Q1 2024 Eve Holding Inc Earnings Call
Operator: Good morning, and welcome to the EVE Air Mobility First Quarter 2024 Earnings Conference Call. All participants will be in a 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 1 on your touchtone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Lucio Aldworth, Head of Investor Relations. Please go ahead and begin.
Good morning, and welcome to the Eve Air Mobility first quarter 2024 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please.
Operator: Please note this event is being recorded.
Operator: I would now like to turn the conference over to Lucio Aldworth head of Investor Relations. Please go ahead and begin.
Lucio Aldworth: Thank you, Operator. Good morning, everyone.
Lucio Aldworth: Thank you operator.
Lucio Aldworth: Morning, everyone.
Lucio Aldworth: Albert the director of Investor Relations.
Lucio Aldworth: And I want wanted to welcome everyone to our first quarter.
Lucio Aldworth: 'twenty 'twenty four earnings conference call.
Lucio Aldworth: This is Lucio Aldworth, the Director of Investor Relations at EADS, and I wanted to welcome everyone to our first quarter earnings, 2024 earnings conference call. Our CEO, Johann Bordais, and CFO, Eduardo Couto, are joining me on the call today. And after the prepared remarks, we will open the call for questions, at which point, Luis Valentini, our Chief Technology Officer, will also join us for more technical questions. We prepared a deck with a few slides and additional pictures that show our achievements in the quarter as well as the assembly of a full-scale prototype, and that's on our website at ir.easairmobility.com. So, please feel free to download it and tag along.
Lucio Aldworth: Oh, Yeah, Oh, Yeah, Oh, yeah. So it's a lot of the call joining me on the call today and after their prepared remarks, we will open the call for questions at which point lead Valenti, Our Chief Technology Officer will also join us for more technical questions.
Lucio Aldworth: Where do you put towards the back with a few slides.
Lucio Aldworth: Additional pictures that show our achievements in the quarter as well as the assembly of a full scale qualified.
Lucio Aldworth: And that's on our website at IR about air mobility Dot com. So please feel free to download it and tag along.
Lucio Aldworth: Let me first start the presentation by saying that it includes forward-looking statements, or statements about events or circumstances that have not yet occurred. These are largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These statements are subject to risks, uncertainties, and assumptions, including, among other things, general economic, political, and business conditions, both in Brazil and in our market.
Speaker Change: Let me first start.
Lucio Aldworth: Let me first start the presentation by saying that it includes forward looking statements or statements about events or circumstances that have not yet occurred these are.
Lucio Aldworth: Largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance.
Lucio Aldworth: Statements that are subject to risks uncertainties and assumptions, including among other things.
Lucio Aldworth: General economic political and business conditions, both in Brazil and.
Lucio Aldworth: The words believe, may, will, estimate, continue, anticipate, intend, expect, and similar words are intended to identify forward-looking statements when they take no obligation to update publicly or revise any such forward-looking statements because of new information, future events, or other factors. Because of that, the future events and circumstances discussed in this presentation may not occur, and actual results could differ substantially.
Lucio Aldworth: The words believes May will estimates continues anticipates intends expects and similar words are intended to identify forward looking statements.
Speaker Change: No, but that's what they've publicly only by Amy.
Lucio Aldworth: Looking statements because of new information future events or other factors.
Lucio Aldworth: Was that the future events and circumstances discussed in this presentation may not occur and actual results could differ substantially from those isn't dissipated in our forward looking statements with that I will now turn the presentation over to our CEO Johan.
Johann Christian Jean Charles Bordais: Thanks, Lucio. Good morning, everyone, and thank you for joining the call today.
Speaker Change: Thanks, Lucia L. Good morning, everyone and thank you for joining the call today, we had a successful startup twenty-twenty several important achievements. The most important one being the quake basic banking, India Assembly about full scale product that we were right on schedule and expect to conclude it.
Johann Christian Jean Charles Bordais: We had a successful start to 2024 with several important achievements, the most important one being the quick-paced advancement in the assembly of our full-scale prototype. We are right on schedule and expect to conclude it in the second quarter. As you will see on the next blue slide, we have already installed the pylons and nacelles to have the electric motors installed, and we have started to install the composite skin of the aircraft. We are also preparing for another round of wind tunnel tests with the rotors on. This will start in a week and will roughly last three weeks.
Johann Christian Jean Charles Bordais: For the quarter.
Johann Christian Jean Charles Bordais: As you will see the next two slides, we already installed the pylon and Nashville.
Johann Christian Jean Charles Bordais: The electric motors and started to install the composite skin of the aircraft.
Johann Christian Jean Charles Bordais: We are also preparing for another round of wind tunnel tests with the water's long this will start in a week and we will roughly last few weeks.
Johann Christian Jean Charles Bordais: This will be used to validate and further refine our computer models before our ground test campaign starts in the second semester. In parallel, we continue to down-select suppliers and sign bidding contracts. These define the technical specifications for the component and commercial aspects with volumes and unit prices, and also the aftermarket support conditions. Just last month we selected KAI, the Korean Aerospace Industries, and before that, we had selected Assetori for the wings and also Cruze for the pilot control, or the gross. We now have more than 90% of all suppliers selected, and we're working to define suppliers for the high-voltage system converter, skid, cabin interior, doors, lighting, transparencies, and other add-on options, like the landing gear brakes.
Johann Christian Jean Charles Bordais: This will be used to validate and further refine our computer models before out of ground test campaign starts in the second semester.
Johann Christian Jean Charles Bordais: In parallel we continue to down select suppliers and find binding contracts. These defined technical specification for the component and commercial aspects with volumes and unit prices and also the same.
Johann Christian Jean Charles Bordais: Market support conditions.
Johann Christian Jean Charles Bordais: Last month, we still like the Sky the Korean aerospace industries and before that we have collected I see jewelry for the wing and also to therefore, the pest control what's caused it.
Johann Christian Jean Charles Bordais: We now have one and 90% of all supply you still like it and we're working to define suppliers for the high voltage system conversion skin cabin interior doors lighting transparency and all the other options like the let me get right now.
Johann Christian Jean Charles Bordais: Lastly, we presented Vector, our urban air traffic management software, at the Airspace World in Geneva with a full demonstration of its capabilities. This is a strategically important tool to help scale the urban air mobility system. On the next slide, it shows the stage of the assembly of our prototype. As you can see, it's already looking like a TV show with typical structures of an airbag.
Johann Christian Jean Charles Bordais: Lastly, we presented factor our urban air traffic management software and the aerospace World in Geneva with full demonstration of its capabilities. This is a strategically important to them to help scale the urban air mobility safely.
Johann Christian Jean Charles Bordais: Next slide it shows the stage of the assembly about polka dots as you can see it's already looking like an ito without physical structures.
Johann Christian Jean Charles Bordais: About now weighing and the exponential when he joined after the foods the likes what we are internally called the marriage and they both have their internal harnessed install these are complex electronic and electric cable system to carry the signals to and from the many sensors in the wings control surfaces and flight computer.
Johann Christian Jean Charles Bordais: Now, the wing and the ambulance are fully joined to the fuselage, what we internally call the marriage, and they both have their internal harnesses installed. These are complex electronic and electric cable systems to carry signals to and from the many sensors in the wings, control surfaces, and flight computer. Also, the internal superstructure already has its electronic components and internal cabling as well. One interesting fact is that, as you can see in slide three, we temporarily placed the many composite parts of the skin of the prototype on tape.
Johann Christian Jean Charles Bordais: Also the internal superstructure already have the electronic components and eternal cabling as well.
Johann Christian Jean Charles Bordais: One interesting fact is that as you can see in slide three we kept where it replaced the many composite parts of the skin of the post attack with the fate they sold.
Johann Christian Jean Charles Bordais: This allows our engineers to make any adjustment they want to do to make it perfect, the placement of the parts. And once the parts are aligned, we have a perfect fit. And then they're installed permanently.
Johann Christian Jean Charles Bordais: Our engineers to make any adjustment they are they want to do to make it perfect. The placing of the parts and once the parks are aligned we have a perfect fit.
Johann Christian Jean Charles Bordais: And then there are installed permanently.
Johann Christian Jean Charles Bordais: Now moving to the next couple of slides, these have a few pictures that show in better detail some of the structures of our EVTOLs, such as the starboard side wing and its pylons and also the nacelle. The pylons are the structure that will support the lifters and are connected to the booms and wings. So, in essence, they will support the weight of the entire aircraft during takeoff and landing. This is when the thrust from the lifter will allow for vertical flight.
Johann Christian Jean Charles Bordais: Now moving to the next couple of slides. These have few pictures that just shows and better detail. Some of the structures of our <unk> suggest that starboard side, Wang and the violence and also the Nashville, the pylons or the structure that will support the lifters and are connected to the bone in wings.
