Eve Holding, Inc.

Good day, and welcome to the Eve Holding Inc. first quarter 2025 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, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Lucio Aldworth, Head of Investor 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 first quarter 2025 earnings conference call. Our CEO, Johan Bourdais, and CFO, Eduardo de Couto, are joining me on the call today. And after their prepared remarks, we're going to open the call for questions, at which point, Ruth Valentini, our Chief Technology 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 quadrant, as well as the testing phase of our full-scale prototype. The deck is on our website at ir.evairmobility.com, so please feel free to download it and follow along. Let me first mention that today's conference call includes 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 forward-looking statements are based on current expectations and involve risks and uncertainties that could cause financial results to differ substantially from those expressed or implied in this conference call. And we undertake no obligations to update publicly or revise any forward-looking statement because of new information, future events, or other factors. For more details of these risks and uncertainties, please refer to our SEC filings available in our website. With that, I will now turn the presentation over to our CEO, Johan.

Thanks, Lucio. Good morning to all, and welcome to our first quarter 2025 conference call. We continue to move at a steady pace in the development of our eVTOL, and we have reached important milestones in the quarter. I would like to highlight today a few of those most important recent achievements, starting with slide two. We continue to perform several ground tests in our full-scale prototype and prepare it for its debut flight. As a reminder, this is a full-scale engineering prototype with no cabin or cockpit. It is made of a composite material that will be piloted remotely in our remote pilot station, what we call the RPS. This prototype will be used to validate and improve the accuracy of previous subscale and computer models. It is also an important contribution for the setup of several rigs we are using for different individual components. Early this year, we tested the pusher motor after having installed it in the aft section of the full-scale prototype. We published a video of the test, and that is online for everyone to see and enjoy. As a reminder, we had already tested the motor in the lab environment in a pedometer to make sure it delivered the expected performance, and the tests after installation were important to make sure that the real-life performance was consistent with lab performance and also that the inverters were properly installed. We are now following the same protocol with the lifter motors, testing them in the dynamometers before installing them in their respective nacelles in the prototype. With that, we are confident that we will begin flying our prototypes until this year. We will initially perform harder flights and gradually increase power and the height. then we'll move to partial transition this is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft vertically and only then we will move to a full transition flight at the same time we continue to make important advancements with the rigs and what we call the island bird this is uh this constructed eVTOL, in which we integrate all the different components of an eVTOL into a physical system to make sure that all systems work together properly. We will get into this in a moment. In parallel, we are highly engaged with our suppliers who are already producing parts for the first of the series of five conforming prototypes we will have for the certification campaign. And lastly, we have already prepared the assembly line in our site of Embraer, San Jose Des Campos, or Xerox Hilda plant for our conforming vehicle. Now slide three lists some of the successful tests that we have performed in the aircraft this quarter. This is to make sure that it is airworthy. Not only we need to make sure that a dedicated radio link between the eVTOL and the RPS has no latency and no interrupted, to prevent the loss of control, but also we need to test how well our cabling system insulates the aircraft from the external electromagnetic interference. We also measure how well the eVTOL structure holds in the vibration test to simulate some turbulence, but more importantly, the structure integrity of our holding adverse conditions. And lastly, we also make sure that the all navigated related equipment such as the GPS and also altimeter are properly calibrated. Now, the next few slides offer a good summary of what we're testing, what we have tested, and also accomplished so far this quarter. Slide four shows the LFTR test in the dynamometer. As you can imagine, we need to perform several tests with each of the eight motors to make sure they deliver, at least in the lab setting, their intended thrust to support the aircraft in the takeoff and landing phase of the flight, remembering that this is the same protocol we use with a push air motor, which means that we're getting close to flying. Slide four shows some of the parts of the Ironbird. Here on the left, you see a picture of the Ironbird simulator. This is the interface through which the pilot will control the entire system. As you can see, the simulator has approximately a 270 degrees view, and it is connected with all the different