Eve Holding, Inc.

Good day and welcome to the Eve Holding Inc. Fourth Quarter 2024 Earnings Conference 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 presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Lucio Alderworth, head of IR. Please go ahead.

Thank you, operator. Good morning, everyone. This is Lucio Alderworth, the director of investor relations at EASE, and I wanted to welcome everyone to our fourth quarter 2024 earnings conference call. Our CEO, Johan Borde, and CFO, Eduardo Bocoto, are joining me on the call today. And after their prepared remarks, we will open the call for questions, at which point, with Valentin, our Chief Technical Officer, will also join us for more technical questions. We have a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the testing phase of our full-scale prototype. The deck is on our site at ir.easairmobility.com. So please feel free to download 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 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, anticipate, intends, expects, and similar words are intended to identify forward-looking statements. When they take 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 will now turn the presentation over to our CEO, Johan.

Thanks, Lucio. Good morning to all, and thank you for joining the call today. We had a very eventful year 2024. We continue a steady progress in the development of our EV toll and have reached important milestones. I would like to highlight today a few of those most important achievements that we had last year. The first one, early in the year, we presented Vector, our air traffic management solution, and we run the five-day simulation in Sao Paulo with a very positive feedback from our partner and customer, Revo. This exercise followed simulation we already had made in Rio de Janeiro and London to help us validate and fine-tune the software for the customers to eventually allow increased air traffic density and keep higher safety standard for the UAM globally. Last year also, late, we launched the EVE Take Care, a fully integrated app-to-market service portfolio that will include technical support, maintenance activities, parts and battery solutions, flat operation support, as well as pilot and mechanic training in partnership with the Embraer CAE Training Services, commonly called ECTS. We have raised $270 million of fresh capital and mix of credit and equity instruments. This allows the company to have a solid liquidity position to continue funding our general expenses, research and development efforts, as well as our necessary investment in our first eVTOL manufacturing facility in Tabate, Brazil. Another important milestone was the publishing of the basis of certification by ANAC, the Brazilian Civil Aviation Agency, which establishes the standard eVTOL to fly commercials. The basis of certification establishes the first set of airworthiness criteria for EV tolls in Brazil and follows each application for TAP certification back in 2022. This is obviously a critical milestone in the project. We are now focused on defining with ANAD the means of compliance. These are specific tests, analysis, and simulation that need to be successfully performed for the TAP certification to be eventually granted. These tests are performed to prove the aircraft design and that it meets the safety standards laid out in the basis of certification. And lastly, we completed the assembly of our prototype and rolled it out of the hangar for the first time in early July 24, followed by a series of ground tests before its first flight. As a reminder, it is a full-scale engineering prototype with no cabin or cockpit. It is made of composite material that will be piloted remotely in the command and control truck. This prototype will be used to validate and improve the accuracy in previous subscale and computer models. It also has an important contribution for the setup of several rigs we are using for different individual components. We have installed the batteries and already performed several tests. We will cover this later on this call. And we're now putting up for the fly campaign. We will initially perform hover flights side 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 originally, and only then we will move to the full transition flights. Now, for the next slide, I think it's a good summary of what I've just been mentioning so far. And it shows, you know, how we met all the milestones that we committed last year, thanks to the great dedication of all ETH, Embraer, and our partners and employees. At the end of this presentation, Edu will go through the new 2025 ambitious milestones, and we're already working hard to meet all of them also. Going to the next slide now, I would like to highlight some of the tests that we have performed with our engineering prototypes. We announced last year the first step of the pusher, a motor after installation. We published a video with a full test, so you can find it and watch it online, where our engineering not only tested successfully the dedicated radio link between the command and control truck and the vehicle, but also the proper installation of the inverters and several performance-related metrics of the motors, including thrust, vibration, sound, and energy consumption. In parallel, we're also testing the lifter motors separately in dynamometers to make sure that we deliver the expected performance before its installation. We also concluded and conducted another set of wind tests and wind tunnel tests in the Netherlands to validate the aerodynamic load and noise level for the lifters turned on. We expect to fly our full-scale engineering prototype for the first time by mid-2025. On the certification front, we continue to be highly engaged with certification agencies, and we are keeping a good and constant dialogue with ENAC in Brazil to define the certification plan. At the same time, we receive a team of specialists from the FAA in our offices in Santos de Descampos in Brazil, and we met representatives from Japan J-CAB in Tokyo. Now, on the next few slides, I'm going to illustrate what I just talked about. You can see images of our pusher test where we have the five blades propeller spinning on the slide six. This assured our engineer that all equipment was properly installed and that the radio link with the command and control truck gives our team the instant control of the aircraft with no delay in the signal. On the slide seven, it shows our team meeting regularly with ANAC and FAA. And lastly, slide eight shows the picture of our latest wind tunnel test. This is a representative subscale model. But here, you can also see the propeller spinning in the picture, right, to give more accurate readings as the aerodynamic forces that would be present on the aircraft during all phases of the flight, including also the important transition between takeoff, landing, and cruising. Moving to slide nine. Our total pre-order backlog stands at approximately 2,800 aircraft for a total value close to $14 billion based on the list price. There are non-binding letters of intent from 28 different customers spread all over nine countries and different businesses from the mainline to regional airline, helicopter operators, ride-sharing platform, and also within companies. And because demand and support guarantees the proper aircraft operation, we are highly focused on providing the best-in-class services and support to eVTOL operators. Therefore, we have also secured contracts with 14 different customers for our EVE Take Care suite of up-to-market products, which could bring up to $1.6 billion in revenues to EVE over the first few years of operation. Importantly, these tech care customers have placed LOI for covering around 1,100 aircraft, which is about 40% of the pre-order book. As you can see, we also have 21 different customers for our air traffic management solution we call Vector, and I believe this reflects the market-leading value proposition that we bring to our customers. Beyond that, together with our customers and authorities, we're also developing a strong network of partners in different areas such as the infrastructure and energy to address one of the many challenges ahead of the urban air mobility, which is to create a whole new ecosystem besides simply the development of an aircraft. So now I would like to invite our CFO, Edu, to go over our financials along with the milestone checklist for 2025.

