Q2 2024 Eve Holding Inc Earnings Call
Good day, and welcome to the Eve Holding, Inc. Second Quarter 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your touchtone phone.
After today's remarks, 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.
Operator: To withdraw your question, please press star then two. Please note this event is being recorded. I'd now like to turn the conference over to Lucio Aldworth, Head of Investor Relations. Please go ahead. Thank you.
Please note this event is being recorded.
I would now like to turn the conference over to Lucio Aldworth, Head of Investor Relations.
Lucio Aldworth: Thank you, operator. Good morning, everyone.
Lucio Aldworth: Please go ahead. Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at EVE, and I wanted to welcome everyone to our second quarter 2024 earnings conference call. Our CEO , Johann Bordais, and CFO , Eduardo Couto, are joining me on this call today.
Lucio Aldworth: This is Lucio Aldworth, the Director of Investor Relations at EVE, and I wanted to welcome everyone to our second quarter 2024 earnings conference call. Our CEO, Johann Bordais, and CFO, Eduardo Couto, are joining me on this call today, and after their prepared remarks, we're going to open the call for questions, at which point Luis Valentini, our Chief Technology Officer, will also join us for more technical questions. We did prepare a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the rollout of our first full-scale prototype, and that's on our website at ir.evairmobility.com. So, please feel free to download it and follow along.
Speaker Change: And after their prepared remarks, we're going to open the call for questions at which point Luis Valentini, our Chief Technology Officer, will also join us for more technical questions.
Speaker Change: We did prepare a deck with a few slides and additional pictures that show our achievements in the quarter as well as the rollout of our first full-scale prototype and that's on our website at ir.evairmobility.com. So please feel free to download it and follow along.
Lucio Aldworth: Let me first say that this presentation includes forward-looking statements, meaning all 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 that affect 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 in Brazil. And in our market. The words believe, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking states. We undertake no obligation to update publicly or revise any statement because of new information, future events, or other facts.
Speaker Change: Let me first say that this presentation includes forward-looking statements.
Speaker Change: 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.
Speaker Change: 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,
Speaker Change: The words believe, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking statements.
Speaker Change: will undertake no obligation to update publicly or revise any statement because of new information.
Lucio Aldworth: Therefore, 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'll now turn the presentation over to our CEO, Johann.
Speaker Change: future events, or other factors.
Speaker Change: 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'll now turn the presentation over to our CEO , Johann.
Johann Bordais: Thanks, Lucio. Good morning, and thank you for joining the call today. We had a very special and exciting second quarter.
Johann: Thanks, Lucio. Good morning and thank you for joining the call today. We had a very special and exciting second quarter. We continue to advance in our program and we reached a very important milestone.
Johann Bordais: We continue to advance in our program, and we reach a very important milestone. As we had anticipated before, we completed the assembly of our prototype, and we rolled it out to the hangar for the first time in early July. This is a traditional ceremony to present a new aircraft to the public, the press, and investors. As a reminder, this is a full-scale engineering prototype without a cabin or cockpit, made of composite materials that will be piloted remotely. This prototype will be used to validate and improve the accuracy of the preview subscale and computer models.
Johann: As we had anticipated before, we completed the assembly of our prototype and we rolled it out to the hangar for the first time in early July . This is a traditional ceremony to present a new aircraft to the public, the press, and investors.
Johann: As a reminder, this is a full-scale engineering prototype without cabin nor cockpit, made of composite materials that will be piloted remotely. This prototype will be used to validate and improve the accuracy of previous subscale and computer models.
Johann Bordais: It will also be useful to build on the several rigs that we have for different individual components. We will now start a series of ground tests before moving to hover and full transition flight tests. We expect these tests to begin later this year, and they will be performed at the SEM Embraer facilities in Gabon, Peixoto, also known and called GPX, in the state of Sao Paulo. GPX offers a parallel infrastructure for test flights that was specially and specifically designed to test the Embraer Prototype Air. In parallel, we continue to down-select suppliers and sign binding contracts that define technical specifications for the component and commercial aspects with volume, unit prices, and aftermarket support conditions.
Johann: It will also be served to build on the several rigs that we have for different individual components.
Johann: We will now start a series of ground tests before moving to hover and full transition flight tests.
Johann: We expect these tests to initiate later this year, and they will be performed at the SENT Embraer facilities in Gama, Peixoto, also known and called GPX, in the state of Sao Paulo.
Johann: GPX offers a parallel infrastructure for test flight that was specially and specifically designed to test Embraer prototype aircraft.
Johann: In parallel, we continue to down-select suppliers and sign binding contracts. These define technical specifications for the component and commercial aspect, with volume, unit prices, and aftermarket support conditions.
Johann Bordais: Just last month, we selected QRD, LogicWare, Ralk, and Altium. As a reminder, earlier in the year, we had selected KAI for the pylons, aftituris for the wings, cruisers for the pylons and scepter, and also FSTC for the tail section of our aircraft. We have now completed the selection of what we call the flight critical component suppliers for our aircraft, and we'll continue to work on defining the non-critical partners. We will come back to this later.
Johann: Just last month, we selected QRD, LogicWare, Ralk, and Altec.
Johann: As a reminder, we had selected earlier in the year KAI for the pylons, Aceturis for the wings, Prusae for the pylot and scepter, and also MPSCC for the tail section of our VTOL.
Johann: We have now completed the selection of what we call the flight critical component suppliers for our aircraft and will continue to work on defining the non-critical partners.
Johann Bordais: Now, moving to the next few slides, we will show some pictures of the rollout event and the aircraft itself. These show the full scale of our prototype, which, by the way, will closely resemble the commercial version. As we mentioned before, our eVTOL will have similar dimensions to most widely used helicopters, so that it fits the helipads and also carries the same number of passengers.
Johann: We will come back to this later on.
Johann: Now, moving to the next two slides, we will show some pictures of the rollout event and the aircraft itself.
Johann: These show the full scale of our prototype, which, by the way, will closely resemble to the commercial version. As we mentioned before, our eVTOL will have similar dimensions to most widely used helicopters, so that it fits the helipads and also carries the same number of passengers.
Johann Bordais: One interesting fact is that the prototype is made of multiple composite panels that are easily detachable and removable. This will allow us to have easy access to the internal electric and electronic components and facilitate any operation that we may need to be done during the flight test campaign. We always had safety and simplicity in mind when defining the lift plus cruise configuration for our EV.
Johann: One interesting fact is that the prototype is made of multiple composite panels that are easily detachable, removable. This will allow us to have an easy access to the internal electric and electronic components and facilitate any operation that we may need to be done during the flight test campaign.
Johann: We always had safety and simplicity in mind when defining the lift plus cruise configuration for our VTOL.
Johann Bordais: With these fixed components, we believe that our aircraft will have many advantages that will allow operators to be profitable with lower maintenance and operating costs and higher availability for their mission. This simpler design also will benefit from certification. Lastly, our commercial eVTOL will have Embraer 5th generation fly-by-wires. This is a proven technology that has been successfully improving safety and passenger comfort in some of the Embraer commercial executive and military aircraft, and we have access to it. This, in my view, is yet another competitive advantage that EVE has, and it will eventually become clear to investors over time.