Johann Christian Jean Charles Bordais: So India is.
Johann Christian Jean Charles Bordais: They will support the weight of the entire aircrafts during the takeoff of letting it just wonder thrust from the lift or weren't allowed to vertical flight as you can imagine the balance to be robust lightweight and flexible and as mentioned before we engage tie to provide the pilots for our commercial aircraft each by a little we'll have.
Johann Christian Jean Charles Bordais: As you can imagine, the pylons have to be robust, lightweight, and flexible. And, as mentioned before, we engaged CAI to provide the pylons for our commercial aircraft. Each pylon will have an electric motor at the front and one in the rear, and these will be housed by the nutsills. Those are the green structures that you can see in those pictures. Now, slide 5, it shows that we've already installed the composite skin of the cockpit, which gives the twins, you know, a house, the funnel shape, and how good the eVTOL will look. I'm a big fan.
Johann Christian Jean Charles Bordais: Electric motor.
Johann Christian Jean Charles Bordais: At the prompt and one in a weird and these will be housed by then ourselves those are the green suggested that you can see all of those are all those pictures.
Johann Christian Jean Charles Bordais: Now slide five it shows that we've already installed the composites kin of the cockpit.
Johann Christian Jean Charles Bordais: Once you get them when and.
Johann Christian Jean Charles Bordais: And how's the funnel shaped, but how could you be so we'll look at.
Johann Christian Jean Charles Bordais: Big fan also looking at engineered bar you can see on both victory. It helps you could put that into perspective and give you a good sense of the size of the illegal.
Johann Christian Jean Charles Bordais: Also, looking at the engineers, as you can see in both pictures, it helps you to put them into perspective and gives you a good sense of the size of the eVTOL. We still need to install the actuators, the control surfaces of the wing, and the empennage, and we expect to finish that in the next few weeks. And once we receive the electric motors in the second semester and successfully perform the necessary ground tests, we plan to start the Best Light campaign later this year.
Johann Christian Jean Charles Bordais: We know you don't need to install the traders are the control surfaces of the wing and the ample dash and we expect to conclude in the next few weeks.
Johann Christian Jean Charles Bordais: And once we receive the electric motors and the second semester.
Johann Christian Jean Charles Bordais: And so it's definitely performed but necessary well first we plan to start the test flight something later this year.
Johann Christian Jean Charles Bordais: Now, getting to slide 6, we can see here the latest addition to our component supplier list, which will start using the first five confirmed suppliers for the type. So far, in 2024, we have announced several suppliers. FHTC to provide the control surface and empennage, Afituri for the wings, Cruzeir for the pilot control interceptor, or the joystick, if you will. We have also signed Thales for sensors and Honeywell for guidance and navigation. And lastly, Recaro for the seats.
Johann Christian Jean Charles Bordais: Now turning to slide six we can see here. The latest addition to <unk>.
Johann Christian Jean Charles Bordais: Our component.
Johann Christian Jean Charles Bordais: Why your list, which will start using the first five confirming prototypes.
Johann Christian Jean Charles Bordais: And just recently, we added Cai for the pilot to this list. Our suppliers team has been quite busy, as you can see. Remember that we announced the first three suppliers at the Ferris Air Show last year, and now we have more than 15 suppliers still in. We have been using the best-of-breed approach to bring suppliers with experience in aviation and certification. Importantly, they will also support us during the certification campaign and throughout the eVTOL lifecycle. Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in the unit price as we reach the higher eVTOL volume of production. Commonly, we call it the economy scale.
Johann Christian Jean Charles Bordais: So far in 2024, we announced several suppliers if they can do to provide the control surface and helping US authority for the wings cruise therefore, the pilots controlling sector or the joy stick. If you will we also have signed the Dallas for sensors and Honeywell for guidance and navigation unless do you recall what disease.
Johann Christian Jean Charles Bordais: And just recently, we added tied with a pilot that is switched our suppliers team has been quite busy as you can see remembering that we announced the first three suppliers at the Paris Air show last year and now we have more than 15 suppliers still up there.
Johann Christian Jean Charles Bordais: We have been using the best of breed approach to bring suppliers with experience in aviation and certification and importantly, they will also support us for certification pumping and throughout the Ito lifecycle. Lastly, these contracts have a defined place and what is the schedule with the scale function with reduction of the unit price as we read.
Johann Christian Jean Charles Bordais: The higher EBITDA volume off production prominently.
Johann Christian Jean Charles Bordais: We call it economies of scale.
Johann Christian Jean Charles Bordais: We still have a few suppliers to select, but these are not the critical ones, like the skids or the landing gear, transparency, cabin interiors, and lights, and we expect to conclude this selection process very soon. Looking at this list, which will keep increasing, I am very confident of the level of safety for the certification and performance of our EVs. Flight 7 shows Vector, our urban air traffic management software. On top of the name of the product, we were part of the integrated demonstration at a NATS booth at the Airspace World in Geneva earlier this year.
Johann Christian Jean Charles Bordais: We still have a few suppliers to select but these are not the critical ones right language kids or the landing gear transparency cabin interiors and lights and we expect to conclude this selection process very soon.
Johann Christian Jean Charles Bordais: Looking at this list, which will keeping breathing I am very confident that the level of safety for the certification and performance of our Ito.
Johann Christian Jean Charles Bordais: Slide seven shows sector, our urban air traffic management software.
Johann Christian Jean Charles Bordais: On top of the name of the product we were part of the integrated demonstration in the Nats Booth at the aerospace World in Geneva earlier, this year, but that's being a tier one N S. B, we showcased our work and the urban air traffic management to a global audience as.
Johann Christian Jean Charles Bordais: With that being a Tier 1 ENFP, we showcased our work in urban air traffic management to a global audience. As a reminder, we successfully conducted a five-day exercise in the UK to test Vector with our partners Fledgit and Hello. This was used to validate and refine the software in a real-world setting, and we tested it under normal conditions.
Johann Christian Jean Charles Bordais: As a reminder, we successfully conducted a five day exercise and you get better with our partner like getting him. Hello. This was used to validate and refine the software in the real world setting and we've tested it under normal conditions and operation, but also under different conditions, such as delays the bad weather and flight there.
Johann Christian Jean Charles Bordais: C and other potential unplanned operation sector will it be an adoptive cell soft layer to support fleet management and control of the air space that we believe will help to scale the urban air mobility safely and globally.
Johann Christian Jean Charles Bordais: [inaudible] On slide 8, it shows the latest addition to our backlog. We signed a nail line and a letter of intent with EREX for the complete package. AirX is the largest public helicopter air charter service in Japan, and we will be collaborating with them to scale up the UAM there. Not only are they willing to purchase 50 of our e-VTOLs, but they are also subscribing to the services and operating support businesses along with the vector to manage them.
Johann Christian Jean Charles Bordais: On slide eight it shows the latest addition to our backlog, we signed an LOI and letter of intent with Air X for the complete package.
Johann Christian Jean Charles Bordais: <unk> is the largest public let pass or air charter service in Japan.
Johann Christian Jean Charles Bordais: And we will be cooperating with them to scale up you out there.
Johann Christian Jean Charles Bordais: Not only are they are willing to purchase 50 of our EBITDA, but they're also subscribing to the services and operating support businesses, along with the sector to manage their fleets.
Johann Christian Jean Charles Bordais: On slide 9, this brings us to the total backlog of 2,900 aircraft, and these are non-binding letters of intent for 30 different customers spread across 13 countries and different businesses, from the mainline to regional airlines to helicopter operators, ride-sharing platforms, and living companies. We also have LOIs for Vector from 16 different customers and believe this reflects the market-leading value proposition that we bring to our customers. Importantly, the value of our backlog is now estimated at $14.5 billion, which is based on the lift price of our EV total.
Johann Christian Jean Charles Bordais: On slide nine.
Johann Christian Jean Charles Bordais: This brings us to the total backlog to 2900 aircrafts.
Johann Christian Jean Charles Bordais: And these are non binding letter of intent for 30 different customers spread over a 13 countries in different businesses from the main lines of regional airlines to helicopter operators ridesharing platform and leasing companies.
Johann Christian Jean Charles Bordais: We also have the lives for vector from <unk>.
Johann Christian Jean Charles Bordais: 16 different customers and believe this reflects the market leading value proposition that we bring to our customers importantly, the value of our backlog is now estimated at a $14 $5 billion, which is based on the list price of our Ito. We previously used a reference price do you estimate the value of our backlog and using a lift.
