Good morning, and welcome to the Eve Air Mobility First Quarter 2024 Earnings Conference Call. 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. 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. 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. Words like believe, may, will, estimates, continues, anticipates, intends, expects, and similar terms 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 house the electric motors and started to install the composite skin of the aircraft. We are also preparing for another round of wind tunnel tests with the rotors on. This will start in a week and will roughly last three weeks. This will be used to validate and further refine our computer models before our ground test campaign starts in the second semester. In parallel, we continue to down-select suppliers and sign binding contracts. These define technical specifications for the components as well as commercial aspects with volumes, unit prices, and aftermarket support conditions. Just last month, we selected KAI, the Korea Airspace Industries, and before that, we 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, doors, lighting, transparencies, and other options like the landing gear, for example. Lastly, we presented Vector, our Urban Air Traffic Management Software, at the Airspace World in Geneva, along with a full demonstration of its capabilities. This is a strategically important tool to help scale 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 structure of an aircraft. Now the wing and empennage are fully joined to the fuselage, which we internally call 'the marriage,' and they both have their internal harness installed. These are complex electronic and electric cable systems to carry signals to and from the many sensors in the wings, control surfaces, and flight computer. Also, the internal superstructure already has its electronic components and internal cabling as well. One interesting fact is that as you can see in Slide 3, we temporarily placed the many composite parts of the skin of the prototype with tape. This allows our engineers to make any adjustments they want to optimize the placement of the parts. Once the parts are aligned, we have a perfect fit and then they're installed permanently. Now moving to the next couple of slides, which have a few pictures that show and detail some of the structures of our eVTOLs such as the starboard side wing and its pylon and also the nacelle. The pylons are the structures that will support the lifters and are connected to the booms and wings. Essentially, they will support the weight of the entire aircraft during takeoff and landing. As you can imagine, the pylons have to be robust, lightweight, and flexible. As mentioned before, we engaged KAI to provide the pylons for our commercial aircraft. Each pylon will have an electric motor at the front and one in the rear, and this will be housed by the nacelles, which are the green structures you can see in the pictures. Now Slide 5 shows that we've already installed the composite skin of the cockpit, which gives a glimpse at how well-formed the funnel shape is and how good the eVTOL will look. I'm a big fan. Looking at the engineers in both pictures helps you put them into perspective and gives you a good sense of the size of the eVTOL. We still need to install the actuators and control surfaces of the wing and the empennage, and we expect to conclude that in the next few weeks. Once we receive the electric motors in the second semester and successfully perform the necessary ground tests, we plan to start the test flight campaign later this year. Now getting to Slide 6, we can see here the latest addition to our component supplier list, which will start using the first five confirming prototypes. So far in 2024, we announced several suppliers, FACC to provide the control surfaces and empennage, Aciturri for the wings, Crouzet for the pilot control inceptor or joystick. We also signed Thales for sensors and Honeywell for guidance and navigation, and lastly, RECARO for the seats. Recently, we added KAI for the pylon to this list. Our suppliers team has been quite busy, as you can see, remembering that we announced the first three suppliers at the Paris Air Show last year, and now we have more than 15 suppliers selected. We have been using the best-of-breed approach to bring suppliers with experience in aviation and certification. Importantly, they will also support us for the certification campaign and throughout the eVTOL life cycle. Lastly, these contracts have defined price and quantity schedules with a scale function that reduces unit prices as we reach higher eVTOL production volumes. Commonly, we call this 'economy of scale.' We still have a few suppliers to select, but these are not critical ones, like the skids or the landing gear, transparencies, cabin interiors, and lights, and we expect to conclude the selection process very soon. Looking at this list, which we'll keep increasing, I am very confident in the level of safety for the certification and performance of our eVTOL. Slide 7 shows Vector, our Urban Air Traffic Management Software. On top of the product naming, we were part of the integrated demonstration in a NATS booth at Airspace World in Geneva earlier this year. With NATS being a Tier 1 ANSP, we showcased our work in urban air traffic management to a global audience. As a reminder, we successfully conducted a five-day exercise in the U.K. to test Vector with our partner, Flexjet and Halo. This was used to validate and refine the software in a real-world setting, and we tested it under normal operational conditions, but also under different conditions such as delays, bad weather, in-flight emergencies, and other potential unplanned operations. Vector will be an agnostic software to support fleet management and control of airspace that we believe will help to scale urban air mobility safely and globally. On Slide 8, it shows the latest addition to our backlog. We signed an LOI with AirX for the complete package. AirX is the largest public helicopter air charter service in Japan, and we will be collaborating with them to scale up UAM there. They are willing to purchase 50 of our eVTOL, and they are also subscribing to the services and operating support businesses along with Vector to manage their fleet. On Slide 9, this brings us to a total backlog of 2,900 aircraft, which are non-binding letters of intent for 30 different customers, spread over 13 countries, and various businesses ranging from mainline to regional airlines, helicopter operators, ride-sharing platforms, and leasing companies. We also have LOIs for Vector from 16 different customers, and we believe this reflects the market-leading value proposition that we bring to our customers. Importantly, the value of our backlog is now estimated at $14.5 billion, based on the list price of our eVTOL. We previously used a reference price to estimate the value of our backlog, and moving to a list price is common practice in aviation and takes into account various internal and external factors to define a standardized price practice in the sector. We will not disclose the aircraft price of each transaction, and we will use the list price as a reference for future transaction values. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the many challenges ahead of Urban Air Mobility, which is to create a whole new ecosystem beyond simply developing an aircraft. Because aircraft don't fly without proper maintenance and support, we are highly focused on providing the best-in-class services to eVTOLs operators. We have also secured contracts with 12 different customers for maintenance, repair, and overhaul, commonly called MRO, that will bring up to $935 million in revenue to Eve over the next five to ten years. Importantly, these customers have placed LOIs for roughly 1,000 of our aircraft, which is about 35% of the order book, so we can potentially expand this business within our own customer base, just like we did in the past quarter with two new service contracts. Now I'd like to invite the CFO, Eduardo, to go over the financials and along with the milestone checklist.

