nd Quarter 20 24 Earnings Call. All participants will be in listen only mode. After today's remarks, there will be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:25I would now like to turn the conference over to Lucio Alworth, Head of Investor Relations. Please go ahead. Speaker 100:00:31Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at Yves. And I wanted to welcome everyone to our Q2 2024 earnings conference call. Our CEO, Johan Bordet and CFO, Edouard de Cote are joining me on this call today. Speaker 100:00:49And after their prepared remarks, we're going to open the call for questions, at which point Luis Valentini, our Chief Technology Officer, will also join us for more technical questions. We did prepare a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the rollout of our 1st full scale prototype and that's on our website at ir. Eveairmobility.com. So please feel free to download it and follow along. Let me first say that this presentation includes forward looking statements or statements about events or circumstances that have not yet occurred. Speaker 100:01:28These are largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These 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 believe, 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 statement because of new information, future events or other factors. With that, the future events and circumstances discussed in this presentation may not occur and actual results could differ substantially from those anticipated in our forward looking statements. Speaker 100:02:26With that, I will now turn the presentation over to our CEO. Johan? Speaker 200:02:33Thanks, Lucio. Good morning and thank you for joining the call today. We had a very special and exciting Q2. We continue to advance in our program and we reached a very important milestone. As we had anticipated before, we completed the assembly of our prototype and rolled it out to the hangar for the first time in early July. Speaker 200:02:53This is a traditional ceremony to present a new aircraft to the public, the press and investors. As a reminder, this is a full scale engineering prototype without cabin nor cockpit made of composite materials that will be piloted remotely. This prototype will be used to validate and improve the accuracy of previous subscale and computer models. It will also be served to build on the several rigs that we have for different individual components. We will now start a series of ground tests before moving to hover and full transition flight tests. Speaker 200:03:31We expect these tests to initiate later this year and they will be performed at the same Embraer facilities in Gama Peixoto also known and called GPX in the state of Sao Paulo. GPX offers a parallel infrastructure for test flight that was specially and specifically designed to test Embraer prototype aircraft. In parallel, we continue to down select suppliers and sign binding contracts. These define technical specification for the component and commercial aspect with volume, unit prices and aftermarket support conditions. Just last month, we selected KeyRD, LATICO Air, RALC and Altek. Speaker 200:04:16As a reminder, we had selected earlier in the year KAI for the pilots, Assituri for the wings, Truzeit for the pilots and sector and also FACC for the tail section of our V Thaw. We have now completed the selection of what we call the flight critical component suppliers for our aircraft and will continue to work on defining the non critical partners. Few slides, we will show some pictures of the rollout event and the aircraft itself. These show the full scale of our prototype, which by the way will closely resemble to the commercial version. As we mentioned before, our e vehicle will have similar dimension to most widely used helicopters so that it fits the helipads and also carry the same number of passengers. Speaker 200:05:11One interesting fact is that the prototype is made of multiple composite panels that are easily detachable, removable. This will allow us to have an easy access to the internal electric and electronic components and facilitate any operation that we may need to be done during the flight test campaign. We always had safety and simplicity in mind when defining the lift plus cruise configuration for our retail. With these fixed components, we believe that our aircraft will have many advantages that will allow operators to be profitable with lower maintenance and operating costs and higher availability for their emissions. This simpler design also will benefit to the certification campaign. Speaker 200:05:58Lastly, our commercial eVTOL will have Embraer's 5th generation fly by wire system. This is a proven technology that has been successfully improving safety and passenger comfort in some of the Embraer commercial executive and military aircraft and we have access to it. This in my view is yet another competitive advantage that EVE has and it will become eventually clear to investors over time. Now moving on to the Slide 6, it shows the next steps of our test campaigns for our engineering prototype. We will now start ground tests to validate thrust, energy consumption, sound, vibration and other tests before to move to the actual flight test campaign. Speaker 200:06:45As we always done, we will approach the test campaign very conservatively and only move forward with the minimal risk. We will initially perform the hover flight