Archer Aviation Inc.

Thank you for attending today's Archer Aviation Inc. Q3 22 Financial Results Conference Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Andy Masson, with Archer Aviation. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today to review Archer's third quarter 2022 financial results. My name is Andy Misson, the Chief Legal Officer of Archer Aviation, Inc. With us on the call today are Adam Goldstein, our CEO, Mark Messler, our CFO, and Tom Yuniz, our COO. We posted a shareholder letter detailing our Q3 2022 financial results and business overview to our IR website. This call is being recorded and an archive will be available on our IR website. Before we begin, I'd like to remind everyone that during today's call, we'll be making forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties are described in the risk factor section of our annual report on Form 10-K are Forms 10Q for the quarterly period ending March 31st and other filings with the Securities and Exchange Commission available on the SEC's website and on our Investor Relations website. Except as required by law, Archer disclaims any obligation to update or make revisions to such forward-looking statements as a result of new information or future events. Also, please note, on this call, certain financial measures are presented on a non-GAAP basis, Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in our shareholder letter posted on our investor relations website. We'll begin with a commentary, and then we'll open up the call to questions. And with that, I'd like to turn the call over to Adam Goldstein.

From day one, Archer's strategy has always been about finding the most efficient path to commercializing eVTOL aircraft. That translates to, one, designing for certifications, which is why we are confident that we do not have any design gaps, and we believe that we have a clear path to certifying Midnight in late 2024. Two, building an aircraft that fits our business case. That means 1,000 pounds of payload to enable a pilot plus four passenger aircraft, low direct operating cost, and the ability to conduct rapid back-to-back 20-mile trips. And three, focusing our in-house development on only the key enabling technologies that cannot be sourced from the existing aerospace supply base. Under this approach, we rely on partners to supply components that are already being used on certified aircraft today, dramatically reducing our certification risk as well as our development timeline and cost. We believe this strategy and our team's ability to execute on it has allowed us to establish our leadership position in the market, and it's why we are confident we will be the first company to certify an eVTOL aircraft in the U.S. with the FAA. You've seen the success of our execution in our maker flight test program and our progress on midnight. Over the coming months, you can expect to hear about further advancements on our path to commercialization. We strongly believe that these achievements will further solidify our leadership position. Earlier in the year, we announced three goals that we aim to achieve in 2022. One, maker transition flight. Two, FAA acceptance of our means of compliance. And three, selecting our site for manufacturing. As we sit here in November, we are on the doorstep of achieving all three goals. First, maker transition flight. Transition is the phase of flight between hover and cruise where the aircraft transitions from lift generated by the propellers to lift generated by the wing, which is called wing-borne flight. I'm happy to announce that on November 2nd, we conducted maker's first wing-borne flight. Over the coming week, We expect to conduct a full transition flight where the tilt propellers will be locked in their cruise position. Second, FAA acceptance of our means of compliance. Archer has submitted its means of compliance, and the completion of this goal by the end of the year will depend on the FAA's ability to review and accept them. We believe we are very close. Third, selecting our manufacturing site. We have selected our site and are finalizing the agreements with the state and local governments involved. We expect to make an announcement on this in the very near term. Next, I will highlight the key areas of progress we made last quarter on our go-to-market efforts, our aircraft technology, and certification. In terms of our go-to-market efforts, we believe we must start planning now for the launch of our UAM network in 2025. This is an effort that spans across many stakeholders, including our business partners and federal, state, and local government authorities. As you saw from our announcement this morning, we have identified our first point-to-point route that we will operate with United between the downtown Manhattan heliport, one of the world's most advanced and well-known heliports, and Newark Liberty International Airport, one of United's largest hubs. In the lead-up to this announcement, our team spent a lot of time talking to the relevant constituents, including members of Congress from both New York and New Jersey, the Port Authority, and Mayor Adams, who I spoke with at length. One of my biggest takeaways from those conversations was the excitement. Excitement for what this new form of safe, sustainable, low noise transportation can mean for the tri-state area. It's this type of validation that makes all the hard work worth it. Recall that we announced on our last earnings call that we received a $10 million pre-delivery payment from United, representing a deposit on the first 100 aircraft we've agreed to deliver as part of their 200 aircraft order. We anticipate that they will deploy some of those aircraft on this first route. We will continue to announce additional routes