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 costs associated with our program development. With that said, I want to highlight some of our numbers. Eve invested $27 million during the first quarter of 2024 in our program as the development activities continued 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 on 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 the fourth quarter of 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 will 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 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.

And the first question today will be from Savi Syth from Raymond James.

I was curious about the plan to build the next five 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.

Thank you for your question. Yes, we are currently working on the nonconforming prototype as shown in the pictures. The next step is to begin assembling the conforming prototype in the second semester, which will include a full cabin. This will be very similar to what the EVE-100 will ultimately look like. We plan to produce all five prototypes next year, and they will all be part of the certification campaigns.

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 two modules, but with some adjustments. So we go 120 first and then 240, and then we expect that's what we call the first module. Then the 240 can become a second module that you add to the 240. So that's where you get the full capacity of our facility in Taubate, Brazil, which will be 480 units per year. It never changed. It was always this rate.

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. You mentioned some list price versus reference prices. Maybe if you could talk about the change there? Was it an accounting change? Why did you change it? It seems to suggest aircraft are going to be for $5 million list price versus $3 million previously. 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 sales campaign. We’re still signing LOIs because interest from customers keeps coming to us. We entertain this because, at the end of the day, the LOI and the backlog show and demonstrate the interest and how customers understand that Eve is bringing a solution. We don't stop signing LOIs. I think it’s essential for expanding our footprint as we will eventually get certification done as per the various countries. First will be ANAC and FAA, and as we go, we will expand. That's why LOIs are important, they demonstrate the solution that we're bringing. It tells the world how, once we certify, then customers will sign purchase agreements. But at the same time, we're really starting the sales campaign. This is why we want to make sure we have a list price as a reference. We don’t disclose the price that we're negotiating the aircraft at. So I think this is better.

Okay.

Do, maybe on the accounting wise, sorry.

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. We are very comfortable, guys, in terms of liquidity and cash. As we showed in the first quarter, our cash position only declined by $19 million, which was a very small decline. We accessed another $15 million from the long-term finance that we have from the Brazilian Development Bank. We now have $280 million left, which is a substantial cash position. We are discussing some additional long-term finance lines, so we are comfortable. This $280 million will take us well into 2025. I would say, for sure, towards the end of 2025. We like this mix of debt and equity, especially when it's long-term debt that fits our profile. We are a preoperational company. Long-term finance of 15, 16 years fits our profile, which is why we are exploring potential additional long-term finance. Our liquidity will remain strong.

