Q3 2024 Eve Holding Inc Earnings Call
Good day and welcome to the East Air Mobility third quarter 'twenty 'twenty four earnings conference call.
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Speaker Change: I would now like to turn the conference over to Lucio Aldworth head of Investor Relations. Please go ahead.
Lucio Aldworth: Thank you operator good morning.
Speaker Change: Juan This is Luca Waldorf director of Investor Relations.
Lucio Aldworth: And then I wanted to welcome everyone towards third quarter 2020 earnings Conference call.
Speaker Change: Youll Onboarding, yes, so it's a lot of the Goldberg.
Lucio Aldworth: On the call today.
Lucio Aldworth: After their prepared remarks, we will open the call for questions at which point.
Lucio Aldworth: Our Chief Technical Officer will also join us for more technical questions.
Lucio Aldworth: With a few slides and additional features that show our achievements in the quarter as well as the testing phase of a full scale prototype the bank is on our side.
But he ever Gilead dotcom, so please feel free to download it and follow along.
Lucio Aldworth: Let me just start by saying that this presentation includes forward looking statements or statements about events or circumstances that have not yet occurred.
Lastly, based on our current expectations and projections about future events.
Lucio Aldworth: Financial trillions affecting our business.
Lucio Aldworth: Future financial performance.
Lucio Aldworth: These statements are subject to risks uncertainties and assumptions, including among other things.
Lucio Aldworth: Generic economic political and business conditions in Brazil and in other markets.
Lucio Aldworth: The words believe may.
Lucio Aldworth: Estimates continues anticipates intends.
Lucio Aldworth: And similar words are intended to identify forward looking statements and we undertake no obligation to update publicly or revise any forward looking statements because of new information future events or other factors with that.
Lucio Aldworth: 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.
Lucio Aldworth: With that I'll now turn the presentation over to our.
Lucio Aldworth: Johan.
Johan: Thanks, Luciano good morning, everyone and thank you for joining the call today.
Johan: We had an eventful third quarter, we continued to advance development of our program and reached important milestones.
Lucio Aldworth: Reminder, we completely.
Lucio Aldworth: Assembly of the prototype and rolled it out.
Lucio Aldworth: For the first time back in July.
Lucio Aldworth: And we have started to test.
Lucio Aldworth: The vehicle ever since.
Lucio Aldworth: This is a full scale engineering prototype with no cabinet quite a bit.
Lucio Aldworth: It hasn't made at Schneider composite material that we'll be piloting it remotely and the command and truck and controlled drug.
Lucio Aldworth: Prototype will be used to validate and improve the accuracy of previous subscale and computer models.
Lucio Aldworth: And also will serve to build on the several rigs that we have for different individual components.
Lucio Aldworth: We have installed the batteries and already performed various test, which we'll be talking about later on in this presentation and we're now prepping up for the broader type two let's start with flight campaign.
Lucio Aldworth: We expect to start receiving the lift motors by next month in December so the flag to US can start early next year.
Lucio Aldworth: We will initially we will initially performed Albert flights tied up to the ground and gradually increase power in height.
Lucio Aldworth: Then we will move to the partial transition. This is when we engage the pusher without fully disengaging blitzer's continue controlling the aircrafts out recently and only then we will move to the full transition flights.
Lucio Aldworth: Another important milestone was the publishing of the base of certification by ANAC sealed stability in aviation agency, which establishes the standards <unk> requirement, we will have to respect in order to fly commercially.
Lucio Aldworth: And Brian I'll do yesterday published as far in the United States.
Lucio Aldworth: You as a supportive to the industry.
Lucio Aldworth: And because we are working closely with Boeing buying agency, we continue working in a constructive path to certification.
Lucio Aldworth: Now on the services side, we launched the eats take care, which is fully integrated portfolio that includes all services for maintenance logistics of spare parts flight hour program to pilot and mechanics training and customer support.
Lucio Aldworth: Last but not least we are conducting a successful five day simulation of vector our air traffic coordination software in Sao Paulo with a very positive feedback from repo a partner and customer repo also indicated an interest in the use of vector flight operations for both the Beatles.
Lucio Aldworth: But also their fleet of <unk>.
Lucio Aldworth: Now on to the next slide.
Lucio Aldworth: Fencing with several best in our engineering prototypes. These are listed here.
Lucio Aldworth: We completed the battery installation and because of our prototype is removable carbon fiber panels. This isn't an easy process.
Lucio Aldworth: The panels are easily detachable to get engineering access to whatever park needed for the maintenance or any services.
Lucio Aldworth: And of course, the panels and can be easily readjusted reinstall.
Lucio Aldworth: So with a battery on we conducted high and low voltage is desk to make sure that there is no linkage in the system.
Lucio Aldworth: We also executed successfully the thermal runaway containment debt and our energy packed and the goal here was to demonstrate the containment.
Lucio Aldworth: Third away.
Lucio Aldworth: Terminal thrown away at it.
Lucio Aldworth: As I mentioned before we expect to receive the Lithia Motors and December.
Lucio Aldworth: Currently being assembled and tested.