Johann: With these fixed components, we believe that our aircraft will have many advantages that will allow operators to be profitable with lower maintenance and operating costs and higher availability for their missions.
Johann: This simpler design also will benefit to the certification campaign.
Johann: Lastly, our commercial eVTOL will have Embraer fifth-generation fly-by-wire system.
Speaker Change: This is a proven technology that has been successfully improving safety and passenger comfort in some of the Embraer commercial, executive, and military aircraft, and we have access to it.
Speaker Change: This, in my view, is yet another competitive advantage that EVE has, and it will become eventually clear to investors over time.
Johann Bordais: Now, moving on to slide six, it shows the next steps of our test campaigns for our engineering prototype. We will now start ground tests to validate thrust, energy consumption, sound, vibration, and other tests before moving to the actual flight test company. As we have always done, we will approach the test campaign very conservatively and only move forward with the minimum risk.
Speaker Change: Now, moving on to the slide six, it shows the next steps of our test campaigns for our engineering prototype.
Speaker Change: We will now start ground tests to validate thrust, energy consumption, sound, vibration, and other tests before to move to the actual flight test campaign.
Speaker Change: As we have always done, we will approach the test campaign very conservatively and only move forward with the minimal risk. We will initially perform the hover flight tied up to the ground and gradually increase power and height.
Johann Bordais: We will initially perform a hover flight, tied up to the ground, and gradually increase power and height. Then we will move to the partial transition, which is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally. And only then will we move to the full transition.
Speaker Change: Then we will move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally. And only then we will move to the full transition flight.
Johann Bordais: The next couple of slides show a bit more of the engineering infrastructure that we are accessing at the General Peixoto and the GPX facilities. Again, this is where Embraer manufactures and tests most of its commercial, executive, and military aircraft, and it's the home of the largest runway in the Southern Hemisphere and the fourth largest in the world. This is a state-of-the-art facility with all the necessary infrastructure for test flight and has been made available to ease air mobility.
Speaker Change: The next couple of slides show a bit more of the engineering infrastructure that we are accessing at the General Peixoto and the GPX facilities.
Speaker Change: Again, this is where Embraer manufactures and tests most of its commercial, executive, and military aircraft. And it's the home of the largest runway in the Southern Hemisphere, and the fourth largest in the world.
Speaker Change: This is a state-of-the-art facility with all the necessary infrastructure for test flight and has been available to ease air mobility.
Johann Bordais: In fact, This is where our prototype was built and will be tested. And it's the house of the custom-built rig that is mounted on the truck. We drive it down the runway to mimic what the real-life aerodynamic track, vibration, or other performance criteria, which we will test with different configurations.
Speaker Change: In fact,
Speaker Change: This is where our prototype was built and will be tested.
Speaker Change: And it's the house of the custom-built rig that is mounted on the truck. We drive it down the runway to mimic what is the real-life aerodynamic track, vibration or other performance criteria.
Speaker Change: which we will test with different configurations. We'll also validate and refine our computer models and ultimately improve the design of the motor propeller rigs of our aircraft.
Johann Bordais: We'll also validate and refine our computer models and, ultimately, improve the design of the motor propeller rigs of our aircraft. At the same time, we have another high-tech truck that will be the nerve center for the remote flying testing phase of our approach. The truck is equipped with all the necessary equipment for the pilots. Our first prototype will be a remote control along with different teams to constantly monitor different telemetry variables of the aircraft. Our prototype has also been fitted with several strategically placed cameras that will also feed real-time images to the team in the truck.
Speaker Change: At the same time, we have another high-tech truck that will be the nerve center for the remote flying testing phase of our prototype.
Speaker Change: The truck is equipped with all the necessary equipment for the pilots.
Speaker Change: Our first prototype will be remote control, along with different teams to constantly monitor different telemetry variables of the aircraft. Our prototype has also been fitted with several strategically placed...
Speaker Change: cameras that will also feed in real-time images to the team in the truck.
Johann Bordais: Now, getting to slide nine, we can see the latest addition to our component suppliers list, which we will start using with the first five or six conforming prototypes. So far, in 2024, we announced several suppliers: APCC to provide the control surface and arcanage, Asituri for the wings, and Kruze for the pilot-controlling sector, or joystick, as we call it sometimes.
Speaker Change: Now, getting to slide nine, we can see the latest addition to our component suppliers list, which we will start using with the first five or six conforming prototypes.
Johann Bordais: And we also have signed with Thales for the sensors, Honeywell for the guidance and navigation, and lastly, Recaro Aero for the. In the first quarter of 2024, we added KAI for the pilots to this list, and now we have added QRD for the polycarbonate windows, latex for the doors, rock, and I'll take for the fuselage components. With these additions, we have completed the selection of our primary component supply.
Speaker Change: So far, in 2024, we announced several supplies. APCC to provide the control surface and antennas. Assetory for the wings. Cruising for the pilot controlling sector. Or the joystick, as we call it sometimes.
Speaker Change: And we also have Syngwith Tallis for the sensors, Honeywell for the guidance and navigation, and lastly, Recaro Aero for the seats.
Speaker Change: In the first quarter of 2024, we added KAI for the pylons to this list, and now we have added QRD for the polycarbonate windows, latex coater for the doors, RAUC and ALTEQ for the fuselage components.
Speaker Change: With these additions, we have completed the selection of our primary component suppliers.
Johann Bordais: We have been using a best-of-breed approach to bring suppliers with experience in aviation and certification. Importantly, they will also support us in the certification campaign and throughout the eVTOL life cycle. Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in unit prices as we reach higher EV toll volumes of production. This will provide economies of scale as we increase our output, and we still have a few suppliers to select, but these are non-critical for the aircraft performance, whether they are off-the-shelf components such as the ELT or the PHF or optional, like the skids or landing gears, lights, and so forth.
Speaker Change: We have been using a best-of-breed approach to bring suppliers with experience in aviation and certification.
Speaker Change: Importantly, they will also support us in the certification campaign and throughout the EBTO life cycle.
Speaker Change: Lastly, these contracts have a defined price and quantity schedule with a scale function with a reduction in unit prices as we reach higher EDTOL volumes of production. This will provide economies of scale as we increase our output.
Speaker Change: We still have a few suppliers to select, but these are the non-critical for the aircraft performance, whether they are off-the-shelf components such as the ELT or the PHF, or optional like the skids or landing gears, lights, and so forth.
Johann Bordais: And when I look at this list, I'm very confident in the high level of safety, certification, and performance of our eVTOL. Now, on slide 10, our total pre-order backlog stands at 2,900 aircraft for a value of a total $14.5 billion U.S. dollars based on the list. These are non-binding letters of intent from 30 different customers spread across 13 countries and different businesses, from the mainline to regional airlines, to helicopter operators, ride-sharing platforms, and leasing companies.
Speaker Change: And when I look at this list, I'm very confident on the high level of safety, certification, and performance of our eVTOL.
