Eve Holding (EVEX) Q4 2024 Earnings Call Transcript

Executive Summary

Pre-revenue with Q4 2024 net loss of $40.7M and cash consumption of $39.9M; FY2024 cash consumption of $141.2M at the low end of guidance ($130–$170M) and year-end total liquidity of $428.6M supported by $270M raised in 2024.
Backlog normalized to ~2.8K LOIs (28 customers, 9 countries), diversified by customer type and geography; Vector software at 21 customers and TechCare services agreements with 14 customers (potential $1.6B services revenue).
2025 guidance calls for total cash consumption of $200–$250M, mid-2025 first flight of full-scale engineering prototype, and production of 5 certification-conforming prototypes; facility customization estimated at $80–$90M while CFO frames total facility CapEx at ~$100M (multi-year).
Near-term stock narrative catalysts: mid-2025 first flight, certification plan alignment with ANAC/FAA, facility build-out, and potential LOI conversions triggering PDP cash inflows; management indicates liquidity sufficient for operations through 2026.

What Went Well and What Went Wrong

What Went Well

Completed assembly of first full-scale prototype and advanced ground testing; management reiterated mid-2025 target for first flight (“We expect to fly our full-scale engineering prototype for the first time by mid-2025.”).
Regulatory milestones: ANAC published Basis of Certification for Eve’s eVTOL; FAA issued SFAR supportive of single-control eVTOLs and streamlined pilot training.
Strengthened liquidity: raised $270M in 2024 via equity and credit lines/loans, enabling $428.6M total liquidity at year-end and confidence to fund operations and R&D through 2026 (“Our total liquidity of $430 million… enough to sustain our operations at least for 2025 and 2026.”).

What Went Wrong

Order book attrition: backlog declined from ~2.9K (Q3) to ~2.8K (Q4) LOIs; CEO cited customer-specific factors (e.g., acquisitions, bankruptcies) while emphasizing focus on core launch customers.
Elevated quarterly cash burn: Q4 cash consumption rose to $39.9M vs. $24.5M in Q4 2023 on intensified R&D and supplier payments; SG&A was stable but pre-operating costs for Taubaté increased.
Continued non-revenue status and net losses: pre-revenue by design during aircraft development; FY2024 net loss $138.2M with 2025 spend expected to rise to $200–$250M, largely for engineering and prototype production.

View the full earnings report

Transcript

Operator (participant)

Good day, and welcome to the Eve Holding Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Lucio Aldworth, Head of IR. Please go ahead.

Lucio Aldworth (Director of Investor Relations)

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 Fourth 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 Technical Officer, will also join us for more technical questions. We have a deck with a few slides and additional pictures that show our achievements in the quarter, as well as the testing phase of our full-scale prototype. The deck is on our site at ir.eveairmobility.com, so please feel free to download and follow along. 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. 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. The words believe, make, will, estimate, 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 statement 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?

Johann Bordais (CEO)

Thanks, Lucio. Good morning to all, and thank you for joining the call today. We had a very eventful year 2024. We continue to make steady progress in the development of our eVTOL and have reached important milestones. I would like to highlight today a few of those most important achievements that we had last year. The first one, early in the year, we presented Vector, our air traffic management solution, and we ran a five-day simulation in São Paulo with very positive feedback from our partner and customer, Revo. This exercise followed simulations we already had made in Rio de Janeiro and London to help us validate and fine-tune the software for the customers to eventually allow increased air traffic density and keep higher safety standards for the UAM globally.

Last year, also late, we launched the eVTECHER, a fully integrated aftermarket service portfolio that will include technical support, maintenance activities, parts and battery solutions, flight operation support, as well as pilot and mechanic training in partnership with Embraer CAE Training Services, commonly called ECTS. We raised $270 million of fresh capital in mixed credit and equity instruments. This allows the company to have a solid liquidity position to continue funding our general expenses, research, and development efforts, as well as our necessary investment in our first eVTOLs manufacturing facility in Taubaté, Brazil. Another important milestone was the publishing of the basis of certification by ANAC, the Brazilian Civil Aviation Agency, which establishes the standards for eVTOLs to fly commercially. The basis of certification establishes the first set of airworthiness criteria for eVTOLs in Brazil and follows Eve's application for STAPS certification back in 2022.