rigs of the flight-critical components. For instance, the Inceptor is connected to actuators and motors, and they react physically to all pilot commands. This, in turn, are connected to the flight computer with our fly-by-wire system and avionics. The motors are connected to the battery. with its own thermal management system. A curious fact is that all wires and cable replicate the composition, the width, and the length of the actual harness that we will have on the eVTOL. This assures a realistic simulation as much as possible. So not only the AvonBird helps us to better integrate and understand all the system and how they all work together, and also help us troubleshoot the potential problems on the ground. But it also, on top of this, is important for the aftermarket benefit. The Ironbird helps us to understand the material and the component fatigue, and these are important input for the efficient maintenance program and also for the reliability of the aircraft. Another important fact is that the Ironbird helps us expedite and reduce costs related to certification campaign. Keep in mind that some of this test can be performed on the ground, such as the electrical system, circuit breakers, and the iron bird becomes a very valuable tool. The next slides show how the advancement that we have made on the digital and computer system to reduce development time and cost. Slide six, it shows a different flight simulator that is used to validate the control law for the fly-by-wire system and was extensively used to develop the flight control. It is also an important tool to develop the ergonomics for the pilot and window positioning to maximize the visibility. Slide seven shows the digital rendering of the structure of the cockpit with all its systems, structural support, and the wiring, remembering that this is an aircraft with a pilot plus four passengers and a luggage compartment, and it is not only designed to be efficient to operate, but to maintain as well. With that in mind, components are placed at a strategic place and easy access to facilitate any maintenance service. Now, the next couple of slides show the level of engagement with our suppliers. We regularly meet them and visit their sites, but in the last couple of months, there was a very noticeable upstick in the activity. As you can see in slide eight and also the slide nine, we already have some of the components ready to go for the first of our series of certification-compliant aircraft. As you can see, the nose of the fuselage, we have the lightning system, actuators, seats, and windshield have already been produced. You can also see some of their tooling to manufacture these components, such as the negative for the carbon fiber structural parts and the autoclave that is used to cure these components and increase its resistance and durability. Again, this increases our confidence level that we will be able to meet our ambitious targets in starting the assembly of the first of these conforming prototypes in the second half of 2025 and initiate the slide portion of the certification campaign early next year. And lastly, on slide 10, we can see the site where we will assemble this conforming prototype. To avoid any confusion, this is not our site in Tabaté, where we will be manufacturing the commercial aircraft. This site is inside of the Embraer main facility in San José de los Campos and will be used exclusively to assemble the conforming prototype for the certification campaign. We plan on deploying five eVTOLs for the certification campaign with an option for maybe a sixth aircraft if needed. Needless to say that this site is strategically important for us because of proximity to Embraer Engineering, which we think will be critical for the learning curve in the assembly process of these aircraft. The site is ready to be used and we will now start installing the equipment and the tooling to manufacture our eVTOLs. And as a reminder, these conforming prototypes will be closed to the commercial version of eVTOL as much as possible. And they will have all the systems, subsystems, and the redundancy that are necessary for certification for the commercial operation. In the end, advancement in these pre-production aircraft means a leap when we're ready to go for the entry service. And my last slide, which is the slide 11, it's our total pre-order backlog, which stands unchanged as approximately 2,800 aircraft. for a total value close to $14 billion based on the list price. These are non-binding letters of intent from 28 different customers spread over nine countries and different businesses, from airliners to the original airliners, helicopter operators, ride-sharing platform, and leasing companies. And because maintenance and support guarantees a proper aircraft operation, we are highly focused on providing the best-in-class services and support to eVTOL's 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 revenue to EVE over the first few years of operation. Importantly, EVE Take Care's customers have placed LOI services for around 1,100 aircraft, which is about 40% of our pre-order book. As you can see, we also have 21 different customers for our air traffic management system 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 sector. to address one of the main challenges ahead of the urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. Now, I would like to invite our CFO, Edu, to go over our financials along with a checklist for our 2025 milestones.

Thanks, Johan.

