Eve Holding, Inc. Q2 FY2022 Earnings Call

Greetings. Welcome to Eve Holding Second Quarter 2022 Earnings Call. This time all participants are in listen only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. At this time, I'll now turn the conference over to Lucio Aldworth, Head of Investor Relations. Lucio, you may now begin.

Thank you, operator. Good afternoon everyone. This is Lucio Aldworth, the Director of Investor Relations at Eve. And I wanted to welcome everyone to the second quarter of 2022 earnings conference call. I have here with me, Co-CEOs Jerry DeMuro, and Andre Stein, as well as our CFO, Eduardo Couto. We also have Luiz Valentini, our Chief Technology Officer, who's responsible for the development of our eVTOL. After the initial remarks, we're going to open the call for questions. We have prepared the deck with a few slides and additional information, which is available at our Investor Relations website at ir.eveairmobility.com. So please download it for your reference. Let me first start by mentioning that this presentation includes forward-looking statements, or statements about events or circumstances that have not yet occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking 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, may, will, estimate, continuous, anticipates, intends, expects and similar words are intended to identify forward-looking statements. We take no obligations to update publicly or revise any forward-looking statements because of new information, future events, or other factors. In light of these risks and uncertainties the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to Jerry. Jerry?

Thank you, Lucio. I'm delighted to be here today on the occasion of our first quarterly release following Eve’s listing on the New York Stock Exchange. This is an exciting time for Eve, and I'm proud to be part of the team that has achieved this important milestone. For those not familiar with our recent merger with Zanite Acquisition Corporation, the transaction includes a number of strategic and financial investors that raised a combined $377 million as shown on Slide 2. We believe this funding provides an excellent foundation for the development and certification of our eVTOL and other elements of the Urban Air Mobility ecosystem that we expect to launch in 2026. Our most notable and relevant strategic investor is Embraer, the third largest aircraft manufacturer, and a leader in the regional and executive jet market. Embraer is a unique partner that brings significant competitive advantages to Eve. We are leveraging its long history and deep expertise in aircraft design and production with royalty-free access to its more than 50 years of intellectual property. We also have access to skilled engineers on a flexible and first priority basis. In simple terms, we have access to a pool of some of the most accomplished and talented aerospace engineers in the world. Our long-term agreement with Embraer yields an unmatched position of development capabilities and cost advantages; it means we do not have to create this workforce from scratch, and then shape it into a cohesive team. It already exists, and we can scale up or down as needed. This arrangement means we do not have to carry these engineers on our P&L when not required, which makes for a lean and highly efficient organization. When coupled with attractive labor costs in Brazil, this arrangement will substantially reduce our development costs. Lastly, our partnership with Embraer also gives us access to its global infrastructure. This is critical not only to our development and certification efforts but also to service and support of aircraft on a global basis. Embraer has more than 80 service centers around the world that can be an important platform for our maintenance business in the future. There could be no eVTOL operation without a reliable and efficient customer support capability. The combination of Embraer’s partnership and our holistic approach to Urban Air Mobility, along with superior aircraft design, have translated into what we believe to be the largest and most diversified order book for eVTOLs globally. We have signed letters of intent for more than 2,000 aircraft from 22 different launch customers. These are operators from around the globe, with different aviation backgrounds, including fixed wing and helicopter operators, rideshare providers, and more recently, a defense player with the potential to expand the applications of our UAM solutions. One last point that is important to note is that no customer represents more than 10% of our order book. This serves to derisk our business plan and brings confidence to our eVTOL program. Now, I would like to invite my colleague and Co-CEO, Andre Stein, to give us a bit more color on the development program and the aircraft itself. Stein?