tied up to the ground and gradually increase power and height. Then we will move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally and only then we will move to the full transition flights. The next couple of slides show a bit more of the engineering infrastructure that we are accessing at the Ganon Peixoto and the JPX facilities. Speaker 200:07:26Again, this is where Embraer manufactures and tests most of its commercial, executive and military aircraft and it's the home of the largest runway in the Southern Hemisphere and the 4th largest in the world. This is a state of the art facility with all the necessary infrastructure for test flight and has been available to EVE Air Mobility. In fact, this is where our prototype was built and will be tested and it's the houses of custom built brakes that is mounted on a truck. We drive it down the runway to mimic what is the real life aerodynamic track, vibration or other performance criteria, which we will test with different configuration. We'll also validate and refine our computer models and ultimately improve the design of the motor propeller rigs of our aircraft. Speaker 200:08:19At the same time, we have another high-tech flux that will be the nerve center for the remote flying testing phase of our prototype. The truck is equipped with all the necessary equipment for the pilots. Our first prototype will be remote control along with different teams to constantly monitor different telemetry variables of the aircraft. Our prototype has also been fitted with several strategically placed cameras that will also feed real time images to the team in the truck. Now getting to Slide 9, we can see the latest addition to our component suppliers list, which we will start using with the first 5 or 6 conforming prototypes. Speaker 200:09:01So far, in 2024, we announced several suppliers: APCC to provide the control surface and Ocunard Assituri for the wings, Cruzeit for the pilot control interceptor or the joystick as we call it sometimes. And we also have signed with Thales for the sensors, Honeywell for the guidance and navigation and lastly Recaro Aero for the seats. In the Q1 of 2024, we added KAI for the pylons to this list and now we have added QRD for the polycarbonate windows, lathe coater for the doors, Rauch and Altek for the fuselage components. With these additions, we have completed the selection of our primary component suppliers. We have been using a best of breed approach to bring suppliers with experience in aviation and certification. Speaker 200:09:54Importantly, they will also support us in the certification campaign and throughout the EV total lifecycle. Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in unit prices as we reach higher EV toll volumes of production. This will provide economies of scale as we increase our outlook. We still have a few suppliers to select, but these are the non critical for the aircraft performance, whether they are off the shelf components such as the ELT or the PHF or optional like the skids or landing gears, lights and so forth. And when I look at this list, I'm very confident on the high level of safety, certification and performance of our eVTOL. Speaker 200:10:42Now on Slide 10, our total pre order backlog stands at 2,900 aircraft for a value of a total of US14.5 billion dollars based on the list price. These are non binding letters of intent from 30 different customers spread over 13 countries and different businesses from the main line to regional airline to helicopter operators, ride sharing platform and leasing companies. We also have NOIs for Vector, our UTM software from 16 different customers and believe that this reflects the market leading value proposition we bring to our customers. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the many challenges ahead of urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. And because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best in class services to eVTOLs operators. Speaker 200:11:46We have also secured contracts with 12 different customers for the maintenance, repair and overhaul, what we call also the MRO, that could bring up to $1,200,000,000 of in revenue for EVE over the 1st 5 years of operation. Now I would like to invite our CFO, Edu, to go over our financials along with the milestone checklist. Speaker 300:12:12Thanks, Johan. Now move to Slide 11. IVE is a preoperational company developing its eVTOL and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development. With that said, I want to highlight some of our numbers. Speaker 300:12:31Yves invested 36,000,000 during the Q2 2024 in our program development as R and D activities continue to speed up with more headcounts and higher engagement from suppliers. The majority was invested in our eVTOL aircraft and a smaller portion in service and support and the urban air traffic management software. We also deployed $5,000,000 in SG and A during the quarter, which was which has been reasonably stable as we continue to control corporate expenses to focus our resources on the EBITDA development. Higher development expenses in the Q2 were partially offset by interest revenues and a mark to market gain in our warrants, resulting in a net loss of BRL 36,000,000 in the Q2 of 2024. Now moving to cash flow. Speaker 300:13:26Our operations consumed $31,000,000 in the quarter, up $4,000,000 versus the same period of 2023 due to higher development