Speaker Change: Now, on slide 10, our total pre-order backlog stands at 2,900 aircraft for a value of a total of $14.5 billion U.S. dollars based on the list price.
Speaker Change: These are non-binding letters of intent from 30 different customers spread over 13 countries and different businesses, from the mainline to regional airlines, to helicopter operators, ride-sharing platforms, and leasing companies.
Johann Bordais: We also have LOIs for Vector, our UTM software, from 16 different customers and believe that this reflects the market-leading value proposition we bring to our customers. 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 won't fly without proper maintenance and support, we are highly focused on providing the best-in-class services to EVTOLS operators.
Speaker Change: We also have LOIs for Vector, our UTM software from 16 different customers and believe that this reflects the market's leading value proposition we bring to our customers.
Speaker Change: 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.
Speaker Change: And because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best-in-class services to eVTOLs operators.
Johann Bordais: We have also secured contracts with 12 different customers for maintenance, repair, and overhaul, or what we call the MRO. That could bring up to $1.2 billion in revenue for EV over the first five years of operation. Now, I would like to invite our CFO, Ed, to go over our financials along with this milestone.
Speaker Change: We have also secured contracts with 12 different customers for the maintenance, repair, and overhaul, what we call also the MRO. That could bring up to $1.2 billion in revenue for EVE over the first five years of operation.
Speaker Change: Now, I would like to invite our CFO , Edu, to go over our financials along with the milestone checklist.
Eduardo Couto: Thanks Johann. Now we move to slide 11.
Edu: Thanks, Johann. Now move to slide 11. EV is a pre-operational company developing its EVTOL and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development.
Eduardo Couto: EVE is a pre-operational company developing its EVTOL 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 numbers. EVE invested $36 million during the second quarter of 2024 in our program development, as R&D activities continue to speed up with more head counts and higher engagement from suppliers. The majority was invested in our EVTOL aircraft and a smaller portion in service and support and the urban air traffic management software.
Edu: With that said, I want to highlight some of our numbers. EVE invested $36 million during the second quarter of 2024 in our program development, as R&D activities continue to speed up with more headcounts and higher engagement from suppliers.
Edu: The majority was invested in our EVTOL aircraft and a smaller portion in service and support and the urban air traffic management software.
Eduardo Couto: We also deployed $5 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 in the second quarter were partially offset by interest revenues and a mark-to-market gain in our warrants, resulting in a net loss of $36 million in the second quarter of 2024.
Edu: We also deployed $5 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.
Edu: Higher development expenses in the second quarter were partially offset by interest revenues and a mark-to-market gain in our warrants, resulting in a net loss of $36 million in the second quarter of 2024. Thank you. Thank you.
Eduardo Couto: Moving to cash flow, our operations consumed $31 million in the quarter, up $4 million versus the same period of 2023 due to higher development spending. It's important to highlight that we drew another $14 million from our pre-approved credit line with the Brazilian Development Bank during the second quarter. And with that, we ended the first quarter with $206 million in cash, down only $16 million from the first quarter of 2024. We still have approximately $38 million available from this line that we expect to access in the upcoming quarters. This is going to continue to help Yves to preserve its cash position. Now, moving to slide 12, please.
Edu: Moving to cash flow, our operations consumed $31 million in the quarter, up $4 million versus the same period of 2023 due to higher development spending.
Edu: It's important to highlight that we drew another $14 million from our pre-approved credit line with the Brazilian Development Bank during the second quarter. And with that, we ended the first quarter with $206 million in cash.
Edu: down only 16 million from first quarter 2024. We still have approximately 38 million available from this line that we expect to access in the upcoming quarters. This is going to continue to help Yves to preserve its cash position.
Eduardo Couto: In early July, a few days after the end of the second quarter, we announced an additional equity raise of $96 million. This private placement included new funds from strategic investors like Embraer, NIDAC, and Space Florida, as well as some financial investors. With this new equity, we managed to attract new investors to our cap table, which, in our view, sends a strong message as to the soundness of our development program, its competitive advantages, and the credibility of our company.
Edu: Now moving to slide 12, please.
Edu: In early July , a few days after the end of the second quarter, we announced an additional equity raise of $96 million.
Edu: This private placement included new funds from strategic investors like Embraer, NIDAC, and Space Florida, as well as some financial investors.
Edu: With this new equity, we managed to attract new investors to our cap table, which in our view sends a strong message as to the soundness of our development program, its competitive advantages and the credibility of our company.
Eduardo Couto: At the same time, we continue to enjoy a strong relationship with Embraer, who remains our controlling shareholder with 83% participation at the end of the year. In parallel, Brazil's certification authority, ANAC, concluded its public hearing process in mid-March to define the basis for certification.
Edu: At the same time, we continue to enjoy a strong relationship with Embraer, who remains our controlling shareholder with 83% participation at EVE.
Edu: Considering the new fund, our second quarter performance liquidity reached approximately $340 million.
Edu: I think this new cash improves what was already a comfortable financial position, considering our commitments to the program in the foreseeable future, and secure our operations for multiple years ahead.
Edu: As a reminder, we expect to invest...
Edu: around $130 to $170 million this year. And our cash consumption should intensify next year with the assembly of five conforming prototypes, as previously mentioned, and investments in our manufacturing site in Brazil, our Taubaté plant.
Edu: Now moving to slide 13.
Edu: We remain on track to deliver our milestones for 2024, and in fact,
Edu: just checked the assembly of our first full-scale prototype and presented it publicly a few weeks ago as initially planned.
Edu: We will now start ground tests in the second half of the year, but we want to call attention to the delivery of electric motors as they are in the critical path for some of our prototype tests in the second half, and we are monitoring it closely.
Edu: In parallel, Brazil's certification authority, ANAC, concluded its public hearing process in mid-March to define the basis of certification. The agency is now compiling all comments and we expect the basis of certification to be published this year.
Edu: Lastly, we continue to prepare our first e-vitol manufacturing plant in an existing site of Embraer in Brazil, in the city of Taubaté. We're also working to secure the necessary funding for the e-vitol industrialization through a long-term financing.
Edu: All our 2024 efforts will consume between $130 to $170 million throughout this year.
Edu: It's important to mention that the recent depreciation of the Brazilian currency versus the U.S. dollar will help to reduce our cash consumption this year, as the majority of our expenses are in the Brazilian currency.
Speaker Change: With that, we conclude our remarks and I would like to open the call for questions. Operator, please proceed.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster.
Speaker Change: Our first question comes from Savi Sith from Raymond James.
Speaker Change: Please go ahead.
Savi Sith: Hey, good morning, everyone.
Savi Sith: I was wondering, you mentioned the electric motors, I was wondering what the kind of the expectation on when those will be delivered and as you kind of contemplate building those certification conforming prototypes for next year.
Speaker Change: What do you need to see before you start building those? Is it anything around the test campaign or what are the factors that will decide when you move forward with that?
Savvy: Hello, Savvy.