Thanks, Jerry. I'm also very excited to be here. It is a historic moment for Eve. We have come a long way, and there is a lot more ground to cover, but you are clearly moving in the right direction. We have already kick-started the certification process of our eVTOL with Brazil's Aviation Authority, ANAC, and initiated conversations with the FAA in the U.S., EASA in Europe, and other major certification authorities as well. It is important to highlight that we will receive undivided attention from ANAC, while the certification authorities in the U.S. and Europe will be busy dealing with multiple problems at the same time. The Brazilian authorities have a long history of collaboration and bilateral agreements with the FAA, whereby it affects and validates the work done by ANAC requiring only a few additional tests. We believe this puts Eve on a clear path to certification, especially when combined with our simpler design with fixed wings and lift-plus-cruise configuration. Embraer’s support is going to be vital in this regard as well. Embraer brings quite a bit to the table by having certified over 30 aircraft just in the last 25 years. They too, for example, received the simultaneous certification approval in Brazil, the U.S., and Europe on schedule within specs and budget. We also took important steps to optimize the plans for our manufacturing facilities and supply chain strategy by partnering with Porsche Consulting. They will bring expertise that will help us plan for future productions, supply chain logistics, and to scale our business. Now, on to Slide 3. In parallel, we are performing several tests in our Proof-Of-Concepts, Wind Tunnel Models, RIGs, Flight Simulators, and Mock-Ups. All of these, of course, offer important input for our aircraft development. We have also run simulations with conventional helicopters to validate and stress test our concept of operations for eVTOLs in a real urban air environment. The most recent experience took place in Rio de Janeiro over 30 days. We collect important information to better address the needs of the passengers, partners, and the community when it comes to the use of eVTOLs for urban mobility. Now onto the next slide, Slide 4. We hosted last month our First Advisory Board in Europe, where we brought several of our customers to discuss the whole spectrum of our portfolio of Urban Air Mobility solutions, including aircraft characteristics, such as performance and user experience. In that sense, we unveiled our fifth generation of our eVTOL cabin Mock-Up. This cabin was later shown for the first time to the public at the Farnborough Airshow, and it showcased our approach to a human-centered design and reflects market needs such as accessibility and safety perception, as well as our own emphasis on sustainability. Last but not least, we also disclosed at the Farnborough Airshow the current design of our aircraft that we can see on the left of the slide, featuring a conventional wing and tail. It's important to highlight that as part of our development process, and based on all the background work that has been done so far, we have been evaluating variations of our lift-plus-cruise configuration. Now we believe that the current configuration is mature enough to disclose to the markets. The aircraft remains simple in design with eight lifters and pushers, allowing for a reliable and safe platform designed for vertical takeoff and landing and avoiding moving parts. The simple design is the differentiation in our certification efforts. Next on Slide 5, Jerry will talk about our partners and how important they are to Eve.

Thanks, Stein. We currently enjoy an extensive list of strategic partners that continues to grow. They will all be important in developing the best-in-class products and services we plan to offer to the UAM market. A number of these partners are also investors in our pipeline, so they do have skin in the game, and their participation reflects the fact that they share our belief and vision for the UAM industry. These partners cover the full spectrum of the UAM ecosystem, offering operational support, infrastructure design, and build-out for technical expertise in the design of critical components of our aircraft such as motors, avionics, and propulsion systems. The list of aviation partners includes leading aircraft operators across the globe such as SkyWest and Republic, as well as important leasing companies like Azorra and Falko. There are also several leading helicopter operators from different parts of the world and ride-sharing platforms that connect the operators with the riding public. In sum, we have partners involved in every aspect of the UAM market. This is a holistic approach that will help define the standards for the entire Urban Air Mobility market. The order book shown on Slide 6 demonstrates that the market recognizes our qualities and strengths. As I noted earlier, we have already received more than 2,009 binding orders from 22 different customers, which we believe to be the largest and most diversified order book for eVTOL in the world today. We have orders from 10 countries across six continents. Not only do these customers include helicopters and fixed-wing operators and leasing companies as well as rideshare platforms, more recently, we signed an agreement with BAE Systems and Embraer, which will jointly pursue defense applications as well, while Eve can remain focused on Urban Air Mobility. This new partnership begins to pave the way for different use cases for our aircraft. Our nonbinding backlog is valued at almost $6 billion. And we expect progress down payments will add significantly to our cash flow as we begin to convert those Letters of Intent into firm orders in the years to come. Now, I'll turn it over to Edu and talk a bit about our financial position.