This is obviously a critical milestone in the project. We are now focused on defining with ANAC the means of compliance. These are specific tests, analysis, and simulations that need to be successfully performed for the STAPS certification to be eventually granted. These tests are performed to prove the aircraft design and that it meets the safety standards laid out in the basis of certification. Lastly, we completed the assembly of our prototype and rolled it out of the hangar for the first time in early July 2024, followed by a series of ground tests before its first flight. As a reminder, it is a full-scale engineering prototype with no cabin or cockpit. It is made of composite material that will be piloted remotely in a command and control truck. This prototype will be used to validate and improve the accuracy and previous subscale and computer models.

It also has an important contribution for the setup of several rigs we are using for different individual components. We have installed the batteries and already performed several tests. We will cover this later on this call. We are now prepping up for the flight campaign. We will initially perform hover flights tied up to the ground and gradually increase the power and height. We will move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft horizontally, and only then we will move to the full transition flight. Now, for the next slide, I think it's a good summary of what I've just been mentioning so far, and it shows how we met all the milestones that we committed last year thanks to the great dedication of all Eve, Embraer, and our partners and employees.

At the end of this presentation, Edu will go through the new 2025 ambitious milestones, and we're already working hard to meet all of them also. Going to the next slide now, I would like to highlight some of the tests that we have performed with our engineering prototype. We announced last year the first step of the pusher motor after installation. We published a video with a full test, so you can find it and watch it online, where our engineering not only tested successfully the dedicated radio 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 thrust, vibration, sound, and energy consumption. In parallel, we're also testing the lifter motors separately in dynamometers to make sure that we deliver the expected performance before its installation.

We also concluded and conducted another set of wind tests and wind tunnel tests in the Netherlands to validate the aerodynamic load and noise level for the lifters turned on. We expect to fly our full-scale engineering prototype for the first time by mid-2025. On the certification front, we continue to be highly engaged with certification agencies, and we are keeping a good and constant dialogue with ANAC in Brazil to define the certification plan. At the same time, we received a team of specialists from the FAA in our offices in São José dos Campos in Brazil, and we met with a representative from Japan, JCAB, in Tokyo. Now, on the next few slides, I mean, it will illustrate what I just talked about. You can see images of our pusher test, where we have the five blades propellers spinning on the slide six.

This assured our engineer that all equipment was properly installed and that the radio link with the command and control truck gives our team the instant control of the aircraft with no delay in the signal. On slide seven, it shows our team meeting regularly with ANAC and FAA. Lastly, slide eight shows the picture of our latest wind tunnel test. This is a representative subscale model, but here you can also see the propellers spinning in the picture, right, to give more accurate readings as the aerodynamic forces that will be present on the aircraft during all phases of the flight, including also the important transition between takeoff, landing, and cruising. Moving to slide nine, our total pre-order backlog stands as approximately 2,800 aircraft for a total value close to $14 billion based on the list price.

There are non-binding letters of intent from 28 different customers spread over nine countries and different businesses from the mainline to regional airline, helicopter operators, ride-sharing platform, and also leasing companies. Because demand and support guarantees the proper aircraft operation, we are highly focused on providing the best-in-class services and support to eVTOL operators. Therefore, we have also secured contracts with 14 different customers for our eVTECHER suite of aftermarket products, which could bring up to $1.6 billion in revenues to Eve over the first few years of operation. Importantly, eVTECHER customers have placed LOI for covering around 1,100 aircraft, which is about 40% of the pre-order book. As you can see, we also have 21 different customers for our air traffic management solution we call Vector, and I believe this reflects the market-leading value proposition that we bring to our customers.

Beyond that, together with our customers and authorities, we are 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 an aircraft. I would like to invite our CFO, Edu, to go over our financials along with the milestone checklist for 2025.

Luiz Valentini (CTO)

Thanks, Johan. Now, moving to slide 10, I want to start with our most recent liquidity events. We have been very successful in attracting new capital to Eve to continue to fund our eVTOL development. In total, we raised $270 million in 2024 in a mix of debt around $170 million and equity instruments around $100 million. We believe that this balanced capital structure is an important key to maximize value for our shareholders as we continue to enjoy strong liquidity, now standing at $429 million, including funding for our industrialization, as well as continued 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. Now, moving to slide 11, Eve is a pre-operational company, and our financials reflect mostly the costs associated with our program development.