Speaker Change: Thank you, thank you for the question. Yes, it was mentioned, you know, that now we've uh...
Speaker Change: We've done the rollout of the prototype and what we call it the engineering prototype, right, which is different from the conforming prototype which will
Speaker Change: start building next year, and we'll have five to six conforming prototypes that we'll use with the certification authorities, ANAC, to get the certification, okay? So we did mention, you know, that the critical path on the electrical motor, and this is for the and we're talking about the engineering prototype, okay?
Luis Valentini: I'm just wondering when you're expecting the electric motor delivered and if there's anything in the testing that you're doing here with that engineering prototype that will then decide when you start building the conforming prototype.
Speaker Change: So that was what we mentioned here.
Speaker Change: I'm just wondering when you're expecting the electric motor delivered and if there's anything in the testing that you're doing here with that engineering prototype that will then decide when you start building the conforming prototype?
Speaker Change: No, I didn't see that. Valentini.
Luis Valentini: Sure. So, good morning. Hi, Savi.
Savvy: Thank you for the questions. So we expect the motors to be delivered still in the second semester, which then will allow us to start the flight test campaign, which includes first
Luis Valentini: Thank you for the question. We expect the motors to be delivered in the second semester, which then will allow us to start the flight test campaign, which includes the first integration tests of this equipment on the vehicle. So you can think of them as production tests to make sure that everything that is installed on the vehicle works together. And then from there, we can start a flight testing campaign and a ground testing campaign also that is more geared towards developing vehicle features, right?
Speaker Change: integration tests of these equipment on the vehicle so you can think of them as production tests
Speaker Change: to make sure that everything that is installed on the vehicle works together.
Speaker Change: And then from there, we can start actually a flight testing campaign and a ground testing campaign also that is more geared towards developing.
Luis Valentini: So studying things like noise, vibration, characteristics of the vehicle during transitions between hover and cruise flight and things like that, with this challenge on the delivery of the motors. We are still moving ahead. And then once the engineering vehicle flies, we can bring the learnings into the conforming prototypes. But again, just emphasizing that these are parallel paths.
Speaker Change: vehicle features right, so studying things like noise, vibration, characteristics of the vehicle during transition between hover and cruise flight and things like that.
Speaker Change: So the arrival of the motors will allow us to complete
Speaker Change: These production tests that I'm calling for this engineering prototype and also move on to complete This engineering flight test campaign which as we have been saying brings more maturity to the vehicle definitions
Speaker Change: So that we can start the testing with the conforming prototypes with more confidence and more efficiency towards certification.
Speaker Change: With respect to how that connects to the building of the conforming prototypes
Speaker Change: We are basing the building and the definitions of the conforming prototypes.
Speaker Change: much more on the relationship and the work that has been going now with the suppliers.
Speaker Change: So that we are moving ahead in parallel with the development of the conforming prototypes while we are developing this engineering prototype. So we don't expect to have a change at this moment in the path and in the pace of the development of the conforming prototypes.
Speaker Change: With this challenge on the delivery of the motors, we are still moving ahead. And then once the engineering vehicle flies, we can bring the learnings into the conforming prototypes. But again, just emphasizing that these are parallel paths.
Eduardo Couto: Very helpful, thank you. And if I might, just on Ed's comments on liquidity, and I think the release had multiple years of sufficient liquidity, so in terms of the step-up next year, it doesn't seem like it's a big step-up, even though you're doing a lot more building and testing. Is that a fair comment, Ed?
Speaker Change: Very helpful, thank you. And if I might, just on the educed comments on liquidity and...
Speaker Change: I think the release had multiple years of liquidity sufficient, so in terms of the step-up next year, it doesn't seem like it's a big step-up even though you're doing a lot more of building and testing. Is that a fair comment?
Speaker Change: That's correct, Savi. We may have a higher cash burn next year. It shouldn't be that higher than this year, especially because we have a couple of
Speaker Change: I would say...
Speaker Change: a positive thing like the recent depreciation of the Brazilian currency against the dollar, it helps us because the majority of our expenses...
Speaker Change: are in Brazilian REIS.
Speaker Change: And with a stronger dollar, that translates in lower, a lower cash burning dollar term. So we have a couple of positives that may help. And despite the higher activity next year, as you mentioned, I don't believe the cash consumption will be significantly higher. Of course, we're still working on the numbers and we're going to come with more details as we go towards the end of this year. But I think your assumption is reasonable.
Andres Sheppard: The next question comes from Andres Sheppard of Cantor Fitzgerald. Please go ahead.
Speaker Change: All right, thank you.
Speaker Change: The next question comes from Andres Sheppard from Cantor Fitzgerald. Please go ahead.
Andres Sheppard: Hey, good morning, everyone. Thanks for taking our questions and congratulations on the quarter. And, Johan, it was great seeing you at Farmboro a few weeks ago. Thank you. I just have a quick question. I was hoping maybe you could give us a little bit more color regarding kind of the test flights that you're going to be initiating in the second half of this year. I'm wondering if you can maybe walk us through the timeline there, kind of what those tests are, and how you anticipate those tests ramping up.
Andres Sheppard: Hey, good morning everyone. Thanks for taking our questions and congratulations on the quarter.
Andres Sheppard: And, Johann, it was great seeing you at Farmboro a few weeks ago. Thank you, Lucas. Thank you. Just a quick question. I was hoping maybe you can give us a little bit more color regarding kind of the test flights that you're going to be initiating in the second half of this year. Wondering if you can maybe walk us through the timeline there, kind of what those tests, how you anticipate those tests ramping up.
Speaker Change: And then maybe in addition to that, just remind us again the plans to assemble the additional up to five prototypes, the ones that will be certification compliant. Yeah, exactly.
Speaker Change: Thank you.
Speaker Change: I'll pass it on to having the CTO with us here, you know, he will give you more insight obviously of what is going to be the next steps, so Valentini.
Luis Valentini: Thank you for the question, Andres. So the idea is to have a gradual opening of what we call the flight envelope of the vehicle. So we'll start running hover flight tests, a campaign that we have scheduled. With respect to the conforming prototypes you mentioned, those also have some development in the sense that the vehicles will not be exactly the same as this engineering prototype, as was mentioned earlier. So since we had to freeze the design to build this prototype, the conforming prototypes still went through some evolution that this engineering prototype didn't go through.
Speaker Change: Sure.
Valentini: Thank you for the question, Andres. So the idea is to have a gradual opening of what we call the flight envelope of the vehicle. So we'll start running hover flight tests.
Speaker Change: These are important for us to balance and to improve the accuracy of our models.
Speaker Change: with respect to things like the power needed.
Speaker Change: to maneuver the vehicle and hover, the power needed, and the controllability features.
Speaker Change: for failure cases that might happen while the vehicle is in flight.
Speaker Change: It will also include ground tests on things like...
Speaker Change: The interference, the electromagnetic interference between the systems of the vehicle since we're dealing with high voltage power systems, this is...
Speaker Change: Very important that is well, it's very well figured out of the vehicle So it with these ground tests and and then initiating the hover flight tests, we will gradually move on
Speaker Change: to what Johann referred to as partial transition, which means that we will start including forward speeds.