Lucio Aldworth: Include the monitors himself and the electronics components that will control each other's motors thrust.
Lucio Aldworth: Moreover, we are conducting a zone right.
Lucio Aldworth: <unk> test in the tool boom section.
Lucio Aldworth: With different blend configuration in different shapes and maximize the performance equation that is the trust first of all it's the energy consumption and vibration and also the noise emissions.
Lucio Aldworth: We have also integrated the multiple system of <unk>.
Lucio Aldworth: Make sure that all operate they all operate the mortgage other smoothly.
Lucio Aldworth: And lastly, we integrated all of the command and control truck to the aircrafts.
Lucio Aldworth: Drug will house, the pilots and the team of engineers, who.
Lucio Aldworth: We will measure and monitor several operating metrics during the flight.
Lucio Aldworth: Truck is designed to track the E V tolls during that first flight and is equipped with several sensors and cameras strategically placed throughout the foozle ACH or real time flight performance data for visual and diagnostic.
Lucio Aldworth: The goal is to guarantee that all systems are working perfectly amongst each other.
Lucio Aldworth: On the following slide it shows some cameras I would just talked about and also the outside view of the truck I believe on them on their earning calls, which we published this morning, and we're also showing the interior of the truck.
Lucio Aldworth: Now moving to the next slide we are glad to see the certification environment is taking shape as well the Brazilian civil Aviation Authority ANAC, just published the basis of certification for <unk> in the country.
Lucio Aldworth: This is an important milestone for the EBIT will industry and we will and this will allow us to progress towards the <unk> certification and seek validation with SMA in the U S. In parallel the SBA issued the special Federal Air regulations as far the details.
Lucio Aldworth: Final rules of advanced mobility and covers also the Vitol and.
Lucio Aldworth: In general.
Lucio Aldworth: We view that this announcement and are supportive of the industry and we're still analyzing the 880 pages technical document to evaluate the impact on our aircraft development and also operations.
Lucio Aldworth: And that basis of certification establishes the first set of <unk>.
Lucio Aldworth: Witness criterias for EV toll in Brazil, and follows eats application for T. C are back in 2022. It is a standard process for developing a new certification basis and an important milestone in the project.
Lucio Aldworth: Ive asked progressed in E V told developments so far in 2020 board of obligation of certification basis by the Brazilian Aviation Authority and October is an important milestone is to establish the essential guidelines 40, or a veto certification activities in the coming years, He's can nellix things to do.
Lucio Aldworth: Definitions of the means of compliance by the Brazilian authorities.
Lucio Aldworth: And validation strategy with the FAA.
Lucio Aldworth: That we will guide further detailing the vehicle and the flight test campaign.
Lucio Aldworth: Our return on path to certification closed the first flight.
Lucio Aldworth: All of our engineering prototyping in early 2025, followed by several flight test for knowledge gain and initiated the assembly of our conforming vehicles next year.
Lucio Aldworth: With the first confirming prototypes already we expect to start our final development and certification and flight test campaign in 2026, which will normally take 12 to 18 months to be completely leading to an expected tax certificate issuance in 'twenty 'twenty silk. We believe that this is a realistic.
Lucio Aldworth: And achievable timeline based on our experience from previous programs.
Lucio Aldworth: Now moving to the next slide.
Lucio Aldworth: We show here some of the highlights of our recent announcement on the customer services part of the business, we especially announced E daycare and all included portfolio of services and support to our customers to aim to increase the <unk> availability and also reduce operating costs.
Lucio Aldworth: Care include services, such as health monitoring to run predictive maintenance and schedule EBIT told downtime.
Lucio Aldworth: Maintenance schedule, which will allow us to optimize the inventory management of components.
Lucio Aldworth: The system integrates operators.
Lucio Aldworth: Flyers and also services centers.
Lucio Aldworth: As a user interface.
Lucio Aldworth: We are also going to offer them advanced training for our pilots maintenance crew and also ground handling personnel that will be powered by the JV. The joint venture between Embraer and E training services called Etfs. This is a long standing and successful partnership with excellent and training for <unk>.
Lucio Aldworth: Global operations since 2007.
Lucio Aldworth: I believe the date here in factor showcases our holistic view of the UAE market since the beginning and how it adds value to our customers.
Lucio Aldworth: The industry skills and I have no doubt that this is one of the <unk> most distinguished Differentiators, we look at you in a complete way.
Lucio Aldworth: On the next slide for some additional details.
Lucio Aldworth: Our latest vector stimulation in Sao Paulo, we run a five day real life exercise and one of the busiest helicopter market in the world with our partner and customer repo, we used a vector to shadow and monitor the total of 45 helicopters fly.
Lucio Aldworth: Carries 100 paying passengers and that average is eight to 10 minutes. This is precisely the U S market that were targeting the.
Lucio Aldworth: The exercise included the operations in various scenarios, including delays or parts on departure or on destination aerospace whether it constrained the inflight deviation to alternate lending location and more.
Lucio Aldworth: And the goal was to validate the algorithm and protocols that are necessary for the EBIT of conduct the safe and reliable operations and high utilization used case.
