Good morning, and welcome to the Eve Air Mobility First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lucio Aldworth, Head of Investor Relations. Please go ahead and begin.

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 First Quarter 2024 Earnings Conference Call. Our CEO, Johann Bordais; and CFO, Eduardo Couto, are joining me on the call today. And after their prepared remarks, we will open the call for questions, at which point, Luiz Valentini, our Chief Technology Officer, will also join us for more technical questions. We prepared the deck with a few slides and additional pictures that show our achievements in the quarter as well as the assembly of a full-scale prototype and that's on our website at ir.eveairmobility.com. So please feel free to download it and tag along. Let me first start the presentation by saying that it includes forward-looking statements or statements about events or circumstances that have not yet occurred. These are largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These statements are subject to risks, uncertainties and assumptions, including, among other things, general economic, political and business conditions both in Brazil and in our market. There was believe, may, will, estimates, continues, anticipates, intends, expects and similar words are intended to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. With that, the future events and circumstances discussed in this presentation may not occur, and actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to our CEO. Johann?

Thanks, Lucio. Good morning, everyone, and thank you for joining the call today. We had a successful start of 2024 with several important achievements. The most important one being the quick-paced advancement in the assembly of our full-scale prototype. We are right on schedule and expect to conclude it in the second quarter. As you will see in the next few slides, we already installed the pylons and nacelles to have the electric motors and started to install the composite skin of the aircraft. We are also preparing for another round of wind tunnel test with the rotors on. This will start in a week and will roughly last 3 weeks. This will be used to validate and further refine our computer models before out of ground test campaign starts in the second semester. In parallel, we continue to down select suppliers and sign binding contracts. These define technical specification for the component and commercial aspect with volumes and unit prices and also the aftermarket support conditions. Just last month, we selected KAI, the Korea Airspace Industries, and before that, we have selected Aciturri for the wings and also Crouzet for the panel control or the joystick. We now have more than 90% of all suppliers selected, and we're working to define suppliers for the high-voltage system converter, skids, cabin interior and doors, lighting, transparencies and other add options like the lending gear, for example. Lastly, we presented Vector, our Urban Air Traffic Management Software at the Airspace World in Geneva with full demonstration of its capabilities. This is a strategically important tool to help scale the urban air mobility safely. For the next slide, it shows the stage of the assembly of our prototype. As you can see, it's already looking like an eVTOL with a typical structures of…

Thanks, Johann. Now moving to Slide 10. Eve is a preoperational company developing its eVTOL and the ecosystem around it. Currently, our financials reflect mostly the cost associated with our program development. With that said, I want to highlight some of our numbers. Eve invested $27 million during the first quarter 2024 in our program as the development activities continue to speed up. The majority was invested in our eVTOL and a smaller portion in Services & Support Solutions and the Urban Air Traffic Management system. We also deployed $6 million in SG&A during the quarter, which has been reasonably stable as we continue to control corporate expenses to focus our resources in the eVTOL development. Higher development expenses were partially offset by interest revenues and a mark-to-market gain in our warrants, resulting in a net loss of $25 million in the quarter, mostly flat versus the same period last year. Now moving to cash flow. Our operations consumed $36 million in the quarter, up $16 million versus the same period of 2023 due to higher development spending. We ended the first quarter with $223 million in cash, down just $19 million from fourth quarter 2023 as we drew another $15 million from our preapproved credit line with the Brazilian Development Bank. We still have around $60 million available from this line that we expect to access in the upcoming quarters, helping Eve to hold its cash position. Eve remains comfortable with total liquidity of $280 million as of the end of the quarter, and we believe it's enough to sustain our operations well into 2025. Now moving to Slide 11. We remain on track to deliver our milestones for 2024. As Johann pointed out earlier, we are advancing rapidly to conclude the assembly of our first full-scale prototype. Once we conclude airframe assembly, we start ground tests in the second half of the year. In parallel, Brazil's certification authority, ANAC, concluded its public hearing process in mid-March to define the basis of certification. The agency will now compile all comments and align them with comments made by other certifying agencies and OEMs. We expect the basis of certifications to be published in 2024. Lastly, we have started to prepare our first eVTOL manufacturing plant in an existing site of Embraer in Brazil. This is going to require new tooling, equipment and customization of the site, but this facility is already functional, saving us time and financial resources. We are also working to secure the necessary funding for the eVTOL industrialization through a long-term financing. All of our 2024 efforts will consume between $130 million to $170 million throughout this year. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

[Operator Instructions] And the first question today will be from Savi Syth from Raymond James.