Thanks, Jerry. I'm glad to be here today to present Eve's second quarter results after the recent conclusion of our capital raise and public listing on the New York Stock Exchange in May. This is a very exciting moment for us as we were able to secure significant funding for our program while bringing strong partners to join our project. Turning to our financials on Slide 7, I would like to start with the income statement highlights. We spent $9.8 million during the second quarter of 2022 and almost $20 million in the first half of this year on research and development. The bulk was invested in our eVTOL development and a portion was used for the development of our service and support solutions in the development of our Urban Air Traffic Management System. We’re the only eVTOL company with a complete solution, including the vehicle, service and support, and air traffic control. In addition to the R&D expenses, we also had $6.5 million in SG&A expenses during the second quarter '22, and $7.3 million in the first six months this year. Given those expenses and considering we are still a nonoperational company, we reported a net loss of $11.8 million in the second quarter of 2022 and $21.3 million in the first half of the year. I would like to call your attention to some of our competitive cost advantages, especially first, our full access to Embraer's engineers on a first priority basis and only as needed. That means we don't need to bring hundreds of engineers to our P&L, which makes our development much more cost-efficient. Second, our ability to use Embraer's 50-year intellectual property on a royalty-free basis; that's another important source of cost savings. And third, access to Embraer's facilities with minor investments in only the sharing of facility fees. That also saves us significant infrastructure CapEx at this stage. That said, moving to cash flow, I would like to highlight our cash burn of $13.2 million in the first six months of 2022. The cash consumption was positively impacted by accounts payable of approximately $10 million related to Embraer's development services. Eve has 45 days to pay Embraer for engineering services for any given period. With that, we ended the second quarter with approximately $330 million in cash following our net capital raise of $329 million in May. Given the cost advantages I just mentioned, we feel extremely comfortable with our current cash position, as it gives Eve plenty of resources to maintain our eVTOL development for multiple years. At this point in time, Eve has no debt on its balance sheet, which provides another avenue for financing operations, as well as cash from customer progress payments once LOIs are definitized into firm orders. Now, on the balance sheet, I want to emphasize again, total accounts payable of $12.6 million at the end of the second quarter that reduced our cash burn. At the same time, we have no debt on our balance sheet and a cash or net cash position of more than $330 million. That concludes our financial highlights. And now, we would like to open for questions. Operator, please go ahead.

Our first question comes from the line of Sheila Kahyaoglu with Jefferies.

So maybe I wanted to just ask first step in terms of you announced the formalization of your eVTOL certificate with ANAC during Q2, what's sort of the next step in the process? And if you could sort of talk about what testing is involved from here? Maybe for Andre or Jerry.

Sure. Thanks, Sheila. It's an excellent question. The quick answer is that there are multiple steps and as we have done in the past, we expect to move to a common structure with the FAA later this year. Stein, you want to talk to that a little bit further?

Sure. Our strategy overall, as Jerry mentioned, is one that's been done in other programs, which is to use ANAC as our primary certification organization. So we have their undivided attention, but at the same time, engage with all the other major regulatory authorities, including in particular, the FAA, where ANAC has bilateral agreements. We’ve used that in previous problems to assure that there is not a new certification process in the FAA, but rather validation of what ANAC has done. So we are quite confident of moving towards that. I'm not sure if Valentini wants to comment more on that, but that covers it.

I have one more question for Eduardo, if possible. I understand you raised some debt on August 1st with a loan agreement from Embraer for $81 million at around a 5% rate. What influenced your decision to take on that debt? How do you plan to use the funds? Also, are you considering any leverage or additional debt raises?

Yeah, hi, Sheila. Just to clarify, it's really the other way around. We didn't raise any debt with Embraer; we invested part of our cash with Embraer at the arms-length rate right of almost 5% a year. So that $80 million will give us almost $5 million in interest rates per year, so a very good investment for Eve. It's a one-year loan; we can prepay that loan and get the money back anytime we want. We get an independent assessment for an auditor regarding the interest rate of 5%. We also get our independent board approval. So it's really the other way around. We don't have any debt. We are always looking for ways to leverage the company and maybe bring additional cash and consider raising some debt in the future. We are approached by a lot of potential lenders, but at this time, we have no leverage in our balance sheet, which gives us flexibility to raise future debt and bring even more cash for Eve.

The next question is from the line of Savanthi Syth with Raymond James.

If I might ask, like, the design changes that you announced at Farnborough, could you talk about some of the rationale behind the changes and kind of what kind of benefits they provide versus the prior design? Just to understand a little bit more of what was finalized here at Farnborough?