spending. It's important to highlight that we drew another EUR 14,000,000 from our pre approved credit line with the Brazilian Development Bank during the Q2. And with that, we ended the Q1 with BRL 206,000,000 in cash, down only BRL 16,000,000 from Q1 2024. We still have approximately EUR 38,000,000 available from this line that we expect to access in the upcoming quarters. This is going to continue to help EVE to preserve its cash position. Speaker 300:14:11Now moving to Slide 12, please. In early July, a few days after the end of the second quarter, we announced an additional equity raise of 96,000,000 dollars This private placement included new funds from strategic investors like Embraer, Nidec and Space Florida as well as some financial investors. With this new equity, we managed to attract new investors to our cap table, which in our view sends a strong message as to the soundness of our development program, its competitive advantages and the credibility of our company. At the same time, we continue to enjoy a strong relationship with Embraer, who remains our controlling shareholder with 83% participation at EVE. Considering the new fund, our 2nd quarter pro form a liquidity reached approximately EUR340,000,000 I think this new cash improves what was already a comfortable financial position, considering our commitments to the program in the foreseeable future and secure our operations for multiple years ahead. Speaker 300:15:26As a reminder, we expect to invest around $130,000,000 to $170,000,000 this year and our cash consumption should intensify next year with the assembly of 5 conforming prototypes as previously mentioned and investments in our manufacturing site in Brazil, our Talbotap plant. Now moving to Slide 13. We remain on track to deliver our milestones for 2024 and in fact just checked the assembly of our 1st full scale prototype and presented it publicly a few weeks ago as initially planned. We will now start ground tests in the second half of the year, but we want to call attention to the delivery of Alexi Motors as they are in the critical path for some of our prototype tests in the second half and we are monitoring it closely. In parallel, Brazil Certification Authority, ANAC, concluded its public hearing process in mid March to define the basis of certification. Speaker 300:16:31The agency is now compiling all comments and we expect the basis of certification to be published this year. Lastly, we continue to prepare our 1st EBITDA manufacturing plant in an existing site of Embraer in Brazil in the city of Talbotar. We're also working to secure the necessary funding for the EBITDA industrialization through a long term financing. All our 2024 efforts will consume between $130,000,000 to $170,000,000 throughout this year. It's important to mention that the recent depreciation of the Brazilian currency versus the U. Speaker 300:17:08S. Dollar will help to reduce our cash consumption this year as the majority of our expenses are in the Brazilian currency. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed. Operator00:17:25Thank you. We will now begin the question and answer Our first question comes from Savi Syth from Raymond James. Please go ahead. Speaker 400:17:52Hey, good morning, everyone. I was wondering, you mentioned the electric motors. I was wondering what the kind of the expectation on when those will be delivered. And as you kind of contemplate building those certification conforming prototypes for next year, what do you need to see to before you start building those? Is it anything around the test campaign or what are the factors that will decide when you move forward with that? Speaker 200:18:25Hello, Savi. Thank you for the question. Yes, it was mentioned that now we've done the rollout of the prototype and what we call it the engineering prototype, right, which is different from the conforming prototype, which we'll start building next year. And we'll have 5 to 6 conforming prototype that we'll use with the certification authorities, ANAC, to get the certification, okay? So we did mention that the critical path on the electrical motor and this is for the and we're talking about the engineering prototype, okay? Speaker 200:19:03So that was what we mentioned here. Speaker 400:19:07Sorry, so just wondering when you're expecting the electric motor delivered and if there's anything in the testing that you're doing here with that engineering prototype that will then decide when you start building the conforming prototypes. Speaker 200:19:26Valentini, maybe you asked to explain the process here. Speaker 500:19:31Sure. So good morning. Hi, Savi. Thank you for the question. So we expect the motors to be delivered still in the 2nd semester, which then will allow us to start the flight test campaign, which includes first integration tests of these equipment on the vehicle, so you can think of them as production tests to make sure that everything that is installed on the vehicle works together. Speaker 500:19:57And then from there, we can start actually a flight testing campaign and a ground testing campaign also that is more geared towards developing vehicle features, right? So studying things like noise, vibration characteristics of the vehicle during transition between hover and cruise flight and things like that. So the arrival of the motors will allow us to complete these production tests that I'm calling for this engineering prototype and