Thanks, Johan. Now moving to slide 10, I want to start with our most recent liquidity events. We have been very successful in attracting new capital to EVE to continue to fund our eVTOL development. In total, we raised $270 million in 2024 in a mix of debt, around $170 million, and equity instruments, around $100 million. We believe that this balanced capital structure is an important key to maximize value for our shareholders as we continue to enjoy strong liquidity, now standing at $429 million. including funding for our industrialization, as well as continued R&D expenses. Our liquidity is equivalent to three times our 2024 cash consumption. It's above our peers and gives us confidence to advance the program to certification. Now, moving to slide 11, EVE is a pre-operational company, and our financials reflect mostly the costs associated with our program development, That said, I want to highlight some of our numbers. EV invested $34 million during the fourth quarter in our program development and $130 million in the full year. The majority was invested in developing our EVTOL, and a smaller portion went to service and support solutions in the urban air traffic management software. We are the only EVTOL company with a complete solution that includes design, development, manufacturing sales of an EVTOL, as well as maintenance services and air traffic control. We also deployed 6 million in SG&A during the quarter and 27 million in the year. Including R&D and SG&A, we reported a net loss of 40 million in the quarter and 138 million in the year. Now, moving to cash flow, our operations consumed 40 million in the quarter and a total of 141 million in the year, staying in our guidance range of 130 to 170 million, showing EVE's financial discipline. as well as our advantages of using Embraer's engineering team. We also had a positive impact of the U.S. dollar appreciation versus the Brazilian real, as the majority of our costs are incurred in Brazil. We ended 2024 with $303 million in cash. This is up from the end of 2023, a cash position of $241, and reflects our continuous focus on liquidity. We also continue to draw from the pre-approved credit line with the Brazilian Development Bank helping to preserve our cash. Our total liquidity of 430 million as of the end of 2024 is very comfortable and it's enough to sustain our operations at least for 2025 and 2026. As we look into 2025, we plan to conclude the ground test phases of our engineering prototype and have its first flight and initiate its flight test campaign in the middle of 2025. In parallel, we continue our high-level engagement with the Brazilian and US certification authorities to define our certification plan, which includes the definition of all certification tests to be performed during the flight test campaign. At the same time, we'll begin the production of our first prototype that will be used in our certification campaign. We expect to use five certification-conforming prototypes for our certification. And now, with funding secured, we will start to prepare our site in Brazil for the manufacturing of our eVTOLs. Finally, we expect to consume between 200 and 250 million of cash this year as we continue to accelerate our eVTOL development. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Savi Sitt from Raymond James. Please go ahead.

