Eve Holding, Inc.

Good day and welcome to the Eve Holding Inc. Second Quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I'd now like to turn the conference over to Lucio Aldworth, Head of Invest Relations. Please go ahead.

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 2024 earnings conference call. Our CEO, Johan Borde and CFO, Eduardo de Coto are joining me on this call today. And after their prepared remarks, we're going to open the call for questions, at which point, Luis Valentini, our Chief Technology Officer, will also join us for more technical questions. We did prepare a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the rollout of our first full-scale prototype, and that's on our website at .evearmobility.com. So, please feel free to download it and follow along. Let me first say that this presentation 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 forward-looking statements, when there take no obligation to update publicly or revise any 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 will now turn the presentation over to our CEO, Johan.

Thanks, Lucio. Good morning, and thank you for joining the call today. We had a very special and exciting second quarter. We continue to advance in our program, and we reached a very important milestone. As we had anticipated before, we completed the assembly of our prototype, and we rolled it out to the hangar for the first time in early July. This is a traditional ceremony to present a new aircraft to the public, the press, and investors. As a reminder, this is a full-scale engineering prototype without cabin nor cockpit, made of composite materials that will be piloted remotely. This prototype will be used to validate and improve the accuracy of previous subscale and computer models. It will also be served to build on the several rigs that we have for different individual components. We will now start a series of ground tests before moving to hover and full transition flight tests. We expect these tests to initiate later this year, and they will be performed at the same Embraer facilities in Guadalupe Choto, also known and called GPX, in the state of São Paulo. GPX offers a parallel infrastructure for test flight that was specially and specifically designed to test Embraer prototype aircraft. In parallel, we continue to down-select suppliers and sign binding contracts. These define technical specification for the component and commercial aspects with volume, unit prices, and aftermarket support conditions. Just last month, we selected KRD, Lattequair, RALC, and ALTEC. As a reminder, we had selected earlier in the year KAI for the pilots, Acyturi for the wings, Fruze for the pilot and scepter, and also FHCC for the tail section of our VTOL. We have now completed the selection of what we call the flight critical component suppliers for our aircraft, and will continue to work on defining the non-critical partners. We will come back to this later on. Now, moving to the next few slides, we will show some pictures of the rollout event and the aircraft itself. These show the full scale of our prototype, which, by the way, will closely resemble to the commercial version. As we mentioned before, our EVTOL will have similar dimension to most widely used helicopters so that it fits the helipads and also carries the same number of passengers. One interesting fact is that the prototype is made of multiple composite panels that are easily detachable, removable. This will allow us to have an easy access to the internal electric and electronic components and facilitate any operation that we may need to be done during the flight test campaign. We always had safety and simplicity in mind when defining the lift plus cruise configuration for our EVTOL. With these fixed components, we believe that our aircraft will have many advantages that will allow operators to be profitable with lower maintenance and operating costs and higher availability for their missions. This simpler design also will benefit to the certification campaign. Lastly, our commercial EVTOL will have Embraer fifth generation -by-wire system. This is a proven technology that has been successfully improving safety and passenger comfort in some of the Embraer commercial, executive, and military aircraft, and we have access to it. This, in my view, is yet another competitive advantage that EVE has, and it will become eventually clear to investors over time. Now, moving on to the slide six, it shows the next steps of our test campaigns for our engineering prototype. We will now start ground tests to validate thrust, energy consumption, sound, vibration, and other tests before to move to the actual flight test campaign. As we've always done, we will approach the test campaign very conservatively and only move forward with the minimal risk. We will initially perform the hover flight tied up to the ground and gradually increase the power and height. Then we will move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally, and only then we will move to the full transition flight. The next couple of slides show a bit more of the engineering infrastructure that we are accessing at the Gunnel Pichotto and the GPX facilities. Again, this is where Embraer manufactures and tests most of its commercial, executive, and military aircraft, and it's the home of the largest runway in the southern hemisphere and the fourth largest in the world. This is a -the-art facility with all the necessary infrastructure for test flight and has been available to EVE Air Mobility. In fact, this is where our prototype was built and will be tested, and it's the houses of custom-built rig that is mounted on the truck. We drive it down the runway to mimic what is the real-life aerodynamic drag, vibration, or other performance criteria, which we will test with different configurations. We'll also validate and refine our computer models and ultimately improve the design of the motor propeller rigs of our aircraft. At the same time, we have another high-tech truck that will be the nerve center for the remote flying testing phase of our prototype. The truck is equipped with all the necessary equipment for the pilots. Our first prototype will be remote controlled along with different teams to constantly monitor different telemetry variables of the aircraft. Our prototype has also been fitted with several strategically placed cameras that will also feed real-time images to the team in the truck. Now, getting to slide nine, we can see the latest addition to our component suppliers list, which we will start using with the first five or six conforming prototypes. So far, in 2024, we announced several suppliers, APCC to provide the control surface and the control surface, which we call it sometimes. And we also have sign-with talus for the sensors, honeywell for the guidance and navigation, and lastly, Recaro Aero for the seats. In the first quarter of 2024, we added KAI for the pilots to this list. And now we have added QRD for the polycarbonate windows, latex coir for the doors, RALC and ALTEQ for the fuselage components. With these additions, we have completed the selection of our primary component suppliers. We have been using a best of breed approach to bring suppliers with experience in aviation and certification. Importantly, they will also support us in the certification campaign and throughout the eVTOL lifecycle. Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in unit prices as we reach higher eVTOL volumes of production. This will provide economies of scale as we increase our RALTEQs. We still have a few suppliers to select, but these are the non-critical for the aircraft performance, whether they are -the-shelf components such as the ELT or the PHF or optional like the skids or landing gears, lights and so forth. And when I look at this list, I'm very confident on the high level of safety, certification and performance of our eVTOL. Now, on slide 10, our total pre-order backlog stands at 2,900 aircraft for a value of a total $14.5 billion US dollars based on the list price. These are non-binding letters of intent from 30 different customers spread over 13 countries and different businesses from the mainline to regional helicopter operators, ride sharing platform and leasing companies. We also have LOIs for Vector, our UTM software from 16 different customers and believe that this reflects the market leading value proposition we bring to our customers. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the many challenges ahead of the next. We are also developing a new ecosystem for urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. And because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best in class services to eVTOL operators. We have also secured contracts with 12 different customers for the maintenance, repair and overhaul, what we call also the MRO, that could bring up to $1.2 billion of in revenue for EVE over the first five years of operation. Now I would like to invite our CFO, Edu, to go over our financials along with the milestone checklist.