I was curious on the plan to build kind of the next 5 aircraft following this first one. Are those going to be certification conforming if they're going to be used for testing that's going to count towards certification? And also, just kind of what's your thoughts around the timing of those? I'm guessing you'd want to test the first one and then start working on those, but curious.

Savi, Johann speaking. Thank you for your question. Yes, indeed, we will have -- right now, we're doing the nonconforming prototype [indiscernible] as we showed the pictures. And then the next step is to start, as of the second semester, the assembly of the conforming prototype, so it will be with a full cabin, right? And this is going to be what the -- very much close to what the EVE-100 will be eventually. We'll produce all those 5-prototype next year, will be assembled and it will be part of the certification campaigns, all 5 of them.

That's helpful. And that's moving really quickly, which is encouraging. Just also, if I might ask on the production of the high-volume production facility, I think before the thought was maybe modular design with capacity for 250 a year, and it looks like maybe that's changed to 120. Just wondering what the process there was and the change of thinking there?

Right. No, Savi, it never changed. Actually, those are 2 modules, but with some modules. So we go 120 first and then 240 then we expect -- that's what we call the first module. And then the 240 can become a second module that you add to 240. So that's where you get the full capacity of our facility in Taubate in Brazil will be 580 -- 480, sorry, units a year -- per year. Okay. So it never changed. It really -- it was always this rate.

Okay. I must have misunderstood. That's great.

And the next question will be from Sheila Kahyaoglu from Jefferies.

I wanted to ask about just the order book. You increased it by 50 aircraft, but the pipeline amounts to $14.5 billion from $8.6 billion last quarter. And you mentioned that some list price versus reference prices. So maybe if you could talk about the change there? Was it an accounting change? Why did you change it? And then it seems to suggest aircraft are going to be for $5 million list price versus $3 million previously, maybe I'm miscalculating something, but if you could tell us the right way to think about it.

Thanks, Sheila. Thanks for the question. Yes, indeed. You know this well. We're now at $14.5 billion. I think that now we're entering the phase of the campaign -- sales campaign. We're passing also the LOI. We're still signing LOIs because interest from the customers keep coming to us and of course, we entertain because, at the end of the day, the LOI and the backlog shows and demonstrate the interest and demonstrate how the customers understand that Eve is bringing the whole solution. So we don't stop signing LOI. I think it's a footprint that needs to grow as, of course, we will be eventually getting certification done as per the various countries, right? First will be the ANAC and FAA, but as we go, and we'll expand. So that's why LOIs are important, important to demonstrate the solution that we're bringing. And it tells the world how -- once we certify, then customers will sign in for a purchase agreement. But at the same time, we're really starting the sales campaign. And I think this is really best practice. Let's come up with a list price, the value, the backlog and -- as a reference price. And then, of course, we don't disclose the price that we're negotiating the aircraft at. So I think it's better that way.

Okay.

[indiscernible] do, maybe on the accounting wise, sorry [indiscernible].

There's no accounting on backlog, it's a non-U.S. GAAP measure.

And the next question will be from Austin Moeller from Canaccord.

My first question here, do you expect the $280 million in total liquidity to be sufficient to get development through all of 2025?

Yes. It's -- we are very comfortable, guys, in terms of liquidity and cash, right? As we show in the first quarter, our cash position -- the actual cash position only declined $19 million. It was a very small decline because we access -- even though we increased, right, the cash consumption because we access $15 million from the long-term finance that we have from the Brazilian Development Bank. We now have this $280 million still left, which is a pretty big cash position. We are discussing, I think, this combination of equity with long-term finance has been quite a successful funding strategy that we have been implemented. We are discussing potential additional long-term finance lines. So we are comfortable. I think this $280 million gives us well into 2025. I would say, for sure, second half of '25 more towards the end of 2025. But as I said, it's -- this -- we really like this mix of debt and equity, especially when it's a long-term debt that fits our profile, right? We are a preoperational company. So long-term finance of 15, 16 years, those are the ones that fit our profile. And because of that, we are already exploring some additional long-term finance. So we are very comfortable and our liquidity will remain strong.