There are a number of benefits, and Valentini, you're probably in the best position to talk about some of the specific trade-offs and what they resulted in.

Sure Jerry, so good afternoon to all. I think there are two important points to highlight with respect to the changing configuration. One is the displacement of the rotors. The placement of the rotors that we made allows us for sizing of the motors with less power, the motors of the lifters with less power, thinking of the controllability in case of the failure of one of them in flight. So we maintain controllability of the vehicle, but we can do that, and we did maintain also, in the previous configuration. But we can maintain it in this updated configuration with less power in each of the motors. So this is helpful with respect to the sizing and the weight of the vehicle. It allows us to reduce the weight, which of course brings benefit in terms of energy efficiency and noise and other aspects. In addition to this, we find that this configuration with the conventional placement of wing and tail gives us a little bit more flexibility to adjust the stability and controllability of the vehicle in the future and make minor adjustments if we have to. So it gives us a little bit more leeway to refine the flying qualities as we refine the project and go along. So those are the two main reasons for updating the configuration in this way.

I guess the follow-up on that would be just the kind of the parts and the aircraft design and suppliers. When do you expect that to be firmed up and when can we kind of expect a full demonstrative vehicle here?

Yeah. So, Savi, that happens as the design matures, as you saw here or as Valentini talked about. These modifications give us an enhanced controllability with reduced power and weight. They also provide a little bit of design margin as we further refine this design. So the best answer I can give to your question is, we're flying a variety of vehicles now, doing extensive simulation and modeling to test variations of key elements so that we can understand and verify the effects those variations have. And with respect to suppliers, you'll probably see us start on three of the key areas, really on the motors, propellers, and batteries. Starting at the end of this year through the first half of next year, we will probably lock down each of those three categories. Valentini, anything you want to add to that?

The timeline aligns with our original plan for developing the vehicle. The schedule for finalizing agreements with suppliers is part of that plan. I want to emphasize that we are discussing contracts for the supply of the parts and systems you mentioned. Prior to that, we have had significant engagement with several potential suppliers since the beginning of this year to encourage their participation and to learn about their products. We are gradually advancing our collaboration with them before finalizing agreements as per the schedule you referred to.

And Savi, I would just add one more point. We believe we will continue to mature this design as we get closer to what we call a production representative model. So it depends on how one defines prototype and commercial or production representative models. But we expect to refine details on this all the way until we head towards that production representative model roughly two years in advance of certification.

Final question, I thought the BAE announcement was interesting. It presents a new vertical in defense to explore. I'm curious about the early stages, but do you have any insights on the types of missions that might be launched first and how significant this defense angle could become? Could it be as impactful as it is for Embraer?

Savi, I'll turn that over to Stein. But in terms of the specific applications, that'll be up to the joint venture between Embraer and BAE to determine. We at Eve will remain focused on the core Urban Air market. Stein, you want to talk a little bit about where maybe some of the early adoption might be on the defense segment?

Sure. And actually, the beauty of the deal between BAE and Embraer is exactly that Eve will remain focused on the Urban Mobility Market, and we'll provide them with our baseline aircraft. So we can optimize our aircraft for Urban Air Mobility and at the same time access the defense market. And particular applications where we could deploy technology for autonomous for example, that are regulatory environment, and these are in the defense applications, then it is for the civilian applications. As Jerry said, the final use will depend on the market development from both BAE and Embraer defense, but some of the applications we have heard during the discussions are things like search and rescue, disaster relief, ship to shore, things that will take advantage of both the different qualities we have on our vehicle, being that it’s electric. And in ship to shore, for example, there is an absence of electricity in the ship, so we don't need to carry fuel. That's the benefit of an electric vehicle for that type of application. And there apparently quite a few potential customers that have been excited about.

Our next question is from the line of Marvin Fong with BTIG.

I appreciate the color you provide on the redesign; that was one of my questions. So I'll move on to a couple of finance questions perhaps. Your press release referenced that you'll be able to kind of leverage additional capital from down payments as orders firm up. And I know that pre-delivery payments are very common in the aircraft industry. But since potentially a lot of investors on the call are actually not familiar being tech investors, maybe it'd be helpful if you guys just kind of dug a little deeper into how much capital you think or working capital you can raise from pre-delivery payments and the timing relative to final delivery those payments will come in. And then I have a couple of additional questions.

