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spk10: 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.
spk01: 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?
spk07: 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.
spk05: Thanks, Johan. Now moving to slide 9, EVE is a pre-operational company developing its eVTOL and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development. With that in mind, I want to highlight some of our 2023 financials. EVE invested 34 million during the fourth quarter 2023 in our program development and 106 in the full year. The majority was invested to develop our eVTOL and a smaller portion went to our service and support solutions in the urban air traffic management system. We are the only eVTOL company with a complete solution that includes design, development, manufacturing and sale of an aircraft, as well as maintenance services and our air traffic control software. We also deployed 5 million in SG&A during the quarter and 23 million in the year. Including R&D and SG&A, we reported a net loss of $39 million in the quarter and 127 million in the year. Now, moving to cash flow, our operations consume 25 million in the quarter and a total of 95 million in the year. We ended the fourth quarter with $241 million in cash, down just $15 million from the third quarter 2023, as we also drew around $15 million from the pre-approved credit line with the Brazilian Development Bank. We still have around $75 million available from this line that we expect to access still in 2024. is highly comfortable with its total liquidity of $316 million as of the end of 2023, and believe our current liquidity would be enough to sustain our operations into the end of 2025. It's important to say that we anticipate an increase in our cash consumption in 2024 as we intensify our development with different rigs to test systems and components, wind tunnel tests to validate our models, And now we are assembling our first full-scale prototype and have selected most of our suppliers, which involves higher payments going forward. Now, moving to slide 10, with a checklist of our previously announced milestones. I'm happy to say that we have either met or exceeded our milestones for 2023. We selected the primary suppliers for critical components of our aircraft, and froze the configuration of our AVTOL around the first semester of last year. And as Johan showed a few slides ago, we are advanced in the assembly of our first prototype. We have also successfully conducted a trial run of our UATM software under real-life conditions in the UK late last year. And lastly, we invested $95 million in our program during 2023. which is lower than anticipated in our guidance of 130 to 150 million range, given the three main factors. First, our continuous discipline on cost control as a pre-operational company. Second, we managed to extract savings from synergies with Embraer. And third, we moved some of supplier payments from 2023 to the years ahead. The last slide. lays the upcoming milestones for 2024 that includes the conclusion of our full-scale prototype and initial tests. In parallel, we expect to conclude the basis of certification and means of compliance with the Brazilian certification authorities. It's important to remind we have Brazil as our primary certification authority that we work in alignment with the FAA to achieve the dual-type certificate in Brazil and in the US in 2026. We'll also start working in preparation for our first eVTOL manufacturing plant in an existing site of Embraer in Brazil. We're also working to secure the necessary funding through a long-term financing to this site. Finally, for 2024, we expect all of our efforts to consume between $130 and $170 million in cash this year. With that, We conclude our remarks, and I would like to open the call for questions. Operator, please proceed.
spk10: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd 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. Our first question comes from the line of Savi Sith with Raymond James. Please proceed with your question.
spk09: Hey, good morning, everyone. I wonder if I can, on the cash burn outlook here, if you can give a little bit of color around the timing throughout the year, if that steps up, and what component of that might be capex?
spk02: Hey, hi Savi, how are you? It's Edu here.
spk05: So basically, this cash consumption will be mostly on the development, right? Which includes the payment to suppliers as well. There is a component for the manufacturing of our facility, right? We have selected an existing Embraer facility in São Paulo. We're going to start to buy some machinery and tooling for our first site. But I would say, you know, maybe around 20 million will go to this first facility. The remaining of the cash consumption will be really focused on the development that is really moving at full speed.
spk09: And that steps up through the year, Edu, or is it fairly steady?
spk05: Generally we burn more in the second half than in the first and But I believe probably it will be like 40%, 35, 40% in the first half and 60, 65 in the second.
spk09: That's helpful. And if I might just might on the Bendis loan, thoughts on like how much of the 75 million you might kind of tap into in 2024? And just to clarify, that's not in the cash burn guidance, right? That should lower the cash burn.
