Ellen Page

Ellen Page asked about the drivers behind the strong margin expansion in the quarter, whether mix played a role, and the expected progression of margins going forward. She also inquired about the impact of the ceasefire on operational disruptions and if it presents an opportunity for further margin improvement.

Answer

CFO Kobi Kagan attributed the margin expansion (0.9% gross, 0.5% operational) to improved backlog profitability, operational excellence initiatives (including AI and process improvements), and CapEx investments in ERP, robots, and cobots. He noted better conversion of revenue growth to profits due to the company's size. CEO Bezhalel Machlis expressed satisfaction with the ceasefire, stating it allows the company to regroup, employees to return from mobilization, and focus on normal business, especially outside Israel where 70% of business is conducted. He sees it as an opportunity to pursue new business and strengthen the backlog.

Ellen Page followed up by asking about the potential impact of reduced operational disruptions, assuming the ceasefire holds, and if this presents an opportunity for further improvement.

Answer

CEO Bezhalel Machlis welcomed the ceasefire, stating it enables the company to regroup, return mobilized employees, and refocus on its predominantly international business. He views it as an opportunity to secure new business and further strengthen the backlog.

Ellen Page from Jefferies questioned how the acquisition of Blade's passenger business by competitor Joby impacts Eve's competitive standing, particularly concerning Eve's existing LOI with Blade.

Answer

CEO Johann Bordais stated that Eve welcomes the Joby/Blade deal, viewing it as a validation of the industry's transition from helicopters to eVTOLs. He expressed confidence that it does not threaten Eve's backlog with Blade, explaining that ride-sharing platforms like Blade are multi-OEM and will require various aircraft for different missions.

Ellen Page asked about the dynamics of the order book, noting a slight decrease in customers, and inquired about the progress of converting Letters of Intent (LOIs). She also requested clarification on the key differences between the current prototype and the future prototypes intended for flight testing and certification.

Answer

CEO Johann Christian Jean Bordais explained that the order book is fluid, with the minor reduction due to customer-specific issues like an acquisition (Wideroe) or bankruptcy, which were partially offset by new LOIs. He stressed the focus is on the core customer base for the initial production years. CTO Luiz Valentini added that the current prototype is a simplified, remotely-piloted engineering model designed to mature technology early, whereas the five planned certification prototypes will feature full redundancy and safety systems required to show compliance.

Ellen Page of Jefferies asked for an update on the FAA ATAPS contract following a favorable protest outcome and inquired about the outlook for the remaining S3I family of recompetes after the recent win.

Answer

CEO Toni Townes-Whitley confirmed the favorable protest outcome on ATAPS and highlighted the program's importance to FAA modernization. CFO Prabu Natarajan added that they expect higher volumes from other FAA training programs. Regarding the S3I family of contracts, Prabu stated that the next two of the four major programs are in procurement and expected to come up for bid over the next couple of years. Toni emphasized their strong execution on the current programs, positioning them well for the recompetes.

Ellen Page asked about the drivers of the quarter-over-quarter margin contraction in the Federal Civil segment and inquired about expectations for on-contract growth in the next fiscal year.

Answer

CFO Prabu Natarajan explained that Federal Civil margins are expected to trough at around 12% this year after benefiting from non-recurring items last year, with a target to improve by 100-150 bps in the coming years. CEO Toni Townes-Whitley added that the company had strong on-contract growth of 5-6% this year and expects to rely on it to a similar extent next year by embedding more technology and commercial solutions into existing programs.

Ellen Page asked about the implied deceleration in the second half guidance, the primary growth drivers for the remainder of the fiscal year, and the company's assessment of risks related to the upcoming election and a potential change in administration.

Answer

Horacio Rozanski, Chairman, CEO and President, acknowledged the turbulent environment but expressed confidence, citing strong first-half momentum in hiring and backlog. He noted that Booz Allen's operating model is an asset during administration changes, allowing it to adapt quickly to new client priorities. CFO Matt Calderone also addressed a follow-up, clarifying there has been no cash impact from recent audit adjustments and that the company believes it is appropriately reserved.