Eve Holding, Inc. Price & Performance (EVEX)

Good morning, everyone. This is Lucio Aldors, the Director of Investor Relations at Eve. And I wanted to welcome everyone to our fourth quarter twenty twenty four earnings conference call. Our CEO, Johan Borge and CFO, Eduardo Cotto are joining me on the call today And after their prepared remarks, we will open the call for questions, at which point Gres Valentini, 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.ehrmobility.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. [indiscernible] 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 and this space, intends, expects in 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 enviable year 2024.

We continue a steady progress in the development of our B. Toll and have reached important milestone. 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 FHSIs followed simulation we already Eve made in Rio Tenerlo and London to help us validate and fine tune the software for the customers to eventually allow in fleet air traffic density and keep higher safety standard for the UAN globally. Last year also late we launched Eve Take Care, a fully integrated app to market service portfolio that will include technical support, maintenance activities, parts and battery solutions, flat operations support as well as pilot and mechanic training. In partnership with the Embraer CAE, Training Services commonly called ECTS. We have raised $270,000,000 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 investments in our first eVTOL manufacturing facility in Tabate, Brazil.

Another important milestone was the Eve Brazilian Civil Aviation Agency, which establishes the standards Eve toll to fly commercial. The basis of certification establishes the first set of airworthiness criteria for eVTOLs in Brazil and follows E's application for stop certification backing 2022. This is obviously a critical milestone in the project. We are now focused on defining with ANAG the means of compliance. These are specific tests, analysis and simulation that need to be successfully performed for the top certification to be eventually granted. These states 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 twenty four followed by a series of ground tests before its first flight. As a reminder, it is a full scale engineering prototype with a no cabin or cockpit It is made of composite material that will be piloted remotely in a command and control slot. This prototype will be used to validate and improve the accuracy in previous sub scale 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 picking up for the fly campaign. We will initially perform hover flights 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 lip aircraft originally and only then we will move to the full transition flight. After the next slide, I think it's a good summary on what I've just been mentioning so far. And so how we met the milestones that we committed last year, thanks to the great dedication of all Eve Embraer and our partners' employees. At the end of this presentation, Edu will walk through the new twenty twenty five ambitious milestones [indiscernible] 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 and 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 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 the thrust, vibration, sound, energy consumption.

In parallel, we're also testing the lifter motors separately in diameters to make sure that we deliver the expected performance before its installation.

We also concluded and conducted another set of wind test 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-twenty twenty five. On the certification front, we continue to be highly engaged certification agencies and we are keeping a good and constant dialogue with INAC in Brazil to define the certification plan. At the same time, we Eve a team of specialists from the FAA in our offices in Sao Paulo's office in Brazil and we met representative from Japan J Cab in Tokyo. Now on the next room slides, I mean, it was great than what I just talked about. You can see images of our pusher test where we have the five blades propellers spinning on the Slide six. This assured our engineer that all equipment was properly in 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 that shows our team meeting regularly with ANAC and FAA. And lastly, Slide eight shows a picture of our latest wind tunnel test This is a representative subscale model But here, you can also see the propellers spinning in the picture, right?

They Eve 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 preorder backlog stands at approximately 2,800 aircraft for a total value close to $14,000,000,000 based on the list price. There are non binding letters of intent from 28 different customers, but over nine countries different businesses from the mainline to regional airline helicopter operators, ride sharing platform and also leasing companies. And because demand and support guarantees to 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 eVtech care suite of aftermarket products.

Which could bring up to $1,600,000,000 in revenues to EVE over the first few years of operation. Importantly, these tech care customers have placed LOI covering about 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 ZECTOR, And I believe this reflects the market leading valuable position 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 towards of the urban and Eve, 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 a milestone checklist for 2025.

Thanks, Ioham. Now moving to Slide 10.

Want to start with our most recent liquidity events. We have been very successful in attracting new capital to Eve continue to fund our EBITDA development. In total, we raised €270,000,000 in 2024, in a mix of debt around $170,000,000 in equity instruments. Around €100,000,000 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 $429,000,000 including funding for our industrialization as well as continued R and 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, It 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. We've invested $34,000,000 during the fourth quarter in our program development and $130,000,000 in the full year. The majority was invested in developing our EBITDA and a smaller portion went to service and support solutions in the urban air traffic management software. We Eve the only EBITDA company with a complete solution that includes design, development, manufacturing sales of an EBITDA, as well as maintenance service and air traffic control.

