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spk09: Greetings and welcome to the EVE Air Mobility second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Lucio Aldworth, Director of Investor Relations. Thank you, Mr. Aldworth. You may begin.
spk06: Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at EVE, and I wanted to welcome everyone to our second quarter 2023 earnings conference call. I have here with me co-CEOs Jerry DeMuro and Andres Stein, as well as our CFO Eduardo Couto. After their initial remarks, we're going to open the call for questions. We've got a deck with a few slides and additional information that's available in our website at ir.evairmobility.com, so please feel free to download it and follow through the presentation. Let me first say that this presentation includes forward-looking statements or statements about events or circumstances that have not yet occurred. We based these statements largely 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, Assumptions, including, among other things, general economic, political, and business conditions, both in Brazil and in our markets. The words believe, may, will, estimate, continues, anticipates, intends, expects, in similar words, are intended to identify forward-looking statements. And we undertake no obligation to update publicly or revise any statement because of new information, future events, or other factors. In light of these risks and uncertainties, the future events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to Jerry. Jerry?
spk02: Thanks, Lucio, and good morning, and thank you to all for joining the call today. Over the past few months, we've continued to make meaningful progress on our eVTOL development and the other aspects of our overall business plan. As announced at the Paris Air Show, we've progressed to the point in our optimization work that we have now defined what we consider to be the final aircraft configuration, which is depicted here. And I'll talk a little bit more about the details of that configuration on the next slide. We've reached this point in our development program by applying the findings most recently from the wind tunnel testing and a whole suite of test rigs, which provide actual performance data to validate our simulations and predictive modeling. Stein will talk a little bit more about these tools that we've used in our development process a little later. Importantly, we have now identified the suppliers as well for several long lead aircraft subsystems. They include the electric motors, the energy and storage management systems, and the propellers. We plan to select and announce the providers for avionics, actuators, and flight control systems in the next few weeks. And then we will move on to the less time-critical elements through the balance of the year. We also have some late-breaking news which we'd like to talk about, and that is that the FAA has agreed to recognize the primary certification and the certificate process through ANAC, which will allow us to do the dual validation, which is so critical to our development program. We still expect that our certification basis will be approved by ANAC in this calendar year. I'd now like to talk a little bit more about the final design configuration as shown here on slide three. It includes a new empennage fixed to the center booms that are then attached to the wings, providing a more robust physical structure. It also includes one pusher with dual motors or redundant motors and eight lifters, which benefits both weight and safety of the vehicle. The DNA of our simple lift and cruise design remains unchanged. It is designed for efficient and safe travel and targeting 99% of the urban missions. The cabin will continue to house up to four passengers and a pilot. We continue to make refinements in the cabin structure based on the mock-up, which we unveiled to investors earlier this year and have taken on a worldwide tour to get customer and user feedback. Based on that feedback, we've made various enhancements including the baggage compartment, which we believe continues to be the best in class and is particularly adapted for airport and downtown shuttle services. With our main suppliers known and specifications for those components defined, we can now start to assemble parts for our full-scale production prototype. We will begin assembly of that prototype by the end of the year and, in fact, have already started to cut components And then we will begin the test campaign sometime next year. Now, moving to the next slide, we announced at the Paris Air Show the selection of several of our main suppliers, BAE for the energy management and energy storage systems, Duke for the propellers for both the pusher and the lifter, and NIDAC Aerospace, which is a JV between NIDAC Corporation and Embraer for the electric motors, which will be bespoke for both the lifters and the pusher. As you may recall, selecting suppliers was one of the main milestones we established for 2023, and we continue to be on track with that milestone. And as I mentioned earlier, achieving this will allow us to start building our first prototype, and recently we received tooling and began cutting material for the wings. And you'll see that on the next slide. Last and certainly not least, I want to mention the announcement that we made last week regarding Johan Bordes joining Eve as our CEO effective September 1st. Johan currently serves as the president and CEO of Embraer Services and Support, having built that organization from the ground up into a $1.3 billion global enterprise, which is one of Embraer's most successful businesses. So Johan is a well-known quantity and a perfect fit for this role. The EVE vision is to not only design and develop a groundbreaking aviation product, as well as a global support network, it is also to develop a sustainable urban air mobility ecosystem that will literally transform urban transportation on a global basis. Achieving these ambitions will require an incredible amount of talent and innovation. Having accomplished our initial goals of establishing EVE as a public enterprise and bringing that enterprise into practice, we are now going to focus on the immense challenge in the next phase and have added a very talented and seasoned executive to complement the existing team. This addition will also allow Stein, who will remain with EVE as our chief strategy officer, to increase the leadership and focus on the diverse elements of operations, infrastructure, and regulation that are absolutely essential if we're going to make UAM a reality. I will remain with the team through the end of October to support Johan's transition. And in parallel, Ken Rickey has announced his intentions to resign from the board in October, and it is intended that I would replace him at that time. I would note this change in leadership is really taking place now versus later in the year so that we can ensure a seamless transition of responsibilities and there is absolutely no rush moving forward. Now, I'd like to ask Stein to provide you more details on other important developments in the last quarter.