spk05: That's correct. When we say that we're going to burn $130 to $170 million, around $150 million for the full year, that means our cash will only go down half of that, right? Because the other half, $75 million, we're going to withdraw from the BNDES line. That's a big advantage, right? We have this line that we are accessing since last year. We already... took 25 million that hold our cash position pretty well in the fourth quarter. And this is going to continue in all the upcoming quarters of this year. So our cash will go down very little, right? Around 75, if you do the simple math, right? 150, 75 has been yes. The other 75 comes from our current cash. That's how it should work.
spk09: Perfect.
spk10: Thank you. Thank you. Our next question comes from the line of Kai von Rumer with TD Cowen. Please proceed with your question.
spk03: Yes, thanks so much. Could you maybe update us on the certification environment? What I mean by that is you probably read that the FAA basically has harmonized with EASA regarding what they're going to require Joby to do, which looks like good news. And yet, you know, if you look at some of the major aircraft, G700, I mean, everything seems to take longer and longer. And, you know, so maybe tell us about the environment and particularly with respect to ANAC and the fact, you know, that you basically are going to be certifying there. Thank you.
spk07: Hello, Kai. Johan speaking. Thank you. Thank you for your question. This is obviously an important topic there that we're following closely. And also Valentini will be responding in more details. But, you know, as you remember well, I mean, our primary certification will be with NAC. And this is, you know, really with the authority that we are discussing. They very recently, end of last year, they opened for public consultation. And, you know, we'll see exactly. They actually extended that period. to the end of this month. And we expect to have, you know, a lot of feedback, but also alignment as we're going to have, you know, inputs, including probably from the FAA and the other, you know, association, airline association. So we're quite confident, you know, we're going to the right direction and we'll know more by then. Valentini?
spk02: Sure.
spk04: So thank you, Haikai. Good to talk to you again. So complimenting what Alan said, We feel that we have good traction with ANAC with the publication of our certification basis for public comment, both in the sense that it gives maturity to the requirements that we have set with them, but also that it allows us to go, as Johan mentioned, in this direction of aligning. We're not saying harmonization in the sense that they would not necessarily be exactly the same, but that it helps us to align both with the FAA basis, and also with AI as a basis in which we have more visibility to, right? So, the publication of the Joby basis yesterday, still not final, but, you know, another publication helps us to make sure that we are indeed following this path of alignment and makes us confident, as we have mentioned before, that with the availability of AMAC to work on this project, that we will be able to maintain the timelines as we have established.
spk03: Terrific. And then my last one. So talking recently with one of your competitors, they were talking about a market, a potential retail market, by which they mean You know, a guy flies to a regional airport. He maybe has his home 40 miles away, but he takes his EV toll to fly from the regional airport to his home and back or to his business so that there might be, you know, sort of a shorter range biz jet type of application. Have you put any thought into that kind of use or any of your, you know, your customers looking at that as a potential market?
spk11: Thanks, Kai.
spk07: Just a question there. When you say his own eVTOL, you mean that he will buy his own eVTOL and fly his own eVTOL? Just like you're doing with cars? Is that what you're referring to? Yes.
spk03: Yes. Exactly. Exactly. Exactly.
spk07: Yeah. No, no, no, no. We don't see this. We do see the air taxi or what we commonly call the first mile, last mile type of service that maybe an airline would offer. It's exactly the model that we're working on with the Republic, uh, you know, for Orlando where, you know, the premium customer will be, uh, or they will go to the, uh, to their house. So we're very close to the house, but it will be a virtual port. But, but at the, at the very beginning, I mean, we don't see this happening. I mean, uh, anytime, unless, you know, you have the autonomous functionality, we don't want to be putting, you know, uh, people or just driving cars and driving, uh, some flying EV thought, you know, no, no, uh, Valentini. Okay.
spk04: Just one more point. I think that it's important to understand that that wouldn't, at least from what the authorities have published so far, that wouldn't change significantly the certification basis in terms of safety level and things like that, Guy, because it would still be considered, at least if it's around the urban mobility areas, the urban centers, it will still be a flight over densely populated areas, which is being considered by the authorities as one of the triggers to meet higher safety levels. So I think that it's just important to understand that in terms of the certification and consequently the design, I don't see that changing the vehicles so much and so they wouldn't have so much of an effect on the certification path.
spk12: Okay, great. Thanks so much. Thank you.
spk10: Our next question comes from the line of Sheila Kayoglu with Jefferies. Please proceed with your question.