Lucio Aldworth: This is the second exercise that we're doing the first one was U K about a year ago.
Speaker Change: Now onto the slide 10, our traditional the total preorder backlog visibility, where we stand now with approximately 2900 aircraft for a total value of $14 $4 billion based on the list price.
Lucio Aldworth: These are the non binding letters of intent for 30 different customers spread over 13 countries in different businesses.
Lucio Aldworth: We also have LOI for a vector from 16 customers and secured contracts with 15 different customers for our tech care suite of aftermarket products and services. This could bring up to $1 $6 billion in revenues two ive over the first few years of operation now.
Speaker Change: Now I'd like to invite our CFO to go over our financial along with the milestone checklist.
Speaker Change: Johan now move to slide nine I once you start to re file our most recent liquidity events, we have been very successful to attract new capital at ease to continue to fund our development in total we raised $236 million since July.
Lucio Aldworth: Six of debt and equity we believe that this balanced capital structure will maximize value for our shareholders. Our pro forma liquidity of 445 million in the third.
Third quarter 2024, including the just transition and bank loans is equivalent to three years of <unk> current cash consumption, which is above our peers and gives us confidence to advance the program to certification.
Lucio Aldworth: Now that's like can you give us a pre operational company grid financials, reflecting mostly the costs associated with our program development.
Speaker Change: I want to highlight some of our numbers Ive invested 32 million during the third quarter.
Lucio Aldworth: Developing as R&D activities continue to speed up with more head counts and high engagement from suppliers.
We also deployed 90 million in SG&A during the quarter and that reflects a bigger workforce, we have been controlling corporate expenses to focus our resources on the EBITA development.
Lucio Aldworth: Higher development expenses in the third quarter were partially offset by interest revenues of our invested cash with tier one banks in the mark to market gains of our warrants, resulting in a net loss of 36 million in the third quarter 2024.
Speaker Change: Moving to cash flow, our operations consumed 34 million in the quarter and 101 million in the first nine months of 2024 that is in line with our guidance.
It's important to highlight that we drew half of our cash consumption or around $50 million from our preapproved credit lines with the Brazilian development Bank <unk>.
Discontinued preserving our cash position.
Speaker Change: We ended up the third quarter with $280 million in cash, which is 73 million more than the previous quarter due to the new equity raised in July.
Speaker Change: We still have approximately 25 million available from our R&D spend by Logan, resulting on a total liquidity of 305, neither which adding with both the newest transportation finance and the bank lower recently announced in October would increase our total current resources to 445 million.
Speaker Change: Models at.
Speaker Change: At Slide 11, we remain on track to deliver our milestones for 2024, we presented our assembled EBIDTA in July and he started several tests are ahead of our first flight.
Speaker Change: L. A knackered published the basis of certification as Johan already described.
Speaker Change: And we secured the manufacturing finance for our Brazilian factor in October.
Speaker Change: Have consumed 101 million so far this year and expect to reach our guidance of 130 to 170 meet any cash in 2024.
Speaker Change: The higher Brazilian currency versus the U S. Dollar has been helping us to stay at the low end of our guidance as we have a lot of development expenses in 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: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Hello.
Speaker Change: First question comes from Savi <unk> with Raymond James. Please go ahead.
Savi: Hey, good morning, everyone.
Savi: Yeah I appreciate all the kind of color around what's been accomplished so far and it looks like maybe kind of your updated outlook and trends that tight certification may have slipped a very little bit.
Savi: And clean and maybe from the end of 2006 to 2027, but I was curious what was driving that and then just any implications for the timing of some of the revenue that could come in at like PDP and kind of other revenue sources that could come in before type certification.
Speaker Change: Okay.
Speaker Change: Hi, Savi, yes. Thank you so much for your question.
Speaker Change: <unk> speaking here.
As we mentioned during the interpretation I mean, we made some significant progress in the <unk> development this year, including the steady progress of a full scale prototype as we showed you know several pictures several design advances with our critical suppliers. We just also coming out of a phase which has joined definitely definition phase with <unk>.
Speaker Change: Suppliers that in all our CS and test each of the component, but also the integration of those components together, we went through a multiple wind tunnel tests and always a challenging technology as we know and at the end of the day, we want to bring the best.
Speaker Change: The best value for our customers so.
Our goal is not to be we're not focus to be the first one you know for the last 13 months that I've been on the job that's what I keep saying I mean, we are now focused on to be the first one we are focused to be the right choice for our customers and the goal is to introduce a matured in a reliable product that will be capable of meeting and exceeding also had expectation from the customer so giving all of that.
Speaker Change: The path to certification that includes the first flight of our engineering prototype that we've been mentioning since we rolled out last year. This year, sorry in July and the Farnborough.
Speaker Change: And of course, you know what we'll have to go for the for the first like but it's starting to get ready for the first light only it.
Speaker Change: It will be good for everyone. We that's why we want but we want to be ready also for all the test flight campaign right and with this it.
Speaker Change: It will be you know in early 'twenty five will be the first flight of the.