Excellent. And then do you view the increased weight of using lifters and a pusher propeller as significant in impacting the range? Or was it more important to simplify certification by not using tilt rotors to get to that 2026 cert date?

So the question about the rotors is one that we really went very deeply in Austin. And for us, it was very important to optimize the vehicle for the mission that we are proposing it to have. So with the urban mobility mission in mind, we see that the eventual loss of range that we have with respect to another configuration, for example, the tilt rotor configuration is more than offset with the gains that we have not only for the simpler systems that we get on this configuration, but also, for example, the clear path to certification. So it's really a matter of optimizing the vehicle and really making the choices that makes it most fit for the mission that is being proposed. And for our case, we think that this is the best balance that the vehicle can have.

I will add, and coming from customer support and services, also the aftermarket and the operation, right, the guarantee, the availability of the aircraft, which guarantee also the return for the operator, simplicity, more pieces subject to break on the field. And then, of course, you need to have the competent mechanic and the parts on stock and on the site. So also, the big advantage for the customer.

The next question will come from Andres Sheppard from Cantor Fitzgerald.

Congratulations on the quarter. I wanted to go back to the backlog and the revenue recognition from that. I realize you're not commenting on the negotiating prices with the customer. But I guess with the uptick in the listing price, I guess I'm just curious, are you basically -- are you -- are these customers going to now be paying a higher price than they initially expected. Does that change at all their interest in the LOIs? Just like -- in other words, if we go from 3 to 5, will that have an impact in the order book? Or what's the best way to think about that?

Thank you, Andres. Thank you for the question. It's a good one. I think the customers we've been doing -- we've been very close to our customers since the first time that we introduced the concept to them, but also when we negotiate the LOI and see the scope and also when we do those various advisory board, human machine interface, workshop, we're developing the solution for them and together. So they know the challenges that we have. They've been following up very closely, and I think this is part of the transparency that we want with our customers. We're the frontiers of the technology here. We're all learning the things that we're learning as we go. This is why we have a prototype right now, and then we'll have the conforming prototype later on. And this transparency just make sure that we built the business model for Eve but also for the customer together, right? It's not only just for Eve, it's for the customer at the end, and that also goes back to the simplicity we're talking about. It needs to be a vehicle that flies and operate and get the return for the customers. So when we have the discussion, we have different scenarios that we look, the optimistic scenario based the -- depending on the -- all the parameters and the typical operator will have the lending fees and operation fees and what's the cost of the asset and so on. So having those different scenarios, it's a one-on-one discussion. But when it comes to the market, that's why we want to make sure that we have this list price, as you may call it. I don't think the price right now is really what so determinant for the customers and for the backlog. I think…

Got it. Okay. No, that's super helpful. I appreciate all that context. Maybe just a quick follow-up. I just wanted to clarify. Apologies if I misunderstood this. But just on the time line for your prototypes and test flights. So if I understood correctly, you're expecting the first prototype to be assembled in Q2 of this year and then the other 4 in the second half of the year? And then similarly to begin test flights of that first prototype in the second half of this year? I just want to make sure I got the timing right.

Right. Thanks, Andre. That's important. Indeed, the first full-scale prototype without the cabin, nonconforming, as we call it, is being assembled and will be, let's say, assembled by the end of the second quarter. That's correct, what you mentioned. But then we will start the production of the 5 conforming prototype that will be finished assembled next year in 2025, okay?

I see. Okay. And then the test flights for the first one will be in beginning in the second half of this year?

That is correct. That is correct. So we'll have different ground tests that we'll be doing, like the ground vibration test, the electromagnetic interference, this type of thing, right, flight control system testing, instrumentation and so on before we can really start the flight test and eventually the flight.

[Operator Instructions] The next question is from Marcelo Motta from JPMorgan.

Two follow-ups here. First, going back to the average price of the eVTOL. Should we read that as just like a pass-through of higher, let's say, construction cost or development costs is just -- that doesn't necessarily mean that you have a higher margin on the sale of those vehicles. So just this follow-up. And on the certification, you guys mentioned about the update with ANAC, the conforming prototypes. So the base case continues to be to have the certification by 2026 or could we have any potential positive, negative surprise here? So just to understand a little bit more on the time line of the certification.