spk08: Hi. Good morning, guys. You know, just to one of Savi's questions, you mentioned five additional prototypes this year with testing to begin in the second half. So just kind of how do we think about the build out and what's the CapEx need to support that?
spk05: Hello, can you hear me? Yes, we can. Hello, Sheila. Valentina, can you elaborate on the first prototype and the others to come? And then I can comment on the impacts.
spk04: Sure. So the first prototype, the one we will start testing this year, is the one that Johan described as being a non-conforming prototype, which means that it doesn't have exactly the final configuration that the commercial vehicle will have. And so it will allow us to bring technical knowledge to validate some of the solutions that we are currently developing with some anticipation with respect to the time when we have to make the commitments for the commercial vehicle. The test of the prototypes of the commercial vehicle will not start until next year. And so then for those prototypes, we have a different set of specifications, product specifications, and they connect to the suppliers that Johan described in the presentation. And those will be the ones that will be used for the certification campaign and then to reach the type certificates. So that the investment then on these prototypes will come later on that I think Edu can mention on it.
spk05: In terms of investment, when we mentioned about the 150 million per year expected for this year, it does include the investment on the development itself, on the engineers and the whole development program, and it also does include the prototypes. This year we are assembling, we have already started to assemble, we're going to conclude the assembly and start the test of the first prototype. We may also start to receive some parts for the other prototypes, but all of that is already included on the guidance to consume $150 million. And have in mind, we still have $75 million available from the long-term finance from BNDS, so the actual burn in cash will be only half of this $150.
spk08: Okay, great. Thank you. And then maybe if I could ask about the suppliers that you guys brought on. How is that relationship working with the suppliers?
spk07: Well, thanks, Sheila, for the question. Yeah, the relationship is great. Well, as you can see, most of them is actually suppliers that we've known from the Embraer time also, right? They're partners of Embraer. some of them or not, but we do have a throughout and very well proven methodology to engage. You know, and like I said, the negotiation is not only about the prototype, the conforming prototype and the production, the per series, and it's also with the customer support and services. So those are very detailed discussion and negotiation that we do for the whole lifetime cycle. And then we automatically engage in a JDP. We started on the last 20th of September. And we engage in all the engineering. So it's a physical presence in San Jose Des Campos between the engineering of Eve, of Embraer, but also the engineering of the suppliers. So we can really, and I explained this in my presentation, where there's this big interaction and how one system impacts the other. So I think it's really good and it's been proving quite efficient.
spk05: If I may add, Johan, regarding the suppliers, Sheila. So just to reinforce how they believe in our program, right? We have long-term contracts, right? We're talking about more than 10, 15-year contracts with those suppliers. It's not only for the development, but the contracts we sign it, they go throughout the whole series of delivers, right? This is one big difference that we have. And also in terms of payments, we're going to have payments That will happen really down the road. So I would say pretty much all suppliers, they accepted that we spread the payments to them over several years. I think it shows the confidence, right, that they have on Eve, on Embraer, and our ability to succeed in this program. And the contracts we sign with them, it fully reflects that, which is different from some other contracts we have seen out there.
spk12: Okay.
spk10: Thank you. Thank you, Sheila. Thank you. Our next question comes from the line of Austin Moeller with Canaccord Genuity. Please proceed with your question.
spk00: Hi. Good morning, Johan and Edu. Just my first question here. Do you have any plans right now to thermally condition the battery, either using coolant or cooling the charging system itself to enable high-volume, high-throughput flight activity during the day?
spk07: Thanks, Austin. Thank you for the question. Now, this is going deep there, and I'm glad, you know, we have our CTO with us so he can really get, you know, walk you through the answer to this. Go ahead, Valentini.
spk04: Sure. Thank you. Thank you, Austin, for the question. So the cooling of the battery and the thermal management in general is a very big part of how the VTOLs work, right? So we are considering that we will need cooling, especially in the cases in which we are seeking shorter turnaround times on the ground between flights and faster charging. So for those cases, we are definitely considering having a cooling system that will allow us to condition the battery before starting to charge it because that makes a big difference on the life cycle of the battery. So it postpones the degradation or it slows the degradation of the battery as we charge it and discharge it, which then in turn results in a reduction of our operational costs. So we do have both inside the vehicle, a cooling system that will enable us to do that, and we are working with the charging infrastructure and the charging equipment to provide that coolant and that thermal exchange for us to keep the temperature of the battery while we charge it.
