Q4 2024 Eve Holding Inc Earnings Call
Speaker Change: [music].
Good day and welcome to the East holding Inc. Fourth quarter 'twenty 'twenty four earnings conference call.
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ALDA: I would now like to turn the conference over to do she'll ALDA book head of IR. Please go ahead.
Speaker Change: Thank you operator, good morning, everyone. This is the most or all of the director of Investor Relations at <unk>.
Speaker Change: Wanted to welcome everyone to our fourth quarter 2024 earnings conference call.
Speaker Change: So we'll have more data and so it's a lot of the coal to our joining me on the call today and after their prepared remarks, we will open the call for questions at which point we.
Speaker Change: Acute technical officer will also join us for more technical questions.
Speaker Change: We have our back with a few slides and additional pictures that show our achievements in the quarter as well as the testing phase of a full scale prototype.
Speaker Change: But that is an upside at our yard got.
Speaker Change: Air mobility dotcom, so please feel free to download and follow along.
Speaker Change: Let me first say that this presentation includes forward looking statements or statements about events or circumstances that have not yet occurred. These are largely based on our current expectations and projections about future events and financial trends affecting our business and future financial performance.
Speaker Change: Dave months are subject to risks uncertainties and assumptions.
Speaker Change: Including among other things generally come on the political and business conditions, both in Brazil and in other market.
Speaker Change: I believe May will estimates continues anticipates intends expects and similar words.
Speaker Change: To identify forward looking statements when they take no obligation to update publicly or revise any forward looking statements because of new information future events or other factors.
Speaker Change: 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.
Speaker Change: With that I will now turn the presentation over to our CEO Johan.
Johan: Thanks, Michele good morning to all and thank you for joining the call today.
Johan: Had a very even full year 'twenty 'twenty four we continued steady progress in the development of our Ito and have reached an important milestone.
Johan: I would like to highlight today a few of those most important achievements that we had last year.
Johan: The first one early in the year, we presented vector our air traffic management solution and we wanted to five day simulation in Sao Paolo with very positive feedback from our partner and customer Revel.
Johan: If it decides followed simulation we already had made it real janiero in London to help us validate and <unk> software for the customers to eventually allowing fleet air traffic density and keep higher safety standards for the UAE and globally.
Johan: Last year also late we announced the E take here a fully integrated aftermarket service portfolio that will include technical support maintenance activities parts and batteries solutions flight operation support as well as pilot and mechanics waning in partnership with the Embraer C waiting server.
Johan: This is commonly called <unk>.
Johan: When you raised $270 million of fresh capital when mixed up credit and equity instruments and this allows the company to have a solid liquidity position to continue funding our general expenses research and development efforts as well as our nearest our reinvestment in our first EBITDA manufacturing facility in <unk>.
Johan: Back to Brazil.
Johan: Another important milestone was the publishing of the bases of certification by ANAC, The Brazilian Civil Aviation agency, which establishes the standards to all to fly commercial.
Johan: The phases of certification establishes the first set of air Worthiness Criterias for EV Dove in Brazil and follows each application for SAP certification back in 2022.
Johan: This is obviously a critical milestone in the project. We are now focused on defining with Eaton and the means of complaints. These are specific test analysis and simulation that need to be successful, we performed well the type certification to be eventually granted.
Johan: These states are performed to prove the aircraft design and that it needs to safety standards laid out A&D basis of certification.
Johan: And lastly, we completed the assembly of our prototype and rolled it out the behavior for the first time in early July 24, followed by a theory of ground tests before its first flight.
Johan: As a reminder, it is a full scale engineering prototype with no cabin old cockpit. It has made a composite material.
Johan: That will be piloted in remotely and the command and control it's luck.
Johan: This prototype will be used to validate and improve the accuracy and previous upscale and computer models. It also has an important contribution for the setup of several rigs we are using for different individual components.
Johan: We have installed the batteries and already performed several test we will cover. This later on this call and we're now putting up for the flight campaign.
Dan: Initially performed father flights tied up to the ground and gladly equally increased power and hi, Dan.