Thanks, Johan. Now move to slide 11. 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 said, I want to highlight some of our numbers. EVE invested $36 million during the second quarter 2024 in our program development as R&D activities continue to speed up with more headscouts and higher engagement from suppliers. The majority was invested in our eVTOL aircraft and a smaller portion in service and support and the urban air traffic management software. We also deployed $5 million in SG&A during the quarter, which has been reasonably stable as we continue to control corporate expenses to focus our resources on the eVTOL development. Higher development expenses in the second quarter were partially offset by interest revenues and a -to-market gain in our warrants, resulting in a net loss of $36 million in the second quarter of 2024. Now moving to cash flow, our operations consumed $31 million in the quarter, up $4 million versus the same period of 2023 due to higher development spending. It's important to highlight that we drew another $14 million from our pre-approved credit line with the Brazilian Development Bank during the second quarter. And with that, we ended the first quarter with $206 million in cash, down only $16 million from first quarter 2024. We still have approximately $38 million available from this line that we expect to access in the upcoming quarters. This is going to continue to help EVE to preserve its cash position. Now moving to slide 12, please. In early July, a few days after the end of the second quarter, we announced an additional equity raise of $96 million. This private placement included new funds from strategic investors like Embraer, NIDAC, and Space Florida, as well as some financial investors. With this new equity, we managed to attract new investors to our cap table, which in our view sends a strong message as to the soundness of our development program, its competitive advantages, and the credibility of our company. At the same time, we continue to enjoy a strong relationship with Embraer, who remains our controlling shareholder with 83% participation at EVE. Considering the new fund, our second quarter pro forma liquidity reached approximately $340 million. I think this new cash improves what was already a comfortable financial position considering our commitments to the program in the foreseeable future and secure our operations for multiple years ahead. As a reminder, we expect to invest around $130 million to $170 million this year, and our cash consumption should intensify next year with the assembly of five conforming prototypes as previously mentioned and investments in our manufacturing site in Brazil, our Taubaté plant. Now moving to slide 13, we remain on track to deliver our milestones for 2024, and in fact, just checked the assembly of our first full-scale prototype and presented it publicly a few weeks ago as initially planned. We will now start ground tests in the second half of the year, but we want to call attention to the delivery of electric motors as they are in the critical path for some of our prototype tests in the second half, and we are monitoring it closely. In parallel, Brazil's certification authority, ANAC, concluded its public hearing process in mid-March to define the basis of certification. The agency is now compiling all comments, and we expect the basis of certification to be published this year. Lastly, we continue to prepare our first EVTOL manufacturing plant in an existing site of Embraer in Brazil in the city of Taubaté. We're also working to secure the necessary funding for the EVTOL industrialization through a long-term financing. All our 2024 efforts will consume between $130 million to $170 million throughout this year. It's important to mention that the recent depreciation of the Brazilian currency versus the U.S. dollar will help to reduce our cash consumption this year as the majority of our expenses are in the Brazilian currency. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Savi Sith from Raymond James. Please go ahead.