Speaker Change: Engineering prototype.
And then of course, we want to gain the knowledge and we're going to start also to assemble the.
The initial conforming vehicle.
Speaker Change: Once we have the confirming prototype ready then we will start the flight test campaign of the conforming prototype in 2026.
We know by experience that we've done this at Embraer many many times.
Speaker Change: It takes about 12 to 18 months to be completed and this will lead us to a certification in 2027, so as you can see.
Personally I don't I see as a normal update of a very innovative and challenging program.
Speaker Change: Given that now we have also a better visibility with the next steps.
Speaker Change: In terms of.
Speaker Change: The Ptb's Savi as I mentioned it to do here.
We are super engaged with our customers they remain super supportive of Eve, they're excited right. Because we are advancing we are breaching them also for these developing we're making sure that we are making the right vehicle right that the customers really want to operate.
Speaker Change: And of course, as we advance on the on those conversations and those negotiations we expect to start to firm. The LOI is right. We have almost 3000 loi's. We have a lot of customers engage we believe we're going to start to firm.
The LOI is very soon and once we affirmed the orders of course, there will be bigger downpayments theres, a PDP schedule so anything.
Speaker Change: All normal and nothing has changed we remain excited and we're moving forward.
Speaker Change: I appreciate the color and if I might just on the 80 to 90 million and the production facility.
How should we think about like the timing of that Capex like Jerry I recognize that you had the financing for it. So that's not a concern, but just curious about the timing of that and what that means for I know in the past you said you know cash burn steps up next year, but not a big step ups that I just kind of curious if you have any early thoughts into kind of that cash burn is violence.
Speaker Change: Hey, Tony Thanks.
Yeah, we secured the finance right for our Brazilian facility.
It's around $90 million right. It's a very long term finance, we were talking about 16 years. There is a four year Grace periods, where we don't pay any interest in nor amortizations. So that's really the type of finance that fits very well with our with our company and our profile.
Speaker Change: The peak of the investments on the facility, they're going to happen in 2026, there will be investments next year, so probably somewhere around 20 million, but the peak is 2026.
Speaker Change: As we get closer to <unk>.
Speaker Change: Certification and entry into service, so that's kind of the profile.
And so we should kind of expect like a similar maybe a little bit more step up on E. R. M.
D as well for next year. So those are the two things that will go.
Speaker Change: This step up.
Yes. This year as I mentioned, we are burning around 130 to 140.
Next year it may go up a little.
Speaker Change: 26 kind of flat versus 25.
That's pretty much where we may end up.
Helpful. Thank you.
Speaker Change: Okay.
The next question comes from Marcelo Motta with Jpmorgan. Please go ahead.
Hi, everyone. Good morning, two questions one on our side as well just to follow up on the coal power plant you know your comment on the <unk>. You know you have perhaps a module one module to module when we think about.
The topics the baby Ray's comment about you know 80 to 90 <unk>. This is like a what size exactly the 120 or you know can you go up to the 480 and then you know for the additional modules is that is the case what is the the additional capex there and then finally second question only.
Speaker Change: Quiddity I mean of course, you'll have a comfortable position for the next three years, but just wondering on hold given what's happened to some peers in the industry. If you think about the trend even more your liquidity in the short term you know just to to have a bigger cushion of cash if necessary or how are you guys thinking about channel Nu.
Speaker Change: Credit facilities or how should we think about that thank you.
Speaker Change: Okay. Thanks.
Speaker Change: Thanks Marcello a.
Speaker Change: First regarding Talbot that right hour.
EBITA facility.
Speaker Change: It's.
D. D. This 80 to 90 million that we got it.
Most of the investment that we're going to be doing that with this 80 to 90 million and we can get probably half of the capacity 240 <unk> dos.
Speaker Change: Do you get that 480, right, which would be the full capacity. We may indeed, I think we need to add an extra shift and also put some tooling extra machines there may be another.
Speaker Change: 30 million or 40, you meet them, but the bulk of the investment and half of the capacity 240, we already gap with the finance we have that gives us a lot of comfort right. So as we said at the beginning we have this project together with Embraer, that's very efficient in terms of capital investment right. We we <unk>.
The engineers from Embraer, we only pay for them when they are working for US once the work is done they go back to the <unk> on the sterilization, we are using existing fulfill adobe Embraer will just buy the tool and the machines. It's a very efficient right. So that's the reason we spent 80 90 in some of the competitors are spending hundreds of millions.
Speaker Change: Only on the industrialization.
Speaker Change: In terms of daily creativity, we're feeling super goods right as I mentioned in my presentation, we closed the quarter with $450 million Illiquidity is our it's our highest liquidity ever right Ive never had so much cash on its hands.
Speaker Change: We as I said, we control costs very seriously right and we really focus our resources on the development that gives US you know these three years almost three years of runaway, which is the longest runway in terms of cash consumption in the market among our peers. So we're feeling good we have money for the years ahead.
Speaker Change: We're not planning any new.
Speaker Change: New capital raises but we are always evaluating but at this point nothing is on the table we're not looking.
Speaker Change: New funding in the short term.