Johann: amplitude until we get to the transition and complete the transition between
Speaker Change: hover and cruise flight, at which time, you remember, the rotors of our vehicle will be turned off and the vehicle will fly as a fixed-wing airplane, right? So, during this transition, there are characteristics of flight that we
Speaker Change: need to make sure that are well understood and again are well captured by our models and our solutions. For the vehicle in cruise flight,
Speaker Change: There are also learnings that we expect to have from this vehicle, but this is a more well-known flight condition.
Speaker Change: coming from the previous history of Embraer airplanes and the use, for example, of the fly-by-wire technology that Johann mentioned, that we have the advantage of use coming from Embraer. So that's the concept of the ground and flight test.
Speaker Change: campaign that we have scheduled.
Speaker Change: With respect to the conforming prototypes you mentioned, then those...
Speaker Change: also have some development in the sense that
Speaker Change: The vehicles will not be exactly the same as this engineering prototype, as was mentioned earlier.
Speaker Change: So, since we had to freeze the design to build this prototype...
Speaker Change: The conforming prototypes still went through some evolution that this engineering prototype didn't go through, right? So they have slightly different characteristics.
Luis Valentini: So they have slightly different characteristics, which will then require some development in ground and flight testing also. But then we expect to quickly move to the certification flight test campaign, which will be geared towards showing compliance with the certification requirements of both AMAC and FAA initially, then expanding to other authorities in the world. So this test campaign will be made using five vehicles. We might add more vehicles if we think that is beneficial to the project overall, but initially, we are expecting to do that with five vehicles that will start being produced and flown next year.
Speaker Change: which will then require some development in ground and flight testing also, but then we expect to quickly move to the certification flight test campaign, which will be geared towards showing compliance with the certification requirements of both AMAC
Speaker Change: and FAA, initially then expanding to other authorities in the world.
Speaker Change: So these will, so this test campaign will be...
Speaker Change: made using five vehicles. We might we might add more vehicles if we think that is beneficial to the project overall, but initially we are expecting to do that with five vehicles that will start being produced and flown next year.
Luis Valentini: Got it, that's super helpful; I appreciate all that color. Maybe just a quick follow-up on certification. So, you know, obviously ANAC has been kind of the primary type certification that you've been targeting concurrently with the FAA. But my question is, you know, with all the recent developments in the UAE, I'm wondering if that maybe has changed some of your type certification plans or how you're thinking about that market. Is that a certification that you'll pursue as well now, and if so, how do you see that process unfolding?
Luis Valentini: Sure, so that's a good point. But it doesn't change the process of certification the way that we have established in the sense that AMAC being the primary certification authority gears us towards defining requirements and then defining how to show compliance with these requirements, first and foremost. What we do with ANAC, as Embraer has done in the past, but is even more important this time around, is to align what requirements will be applicable to the eVTOL certification, and ANAC and also EVE are supporting that very much.
Speaker Change: Got it. That's super helpful. I appreciate all that color. Maybe just a quick follow-up on certification. So, you know, obviously, ANAC has been kind of the primary...
Speaker Change: type certification that you've been targeting in concurrent with the FAA. But my question is, you know, with all the recent developments in the UAE,
Speaker Change: I'm wondering if that maybe...
Speaker Change: Has changed some of your type certification plans or if you're you know how you're thinking about that market Is that a certification that you'll pursue as well now? And if so, how do you see that process? Unfolding. Thank you
Speaker Change: Sure, so that's a good point. It doesn't change the process of certification the way that we have established in the sense that AMAC being the primary certification authority
Speaker Change: ...gears us towards defining requirements and then defining how to show compliance with these requirements.
Speaker Change: first and foremost. What we do with ANAC in this case, as Embraer has done in the past, but is most even more important this time around,
Speaker Change: is to align what requirements will be applicable to the eVTOL certification. And ANAC, and also EVE is supporting that very much, ANAC has been very active.
Luis Valentini: ANAC has been very active in seeking alignment and understanding and as much as they feel that they are comfortable with harmonizing those requirements with other authorities in the world. So by doing that, they set out a certification basis that is more closely acceptable for validation by other authorities in the world. So our path has been that from the beginning, which is to build this basis with ANAC, and try to make it such that it is as common as we can with other authorities, so that once we receive the type certificate from ANAC, we have, let's say, a more clearly paved way toward getting this validation from other authorities.
Speaker Change: in seeking alignment and understanding
Speaker Change: They feel that they are comfortable with harmonizing those requirements with other authorities in the world.
Speaker Change: So by doing that
Speaker Change: They steer a certification basis that is more closely acceptable for validation by other authorities in the world. So our path has been that from the beginning, which is to build this basis with ANAC, try to make it such.
Speaker Change: that is as common as we can with other authorities so that once we receive the type certificate from INAC, we have
Speaker Change: Let's say a more clearly paved way towards getting this validation from other authorities. And then that includes UAE and other authorities that we have mentioned.
Luis Valentini: And then that includes the UAE and other authorities that we have mentioned previously as markets that are of interest to EAVS. So, and just summarizing, the UAE or other authorities, we expect them to be very well captured, so to speak, by this process of building a basis with ANAC that is well aligned with other authorities in the world.
Speaker Change: previously of markets that are of interest to EAVS.
Speaker Change: And just, you know, summarizing it, UAE or other authorities, we expect them to be very well captured, so to speak, by this process of building a basis with ANAC that is well aligned with other authorities in the world.
Austin Moeller: Wonderful. Thank you so much. I really appreciate it. Congratulations on the quarter again. I'll pass it on.
Speaker Change: Wonderful. Thank you so much. Really appreciate it. Congrats on the quarter again. I'll pass it on.
Austin Moeller: The next question comes from Austin Moeller from Canaccord. Please go ahead.
Speaker Change: Thank you.
Speaker Change: The next question comes from Austin Moeller from Canaccord. Please go ahead.
Austin Moeller: Hi, good morning, and great to see you at Farnborough, Johann. My first question... just on the battery. So the battery is being supplied by BAE? I know they've done some work providing those for industrial vehicles and buses, but I was just wondering what the production volumes look like for the cells within the batteries being provided by BAE? Are they being built at a production volume each year that could enable a strong manufacturing supply chain going out the gate? And what does that look like? If you could just tell us a little bit more,
Austin Moeller: Hi, good morning, and great to see you at Farnborough, Johann. My first question...
Speaker Change: Just on the battery, so the battery is being supplied by BAE.
Speaker Change: I know they've done some work providing those for industrial vehicles and buses, but...
Speaker Change: I was just wondering, what is the production volumes look like for the cells within the batteries being provided by BAE? Are they being built at a production volume each year that could enable a strong manufacturing supply chain going out the gate?
Speaker Change: And what does that look like? If you could just tell us a little bit more.
