Archer Aviation Inc.

Thank you for attending today's Archer Aviation Inc. Q4 2022 Financial Results Conference Call. My name is Bethany, and I will be the 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 Misson, Chief Legal Officer with Archer Aviation. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today to review Archer's Q4 and full year 2022 operating and financial results. My name is Andy Misson, the Chief Legal Officer of Archer Aviation. On the call today is Adam Goldstein, our founder and CEO, Mark Messler, our CFO, and Tom Yunez, our COO. We posted a shareholder letter detailing our Q4 and full year 2022 operating and financial results 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. on this call those risks and uncertainties are described in the risk factor section of our last annual report on form 10k our form 10q is filed to spend and other filings with the securities and exchange commission available on the sec's website and on our ir website except if required by law we disclaim 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 IR website. We'll begin with 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. Adam?

We remain committed to bringing to market the leading commercializable EDTOL aircraft. Our strategy is unwavering. We have advanced toward this goal faster than anyone thought was possible. I want to reiterate the key aspects of our strategy. One, designing, building, and optimizing an aircraft for the UAM business case. That means bringing to market a safe, low-noise aircraft that can carry approximately 1,000 pounds of payload to enable a pilot plus four passenger aircraft operation that has low direct operating costs and the ability to conduct rapid back-to-back trips in and around urban areas. Two, designing an aircraft for certification and mass manufacturing from day one. And three, focusing our in-house development on only the key enabling technologies that cannot be sourced from the existing aerospace supply base. We believe that our strategy, coupled with our team's Industry leading experience across eVTOL aircraft and electric propulsion systems is what allows us to make such demonstrable and clear progress. We entered 2022 with an aggressive roadmap to advance our business across four key areas. Technology development, manufacturing build out, certification, and commercial operations. We exited 2022 with tremendous momentum. with the Archer team achieving significant milestones in each area. I'll recap for you a few of what I believe to be the most noteworthy highlights that demonstrate our leadership in this market. Taking Maker from hover to full transition in less than a year. Receiving an industry-first $10 million non-refundable pre-delivery payment on 100 aircraft from United Airlines. Announcing with United Airlines the first commercial electric air taxi route in the U.S. from downtown Manhattan to Newark Liberty International Airport, unveiling our production aircraft midnight at our open house event in the Bay Area that included a flight test experience, and announcing the industry's first high-volume eVTOL manufacturing facility in Covington, Georgia. I couldn't be prouder of what our team has achieved. We ask them to come to work every day to figure out how to do what was once thought impossible, build and commercialize electric aircraft. But the challenge to our team doesn't stop there. We push them to do it more efficiently than anyone else in the industry. That means finding a way to do it while spending a third less capital, using a third less people, and then a third of the time as some of our leading competitors. Our team continues to deliver in spades. One of the keys to our efficiency is how we leverage our relationships with our key strategic partners, United and Stellantis. I've previously talked at length about our United relationship, and given our recent exciting announcements about the deepening of our partnership with Stellantis, I'll focus on that on today's call. As a reminder, Stellantis is one of the world's largest automakers. Its storied and iconic brands include Jeep, Ram, and Maserati. Stellantis has been a strategic partner to us since 2020 through various collaboration initiatives. They have also been a cornerstone investor since 2021. During this time, Archer has leveraged Stellantis' deep manufacturing, supply chain, and design expertise in connection with our efforts to design, develop, and commercialize our eVTOL aircraft. Carlos Tavares, Stellantis CEO, has a very unique perspective on the industry as a result of his experience as the CEO of one of the world's largest and best run auto manufacturers in the world and having sat on the board of Airbus for nearly six years. This makes him one of the only people in the world that has expertise in both efficient, high volume auto manufacturing operations and large scale aerospace manufacturing. And that is why we are very proud of the sentiment he shared recently when he commented that he is, quote, continually impressed by Archer's ingenuity and unwavering commitment to deliver, end quote. One of the common investor questions people ask me is, how is Archer going to manufacture aircraft in higher volumes than other traditional aerospace OEMs? The answer is simple, together with Celantis. And this is what our expanded partnership is all about. As Carlos said, supporting Archer with their manufacturing expertise is another example of how Stellantis will lead the way the world moves. We've joined forces to ramp our manufacturing capabilities together. We will leverage each company's respective strengths and competencies. We bring our world-class team of EV tunnel, electric powertrain, and certification experts, while Stellantis brings advanced manufacturing technology and expertise, scale, experience, personnel, and capital to the partnership. This combination