Speaker Change: Yeah.
Speaker Change: Perfect. Thank you very much.
Speaker Change: The next question comes from Andres Sheppard with Cantor Fitzgerald. Please go ahead.
Andres Sheppard: Hey, good morning, everyone. Congratulations on the quarter and thanks for taking our question.
Speaker Change: I wanted to maybe touch on the Fr regulations. So you know you mentioned that obviously this is supportive.
Speaker Change: I'm curious what did you see as the number one or number two most of <unk>.
Speaker Change: Supportive regulation as it pertains to eve or the EV totally different you know what what was it that you thought was most significant there. Thank you.
Yes. Good morning, Andreas This is Louis spelling Tina and thank you for the question.
Speaker Change: I think first of all it's important for us to have the rules clear right. So we were with the draft of the S far for around a year and it's very hard to develop the project and it's the same for US as is for the rest of the industry. It's very hard to move ahead at the pace that we are going without having.
Speaker Change: Clarity on what the rules will be so so having the final document out is really good for us to really have the rules in the hand and be able to discuss with the authorities as well as setting up our operation our vehicle operation with the operators that they will have them.
Speaker Change: Specifically I can mentioned for example, the issue about the training that in the original.
Speaker Change: Draft of the S. Four was mentioned that would be required to have flight hours.
With an instructor onboard and that would require the vehicles to have to command positions.
Speaker Change: And the structure could be occupying at the same time that the.
Speaker Change: The pilot that is in training was occupying.
And that would be for our vehicle is for others in the industry.
Speaker Change: Unnecessary necessity of creating a specific vehicle for training since our vehicle has only one command posts for pilot.
On the newer version on the final version of the S. Far it's stated still that you need flight hours for training, but those are not required to be made in duo controls aircraft.
Speaker Change: The pilot can be trained in the simulator and then can go to the vehicle with an observer onboard but this observer does not necessarily have to have the controls and so that was a simplification that was made we believe that it was the correct move this was something that the industry as they are.
Speaker Change: The a to evolve too so we were specifically satisfied with this one.
Speaker Change: It's now a matter of creating a training.
Speaker Change: Training program together with the stimulation devices that will allow for the proficiency of the pilot, but we believe this is a better path and what's under the draft of the document.
Got it that's very helpful. I appreciate all that context, and maybe just as a quick.
Speaker Change: Follow up with a with certification now expected in 2027.
Speaker Change: I'm just trying to understand what is driving that and move into 2027.
Speaker Change: Understanding that the test flights, we'll will ramp up in 12 to 18 months, but from the regulatory perspective, what are you seeing from from <unk> and from the FAA that.
Speaker Change: You know that makes it seem like the certification is more realistic.
Speaker Change: 27, thank you.
Speaker Change: Yes.
Speaker Change: Johan mentioned earlier, we believe that this is a timeline.
Speaker Change: It fits our development.
Speaker Change: This together with the publishing of the certification basis last week by a Mac.
And the flight test program as Johan mentioned, so the first flight of the engineering prototype in the beginning of next year and then our confirming prototypes in 2026 and.
Speaker Change: And we believe that that's a robust timeline that we can follow up considering all the challenges and the novelties that there is that there are in this project right. So Johann mentioned, we build very much on the experience of Embraer in creating these timelines and creating the process for the development of the vehicle, but we also have.
New technology that is being brought in a new requirements. We've just mentioned right. The us far in addition to the certification basis. So all of these together.
Speaker Change: For this timeline that we just published a more realistic timeline and argue.
Got it thanks again, congrats on the quarter I'll pass it on thank you.
Speaker Change: Thank you thanks Andre.
Speaker Change: The next question comes from Sheila <unk> with Jefferies. Please go ahead.
Hi, how are you congrats on the quarter guys and then just maybe just wanted to fine tune that a little of that because there's been a lot thrown out there.
Speaker Change: And I appreciate the additional funding.
When we think about the flight test program and the final development.
Speaker Change: Kicking off in 2026.
Speaker Change: That mean.
With another 12 to 18 months to complete it does that mean Aif has pushed out about.
A year and a half is that fair to say and Thats whats driving the additional funding.
Speaker Change: Oh. Thank you. Thank you for the question the comment but no no. It's not 12 to 18 months no pushout no. It's really you know up from 26 to 27, we're not giving you know in the quarter.
Speaker Change: <unk>.
Speaker Change: At this stage, but we have to count the 27, and it's not again, it's up to 12 months right.
Pushback right, that's what we're looking at.
Speaker Change: Okay.
And then just on the otherwise obviously, we don't expect that to really move antero.
You've got closer to Eas, but theyre flat from last quarter at 2900 aircraft, but services revenues picking up up 30% Q over Q to one 6 billion in the background. So maybe if you could just talk about how youre selling that to your customers and how we should.
Speaker Change: Think about that shift in customer conversations and detailed.
Speaker Change: Lifetime revenue model.
Speaker Change: Yeah.
The scale of sorry, we had a just a little above.
Speaker Change: Probably.
Speaker Change: Just to cut up for 10 seconds. So a.