Johann Christian Jean Charles Bordais: We previously used a reference price to estimate the value of our backlog, and using a lift price is common practice in aviation and takes into account the different internal and external factors to define the standardized price practice in the sector. We will not disclose the aircraft price of each transaction, but we will use the list price as a reference for future transaction values.
Johann Christian Jean Charles Bordais: Rice is common practice in aviation and takes into account the different internal and external factors, so defined as standardized price breakfast in the sector.
Johann Christian Jean Charles Bordais: We will not disclose the aircraft price of each transaction and we're going to use the list price as the restaurants for future transactions out.
Johann Christian Jean Charles Bordais: Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the many challenges ahead of urban air mobility, which is to create a whole new ecosystem besides simply developing an aircraft. And because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best-in-class services to eVTOL operators. We have also secured contracts with 12 different customers for maintenance, repair, and overhaul, what is commonly called MRO.
Johann Christian Jean Charles Bordais: Beyond that we are developing a strong network of partners in areas, such as infrastructure and energy to address one of the many challenges ahead of urban air mobility, which is to create a whole new ecosystem, besides simply developing aircrafts and because aircraft don't fly without proper maintenance and support.
Johann Christian Jean Charles Bordais: We are highly focused on providing the best in class services to eat those operators. We have also secured contracts with 12 different customers for maintenance repair and overhaul was prominently called tomorrow that will bring up Judy $935 million in revenue to ease over the five to 10 years period.
Johann Christian Jean Charles Bordais: That will bring up to $935 million in revenue to eVTOLs over the 5 to 10-year period. Importantly, these customers have paid LOIs for roughly 1,000 of our aircraft, which is about 35% of the order book, so we can potentially expand this business within our own customer base, just like we did in the past quarter with two new service contracts. Now, I'd like to invite the CFO, Ed, to go over the financials and, along with the milestone checklist.
Ed: Importantly, these customers up late LOI for roughly 1000 of our aircraft, which is about 35% of the order book. So we can potentially expand this business within our own customer base just like we did in the past a quarter with new two new service contracts now I'd like to invite our CFO.
Ed: They do to go over the financial and along with the milestone checklist.
Eduardo Siffert Couto: Thanks, Johann. Now moving to the slides. Yves is a pre-operational company developing its Yves Vitaux and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development. With that said, I want to highlight some of our members.
Ed: Thanks Johan novel features like them.
Ed: He was a pre operational company developer needs to keep you talk in the ecosystem around it currently our financials reflect mostly the cost associated with our program development.
Ed: That said I want to highlight some of our numbers.
Eduardo Siffert Couto: EVE invested $27 million during the first quarter of 2024 in our program as the development activities continue to speed up. The majority was invested in our EVE toll and a smaller portion in service and support solutions and the urban air traffic management system. We also deployed $6 million in SG&A during the quarter, which has been reasonably stable as we continue to control corporate expenses to focus our resources on the eVTOL development. Higher development expenses were partially offset by interest revenues and a market-to-market gain in our warrants, resulting in a net loss of $25 million in the quarter, mostly flat versus the same period last year.
Ed: We've invested 27 million during the first quarter 2024, and our program development activities continue to speed up the majority was the fastest in our EBITA and a smaller portion of it services and support solutions and the urban air traffic management system.
Eduardo Siffert Couto: We also deployed 6 million in SG&A during the quarter, which has been reasonably stable as we continue to control corporate expenses to focus our resources and Dave you toward development.
Eduardo Siffert Couto: Higher development expenses were partially offset by interest revenues and a mark to market gains in our warrants, resulting on a net loss of 25 million in the quarter, mostly flat versus the same period last year.
Eduardo Siffert Couto: Now moving to cash flow, our operations consumed $36 million in the quarter, up $16 million versus the same period of 2023 due to higher development spending. We ended the first quarter with $223 million in cash, down just $19 from Q4 2023, as we drew another $15 million from our pre-approved credit line with the Brazilian Development Bank. We still have around $60 million available from this line that we expect to access in the upcoming quarters, helping Yves to hold its cash position. It remains comfortable with total liquidity of $280 million as of the end of the quarter, and we believe it's enough to sustain our operations well into 2025.
Eduardo Siffert Couto: Now moving to cash flow, our operations consumed 36 million in the quarter.
Eduardo Siffert Couto: 16 million versus the same period of 2023 due to higher development spending.
Eduardo Siffert Couto: We ended the first quarter with 223 million in cash down just 19 from fourth quarter 2023, as we drew another 50 meet them from our preapproved credit lines with the Brazilian development Bank.
Eduardo Siffert Couto: We still have around 60 million available from these line that we expect two axes in the upcoming quarters, helping each to hold its cash position.
Eduardo Siffert Couto: He remains comfortable with total liquidity of $280 million as of the end of the quarter and we believe it's enough to sustain our operations well into 2025.
Eduardo Siffert Couto: Now moving to slide 11, we remain on track to deliver our milestones for 2024. As Johan pointed out earlier, we are advancing rapidly to conclude the assembly of our first full-scale prototype. Once we conclude airframe assembly, we will start ground tests in the second half of the year. In parallel, Brazil's certification authority, ANAC, concluded its public hearing process in mid-March to define the basis for certification. The agency will now compile all comments and align them with comments made by other certifying agencies and OEMs.
Eduardo Siffert Couto: Now moving to slide 11, we remain on track to deliver our milestones for 2024 as Johan pointed out earlier, we are advancing rapidly to conclude the assembly of our first full scale prototype once we conclude airframe and assembly, we start growing fastest in the second half of the year.
Eduardo Siffert Couto: Parallel Theres Youll certification authority ANAC conclude each public hearing process mid March so they find the bases up certification. The agency will now compile all comments and aligned them with comments made by other certifying agencies and Oems, we expect the bases of certifications you would publish.
Eduardo Siffert Couto: In 2024.
Eduardo Siffert Couto: We expect the basis for certification to be published in 2024. Lastly, we have started to prepare our first EVTOL manufacturing plant at an existing site of Embraer in Brazil. This is going to require new tooling, equipment, and customization of the site, but the facilities already function, saving us time and financial resources. We are also working to secure the necessary funding for the eVTOL industrialization through long-term financing. All of our 2024 efforts will cost between $130 to $170 million this year.
Eduardo Siffert Couto: Lastly, we have started to prepare our first easy toll manufacturing plant.
Eduardo Siffert Couto: These two site of Embraer in Brazil.
Eduardo Siffert Couto: It is going to require new tooling equipment and customization of the site, but its facilities already functional saving them time and financial resources.
Eduardo Siffert Couto: We're also working to secure the necessary funding for the EBITA in this transition through a long term financing.
Eduardo Siffert Couto: All of our 'twenty to 'twenty four efforts will consume between 130 to 170 million throughout this year.
Eduardo Siffert Couto: With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed. Thank you.
Speaker Change: With that we conclude our remarks and I would like to open the call for questions. Operator. Please proceed.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. And at this time, we will pause momentarily to assemble our roster. And the first question today will be from Savi Sith from Raymond James. Please go ahead.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Operator: To withdraw your question. Please press Star then two.
Operator: And at this time, we will pause momentarily to assemble our roster.
Savanthi Nipunika Prelis: And the first question today will be from Savi <unk> from Raymond James. Please go ahead.
Savanthi Nipunika Prelis: Hey, good morning everyone. I was curious about the plan to build kind of the next five aircraft following this first one. Are those going to be, you know, certification-conforming if they're going to be used for, you know, testing that's going to count towards certification and also just kind of what are your thoughts around the timing of those? I'm guessing you'd want to test the first one and then start working on those.
Savanthi Nipunika Prelis: Hey, good morning, everyone.
Savanthi Nipunika Prelis: I was curious on the on the plan to build a kind of a Max five aircrafts. Following this first one.
Savanthi Nipunika Prelis: Are those going to be you know certification performing if theyre going to be used for.
Savanthi Nipunika Prelis: In our testing.
Savanthi Nipunika Prelis: Testing that that's going to count towards education, and also just kind of what's your thoughts around the timing.
Savanthi Nipunika Prelis: I'm guessing you'd want to test the first one and then start working on those but just curious.
Johann Christian Jean Charles Bordais: But
Savviest Jan: Hello, Savviest Jan speaking. Thank you. Thank you for your question, Yes. Indeed, we will have a right now were doing the nonconforming till the time to get them up to show. We showed the victors and then the next step is to start as of the second semester. The assembly of the conforming prototypes. So it will be with them.
Johann Christian Jean Charles Bordais: Hello, this is Savyas Johan speaking. Thank you. Thank you for your question. Yes, indeed, we will have right now the non-conforming prototype, as we showed the pictures, and then the next step is to start, as of the second semester, the assembly of the conforming prototype. So it will be with a full cabin, right, and it's going to be very much close to what the E100 will be eventually. We'll produce all those five prototypes next year, they will be assembled, and they will be part of the certification campaigns, all five of them.