Dan: And we will move to the partial transition. This is when we engage the pusher without fully disengaging. The lifters to continue controlling the aircrafts originally and only then we will move to the full transition flight.
Dan: I think the next slide I think it's a good summary of what I've just been mentioning so far and it shows you know how we met all the milestones that we committed last year. Thanks to the blade dedication of all ease embraer and our partners employees.
Dan: And yet at this presentation.
Dan: We will go through the new 2025 ambitious milestones and we're already working hard to meet all of them also.
Dan: Going to the next slide now I would like to highlight some of the best that we have performed with our engineering prototypes, we announced last year. The first day that the pusher motor after installation.
Dan: The video with a full best so you can find it and watch it online where our engineering not only tested successfully the dedicated video link between the command and control truck and the vehicle, but also the proper installation of the Inverters and several performance related metrics of the motors, including depressed vibration film and energy consumption.
Dan: In parallel we're also testing the electric motor separately in dental meters.
Dan: Actually that we delivered the expected performance before its installation.
Dan: We're also contributed and conducted another set of wins and wind tunnel tests in the Netherlands to validate our dynamic loads and noise level for the lifters turned off.
Dan: We expect to fly our full scale engineering people decide for the first time by mid 2025.
Dan: On the certification front, we continued to be highly engaged with certification agencies and we are keeping a good in constant dialog with enact in Brazil to define the certification plan at the same time, we receive a team of specialists from the FAA in our offices in sources of accomplished in Brazil, and we met representative from Japan.
Dan: Jay cab in Tokyo.
Dan: Now on the next slide 17, illustrating what just talked about you can see images of our pusher test, where we have the five blades propeller spinning on slide six.
Dan: This ensured our engineer that all the equipment was properly installed and that the video link with the command and control book gives our team the ease of getting control of the aircrafts with no delay in the signal.
Dan: On the slide seven that shows all of our team meeting regularly with ANAC FAA and lastly, slide eight shows the picture of our latest wind tunnel tests. This as a representative subscale muddle, but here you can also see the propellers spinning in the picture I had to give more accurate reading as the aerodynamic forces.
Dan: That wouldn't push it only aircrafts during all phases of the flight, including also the important transition between takeoff mainly inclusion.
Dan: Moving to slide nine our total pre order backlog stands at approximately 2800 aircraft for a total value close to $14 billion based on the list price.
Dan: There are non binding letters of intent from 28 different customers, but older nine countries and different businesses from the mainline to original airline elite.
Dan: Operators ride sharing platform and also losing comedies.
Dan: And because the maintenance and support guarantees to proper aircrafts operation. We are highly focused on providing the best in class services and support to EBIT filled operators.
Dan: We have also secured contracts with 14 different customers for our eats take care suite of aftermarket products, which could bring up to one $6 billion in revenues to eat over the first few years of operation.
Dan: Ultimately he take care of customers that placed LOI for covering about 1100 aircraft, which is about 40% of the tweet order book.
Dan: As you can see we also have 21 different customers for our air traffic management solution, we called vector and I believe this reflects the market leading value proposition that we bring to our customers.
Dan: Beyond that together with our customers and authorities. We also developing a strong network of partners in different areas, such as the infrastructure and energy to address one of the many challenges ahead of the urban air mobility, which is to create a whole new ecosystem. Besides simply the development of a new aircraft.
Speaker Change: So now I would like to invite our CFO to go over our financials, along with the milestone checklist for 2020 five.
Speaker Change: Thanks, Johan now moving to slide 10, I once you start with our most recent liquidity events, we have been very successful in attracting new capital to Eve to continue to fund our EBITA development in total we raised 270 million in 2024.
Speaker Change: Of that around 170 million and equity east remains around 100 meter. We believe that this balanced capital structure is an important key to maximize value for our shareholders. As we continue to enjoy strong liquidity notwithstanding at 429 million, including funding.
Speaker Change: For our interest reservation as railroads continue R&D expenses, our liquidity is equivalent to three times, our 2024 cash consumption, it's above our peers and gives us confidence to advance the program to certification.