is intended to enable the rapid scaling of aircraft production to meet our commercialization plans, while allowing us to strengthen our path by helping us avoid hundreds of millions of dollars of spending during the manufacturing ramp-up phase. Working with Delantis, we have now begun construction on the industry's first high volume manufacturing facility in Covington, Georgia, at a site adjacent to the Covington Municipal Airport. In selecting this location, we completed, together with Stellantis, a comprehensive survey of potential sites across the United States. Key considerations included the availability and diversity of talent in the local labor market, ability to conduct seamless flight test operations, construction costs, and logistics. In April, we plan to host a ceremonial event at the site to celebrate this achievement and the exciting future we have ahead in Georgia. The plan is to initially build out a 350,000 square foot facility capable of producing up to 650 aircraft per year. The facility is set up so that it can be expanded by an additional approximately 550,000 square feet to support production of up to 2,300 aircraft per year. We will share more details on the progress of this build out as it continues to take shape. Just as important as the manufacturing expertise and experience they bring to the relationship, is the capital they bring. As a key part of our expanded relationship, Stellantis is providing us with up to $150 million in equity capital for draw at our discretion in 2023 and 2024, subject to our achievement of certain business milestones, which we expect to occur in 2023. The structure of this equity investment is quite unique and intentional in that it gives us the flexibility to access it if and when we need it, with our goal being to minimize pollution. Stellantis also signaled their intent to increase their strategic shareholding through future purchases of our stock in the open market. We believe this is by far the deepest commitment by a strategic partner across the eVTOL industry. I couldn't be happier with the relationship we have forged with Carlos Tavares and his team at Stellantis. I'll now shift to what's ahead in 2023. The leaders in this industry are now focusing on building and conducting piloted operations with conforming aircraft to support the goal of entering into service in 2025. Today, we announced our exciting progress that the final assembly of our first midnight aircraft is nearly complete. All major aerostructures, that is, the wing, tail, and fuselage, et cetera, have been built and mated together. Our team has installed a significant portion of the wiring, electronics, actuators, and other systems. and we are currently targeting to begin our flight test campaign with this aircraft in mid-2023. I'll let Tom talk in more detail about the progress and purpose of this aircraft, but I do want to note that it will be used to enable company testing in advance of four-credit certification testing. Additionally, component manufacturing is already underway for our first conforming midnight aircraft, which will be flown with the pilot. As we noted in our shareholder letter, we are planning to build six or more conforming aircraft for credit testing with the FAA in support of our type certification. We are targeting completion of our initial conforming aircraft in 4Q 2023. And in turn, we will begin piloted flight test operations with this conforming aircraft in early 2024. These conforming aircraft will be built at our San Jose, California manufacturing facility and integrated test lab. located strategically just around the corner from our HQ. Now I'll turn to our commercial operations build-out efforts. We continue to make great strides there. Following on from our announcements in 2022 with United Airlines setting out the first planned commercial point-to-point eVTOL route from downtown Manhattan to Newark Liberty International Airport, as well as our Joint eVTOL Advisory Committee, Our teams continue to work closely to identify additional planned takeoff and landing locations in the New York metropolitan area and other cities in the U.S., and mature our plans around commercial operational matters. As part of this work with United, and as we build out our customer-facing app, our data science and product teams are working hard to map out the desired urban air mobility customer experience. To better understand the customer journey, we recently built out our first Archer Portal at our HQ. The Archer Portal is a prototype build of the takeoff and landing experience we plan to deploy. It will allow us to test the configuration, technologies, and procedures we will leverage in our everyday commercial operations. The Archer Portal design is modular, adaptable, and low-cost, enabling it to evolve based on a variety of environments and requirements. we plan to integrate Archer portals seamlessly into the existing infrastructure at our takeoff and landing locations so that we can offer a heightened and efficient experience for both passengers and crew members. Stay tuned as we'll continue to have exciting announcements in this area throughout 2023. At Archer, and as an industry, we are pushing the boundaries to provide the world with a new sustainable form of transportation that will unlock the skies. We are honored to host FAA Acting Administrator, Billy Nolan, and Director of Certification, Lyrio Liu, along with other members from the FAA, at our HQ in January to discuss how we are executing against that goal. The key takeaway from our time together was that safely integrating eVTOL aircraft into the national airspace in 2025 is a top three priority at the FAA. Our team remains focused and energized as we close in on achieving our mission. I'll now turn it over to Tom Yunez to share more details on our technology development and certification progress.