Johann Bordais: All right, Austin, thank you so much for your question. Yes, BAE is definitely, you know, the supplier that won the bidding process. And simply because, like you mentioned, they have more than 8000 EVs running around the world, especially, you know, most of the coaches and buses that you have in major cities around the world are actually made by BAE, the batteries are made by BAE. So they do have, you know, extensive experience and, you know, reliability and production. They are using, you know, most of the OEM or eVTOL are using the same cells, right? So they're not different. This one is also a Moly cell. There are the cylindrical little cells that you're using.
Speaker Change: All right, Austin, thank you so much for your for your question. Yes, PAE is definitely, you know, the suppliers that won the bidding process.
Speaker Change: And simply because...
Speaker Change: Like you mentioned, I mean, they have more than 8,000 EVs running around the world, especially, you know, most of the coaches and buses that you have in the major cities around the world are actually made by BAE, the batteries are made by BAE.
Speaker Change: You know what, extensive.
Speaker Change: you know, experience and, you know, how the reliability and production.
Speaker Change: They are using, you know, most of the OEM or eVTOL are using the same cells, right? So they're not different.
Johann Bordais: And this is the one that we elected with BAE. And I'll let Valentini explain, you know, what the benefits of this are, obviously. But when we signed this contract, and we've done this since last year, we've signed 21 contracts with PSA, and BAE was one of the first ones, and it does cover the ramp-up of production. So we make sure that, you know, they have the ability to ramp up production as we go, as we sell and deliver those eVTOLs.
Speaker Change: This one is also Molly's sale. There's the cylindrical little cells that you're using. And this is the one that we elected with BAE. And I'll let, you know, Valentini explain, you know, what are the benefits of this, obviously. But when we signed those contracts, and we've done this since last year, we've signed 21 contracts of the PSA and BAE was the first one, and it does cover the ramp up of production. So we make sure
Speaker Change: They have the ability to ramp up production as we go, as we sell.
Johann Bordais: And we're confident they've been doing that. And then also, they've been looking at de-risking their operations. So, which is quite important for us, right, when it comes to production sites. It's not only, you know, the capacity but also making sure that, you know, if something happened to one site, then they have a backup production site.
Speaker Change: and deliver those eVTOLs.
Valentini: And we're confident they've been doing, and then also they've been looking at de-risking their operations, which is quite important for us when it comes to production sites. It's not only the capacity, but also making sure that if something happened to one site, then they have a backup production site.
Luis Valentini: Okay. So we're actually in line. And yeah, Valentini, if you want to mention a bit more detail about the technology used there, sure. Okay, so we're
Speaker Change: Okay, so we're actually in line. And yeah, Valentini, if you want to mention a bit more detail, you know, on the technology used there.
Luis Valentini: Sure. So we're using cells that are not specific to our project, right? I mean, similar cells are being used by other eVTOL manufacturers, as has been publicly stated, and also our cells that are used in other applications in the world, such as power tools and other things. So with respect to the production volume, as Johan mentioned, we don't believe that there is a question there. We believe that BAE will supply the batteries for us as we have the production plan for it, and I just wanted to make a quick point with respect to us selecting BAE.
Valentini: Sure, so we're using cells that are not specific to our project, right? I mean, these have similar cells being used by other eVTOL manufacturers, as has been publicly stated, and also our cells that are used in other applications.
Speaker Change: in the world such as power tools and other things. So with respect to the production volume, as Johan mentioned, we don't believe that there is
Luis Valentini: As Johann mentioned, they have pretty significant experience with their electric vehicles and batteries and electric vehicles in operation today. So that brings a vision and experience of the life cycle of the products, which is very important. So we talk very much about certification of these batteries, thermal runaway containment, and containment of propagation, things like that. And these are very important for the safety of the vehicle. But it's also very important that the characteristics of the products in operation in the hands of the operators are very well known, and how to treat occurrences with these products in the field are very well known.
Johann: pretty significant experience with their electric vehicles and batteries and electric vehicles in operation today. So that brings
Johann: a vision and an experience of the life cycle of the products.
Johann: which is very important. So, we talk very much about certification of these batteries, thermal runaway.
Speaker Change: occurrences with these products in the field are very well known. So BAE has over the years built experience and knowledge about these products in operation which we believe that brings quite a bit of maturity to our product.
Luis Valentini: So BAE has, over the years, built up experience and knowledge about these products in operation, which we believe brings quite a bit of maturity to our product. And they also have quite a bit of experience in aeronautical developments from previous projects. So we believe that this combination of being an aeronautical aviation company with the history and knowledge that they have of these batteries in operation will bring the maturity level of the solution in our vehicle up to the start of operations when it enters service.
Speaker Change: Do you expect to provide aftermarket support from day one in one specific geography, or do you expect to provide aftermarket support at all of Embraer's MRR facilities right from the beginning?
Speaker Change: We're actually looking at all possible scenarios. One thing is for sure is that Eve will be the face of the customer. This is the way that we build up.
Speaker Change: you know, the space of the customer available, whether it's going to be own MRO of Eve.
Speaker Change: or using the Embraer footprint, which obviously is very large.
Speaker Change: which more than 70 and 80 authorized cyber centers around the world with their own embraer or even an unauthorized one.
Conor Walters: The next question comes from Conor Walters from Jeffries. Please go ahead.
Speaker Change: The next question comes from Connor Wolters from Jeffries. Please go ahead.
Connor Wolters: Hi guys, congrats on the progress in the quarter and thanks for taking my question. Maybe just to go back on liquidity, as of the first quarter, you indicated that the $280 million that you had at the time was sufficient to support operations well into 2025. So, curious on the rationale for the equity raise in the quarter.
Speaker Change: Yeah, I think, you know, we had this opportunity, right, to bring new partners.
Speaker Change: New Investors, right, was a very...
Connor Wolters: I would say a very selected and interesting group. We brought the strategic investors like NIDAC, right, which...
Connor Wolters: which is a partner in the program as well, Embraer, our controller, also invested, Space Florida, we also brought some additional financial investors. So I think it was an opportunity to raise additional capital, right, the almost $100 million that we raised.
Connor Wolters: With that, we have now an even stronger liquidity that, as you said before, we had sufficient resources until the end of 2025 with these additional...
Connor Wolters: Equity Raise
Connor Wolters: and some long-term finances, right, that we're discussing.
Connor Wolters: We believe we have resources.
Connor Wolters: for multiple years now, probably that will get us into 2027.
Speaker Change: So, you know, I think it was an opportunity that showed up.
Connor Wolters: It's important, right, as a pre-operational company to have a very strong liquidity. Now I think we have...
Connor Wolters: Probably the longest runway among all eVTOL manufacturers, right? And I think that gives us comfort to continue to advance the program at full speed that we're doing without having to worry about resources, right? Now we have plenty of funds.
Connor Wolters: to get the certification and start to deliver the eVTOLs and we thought this additional capital made sense in that context.
Eduardo Couto: And this year we're going to be around the $130K to $170K, probably a little closer to the $130K than the $170K because we have this tailwind of the weaker Brazilian currency against the dollar that will help us. Despite the higher, the increasing headcounts, and the additional prototypes, we have this positive. The expenses are going to continue to go up. As I mentioned to Savi, I don't think it's a big step up.