Speaker Change: Now moving to slide 11, he was the preparation of company and all our financials reflect mostly the costs associated with our program development that said I want to highlight some of our numbers you've invested 34 million during the fourth quarter and on a.
Speaker Change: Program development and 130 million in the full year. The majority of it was invested in developing our EBITA and a smaller portion went through services and support solutions and the urban Air traffic management software, where the only if you talk company with a complete solution that includes design development manufacturing sales have any veto.
Speaker Change: As well as maintenance services and air traffic control. We also deployed 6 million in SG&A during the quarter and 27 million in the year, including R&D and SG&A, We reported a net loss of $40 million in the quarter and 138 million in the year.
Speaker Change: Now moving to cash flow operations consumed 40 million in the quarter and a total of 141 million in the year staying in our guidance range of 130 to 170 million showing each financial discipline as well as our advantages of using Embraer engineering team.
Speaker Change: Also had a positive impact of the U S dollar appreciation versus the Brazilian real is the majority of our costs are incurred in Brazil.
Speaker Change: We ended 2024, we have 303 million in cash. This is up from the end of 2023, a cash position of 241 and reflects our continuous focus on liquidity.
Speaker Change: Also continued to draw from the Preapproved credit line with the Brazilian development bank, helping to preserve our cash our total liquidity of 430 million as of the end of 2024, he's very comfortable and it's enough to sustain our operations at least for 'twenty to 'twenty, five and 2020 six.
Speaker Change: As we look into 2025, we plan to conclude the ground test phases.
Speaker Change: Of our engineering prototypes and habits first flight and initiate its flight test campaign in the middle of 2025 in parallel we continue our high level of engagement with the Brazilian and U S certification authorities to define our certification plan, which includes the definition of all certification test to be performed.
Speaker Change: During the flight test campaign at the same time, we will begin the production of our first prototype that will be used in our certification campaign. We expect you use five certification confirming prototypes for our certification.
Speaker Change: In all we funding secured we will start to prepare our sorry, our sites in Brazil for the manufacturing of our easy toss. Finally, we expect to consume between 200 and 250 million of cash this year as we continue to accelerate our UV tall development.
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: Two last quick question you May Press Star then one on your telephone keypad.
Speaker Change: If you are 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.
Savi: The first question comes from Savi <unk> from Raymond James.
Speaker Change: Please go ahead.
Savi: Hey, good morning, everyone I curious if I might start with you just on the kind of a cash burn for this year could you provide a little bit more on this.
Speaker Change: Is being recorded this meeting is being transcribed sorry, Savi you broke up eating a repeat please.
Savi: Yeah.
Savi: Can you provide a little color on the.
Savi: The cash burn for this year kind of how that progresses less and I'm guessing, it's increasing increasing just given that the work being done on the production side and kind of the bills that come later in the year, but could you give us a little bit of color on kind of the trend. There is as we kind of go through the year end and maybe early thoughts into kind of.
Savi: Next year, given that you have enough liquidity just kind of last through 2026.
Savi: Yes sure.
Savi: In 2024, we consume $140 million right as we as I mentioned in.
Savi: In the presentation. The majority of the expenses last year were focused on the development. The Vitol development. This year its not going to be too different in terms of the focus remains on the EBITA development, we're going up to something between 200 to 250.
Savi: Depending on the currency right we can.
Savi: We see how this is going to how this is going to be heavily focused on D. V. Tau development, we continue to accelerates D. If at all.
Savi: <unk> development, we're going to start to fly a D.
Savi: The Vito do several flight tests in parallel we are working on the <unk>.
Savi: On the conforming vehicles to start be the official flight that campaign in.
Savi: In 2026, so you know basically it's still more heavily loaded on the R&D on the developing of the dog of course. This year, we may start to to invest on the fulfill it on the production facility remains spend around 30.
Savi: 30 million on that.