supported by our proprietary data modeling platform, Prime Radiant, which is helping us determine the optimal takeoff and landing locations for these routes. Expect more exciting route announcements in the weeks and months ahead. Next, I want to highlight our progress on our aircraft technology. On November 2nd, Maker flew its first wing-borne flight. It flew above the stall speed, generating lift from the wing. We believe we are one of a very small group that has done this with a vector thrust eVTOL configuration. And we did this with impressive speed and execution, having started Maker's flight test campaign less than one year ago. I believe the reason we continue to execute well against our goals is that we have the best team in the industry. Today, we have almost 500 employees with a vast majority working exclusively on the development, certification, and commercialization of Midnight. We believe we have the most experienced engineering leadership in the industry. For example, Tom Muniz, our COO, has played a major role in leading the design and development of eight full-scale eVTOL aircraft since 2010. He has been instrumental in implementing our design for certification approach. And Dr. Jeff Baller, our chief engineer, has also played a major role in leading the design and engineering of eight full-scale eVTOL aircraft over the past decade plus. It is incredible to see what these two and the rest of the team accomplish on a daily basis. We will highlight more of our team's impressive experience at our upcoming open house event. As to certification, Tom will cover that in depth during his remarks, but I do want to highlight another key leader on the team that is making a huge impact as we work towards certification. Dr. Michael Romanowski, our new head of government relations, joined us in August after 14 years at the FAA. Dr. Romanowski served most recently as the FAA Aircraft Certification Director of Policy and Innovation. It's not an exaggeration to say that Dr. Romanowski has been the go-to person within the FAA on eVTOL over the past several years. Now let's transition to our upcoming open house. While we originally planned to unveil our production aircraft midnight in 2023, We were able to pull it forward to 2022 given our confidence in the program. On November 16th, we will show a live audience the amazing progress we have been making. And on the 17th, we will be making it available to the public. We will start with a flight test in the morning where we will show MakerFlying a high-speed wing-borne flight. The analysts, investors, and partners will get to witness firsthand the performance capabilities of the aircraft and how quiet it is. As Archer board member and former United CEO and chairman, Oscar Munez always says, proof, not promise. I can't wait to share the test flight experience with many of our great suppliers, investors, business partners, and other supporters of Archer's that will be in attendance. After flight test, we will take attendees through a series of presentations covering our commercialization strategy, our proprietary powertrain development, and a detailed look at our certification progress. The powertrain segment will be especially exciting as we will be showing off sample hardware and explaining how it has enabled our 1,000 pounds of payload. To cap off the day, we will take attendees to a hangar where we will unveil midnight. I also want to highlight the continued work we are doing with our strategic partner Stellantis. Stellantis is one of the largest global auto OEMs with brands including Jeep, Ram, and Maserati, and they've played a critical role in our manufacturing journey to date. Building millions of cars annually, Stellantis has a core competency in high-volume manufacturing. We have been working with Stellantis since 2019 across different engineering projects, and we continue to leverage their deep manufacturing and design expertise. Importantly, Stellantis is fully committed to EV and are investing tens of billions to advance electrification across its portfolio. We look forward to maturing our relationship as we transition into production. In summary, we have made great progress in 2022, and look forward to sharing our 2023 goals in more detail on our next call. We believe the hard work we're doing now to advance our go-to-market efforts, our aircraft technology, and certification will put us in a position to be first to market and win substantial market share once we get there. I am confident we have the plan, the tools, and most importantly, the team to do that. Now, I'll turn it over to Tom Ynez. Thanks, Adam. It's an exciting time to be at Archer as our momentum continues to build. Today, I'm specifically going to talk in detail about our aircraft technology development and certification progress. On the aircraft technology development front, we are really excited about the progress on Maker's flight test campaign that Adam highlighted earlier. One of our critical milestones for 2022 is to achieve our first full transition flight with Maker. We are close to that goal and recently achieved wing-borne flight on Maker with aircraft flying at speeds where the vast majority of the lift required for flight is generated by the wing. This ongoing testing is part of our transition envelope expansion test campaign where the aircraft transitions from lift generated by the propellers at low speeds to lift generated by the wing at higher speeds. We are on track to complete our full transition milestone on schedule before the end of the year where the tilt propellers will be locked in the cruise position. It's important to remember that the reason we chose our tilt propeller aircraft configuration is because of the substantial benefits it offers in the form