Excellent. 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?

The question about the rotors is one that we really assessed deeply, Austin. For us, it was vital to optimize the vehicle for the mission we propose. With the urban mobility mission in mind, we see that the eventual loss of range we have with respect to another configuration, for example, with tilt rotors, is more than offset with the gains that we achieve not only from simpler systems but also the clear path to certification. It’s a matter of optimizing the vehicle and making the choices that make it most fit for the mission we are proposing. For our case, we think this is the best balance the vehicle can have.

I will add, coming from customer support and services, the aftermarket, and operation perspective, the guaranteed availability of the aircraft guarantees the return for the operator, as the simplicity of fewer pieces reduces the likelihood of something breaking in the field. You also need competent mechanics and parts in stock at the site. This is a significant advantage for the customer.

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

Congratulations on the quarter. I wanted to revisit 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, are these customers going to be paying a higher price than they initially expected? Does that change at all their interest in the LOIs? In other words, if we go from 3 to 5, will that have an impact on the order book? What's the best way to think about that?

Thank you, Andres, for the question. It’s a good one. I think we’ve been very close with our customers since we first introduced the concept to them, during LOI negotiations, and in discussions with our advisory board, which focuses on human-machine interface workshops. We are developing solutions for them together. They know the challenges we have. They have followed closely, which is part of the transparency we want with our customers. We are at the frontier of the technology here. We’re learning things as we go. That’s why we have the current prototype and later the conforming prototype. This transparency ensures we build a business model for Eve and the customer together; it’s not only for Eve, but for the customer at the end. This also relates to the simplicity we are discussing. The vehicle needs to fly, operate, and provide returns for the customers. When we have discussions, we look at various scenarios: the optimistic scenario based on parameters like lending fees, operational fees, and the cost of the asset. Having those different scenarios allows for one-on-one discussions. When it comes to the market, we want to ensure we have this list price as a basis. I don’t believe the price right now determines aspects for our customers and our backlog; what’s essential is certifying the aircraft. We need to deliver a technical solution and ensure we have a service and support team ready to assist them for any potential interruptions in the field. Yes, we need to develop a model that works for them. So, while the price may impact the backlog at some point, I think the readiness of the ecosystem will have a more significant impact. That will determine an operator’s choice for a city or another location. We need to ensure the ecosystem is ready, and once it is, we’ll have operations up and running, allowing us to proceed with firm orders and the option to fulfill our program that requires delivering the first airplane as a showcase.

Got it. Okay. No, that’s super helpful. I appreciate all that context. Maybe just a quick follow-up to clarify. Apologies if I misunderstood, but what’s the timeline for your prototypes and test flights? If I understood correctly, you’re expecting the first prototype to be assembled in Q2 of this year, with the other four in the second half of the year? Similarly, the test flights of that first prototype beginning in the second half of this year? I want to make sure I got the timing right.

Right. Thanks, Andre. That's important. Indeed, the first full-scale prototype without the cabin, the nonconforming prototype as we call it, is being assembled and will be completed by the end of the second quarter, as you mentioned. We will then start producing the five conforming prototypes that will be assembled next year, in 2025.

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

That is correct. We’ll have different ground tests to perform, like ground vibration testing, electromagnetic interference testing, and the flight control system testing before we can start the actual flight tests.

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 construction cost or development costs? Does that mean you have a higher margin on the sale of those vehicles? Second, regarding certification, you mentioned the update with ANAC and the conforming prototypes. So the base case continues to be to have certification by 2026, or could we have any potential positive or negative surprises here? I just want to understand a little bit more on the timeline of the certification.