Johann Christian Jean Charles Bordais: Full cabin right and there's going to be what the very much close very much close to what the eat 100 will be eventually.
Johann Christian Jean Charles Bordais: We will produce all those five prototype next year will be assembled and they will be part of the certification campaigns all five of them.
Savanthi Nipunika Prelis: That's helpful, and that's moving really quickly, which is encouraging. Just, I'll say, on the production of the high-volume production facility, I think before the thought was maybe a modular design with capacity for 250 a year, and it looks like maybe that's changed to 120. I'm just wondering what the process there was and, you know, the change of thinking there.
Johann Christian Jean Charles Bordais: That's helpful.
Savanthi Nipunika Prelis: That's moving very quickly.
Speaker Change: Encouraging and I'll see if I might ask on the production.
Savanthi Nipunika Prelis: The highest high volume production facility I think before that thought was maybe modular design with a capacity for 250, a year and it looks like maybe that 'twenty. One 'twenty I'm. Just wondering you know what the process there wasn't any.
Savanthi Nipunika Prelis: That's a change of thinking there.
Johann Christian Jean Charles Bordais: Right. No, it never changed.
Speaker Change: Right no it isn't.
Johann Christian Jean Charles Bordais: Never change actually those are two modules split with some module. So we go 120 person and 240.
Johann Christian Jean Charles Bordais: Actually, those are two modules, but with some extra modules. So we go 120 first and then 240. Then we expect, you know, that's what we call the first module. And then the 240 can become, you know, a second module that you add 240. So that's where you get the full capacity of our facility in Tabate, in Brazil, will be 580, 480, sorry, units a year.
Johann Christian Jean Charles Bordais: Then we expect to you know that's what we called the first module and then the 240 can become.
Johann Christian Jean Charles Bordais: <unk> module that you add 240, so that's where you get the full capacity of our AR facility into about Te in Brazil will be 580 480, sorry.
Savanthi Nipunika Prelis: A year. Okay. So I never changed. It really was always just this rate. OK.
Johann Christian Jean Charles Bordais: Yeah.
Speaker Change: Okay. So I never changed it really it was always always this rate.
Operator: Okay. I must have misunderstood. That's great. Thank you.
Savanthi Nipunika Prelis: Okay.
Savanthi Nipunika Prelis: Understood.
Speaker Change: Right. Thank you.
Speaker Change: Thank you.
Sheila Karin Kahyaoglu: And the next question will be from Sheila Kahyaoglu from Jefferies. Please go ahead.
Speaker Change: And the next question will be from Sheila K I'll glue from Jefferies. Please go ahead.
Sheila Karin Kahyaoglu: Thank you. Good morning, guys.
Sheila Karin Kahyaoglu:
Sheila Karin Kahyaoglu:
Johann Christian Jean Charles Bordais: I wanted to ask about just the order book. You increased it by 50 aircraft, but the pipeline amounts to $14.5 billion from $8.6 billion last quarter. And you mentioned that it's on list price versus reference prices. So, you know, maybe if you could talk about the change there. Was it an accounting change? Why did you change it?
Sheila Karin Kahyaoglu: Good morning, guys I wanted to ask about just the order book are you increase the fact that the aircraft, but the pipeline amounts to 14 and a half billion from eight six last quarter.
Johann Christian Jean Charles Bordais: And you mentioned that that person has referenced prices. So you.
Johann Christian Jean Charles Bordais: You know maybe if you could talk about the change there was an accounting change well why did you change that and then.
Johann Christian Jean Charles Bordais: And it seems to think that the aircraft are going to be for $5 million less price versus 3 million previously maybe I'm calculating something but you could tell us the right way to think about it.
Sheila Karin Kahyaoglu: And then it seems to suggest aircraft are going to be for a $5 million list price versus $3 million previously. Maybe I'm miscalculating something, but you could tell us the right way to think about it.
Johann Christian Jean Charles Bordais: Thanks, Sheila. Thanks for the question. Yes, indeed, you know this well. We're now at $14.5 billion. I think that now we're entering the phase of the sales campaign. We're also passing the LOI. We're still signing LOIs because interest from the customers keeps coming to us. And, of course, we entertain because, at the end of the day, the LOI and the backlog show and demonstrate the interest and demonstrate how the customers understand that EVE is bringing the whole solution.
Speaker Change: Thanks Sheila.
Speaker Change: Thanks for the question, Yes, Indeed, you noticed well, we're now to $14 5 billion.
Johann Christian Jean Charles Bordais: I think that now we're entering the phase of the car.
Johann Christian Jean Charles Bordais: Company sales campaign, we're passing the also the LOI were still studying L wise because interest from the customers that keep coming to us and of course, we entertained because at the end of the day, the LOI and the backlogs are shows and demonstrate the interested in hanging out there.
Johann Christian Jean Charles Bordais: Demonstrate how the customers understand that ive is bringing the whole solution. So we don't stop sending LOI I think it's a footprint that needs to grow as of course, we will be eventful year getting certification done as part of the various countries I'd first will be the ANAC and iffy, but as we go and we will expand so that's why you know L. O I's are in.
Johann Christian Jean Charles Bordais: So, we don't stop signing LOIs. I think it's a footprint that needs to grow as, of course, we will eventually get certification done for the various countries, right? First, it will be the ANAC and the FAA, but as we go, we'll expand. So, that's why, you know, LOIs are important, important to demonstrate the solution that we're bringing, and it tells the world, you know, how once we certify, then customers will sign on for a first agreement.
Johann Christian Jean Charles Bordais: <unk> are important to demonstrate the solution that we're bringing in to tell the world. How once we sort of by then customers will sign them for a purchase agreement, but at the same time you know, we're really starting to be a sales campaign and I think this is really best practice, let's come up with a list price to value.
Johann Christian Jean Charles Bordais: But at the same time, you know, we're really starting the sales campaign. And I think this is really best practice. Let's come up with a list price, the value, the backlog, and this as a reference price. And then, of course, we don't disclose the price at which we're negotiating the aircraft. So, I think it's better.
Johann Christian Jean Charles Bordais: The backlog and this is the reference price and then of course, we don't disclose the price you know that we're negotiating the bureaucrats that so well I think it's it's it's better that way.
Johann Christian Jean Charles Bordais: There's no accounting for backlog; it's a non-U.S. gap measure.
Johann Christian Jean Charles Bordais: Okay.
Johann Christian Jean Charles Bordais: They do maybe on the accounting wise sorry.
Johann Christian Jean Charles Bordais: There is no accounting the dredging, there's no accounting on backlog at that it's a it's a non U S GAAP measure.
Operator: Perfect. Thank you. Thank you both.
Speaker Change: Perfect. Thank you. Thank you though.
Speaker Change: Thank you.
Austin Nathan Moeller: And the next question will be from Austin Moeller from Canaccord. Please go ahead.
Operator: And the next question will be from Austin Moeller from Canaccord. Please go ahead.
Austin Nathan Moeller: Hi, good morning Johann and Ed. My first question here is, do you expect the $280 million in total liquidity to be sufficient to get development through all of 2025?
Austin Nathan Moeller: Hi, Good morning, Johan and you do my first question here do you expect the $280 million in total liquidity to be sufficient to get our development through all of 2025.
Eduardo Siffert Couto: Yeah, we are very comfortable, guys, in terms of liquidity and cash, right? As we showed in the first quarter, our cash position, the actual cash position only declined by 19 million, which was a very small decline because we access, even though we increased, right, the cash consumption, because we access 15 million from the long-term finance that we have from the Brazilian Development Bank. We now have this 280 still left, which is a pretty big cash position.
Speaker Change: Yeah. It's a we are very comfortable guys in terms of liquidity and cash right. There's a as we show in the first quarter, our cash position the actual cash position on the only decline 90 million was a very small decline because we access even though increase ride the cash consumption because we access.
Eduardo Siffert Couto: 50 million from the long term finance that we have from the Brazilian development Bank.
Eduardo Siffert Couto: We now have these 280 still left that we choose a pretty big cash position. We are discussing you know I think this combination of equity with long term finance.
Eduardo Siffert Couto: We are discussing, you know, I think this combination of equity with long-term finance has been quite a successful funding strategy that we have implemented. We are discussing, you know, potential additional long-term finance lines. So, we are comfortable. I think this 280 gives us well into 2025. I would say, for sure, the second half of 2025, more towards the end of 2025.
Eduardo Siffert Couto: Has been quite a successful fund the strategy that we have been implemented we are discussing you know a potential additional long term finance lines. So so we're comfortable I think these 280 gives us well into 2025 I would say.