Now moving to slide 12, EVE is a preoperational company and our financials reflect mostly the costs associated with our program development. That said, I would like to highlight some of our numbers. EVE invested $45 million during the first quarter in our program development, including our eVTOL, the service and support solutions, and the urban air traffic management software. We continue to accelerate our program development this year with more engineers from EVE and Embraer, as well as higher engagement with suppliers. That explains the higher R&D expenses in the quarter, also deployed almost 8 million in SG&A during the first quarter. Including R&D and SG&A, we've reported a net loss of 49 million in the first quarter 2025. Now, moving to cash flow, our operations consumed 25 million in the quarter, which is lower than previous quarters, as it included a temporary working capital gain, as one of our invoices of $15 million from Embraer related to the engineering development services that are typically paid at the end of the quarter is lipped to the beginning of the second quarter. We are comfortable with our guidance for the full year, which reflects our financial discipline, advantages of using Embraer's engineering team, as well as our increased efforts in the program development. Finally, on liquidity, We ended the first quarter with $288 million in cash. This is down $15 million from the end of 2024 and also reflects an additional disbursement of the credit lines from the Brazilian Development Bank of $9 million. These standby facilities continue to help EVE to preserve a solid cash position throughout the year. The total liquidity of $411 million at the end of the quarter includes our cash, and all undrawn standby facilities, and is sufficient to sustain our operations through 2026. Now going to slide 13, we remain on track to deliver our milestones this year. As Johan detailed earlier, our first full-scale prototype is concluding the final tests and installations to start to perform its initial flights in 2025. In parallel, we continue in talks with AMAC to detail the needs of compliance, which are the specific tasks that need to be conducted during the certification campaign. We also continue highly engaged with the suppliers, working on the initial parts of our conforming prototypes. In parallel, the sites to assemble these aircraft is starting to receive the necessary equipment and tooling. Lastly, our cash consumption in the year, despite the better first quarter should stay in the guidance of $200 million to $250 million, probably closer to the low end of the range. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad.

If your question has already been addressed and you'd like to remove yourself from the This meeting is being transcribed.

If your question has already been addressed and you'd like to remove yourself from queue, please press star then two. At this time, we'll pause for just a moment to assemble our roster. And today's first question comes from Savi Scythe at Raymond James. Please go ahead.

Hey, good morning, everyone. And maybe first for Edu, you know, the R&D spend was a little bit higher than I would have expected. but obviously you're kind of within how you're thinking about the cash flow. Do you still expect that pace to kind of step up, or is this kind of the right level of spend for the rest of the year on R&D and on the G&A, SG&A as well?

Yeah, I believe we should be around this level, Savi. You're right, we had a lot of engagement, not only in Briar Eve, but also with suppliers. R&D was 44 million in the quarter. I believe it should stay at this level. Probably will not accelerate further.

That's helpful. And then just on the certification aircraft build, I think Johan, you mentioned maybe can do test flights as early as 2026. And I know you called out the Embraer site being prepared and partners building parts. Just Could you talk about what items you're still waiting on to start building that? I'm just trying to think about how much early preparation and what might delay the start of that program if something does.

Sure. Thanks, Savvy. Well, a reminder that we have two prototypes, let's call it. We have the engineering prototype, the one that we rolled out in the last year. at the Farnborough Airshow. And this is the one that we've been showing in videos. And then we have the first conforming prototype, the one that, you know, one of the series of five aircraft that we will use to certify the aircraft. And this is the one that I showed one slide about, you know, where the plant is going to be. It's going to be in what we call the Osiris Silva plant in the Faro Lima and San Jose de los Campos. It's not Tabateh. And as you can see, the floor is now ready to receive the tooling, I mean, to start to build the prototype. So when it comes to the prototype, everything is on schedule, right, for the conforming prototype. I think this is what you asked for.

Yes. Okay. Sounds good. I appreciate the call. Thank you. Thank you.

And our next question today comes from Austin Moeller in Canaccord.

Please go ahead. Hi. Good morning, Johan and Edu. So just my first question here, the $1.6 billion in services contract backlog, does that reflect any expectation of a battery upgrade in the future into existing aircraft with an STC, or does that only assume replacements of existing battery types and maintenance?

Thanks, Austin. Indeed, this is... This is including the replacement and the repair of the batteries, right, as it is a replacement. A little bit more on a yearly basis, right? It doesn't have inside the upgrade, right?

Okay. And on the certification prototype, so the prototype that you're building now, are you planning to fly that specific aircraft? aircraft with a pilot, or would that be on future aircraft since you're planning to build five as part of TC?

The conforming prototype we're starting to build this year and will fly next year will have a pilot. It will be man, yes. This is part of the certification process.

Great. I'll pass it back there. Thank you.

Thank you.

And our question today comes from Sheila Kealagu with Jefferies. Please go ahead.

Good morning, guys, and thank you for the time. You know, maybe one on the order book and one on free cash flow. So the order book, can you talk to us about discussions there? Just what's the latest on the customer engagement front? How should we expect the order book and backlog to move forward as we think about timing with your first flight as well?