also move on to complete this engineering flight test campaign, which as we have been saying brings more maturity to the vehicle definitions, so that we can start the testing with the conforming prototypes with more confidence and more efficiency towards certification. With respect to how that connects to the building of the conforming prototypes, We are basing the building and the definitions of the conforming prototypes much more on the relationship and the work that has been going now with the suppliers, so that we are moving ahead in parallel with the development of the conforming prototypes, while we are developing this engineering prototype. So we don't expect to have a change at this moment in the path and in the pace of the development of the conforming prototypes with this challenge on the delivery of the motors. Speaker 500:21:24We are still moving ahead. And then once the vehicle the engineering vehicle flies, we can bring the learnings into the conforming prototypes. But again, just emphasizing that these are parallel paths. Speaker 400:21:37Very helpful. Thank you. And if I might, just on the Edu's comments on liquidity, and I think the release had multiple years of liquidity sufficient. So in terms of the step up next year, it doesn't seem like it's a big step up even though you're doing a lot more of building and testing. Is that a fair comment, Edu? Speaker 300:22:02That's correct, Savi. We may have a higher cash burn next year. It shouldn't be that higher than this year, especially because we have a couple of, I would say, positive things like the recent depreciation of the Brazilian currency against the dollar, right? It helps us because the majority of our expenses are in Brazilian reais and we face stronger dollar that that translates in lower cash burning dollar term. So we have a couple of positives that may help. Speaker 300:22:36And despite the higher activity next year, as you mentioned, I don't believe the cash consumption will be significantly higher. Of course, we're still working on the numbers, and we're going to come with more details as we go towards the end of this year. But I think your assumption is reasonable. Speaker 400:22:55All right. Thank you. Operator00:22:58The next question comes from Andres Sheppard from Cantor Fitzgerald. Please go ahead. Speaker 600:23:05Hey, good morning, everyone. Thanks for taking our questions and congratulations on the quarter. And Johan, it was great seeing you at Farm Bureau a few weeks ago. Thank you, Otis. Speaker 200:23:15Thank you. Speaker 100:23:16Just a quick question. I was hoping maybe you can give us Speaker 600:23:19a little bit more color regarding kind of the test flights that you're going to be initiating in the second half of this year. Wondering if you can maybe walk us through the timeline there, kind of what those tests how you anticipate those tests ramping up? And then maybe in addition to that, just remind us again the plans to assemble the additional up to 5 prototypes, the ones that will be certification and compliance. Yes, exactly. Thank you. Speaker 600:23:49Sure. Speaker 200:23:51And then I'll pass it on to having the CTO with us here. He will give you more insight obviously, what was going to be the next step. So Valentini? Speaker 500:23:59Sure. Thank you for the question, Andres. So the idea is to have a gradual opening of what we call the flight envelope of the vehicle. So we'll start running hover flight tests. These are important for us to balance and to improve the accuracy of our models with respect to things like the power needed to maneuver the vehicle and hover, the power needed and the controllability features for failure cases that might happen while the vehicle is in flight. Speaker 500:24:40It will also include ground tests on things like the interference, the electromagnetic interference between the systems of the vehicle since we're dealing with high voltage power systems. This is very important that is well is very well figured out of the vehicle. So with these ground tests and then initiating the hover flight test, we will gradually move on to what Johan referred to as partial transition, which means that we will start including forward speeds of increasing amplitude until we get to the transition and complete the transition between hover and cruise flight, at which time you remember the rotors of our vehicle will be turned off and the vehicle will fly as a fixed wing airplane, right. So during this transition, there are characteristics of flight that we need to make sure that are well understood and again are well captured by our models and our solutions. For the vehicle in cruise flight, there are also learnings that we expect to have from this vehicle, but this is a more well known flight condition coming from the previous history of Embraer Airplanes and the use, for example, of the fly by wire technology that Johan mentioned that we have the advantage of use coming from Embraer. Speaker 500:26:06So that's the concept of the ground and flight test campaign that we have scheduled. With respect to the conforming prototypes you mentioned, then those also have some development in the sense that the vehicles will not be exactly the same as this engineering prototype as was mentioned earlier. So since we had to freeze the design to build this prototype, the conforming prototypes still went through some evolution that this engineering prototype didn't go