Marcelo, thank you for those 2 questions. The first one, you talked about the margin. I think again, we -- it's -- we're creating a new segment, right? There's a lot of challenges, whether it's on the COGS side. We decided to go for the best in breed suppliers. It's a risk-sharing partnership that we have with our suppliers. We decided to have them and go for -- help us only -- not only for the vehicles and the development, but also the production, the series, the certification and also the aftermarket, we're all learning, let's call it, right? We do have challenges, right? When it comes to the weight, the performance of the vehicle. We have also on the lead time and also the -- well, the development in general. So I don't think it's about margin right here and making sure that we're going to be making a lot of margin on this vehicle. Like I said, it's to make sure that we, first of all, certify. We're very, very cautious and cost cautious about how we spend the money that we have right now and the cash, we talked about this. I do made it clear that we're in a comfortable position, but can be very careful, and that's what we're doing. It needs to take us to the certification, and it will be the second part of the question that you had on the answer that Valentini will give you an update. But right now, it needs to be reasonable. And what we're focused on is not only Eve to make money, but also the customer. It needs to make sense. There's actually no point of delivering eVTOLs to customers that will demonstrate not to be profitable for the operator. It will just only -- will be only selling 100 of them, and that will be it. We'll kill the segment, and that's not the purpose. So I think this is exactly the sweet balance that we're trying to look for with the customers, with the operators to see, first, yes, are we going to be charging and what's going to be the cost of eVTOL, well, you got to get the return? And how much are you going to be charging on the [ pax ]. And we all know that we want to go similar to the premium risk-sharing platform, but it's a long way, right? You want to make sure that you can do this effectively. So I think it's a partnership that we have with customers and both customers and ourselves and suppliers need to be profitable, so -- if we want to be for the long run, and we want to be for the long run. And for the second part, Valentini?

Yes. So Marcelo, thank you for the question. So you remember that ANAC is developing a certification basis specific for our eVTOL project as is the case with the FAA. And it's very important that we understand what the requirements are early on in the project so that we can define the vehicle solutions in a way that they will comply eventually with the requirements that are established, right? So that's why we have been working so hard with ANAC, our primary certification authority, to get these requirements defined and then be able to move on to other stages that we call means of compliance, detailed design standards, which really are the way in which we will show compliance to requirements that are defined, right? So we are confident in the step that we are today and how mature the basis of certification is. But of course, we needed to advance and that's why we put that as one of the goals for this year. And so we are working both with ANAC, as I mentioned, and the FAA to make sure that what we have established will support the development of the vehicle for the next phases of the project. We still have some significant uncertainties on how to align the basis with basis of other authorities, EASA in Europe, for example. And we also have some significant uncertainty, and this is something that affects the whole industry, not only our project on the operational requirements. So both ANAC and the FAA are still developing what the operational requirements will be for these vehicles. This includes things like reserves for flight, but also includes training, pilot requirements, things like that. So there is still a lot to be done. This affects the development, and we are working on that with the authorities. With respect to entry into service in '26, you mentioned, we're still maintaining that date. We think that based on where we are today on the project, that's still something that we are targeting, but also depends, as you pointed, on the development that we have on the certification basis and with the authorities in general.

And the next question will be from Cai von Rumohr from TD Cowen.

Terrific. Guys, when do you expect to basically start flight test of the conforming prototype? And then secondly, when do you hope to start certification flight tests? And what are the other key milestones that we're looking for to get us to certification and maybe give us some time frame? I know it's not a specific date, but time frame as to when you might start those.