Marcelo, thank you for those two questions. The first one, regarding margin, we are creating a new segment. There are a lot of challenges, whether it's on the cost of goods sold. We decided to go for the best suppliers, which is a risk-sharing partnership. We've chosen them to help us not only with the vehicles and development but also with production, series, certification, and aftermarket; we're all learning. We do have challenges regarding weight and performance, and also lead time and development in general. I don’t think it’s about margin here; we must first ensure certification. We are very cautious about our spending currently. I made it clear that we’re comfortable, but we need to be very careful. The goal is certification. Regarding the second part of your question, Valentini?

Yes. So Marcelo, thank you for the question. Remember that ANAC is developing a certification basis specific for our eVTOL project, as is the case with the FAA. It’s crucial to understand these requirements early in the project so we can define vehicle solutions that will eventually comply with established requirements. This is why we are working hard with ANAC, our primary certification authority, to get these requirements defined and move on to other stages of what we call means of compliance, and detailed design standards, which we will use to show compliance with defined requirements. We are confident in where we stand in our project and how mature the basis of certification is, but we need to advance. That’s why we set this as a goal for this year. We are working with ANAC and the FAA to ensure what we establish will support our vehicle development in the next phases of the project. Some significant uncertainties remain, such as aligning this basis with those of other authorities, like EASA in Europe. There are also significant uncertainties affecting the entire industry—not just our project—related to operational requirements. Both ANAC and the FAA are still defining what operational requirements there will be for these vehicles, which will require flight reserves and pilot training, among others. We have a lot of work ahead and the timeline for entry into service in 2026 remains our target.

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

Terrific. When do you expect to start flight tests of the conforming prototype? When do you hope to start certification flight tests, and what are the other key milestones we should look for to get us to certification? Can you provide some timeframe as to when you might start those?

Yes. Cai, thanks for the question. We expect to fly the prototypes in the second half of next year, supporting the entry into service in 2026. As you know, there’s some maturing of the vehicles to be done during flight, and after this development period, we’ll start getting credit toward certification. So typically, there’s a period during which you’re flying to finalize the tuning of control laws, deflection of control surfaces, and aerodynamic fixes that need to be made. You finalize the configuration definition in flight and then establish a configuration credit for certification. We believe flying in the second half of next year will support our development in time for entering service in 2026. As for important milestones until then, the certification basis definition is one. We are working with ANAC to support them in finalizing the certification basis and progressing discussions on means of compliance. These next steps of the certification process will indicate our preparedness to start flight testing for certification.

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 took them a little longer than expected. What do you think the key tech challenges are?

Sure. I think there are a few. One challenge is making everything work with electric power. Batteries are still quite limited for longer ranges and higher payloads. Integrating those systems effectively is a significant challenge encountered by everyone at our stage of development. After that, there are flight challenges. For example, eVTOLs do not have the inherent stability in flight that conventional fixed-wing configurations have. That means we’re much more dependent on the fly-by-wire flight control systems. This needs development in these new transition phases of eVTOL flight, whether it’s lift plus cruise, tilt rotor, or any other configuration. Handling the hover-to-cruise transition introduces complexities in fly-by-wire flight control. While this is a challenge, we feel prepared based on the experience Embraer has with developing fly-by-wire systems across several other aircraft. Combining battery power and eVTOL flight is a challenge we have all faced, and optimizing the various phases of flight with fly-by-wire remains a significant challenge for all manufacturers.

I have one last question: the FAA is expected to finalize the operational requirements. Two key areas are the reserve requirement and training—do you know where they stand? Do you expect the FAA and ANAC to finalize the operational requirements, which will have some impact on whether your design needs to be changed?

Thank you, Cai. These are essential points. The FAA has been going through a significant process in developing these requirements. There’s been prior industry expectation that these would be finalized by now. A draft of these requirements was published last year, which received considerable pushback from the industry. The points you brought up are among the most critical. There is now an expectation from the industry that these will be finished soon, but we lack clarity on when that will happen. We believe there might be a new publication by the end of the year, which we anticipate to be a finalization of the requirements. We're bracing for significant changes, particularly in pilot training and reserves. However, we don't have clear statements from the FAA about when this will occur, so we are working with the timeframe you referenced for the second semester but without further detail.

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. We'll continue updating you on our prototype's progress throughout the next few quarters. We look forward to meeting you at 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 my team. Thanks, and have a good day.

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