Thanks, Sheila. The order book is, you know, something that we've worked since the very beginning when we started to visit the customers about four years ago. And I think, you know, the vote of confidence of the solution that we're developing is really right there. That's three, you know, 2,800 vehicles under LOI. Obviously, it is evolving. I mean, it's been a couple of years sometimes. The customers are signed, and it's evolving on the corporate level. Nothing to do with the product, but we have a few customers like Vida Zero, for example. They got purchased by Norwegian, and they changed their strategy, and it's not the priority right now for the eVTOL. But at the same time, we have others like this that went actually bankrupt. But we're also bringing some other customers. And I think the strategy is really to keep a footprint around the world where we have customers in Japan, Australia, Middle East, India, US, and the primary market, of course, of Brazil and the US. So this is really, we're keeping at the same level. We're not chasing more LOIs just because we want to get numbers. We really want to make sure now that we're starting to work on where it's going to be, the first customer and the first operation, the first city at the city level. So we engage with the customer on the ecosystem development. So we're already doing this with our customers. And naturally, we will get into this negotiation of the firm and the firm orders.

Got it. No, makes sense. And then maybe just on free cash flow, You know, as we think about 420, sorry, 25 million of usage in the quarter versus total cash consumption guide of 2 to 250. Can you provide a little color on the cadence of the burn as we progress throughout the year and how you're thinking about the 410 million of liquidity?

No, thanks, Sheila, for the question. As you mentioned, we consume 25 million in the quarter. There was one invoice that skipped to the beginning of the second quarter of 15 million. So if you adjust that, the consumption would have been around 40 million. So if you annualize that, it would be around 160. We believe the quarters ahead in terms of cash, they may be a little higher than the adjusted 40 million we should have had in the first quarter. So that's the reason We believe we may be at probably closer at the low end of the 200 to 250 and more close to the 200. So I think we are on track on that. The liquidity, our total liquidity is 411, right? Which is around 290, almost 300 million cash. And there is the standby facilities a little bit more than 100. so if we consume 200 and we have a little bit more than 400 that gives us enough cash for 2025 and 2026 the certification is 2027 so you know we still have a plant of cash but at some point we need to work on this liquidity for 2027 we have multiple options so i don't think funding is a problem at all we have plenty of funding but that's how we view covered for 25 26 and the pace of burn accelerating a little bit from this around 40 million level per quarter.

That's great. Perfect. Thank you.

Thank you, Sheila.

Thank you. And as a reminder, to ask a question, please press star then 1. Our next question comes from Andre Shepherd with Cantor Fitzgerald. Please go ahead.

Hey, everyone. Good morning, and congratulations on the quarter. Thank you for taking our questions. I want to touch on maybe just the five prototypes that you expect to build, again, for certification campaign. Do we have a sense on roughly what the timing of that might be, and is that embedded into the cash consumption guidance for this year? Just trying to figure out how and when we should think about maybe CapEx and cash consumption for these five aircraft. Thank you.

Thanks, Andres. I see that you guys are focused on the prototype, obviously the conforming one, which I think is important. And this is also why we showed you in this quarter how we're progressing. There are actually parts coming from the suppliers. There's the facility that is being prepared and ready to receive the first tooling so we can build up those five prototypes. So, yeah, it's really towards the end of this year now that we're going to be starting to assemble the parts. More probably, you're not going to see a full aircraft already this year being assembled, but definitely parts of it.

The focus is still most of our cash goes to R&D for the development, for paying the engineers. We have around 800 to 900 engineers engaged, so Yes, the cost of the prototypes, the parts, the initial assemble is there, but the majority is not related to that. It's still the development.

Got it. That's super helpful. I appreciate that. And just as a quick follow-up, can you maybe just remind us, in terms of your service and maintenance business segment, when, how do you expect to maybe commercialize What's the latest there? You know, that's something that is maybe differentiated to EVE. So just curious on the timing on the maintenance and service business segment. Thank you.