spk04: Thanks, Jerry. We are excited to announce that you have just celebrated the completion of the first carbon fiber laminate material for our first eVTOL prototype, as we plan to start assembling it now in the second half of the year. We continue to make important advancements in our development process. We continue to work in our dedicated rigs to test different motor and propeller configurations under different conditions. This is also used to stress test and measure vibration in the entire system sound profile, and other metrics. We also built and we are running a truck mounted rig that is designed to travel down the runway and simulate the active vibration and the aerodynamic drag of the rotors under real-life conditions. And it is used to validate and refine our modeling of rotor performance. And lastly, We are also employing a series of additional rigs for batteries and motor, as well as thermal management tests that permit extensive, independent testing of discrete subsystems. Again, this part of our testing protocol in which you test different components separately and allowing for a quick and relatively inexpensive development process. We can easily swap parts and change component configurations once we find our optimal solution. This would be not possible had we already committed to a prototype flying. Now onto slide 6. Perhaps as importantly, we selected a few weeks ago where our initial factory would be in Brazil. We had announced it last year after extensive studies with Porsche Consulting to define and optimize our industrialization strategy that our initial facility would be in Brazil, and now we define the site in Taubaté in the state of São Paulo. We are going to expand one of Embraer's units, and the image shows the already existing building. The site is strategically important with easy access to major highways and the railway. It's also close to Embraer's and EVE's headquarters in São José dos Campos, and our development teams and other human resources. We believe this will facilitate the development and sustainability of new production process and reinforce our agility and competitiveness. On top of that, this will be a cost-efficient way to maximize synergies with product development and experience and resources of Embraer. Slide 7 shows that we currently have what you believe to be the largest and most diversified backlog by number of customers and regions in the industry today. In total, we have announced LOIs for 2,850 aircraft from 28 different customers spread over 14 countries and different business, from mainlines to regional airlines to helicopter operators, ride-sharing platforms, and leasing companies. We also have LOIs to offer our urban air traffic management systems for nine customers, not to mention our portfolio of service and operation solutions that is an integral part of urban air mobility solutions and our discussions with our customers. We believe this reflects the state-of-the-art value proposition we bring to our partners and their clients. And there is more to come. on that front. We believe this pipeline offers strong long-term revenue visibility and will help EVE to smooth cash flow consumption in the years to come as we start to convert the existing ladder of intentions into firm orders and collect pre-delivery payments, known as PDPs. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy, to address one of the largest challenges ahead of urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. As part of this effort, we started to announce, together with our customers, our focus cities, where we will be accelerating these efforts. San Francisco, if United Airlines is in the U.S., and Rio and Helios 2 in Brazil. More to come on that front as well. Now, I'd like to invite Edu to talk about our financials and next milestones.