through, right. So they have slightly different characteristics, which will then require some development in ground and flight testing also. But then we expect to quickly move to the certification flight test campaign, which will be geared towards showing compliance with the certification requirements of both AMAC and FAA initially, then expanding to other authorities in the world. Speaker 500:27:08So these will so this test campaign will be made using 5 vehicles. We might add more vehicles if we think that is beneficial to the project overall, but initially, we are expecting to do that with 5 vehicles that will start being produced and flown next year. Speaker 600:27:33Got it. That's super helpful. I appreciate all that color. Maybe just a quick follow-up certification. So obviously ANEC has been kind of the primary type certification that you've been targeting in concurrent with the FAA. Speaker 600:27:53But my question is, with all the recent developments in the UAE, I'm wondering if that maybe has changed some of your type certification plans or if you're how you're thinking about that market? Is that a certification that you'll pursue as well now? And if so, how do you see that process unfolding? Thank you. Speaker 500:28:19Sure. So that's a good point. It doesn't change the process of certification, the way that we have established in the sense that AMAC being the primary certification authority gears us towards defining requirements and then defining how to show compliance with these requirements, 1st and foremost. What we do with ANAC in this case, as Embraer has done in the past, but is most even more important this time around, is to align what requirements will be applicable to the eVTOL certification and ANAC and also Eve is supporting that very ANAC has been very active in seeking alignment and understanding, and as much as they feel that they are comfortable with harmonizing those requirements with other authorities in the world. So by doing that, they steer a certification basis that is more closely acceptable for validation by other authorities in the world. Speaker 500:29:29So our path has been that from the beginning, which is to build this basis with ANAC, try to make it such that is as common as we can with other authorities. So that once we receive the type certificate from INAC, we have, let's say, a more clearly paved way towards getting this validation from other authorities. And then that includes the UAE and other authorities that we have mentioned previously of markets that are of interest to Eve. So, and just summarizing, UAE or other authorities, we expect them to be very well captured, so to speak, by this process of building a basis with AMAK that is well aligned with other authorities in the world. Speaker 600:30:18Wonderful. Thank you so much. Really appreciate it. Congrats on the quarter again. I'll pass it on. Speaker 500:30:24Thank you. Speaker 200:30:25Thanks, Chris. Operator00:30:27The next question comes from Austin Moller from Canaccord. Please go ahead. Speaker 700:30:33Hi, good morning and great to see you at Farnborough, Johan. My first question, just on the battery. So the battery is being supplied by BAE. I know they've done some work providing those for industrial vehicles and buses. But I was just wondering what is the production volumes look like for the cells within the batteries being provided by BAE? Speaker 700:31:04Are they being built at a production volume each year that could enable a strong manufacturing supply chain going out the gate? And what does that look like? If you could just tell us a little bit more. Speaker 200:31:22All right, Austin. Thank you so much for your question. Yes, PAE is definitely the suppliers that want the bidding process and simply because, as you mentioned, I mean, they have more than 8,000 EVs running around the world, especially most of the coaches and buses that you have in the major cities around the world are actually made by BAE. The batteries are made by BAE. So they do have an extensive experience and how the reliability and production. Speaker 200:31:52They are using most of the OEM or EBITDALL using the same cells, right? So they're not different. This one is also Molysell. There's the cylindrical cells that you're using and this is the one that we elected with BAE and I'll let you know Valentini explain whether the benefit of this obviously. But when we signed those contracts and we've done this since last year, we've signed 21 contract of the PSA and VAE was 1 the first one and it does cover the ramp up of production. Speaker 200:32:28So we make sure that they have the ability to ramp up production as we go, as we sail and deliver those EBITDA. And we're confident they've been doing. And then also they've been looking at derisking their operations, so which is quite important for us, right, when it comes to production sites. It's not only capacity, but also making sure that something happened to one site, then they have a backup production site, okay? So we're actually in line. Speaker 200:32:58And yes, Valentini, if you want to mention a bit more detail on the technology used there. Speaker 500:33:05Sure. So we're using cells that are not specific to our project, right? I mean these have similar cells being used by other eVTOL manufacturers as been publicly stated and also ourselves that are used in other applications in the world such as power tools and other things. So