Yes. Cai, thanks for the question. So we are expecting to fly the prototypes in the second half of next year. We think that, that's a time line that supports the entry into service in '26 because, as you know, there is some maturing of the vehicles to be done during flight and then after this development period that we really start to get credit for the flights towards certification. So there is usually -- and that's the case with, let's say, all of the projects, even with fixed wing airplanes, things like that, that you have some period in which you're flying to finalize, let's say, tuning of control laws, deflection of control surfaces, eventually any aerodynamic fixes that have to be made. So you finalize the configuration definition and in-flight and then you really get to a configuration in which you can start taking credit for certification. So flying in the second half of next year is something that we believe will support this development still in time for entering into service in '26. With respect to important milestones, until then, certainly, the certification basis definition is one of them. We are working with ANAC. As we mentioned now that we have the commenting period closed, trying to support them as much as we can in their process of finalizing the certification basis, but also advancing, as I mentioned earlier, discussion on means of compliance, for example. So these next steps of the certification process, such as defining what the means of compliance will be and then the certification plans being approved by the authorities will support the taking credit of the flights for certification. So there will be other stages that we will communicate after finalizing the certification basis. These, I believe, will also help you to see the progress and the preparedness for the start of the flight test for certification.

And then what are the key technology challenges you anticipate? For example, I know with Beta, which is the other eVTOL, it has a lift cruise design. I think the transition from lift phase to cruise, they basically, I think, have done it now, but that was -- took them a little longer than expected. What do you think the key tech challenges are maybe for Valentini?

Sure. So I think there are a few. I mean, one, I'd say, I think that everybody encountered first was making everything work with the electric power, right? So using batteries only. We know that the batteries today still are quite limited for longer ranges, but also for higher payloads, right? So it's making this integration and having the vehicles work is a challenge, I think, that everybody -- that is on the stage of development that we have already encountered. Then after that, there are some challenges with respect to flights. So for example, these vehicles, they don't have an inherent stability in flight that conventional fixed-wing configurations have. And so that means that we are much more dependent on the fly-by-wire flight control systems, for example. And so this is something that has to be developed in these new transition phases or these new phases of flight that eVTOLs have, right, being a lift plus cruise or tilt rotor or any other configuration, there is a change in flight between the hover flight and the cruise flight that requires a lot of complexity on the fly-by-wire flight control. So this is something that we see for us. That will be a significant challenge also, but it's one that we feel prepared with the background that we bring from Embraer of developing flight control systems with fly-by-wire, something that we have been doing at Embraer or that Embraer has been doing for the last few projects, right? So Praetor C-390, E2, these are fly-by-wire airplanes in which we are basing very much of our technology, and it's something that we bring with very high maturity. So I think that combining -- just to summarize, the systems with the battery power in the eVTOL flight, in the vertical flight is a challenge that I think everybody has faced. And then getting this to fly in the different phases of flight, especially with the fly-by-wire that I mentioned, I think, is something that will also be challenging for all of the manufacturers.

Terrific. Great answer. I have one last question, which is, as you know, I think the FAA is expected to -- as a schedule to finalize the operational requirements where 2 of the keys are what is the reserve requirement and the training, do we need to be able to have 2 pilots upfront to do the training? Do you know where they are on that? And do you still expect the FAA and I assume, ANAC also to kind of reach finalization of the operational requirements because, obviously, that will have some impact on whether your design needs to be changed or not.

Thank you, Cai. These are very important points. You've been following that the FAA has been going through, I think, quite a significant process in the development of these requirements, right? And the industry has had, I think, previously an expectation that these would be finalized by now. There was -- if you remember, the publication of a draft of these requirements last year, these were, I think, received a significant pushback from the industry. And a couple of the most important points are the ones you brought, right? But there is really, I think, an expectation that -- from the part of the industry that they are finished soon, but we don't really have a very clear visibility from the FAA when that will happen. So there is -- I think that we have the same information that you mentioned that we have the expectation that by the end of the year, there's going to be a new publication. We expect this to be a final publication of the requirements. We expect, I think, as Eve, but also as industry that there is significant change, for example, on requirements for pilot training and reserves. But there's really not a clear statement from the FAA, where that will end, where these will be when a final publication comes and when that will happen. So we still work with this time frame that you mentioned of the second semester, but without any more detail than that.

And thank you. Ladies and gentlemen, this concludes our question-and-answer session. I will turn the conference back over to Lucio Aldworth for any closing remarks.

Thank you, Chad, and thanks to everyone who joined the call today. As you can see, we accomplished several important milestones this past quarter. We're fully engaged and moving fast, and there's much more to come. So we're going to continue updating you on our prototype on the progress throughout the next few quarters as well as the prototype to progress and look forward to meeting you in the upcoming events we are 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.

The conference has concluded. Thank you for attending today's presentation. You may now disconnect.