Connor Wolters: As I said, right, we...
Connor Wolters: This year we're going to be around the 130 to 170 probably a little closer to the 130 than the 170 because we have this
Connor Wolters: Despite the higher, the increasing head counts.
Connor Wolters: We have this positive. The expenses, they are going to continue to go up.
Eduardo Couto: We're still working on the detailed budget for 2025, and I believe we'll have more color on that as we get closer to the end of this year. But as I said, we're anticipating some increase next year. We also have the initial investments in the manufacturing plant in Taubaté, in So Paulo, in Brazil. That will give us, you know, the capacity for the initial e-vitol deliveries. So, you know, there will be an increase. I don't think it's a big one, but we are still working on the details, and I hope at some point later this year we're going to come up with a figure for cash burning 2020.
Connor Wolters: We're still working on the detailed budget for 2025, I believe we're going to have more color on that as we get closer to the end of this year. But as I said, we are anticipating some increase next year. We also have the initial investments on the...
Connor Wolters: Thank you so much. Sorry, Connor and I are tag-teaming as I'm at the airport.
Speaker Change: He got my cash questions in, and I just maybe want to ask about orders, you know, you haven't had vehicle orders, but you got a big chunk of maintenance orders that you guys highlighted in the script. So maybe can you talk about how we should expect that?
Eduardo Couto: Thank you. Thank you. Yes, yeah.
Speaker Change: Thank you. Yes, I'd love to. Yeah, thank you. Yeah, as a matter of fact, I mean, you didn't mention there were 2900 vehicles sold through the LOI. I think this is really the diversity of our customer base. It tells a lot of how they are comfortable with the model that we're providing to them. They really trust that we have the right solution. Like I've been always saying, it's not only the vehicle, but it's also the service support. We didn't mention that there was a question about what would be the MRO network that we will have. It will be the face of the customer. The UATM also is very important, at least for the scale up, right? So something that we're thinking about. We don't want to substitute only a few.
Speaker Change: We're being very conservative when it comes to the initial scope and those LOIs when it comes to service and support. It's basically maintenance and also the spare parts, what we call flat-out program, but we expect that as we get closer and we get to the conversion of those LOIs, then we'll be able to discuss more depth.
Speaker Change: , and the team that will be managing the scope of the services that go along with the firm order. This is a process that we are right now. I think the priority for us with all of those customers is to get a list of five to six customers.
Speaker Change: It doesn't have to be this year. The priority is always making sure that we have the ecosystem ready. But over the next 12 months, we should be having something about the firm order.
Speaker Change: Got it. Thank you. Okay. Thanks, Sheila. Appreciate it.
Cai von Rumohr: The next question comes from Cai Von Rumohr from Cowan. Please go ahead.
Speaker Change: The next question comes from Cai Von Rumohr from Cowan. Please go ahead.
Cai von Rumohr: Yes, thanks so much. Ed, you said you knew you had the funds to get to 2027. Perhaps, when do you expect to begin getting PDPs on the planes? And secondly, are there any financial requirements on your part or advances that you expect as a result of your MRO agreement?
Speaker Change: Yes, thanks so much. So, Edu, you said, you know, you have the funds to get to 2027. Maybe, when do you expect to begin getting PDPs on the planes?
Eduardo Couto: Yeah, I may start here and maybe Johann can add, but in terms of the PDPs, as Johann mentioned, we are now working very closely with all these LOIs and customers that we have to make sure we select the ones that will be the launch customers, and we can convert those LOIs into firm orders. Those, you know, discussions are happening right now, and we expect to start to implement that in the next 12 months.
Edu: Yeah, I may start here and maybe Johan can add, but...
Johan: In terms of the PDPs, as Johann mentioned, right, we are now working very closely with all these.
Johan: LOIs and customers that we have to make sure we select the ones that will be the launch customers and we can convert those LOIs into firm orders. Those, you know, discussions are happening right now and we expect to start to convert that in the in the next 12 months.
Eduardo Couto: So that will translate into initial deposits, right, and PDPs, additional pre-delivery payments that we're going to receive prior to the delivery of the aircraft. So that will be an extra source of funds for the company in the months and years ahead. We also have, as I mentioned before, advanced discussions for long-term finance, right, for our manufacturing facility in Brazil and even for R&D expenses. So we are feeling very comfortable with our funds, right, not only the equity raise we recently did but, you know, these PDPs and, as I said, this additional long-term finance that we may get. And that gives us, you know, a runway until 2027, as I mentioned.
Johan: So, that will translate into initial deposits, right, and PDPs, additional pre-delivery payments that we're going to receive prior to the delivery of the aircraft, so that will be the next step. Thank you.
Speaker Change: an extra source of funds for the company.
Speaker Change: in the months and years ahead.
Speaker Change: We also have, as I mentioned before, advanced discussions for long-term finance, right, for our manufacturing facility in Brazil, and even for R&D expenses. So we are feeling very comfortable and with our funds, right, not only the equity raise we recently did, but, you know, this...
Speaker Change: PDPs and as I said this additional long-term finance that we may get and that gives us you know a runway until 2027 as I mentioned.
Luis Valentini: Terrific. Thank you. And then Valentini, you know, we're getting closer to getting definition by the FAA and others in terms of what's going to be required to get your design and other designs certified now that we have a little bit more visibility there. Could you comment at all on the difficulty of certifying a tilt rotor, which is what the other guys, most of the other guys have, and a lift cruise design, which seems inherently a little safer in the sense that basically you can fly with the rotors and you can fly with the pusher.
Speaker Change: Terrific, thank you. And then Valentini.
Speaker Change: You know, we're getting closer to get definition by the FAA and others in terms of what's going to be required to get your design and other designs certified. Now that we have a little bit more visibility there,
Speaker Change: Could you comment at all in terms of the difficulty of certifying?
Speaker Change: A tilt rotor, which is what most of the other guys have, and a lift-cruise design, which seems like inherently a little safer in the sense that basically you can fly with the rotors and you can fly with the pusher prop.
Luis Valentini: Yes. Hi Cai.
Kai: Yes, hi Cai, thank you for the question. We, the reason why we went for a lift plus cruise configuration is that we believe
Kai: that configuration
Kai: that has tilting rotors or tilting, you know, mechanisms in general.
Kai: brings complexities in two main fronts. One is certification, as you mentioned, but I'll start with.
Luis Valentini: Thank you for the question. We, the reason why we went for a lift plus cruise configuration is that we believe that configuration, that has tilting rotors or tilting mechanisms in general brings complexities in two main fronts. One is certification, as you mentioned. But I'll start with the other, which is a consistency of operation. By having more systems and more actuation, more sensors, there are more areas and more components, that can become sources of, disruption to the operation of the vehicles in service right so that was one aspect that weighed very heavily and and that comes I think very much from the experience of Embraer with their airplanes into service knowing how important it is that these vehicles have a consistency operation of operation into the hands right and into the fields and so serving the business model of the operator So that was one point.