Eduardo Siffert Couto: For sure or second half of 'twenty five more towards the end of 'twenty to 'twenty five but you know as I said, it's did this we really like this mix of debt and equity, especially when it's a long term that that fits our profile right. We are pre operational company. So long term fine.
Austin Nathan Moeller: But, you know, as I said, we really like this mix of debt and equity, especially when it's long-term debt that fits our profile, right? We are a pre-operational company, so long-term finances of 15, 16 years are the ones that fit our profile. And because of that, we are, you know, already exploring some additional long-term finance. So, we are very comfortable, and our liquidity will remain stable.
Austin Nathan Moeller: This is a 15 16 years those are the ones that fit our profile and ER and because of that we are you know already exploring some additional long term financing. So we are very comfortable in our in our liquidity remains strong.
Luis Valentini: Excellent. And then do you view the increased weight of using lifters and a pusher propeller as significant in impacting the range? Or was it more important to simplify certification by not using tilt rotors to get to that 2026 certification date?
Speaker Change: Excellent and then do you view the increased weight of using lifters and a pusher propeller are significantly impacting the range or was it more important to simplify certification by not using tilt rotors to to get to that that 2026 or date.
Luis Valentini: So.
Luis Valentini: [inaudible] The question about the rotors is one that we really went very deeply into, Austin, and for us, it was very important to optimize the vehicle for the mission that we are proposing it for. So with the urban mobility mission in mind, we see that the eventual loss of range that we have with respect to another configuration, for example, the tilt rotor configuration, is more than offset by the gains that we have, not only for the simpler systems that we get on this configuration but also, for example, the clear path to certification.
Luis Valentini: Question about the rotors is one that we really weren't very deeply in Austin and for US was very important to optimize the vehicle for the mission that we are proposing to have so with the urban mobility mission in mind, we see that the eventual loss of range that that we.
Luis Valentini: We have with respect to another configuration for example, the tilt rotor configuration is more than offset with the gains that we have not only for the simpler systems that we get on this configuration, but also for example, with a clear path to certification. So it's really a matter of optimizing that.
Luis Valentini: So it's really a matter of optimizing the vehicle and really making the choices that make it most fit for the mission that is being proposed, and in our case, we think that this is the best balance that the vehicle can have. I will add, coming from customer support.
Luis Valentini: Veeco and really making the choices that makes it the most fit for the mission that is being proposed in our case. We think that this is the best balance that the vehicle that can have that will add in coming from customer support and services also the aftermarket in the operation right. The guarantee the availability of the aircraft, which guarantee also.
Luis Valentini: I will add, coming from customer support and services, also the aftermarket and the operation right to guarantee the availability of the aircraft, which guarantees also the return for the operator. Simplicity, you know; more and more pieces subject to break on the field. And, and then, of course, you need to have the competent mechanic and the parts on stock and on the site. So, this is also a big advantage for the customer.
Luis Valentini: The return for the operator simplicity.
Luis Valentini: You know more and more pieces subject to break on the field and and and then of course, you need to have the competent.
Luis Valentini: Mechanic and the parts on stock on stock and on the site. So so well so the big advantage for the customer.
Luis Valentini: Yeah.
Operator: Excellent. Thank you for the insight.
Speaker Change: Excellent. Thank you for the insights.
Andres Juan Sheppard: Thank you. The next question will come from Andres Sheppard of Cantor Fitzgerald. Please go ahead.
Operator: Thank you. The next question will come from Andres Sheppard from Cantor Fitzgerald. Please go ahead.
Andres Juan Sheppard: Yeah, thank you. Good morning, everyone.
Andres Juan Sheppard: Yeah. Thank you good morning, everyone. Thanks.
Andres Juan Sheppard: Thanks for taking my question and congratulations on the quarter.
Johann Christian Jean Charles Bordais: Thanks for taking our question and congratulations on the quarter. I wanted to go back to the backlog and revenue recognition from VAD. I realize you're not commenting on the negotiation prices with the customer, but I guess with the uptake in the listing price, I guess I'm just curious. Are you basically, you know, are you, are these customers going to now be paying a higher price than they initially expected? Does that change at all their interest in the LOIs? I'm just like, in other words, if we go from three to five, will that have an impact on the order? or What's the best way to think about that? Thank you.
Andres Juan Sheppard: I wanted to go back to the the backlog and the the revenue.
Johann Christian Jean Charles Bordais: Recognition from that I, I, I I realize youre not commenting on the negotiating prices with the customer.
Johann Christian Jean Charles Bordais: But I guess with the uptake in the listing price I guess I'm just curious.
Johann Christian Jean Charles Bordais: Are you basically you know are you.
Johann Christian Jean Charles Bordais: Are these are these customers going to not be paying a higher price than they initially expected does that change at all the their interest in the LOI is that just like in other words. If you go from three to five well that have an impact in the in the order book.
Johann Christian Jean Charles Bordais: Or what's the best way to think about that thank you.
Johann Christian Jean Charles Bordais: Thank you, Andre. Thank you for the question. It's a good one.
Speaker Change: Thank you Andre. Thank you for the question. It's a good one but I think the customers you know we've been doing well.
Johann Christian Jean Charles Bordais: I think the customers, you know, we've been very close to our customers since the first time that, you know, we introduced the concept to them, but also when we negotiate the LOI and see the scope. And also when we do those various advisory boards, human machine interface, and workshops, we're developing the solution for them and together. So they know, you know, the challenges that we have. They've been following up very closely, and I think this is part of the transparency that we want with our customers. We're at the frontiers of technology here, and we're all learning the things that we're learning as we go.
Speaker Change: We've been very close to or to customers. Since the first time that you know we introduced the concept to them, but also when we negotiate the LOI and see the scope.
Johann Christian Jean Charles Bordais: And also when we do those various advisory board human machine interface a workshop.
Johann Christian Jean Charles Bordais: We're developing the solution for them in together. So they know you know the challenge that we have they've been following very closely and nothing. This is part of the transparency that we want with our customers where different tiers of the technology here and we're all learning the things that we're learning as we go this is what we have.
Johann Christian Jean Charles Bordais: This is why we have a prototype right now, and then we'll have a conforming prototype later on. And this transparency just makes sure that we build the business model for EVE, but also for the customer together, right? It's not just for EVE, it's for the customer. In the end, and that also goes back to the simplicity we're talking about, it needs to be a vehicle that flies and operates and gets a return for the customers.
Johann Christian Jean Charles Bordais: Prototype right now Oh, and then we will have the confirmed before the tablet in Iran, and and this Trump RNC just make sure that we built the business model.
Johann Christian Jean Charles Bordais: For <unk>, but also for the customer together and it's not only just 40 minutes for the customer.
Johann Christian Jean Charles Bordais: And that's also goes back to the simplicity you were talking about it needs to be a vehicle that flies and operates and gets the return for it for the customers. So oh well we have the discussion we have different scenarios that we look at you know the optimistic scenario, you'll base D and depending on the all the parameters and the typical operator will have the law.
Johann Christian Jean Charles Bordais: So when we have the discussion, we have different scenarios that we look at, you know, the optimistic scenario based on all the parameters and the typical operator will have lending fees and, you know, operation fees and what's the cost of the asset and so on. So having those different scenarios, it's a one-on-one discussion, but when it comes to the market, that's why, you know, we wanna make sure that we have this bliss price, as you may call it.
Johann Christian Jean Charles Bordais: Ending fees and you know operation fees in and what's the cost of the asset and so on and so having those different scenarios. It's a one on one discussion, but when it comes to the market. That's why you know we want to make sure that we have this bliss price says as you may call. It I don't think the price right now is really you know what.
Johann Christian Jean Charles Bordais: I don't think the price right now is really, you know, what's so determinant for the customers and for the backlog. I think that what is important for them is to make sure that we certify, we bring the technical solution for the aircraft, and we make sure we also have the service and support team ready to support them for any interruption that we may have in the field. And yes, make a model that will work for them, all right? So I think this is where we are.
Johann Christian Jean Charles Bordais:
Johann Christian Jean Charles Bordais: So determined in Florida customers and for the backlog I think that what is important for them is to make sure that we sort of buy it we bring the the technical solution of the aircraft with measured will also have the service and support team ready to support them.
Johann Christian Jean Charles Bordais: For any interruption that we might have in the field and and and and yes make model that will just that will work for them right. So I think this is where we are they want to be in they want to make it happen and they understand there's a range. There is challenge in and will evolve those discussion with them as we go especially.