Hey, good morning, everyone. Savi is wondering, you mentioned the electric motors. I was wondering what the expectation on when those will be delivered. As you contemplate building those certification-conforming prototypes for next year, what do you need to see before you start building those? Is it anything around the test campaign, or what are the factors that will decide when you

move forward with that? Hello, Savi. Thank you for the

question. Yes, it was mentioned that now we've done the rollout of the prototype, and what we call it the engineering prototype, which is different from the conforming prototype, which we'll start building next year. We'll have five to six conforming prototypes that we'll use with the certification authorities, ANACH, to get the certification. We did mention that the critical path on the electrical motor, and this is for the, and we're talking about the engineering prototype. That was what we mentioned here.

Sorry, just wondering when you're expecting the electric motor delivered, and if there's anything in the testing that you're doing here with that engineering prototype that will then decide when you start building the conforming prototype.

Valentini, it would be nice to

find the process here.

Sure, so good morning. Hi, Savi. Thank you for the question. So we expect the motors to be delivered still in the second semester, which then will allow us to start the flight test campaign, which includes first integration tests of these equipment on the vehicle, so you can think of them as production tests to make sure that everything that is installed on the vehicle works together. And then from there, we can start actually a flight testing campaign and a ground testing campaign also that is more geared towards developing vehicle features, right, so studying things like noise, vibration, characteristics of the vehicle during transition between hover and cruise flight and things like that. So the arrival of the motors will allow us to complete these production tests that I'm calling for this engineering prototype and also move on to complete this engineering flight test campaign, which as we have been saying, brings more maturity to the vehicle definitions so that we can start the testing with the conforming prototypes with more confidence and more efficiency towards certification. With respect to how that connects to the building of the conforming prototypes, we are basing the building and the definitions of the conforming prototypes much more on the relationship and the work that has been going on with the suppliers so that we are moving ahead in parallel with the development of the conforming prototypes while we are developing this engineering prototype. So we don't expect to have a change at this moment in the path and in the pace of the development of the conforming prototypes with this challenge on the delivery of the motors, we are still moving ahead and then once the engineering vehicle flies, we can bring the learnings into the conforming prototypes, but again, just emphasizing that these are parallel paths.

Very helpful, thank you. And if I might, just on the, Ady's comments on liquidity and I think the release had multiple years of liquidity sufficient, so in terms of the step up next year, it doesn't seem like it's a big step up even though you're doing a lot more building and testing. Is that a fair comment, Ady?

That's correct, Savy. We may have a higher cash burn next year. It shouldn't be that higher than this year, especially because we have a couple of, I would say, positive things like the recent depreciation of the Brazilian currency against the dollar, right? It helps us because the majority of our expenses are in Brazilian reais and with a stronger dollar that translates in lower cash burning dollar terms. So we have a couple of positives that may help and despite the higher activity next year, as you mentioned, I don't believe the cash consumption will be significantly higher. Of course, we're still working on the numbers and we're going to come with more details as we go towards the end of this year, but I think your assumption is reasonable.

All right, thank you.

The next question comes from Andres Shepherd from Cantor Fitzgerald. Please go ahead.

