Eve Holding, Inc.

Greetings, and welcome to the Eve Holding, Inc. Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, Mr. Lucio Alder, Director of Investor Relations for Eve Holding. Thank you. You may begin.

Thank you, Operator. Good morning, everyone. This is Lucio Waldroth, the Director of Investor Relations at EVE, and I wanted to welcome everyone to our fourth quarter 2023 and full year earnings conference call. I have here with me our CEO, Johan Bordet, CFO, Eduardo Couto, and our Chief Technology Officer, Luis Valentini. After their initial remarks, we're going to open the call for questions. We have a deck with a few slides and additional information on our website at ir.eaveairmobility.com, so please feel free to download it and tag along. Let me first start this presentation by saying that it includes forward-looking statements or statements about events or circumstances that have not yet occurred. These 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 these forward-looking statements. And we undertake no obligation to update publicly or revise any forward-looking 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. With that, I wanted to turn the presentation over to Johan. Johan?

Thank you, Lucio. Good morning, y'all, and thank you for joining us for this call today. We had a very busy 2023 year with several important achievements, and among the milestones last year, I would like to highlight the one that most directly influenced our program, starting with the selection of our suppliers and the signing of the binding contracts, which defined technically all the specifications for each of the components as well as all commercial aspects with the volume and the unit price, including, by the way, aftermarket support conditions. We defined the architecture of our VTOL in June of last year with the definition of the flight critical component like the electrical motors, the energy management system, the propellers, especially when it comes to the dimension and the requirements for the subsystem of each of these parts. This enabled us to start the building process of our first full-scale non-conforming prototype. As a reminder, I would like to say that we have a unique approach that was inherited by Embraer proven methodology. We test the system and the components independently, and only then we incorporate them in the design once we find an optimal configuration. This allows us to be quicker and efficiently involved with the design and reduce the program development schedule, but also the cost. So up until the initial assembly of the prototype, we already had tested individual system with the rigs under different condition and configuration. We also started the September, the joint definition phase. We will also call it internally a JDP. This is when our engineer interacts closely with their part of the suppliers we have selected to go over all the details and how each component will work and interact with each other. for a seamless and integrated system. I'm going to give you an example here. I think it's a little bit more concrete. During the GDP, the team will define the multiple sensors and which will feed the airspeed data, temperature, relative humidity into the avionics and how the flight control system will interpret the data in order to control the flight surface after the pilot command. This, of course, will be supported by the fly-by-wire system that we are putting in place. So, as you can see, it is a very complex task that involves several different processes impacting each other with a lot of moving parts and interactions. So, the focus here is to design the systems to work seamlessly and safely. Now, going to slide three. It shows us the latest development and includes the five-day exercise that we conducted in the UK to test the urban air traffic management, the ATM software, with a partner, FlexJet. Hello. It was used to validate and refine the software. We deployed it in parallel with the incumbent software that they already have in operation right now in their operation, but to simulate all typical function in the air traffic management operations. We successfully run some tests under normal conditions, but also under different conditions, which is, you know, such as the delay, the bad weather, and it was a very concrete operation, and we could learn from it and obviously just make the software better afterwards. So, quite excited about this. Now, moving to the next slide, couple of slides, we have, we're bringing here several pictures that we just took from the test facility in Gagampachoto in Brazil, in the state, Sao Paulo state, where you can see the process of our full-scale prototype. You can see the harness, which are all the electrical and electronic connectors that we will place soon inside the wings and the empennage. These also carry all the information and the comments back and forth between the flight computers, sensors, and actuators. You can also see the early stage of the structure and the fuselage, the wing, the detail of the vertical stabilizer of the empennage. If you go to the next slide, it would show you the prototype is getting really the final stage. We have positioned the wing and the empennage in the fuselage. We call it internally, you know, the junction, but also even like in a nice way, we call it a marriage, just the marriage between the fuselage and the underwing. we now still have to install the actuators, the control surface on the wings, on the eponage, and the composite of the skin of the beetle, which we expect to be concluded in the next few weeks. And once we