Johann Christian Jean Charles Bordais: They wanna be in, they wanna make it happen, and they understand there's a range, there's challenges, and we'll evolve those discussions with them as we go, especially on price. And then does it backlog the backlog, as you said? At some point, yes, probably, but I think what impacts the backlog is not the price of the vehicle, but it's the readiness of the ecosystem.
Johann Christian Jean Charles Bordais: On the Hum on the on the price and then does it impact the backlog as you said at some point, yes, probably but I think what impact the backlog is not the breath of the vehicle, but it's the readiness of the ecosystem. This is what's gonna make no one operator.
Johann Christian Jean Charles Bordais: This is what's gonna make, you know, an operator choose one city or another and just make sure that the ecosystem is ready. Once it's ready, then we'll have the operation up and running, and then, of course, we can go with firm orders and then, you know, optional, and then just, as you can see, I mean, we've shown it before, it's a program that needs to deliver the first airplane.
Johann Christian Jean Charles Bordais: One city or another it just makes sure that the ecosystem is ready once it's ready then we will have the operation up and running and ER and then of course, we can go with firm orders and then you know optional and then just as you could see I mean, you know we've shown it before it's.
Johann Christian Jean Charles Bordais: It's it's it's.
Johann Christian Jean Charles Bordais: It's a program that has that needs to deliver the first airplane. We should've between this is a strategy of Eve we have few key customers that we're working on we get the ecosystem ready get the operation are ready and then it will it will serve as it between and then we will get the orders.
Johann Christian Jean Charles Bordais: We show the vitrine; this is a strategy of EVE. We have a few key customers that we're working on. We get the ecosystem ready, get the operation ready, and then it will serve as a vitrine. And then we'll get the orders.
Andres Juan Sheppard: Got it. Okay. No, that's super helpful. I appreciate all that context.
Speaker Change: Got it okay, well that's a that's super helpful. I appreciate all that context, maybe just a quick follow up I just wanted to clarify I apologize if I misunderstood this but just on the timeline for your prototypes in test flight, so if I understood correctly.
Johann Christian Jean Charles Bordais: Maybe just a quick follow-up. Apologies if I misunderstood this, but just on the timeline for your prototypes and test flights. So, if I understand correctly, you're expecting the first prototype to be assembled in Q2 of this year and then the other four in the second half of the year, and then similarly, to begin test flights of that first prototype in the second half of this year. I just want to make sure I got the timing right. Thank you.
Andres Juan Sheppard: You're expecting the first prototype to be assembled in Q2 this year.
Speaker Change: And then the other four in the second half of the year and then similarly to begin test flights over that first prototype in the second half of this year I just want to make sure I got the timing right right Oh. Thanks, Andre that's important indeed, the the first full scale without the cabin nonconforming as we call it is being assembled and will be.
Johann Christian Jean Charles Bordais: Right. Oh, thanks, Andre. That's important. Indeed, the first full-scale prototype without the cabin, non-conforming, as we call it, is being assembled and will be, let's say, assembled by the end of the second quarter. That's correct, as you mentioned. But then we will start the production of the five-conforming prototype that will be finished and assembled next year in 2025. Okay.
Johann Christian Jean Charles Bordais: Let's say assembled by the end of the second quarter. If that's correct. Then what you mentioned, but then we will start the production of the fives conforming prototypes that will be finished the assembled next year in 2020 or 25, okay.
Johann Christian Jean Charles Bordais: I see. Okay. And then the test flights for the first one will be beginning in the second half of this year.
Speaker Change: I see okay, and then the test flights for the first one will be in the beginning of the second half of this year.
Johann Christian Jean Charles Bordais: That is correct. That is correct.
Speaker Change: That is correct that is correct. So won't have no different than our ground tests that we'll be doing a you know like the ground vibrations tasked the electromagnetic interference. This type of thing right. So that control system testing, our instrumentation and so on.
Johann Christian Jean Charles Bordais: So we'll have different ground tests that we'll be doing. You know, like the ground vibration test, the electromagnetic interference, this type of thing, right? Flight control system testing, instrumentation, and so on before we can really start the flight.
Johann Christian Jean Charles Bordais: Before we can really start the Oh the flight test.
Johann Christian Jean Charles Bordais: And eventually they have to fly.
Andres Juan Sheppard: Thank you so much. That's helpful. I'll pass it on. Thanks, Andre.
Speaker Change: Got it. Thank you so much that's helpful. I'll pass thanks Andre.
Speaker Change: Thank you Andre.
Operator: Again, if you would like to ask a question, please press star, then 1. The next question is from Marcelo Malta from J.P. Morgan. Please go ahead. Hi everyone.
Andres Juan Sheppard: Again, if you would like to ask a question. Please press Star then one.
Operator: The next question is from Marcelo Malta from J P. Morgan. Please go ahead.
Marcelo Malta: Hi everyone. Thank you for taking the questions. Two follow-ups here. First, going back to the average price of the Evito, should we read that as just like a pass-through of higher, you know, let's say construction costs or development costs? You know, it doesn't necessarily mean that you have a higher margin on the sale of those vehicles.
Marcelo Malta: Hi, everyone. Thank you for taking the questions two follow ups here first going back to two the average price of the <unk>. So should we read that that's just like a a pass through of higher you know, let's say construction costs or development cost and always just that doesn't necessarily mean that you have a high.
Marcelo Malta: Your margin on the sale of all of those vehicles. So just a follow up.
Marcelo Malta: So just this follow-up. And on the certification, you guys mentioned the updates with ANAC, you know, the conforming prototypes. So the base case continued to be to have the certification by 2026. Or, you know, could we have any potential positive or negative surprise here?
Marcelo Malta: And on the certification you know you guys mentioned about the gift the dates with ANAC you know that the conforming prototypes are sort of the base case continues to be to have the certification by 'twenty 'twenty seek so you know who do we have any you know potential both of these negative surprise here for just to understand a little bit more on the owner.
Marcelo Malta: So just to understand a little bit more about the timeline for the certification. Thank you.
Speaker Change: I'm a lineup for north of certification. Thank you.
Johann Christian Jean Charles Bordais: Hi Marcel. Thank you for those two questions. The first one, you're talking about the margin. I think, you know, again, it's We're creating a new segment. There are a lot of challenges, whether it's on the COG side, you know. We decided to go for the best in breed with our suppliers. It's a risk-sharing partnership that we have with our suppliers. We decided to have them and go for, you know, help us only, not only for the vehicles and the development but also for the production, the series, the certification, and also the aftermarket. We're all learning, let's call it that, right?
Speaker Change: Okay Marcella. Thank you for those two questions. The first one that you're talking about the margin I think you know again.
Rick: It's it's Rick.
Johann Christian Jean Charles Bordais: We're creating a new segment and there's a lot of challenges whether it's on the Cogs side. You know we decided to go for the best in breed suppliers are it's a risk sharing partnership that we have with our suppliers we.
Johann Christian Jean Charles Bordais: We decided to have them in and angle for you know help us only but not only for the vehicles into development, but also the production of the series the certification and also the aftermarket will learning let's call. It right I, we do have challenges when it comes to the wait the performance of the vehicle.
Johann Christian Jean Charles Bordais: We do have challenges, right, when it comes to the weight and the performance of the vehicle. We also have, you know, the lead time and also the, well, the development in general. So I don't think it's about margin right here and, you know, making sure that, you know, we're going to be making a lot of margin on this vehicle. Like I said, it's to make sure that we, first of all, prove that we're very, very cautious and cost-cautious about how we spend the money that we have right now and the cash.
Johann Christian Jean Charles Bordais: We have also on the lead time and also the well the development in general So I don't think it's about margin right here in that you know, making sure that you know we're going to be making a lot of margin on this vehicle like I said that's to make sure that we first of all certified.
Johann Christian Jean Charles Bordais: We're very very cautious and cost cautious about how we spend the money that we have right now and the cash we talked about this they do mclear that we're in a comfortable position, but it could be very careful and thats what were doing and used to take us to the certification and that would be the second.
Johann Christian Jean Charles Bordais: We talked about this. I did make it clear that we're in a comfortable position but have got to be very careful. And that's what we're doing. It needs to take us to the certification, and that will be the second part of the question that you had and the answer that Valentini will give you an update.
Johann Christian Jean Charles Bordais: Part of the question that you had at the answered that they'll continue will give you an update but right now it needs to be reasonable and what we're focused on is not only easy to make money, but also the customer anything makes sense. So there's actually no point of delivering.
Johann Christian Jean Charles Bordais: But right now, it needs to be reasonable. And what we're focused on is not only the ease of making money but also the customer. And this makes sense.
Johann Christian Jean Charles Bordais: There's actually no point in delivering eVTOLs to customers that will demonstrate not to be profitable for the operator. It will just only, we'll be only selling, you know, a hundred of them, and that will be it. We'll kill the segment. And that's not the purpose.