Hey, good morning, everyone. I'm curious, Edu, if I might start with you just on the cash burn for this year. Could you provide a little bit more color on... This meeting is being recorded.

This meeting is being transcribed.

Sorry, Savi, you broke up. Can you repeat, please?

Yeah, could you provide a little color on... you know, the cash burn for this year, kind of how that progresses with, I'm guessing it's increasing just given the work being done on the production side and kind of the bills that come later in the year. But could you give a little bit of color on kind of the trend there as we kind of go through the year and maybe early thoughts into kind of next year, given that you have enough liquidity to kind of last through 2026? Yeah, sure.

Sure. In 2024, we consume 140 million, right, as I mentioned in the presentation. The majority of the expenses last year were focused on the development, the eVTOL development. This year, it's not going to be too different in terms of the focus remains on the eVTOL development. We're going up to something between 200 to 250. Depending on the currency, right, we can... We see how this is going to be. Heavily focused on the VTOL development. We continue to accelerate the VTOL development. We're going to start to fly the VTOL, do several flight tests. In parallel, we are working on the conforming vehicles to start the official flight test campaign in 2026. So, you know, basically it's still more heavily loaded on the R&D, on the development of the eVTOL. Of course, this year we may start to invest on the facility, on the production facility. We may spend around $30 million on that. But overall, it's still, as I said, more eVTOL development as we are bringing even more engineers from Embraer. Now I think we are around 800 engineers at Embraer, another 200 people at EVE. We have around 1,000 people working in the program. And for the following years, as you mentioned, I believe we may keep this range around 200, 250. So that's the reason, you know, the liquidity we have, the almost 450 million, give us enough resources for 2025 and 2026 at least.

Okay? That's super helpful. And just if I might follow up on that production facility, is you going to use that facility to build a CERT aircraft? I'm just kind of wondering on just how you think about whether you start kind of building out that facility or not, like the timing around that.

The facility already exists, right? It's an existing site from Embraer that we are leasing. So the investment is really on tooling, Machines, right? This tool and machine, it starts in one side, then we transfer to this final side, more towards the, I would say probably in 2026. I would say, you know, there is investments on tooling, machining, that's the majority of the 2025 investments. We are also doing IT. investments on the side itself. So that's pretty much what we're doing this year.

Very helpful. Thank you.

Thank you. The next question is from Ellen Page with Jefferies. Please go ahead.

Hi, guys. Thanks for the question. On the order book, I think you had a A couple more customers last quarter than this quarter. Can you talk about how you're thinking about those LOIs converting and the progress you've made in your marketing campaign? I know you're still the most, the largest order book of your peer set.