Eduardo Couto (CFO)

That said, I want to highlight some of our numbers. Eve invested $34 million during the fourth quarter in our program development and $130 million in the full year. The majority was invested in developing our eVTOL, and a smaller portion went to service and support solutions and the urban air traffic management software. We are the only eVTOL company with a complete solution that includes design, development, manufacturing sales of an eVTOL, 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.

Now, moving to cash flow, our operations consumed $40 million in the quarter and a total of $141 million in the year, staying in our guidance range of $130-$170 million, showing Eve's financial discipline, as well as our advantages of using Embraer's engineering team. We also had a positive impact of the US dollar appreciation versus the Brazilian real as the majority of our costs are incurred in Brazil. We ended 2024 with $303 million in cash. This is up from the end of 2023, a cash position of $241 million, and reflects our continuous focus on liquidity. We also continue to draw from the pre-approved credit line with the Brazilian Development Bank, helping to preserve our cash. Our total liquidity of $430 million as of the end of 2024 is very comfortable, and it's enough to sustain our operations at least for 2025 and 2026.

As we look into 2025, we plan to conclude the ground test phases of our engineering prototype and have its first flight and initiate its flight test campaign in the mid of 2025. In parallel, we continue our high-level engagement with the Brazilian and U.S. certification authorities to define our certification plan, which includes the definition of all certification tests to be performed 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 to use five certification-conforming prototypes for our certification. Now, with funding secured, we will start to prepare our site in Brazil for the manufacturing of our eVTOLs. Finally, we expect to consume between $200 million and $250 million of cash this year as we continue to accelerate our eVTOL development.

With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Savanthi Nipunika Prelis-Syth from Raymond James. Please go ahead.

Hey, good morning, everyone. I'm curious, Edu, if I might start with you just on the kind of the cash burn for this year. Could you provide a little bit more color on that?

This meeting is being recorded. This meeting is being transcribed.

Eduardo Couto (CFO)

Sorry, Savi, you broke up. Can you repeat, please?

Yeah. Could you provide a little color on the cash burn for this year, kind of how that progresses with, I'm guessing it's increasing just given the work being done on the production side and kind of the bills that come later in the year? Could you give a little bit of color on kind of the trend there as we kind of go through the year and maybe early thoughts into kind of next year, given that you have enough liquidity to kind of last through 2026?

Yeah, sure. In 2024, we consume $140 million, right, as I mentioned in the presentation. The majority of the expenses last year were focused on the development, the eVTOL development. This year, it's not going to be too different in terms of the focus remains on the eVTOL development. We're going up to something between $200-$250 million, depending on the currency, right? We see how this is going to be heavily focused on the eVTOL development. We continue to accelerate the eVTOL development. We're going to start to fly the eVTOL, do several flight tests. In parallel, we are working on the conforming vehicles to start the official flight test campaign in 2026. Basically, it's still more heavily loaded on the R&D, on the development of the eVTOL. Of course, this year, we may start to invest on the facility, on the production facility.

We may spend around $30 million on that. Overall, it's still, as I said, more eVTOL development as we are bringing even more engineers from Embraer. Now, I think we are around 800 engineers at Embraer, another 200 people at Eve. We have around 1,000 people working in the program. For the following years, as you mentioned, I believe we may keep this range around $200 million-$250 million. That's the reason the liquidity we have, the almost $450 million, gives us enough resources for 2025 and 2026 at least. Okay?

That's super helpful. Just if I might follow up on that production facility, are you going to use that facility to build a third aircraft? I'm just kind of wondering on just how you think about whether you start kind of building out that facility or not, like the timing around that.

The facility already exists, right? It's an existing site from Embraer that we are leasing. The investment is really on tooling, machines, right? This tooling machine, it starts in one site. We transfer to this final site more towards the, I would say, probably 2026. I would say there is investment on tooling, machining. That's the majority of the 2025 investments. We are also doing IT investments on the site itself. That's pretty much what we're doing this year.

Very helpful. Thank you.

Operator (participant)

Thank you. The next question is from Ellen Dionysia Page with Jefferies. Please go ahead.

Hi, guys. Thanks for the question. On the order book, I think you had a couple more customers last quarter than this quarter. Can you talk about how you're thinking about those LOIs converting and the progress you've made in your marketing campaign? I know you're still the largest order book of your peer set.