spk03: Thanks, Stein. Now moving to slide eight, EV is a preoperational company, and our financial results reflect mostly the costs associated with the development of our EV talk. Starting with income statement highlights, we invested almost $22 million during the second quarter of 2023 in our program development versus $10 million a year ago. The majority was invested to develop our eVTOL and a portion in service and support solutions and the urban air traffic management system. In addition to development expenses, we also deployed $7 million in SG&A disclosure compared to $16 million last year. Important to say, last year we had several IPO and other non-recurring expenses, Excluding that, our SG&A expenses are actually growing as we increase our corporate structure together with the program development. EVE also reported around $7 million in non-cash expenses related to the mark-to-market of our warrants as our shares went up during the quarter, and we also had $4 million in financial revenues during the second quarter, mostly due to the financial return of invested cash as interest rates are higher. We have a very conservative financial policy, keeping our money invested in short-term deposits with big banks. With that, we reported a net loss of 31 million in the second quarter of 2023. Now, moving to cash flow, our operations consumed $28 million in the quarter versus 20 million last year, mostly driven by the higher R&D expenses in the agreement with Embraer for the eVTOL development. In total, our cash consumption in the first six months of the year was 48 million. This is more than twice the 22 million of the first semester of 2022. This increase was already expected and shows EVE's higher R&D efforts. With that, we ended the second quarter with 269 million in cash, But when we consider the standby credit line from the Brazilian Development Bank of around $100 million that we're going to start to access now in September, our total liquidity exceeds $370 million. And it's enough to fund our operations into 2025. Finally, slide nine summarizes our short-term milestones, and we want to reaffirm our commitments. As mentioned before, we concluded the first two milestones, selecting primary suppliers for critical components of our aircraft and freezing the configuration of our eVTOL. We have also started to manufacture some of the individual components of our first prototype and should begin to assemble these individual parts later this year. With that, we plan to initiate the test campaign next year. We also continue to work in the trial software of our urban air traffic management system. Lastly, we reaffirm our total cash consumption between $130 and $150 million in 2023, which is a result of all our development efforts. With that, we conclude our remarks, and I would like to open the call for questions.
spk05: Operator, please proceed.
spk09: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you. Our first question comes from the line of Savi Sith with Raymond James. Please proceed with your question.
spk10: Hey, good morning, everybody. This is Matt filling in for Savi. First, congrats to Stein and Jerry alike on leading the company thus far in the new roles. And Jerry, I believe this will be your last call if my calendar is correct. So thank you for all the knowledge along the way, and we've really enjoyed speaking with you. That being said, for my questions, with the aircraft configuration now set, do you have any early thoughts on what the aircraft performance specifications and production or operating costs will look like? Or is that more of the event after you finalize more of the suppliers?
spk02: You know, good question, Matt. First, thank you for that on behalf of Stein as well, and I'll turn it over to him. You know, we're still targeting those same high-level numbers that we've been advertising since inception, roughly the 100-kilometer range, et cetera. So I'll pass it over to Stein for a little more detail, if you like.
spk04: Absolutely. I think that's the message. We are on track. And now with more confidence that the goals are set for the aircraft are feasible. We are talking about 100 kilometers, six miles of maximum range. We are talking about payload for four passengers with their carry-on on board. So that's all in good place. And we are moving forward to that. So there was no change. The configuration, it's closed now. We have been working with it for a while. We just opened... and disclose as we select the motors. So that also give us more comfort to talk about it with an actual supplier in place. That makes a lot of difference, both for the motors and for the batteries. So we keep on moving with the confidence that we are in the right track.
spk10: Okay, great. That makes sense. Thank you both. And then maybe for Edu or whoever may want to take it, now with more of the main suppliers selected, Are you able to discuss at a high level on how those agreements are set up and when we could expect certain deliverables and payment timing to hit? Thanks again for taking the questions.
spk03: Yes. As you mentioned, right, Matt, we signed the primary suppliers, right? We are finalizing some other key components in the short term. Those are, of course, long negotiations, right? They may require some payments from the EAP side, but those payments are highly connected with the eVTOL development, right? We pay part of the development from some suppliers, and this payment is connected to the different phases of the development, right? The more we progress or as we advance, we do those payments. All of that is already included in our short-term forecast, and we feel comfortable with the cash level, we have a print of cash for, you know, I would say way into 2025.
spk10: Okay, that makes sense. So basically no real non-recurring cost timing or lumpiness that we should really consider. It's more just, you know, as you progress.
spk02: Yeah, Matt, I think, you know, just to highlight what Edu said, if you look at our cash burn in the first half versus the second half, You know, there's an increase in the second half, and that's directly attributable in a major way with now stepping up the development program with the vendors, supplier payments. The product deliveries really won't be until well into next year. So that's really one of the main reasons why you see the increase in the cash second half over first half. The second issue, which we're working very aggressively to manage cash, is the beginning of the industrialization of the Tabate site, as Stein alluded to. So they're the main drivers there. But, you know, payments related to product really will be more in next year than this year. We're still developing.
spk04: And Matt, if I can complement your question, I didn't mention about the operational costs that you also ask. So like with the performance, the selection of the suppliers and the freezing the configuration help us to be comfortable with that when it comes to cash operational costs, how much it's going to cost to operate the aircraft. And our internal analysis put us with a clear advantage against the competitors. at least double-digit advantage when it comes to cash operational costs. And again, with the suppliers, the performance, as well as even the cost of goods sold becomes more mature, and we believe we are, like with the performance, in the right track towards that as well.