Johann Christian Jean Charles Bordais: E V tolls to customers that will demonstrate and not to be profitable for the operator. It will just only it will be only selling you know hundreds of them and that will be it will kill the segment and that's the purpose. So I think this is exactly the sweep balance that we're trying to look for with the customers with the operators to see first yes are we going to be.
Johann Christian Jean Charles Bordais: So I think this is exactly the sweet balance that we're trying to look for with the customers, with the operators to see first, yes, are we going to be charging and what's going to be the cost of eVTOL, but you have to get the return, and how much are you going to be charging on the backs. We all know that we want to go in a similar direction to the premium risk sharing platform, but it's a long way.
Johann Christian Jean Charles Bordais: Charging and what's gonna be the Costco as you can tell but you got to get the return and how much you know you're gonna be charging on the Baxter and we all know that we want to go similar to the premium risk sharing platform.
Johann Christian Jean Charles Bordais: But it's it's a long way I want to make sure that you can do this effectively so I think it's a it's a partnership that we have heard of customers and both customers and ourself and suppliers need to be profitable. So we if we want to be for the long run and we want to be for the wrong right.
Johann Christian Jean Charles Bordais: All right. You want to make sure that you can do this effectively. So I think it's a partnership that we have with our customers, and both customers and ourselves, and suppliers need to be profitable. So if we want to be in the long run, and we want to be in the long run. And on the second board, Valentini? Yes.
Johann Christian Jean Charles Bordais: For the second word valentini.
Luis Valentini: Yes, so hi Marcel and thank you for the question. So, you remember that ANAC is developing a certification basis specific to our eVTOL project, as is the case with the FAA, and it's very important that we understand what the requirements are early on in the project so that we can define the vehicle solutions in a way that they will eventually comply with the requirements that are established, right? So that's why we've been working so hard with ANAC, our primary certification authority, to get these requirements defined and then be able to move on to other stages for what we call means of compliance, detailed design standards, which really are the way in which we will show compliance to the requirements that are defined, right?
Valentini: Yes, so hi myself. Thank you for the question. So you remember that a Mac is developing a certification basin specific for our EV Tau project as is the case with the FAA and it's very important that we understand what the requirements are early on in the project. So that we can.
Luis Valentini: Define the vehicle solutions in a way that they will comply eventually with the requirements that are established right. So so that's why we have been working so hard with Aynak. Our primary certification authority to get these requires a requirement defined and then be able to move on to other stages for you know that.
Luis Valentini: We call them ease of compliance detailed design standards, which really are the way in which we will show compliance to required they were.
Luis Valentini: Requirements that are defined right. So.
Luis Valentini: So we are confident in the step that we are at today and how mature the basis of certification is, but of course, we need it to advance, and that's why we put that as one of the goals for this year. And so we are working both with ANAC, as I mentioned, and the FAA to make sure that what we have established will support the development of the vehicle for the next phases of the project.
Luis Valentini: We are confident in the steps that we are today and how mature the basis of certification is.
Luis Valentini: But of course, we needed to advance and that's why we we put.
Luis Valentini: That is one of the goals for this year.
Luis Valentini: And so we're working both with ANAC as I mentioned and the FAA to make sure that what we have established will support the development of the vehicle for you know the next phases of the project, we still have some significant uncertainties on how to align the bases with a basis of other authorities.
Luis Valentini: We still have some significant uncertainties on how to align the basis with the basis of other authorities, EASA in Europe, for example, and we also have some significant uncertainties, and this is something that affects the whole industry, not only our project, about the operational requirements. So both ANAC and the FAA are still developing what the operational requirements will be for these vehicles. This includes things like reserves for flight but also includes training, pilot requirements, and things like that.
Luis Valentini: Europe for example, and we also have some significant uncertainty and this is something that affects the whole industry not only our project on the operational requirements. So both aimak Andy FAA are still developing what the operational requirements will be for these vehicles. This includes.
Luis Valentini: Things like reserves for flight, but also includes training pilot requirements things like that so there is still a lot to be done. This affects the development and we are working on that with the authorities with respect to entry into service and 26, you mentioned, we're still maintaining that date, we think that based on where we are today.
Luis Valentini: So there is still a lot to be done. This affects development, and we are working on that with the authorities. With respect to entry into service on 26, as you mentioned, we're still maintaining that date. We think that based on where we are today on the project, that's still something that we are targeting, but it also depends, as you pointed out, on the development that we have on the certification basis and with the authorities in general.
Luis Valentini: On the project, that's still something that we are targeting but also depends as as you pointed on the development that we have on the certification basis and with the authorities in general.
Marcelo Malta: Perfect, super clear. Thank you very much.
Speaker Change: Perfect Super clear, thank you very much.
Marcelo Malta: So.
Cai von Rumohr: And the next question will be from Cai von Rumer from TD Cowan. Please go ahead.
Speaker Change: And the next question will be from Cai von rumor from TD Cowen. Please go ahead.
Cai von Rumohr: Terrific, thank you so much. Guys, when do you expect to basically start flight tests of a conforming prototype? And then secondly, when do you hope to start a certification flight test? And what are the other key milestones that we're looking for to get us to certification, and maybe give us some time frame, you know, I know it's not a specific date, but a time frame as to when you might start those. Thank you.
Speaker Change: Terrific. Thank you so much.
Cai von Rumohr: When do you expect them.
Cai von Rumohr: To basically start flight test of the conforming prototypes.
Cai von Rumohr: And then secondly, when do you hope to start.
Cai von Rumohr: Certification flight tests and what are the other key milestones you know that we're looking for to get us to certification and maybe give us. Some timeframe you know I know, it's not a specific date, but timeframe as to when you might start those thank you.
Cai von Rumohr: Yeah.
Luis Valentini: Hi Cai. Thanks for the question. So we are expecting
Speaker Change: Hey, Kai thanks for the question. So we are expecting.
Luis Valentini: to fly the prototypes in the second half of next year. We think that that's a timeline that supports the entry into service in 26 because, as you know, there is some maturing of the vehicles to be done during flight. And then after this development period, we really start to get credit for the flights towards certification. So there is usually, and this is the case with, let's say, all of the projects, even with fixed-wing airplanes, things like that, that you have some period in which you're flying to finalize, let's say, tuning of control laws, deflection of control surfaces, eventually any aerodynamic fixes that have to be made.
Speaker Change: To fly the prototypes and the second half of next year.
Luis Valentini: We think that that's a timeline that supports the entry into service and 26, because as you know there is some maturing of the vehicles to be done during flight.
Luis Valentini: And then after this development period that we really start to get credit for the flights are towards certification. So there is usually and that's the case with let's say all of the projects even with fixed wing airplanes things like that that you have some period in which you are flying to finalize.
Luis Valentini: Let's say a tuning of control laws deflection of control surfaces.
Luis Valentini: Eventually any aerodynamic fixes that have to be made so.
Luis Valentini: So you finalize the configuration definition in flight, and then you really get to a configuration in which you can start taking credit for certification. So flying in the second half of next year is something that we believe will support this development, still in time for entering service in 2026. With respect to important milestones, until then, certainly the definition of the certification basis is one of them. We are working with ANAC, as we mentioned, now that we have the commenting period closed, trying to support them as much as we can in their process of finalizing the certification basis, but also advancing, as I mentioned earlier, discussions on means of compliance, for example.
Luis Valentini: You finalize the configuration definition and in flight and then you really get to a configuration in which you can start taking credit for certification. So flying in the second half of next year is something that we believe will support.
Luis Valentini: This development still in time for entry into service in 'twenty six.
Luis Valentini: With respect to important milestones until then.
Luis Valentini: Certainly the certification business definition is one of them.
Luis Valentini: We are working with ANAC as we mention though that we have the comment period closed.
Luis Valentini: I'm trying to support them as much as we can and in their process of finalizing the certification bases, but also advancing as I mentioned earlier discussion on means of compliance for example, so these next steps.
Luis Valentini: These next steps of the certification process, such as defining what the means of compliance will be and then the certification plans being approved by the authorities will support the taking credit of the flights for certification. So there will be other stages that we will communicate after finalizing the certification basis. These, I believe, will also help you to see the progress and your preparedness for the start of the flight test for certification. Thanks a lot.
Luis Valentini: The certification process.
Luis Valentini: As such as defined in your what the means of compliance will be and then.
Luis Valentini: The certification plans being approved by the authorities will support.
Luis Valentini: The taking credit of the flights for certification so there.
Luis Valentini: There will be other stages that we will communicate after finalizing the certification basis. These I believe will also help you.