Speaker Change: Can you just maybe summarize the question I'm sorry.
Speaker Change: Sure sure L. O I's are basically flat at 2900 aircraft in the backlog of 14 billion, but you've seen revenue momentum in the services side of the business about 30% Q over Q and just curious how youre selling that.
Speaker Change: Or should we see services backlog start picking up Marcel.
Speaker Change: Yeah, Okay. Thank you sorry, okay.
Speaker Change: In fact, Greg where 2900 aircraft or the LOI. This a strategy that we've been having for the last four years is really going around the world and showing our solution. Our solution is not only in since the very beginning we say this is not only the vehicle, but we know that guaranteeing the availability of the aircraft, but also most.
Speaker Change: Most optimized operating cost will be the key of success, especially at the beginning right. We really wanted to focus on increasing service few Cds Mecca.
Speaker Change: <unk> work make it work for the operator, and then we can replicate as much as possible and then of course for our portfolio that we're creating that we've been creating as the biggest one and when it comes to an end.
Speaker Change: Again, there was a LOI of course, but the customers are telling US look you know you've got a good solution I know youre not thinking only about the.
Speaker Change: Thinking about only the vehicle, but also to serve and support which is very it's paramount for our customers. They understand it's a it's a new aircraft, it's a new ecosystem that we're working on.
Speaker Change: And.
Speaker Change: They want to make sure that were backed up by.
Speaker Change: Any service provider, but definitely by the OEM Who's got what we call the skin in the game they really want everyone.
Wants to make sure that the operation will be it will be working so so yes, LOI and plus the service and support is a big component of our solution and this is the reason why now one thing that we've been working hard as the wood that we announced recently the launch of the Tech care, which is really the all in one services platform.
Speaker Change: What's exactly the customer had been asking us for strongly based on the <unk> experience.
Speaker Change: One.
Speaker Change: Flight hour program or whatever it's going to be designed but you know what.
Speaker Change: With Ala Carte services that fits the operation of the customers and also we keep working hard just on the ecosystem side and we launched a vector as you know are uhm and last week, we were and Sao Paulo with repo and we were shadowy their operation where the helicopter more than.
Speaker Change: 45 fly that we've done in a couple of days and the intent there was to demonstrate that our software made for the operator not only for <unk>, but also the helicopter operation will allow us to save you know.
Speaker Change: The organizational time be more optimized weather condition can impact the operation and how you anticipate as much as possible. So this is going to be also very important for the operation of the EBITDA when we launched them.
Speaker Change: Thank you.
The next question comes from Cai von rumor with TD Cowen. Please go ahead.
Yes, thank you so much and.
Speaker Change: So congratulations on the S. Four.
Speaker Change: So I've read the thing can you go through the diversion requirements slight diversion requirements, whether those are totally in line because they looked a little confusing.
Speaker Change: Any hurdle requirements that are spelled out there.
Speaker Change: Yeah.
Speaker Change: Yes, good morning, so on the energy reserves.
Speaker Change: We believe that it's clear.
Speaker Change: A path that the FAA has been putting out which is to be very.
Speaker Change: Very in line with what is in operation today. So we see that the FAA very careful in building what is today valid and what's working.
Speaker Change: Of course, adapting where it's necessary for the ebitdas, but very much trying to build on the basis that is operational today.
Speaker Change: And I mentioned this because it's.
Speaker Change: Specifically says that if the VITAS can land vertically at any moment during the route then they can use the reserves that are today and used for helicopters. So 20 minutes for our VFR flights and 30 minutes for Ifr.
Speaker Change: It also states.
Speaker Change: But if you have.
Speaker Change: The operators out of the 135 permit then you can have they can have a proved routes.
Not necessarily use the 20 minutes, but use whatever is necessary to land at the predetermined landing zones on that specifically approved route. So we believe that this was a good arrangement in the sense that it builds on something that already exists and it works today in aviation, but also leaves a door.
Speaker Change: <unk>.
Speaker Change: For operators to not use the general 20 minute rule.
Speaker Change: And use something specific if they have the approved route. So that's why we believe that is the best way to go. So you don't have to have.
Speaker Change: Excess energy.
Speaker Change: Left in the battery for the General 20 minutes Reserve you can really have a more tailored and more adjusted reserve for the routes that youll be operator. So this is something that the operators will have to do of course, we can support them and improving the roads.
Speaker Change: And we have the experience of Embraer in doing that but this is going to be something that they can do and again that that will make them.
Speaker Change: More fit in terms of their energy use to the routes, where there would be operating with respect to the Verde ports.
Speaker Change: I don't see any major points MBS far at this moment that changes our point of view and the infrastructure on the ground.
Speaker Change: So we believe that this.
Speaker Change: The energy reserve as it's stated we work with that with the type of reports that we are expecting to see.
Speaker Change: Terrific and then on the issue of service at one point you were going to.
Speaker Change: Make available service to EV tools as your competitors, particularly I believe archer. So so where are you in that process and secondly, as you think about the service opportunity.
Speaker Change: Who are the people, who you view as potential competitors if any.