spk00: Great. And then should we expect manned flight testing of the first prototype, or would that be on the follow-ons? And should we think about manned flight testing as more of a 2025 action item?
spk04: Yeah, so we will start the testing with an uncrewed vehicle piloting it remotely from a ground station in the Embraer test facility in Gavião Peixoto here in Sao Paulo in Brazil. And the whole testing of this first prototype that we described will be made without a person on board, so only an uncrewed vehicle. The prototypes that we mentioned that will be used for certification then those will be piloted, and so the test campaign with those will have a pilot on board, but this first prototype is only an uncrewed vehicle.
spk11: Great. Thanks for all the color.
spk12: You're welcome.
spk07: Thanks, Austin.
spk10: Thank you. As a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of Andre Shepard with Cantor Fitzgerald. Please proceed with your question.
spk06: Hi, good morning, everyone. Congratulations on the quarter and thanks for taking our questions. I wanted to touch on your service and support revenue stream. You know, this is obviously an area that you're placing a large emphasis on or at least have mentioned in the past. I'm curious, you know, what are the kind of developments there, you know, particularly as some of your peers might be targeting entering into service in 2025. So what might we expect from the service and support revenue stream, you know, maybe next year and onwards, and what are the latest developments there? Thank you.
spk07: Thanks, Andres. Great question. Obviously, it's dear to my heart when it comes to service and support, so I will take this one. As you can see, I mean, we're up to, you know, 600,000 $60 million worth of service and support that we pre-sold. It's really linked to the operation, and we need to have the certified aircraft and then enter the service so we can really kick in with those services. There's one revenue stream that could happen before. It's with the ATM software that we are developing. And it is agnostic, so yes. But that's part of the same concept where, you know, we want to make sure that we have the vehicle, but also the operation very smooth. And we believe there is one way to do it is to be with our customers on ground, boot on the ground, and to make sure that, you know, they have all the support to operate. And guaranteed availability, that's the ultimate goal, availability. So we demonstrate the segments, the aircraft operation, reliability. and then obviously the customer can make money with the vehicle. So this is very important that we can replicate. So we are really looking at the full spectrum, exactly what has been done, and this is another heritage that we have from Embraer, engineering, manufacturing, but service and support. We've learned all those years, and we're going to be applying all those lessons learned, let's say, right away with a full total package, very much a la carte service. There are operators that have their own MRO. They want to train their mechanics. They want to be able to perform the maintenance, and that's fine, you know, and then they want to go for a fly-by-hour program, having the engineering support, having the spare parts support, having also the whole package I think what differs a little bit from the traditional market of service and support is the battery, and this is something, and this is exactly the model that we're studying right now, and how is it going to be the support and the charging and the recycling also, what's going to happen with the battery as we're going to be changing it every year, we're going to get to the 80%. power and remaining. So we'll have to look at what we're going to be doing. So right now, we're really focusing on this. The rest is very traditional model. And it depends on what, you know, the customer choice. Some other or very much executive jet type of support is turnkey solution. And then others are way more independent. And then we'll support, you know, the way that they want us to be supported.
spk06: Got it. That's super helpful. I appreciate all that context. Maybe one quick follow-up question for Edu. So, you know, within your cash consumption guidance of $130 to $170 million, I'm wondering if we can maybe get a little more color on, you know, how much of that you expect will translate into CapEx, particularly as you're building some of these units now. You know, how should we think about CapEx for this year and also maybe, you know, what's the best way to think about optics for this year as well. Thank you.
spk05: The majority of the development that includes, as I said, the engineers and the prototype may spend around 20, 30 million on the prototype. I would say the majority is with the development of the upcoming vehicles. This is important to mention. We are, of course, focused on the first prototype that is coming, but we are also at full speed. on the development of the additional five that will come in 2025 to start the full flight test campaign. So there is a lot of money that we are putting on that. It's not only this upcoming vehicle. And we may spend some money on the manufacturing facility, right? Our first plant in Brazil. but it shouldn't be that much in 2024, so it should be more in 2025. But there will be some investments on CAPEX on the facility as well. But I would say that the majority of the investments are still engineering development for the multiple vehicles that we bring for the flight test campaign.