Luis Valentini: To see the progress and the preparedness for the start of the flight test for certification.
Luis Valentini: Thanks a lot. And then, what are the key technology challenges you anticipate? For example, you know, with Beta, which is the other eVTOL that has a lift cruise design, I think, you know, the transition from the lift phase to cruise, they basically, I think, have done it now, but that took them a little longer than expected. What do you think the key tech challenges are, maybe for Valentini?
Speaker Change: Thanks, a lot and then what are the key technology challenges you anticipate for example, you know I know with beta which is the other EV to all one has to Lyft Cruze design I think you know.
Luis Valentini: The transition from Lyft phase two crews you know they basically I think have done it now but that was took them a little longer than expected what what do you think the key tech challenges maybe for Alan.
Speaker Change: Sure and so.
Cai von Rumohr: So I think there are a few. I mean, one.
Valentini: So I think there are a few I mean one.
Luis Valentini: I think that everybody encountered first was making everything work with electric power, right? So using batteries only, we know that batteries today are still quite limited for longer ranges and higher payloads, right? So making this integration and having the vehicles work is a challenge that I think that everybody that is on, you know, the stage of development that we are in has already encountered. Then after that, there are some challenges with respect to flight.
Cai von Rumohr: So I think that everybody encountered first.
Luis Valentini: Just making everything work with the electric power.
Luis Valentini: Power rates of using batteries only we know that the batteries today still are quite limited.
Luis Valentini: For longer ranges, but also for a higher payloads right. So it's.
Luis Valentini: Making this integration of having the vehicles work.
Luis Valentini: Is.
Luis Valentini: Is a challenge I think that everybody that is on the stage of development that we are have already encountered.
Luis Valentini: So, for example, these vehicles don't have the inherent stability in flight that conventional fixed-wing configurations have. And so that means that we are much more dependent on the fly-by-wire flight control systems, for example, and so this is something that has to be developed in these new transition phases or these new phases of flight that eVTOLs have, right? Being a liftless cruiser or a tilt rotor or any other configuration, there is a change in flight between the hover flight and the cruise flight that requires a lot of complexity in the fly-by-wire flight control.
Luis Valentini: Then after that there are some challenges with respect to flight. So for example, these vehicles they don't have an inherent stability in flight.
Luis Valentini: That conventional fixed rate configurations have and so that means that we are much more dependent on the fly by wire flight control systems for example.
Luis Valentini: And so this is something that has to be developed in these new transition phases or these new phases of flight that EV tolls have been been at Lyft, plus crews or tilt rotor or any other configuration. There is a change in flight between the Hubbard flight and the crews flight that.
Luis Valentini: Requires a lot of complexity on the fly by wire flight control. So this is something that we see for US there will be a significant challenge also but it's one that we feel prepared with the background that we bring from embraer of developing flight control systems.
Luis Valentini: So this is something that we see for us that will be a significant challenge also, but it's one that we feel prepared with the background that we bring from Embraer of developing flight control systems with fly-by-wire, something that we have been doing at Embraer or that Embraer has been doing for the last few projects, right? So Creator, C390, E2, these are all... fly-by-wire airplanes on which we are basing very much of our technology.
Luis Valentini: With fly by wire is something that we have been doing at Embraer cause that embraer has been doing for the last few projects right. So creator to 392. These are all.
Luis Valentini: Fly by wire airplanes, and which we are basing very much of our technology and its something that we bring with very high maturity. So so I think that combining a just to summarize you know the the systems with the battery power.
Luis Valentini: And it's something that we bring with very high maturity. So I think that combining, just to summarize, the systems with the battery power in the eVTOL flight, in the vertical flight, is a challenge that I think everybody has faced. And then getting this to fly in the different phases of flight, especially with the fly-by-wire that I mentioned, I think is something that will also be challenging for all of the manufacturers.
Luis Valentini: In the Ito flight in the vertical flight is a challenge that I think everybody has faced and then getting this to fly in the different phases of flight, especially with fly by wire and stuff that I mentioned I think is something that well it would be challenging for for all of the manufacturers.
Cai von Rumohr: Terrific. Thank you. Great, great answer. I have one last question, which is, as you know, I think the FAA is expected to, has a schedule to finalize the operational requirements, where two of the keys are, what is the reserve requirement and the training? Do we need to be able to have two pilots up front to do the training? Do you know where they are on that? And do you still expect the FAA, and I assume ANAC, also to kind of reach the finalization of the operational requirements? Because obviously, that will have some impact on whether your design needs to be changed or not.
Speaker Change: Terrific. Thank you great Great answer I have one last question, which is as you know I think the FAA is expected to have.
Cai von Rumohr: Schedule to finalize the operational requirements, where two of the keys are what is the reserve requirement and the training do we need to be able to have two two pilots are upfront to do the training do you know where they are on that and do you still expect the F.
Luis Valentini: Thank you.
Luis Valentini: And I assume a Mac also to kind of reach finalization of the operational requirements, because obviously that will have some impact.
Luis Valentini: Whether your design needs to be changed or not thank you.
Luis Valentini: Yeah.
Cai von Rumohr: Well, thank you, Cai. These are very important points you you've been following. The FAA has been going through, I think, quite a significant process in the development of these requirements, and the industry has had, I think, previously, an expectation that these would be finalized by now. Remember, the publication of a draft of these requirements last year received... I think it received a significant pushback from the industry, and a couple of the most important points are the ones you brought, right?
Speaker Change: Well. Thank you Kai these are very important points are you you've been following that.
Cai von Rumohr: The FAA has has.
Cai von Rumohr: Been going through I think quite a significant process and the development of these requirements right and in the industry has had I think previously an expectation that these would be finalized by now.
Cai von Rumohr: There was a you remember the publication of a draft of these requirements last year. These were.
Cai von Rumohr: I think received a significant pushback from the industry and and and and and a couple of the most important points are the ones you broad right.
Cai von Rumohr: But there is really, I think, an expectation from some in the industry that they are finished soon, but we don't really have very clear visibility from the FAA when that will happen. So there is...
Cai von Rumohr: But there is really I think and expectation that.
Cai von Rumohr: The part of the industry that they are finished soon but we don't really have a very clear visibility from the FAA when that happens. So there is.
Luis Valentini: I think we have the same information that you mentioned, that we have the expectation that by the end of the year, there's going to be a new publication. We expect this to be the final publication of the requirements. We expect, I think, as EVEs but also as industry, that there will be significant changes, for example, on requirements for pilot training and reserves, but there's really not a clear statement from the FAA where that will end, you know, where they will be when final publication comes and when that will happen. So we still work with this time frame that you mentioned for the second semester, but without any more detail than that.
Speaker Change: I think we have the same information that you mentioned that.
Luis Valentini: You have the expectation that by the end of the year. There is theres going to be a new publication. We expect this to be final publication of the requirements.
Luis Valentini: We we expect I think as Ive, but also has industry that there is significant change for example on requirements for pilot training in our reserves.
Luis Valentini: But theres really not a clear statement from the FAA, where that will end you know where these will be when final publication comes in and when that will happen. So.
Luis Valentini: So we still work with this timeframe that you mentioned of the second semester, but without any more detailed than that.
Operator: And thank you. Ladies and gentlemen, this concludes our question and answer session. I will turn the conference back over to Lucio Aldworth for any closing remarks.
Luis Valentini: And thank you ladies and gentlemen. This concludes our question and answer session I will turn the conference back over to Lucio Aldworth for any closing remarks.
Lucio Aldworth: Thank you, Chad, and thanks to everyone who joined the call today. As you can see, we accomplished several important milestones this past quarter. We're fully engaged and moving fast, and there's much more to come. So we're going to continue updating you on our prototype and its progress throughout the next two quarters, as well as the progress of the project itself, and look forward to meeting you at the upcoming events we are going to attend.
Lucio Aldworth: Thank you Chad and thanks to everyone, who joined the call today as you can see we accomplished several important milestones. This past quarter were fully engaged and moving fast and there's much more to come.
Lucio Aldworth: So we're going to continue updating you on our prototype on the progress throughout the next two quarters as well as the prototype the progress and look forward to meeting you in the upcoming events, we are going to attend and as always if you have any questions. Please don't hesitate to reach out to me or my team.
Lucio Aldworth: As always, if you have any questions, please don't hesitate to reach out to me or to my team. Thanks, and have a good day. The conference has concluded. Thank you for attending today's presentation. You may now disconnect.
Lucio Aldworth: Thanks and have a good day.
Lucio Aldworth: The conference has concluded. Thank you for attending today's presentation you may now disconnect.
Lucio Aldworth: Okay.
Operator: BF-WATCH TV 2021
Lucio Aldworth: [music].