with respect to the production volume, as Johan mentioned, we don't believe that there is a question there. We believe that BAE will supply the batteries for us as we have the production plan for. Speaker 500:33:40And just I just wanted to bring quickly a point with respect to us selecting BAE. As Johan mentioned, they have a pretty significant experience with their electric vehicles in batteries and electric vehicles in operation today. So that brings a vision and an experience of the life cycle of the products, which is very important. So we talk very much about certification of these batteries, thermal runaway containment and the containment of propagation, things like that. And these are very important for the safety of the vehicle. Speaker 500:34:17But it's also very important that the characteristics of Operator00:34:21the battery in operation on the hands of the Speaker 500:34:24operators are very well known and how to treat occurrences with these products in the field are very well known. So BAE has over the years built experience and knowledge about these products in operation, which we believe that brings quite a bit of maturity to our product. And they also have quite a bit of experience in aeronautical developments from previous projects, right? So we believe that this combination of being an aeronautical aviation company with the history and knowledge that they have of these batteries in operation will bring the maturity level of solution in our vehicle up for the start of entry the start of operations at the entry into service. Speaker 700:35:16Excellent. And just a follow-up, depending on where your first launch customers are once you get to serial manufacturing stage and you're certified, do you expect to provide aftermarket support from day 1 in one specific geography? Or do you expect to provide aftermarket support at all of Embraer's MRR facilities right from the beginning? Speaker 200:35:46We're actually looking at all possible scenarios. One thing is for sure is that Eve will be the face to the customer. This is the way that we build up with our partners, with the suppliers, but also this is a wish from the customers. I think it has to do with the fact that we're really breaking ground on the new segments and they want to make sure that the OEM is engaged and will guarantee the operational cost and also the availability. So different models are open to us, how we're going to be making the space to the customer available, whether it's going to be own MRO of EVE or using the Embraer footprint, which obviously is very large, which more than 70 80 authorized subacenters around the world with the own operator or even an authorized one. Speaker 200:36:34And or the yes, that will be the model that we'll be using, right? Operator00:36:47The next question comes from Connor Walters from Jefferies. Please go ahead. Speaker 800:36:53Hi, guys. Congrats on the progress in the quarter and thanks for taking my question. Maybe just to go back on liquidity. As of the Q1, you indicated that the 280,000,000 that you had at the time was sufficient to support operations well into 2025. So curious on the rationale for the equity raise in the quarter? Speaker 300:37:12Yes. I think we had this opportunity, right, to bring new partners, new investors, right, was a very, I would say, very selected and interesting group. We brought the strategic investors like Nidec, right, which is a partner in the program as well. Embraer, our controller, also invested. Space Florida. Speaker 300:37:37We also brought some additional financial investors. So I think it was an opportunity to raise additional capital, right, the almost $100,000,000 that we raised. With that, we have now even stronger liquidity that, as you said before, we had sufficient resources until the end of 2025 with these additional equity raise and some long term finances, right, that we are discussing, we believe we have resources for multiple years now, probably that will get us into 2027. So I think it was an opportunity that show up. It's important, right, as a pre operational company to have a very strong liquidity. Speaker 300:38:23Now I think we have probably the longest runway among all EBITDAO manufacturers, right? And I think that gives us comfort to continue to advance the program at full speed that we're doing without having to worry about the resources. Right now, we have plenty of funds to get the certification and start to deliver the EBITDAOs and we thought this additional capital made sense in that context. Speaker 800:38:51Okay, got it. That's very helpful. And maybe just to go back to your commentary about a modest step up in burn into 2025. Is there any way that you can frame the cadence for quarterly cash burn over maybe the next 4 quarters as we think about you progressing through these next few milestones? Speaker 300:39:10As I said, right, we this year, we're going to be around the $130,000,000 to $170,000,000 probably a little closer to the $130,000,000 than the $170,000,000 because we have this tailwind, right, of the weaker Brazilian currency against the dollar that will help us. Despite the higher the increasing headcounts and the additional prototypes, we have this positive. The expenses, they are going to probably they are going to continue to go up. As I mentioned to Savi, I don't think it's a big step up. We're still working on the detailed budget for 2025. Speaker 300:39:54I believe