receive the electric motors, also in the second semester, we'll perform an necessary ground test, and we plan to start the test flight campaign later on this year. Going to slide number six. Now, this is showing you here the latest additions to our component suppliers list, which we will start to use for the first of our five conforming prototypes. Since the third quarter of 23, we have announced several suppliers. We have selected the AFSCC to provide the control surface and empennage, Assetori, the Spanish provider for the wings, Cruze for the pilot control, we call it also a joystick, And we also have signed with Thales for the sensors and Honeywell for guidance and navigation. And lastly, Recaro for the seats. These new suppliers are actually joining the select group of the industry leaders of our ROV toll. You know, really important to highlight here that we have the best of breed approach to bring suppliers with their experience in aviation and certification. And importantly, we will support us in the certification campaign. and throughout the VTOL lifecycle, not only for the certification and delivery, but also, you know, in the lifecycle process. Lastly, these contracts will define the price, the quantity schedule, with a scale function, with reduction of the unit price as we reach the higher EVTOL volumes out of our production site, which will reduce the unit price of production, right, as we call it, economy of scales. The service suppliers joined NEDEC to supply the electrical motors, the BAE that we already informed early on in 2023 for the energy management, and Duquelis for the propellers. We had also signed the Embraer for the EVE's flight control computer, the FCC, and systems, and with these fly-by-wire capabilities. Embraer will also assist us in designing, developing, and manufacturing all flight control hardware systems and provide support for certification. Garmin will supply all of the flight deck with the high resolution display of the flight deck and integrate the aircraft management with the flight control system. We also selected lever for the flight control actuators and intergalactic to provide us the thermal management system for the equipment. We still have a few suppliers to select, but as they're not that critical for the aircraft performance, like the transparencies, the cabin interior, we expect to conclude the selection process very soon. Looking at the list, which is obviously increasing, we're not up to 90%. I'm very confident that the level of safety and the certifiability and performance of our RV eVTOL. Moving on to the slide seven, it shows that we are in the entire, you know, where we are in the entire master development phase. As I mentioned before, we are currently in a joint definition phase to detail all the interface to link the different systems and make sure that they integrate all together. This phase also includes the system of our manufacturing process as well. As a reminder, we have already selected our manufacturing site a few months ago. The site is currently being used by Embraer, but we will start soon to customize it to our own need later on this year. At the current pace, and judging by the progress of the assembly of our prototype, we're in really good shape to receive the certification, the top certification, and make the first delivery still in 2026. Moving on to the slide number eight. It shows that currently what we have, we believe, is to be the largest and the most diversified backlog by number of customers, but also by region, by diversity in the whole industry today. In total, we have announced LOIs for 28 countries. 50, 2850 aircraft from 29 different customers spread over 13 countries and different businesses from the main lines to the regional airlines to helicopter operators, ride sharing platform, the leasing company. As you can see, it's very complete. We also have LOIs to offer our urban air traffic management system for 14 different customers. And we also, you know, we believe that this reflects the market leading value proposition That we bring to our customers and our partners. Beyond this, we are developing a strong network of partners in the area, such as the infrastructure energy to address one of the main challenges that we have in industry and the air mobility. It's really to create the whole new ecosystem besides the simple development of aircraft. And important, and I think more important than the vehicle, and obviously to me it's real dear, it's also we're securing the contracts with 10 different customers for the maintenance repair overhaul for service and support that will bring about up to $660 million in revenues for Eve over the course of the next five years. actually five years from the delivery, the first delivery in 2026. Importantly, these customers have placed LOIs and they represent 985 aircraft, okay? And which is about 35% of our order book. So we can potentially expand this business within this customer base that I then mentioned about the 2,850 aircraft. And because those are agnostic also, that means that we potentially, we can service the eVTOL of our competitors service revenues could proceed actually aircraft sales. We believe that our pipeline is that the services for the vehicle, but also service and support contracts offer a strong long-term revenue visibility, and it will help EVE to smooth the cash flow consumption in the years to come as we start converting the existing letters of intent into orders and collect the pre-delivery payment known as PDP. Now I'd like to invite Edu to go over our financial and the next milestones.