Eve Holding, Inc.

Good day and welcome to the E of Holding Inc. First Quarter 2025 earnings conference call. All participants will be in this lonely 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. Now I 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 Borde and CFO Eduardo de Coto are joining me on the call today. And after their prepared remarks, we're gonna open the call for questions. At which point, with Valentinia, 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 quarter, as well as the testing phase of our full-scale prototype. The deck is on our website at .evveremobility.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, Luisio. 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 EBITX, 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 session 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 results, 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 nestle-nestle in the prototype. With that, we are confident that we will begin flying our prototypes till this year. We will initially perform harder flights and gradually increase power and be high. 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 Islandberg. This is a deconstructed 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 performing prototypes we will have for the certification campaign. And lastly, we have already prepared the assembly line and our site of Embraer, San Jose de Escampos, or Zerisilva plant for our performing 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 interruptions to prevent the loss of control, but also we need to test how well our cabling system insulates the aircraft on 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 in adverse condition. 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 Avonbird. Here on the left, you see a picture of the Avonbird 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's commands. This, in turn, are connected to the flight computer with our -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 EV at all. 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 benefits. The Avonbird 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 Avonbird helps us expedite and reduce costs related to certification campaigns. Keep in mind that some of these tests can be performed on the ground, such as electrical systems, circuit breakers, and the Avonbird becomes a very valuable tool. The next slide shows how the advancements 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 -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 the strategic place and easy access to facilitate any maintenance service. Slide eight. 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. Now, 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 Men's Facility in Sanchez's campus and will be used exclusively to assemble the conforming prototype for the certification campaign. We plan on deploying five EV tools for the certification campaign with an option for maybe a six 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 EV tools. And as a reminder, these conforming prototypes will be closed to the commercial version of EV tool as much as possible. And they will have all the systems, subsystem 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 losing 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 EV tools operators. Therefore, we have also secured contracts with 14 different customers for our EVE Take Care Suite of aftermarket product. 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 to 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 that we bring to our customers. Beyond that, together with our customers and authorities, we 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 developing an aircraft. Now, I would like to invite our CFO, Edu, to go over our financials along with the checklist for our 2025 milestones.

Thanks, Johan.

Now moving to slide 12, EVE is a pre-operational 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 EVE toll, the service and support solutions in 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, EVE 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 50 million from Embraer related to the engineering development services that are typically paid at the end of the quarter is linked to the beginning of the second quarter. We're 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 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 test and installations to start to perform its initial flight in 2025. In parallel, we continue in talks with AMAC to detail the needs of compliance, which are the specific tests 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 one on your telephone keypad. If your question has already been addressed, you'd like to remove yourself from queue. This meeting is being recorded.

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 Seif at Raymond James. Please go ahead.

Hey, good morning, everyone. Maybe first, the R&D spend is a little bit higher than I would have expected, but obviously you're kind of within, how you're thinking about the cash run. 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 not the G&A, &G&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 Breyer Eve, but also with suppliers. R&D was 44 million in the quarter. I believe it should stay at this level, probably not accelerate further.

That's helpful. And then just on the certification aircraft build, I think Johan, you mentioned, maybe you can do test flights as early as 2026. And I know you called out, the MBR 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 kind of early preparation and what might delay the start of that program if something does.

Sure, thanks, Savi. Well, a reminder that we have two prototypes, let's call it, right? We have the engineering prototype, the one that we rolled out last year at the Fan Barrow Air Show. And this is the one that we've been showing in videos. And then we have the first conforming prototype, the one that 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 where the plant is gonna be. It's gonna be in what we call the Zeri Silva plant in the Farallima and San Jose de Scampos, it's not Tabatay. 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 Moller in Canaccord, please go ahead.

Hi, good morning, Johan and Idu. 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 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 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 were starting to build this year and we'll fly it next year, we'll 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 next question today comes from Sheila K. Alagu with Jeffreys, please go ahead.

Good morning guys and thank you for the time. 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 fund, 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 something that we've worked since the very beginning when we start to visit the customers four years ago. And I think the vote of confidence of the solution that we're developing is really right there. That's 3, 2,800 vehicle under LOI. Obviously it is evolving. I mean, it's been a couple of years sometimes, the customers assigned and it's evolving on the corporate level, nothing to do with the product. But we have few customers like Veeda Zero for example, they got purchased by Norwegian and they changed their strategy and it's not the priority right now for the EV toll. But at the same time, and we have others like that 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 wanna get numbers, we really wanna make sure now that we're starting to work on where it's gonna 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 in the firm orders.

Got it, no, makes sense. And then maybe just on free cash flow, as we think about 420, sorry, 25 million of usage in the quarter versus total cash consumption in the data of two 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 is keep 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're 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 a hundred. 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 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 2025, 2026 and the pace of burn accelerating a little bit from this around 40 million.

Sounds

great, perfect.

Thank

you.

Thank you,

Sheila. Thank you. And as a reminder to ask a question, please press star than one. Our next question comes from Audrey Sheppard with Cancer Fitzgerald. Please go ahead.

Hey everyone, good morning. And congratulations on the quarter. Thank you for taking our questions. I wanna 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, Samina. 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 prototype. So yeah, it's really towards the end of this year now that we're gonna be starting those to assemble the parts. More probably you're not gonna see a full aircraft already this year, right? Being assembled, but definitely parts of it, okay? On the cash consumption. I do.

No, the cash, 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? That's something that is maybe differentiated to EVE, so just curious on the timing on the maintenance and service business segment, thank you.

Now, thank you for that question, I'll take this one. It's corn and dear to my heart. This is something that since the very beginning in the whole project, I mean, we thought about the customer support and services, because we know that it's not only about certification, it's also about operating. This is gonna 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 a really step forward, what Embraer and the industry has done so far, is that we're guaranteeing the face to the customer, and this also guarantees the operation, and then 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 wanna make sure that we have introduced 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 entry 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, we're on all fronts, making sure that the operation will be seamless, and with few operators and cities, because we wanna make it a success. It will be a vitrine, and then we'll be able to replicate 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, Edoub, I'll pass it on. Thank you,

thank you. Thank you, and our next question today comes from Amit Deol with HCWainwright, 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, and we'll give you more color about this.

Good, so good morning, Amit, 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 and 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, it looks like you're good with financing maybe till the end of 2026, but beyond that, just wanted to see what options you may be entertaining and if any of those options include any strategic investors from the value chain that may not be Embraer, but somebody else, just any color on how we should think about future financing options for you guys.

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 in terms of a runaway of funding. In terms of options, we have several, even for the, 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 fundings. We have that that comes from local ECA's to support payments to suppliers. We have additional discussions for, 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 Sait and Raymond James. Please go ahead.

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

Yeah, Savi, this is Luis Valentini. The battery is not exactly the same. So there 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 and 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 kind of 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.

Thanks, 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.

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.