we're going to have more color on that as we get closer to the end of this year. But as I said, we are anticipating some increase next year. We also have the initial investments on the manufacturing plant in Talbotang, Sao Paulo in Brazil that will give us the capacity for the initial EBITDA delivers. So there will be an increase. I don't think it's a big one, but we're still working on the detailed numbers. Speaker 300:40:22And I hope at some point later this year, we're going to come with a figure for the cash burn in 2025. Speaker 800:40:33Okay, great. Thanks so much. I'll leave it there. Operator00:40:37Our next question comes from Sheila Kahyaoglu from Jefferies. Please go ahead. Speaker 900:40:43Thank you so much. Sorry, Connor and I are tag teaming as I'm at the airport. So, he got my cash questions in. And I just maybe do want to ask about orders. You haven't had vehicle orders, but you got, a big chunk of maintenance orders that you guys highlighted in the script. Speaker 900:41:00So, maybe can you talk about how we should expect that or should we expect more maintenance orders? You gave that $1,200,000,000 over the next 5 years. Can you talk a little bit about how you expect that transition to revenue? Thank you. Speaker 200:41:18Yes. Yes, yes. I'd love to. Yes, thank you. Yes, as a matter of fact, I mean, you did mention it, we're 2,900 vehicles sold through the LOI. Speaker 200:41:28I think this is really the diversity of our customer base is it tells a lot of how they are comfortable with the model that we're providing to them. They really trust that we have the right solution. Like I've been always saying, it's not only the vehicle, but it's also the service support. We didn't mention it. There was a question about what would be the MRO network that we will have. Speaker 200:41:49We will be the face of the customer. The UATM also is very important, at least for the scale up, right? So it's something that we're thinking about. We don't want to substitute only a few helicopters. We really want to make it a segment, a new segment and create new opportunities for operators. Speaker 200:42:06So service and support is definitely a big chunk. Yes, dollars 1,200,000,000 up to you. It's over a period of 5 years. We'll have to define them when the times is correct with the customers was the scope. We're being very conservative when it comes to the initial scope and those LOIs when it comes to service and support. Speaker 200:42:27It's basically maintenance and also the spare parts, what we call in the flat oil program. But we expect that as we get closer and we get to the conversion of those LOI, then we'll be able to discuss more depth what will be the scope of the services that will go along with the firm order, okay? So this is a process that we're right now. I think the priority for us with all those customers is to get a list of 5 to 6 strategic customers around the world. Obviously, because of the being primary certification, ANAC and also with this bilateral agreement that they have with FAA, we can expect our launch customer to be in Brazil and also in the United States. Speaker 200:43:16Right now, we're defining the ecosystem per city, all right. So it's the network creating a network and a growing network per city. And so then obviously, it will come along with the service and support. So that's what we expect working on right now as to get the firm orders. It doesn't have to be this year. Speaker 200:43:41The priority is always making sure that we have the ecosystem ready. But over the next 12 months, we should be having something about the firm order. Speaker 400:43:53Got it. Thank you. Speaker 200:43:54Okay. Thanks, Sheila. Appreciate it. Operator00:43:58The next question comes from Cai von Rumohr from Cowen. Please go Speaker 1000:44:03ahead. Yes. Thanks so much. So, Itu, you said you have the funds to get to 2027. Maybe when do you expect to begin getting PDPs on the planes? Speaker 1000:44:17And secondly, are there any financial requirements on your part or advances that you expect as a result of your MRO agreements? Speaker 300:44:28Yes. I may start here and maybe Johan can add. But in terms of the PDPs, as Johan mentioned, right, we are now working very closely with all these LOIs and customers that we have to make sure we select the ones that will be the launch customers, and we can convert those LOIs into firm orders. Those discussions are happening right now, and we expect to start to convert that in the next 12 months. So that will translate into initial deposits, right? Speaker 300:45:00And PDPs, additional pre delivery payments that we're going to receive prior to the delivery of the aircraft. So that will be an extra source of funds for the company in the months and years ahead. We also have, as I mentioned before, advanced discussions for long term finance, right, for our manufacturing facility in Brazil and even for R and D expenses. So we are feeling very comfortable and with our funds, right? Not only the equity raise we recently did, but these PDPs and as I said, these additional long term finance that we may get. Speaker 300:45:42And that gives us a runway until 2027 as I mentioned. Speaker 1000:45:49Terrific. Thank you. And then Valentini, we're getting closer to get definition by the FAA and others in terms of what's going to be required to get your design and other designs certified. Now that we have a little bit more visibility