Hey, good morning, everyone. Thanks for taking our questions and congratulations on the quarter. And Johan, it was great seeing you at Farmboro a few weeks ago. Thank you, Lucas. Thank you. Just a quick question. I was hoping maybe you can give us a little bit more color regarding kind of the test flights that you get to be initiating in the second half of this year. Wondering if you can maybe walk us through the timeline there, kind of what those tests, how you anticipate those tests ramping up. And then maybe in addition to that, just remind us again the plans to assemble the additional up to five prototypes, the ones that will be certification compliant. Yeah, exactly. Thank you.

Sure. I'll pass it on to having the CTO with us here. He will give you more insight, obviously, of what's going to be the next step. So Valentini?

Sure. Thank you for the question, Andres. So the idea is to have a gradual opening of what we call the flight envelope of the vehicle, so we'll start running hover flight tests. These are important for us to balance and to improve the accuracy of our models with respect to things like the power needed to maneuver the vehicle and hover, the power needed and the controllability features for failure cases that might happen while the vehicle is in flight. It will also include ground tests on things like the interference, the electromagnetic interference between the systems of the vehicle since we're dealing with high voltage power systems. This is very important. That is very well figured out of the vehicle. So with these ground tests and then initiating the hover flight tests, we will gradually move on to what Johan referred to as partial transition, which means that we will start including forward speeds of increasing amplitude until we get to the transition and complete the transition between hover and cruise flight, at which time, you remember, the rotors of our vehicle will be turned off and the vehicle will fly as a fixed-wing airplane, right? So during this transition, there are characteristics of flight that we need to make sure that are well understood and, again, are well captured by our models and our solutions. For the vehicle in cruise flight, there are also learnings that we expect to have from this vehicle, but this is a more well-known flight condition coming from the previous history of Embraer airplanes and the use, for example, of the -by-wire technology that Johan mentioned, that we have the advantage of use coming from Embraer. So that's the concept of the ground and flight test campaign that we have scheduled. With respect to the conforming prototypes you mentioned, then those also have some development in the sense that the vehicles will not be exactly the same as this engineering prototype, as was mentioned earlier. So since we had to freeze the design to build this prototype, the conforming prototypes still went through some evolution that this engineering prototype didn't go through, right? So they have slightly different characteristics, which will then require some development in ground and flight testing also, but then we expect to quickly move to the certification flight test campaign, which will be geared towards showing compliance with the certification requirements of both AMAC and FAA initially, then expending to other authorities in the world. So this test campaign will be made using five vehicles. We might add more vehicles if we think that is beneficial to the project overall, but initially we are expecting to do that with five vehicles that will start being produced and flown next year.

Got it. That's super helpful. I appreciate all that color. Maybe just a quick follow-up on certification. So, you know, obviously ANAC has been kind of the primary type certification that you've been targeting in concurrent with the FAA, but my question is, you know, with all the has changed some of your type certification plans or if you're, you know, how you're thinking about that market. Is that a certification that you'll pursue as well now, and if so, how do you see that process unfolding?

Thank you. Sure. So that's a good point. It doesn't change the process of certification the way that we have established in the sense that ANAC being the primary certification authority, gears us towards defining requirements and then defining how to show compliance with these requirements first and foremost. What we do with ANAC in this case, as Embraer has done in the past, but is even more important this time around, is to align what requirements will be applicable to the CFE TOL certification, and ANAC and also EVE is supporting that very much. ANAC has been very active in seeking alignment and understanding and as much as they feel that they are comfortable with harmonizing those requirements with other authorities in the world. So by doing that, they steer a certification basis that is more closely acceptable for validation by other authorities in the world. So our path has been that from the beginning, which is to build this basis with ANAC, try to make it such that it's as common as we can with other authorities so that once we receive the type certificate from ANAC, we have a more clearly paved way towards getting this validation from other authorities and then that includes UAE and other authorities that we have mentioned previously of markets that are of interest to EVE. So just summarizing, UAE or other authorities, we expect them to be very well captured, so we expect them to speak by this process of building a basis with ANAC that is well aligned with other authorities in the world.

Wonderful. Thank you so much. Really appreciate it. Congrats on the quarter again. I'll pass it on.

Thank you. Thanks, Tom. Grace? The next question comes from Austin Moller from Canaccord. Please go ahead.

Hi. Good morning and great to see you at Farnborough, Johan. My first question, just on the battery, so the battery is being supplied by BAE. I know they've done some work providing those for industrial vehicles and buses, but I was just wondering what is the production volumes look like for the cells within the batteries being provided by BAE? Are they being built at a production volume each year that could enable a strong manufacturing supply chain going out the gate? And what does that look like? If you could just tell us a little bit more.