Savi: So, but overall, it's still as I said more EBITA development as we are bringing even more engineers for main brand now I think we are around 800 engineers at at Embraer. Another 200 people at Eve, we have around 1000 people working in the program.
Savi: And for the following years as you mentioned I believe we may keep this range around 200 250. So that's the reason you know the the liquidity we have the almost 450 million key.
Speaker Change: Give us enough resources for 20% to 25% in 2026 at least okay.
That's helpful and just if I might follow up on that production facility and.
Speaker Change: Is that the fed is you're going to use that facility to tell the third aircraft I'm just kind of wondering on just how you think about whether you start kind of building out that facility are not like the timing around that.
Speaker Change: The facility rather cause is right. It's an existing site for main bread that we are leasing so the investment is really on Thule machines right.
Speaker Change: Those are the stool in machine. It starts in one side. Then we then we transfer to these final side more towards <unk>.
Speaker Change:
Speaker Change:
Speaker Change: So I would say probably in 2026.
Speaker Change: I would say you know that there is investments on tooling machining. That's the majority of the 2025 investments are we are also doing your I T. A.
Speaker Change: Investments on undecided.
Speaker Change: So that's pretty much what we were doing this year.
Speaker Change: Very helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: The next question is from Alan Phage with Jefferies. Please go ahead.
Alan Phage: Hi, guys. Thanks for the question.
Alan Phage: On the order book I think you had a couple of our customers last quarter than this quarter can you talk about how youre thinking about those otherwise converting and the progress you.
Alan Phage: And your marketing campaign I know you're still.
Alan Phage: The largest order book of your peers that.
Alan Phage: Michelle and Jan speaking. Thank you for the question as a matter of fact, you probably saw that you know are they went from a 2900 2800.
Alan Phage: It's the reduction is still you know not relevant when thumbs up in terms of dollars dollar amount $14 billion, but it's you know, it's it's really fluid I mean, what we've done since we created the eve is to to go and visit you know prospect and customers and show them actually more a solution then the actual product the final product.
So they bought in you know the solution that we're offering.
Alan Phage: It's just not only the vehicle, but also the customer support and also Victoria, eventually which are which is our air traffic management, which is also and more operation ground operation first modules for ground operation, our software and giving that approach that we have are they are you know.
Alan Phage: They sign up for for those Hum LOI and this is why the number is a it's been at the highest level because they trust that we have the.
Alan Phage: Capabilities, the know how and the expertise to ensure not only the vehicle but also.
Alan Phage: The operation afterwards.
Alan Phage: It is fluid because you know it.
Alan Phage: It takes time, it's obviously tied up also two certification progress you can understand that if you're going to be buying a vehicle you know well a list price of $5 million you want to see them actually that the aircraft also is flying so are we really work together with our customers to first develop the you know are the the vehicle but also.
Alan Phage: To make sure that they're starting to work on the ecosystem.
Alan Phage: There are a couple of customers that just that left the backlog up at totally independent from eve, whether any of them going bankrupt or it's just a big decision. There was you know it was visa that was purchased by Norwegian and ER and then Norwegian decided that you know are the air mobility was not the top priority for the moment at least.
Alan Phage: And the other company went bankrupt, but also you know put some more others on onboard so well like air X or or aliens and the U S. So you know it's it's flexible it varies I think what is very important and that's just to make sure that we have our core customer base.
Alan Phage: Especially for the first three years of production.
Alan Phage: Great that makes sense.
Alan Phage: Can you talk about the differences between the full scale prototype for flight testing and.
Alan Phage: And for certification relative to the prototype you have today are there any significant changes in the farmers just that finalization you've made in the past year.
Louis Valentini: Yes. Good morning, Alan This is Louis Valentini the differences are.
Louis Valentini: Most significant in the sense that this is a simplified vehicle that does not have all of the redundancies in the safety level of the refinement that the confirming prototypes need to have in order to show called.
Louis Valentini: Zero complaints with certification requirements. So the idea was that by doing this simplification, we could advance the development of this engineering prototype, which is a full scale prototype very representative of what the confirming prototypes will be but then it's available earlier on in the development program for us.