spk11: Great. Gary, Sarah, thank you all again.
spk09: Thank you. And our next question comes from the line of Kai Von Rummer with TD Cowan & Co. Please proceed with your question.
spk00: Yes, thanks so much. And Jerry and Stein, great work. So as for suppliers, you know, in air transport programs, it's not unusual to have pay-to-play provisions for the suppliers. contribute to the development and that sometimes they get paid, you know, after the articles are actually delivered to end customers. I know you're not going to talk about, you know, individual agreements, but just philosophically, can you give us a little more color on how those agreements are structured and what they imply in terms of cash contributions from suppliers and, you know, cash flows?
spk02: So I'll give a very high level, Kai. You know, the typical launch assistance, you know, we're staying away from that. But these agreements are very comprehensive. They cover the development phase, the production phase. And to date, each of them addresses the aftermarket and how we will manage the support to the aircraft and customers after that. But the Other than that, though, the development and production are set up pretty traditionally, as you might in any product manufacturing, and little, if any, real what I would call launch assistance. Stein, do you want to expand on that at all?
spk04: I think you touched the main points, but the rationale here is not to get any surprise in the aftermarket, so we are really conscious on how we are setting that deal, so we can deliver back to the previous questions, aircraft that is the leader in the market when it comes to cash operational costs. So there is always a trade-off there, and we are very savvy about it, given our own experience from previous programs with something that we do bring from the modern company.
spk00: And I think you mentioned, Stein, you think you have an operating cash operating cost advantage versus the competitors. Can you expand on that a little bit? Why? Roughly what sort of range of magnitude that might be?
spk04: Sure. So what's the rationale behind it? Our simple design, there is a reason why we decide to go. So avoiding complexities that increase maintenance costs, for example. our performance being tailored towards urban air mobility, there is no free lunch. You want to fly further and faster, that comes at a cost. So when add this simplicity of design, this performance-based aircraft as well that you can design for a given mission, you add our understanding of design for maintainability, designing for manufacturing, And even how we are talking with our suppliers and assuring that you have a competitive aircraft in the end, when you do our own internal analysis and compare what you would be if you were doing a different aircraft, and we've done that since the beginning, right? We look at different trade-offs in terms of adding tilts or increasing the complexity. If you look at that and the final conclusion we got that we are in the right track to create that differentiation, It will vary from operator to operator, maybe in some case 10%, some case 15%, some case could be a bit less, but there is a clear advantage there. Given, again, the simplicity of our design, our design for maintainability, our know-how designing and building aircraft towards that, keep in mind that one of the main points for any regional aircraft is exactly that philosophy, how you are designed for the mission and assuring that you have a reliable aircraft which helps with increased utilization. That also helps reducing the operational costs at a lower cost of operation, keeping the user experience in mind as well.
spk05: So that's how you are reaching that.
spk00: Terrific. And one other one. So with Johan joining, you bring additional support. expertise. And I think you are different than your competitors and you have much more focus on offering support and service. I think, you know, your initial IPO plans called in 2030, roughly 45% of revenues would come from service and support. Can you give us any color in terms of, you know, because you're going to be slower tomorrow or after your competitors in terms of entry into service, how you intend on building up, you know, the support effort. And I assume that's going to be the earliest revenues that you'll recognize. Thanks.
spk02: Okay. You'll probably turn it over to Stein. I'm not sure we accept your characterization that we will be substantially behind others. You know, there's quite a bit to be accomplished, as you well know, to get these products through certification and then actually in operations. And without mentioning a specific competitor, when you look at their business plan, it's, it's for, you know, two handfuls of, of, uh, these products to be delivered in the first couple of years. So I'm not sure that material difference is going to exist. Having said that, I think you're exactly right. Uh, that, you know, this team with this experience supporting aircraft around the world, um, is focused on that part of the role. And Stein has been, uh, Very, very involved with the teams. He mentioned the launch cities. Quite a bit of planning is going into that. And it's also one of the reasons why we're bringing on the level of expertise that we are. Stein?