Sure, I'll turn that over to Edu in a moment. But as Edu said, we've got substantial cash on the balance sheet. So we've got quite a bit of runway in front of us that allows us to determine what's the most advantageous way to strengthen the balance sheet if and when we decide to do that. And certainly, the pre-delivery payments are a vehicle to do that. In terms of timing, we expect to start definitive sizing of those LOIs over the next 24 months.

Yeah, sure. Gerard. Thanks, Marvin for the question. Yeah, it depends from product to product, but down payments or advances could be as big as 50% of the value of the vehicle. So if you look, our nonbinding backlog, right, it's over 2,000 vehicles, over $6 billion. If you assume that some of the advances could be as high as 50%, you can figure out that a lot of cash inflow may come to the company as we transition those nonbinding orders into firm orders. In general, that happens as Jerry mentioned, 24 to 18 months prior to the delivery, so there is a schedule. But it depends a lot and varies from customer to customer.

Okay, great. Thanks for that color. And one other question on finances. Edu, maybe you could share your thoughts on how we should be thinking about OpEx and CapEx for the back half of the year? If the second quarter rates a good run rate or do you expect that to step up?

We anticipate that our expenses will increase as we progress in the program. Therefore, we expect higher cash burn and investment in the second half of the year. We have several advantages, including only paying our engineers for the work they do without carrying them on the balance sheet. Most of our labor force is based in Brazil, where rates are competitive. We expect to spend around $100 million throughout development, although this may vary from year to year. Given our current cash position of $330 million, we feel well-equipped to manage our anticipated cash burn and have ample resources to accelerate our development. Overall, we feel optimistic about our situation.

I have one last question. Regarding business development, you have built the largest unit backlog in the industry as far as I know. Can you explain the process to investors? Are potential customers reaching out to you, or are you reaching out to them? What does the evaluation process look like? Are they comparing you to other eVTOL players, or is it typically more of an exclusive negotiation?

That's an excellent question. I think Stein's in the best position to answer that, but as you look at the backlog, it really covers the first three or four years of our business plan. So, at this point, we're not focused as much on numbers as the strategic positioning, et cetera. Stein, you want to add anything to that?

Sure. To your question about whether we are being sought out by customers or if we are seeking them, the answer is that we are doing both. We have been approached by various customers worldwide. As Jerry mentioned, we are very selective about the partners we choose to work with. It’s not just about accumulating a large backlog for its own sake, but rather about finding the right partners. Currently, we do not have any customer that represents more than 10% of our backlog, which helps to reduce risks by spreading them out. We have customers from all over the world, which also aids in minimizing risk, in addition to our business models involving leasing companies, helicopter operators, and airlines joining us. We are being strategic and moving in that direction. Regarding competition, it is definitely always present.

The next question is coming from the line of Marcel Laniado with JPMorgan.

Question to Eduardo. Regarding cash needs and capital structure. I mean, you guys comment about this like, $100 million cash burn per year over the next I don’t know, two to three years, but just to understand what you guys see as the capital structure? Of course, it all depends on the speed of development and so on. So just to understand how much leverage you guys think that you can add and how do you see the capital structure evolving over the years?

We successfully raised nearly $400 million in our capital raise, with approximately $350 million currently on our balance sheet. We believe our cash burn is well managed. We continuously evaluate opportunities to increase our cash reserves. One method could be leveraging the company, and while we could raise funds this way, we need to ensure any debt has the right maturity, ideally long-term, with a possible grace period, and comes at an appropriate cost. We have been approached by various parties with different proposals, but we have not secured anything yet. Another potential avenue is obtaining advances from customers; as we secure orders, we anticipate receiving larger down payments, which could provide significant cash inflow. There are several strategies we can employ to enhance our cash position. Given our current cash burn rate, we feel comfortable with our cash situation, but we are also exploring ways to generate additional cash flow, and we feel optimistic about our prospects.

The second question is regarding the start of the levers. There were those changes on design, and everything's very fluid at this point in time as you guys are perfecting the model and get to the most efficient solution. So, just wanted to double check, if 2026 continues to be kind of the base case or if no change in design or supply chain or certification process, has any of those things over the past six months changed and could lead to an anticipation or delay on this base case for 2026?