Louis Valentini: Test solution and like Johan mentioned to advanced modeling to advance the maturity of the technical aspects of the vehicle. So.
Louis Valentini: In a nutshell really the differences are that it's it's a simplified vehicle. Therefore, it's an unmanned vehicle, it's remotely piloted and.
Louis Valentini: And so the it's.
Louis Valentini: It's not going to be used to show compliance with certification requirements.
Louis Valentini: That's helpful.
Louis Valentini: Hop back in the queue.
Louis Valentini: Selling kit.
Austin Moeller: The next question is from the line of Austin Moeller from Canaccord.
Speaker Change: Go ahead.
Austin Moeller: Hi, Good morning. So my first question has ANAC started to establish a framework of how we will harmonize certification with the other non FAA regulators like you often see a and could you go into detail on that effort.
Austin Moeller: Sure. Good morning, Austin. So this is something that we work a lot with a neck, it's very important for us that the certification basis are as.
Speaker Change: Similar as possible if not completely harmonized and a neck has been very active in influencing other authorities both in what they call the CMT, which as a group and between the ANAC FAA.
Speaker Change: And certification, Canada T C E O, but also doing individual agreements are bilateral agreements with other certification authorities and the world to discuss EBIDTA certification requirements. So we are very confident that through this this.
Speaker Change: Tight connection between the authorities, we will advance to more.
Speaker Change: I don't want to say harmonize, but at least similar certification bases that do not require significant differences between the vehicles that we will certify at each country.
Speaker Change: Okay, and just a follow up if we think about 2025 in 2026.
Speaker Change: How many prototypes do you expect to build with existing capital beyond the prototype you have right now.
Speaker Change: So far the certification campaign, we expect to have five prototypes. This is very similar to what Embraer has used in previous the development programs and certification programs.
Speaker Change: It's a mix.
Speaker Change: Of prototypes that are used for different purposes. So some of them are more used for let's say system certification in others. We're focused on our interiors. For example, there was more focused on aerodynamics flights, but this number allows us to have not only representation in all of the vehicle characteristics.
Speaker Change: But also a good pace for the flight test campaign still being a manageable fleet right. So it's a balance of having enough resources to perform the flights and being able to conclude all the flight tests needed flight and ground test, but also not having too.
Speaker Change: Too much investment in too much of our fleet to manage of these test vehicles.
Speaker Change: Okay, Great I'll pass it back there. Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Unidentified Moderator: The next question is from Amit Dayal with H C. Wainwright. Please go ahead.
Amit Dayal: Thank you good morning, everyone.
Unidentified Moderator: These.
Speaker Change: You know the Capex that you mentioned, a 30 million will that cover.
Speaker Change: The full building or will you need additional investments.
Speaker Change: For that manufacturing facility further down the road as well.
Speaker Change: Yeah in terms of Capex for all of our manufacturing plant, we're going to spend around 100 million. We already have these moneys secured.
Speaker Change: We signed last year, a 16 year right the long term.
Speaker Change: Facility from the Brazilian development Bank as we advance on the on the works write off the facility, we're going to draw this money, but yeah, we're going to spend more than the 30, we're going to spend the 100. The majority will be spent I would say in 2020 six but we already have all the money secured from the long term.
Speaker Change: Fine.
Speaker Change: That's amazing. Thank you and then just a question on the tech offering that is launched I think you know.
Speaker Change: Some of them last year.
Speaker Change: Are you actively marketing that offering to customers right now like what is happening with you.
Speaker Change: You know the launch that has taken place already for that.
Speaker Change: Thanks, Samit John speaking, yes, indeed, the east take care of them will just lounge last year. This is something that we discuss with our customers. This is something that they want from eve were the face to the customer and I think this is important for them to make sure that we guarantee the availability of the operation, but also to optimize operate.
Speaker Change: <unk> cost and <unk> and they understand that needs to be done through Eve. This is also the contracts that we have with their suppliers. Basically this is a you know about the spare parts of flight hour program mechanics training also.
Speaker Change: Pilot.