of energy efficiency and longer range, first aircraft that have separate lift and cruise propulsion systems, or aircraft without a wing that use propellers to generate lift in all phases of flight. The data we have gathered from Flying MAKR is a critical advantage and has resulted in a major de-risking for the midnight program. I think it's important to emphasize the relationship between MAKR and midnight. Our strategy from the beginning was to validate key aspects of our aircraft configuration, including the aerodynamics, flight controls, and tilt propeller system on Maker first, then leverage these lessons learned in the development of Midnight. Midnight has the same aircraft configuration as Maker, but it's slightly larger in order to support the 1,000 plus pounds of payload and carry a pilot to soar passengers. We are confident this is a winning strategy. The invaluable technical data from Maker has given us confidence in the aircraft configuration and our ability to execute the midnight program to plan, which is exactly what we've done with Maker. As Adam outlined earlier, our strategy from day one has been to take the most capital and time-efficient path to developing, certifying, and commercializing our eVTOL aircraft. The key aspect of this strategy has been to focus our internal development efforts on the key technical enablers, like the batteries, motors, and flight control software. For those areas that aren't differentiating technologies, we leveraged the existing aerospace supply base to provide us with components that are already being used in certified aircraft today. This has enabled us to further de-risk the program, but has not impacted our ability to maintain the 1,000 plus pounds of payload necessary for our business model. At this stage, we've selected suppliers for approximately 64% of the bill of materials for midnight, and we look forward to announcing several other of our major key supplier partners over the next few weeks. Another key element of our strategy has been to sync the design of midnight with our certification efforts. Our design for certification approach is based on understanding the detailed regulatory requirements for our aircraft early enough in the program so that the aircraft is designed to be FAA compliant from the start. We believe this is translating to a more efficient certification timeline. Because of this process, we currently don't see any certification gaps in the midnight design. As we discussed last quarter, The FAA's change to certify eVTOL aircraft under its special class process in Part 21-17B has for us proven to be largely administrative. Since our last quarterly update, the FAA has added certain new requirements to our certification basis as a result of the change, including one change addressing the robustness of our aircraft to bird strikes, and another change covering the safety features of our aircraft related to complete loss of propulsive power in flight. Both of these new regulatory requirements are already addressed in MNIT's design, and thus, we don't anticipate they will have any impact on MNIT's development or timeline for certification. As a reminder of how the aircraft certification process works, the first step is agreeing to the G1 certification basis, where the airworthiness criteria are set. The second step is then to agree on the MESA compliance, which is the detailed list of design, analysis, and testing standards that will be used to demonstrate that the aircraft is safe and complies with all of the airworthiness criteria. We have been told by the FAA that the airworthiness criteria from our amended Part 21-17B-G1 certification basis will be published in the Federal Register in the coming weeks. We submitted a comprehensive proposal for midnight means of compliance to the FAA back in December of 2021. we've made lots of progress discussing the means of compliance topics with the technical experts at the FAA over the past year. Because of the shift to 2117 that we just discussed, the FAA decided to review again all of the previously accepted means of compliance to ensure that they remain applicable to the updated G1 certification basis. With an amended and accepted G1, this unlocks the FAA to formally accept the means of compliance that we've been discussing over the past year. Just like we saw with the G-1, we anticipate the re-acceptance of the needs of compliance to be largely administrative. In parallel with efforts around our needs of compliance, our team has been hard at work on our subject-specific certification plans, or SSCPs. The SSCPs provide precise detail on the tests and analysis that will be completed during the implementation phase of the project, which will require that we demonstrate to the FAA that midnight meets all relevant FAA requirements necessary to receive type certification. We expect to have approximately 18 SSCPs, each of which we plan to submit to the FAA for review and acceptance over the coming months. We recently submitted our first SSCP to the FAA, and our goal is for the FAA to accept all of our SSCPs by the time of our next program development milestone for midnight, the critical design review, which is scheduled to occur during the first half of next year. We remain highly engaged, working in partnership with the FAA at all levels, from the administrator and head of aviation safety down to our day-to-day contacts throughout the administration. We are working to progress on certification as efficiently as possible, and the dialogue to date has been highly constructive. Our goal continues to be achieving tight certification by the end of 2024, putting us on track for our first aircraft deliveries in early 2025. With that, I'll turn it over to Mark to discuss the financials for the quarter.