I'll turn this over to Valentini and Stein, but the short answer is we're still looking at 2026. But as you know, things can happen like, for instance, you mentioned the certification process and major agencies, whether it's ANAC, FAA, or EASA, we are still working our way through that. I think that's not so much an Eve specific issue, but that affects the industry as a whole. That's one of the macro things that could affect entry into service. As well as the other community acceptance and the other regulatory factors associated with the operation, not just certification, I think they could be as much or more of an impact on 2026 for the industry than the internal factors. Stein, Valentini, do you want to add anything to that?

Sure. Just on the configuration, it's important to highlight that it is part of the development process; selecting the configuration was a planned part of it. So we have been particularly in the lift-plus-cruise solution, perceiving that as the best direction to go with eight rotors to take off. That's what we have been evaluating, and we've selected the direction to go now. So, that was the way it was planned, and there is no change on our target for service for the first deliveries.

The next question comes from the line of Kristine Liwag with Morgan Stanley.

This is Jeff Hung on for Kristine. I wanted to ask about plans for autonomy, appreciating that it's still a ways out. But maybe you could speak to the roadmap here in any maybe near-term milestones to watch for with regard to autonomy?

That's an excellent question. Stein, you already alluded to that with the defense application, maybe giving us an early adopter there, but some things that we were already doing in CONOPS in Rio to advance the autonomous capabilities. Stein?

Absolutely. Earlier this year, we announced our tasks in Rio where we have been carrying a pack of sensors in a helicopter in a real urban environment. And the idea for that was exactly to start the machine learning in a very literal sense, so starting to acquire the data in a real urban environment so we can apply that for the future that is autonomous. We are on track for that. We believe that we started operations with eVTOL operators on board and from there gather even more data in real operations to move towards an autonomous future. So we have been investing in that and investing in the development of the technology, but not counting on that as part of the critical path for eVTOL service. Valentini, if you want to add anything else to it?

In addition to what Stein described, we are currently making progress in establishing guidelines for our vehicles while they are still piloted, which we believe will lay the groundwork for introducing autonomous flight. One example of this is implementing a modular architecture for the avionics that allows us to develop towards autonomous flight, utilizing the existing fly-by-wire flight controls, sensors, and integration we have built. This also aligns with our goal of creating a simplified human-machine interface for pilots onboard, which will help automate the system, such as the flight control system, and prepare us for integrating autonomous functions in the vehicle. While we are working on the initiatives mentioned by Stein in collaboration with Embraer, we are also focused on the vehicle architecture and definitions that will facilitate the adoption of autonomous capabilities in the future.

Next question comes from the line of Josh Milberg with Morgan Stanley.

You guys covered a number of our doubts, but I wanted to ask if you could elaborate a little further on the topic of proof-of-concept flight testing? Just on the latest developments there, what you have planned for the remainder of the year?

As I said, we're flying a number of different kinds of aircraft; you can define them as proof-of-concepts, prototypes, etc. But more importantly, we think is evolving the final design through the simulation modeling and testing. Valentini, you want to talk about that?

Sure. We recently discussed updating the configuration, and we believe it is essential to understand all the possible variations for the vehicle. We need to implement any improvements or changes now while we still have the flexibility to do so. The longer we wait to make modifications, the harder and more expensive it becomes, along with the increased rework needed as the project progresses. Keeping this in mind, the tests we are conducting, which include flying vehicles as well as wind tunnel tests and RIGs, help us comprehend the characteristics and the different effects of various system architectures. With the modeling we do, which incorporates data from these tests, we can ensure that the decisions we make regarding the vehicle are the correct ones to proceed. That's how these tests, whether they are proof-of-concepts or not, contribute to our current stage of development.

So Josh, the short answer is we generally don't publish a schedule; we let the engineering team move through this entire process of model, as Embraer has proven is very effective in the past. And we expect to be flying more and more mature aircraft all the way up to the time that I said about two years out from entry into service, where we think we have a production-ready or production representative specimen. So it's ongoing.

At this time, we've reached the end of our question and answer session. I'll turn the call over to Lucio Aldworth for closing remarks.

Thanks, Rob. And thank you everyone for joining us today. We do look forward to updating you on our continued progress throughout the year. And please, don't hesitate to reach out to us in case you have any additional questions. Thanks and have a good day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.