spk04: Again, I think we touched all the main points. But first of all, I completely agree that it should seem that we are coming after our competitors or not. and also the ramp-up plan that, in our case, it's sound, so it's not extreme that you're going to deliver thousands of aircraft in the first year, but at the same time, we're going to deliver enough aircraft to really create a good position for us in terms of market share. That's the plan. When it comes to service and operational solutions, beyond the experience, the access we have with existing infrastructure, how we are overlapping and combining that with the discussions of the initial cities, where you can deliver type of infrastructure pre-exists from Embraer, structure partnerships and so on from Embraer that can help us do that without an incredible amount of KPACs in the beginning. That again, it's a clear differential that was mentioned since the beginning, that to achieve that network, that pre-existing network from Embraer, it would take us, if you were to do it from scratch, It would take us decades and hundreds of millions of dollars in terms of investment. So we definitely have an edge there, and we had a lot of lessons learned on how to deliver, too. And now with Johan coming, Johan has been running that organization since its creation, actually, on the beginning. A lot of expertise on that area, too.
spk11: Thank you very much.
spk09: Thank you. And our next question is from Jonathan Kutras with JP Morgan. Please proceed with your question.
spk01: Yeah, good morning, Jerry Stein, Lucio. Now that we have primary suppliers named and the test campaign will begin early next year, when should we expect the LOIs that compose the significant backlog to be converted into for mortars? Is this something we can expect once the prototype is completed, so mid to late next year, or am I thinking about it wrong? Thank you.
spk04: If I may, Jerry, the two things are not directly related. That definition is more related to us maturing the development of the aircraft, something you said from the beginning. Us doing the things on the right order in terms of prototypes and so on, not flying too early just to show to the market. So that's one track. When it comes to the to that confirmation. It's exactly the work we are doing now on really getting this backlog we have and working for our customers to better understand their business case, where their craft will be deployed, what type of infrastructure needs to be there, what you need from our program, as well the confirmations we are having now with supplier selection. That's a very key milestone because that allows us to have the right visibility in terms of both performance and cost, as you mentioned before. So these are the key drivers for us to really start in converting this backlog in real orders and in real deals. Jerry, not sure if you want to comment anything else there.
spk02: No, I think you're exactly right. While the two are not necessarily contingent on the other, The timeframe that you mentioned is probably realistic. And the priority, as Stein said, will be first with our launch city and launch customers to convert them. And then we'll move through the balance of the backlog. We're working right now to fill the first two years of production slots. So they will be the priorities as we move through the first half of next year. And by that point, I think you'll see some of those early ones converted and then we'll move through the balance.
spk11: Perfect. Thank you, Jerry Stein.
spk09: Thank you. And our next question is from Sheila Kayoglu with Jefferies. Please proceed with your question.
spk08: Good morning and congratulations, guys. So just wanted to talk about suppliers again and just the configuration of the eVTOL. As you point out on slide three, you've made some finalizations and refinements. Maybe can you point out to us what was the most significant and then what's left, if anything, on the configuration or this is final?
spk02: Good question, Sheila. It just so happens we have with us today our Chief Technology Officer, But I think, you know, Stein can probably give you a pretty high level. We expect some further refinements, though, as we go along. You know, we still have another set of wind tunnel tests, at least on the horizon, and we mentioned these test rigs. So there may be some minor tweaking of the wing, et cetera. Stein, you want to talk to that?
spk04: Sure. It is the configuration, so where the pusher is, what you actually see. That's what is defined. We've been working towards that for a while now. What we've done in Paris was just to disclose, and we timed that together with the selection of the, particularly the motors, so we could assure, okay, there is a real offer there for us to move ahead of that. So we don't expect anything that's really visible, but we are fine-tuning the shape of the wing, the shape of the blades of the propellers, the interactions of the systems, the noise profile of the aircraft, the sound profile of the aircraft, and tweaking these interactions. But visually, we won't see and we don't expect any change, anything that is visually different, really, other than the fine-tuning of the control loss, of the human-machine interface as well, how exactly the cockpit will be. We have been interacting with future pilots and users to really refine that, to optimize the battery consumption. So that is ongoing. This level of refinement already with the suppliers on board, that is part of this phase of the project. But we don't expect to see any change that can actually visually perceive in terms of the aircraft, other than details on the shape. You really need to go, you need to be an engineer and go deep dive on the details of it to see any future difference there. But the configuration as a whole is set.
spk05: That was part of the finalization of the current phase of the development.
spk08: Got it. And then on the suppliers, were they all... competitive wins that you guys put out RSPs for. So a little bit to Kai's question and do they already have these products on any other eVTOLs?