Speaker Change: Alright. Thanks for the question, yes, Indeed, we have been discussing with other EV tall, but through the customers are really the focus here is to make sure that we have the first operation.
Speaker Change: With our customers and working on the intra service. We also understand that a particular customer can elect.
Speaker Change: Various OEM bright for their operation to be complementary right, depending on the performance of the veto.
So that's something that we entertain and that we are always willing to discuss that's what we've been doing in deal with Archer, but we're also doing well.
Speaker Change: When requested by our customers with.
With other customers, but with other OEM.
We fully understand that we are creating an industry. This is a novelty so.
Speaker Change: We understand also that the market there will be big enough. So that we have several OEM and we.
Speaker Change: We want to create this industry and especially on the charging their base for example.
We are very in favor or having a common standard when it comes to.
Speaker Change: Recharging device for an example, and just gave us much as capillarity of our power grid and the possibility to really get the veto lounge and ramp up as much as possible. So this is something that we're looking at them, we keep having discussion with our other.
Speaker Change: Other Oems indeed.
Speaker Change: And lastly, I mean are you.
Speaker Change: The only guy kind of with this major focus on service obviously other.
We're going to support their own vehicles, but are you. The only one who is sort of trading this broader approach toward.
Speaker Change: Looking at.
Speaker Change: At servicing competitor vehicles.
Speaker Change: I think it was the only one that's been talking about it since the very beginning as the whole industry is moving forward and eventually we'll get the certification that we pass that hype about the prototype flying around.
Speaker Change: I think it's a it's natural and now our customers are the one also asking well how's the readiness the readiness of the VA.
The ecosystem, so so more and more the industry, but also the market or any one involving the AAM is thinking about what's going to be real clean look the enter into service and this is why we were ready with the back of obviously of Embraer and and all the customer support and services experienced for the last 55 years.
Speaker Change: So I mean, you got to the point, where it will also have agreements with our suppliers, which is not only for the production of prototypes order confirming prototype or their production, but it's also to ensure that we have the service and support operation ready. So this is something that we believe it's on our DNA. One thing is to talk about it the <unk>.
Other is to get ready for it and know what it takes to really have a reliable reliable operation on a day to day. So I understand that <unk> has the DNA for the customer support and services and it's going to make a difference.
Speaker Change: Very soon very soon at the entry into service.
Speaker Change: Terrific. Thank you very much.
Speaker Change: Thank you alright. Thank you. Thank you.
Speaker Change: The next question comes from Austin Moeller with Canaccord. Please go ahead.
Austin Moeller: Hi, Good morning, Johan and you do this is my first question here on the S. Far does the 20 minutes of battery reserve for flight required by the FDA, which was less than the 30 minutes expected a benefit the Tam and potential routes for your aircraft in the U S.
Speaker Change: So this is Louis Burlington so.
About 20 minutes.
Speaker Change: It's it's firstly, it's only applicable in the U S rates. So other authorities for example.
Speaker Change: And even <unk> in Brazil are looking at different requirements, but.
Speaker Change: We believe that for the urban mobility mission, which is our focus the 20 minutes are not necessary I think that the 20 minutes my opinion in our opinion here at <unk> is that the 20 minutes and the concept of having a general number.
Speaker Change: It's time for our reserves is more applicable when you have let's say a less structured operation. When you are flying and distant areas. For example, where you don't know where lending sites will be available in our case with the urban mobility missions or sightseeing emissions for example that we are prioritizing.
Speaker Change: You will have a more well known environment, where youll be flying and that's why I mentioned the possibility of approving routes the operators doing that which then will make you you.
Use pre determined landing zones and not use the 20 minutes. So you don't have to keep that much energy on the battery. So for you to have a reference our our whole mission today are expected to last approximately 20 minutes right. So it's not necessary to have another full mission of energy and the.
Battery you can use these pre determined areas and I'm, giving just a reference of the time the duration of each mission right. So of course, each one will have a different duration, but just to have a feel for how much 20 minutes. So that's why we think that again for the urban mobility mission, which is our focus it's more reasonable to you.
Speaker Change: <unk>.
They are preapproved routes and the predetermined landing zones, then to 20 minutes. So we think that makes more sense.
Speaker Change: Great and just a follow up have you had any new conversations with potential customers in the last couple of weeks after orders coming over to your book now that Theres been a recent shake out among competitors.
Speaker Change: Thanks Austin.
Speaker Change: Always.
Speaker Change: Discussing we have we're flushing out the R.
Speaker Change: Our pipeline on a regular basis, we announced also the rigor of our new CTO and she's coming with a lot of energy in and definitely eager to talk to our customer base, which we've been doing with our team of Bd's. This is this has been a natural.
Speaker Change: It.
Speaker Change: It would be weird enough for BD.
Speaker Change: Team of hunters as I call them, not just going after.
Speaker Change: Every single opportunity in and being in touch with you know with.
With our customer base the broader one.
And even the one that is closed for OEM auto OEM for a moment, though even at all so I can tell you that yes, we're on the hunting base, we do talk to all of the EV. So.