We also deployed $6,000,000 in SG and A during the quarter, $27,000,000 in the year. Including R and D and SG and A, we reported a net loss of $40,000,000 in the quarter and $138,000,000 dollars in the year.

Now moving to cash flow. Our operations consumed $40,000,000 in the quarter, and a total of $141,000,000 in the year. Staying in our guidance range of $130,000,000 to $170,000,000 showing EVE's financial discipline. As well as our advantages of using Embraer's engineering team. 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 $3.00 $3,000,000 in cash. This is up from the end of twenty twenty three.

A cash position of €241,000,000 and reflects our continuous focus on liquidity. We also continue to draw from the preapproved credit line with the Brazilian Development Bank helping to preserve our cash. Our total liquidity of $430,000,000 as of the end of twenty twenty four is very comfortable and it's enough to sustain our operations at least 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 mid of twenty twenty five. In parallel, we continue our high level engagement with the Brazilian and U. S. Certification authorities to define our certification plan, which includes the definition of all cert certification tests to be performed during the flight test campaign. At the same time, we will begin the production of our first prototype that will be used in our certification campaign. We expect to use five certification confirming prototypes for our certification. And now with funding secured, we will start to prepare our our site in Brazil for the manufacturing of our Eve tools.

Finally, expect to consume between $200,000,000 and $250,000,000 of cash this year as we continue to accelerate our EBITDA development. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please. Proceed.

Eve will now begin the question and answer session. The first question comes from Savi Syth from Raymond James. Please go ahead.

Hey, good morning, everyone. I curious, Eve, if I might start with you, just on the kind of the cash burn for this year. Could you provide a little bit more color on that? This meeting is being recorded. This meeting is being transcribed.

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

Yes. Could you provide a little color on on 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 us a little bit of color on kind of Eve the trend there as we kind of go through the year and and maybe early thoughts into kind of next year given that you have enough liquidity to kind of last through 2026? Yes, sure. In 2024, we consume $140,000,000 right, as we as I mentioned in the presentation. The majority of the expenses last year were focused on the development, the EBITDA development. This year, it's not going to be too different in terms of focus remains on the EBITDA development. We're going up to something between $200,000,000 to $250,000,000 depending on the currency, right, we can we see how this is going to [indiscernible] Heavily focused on the EBITDA development. We continue to accelerate the Vitale development. We're going to start to fly the VITAL, do several flight tests. In parallel, we are working on the the conforming vehicles to start the official flight test campaign in 2026.

So basically, it's it's still more heavily loaded on the R and D, on the development of the EBITDA. Of course, this year, we may start to to invest on the facility, on the production facility, we may spend around $30,000,000 on that. So but overall, it's still as I said, more EBITDA development. As we are bringing even more engineers from Embraer. Now I think we are around 800 engineers at Ingraer, another 200 people at Eve. We have around 1,000 people working in program. And for the following years, as you mentioned, I believe we may keep this range around two hundred two fifty So that's the reason the liquidity we have the almost €450,000,000 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. [indiscernible] going to use that facility to build a third 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 really exists. Right? It's an existing site from Embraer that we are leasing. So the investment is really on tooling machines, right? Those this tool and machine, it starts in one side, then we transfer to this final side more towards [indiscernible] I would say, probably 2026, I would say 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. On the order book, I think you had a couple more customers last quarter than this quarter. Can you talk about how you're [indiscernible] You've made in your marketing campaign? I know you're still the most the largest order book of [indiscernible] Thanks, Alan.

Yohan speaking. Thank you for the question. As a matter of fact, you probably saw that went from 904,800 It's the reduction is still not relevant when it comes terms of dollars dollar amount $14,000,000,000 it's really fluid. I mean, what we've done since we created Eve is to to go and visit prospect 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 vector and ventilator, which is our air traffic management, which is also a more operation ground operation, first module is for ground operation software. And giving that approach that we have, they sign up for those LOI. And this is why the number has been at the highest level because they trust that we have the capabilities, the know how and the expertise to ensure not only the vehicle, but also the operation afterwards.