Speaker Change: Yes.
Speaker Change: The whole complete portfolio that an operator will need to get from the OEM to make sure that we have a good operating experience.
Speaker Change: Understood.
Speaker Change: Last one for me are you seeing some evidence of investments are being made by.
Speaker Change: Potential customers or other partners in the supply chain or the value chain for easy dosed.
Speaker Change: From the infrastructure point of view I know you know you are getting into various stages of testing some of the other competitors are also.
Speaker Change: Planning to maybe launch initial flights to by the end of this year early next year.
Speaker Change: So I'm just trying to get a sense of whether you are seeing.
Speaker Change: Estimates by other players you know to build infrastructure and bring these you'd be doing some market.
Speaker Change: Yeah. Thanks, Samit just like you asked about the ethane carrier, which is the support from the Oems will also the other challenge that we have is we're creating a new segment. Obviously the ecosystem is very important and this is what we need to do not only the design the delivery certification, but or the operation support but also.
Make sure that we have the ecosystem ready that means that you know first we were going to be using as much as possible the any port and infrastructure existing infrastructure, but as we go and we want to deliver a dozen and hundreds of vehicles per year, we wanted to make sure that oh, the devote the ports and the corridors and.
Speaker Change: Everything can just basically rump up right up.
Speaker Change: So we're working with authorities in private companies. We have partners. They were usually the same also our partners that are the other OEM are using because you can understand the words investment or quite substantial when they need to be made and ER and we were really pushing to make sure that every infrastructure will be allowing.
Speaker Change: Not only the E 100 operation, but also the other way <unk> operation I think Neal we're grading the segment and and this is why you know those investment will bring return if if if if operators and infrastructure companies can be a you know operating more than one if it's all type.
Speaker Change: Understood. That's all I have thank you so much.
Speaker Change: Actually I mean.
The next question is from Marvin Fong from <unk>. Please go ahead.
Marvin Fong: Hi, good morning, Thanks for taking my questions just one maybe it's what you do.
Speaker Change: Just looking at.
Speaker Change: The $200 million to $250 million.
Speaker Change: And in cash burn for next year, and if I just kind of.
Speaker Change: Look at the moving parts.
Speaker Change: You know $100 million of Capex and assume relatively flat G&A seems to imply that R&D, maybe down next year I just wanted to make sure I had that right and how should we kind of think about the composition of the cash burn at the Opex level would be great. That's all I had.
Speaker Change: Thank you.
Speaker Change: Okay. Thanks, Marvin no no no. The Capex for this year is around 30 million. The 100 million that I mentioned is the full capex for the facility and the majority will be spent in 2026 for 2025, it's something around 30 million of this 200 and 250 the majority of.
Speaker Change: D expenses. This year are really on the EBITA development as I mention we have around a thousand people engage it in the program between even Embraer. So we're gonna be Spain, D 150 $160 million.
Speaker Change: On development right mostly.
Speaker Change: Engineering.
Speaker Change: Works then there is the 20 to 30 million on Capex and of course, we have also a small SG&A around 2030. So that's how we get at the full 200 and 250 the majority by far are indeed, the Vitol development.
Speaker Change: Okay, Okay, I misunderstood that okay. Thanks for clarifying.
Speaker Change: Thank you.
Unidentified Moderator: Again, if you have a question. Please press Star then one.
Speaker Change: Yeah.
Speaker Change: We have no further questions.
Speaker Change: This concludes our question and answer session.
Unidentified Moderator: I'd like to turn the conference back over to Louis you always look for any closing remarks.
Louis Valentini: Thank you Darren and thanks, everyone, who joined the call today are as you can see were accomplished several important milestones this past quarter and in 2024, we're fully engaged and moving forward moving fast and there is much more of this meeting is no longer being transcribed well, leaving you know not all of them.
Louis Valentini: A throw out the next few quarters and look forward to meeting all of you indeed upcoming events, we're going to attend and as always if you have any questions. Please don't hesitate to reach out to me or to my team. Thanks and have a good day bye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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