Speaker Change: Let's say prospect include.
Speaker Change: Including the one.
Speaker Change: Of OEM debt.
Speaker Change: Yes.
Speaker Change: It might not be in the market for long or decided to tap into.
To go bankrupt, so or filed for insolvency. So so yes. This is this is part of the DNA, we want to be a present, especially on the urban.
Speaker Change: Mobility Alright. This is what we're focusing on in the shuttle.
Speaker Change: Upon pointed from point to point, a sightseeing and.
Speaker Change: This is what the team has been doing differently.
Speaker Change: Fantastic Thanks for all the detail.
The next question comes from Amit Dayal with H C. Wainwright. Please. Please go ahead.
Amit Dayal: Thank you good morning, everyone. Good to see the liquidity position continue to be strengthened I just wanted to touch on the Victor offering again I know you've already provided some color on it but.
What is the significance of launching this offering almost three years ahead.
Speaker Change: Is there any more.
Monetization that we can expect to take place.
Speaker Change: If you could just lay out what are the milestones for the pet care offering are from here.
Speaker Change: Next two three years as you get ready for operational launch.
Speaker Change: <unk> be helpful to just understand what youre trying to achieve.
Speaker Change: This today thank you.
Speaker Change: Great. Thank you so much thank you.
Speaker Change: I think it's super important and it's all about the ecosystem right and one one important.
Speaker Change:
Speaker Change: A part of this ecosystem is definitely the support and services what will make this a VTOL operation work as I mentioned before it's to make sure that we have the availability of the reliability. This is what we've been building, which is what we are developing making sure. That's the right the right aircraft for our customers right. So.
Speaker Change: And I think building on this.
The answer any service preparing the interim service to be a success is the key and you don't do this whether it's the ecosystem, but also part of the customer support and services you don't do this.
Speaker Change: Before you don't even do this on a normal entry into service for an incremental aircrafts you do a 12 month prior the first arrival of the aircraft at the operator space. So you can imagine that the veto.
Speaker Change: Be ready now to engage the customer to engage with the stakeholders and that's why we've been launching this platform to tell the customers that we are preparing the operation.
Speaker Change: This is all about the east take care of the whole solution as the customer support or you want to make sure you have your train and you're you know youre technicians around the world or at least you know I'd say the first operation with a startup team when the operator, we'll start operation whether it is going to be in Brazil is going to be the U S. You want to have deployed your team you want to.
Speaker Change: You have the technical solution and this is not a trivial, but you need to have a 24 hour.
Speaker Change: Our customer care Center, I mean with trained people with our process system that works.
Speaker Change: I know it sounds obvious, but it's not you know when you're going to be 24 hours and you're going to be flying with vehicle a thousand thousand hours a year just as we're looking at what is going to be flying some 4600 fly cycle a year. This will work even it'll work and we believe it will work with a high utilization of vehicle and high utilization mix.
Speaker Change: Sure that you have the reliable aircraft you need to have the material the battery solution alright. The MRO. So it's got to be a low maintenance, obviously, but still you need to have your technician the fly up solution and last but not the least is definitely the training services and this is exactly why we announced DSL.
Speaker Change: This contract on the services you don't want to make sure that you have your simulators and all linked and this is why <unk> can you just explain how important it is.
Speaker Change: Do you have the as far as taking us to the next step and we know now you know where to go but and this is why we just announced on the 31st of October the contract with Easyjet, The Embraer CAE training services.
Speaker Change: Which is really is going to be also are planning for the training. The pilots aircraft pilots, but also the maintenance technicians on the ground handling personnel.
Speaker Change: This is something that you need to be ready now otherwise we were running the risk and I always say, we as the industry running the risk just to work on their certification focus only on the certification and but it's something that you would get the interim service you absolutely not ready for the operation and this is the worst thing that could happen then you deliver those dozens or hundreds of EV.
Speaker Change: Though in the first year, and then youre going to be grounded because you don't have the right technician on the right are material or distribution, which is by the way. It's way more capillarity. Then you know when aircraft operation you can fly your aircrafts.
Speaker Change: Across our continent.
Speaker Change: Or multiple states in the U S to to get your maintenance done that's not the case for EBITDA. So this is something that we're preparing right now customers understood. This is why they want to buy from US you know what the service and support and this is where also we wanted to give a name to this with a solution which is the take care.
Speaker Change: That makes a lot of sense you know good to see you thinking so far ahead.
Speaker Change: My other questions have been asked.
Speaker Change: They're both a queue and follow up offline. Thank you so much.
Speaker Change: Excellent. Thank you Austin.
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, Betsy and I wanted to thank everyone, who joined the call today as you can see.
Lucio Aldworth: See we accomplished several important milestones this past quarter were fully engaged and we continue to progress on our suite of products and services for the uranium market and there is a whole lot more to come in the next few quarters. So we're going to continue updating you on our progress throughout the next two quarters and we look forward to meeting all of you in.
Speaker Change: The upcoming events, we're going to participate in the next few months as always if you have any questions don't hesitate to reach out to <unk>, Thanks and have a good day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].