Thanks, Ellen. Johan speaking. Thank you for the question. As a matter of fact, you probably saw that, you know, it went from a 2,900 and 2,800 to The reduction is still not relevant in terms of dollars, dollar amount, $14 billion. But it's really fluid. I mean, what we've done since we created EVE is to go and visit prospects and customers and show them actually more a solution than the actual product, the final product. So they bought in the solution that we're offering. which is not only the vehicle but also the customer support and also vector inventory, which is our air traffic management, which is also more operation, ground operation, first module for ground operation software. And given that approach that we have, they signed up for those LOI, and this is why the number has been at the highest level because they trust that we have the technology capabilities, the know-how, and the expertise to ensure not only the vehicle but also the operation afterwards. It is fluid because, you know, it takes time. It's obviously tied up also to certification progress. You can understand that if you're going to be buying a vehicle of, you know, a list price of $5 million, you want to make sure that the aircraft also is flying. So we really work together, work with our customers, to first develop the vehicle, but also to make sure that they're starting to work on the ecosystem. There are a couple of customers that just left the backlog totally independent from EVE, whether they're going bankrupt or it's just a big decision. It was Vidra that was purchased by Norwegian, and then Norwegian decided that the air mobility was not the top priority for the moment, at least. And other company went bankrupt, but also, you know, put some more others on board. So like AirX or Alien in the U.S. So, you know, it's flexible. It varies. I think what is very important is just to make sure that we have our core customer base, especially for the first three years of production.

Great. That makes sense. And can you talk about the differences between the full-scale prototype for flight testing and for certification relative to the prototype you have today? Are there any significant changes in the form or is just that finalization you've made in the past year?

Yes. Good morning, Ellen. This is Luis Valentini. The differences are most significant in the sense that this is a simplified vehicle that does not have all of the redundancies and the safety level and the refinement that the conforming prototypes need to have in order to show compliance with certification requirements. So the idea was that by doing these simplifications, we could advance the development of this engineering prototype, which is a full-scale prototype, very representative of what the conforming prototypes will be, But then it's available earlier on in the development program for us to test solution and, like Johan mentioned, to advance the modeling, to advance the maturity of the technical aspects of the vehicle. So in a nutshell, really, the differences are that it's a simplified vehicle. Therefore, it's an unmanned vehicle. It's remotely piloted. And so it's not going to be used to show compliance with certification requirements.

I'll hop back in the queue.

Thank you.

The next question is from the line of Austin Moller from Canaccord. Please go ahead.

Hi. Good morning. So my first question, has ANAC started to establish a framework of how it will harmonize certification with the other non-FAA regulators? EASA and CAA. And could you go into detail on that effort?

Sure. Good morning, Austin. So this is something that we work a lot with ANAC. It's very important for us that the certification bases are as similar as possible, if not completely harmonized. And ANAC has been very active in influencing other authorities, both in what they call the CMT, which is a group between ANAC, FAA, EASA, and the Certification Canada, TCCA, but also doing individual agreements, bilateral agreements with other certification authorities in the world to discuss eVTOL certification requirements. So we are very confident that through this tight connection between the authorities, we will advance to more, I don't want to say harmonize, but at least harmonize Similar certification bases that do not require significant differences between the vehicles that we will certify at each country.

Okay. And just to follow up, if we think about 2025 and 2026, how many prototypes do you expect to build with existing capital beyond the prototype you have right now?

So for the certification campaign, we expect to have five prototypes. This is very similar to what Embraer has used in previous development programs and certification programs. It's a mix of prototypes that are used for different purposes. So some of them are more used for, let's say, system certification. Others more focused on interiors, for example. Others more focused on aerodynamic flights. But this number allows us to have not only representation in all of the vehicle characteristics, but also a good pace for the flight test campaign still being a manageable fleet, right? So it's a balance of having enough resources to perform the flights and being able to conclude all the flight tests needed, flight and ground tests, but also not having too much investment and too much of a fleet to manage of these test vehicles.

Okay, great. I'll pass it back there.

Thank you. Thank you.

The next question is from Amit Dayal with HC Wainwright. Please go ahead.

Thank you. Good morning, everyone.

These, you know, the CapEx that you mentioned, $30 million, will that cover the full bill, or will you need additional investments for that manufacturing facility further down the road as well.

Yeah, in terms of capex for our manufacturing plant, we're going to spend around 100 million. We already have this money secured. We signed it last year, a 16-year, right, a long-term facility from the Brazilian Development Bank. As we advance on the on the works, right, of the facility. We're going to draw this money. But, yeah, we're going to spend more than the 30. We're going to spend 100. The majority will be spent, I would say, in 2026. But we already have all the money secured from the long-term finance.