spk02: Absolutely. They were all competed. There was a very large funnel and an eventual down selection process to the final vendors. And frankly, I think as you have found with the other or in speaking with the other eVTOL manufacturers, Virtually every one of these solutions is bespoke to that particular aircraft, its configurations, and its performance requirements. Stein, you want to add anything to that?
spk05: No, no. I think you said it all. We are on the right track on that, too.
spk11: Okay. Thank you both.
spk09: Thank you. And our next question is from Austin Muller with Canaccord. Please proceed with your question.
spk13: Hello, good morning. So just my first question here, what issues do you think other eVTOL OEMs will have in maintaining their aircraft once delivered to customers relative to EVE, which has access to Embraer's global MRO shops and supply chain?
spk04: So, Jerry, if I might start. There are a lot of issues related to logistics, to managing the initial provision list of materials, for example, the parts, having the KPACs in place, even for the physical locations that we have earlier access, not only on the existing infrastructure, as I mentioned, but even on the experience of understanding what comes first. So what you need to target first. And logistics is one good example of that, particularly in a market like that, that will happen at city level. It's not like these aircraft will be able to fly across country to go to a different MRO. So we really need to establish how we do that. So working with our customers as well, a lot of our customers have their own capabilities. And one example of that in Paris, we've also announced moving ahead and put it on the discussion with Hallyu in Brazil. And don't go more into detail to the, how the substance operation solutions will work here in Brazil, but same applies for other operators. So it's the combination of the physical infrastructure, but the process know how logistics that we are bringing from the, on our DNA from the modern company.
spk13: Okay, that's helpful. And do you expect to be able to collect PDPs after the first test flights are complete or closer to ANAC and FAA certification?
spk05: We, sorry, Jerry.
spk02: No, that's fine. I think we're both going to say the same thing. It will depend on the, you know, the conversion of the LOIs into firm agreements. But generally, the PDPs will start about 18 months before, roughly 18 months, isn't that right, Edu, before delivery of the aircraft. And then as we hit milestones through certification and build, you know, those progress payments increase. So roughly 18 months out.
spk11: Great. Thanks for all the details.
spk09: Thank you. And our next question is from Andres Shepherd with Cantor Fitzgerald. Please proceed with your question.
spk12: Hi. Good morning, everyone. Thanks for taking our question. And congrats to Jerry and Andres. Andres, it was great seeing you in Paris at the air show. A lot of our questions have been asked, but maybe one qualitative and one quantitative. On the qualitative side, I was just curious to get your thoughts on the recent FAA implementation guide that was published in late July. There's a lot of information there, so just wondering maybe at a high level what your preliminary thoughts around that were. Thank you.
spk05: Stai?
spk04: Yeah, we had a deep dive on that, and we have been talking with FAA and with our peers as well as an industry answer to that I understand, and even on discussions we had with them, that was quite preliminary, so very similar to what you see in our taxi today with internal combustion engine aircraft, and the expectations exactly for us as an industry to comment and come back on that. We are working closely, including with Gamma, in UAS, to answer together, but there are a few points there that I think are relevant to highlight. We understand that we are focusing on urban air mobility operation, so we need to keep the highest safety level, highest safety standards. We are completely aligned with FAA with that concern. We believe, though, there are different ways to show that we're complying with that level of safety that is required. So in terms of reserves, keep in mind that when you're talking about urban air mobility, you're talking about structural operations. So we take off knowing exactly where you need to go, you know exactly where your alternates are, just to give you a bit of color on things you're talking about. It's different than when you're flying ad hoc and you need time to figure out in case of any emergencies, you need to figure out where to land. Structural operations, you don't require that. You know already before taking off all the potential alternates. So that's one example. Same with pilots. We need to apply the latest of technology to assure that you have the capable pilots on board, but there are different ways to do that. Not necessarily experienced from previous flights in different types of aircraft is the best way. There was a comment about ATP pilots for eVTOLs. We believe there are other ways to assure the same level of safety through different methodologies for training, use of technology for training to assure that the pilot knows what he's doing and is comfortable flying our eVTOLs, reducing the pilot's workload on the eVTOLs, another key aspect of that. So I believe that it's going as expected. The first issue of this far became heavy, but again, I believe and I believe based on all the discussions we have, that was the intention for the industry now to position themselves and showing how we can deliver the highest standards of safety through different processes, different technologies, different alignments. And there is a timeline, and actually you are reaching the time for the – there's a timeline for the industry to comment. It's the 14th of the month now. So we are good in front of our side who have made our comments already.