All right, Austin. Thank you so much for

your question. Yes, BAE is definitely the suppliers that won the bidding process and simply because, like you mentioned, they have more than 8,000 EVs running around the world, especially most of the coaches and buses that you have in major cities around the world are actually made by BAE, the batteries are made by BAE, so they do have an extensive experience and how the reliability and production. They are using most of the OEM or EV toll using the same cells, right, so they're not using the same cells, but they're using the same cells, so they're using the same cells This one is also Molle cell. There's the cylindric little cells that you're using, and this is the one that we elected with BAE, and I'll let Valentini explain what are the benefits of this, obviously. But when we signed those contracts, and we've done this since last year, we've signed 21 contracts of the PSA, and BAE was the first one, and it does cover the ramp up of production, so we make sure that they have the ability to ramp up production as we go, as we sell and deliver those EV tolls, and we're confident they've been doing that, and also they've been looking at the risking the operation, which is quite important for us when it comes to production sites. It's not only the capacity, but also making sure that if something happened to one site, then they have a backup production site. So we're actually in line. Valentini, if you want to mention a bit more detail on the technology used there.

Sure, so we're using cells that are not specific to our project, right? I mean, these have similar cells being used by other EV toll manufacturers, as has been publicly stated, and also are cells that are used in other applications in the world, such as power tools and other things. So with respect to the production volume, as Johan mentioned, we don't believe that there's a question there. We believe that BAE will supply the batteries for us as we have the production planned for. And I just wanted to bring quickly a point with respect to us selecting BAE. As Johan mentioned, they have a pretty significant experience with their electric vehicles in batteries and electric vehicles in operation today. So that brings a vision and an experience of the life cycle of the products, which is very important. So we talk very much about certification of these batteries, thermal runaway containment and containment of propagation, things like that. And these are very important for the safety of the vehicle. But it's also very important that the characteristics of the battery in operation on the hands of the operators are very well known and how to treat occurrences with these products in the field are very well known. So BAE has over the years built experience and knowledge about these products in operation, which we believe brings quite a bit of maturity to our product. And they also have quite a bit of experience in aeronautical developments from previous projects. So we believe that this combination of being an aeronautical aviation company with the batteries in operation will bring the maturity level of the solution in our vehicle up for the start of operations at the entry into service.

Excellent. And just a follow-up, depending on where your first launch customers are once you get to serial manufacturing stage and you're certified, do you expect to provide aftermarket support from day one in one specific geography or do you expect to provide aftermarket support at all of Embraer's MRR facilities right from the beginning?

We're actually looking

at all possible scenarios. One thing is for sure is that Eve will be the face of the customer. This is the way that we build up with our partners, with the suppliers, but also this is a wish from the customers. I think it has to do with the fact that we're really breaking ground on the new segments and they want to make sure that the OEM is engaged and will guarantee the operational cost and also the availability. So different models are open to us. How are we going to be making the face of the customer available, whether it's going to be owned MRO of Eve or using the Embraer footprint, which obviously is very large, which more than 70 and 80 authorized server centers around the world with the own Embraer or even an authorized one.

That will be the model that we'll be using. Awesome. Thanks. That's all from me.

The next question comes from Conor Wolters from Jeffries. Please go ahead.

Hi, guys. Congrats on the progress in the quarter and thanks for taking my question. Maybe just to go back on liquidity, as of the first quarter, you indicated that the $280 million that you had at the time was sufficient to support operations well into 2025. So curious on the rationale for the equity rates in the quarter.

Yeah, I think we had

this opportunity to bring new partners, new investors. It was a very, I would say, very selected and interesting group. We brought the strategic investors like NIDAC, which is a partner in the program as well. Embraer or Controller also invested. Space Florida, we also brought some additional financial investors. So I think it was an opportunity to raise additional capital, the almost $100 million that we raised. With that, we have now an even stronger liquidity that, as you said before, we had sufficient resources until the end of 2025 with these additional equity rates and some long-term finances that we're discussing. We believe we have resources for multiple years now, probably that will get us into 2027. So I think it was an opportunity that showed up. It's important as a preoperational company to have a very strong liquidity. Now I think we have probably the longest runaway among all EVTOL manufacturers. And I think that gives us comfort to continue to advance the program at full speed that we're doing without having to worry about the resources. Right now we have plenty of funds to gather the certification and start to deliver the EVTOLs. And we thought this additional capital made sense in that context.