spk11: Okay, great. That's helpful. Thank you very much. Congrats again, and I'll pass it on. Thank you.
spk12: Thank you, Andres. Thank you.
spk10: Thank you. Our next question is a follow-up from the line of Savi. It's with Raymond James. Please proceed with your question.
spk09: Hi. Just a clarification on the PDPs. Is there kind of a certain milestone? Is it, you know, when the first prototype is kind of flying or perhaps next year when you're flying the other five prototypes that you'll be able to kind of go and solidify those LOIs or even, you know, what might contribute to kind of first PDP flows.
spk12: Thanks, Abby. Yeah, we haven't. Go ahead, you do.
spk07: Go ahead. No, you start. You start. Go ahead.
spk05: No. Yeah, okay. I was just going to say, Savi, we have multiple campaigns in discussion. We have multiple customers, as you can see by the largest backlog in the industry. The focus is to start to convert those LOIs into firm orders, which also translates into deposits and pre-delivery payments, as you referred to. This is going to start to come, right? This year, next, 26, we're going to receive a lot of down payments and pre-delivery payments. But the most, I would say, Johan can add, but I think the most important thing is really the engagement with those customers, make sure they're comfortable with the number of EV tolls, the slots, when they're going to be taking those vehicles and where they're going to be deploying them. But, you know, the cash is going to come, the PDPs and the deferred orders are going to come this year and in the upcoming years.
spk07: Absolutely, I do. I think this is really important and what we want to have and convert some of those LOIs into the first purchase agreement is just to make sure that we have our customers engaged, right? The whole ecosystem. It takes time. It takes, you know, people, resources. And it's not so much because of the customer, but it's because of the whole ecosystem. It is not a traditional process. you know, aircraft, you know, you're adding to your fleet. I mean, it's really, it's more than this. And I think, you know, we've been discussing very much with the customers on this. And we need to engage, get what we call the skin in the game from all the stakeholders. And this is what the TA, you know, is about. And they're the one asking for this, right? So it's not like we have to sign those purchase agreements this year from a cash need perspective, but definitely from an engagement perspective.
spk09: Very helpful. Thank you.
spk07: Thank you. Thank you, Sabi.
spk10: Thank you. Our next question is a follow-up from the line of Kai Von Riemer with TD Cowen. Please proceed with your question.
spk03: Yes, thanks so much. So of the $660 million kind of service contracts, how much of that is with your competitors or with customers of your competitors?
spk11: None, Kai, none.
spk07: all on the eVTOL. And what we're offering, of course, is to be able to go for agnostic, but it's really all the LOIs are based on the current aircraft LOIs.
spk03: But given that, like Joby and Archer indicate they hope to be certified ahead of you, how are you doing in your efforts to kind of sell services either to them or to their ultimate customer? given that you have a long history of service capability and they don't?
spk07: Yes, we do have common operators or customers that have been asking, and I'm sure it does make sense from an operator's standpoint of view when it comes to customer support and services. You want to have one point of contact. You don't want to multiply the contracts of the same nature if you go for MROs. then you might as well just have one provider for the different vehicle. That's a concept that does exist today, whether an independent MRO or when you have an agnostic MRO that can offer this type of service. We're open. We've been having a few conversations through United, as a matter of fact. That's one example where they've been asking us to, you know, to sit down with other EBITDA OEM and start talking about, you know, how it's going to look like on the service and support. And you're right. We do have the expertise, you know, when it comes to service and support. So it would be natural that we take the lead on this. But nothing more concrete at this stage.
spk12: Great. Thank you. Thank you. Thank you. Bye.
spk10: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Albrecht for any final comments.
spk01: Thank you, Melissa. And I want to thank everyone who joined the call today. As you can see, we accomplished several important milestones this past year. We're fully engaged. And of course, there is much more to come. So we do look forward. We're going to continue updating you on our progress throughout the next few quarters. And of course, look forward to you to meeting all of you in the upcoming events we're going to attend. As always, if you have any questions, don't hesitate to reach out. Thanks and have a good day. Thank you.
spk10: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
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