Kai: The other, which is a consistency of operation. By having more systems and more actuation, more sensors, there are more areas and more components.
Kai: that can become sources of
Kai: disruption to the operation of the vehicles in service, right?
Kai: So, that was one aspect that weighed very heavily, and that comes, I think, very much from the experience of Embraer with their airplanes into service, knowing how important it is that these vehicles have a consistency of operation into the hands, right, and into the fields.
Kai: and so serving the business model of the operators.
Luis Valentini: But going back to the certification, as you asked, we believe that there are complexities in the flight of the vehicle. So, for example, one of the things that we usually do with authorities is to determine what is the most critical condition in flight where you have to show compliance with requirements so that all other conditions are covered, right? So you don't have to do every single, let's say maneuver at every single point of the flight envelope in every single configuration.
Kai: So that was one point, but going back to the certification as you asked.
Kai: We believe that there are complexities in the flight of the vehicle.
Kai: So, for example, one of the things that we usually do with authorities is to determine what is a most critical condition in flight in which you have to show compliance with requirements so that all other conditions are covered, right? So you don't have to do...
Kai: every single let's say maneuver and every single point of the the flight envelope and every single configuration you you sort of have like a define what is a an umbrella of and and and show compliance in these most critical cases.
Luis Valentini: You sort of have to define what an umbrella is and show compliance in these most critical cases. If you have a more complex flight profile with more complex mechanisms, sometimes determining what this most critical condition is more difficult. So this makes your flight test campaign longer, for example, because you cannot take credit for determining what the single condition that you have to show compliance with is, but you have to add other conditions.
Kai: If you have a more complex flight profile,
Kai: with more complex mechanisms.
Kai: Sometimes determining what is this most critical condition is more difficult.
Kai: So this makes your flight test campaign longer, for example, because you can't, cannot take credit of, you know, determining what is the single, you know, condition that you have to show compliance with.
Luis Valentini: You have to discuss this with the authorities. So we believe that the complexity of the flight profile brings more discussion and more uncertainty to the certification path. And so that was the other aspect that weighed in our decision to go to the lift plus cruise configuration.
Kai: But you have to be adding other conditions, you have to be discussing this with the authorities. So, we believe...
Kai: that the complexity of the flight profile
Kai: brings also more discussion and more uncertainty to the certification path and so that was the other aspect that weighed in our decision for going to the lift plus cruise configuration.
Cai von Rumohr: Terrific. Thank you very much. And then, Johann, when you put it all together, do you have a rough target? Obviously, you can't know exactly, but a rough target in terms of when you might achieve certification and when you might see entry into service?
Kai: Terrific. Thank you very much. And then, Johann, when you put it all together, do you have a rough target? Obviously, you can't know exactly, but a rough target in terms of when you might achieve certification and when you might see entry into service?
Johann Bordais: Thank you. Thank you, Cai.
Johann: Thank you. Thank you, Cai. Yes, been well, been known.
Johann Bordais: It's been a well-known 11 months, almost a year on the job. So yeah, getting a good grasp of the challenges that we have. As we mentioned from the beginning, and I'm going back to 2017, the schedule is very challenging, right, for certification and intern service. But we remain confident that we can succeed. And simply because we are, first of all, differentiating when it comes to a vast agronomical experience, and we have access to Embraer resources.
Speaker Change: 11 months, almost a year on the job, so yeah, getting a good grasp of...
Johann: of the challenges that we have. As we mentioned from the beginning, and I'm going back to 2017, the schedule is...
Speaker Change: It's very challenging, right, of certification into the service, but we remain confident that we can, you know, be succeeded. And simply because, you know, we're, first of all, we're differentiating when it comes to the vast agronomical experience, and we have access of the amber area, right, resources.
Johann Bordais: We're using the proven method. I think Valentini's explained, you know, in detail, how cost-effective and successful the certification process is, and also the preparation for the intern to service that we're bringing in the expertise from Embraer, but we're also building our own expertise from all the con ops that we've done with our customers. So service and support, air traffic management, and training is something we're familiar with. The third one that would, you know, say that is an advantage, or let's say that we're making good progress, and that's evidenced by the full-scale prototype we just announced.
Speaker Change: We're using the proven method. I think, you know, Valentini's explained, you know, in detail, you know, how cost-effective and successful the certification process and also the preparation for the internet service.
Speaker Change: that we're bringing in the expertise from Embraer, but also we're building our own expertise from all the con ops that we've done with our customers. So service and support, air traffic management, the training is something we're familiar with.
Speaker Change: The third one that we, you know, say that is, you know, an advantage or let's say that we're making good progress and it's evidenced by the full-scale prototype we just announced and then we've also done multiple wind tunnel tests.
Johann Bordais: And then we'll also have done multiple wind tunnel tests. So, yeah, so, you know, I think we're at the point where there are the main challenges now with, you know, few suppliers. We're right now in a joint definition phase. You know, we're always, and since the very beginning for everyone creating this segment, all the OEMs, it's all this, you know, pushing the limits and looking at the size, the weight, and the power, and always the trade-off that you get a look at.
Speaker Change: So, yes, I think we're at the point where there's a main challenge now with a few suppliers. We're right now in a joint definition phase. It's always, and since the very beginning, for everyone creating this segment, all the OEM, it's all this.
Speaker Change: You know, pushing the limits and looking on the size, the weight, and the power, and always the trade-off that you get a look at. We want to make sure that we have a robust and reliable vehicle that will also be profitable for the operation of our customers.
Johann Bordais: We want to have, make sure that we have a robust and reliable vehicle that will also be profitable for the operation of our customers. So there, like I said, there are many challenges, but all the good reasons I just mentioned, Maxis believes that, you know, we're going to be, you know, we're on a 2026 entry into service.
Speaker Change: So there are, like I said, there are many challenges, but all the good reasons I just mentioned, you know, Mexicans believe that, you know, we're going to be, you know, we're on the 2026 Internet of Service.
Cai von Rumohr: Okay, great. Thank you so much.
Speaker Change: Okay, great. Thank you so much.
Lucio Aldworth: This concludes our question and answer session. I would like to turn the conference back over to Lucio Aldworth for any closing remarks.
Kyle: The next one, Cai.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Lucio Aldworth for any closing remarks.
Lucio Aldworth: Thanks Jason and thanks everyone who joined the call today. As you can see, we accomplished several things.
Lucio Aldworth: Thanks Jason and thanks everyone who joined the call today. As you can see we accomplished several important milestones.
Lucio Aldworth: So we're going to continue updating you on our progress throughout the next few quarters, and we look forward to meeting you at the upcoming events we're going to attend. As always, if you have any questions, please don't hesitate to reach out to me or to my team. Thanks, and have a good day.
Lucio Aldworth: This meeting is no longer being transcribed. This meeting is no longer being recorded. So we're going to continue updating you on our progress throughout the next few quarters, and we look forward to meeting you in the upcoming events we're going to attend. As always, if you have any questions, please don't hesitate to reach out to me or to my team.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Thanks, and have a good day.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.