Okay, got it. That's very helpful. And maybe just to go back to your commentary about a modest step up in cash burn in 2025, is there any way that you can frame the cadence for quarterly cash burn over maybe the next four quarters as we think about you progressing through these next few milestones?

As I said, right, this year we're going to be around the $130

to $170, probably a little closer to the $130. And the $170 because we have this tailwind right of the weaker Brazilian currency against the dollar that will help us. Despite the higher, the increasing headcounts and the additional prototypes, you know, we have this positive. The expenses, they are going to continue to go up. As I mentioned to Savi, I don't think it's a big step up. We're still working on the detailed budget for 2025. I believe we're going to have more color on that as we get closer to the end of this year. But as I said, we are anticipating some increase. Next year we also have the initial investments on the manufacturing plant in Taubatain, in São Paulo, in Brazil that will give us the capacity for the initial e-vital delivers. So, you know, there will be an increase. I don't think it's a big one, but we're still working on the detail numbers. And I hope at some point later this year we're going to come with a figure for the cash burn in 2025.

Okay, great. Thanks so much. I'll leave it there. Our next question comes from Sheila Kayagulu from Jeffreys. Please go ahead.

Thank you so much. Sorry, Connor and I are tag teaming as I'm at the airport. So he got my cash questions in, and I just maybe do want to ask about orders. You know, you haven't had vehicle orders, but you got a big chunk of maintenance orders that you guys highlighted in the script. So maybe can you talk about how we should expect that? Should we expect more maintenance orders? You gave that $1.2 billion over the next five years. Can you talk a little bit about how you expect that transition to revenue? Thank you.

Yeah, thank you. Thank you, Angela. Yes, yeah, yeah, yeah, love to. Yeah, thank you. Yeah, as a matter of fact, I mean, you did mention there were 2,900 vehicles sold through the LOI. I think this is really the diversity of our customer base. It tells a lot of how they are comfortable with the model that we're providing to them. They really trust that we have the right solution. Like I've been always saying, it's not only the vehicle, but it's also the service support. We did mention there was a question about what would be the MRO network that we will have. We will be the face of the customer. The UATM also is very important, at least for the scale-up, right? So it's something that we're thinking about. We don't want to substitute only a few helicopters. We really want to make it a segment, a new segment, and create new opportunities for operators. So service and support is definitely a big chunk. Yes, $1.2 billion up to. It's over a period of five years. We'll have to define when the time is correct with the customer's scope. We're being very conservative when it comes to the initial scope and those LOIs when it comes to service and support. It's basically maintenance and also the spare parts, what we call the flat-out program. But we expect that as we get closer and we get to the conversion of those LOIs, then we'll be able to discuss more depth what will be the scope of the services that go along with the firm order. So this is a process that we're right now. I think the priority for us with all those customers is to get a list of five to six strategic customers around the world, obviously because of the primary certification, ANAC, and also with this bilateral agreement they have with FAA, we can expect our long customer to be in Brazil and also in the United States. Right now we're defining the ecosystem per city. So it's the network, creating a network and a growing network per city. So then obviously it will come along with the service and support. So that's what we expect working on right now is to get the firm orders. It doesn't have to be this year. The priority is always making sure that we have the ecosystem ready. But over the next 12 months we should be having something about the firm order.

Got it. Thank you.

Okay. Thanks, Gillian. Appreciate it.

The next question comes from Kai Von Rumer from Cowan. Please go ahead.

Yes. Thanks so much. So, Edu, you said you have the funds to get to 2027. Maybe when do you expect to begin getting PDPs on the planes? And secondly, are there any financial requirements on your part or advances that you expect as a result of your MRO agreements?

Yeah, I may start here and maybe Johan can add. But in terms of the PDPs, as Johan mentioned, right, we are now working very closely with all these LOIs and customers that we have to make sure we select the ones that will be the launch customers and we can convert those LOIs into firm orders. Those discussions are happening right now and we expect to start to convert that in the next 12 months. So that will translate into initial deposits and PDPs, additional pre-delivery payments that we're going to receive prior to the delivery of the aircraft. So that will be an extra source of funds for the company in the months and years ahead. We also have, as I mentioned before, advanced discussions for long-term finance, right, for our manufacturing facility in Brazil and even for R&D expenses. So we are feeling very comfortable and we follow our funds, right, not only the equity raise we recently did, but these PDPs and, as I said, this additional long-term finance that we may get and that gives us a runway until 2027, as I mentioned.