It is fluid because 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 a list price of $5,000,000 you want to see that the aircraft also is flying. So we really work together word with our customers to first develop the vehicle, but also to make sure that they're starting to work on the ecosystem. Eve there are a couple of customers that just left the backlog at totally independent from Eve. Whether they're going bankrupt or it's a big decision, it was Veeder that was purchased by Norwegian and then Norwegian decided air mobility was not the top rated for the moment. At least and other company went bankrupt but also put some more others on board. So like AREX or Alianc in The U. S. So it's flexible, it varies. Think what is very important is just to make sure that we have our core customer base especially for the first three years of of production.

Great. That makes sense. And can you talk about the differences 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 it just that finalization? You've made in the past year?

Yes. Good morning, Owen. 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 this simply 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 search requirements.

That's helpful.

Hop back in the queue.

The next question is from the line of Austin Moeller 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 like IASA 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 AMAK. 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 harmonized, but at least similar certification bases that do not require significant differences between the vehicles that we will certify at each country.

Okay. And just a 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, Eve 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 flight 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 managed both 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. Thank you.

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

Thank you. Good morning, everyone. [indiscernible] the CapEx that you mentioned, dollars 30,000,000, will that cover the full build or will you need additional investments for that manufacturing facility further down the road as well?

Yes.

In terms of CapEx for our manufacturing plant, we're going to spend around $100,000,000 We already have this money secured We signed it last year a sixteen 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 yes, we're going to spend more than the $30,000,000 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 TechCare that was launched, I think sometime last year. Are you actively marketing that offering to customers right now? Like what is happening with the launch that has taken place already for that?

Thanks, Amit. Johan speaking. Yes, indeed, the Eve take care orders launched last year. This is something that we discussed with our customers. This is something that they want from Eve. We're they face to the customer. I think this is important for them. To make sure that we guarantee the availability of the operation, but also to optimize operating cost and they understand that it needs to be done through Eve. This is also the contracts that we have with our suppliers. Basically, this is about the spare parts flat hour program, mechanics training, also the pilot maintenance, the whole complete portfolio that now operator will need to get from the OEM to make sure that we have a good operating experience.

Understood. Just last one from me.

Are you seeing some evidence of investments being made by potential customers, other partners in the supply chain or the value chain 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?

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 Etech here, which is the support from the OEM. We'll sell 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, delivery certification, but or the operation support, but also make sure that we have the ecosystem ready. That means that first, we were going to be using as much as possible ElitePort 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 the VERTAPORTs and 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 quite substantial when they need to be made. And we are really pushing to make sure that Eve infrastructure will be allowing not only the EV 100 operation, but also the other EV cell operation. I think we're creating this segment and this is why those investment will bring return if operators and infrastructure companies can be operating more than one eVTOL type.

Understood.

All I have is. Thank you so much.

Thanks, Emmet.

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

Good morning. Thanks for taking my questions. Just one maybe for you to Just looking at the $200,000,000 to $250,000,000 in cash burn for next year. And if I just kind of look at the moving parts $100,000,000 in CapEx and assume relatively flat G and A, seems to imply that R and 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 $30,000,000 The $100,000,000 that I mentioned is the full CapEx for the facility and the majority will be spent in 2026. For 2025, it's something around $30,000,000 of this $200,000,000 $250,000,000 The majority of the expenses this year are really on the EBITDA development. As I mentioned, [indiscernible] in the program between EVE and Embraer. So we're going to be spending $150,000,000 $160,000,000 on development, right, mostly engineering works Then there is the €20,000,000 to €30,000,000 on CapEx. And of course, we have also a small SG and A around €20,000,000 30 So that's how we get it the full $200,000,000 $250,000,000 The majority is by far are indeed the EBITDA development. [indiscernible] Okay.

Okay.

I misunderstood that. Okay. Thanks for clarifying.

Thank you. Thank you. We have no further questions. This concludes our question and answer session. I would like to turn the conference back over to Lucio Alworth for any closing remarks.

Thank you, Dorwin, and thanks everyone who joined the call today. As you can see, 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.

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.