That's amazing. Thank you. And then just a question on the tech care offering that was launched, I think, you know, sometime last year. Are you actively marketing that offering to customers right now? Like, what is happening with, you know, the launch that has taken place already, you know, for that?

Thanks, Hamid. Dion speaking. Yes, indeed, the Eve Take Care was launched last year. This is something that we discussed with our customers. This is something that they want from Eve. We're the face to the customer. I think this is important for them to make sure that we guarantee the availability of the operation, but also the optimized operating cost. And they understand that, you know, it needs to be done through EVE. This is also the contracts that we have with our suppliers. Basically, this is, you know, about the spare parts, flat hour program, mechanics training, also the pilot maintenance, The whole complete portfolio that an operator will need to get from the OEM to make sure that, you know, we have a good operating experience.

Understood. Last one from me. Are you seeing, you know, some evidence of investments being made by, you know, potential customers, other partners in the supply chain or the value chain, you know, for EVTOLs? From the infrastructure point of view, I know you are getting into various stages of testing. Some of the other competitors are also planning to maybe launch initial flights by the end of this year or early next year. So I'm just trying to get a sense of whether you are seeing investments by other players to build the infrastructure and bring these eVTOLs to market.

Thanks, Amit. Just like you asked about the e-tech here, which is the support from the OEM, also the other challenge that we have is we're creating a new segment. Obviously, the ecosystem is very important, and this is what we need to do, not only the design, the delivery certification, but or the operation support, but also make sure that we have the ecosystem ready. That means that, you know, first we're going to be using as much as possible the heliport and the infrastructure, existing infrastructure. But as we go and we want to deliver dozens and hundreds of vehicles per year, We want to make sure that, you know, the voter ports and the corridors and everything can just basically ramp up, right? So we're working with authorities and private companies. We have partners. They're usually the same also partners that the other OEM are using because, as you can understand, there is investment or quite substantial when they need to be made. And we are really pushing, you know, to make sure that, Every infrastructure will be allowing not only the E100 operation, but also the other eVTOL operation. I think we're creating this segment, and this is why those investments will bring return if operators and infrastructure companies can be operating more than one eVTOL type.

Understood. That's all I have, guys. Thank you so much. Thanks, Amit. Thank you.

The next question is from Marvin Fong from BTIG. Please go ahead.

Good morning. Thanks for taking my questions. Just one maybe for Yidu. Just looking at the $200 to $250 million in cash burned for next year, and if I just kind of look at the moving parts, you know, $100 million in CapEx and assume relatively flat G&A, Seems to imply that R&D may be down next year. I just wanted to make sure I had that right. How should we kind of think about the composition of the cash burn at the OpEx level would be great. That's all I had. Thank you.

Okay. Thanks, Marvin. No, no, no. The CapEx for this year is around $30 million. The $100 million that I mentioned is the full CapEx for the facilities. And the majority will be spent in 2026. For 2025, it's something around 30 million of this 200, 250. The majority of the expenses this year are really on the EVTOL development. As I mentioned, we have around 1,000 people engaged in the program between EV and Embraer. So we're going to be spending 150, 160 million on development, right, mostly EVTOL. engineering works. Then there is the 20 to 30 million on CAPEX and of course we have also a small SG&A around 20, 30. So that's how we get at the full 200, 250. The majority is by far R&D, the EVTOL development.

Okay, I misunderstood that. Okay, thanks for clarifying. Thank you. Thank you. Again, if you have questions, please press star, then one. We have no further questions.

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

Thank you, Dorwin, and thanks everyone who joined the call today. As you can see, we accomplished several important milestones this past quarter and in 2024. We're fully engaged and moving forward, moving fast, and there's much more.

This meeting is no longer being transcribed.

This meeting is no longer being recorded. And look forward to meeting all of you in the upcoming events we're going to attend. And 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. Bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.