there, could you comment at all in terms of the difficulty of certifying a tiltrotor, which is what the other guy most of the other guys have and a lift cruise design, which seems like inherently a little safer in the sense that basically you can fly with the rotors and you can fly with the pusher prop? Speaker 500:46:33Yes. Hi, Kai. Thank you for the question. We the reason why we went for a lift plus cruise configuration is that we believe that configuration that has tilting rotors or tilting mechanisms in general brings complexities in 2 main fronts. One is certification as you mentioned, but I'll start with the other, which is a consistency of operation. Speaker 500:47:03By having more systems and more actuation, more sensors, there are more areas and more components that can become sources of disruption to the operation of the vehicles in service, right. So that was one aspect that weighed very heavily and that comes I think very much from the experience of Embraer with their airplanes into service, knowing how important it is that these vehicles have a consistency of operation into the hands, right, and into the fields. And so serving the business model of the operators. So that was one point. But going back to the certification for example, one of the things that we usually do with authorities is to determine what is a most critical condition in flight in which you have to show compliance with requirements so that all other conditions are covered, right? Speaker 500:48:07So you don't have to do every single, let's say, maneuver in every single point of the flight envelope and every single configuration. You sort of have like a define what is an umbrella and show compliance in these most critical cases. If you have a more complex flight profile with more complex mechanisms, sometimes determining what is this most critical condition is more difficult. So this makes your flight test campaign longer, for example, because you cannot take credit of determining what is the single condition that you have to show compliance with, but you have to be adding other conditions. You have to be discussing this with the authorities. Speaker 500:48:50So we believe that the complexity of the flight profile brings also more discussion and more uncertainty to the certification path. And so that was the other aspect that weighed in our decision for going to the lift plus cruise configuration. Speaker 1000:49:09Terrific. Thank you very much. And then, Johan, when you put it all together, do you have a rough target? Obviously, you can't know exactly, but a rough target in terms of when you might achieve certification and when you might see entry into service? Speaker 200:49:30Thank you, Cai. Yes, it's been well been now 11 months, almost a year on the job. So yes, getting a good grasp of the challenges that we have. As we mentioned from the beginning and I'm going back 2017, the schedule is very challenging, right, of certification into the service. But we remain confident that we can be succeed. Speaker 200:49:54And simply because we're first of all, we're differentiated when it comes with the vast aeronautical experience and we have access of the Embraer resources. We're using the proven method. I think what Juan Tini has explained in details how cost effective and successful the certification process and also the preparation for the e tranche service that we're bringing and the expertise from Embraer, but also we're building our own expertise from all the con ops that we've done with our customers. So service and support, air traffic management and training is something we're familiar with. The third one that we'd say that is an advantage or let's say that we're making good progress and it is evidenced by the full scale product that we just announced. Speaker 200:50:36And then we also have done multiple wind tunnel tests. So yes, I think we're at the point where there's the main challenges now with a few suppliers. We're right now in a joint definition phase. And we're it's always and since the very beginning for everyone creating this segment, all the OEM, it's all this pushing the limit and looking on the size, the weight and the power and always the trade off that you look you got to look at. We want to have make sure that we have a robust and reliable vehicle that will also be profitable for the operation of our customers. Speaker 200:51:13So there like I said, there are many challenges, but all the good reason I just mentioned, Maxis believe that we're going to be we're on the 2026 enter the service. Speaker 1000:51:26Okay, great. Thank you so much. Speaker 200:51:30Excellent, Kai. Operator00:51:31This concludes our question and answer session. I would like to turn the conference back over to Lucio Oldworth for any closing remarks. Speaker 100:51:40Thanks, Jason, and thanks to everyone who joined the call today. As you can see, we accomplished several important milestones. Speaker 400:51:48This meeting is no longer being transcribed. This meeting is no longer being recorded. Speaker 100:51:53So we're going to continue updating you on our progress throughout the next few quarters and we look forward to meeting you in the upcoming events we're going to attend. As always, if you have any questions, please don't hesitate to reach out to me or to my team. Thanks and have a good day. Operator00:52:09The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreRemove AdsPowered by