Thank you for that question. I'll take this one. It's important and dear to my heart. This is something that since the very beginning in the whole project, I mean, we thought about in the customer support and services, because we know that it's not only about certification, but it's also about operating. This is going to be the success of this vehicle. And customers are asking two things, reliability, availability of the aircraft, and also the optimized operating costs. So this is what we build up in our solution. I think this is really a step forward. What Embraer in the industry has done so far is that we are guaranteeing the face to the customer. And this also guarantees the operation, and we're involved with the operation, directly involved with the operation of the aircraft at the customer. So what we've been doing now is focus on the first aircraft. What we want is we want to make sure that we have entered the service, they're well prepared. That also involves the service and support, the maintenance, the right maintenance with the right training, remembering that we already signed the contract with ECTS, which John ventured between CAE and Embraer for the training of the pilot and the mechanic to make sure that we'll be ready at the internet service. And we already, as a matter of fact, this quarter gave the first data package to ECTS so they can start building up the training solution. So as you can see, I mean, we're on all front making sure that the operation will be seamless and with few operators and cities because we want to make it a success. It will be a vitrine, and then we'll be able to replicate, you know, with aircraft plus service and support, complete solution to the operator and make it a success.

Wonderful. Thank you so much, Johan, and thank you, Edu. I'll pass it on. Thank you.

Thank you. Thank you. And our next question today comes from Amit Dale with HC Wainwright. Please go ahead.

Thank you. Good morning, everyone. Thanks for taking my questions. Guys, what's the progress on the software side for the services side of the business? Any update on how some of those applications are coming along?

Yeah, I'll take advantage that we also have a Luis Valentini, our CTO, that will give you more color about this.

Good. So, good morning, Ahmed. Thank you for the question. The software side for the services is a really important basis for how we will provide the services that Johan mentioned on the previous question, right? So we are focusing on engaging with the potential operators to understand what their use will be and how they will manage the aircraft to make sure that the software not only performs the functions that it needs to, but it's also, for example, user-friendly easy to maintain and operate in all of the bases where the vehicles will be operated. So this is a very active effort that we have ongoing to make sure that as we have the vehicle progressing, like Johan mentioned, that we also have these tools evolving and ready to go into service when the vehicle does.

Understood. Thank you for that. And this one, last one for me, you know, it looks like you're good with financing for, you know, maybe till the end of 2026. But beyond that, I just wanted to see what options you may be entertaining, you know, and if any of those options include any strategic investors from the value chain that may not be Embraer, but, you know, somebody else, just any color on how we should think about, you know, future financing options for you guys.

Mm-hmm. Yeah, we have several funding options. So, as I said, we are fully funded for 2025 and 2026. I think probably is one of the best companies within the sector, right, in terms of runway of funding. In terms of options, we have several. Even, you know, for instance, the service and support softwares, We have some grants that we are discussing, or not even loans or grants, that we are discussing with some authorities. But we have a lot of different funds. We have debt that comes from local ECAs to support payments to suppliers. We have additional discussions with the Brazilian Development Bank for also some long-term facilities for the development. You know, there are several sources of funding that we can bring on top of the funding we already have. So as I said, we already have plenty of funding for the upcoming quarters and years, but we have other options to put on top of the liquidity we already have.

Understood. Thank you, guys. That's all I have. Thank you. And our final question today is a follow-up from Savi Scythe and Raymond James.

Please go ahead.

Hey, thanks for taking the follow-up. Just a clarification on the battery side. Is the battery that you're using and kind of the prototype that's kind of going under testing right now, is that going to be the same as the batteries being used for the certification aircraft that's being built later this year?

Yeah, Sevi, this is Luis Valentini. The battery is not exactly the same, so it will be a different design and therefore a different part number, we call it. But it builds very much on the same technology and very similar cells to the ones that we will use for the commercial vehicle. So we believe that We are taking advantage of the fact that the engineering prototype doesn't have to have the maturity and the redundancies, and that applies to the battery too. So that's why the battery is a little bit different than the one that will be on the commercial vehicle. But it allows us to apply the learnings from it and even work with the same supplier to build the development that we have with this battery in the engineering prototype test. into what will be the battery for the commercial vehicle.

Okay, so the same supplier, so you'll have confidence on the production and everything.

Right, and so as we progress with the tests, we also evaluate, for example, the manufacturability of the solutions and things like that with, like you said, the supplier that will supply the commercial vehicle battery. So we believe that even though we're not using the same part, you know, the same component as was your question, we are still building very much a path towards the maturity of the commercial component.

I appreciate that. Thank you.

Thank you. And this concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.

Thank you, Rocco. And thanks everyone who joined the call today. As you can see, we accomplished several important milestones this past quarter. We're fully

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

So we're going to continue updating you all on our progress throughout the next few quarters, and we look forward to meeting you all 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 great day. Thank you.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.