spk12: Got it. Thank you very much. That's very helpful. And maybe just one last quick one, a question for maybe for Edu. You know, with the $370 million in total liquidity, which includes the lines of credit, I'm just wondering, you know, you're funded into 2025. you've said before that the certification process is expected to cost between 500 and 600 million, which obviously are well underway. I'm just wondering, you know, how are you thinking about capital raising opportunities? There's going to have to be a point where once you begin manufacturing and testing and as you go through all these three different certifications, I would expect some sort of capital raise at that point. So I'm just curious, how you're thinking about that and anything you can say to that extent. Thank you.
spk03: Well, thanks, Andres, for the question. As you mentioned, we are very well capitalized, right? We have this 370 million in liquidity. We have been working to start to access these 100 million long-term standby facility, right, from the Brazilian Development Bank now in September. We're in very good shape. That will be quite interesting because we have been able to control our cash consumption, right? But with this line, our cash consumption should reduce even further, right? Because a good amount of our expenses for the second half of this year and throughout 2024 will be financed with this long-term R&D line. Regarding CapEx, we are also discussing some long-term finance. So I think overall we are in a very good shape. We do not plan any capital raise in the short term because, you know, our liquidity is high. We still have to access those finance lines, and we're going to start to withdraw them now. So we are feeling good. Of course, we, as you mentioned, we have this 5600 medium, our total R&D. But we raised, right, we already raised half a billion, including equity and debt.
spk05: So we are in good shape.
spk11: Got it. Thank you very much. Congrats on the quarter again, and I'll pass it off. Thank you.
spk09: Thank you. And our next question is from Marvin Fong with BTIG. Please proceed with your question.
spk07: Good morning. Thanks for taking my questions and congratulations and good luck on your next moves, Jerry and Stein. My question is just kind of follow up on what others have been asking about, you know, now that you've selected several of your suppliers and have visibility on some of the other ones, you know, are you still confident on sort of your earlier estimates on what it would cost to build the EV VTOL? And could you comment on what percentage now of operating costs you've now secured now that you've selected suppliers? For instance, I believe propulsion is your largest operating cost, and now that you've selected the suppliers for it, it seems like you've locked that in. So maybe just comment on that. you know, how much of your operating costs you've sort of nailed down now that you've actually, you know, seen the product and made the orders.
spk04: Sure. To your point, it is indeed assuring that the key suppliers help us a lot to understand that future more than the propulsion. Actually, the battery, I think it's really the game changer in terms of operational costs for electrical aviation. But both things are quite relevant. And having now an actual supplier with a contract in place, it's not an R&D partnership that you're going to know later on. It's an actual agreement like we've done in other programs. So that gives us considerably more confidence to understand our future numbers. We'll not comment on the exact percentage that represents on that. on the operational costs, but what I can say, and it will change from country to country, right? Depend on pilot salaries and mechanic salaries and so on. But battery kind of represents what fuel used to represent internal combustion engines in terms of relevance. So having that in place really help us to see how that gonna play out in terms of operational costs. Also on another key aspect of the operational costs, it's of course, the ownership costs of the eVTOL. So having select that suppliers and having a good understanding of the next phase as well, because we are going through this process already with answers in hand, even though some properties you'll select more suppliers, but you are heavily engaged. So that gives us a lot of confidence on these future operational costs.
spk02: You know, we haven't seen anything though. that would change our basic estimate, you know, in terms of the cost of building the aircraft. So, you know, some are a little bit higher, some are a little bit lower, and it will be volume dependent, but we're not changing the original forecasts.
spk07: Okay, that's great.
spk11: That's all I had. Thank you. All right. Thank you.
spk09: Thank you. There are no further questions at this time. I would like to turn the floor back over to management for closing comments.
spk06: Thank you, Camila. We look forward to updating you on our progress throughout the next few quarters as we achieve our operating milestones and meeting you in the upcoming events we're scheduled to attend. As always, if you have any questions, please don't hesitate to reach out to our team. Last but certainly not least, I want to thank Jerry and Stein personally for their friendship and contributions to EVA for the last few years. I'm positive we're only in the position we are in right now because of their leadership. So thanks to both of you and best of luck. To everyone else, thank you for participating in today's conference call and have a good day. Thank you.
spk09: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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