Johann Bordais (CEO)

Thanks, Ellen. Johan speaking. Thank you for the question. As a matter of fact, you probably saw that it went from $2,900 to $2,800. The reduction is still not relevant in terms of dollars, dollar amount, $14 billion. It is really fluid. I mean, what we've done since we created Eve is to go and visit prospects and customers and show them actually more a solution than the actual product, the final product. They bought in the solution that we're offering, which is not only the vehicle, but also the customer support and also Vector eventually, which is our air traffic management, which is also more operation, ground operation. The first module was for ground operation software. Giving that approach that we have, they signed up for those LOI.

This is why the number has been at the highest level, because they trust that we have the capabilities, the know-how, and the expertise to ensure not only the vehicle, but also the operation afterwards. It is fluid because it takes time. It's obviously tied up also to certification progress. You can understand that if you're going to be buying a vehicle of a list price of $5 million, you want to see and make sure that the aircraft also is flying. We really work together with our customers to first develop the vehicle, but also to make sure that they're starting to work on the ecosystem. There are a couple of customers that left the backlog. It's totally independent from Eve, whether they're going bankrupt or it's just a big decision. It was Vizor that was purchased by Norwegian.

Operator (participant)

Norwegian decided that the air mobility was not the top priority for the moment, at least. Another company went bankrupt, but also put some more others on board, like AirX or Alliant in the US. It is flexible. It varies. I think what is very important is just to make sure that we have our core customer base, especially for the first three years of production.

Great. That makes sense. Can you talk about the differences between the full-scale prototype for flight testing and for certification relative to the prototype you have today? Are there any significant changes in the form, or is it just that finalization you've made in the past year?

Luiz Valentini (CTO)

Yes. Good morning, Ellen. This is Luis Valentini. The differences are most significant in the sense that this is a simplified vehicle that does not have all of the redundancies and the safety level and the refinement that the conforming prototypes need to have in order to show compliance with certification requirements. The idea was that by doing these simplifications, we could advance the development of this engineering prototype, which is a full-scale prototype, very representative of what the conforming prototypes will be. It is available earlier on in the development program for us to test solution and, like Johan mentioned, to advance the modeling, to advance the maturity of the technical aspects of the vehicle. In a nutshell, really, the differences are that it is a simplified vehicle. Therefore, it is an unmanned vehicle. It is remotely piloted.

It is not going to be used to show compliance with certification requirements.

That's helpful. I'll hop back in the queue.

Operator (participant)

Luiz Valentini (CTO)

Thank you.

Operator (participant)

The next question is from Marvin Fong from BTIG. Please go ahead.

Good morning. Thanks for taking my questions. Just one maybe for you to just looking at the $200-$250 million in cash burn for next year. If I just kind of look at the moving parts, $100 million in CapEx and assume relatively flat G&A, seems to imply that R&D may be down next year. I just wanted to make sure I had that right. 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. Thank you.

Eduardo Couto (CFO)

No. 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-$250 million. The majority of the expenses this year are really on the eVTOL development. As I mentioned, we have around 1,000 people engaged in the program between Eve and Embraer. We're going to be spending $150-$160 million on development, right, mostly engineering works. There is the $20-$30 million on CapEx. Of course, we have also a small SG&A, around $20-$30 million. That's how we get at the full $200-$250 million. The majority is by far R&D, the eVTOL development.

Eve Holding - Earnings Call - Q4 2024

Executive Summary

What Went Well and What Went Wrong

What Went Well

What Went Wrong

Transcript

Operator (participant)

Lucio Aldworth (Director of Investor Relations)

Johann Bordais (CEO)

Luiz Valentini (CTO)

Eduardo Couto (CFO)

Operator (participant)

Eduardo Couto (CFO)

Operator (participant)

Johann Bordais (CEO)

Operator (participant)

Luiz Valentini (CTO)

Operator (participant)

Johann Bordais (CEO)

Luiz Valentini (CTO)

Johann Bordais (CEO)

Luiz Valentini (CTO)

Johann Bordais (CEO)

Luiz Valentini (CTO)

Operator (participant)

Eduardo Couto (CFO)

Johann Bordais (CEO)

Operator (participant)

Luiz Valentini (CTO)

Operator (participant)

Luiz Valentini (CTO)

Operator (participant)

Eduardo Couto (CFO)

Operator (participant)

Johann Bordais (CEO)

Operator (participant)

Johann Bordais (CEO)

Operator (participant)