Terrific, thank you. And then Valentini, we're getting closer to get definition by the FAA and others in terms of what's going to be required to get your design and other designs certified. Now that we have a little bit more visibility there, could you comment at all in terms of the difficulty of certifying a tilt rotor, which is what most of the other guys have, and a lift cruise design, which seems like inherently a little safer in the sense that basically you can fly with the rotors and you can fly with the pusher prop.

Yes, hi Kai, thank you for the question. The reason why we went for a lift plus cruise configuration is that we believe that a configuration that has tilting rotors or tilting mechanisms in general brings complexities in two main fronts. One is certification, as you mentioned, but I'll start with the other, which is a consistency of operation. By having more systems and more actuation, more sensors, there are more areas and more components that can become sources of disruption to the operation of the vehicles in service, right? So that was one aspect that weighed very heavily and that comes, I think, very much from the experience of Embraer with their airplanes into service, knowing how important it is that these vehicles have a consistency of operation into the hands and into the fields, so serving the business model of the operators. So that was one point, but going back to the certification, as you asked, we believe that there are complexities in the flight of the vehicle. So, for example, one of the things that we usually do with authorities is to determine what is a most critical condition in flight in which you have to show compliance with requirements so that all other conditions are covered, right? So you don't have to do every single, let's say, maneuver and every single point of the flight envelope and every single configuration. You sort of have, like, defined what is an umbrella and show compliance in these most critical cases. If you have a more complex flight profile with more complex mechanisms, sometimes determining what is this most critical condition is more difficult. So this makes your flight test campaign longer, for example, because you cannot take credit of, you know, determining what is the single condition that you have to show compliance with, but you have to be adding other conditions. You have to be discussing this with the authorities. So we believe that the complexity of the flight profile brings also more discussion and more uncertainty to the certification path, and so that was the other aspect that weighed in our decision for going to the lift plus cruise configuration. Terrific.

Thank you very much. And then, Johan, when you put it all together, do you have a rough target? Obviously, you can't know exactly, but a rough target in terms of when you might achieve certification and when you might see entry into service?

Thank you, Kai. It's been, well, now 11 months, almost a year on the job, so yeah, getting good graphs of the challenges that we have. As we mentioned from the beginning, and I'm going back to 2017, the schedule is very challenging of certification and entry into service, but we remain confident that we can be succeeded. And simply because we are, first of all, differentiating when it comes with a vast, agronomical experience, and we have access of the embryo resources. We're using the proven method. I think Valentini has explained in detail how cost-effective and successful the certification process and also the preparation for the entry into service that we're bringing in the expertise from Embraer, but also we're building our own expertise from all the con-ops that we've done with our customers. So service and support, air traffic management, and training is something we're familiar with. The third one that we say that is an advantage or let's say that we're making good progress and it is evidenced by the full-scale process that we just announced, and then we also have done multiple wind tunnel tests. So yeah, I think we're at the point where there's a main challenge now with a few suppliers. We're right now in a joint definition phase. It's always, and since the very beginning, for everyone creating this segment, all the OEM, it's all this pushing the limits and looking on the size, the weight, and the power, and always the trade-off that you get a look at. We want to make sure that we have a robust and reliable vehicle that will also be profitable for the operation of our customers. So like I said, there are many challenges, but all the good reason I just mentioned, Max just believed that we're on the 2026 center of service.

Okay, great. Thank you so much.

Excellent, Kyle. This concludes our question and answer session. I would like to turn the conference back over to Lucio Aldworth for any closing remarks.

Thanks, Jason, and thanks everyone. Thank you to everyone who joined the call today. As you can see, we accomplished several important milestones.

This meeting is no longer being transcribed. This meeting is no longer being recorded.

So we're going to continue updating you on our progress throughout the next few quarters, and we look forward to meeting you in the upcoming events we're going to attend. As always, if you have any questions, please don't hesitate to reach out to me or to my team. Thanks, and have a good day.

The conference is now concluded. Attending today's presentation, you may now disconnect.