Eve Holding, Inc. (NYSE:EVEX) Q2 2023 Earnings Call Transcript

Eve Holding, Inc. (NYSE:EVEX) Q2 2023 Earnings Call Transcript August 8, 2023

Operator: Greetings, and welcome to the Eve Air Mobility Second Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Lucio Aldworth Director of Investor Relations.

Lucio Aldworth: 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 second quarter 2023 earnings conference call. I have here with me co-CEOs, Jerry DeMuro and Andre Stein as well as our , Eduardo Couto. After their initial remarks, we are going to open the call for questions. We have got a deck with a few slides and additional information that is available in our website at ir.evermobility.com. So please feel free to download it and follow through the presentation. Let me first say that this presentation includes forward-looking statements or statements about events or circumstances that have not yet occurred. We based these statements largely on our current expectations and projections about future events and financial trends are affecting our business and our future financial performance.

These statements are subject to risks, uncertainties, assumptions, including, among other things, general economic, political and business conditions both in Brazil and in our markets. Towards believes, may, will, estimates, continues, anticipates, intends, expects and similar words are intended to identify forward-looking statements. And we undertake no obligation to update publicly or revise any statements because of new information, future events or other factors. In light of these risks and uncertainties the future 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?

Gerard DeMuro: Thanks, Lucio, and good morning, and thank you to all for joining the call today. Over the past few months, we have continued to make meaningful progress on our eVTOL development and the other aspects of our overall business plan. As announced at the Paris Air Show, we progressed to the point in our optimization work that we have now defined what we consider to be the final aircraft configuration, which is depicted here. And I will talk a little bit more about the details of that configuration on the next slide. We have reached this point in our development program by applying the findings most recently from the wind tunnel testing and a whole suite of test rigs, which provide actual performance data to validate our simulations and predictive modeling.

Stein will talk a little bit more about these tools that we have used in our development process a little later. Importantly, we have now identified the suppliers as well for several long-lead aircraft subsystems. They include the electric motors, the energy and storage management systems and the propellers. We plan to select and announce the providers for avionics, actuators and flight control systems in the next few weeks. And then we will move on to the last time critical elements through the balance of the year. We also have some late-breaking news, which we would like to talk about, and that is that the FAA has agreed to recognize the primary certification and a certificate process through ANAC, which will allow us to do the dual validation, which is so critical to our development program.

We still expect that our certification basis will be approved by ANAC in this calendar year. I would now like to talk a little bit more about the final design configuration as shown here on Slide 3. It includes a new empennage fixed to the setter booms that are then attached to the wings, providing a more robust physical structure. It also includes one pusher with dual motors or redundant motors and 8 lifters, which benefits both weight and safety of the vehicle. The DNA of our simple lift and cruise design remains unchanged. It is designed for efficient and safe travel and targeting 99% of the urban missions. The cabin will continue to house up to four passengers any pilot. We continue to make refinements in the cabin structure based on the mockup, which we unveiled to investors earlier this year and have taken on a worldwide tour to get customer and user feedback.

Based on that feedback, we have made various enhancements, including the baggage compartment, which we believe continues to be the best in class and is particularly adapted for airport downtown shuttle services. With our main suppliers known and specifications for those components defined, we can now start to assemble parts for our full-scale production prototype. We will begin assembly of that prototype by the end of the year and, in fact, have already started to cut components, and then we will begin the test campaign sometime next year. Now moving to the next slide. We announced at the Paris Air Show, the selection of several of our main suppliers, BAE for the energy management and energy storage systems, Duc for the propellers for both the pusher and the Lifter and Nidec Aerospace, which is a JV between Nidec Corporation and Embraer for the electric motors, which will be bespoke for both the lifters and the pusher.

As you may recall, selecting suppliers was one of the main milestones we established for 2023, and we continue to be on track with that milestone. And as I mentioned earlier, achieving this will allow us to start building our first prototype. And recently, we received tooling and began cutting material for the wings, and you will see that on the next slide. Last and certainly not least, I want to mention the announcement that we made last week regarding Johann Bordais joining Eve as our CEO effective September 1. Johann currently serves as the President and CEO of Embraer Services and Support, having built that organization from the ground up into a $1.3 billion global enterprise, which is one of Embraer’s most successful businesses. So Johann is a well-known quantity and a perfect fit for this role.

Eve vision is to not only design and develop a groundbreaking aviation product as well as a global support network. It is also to develop a sustainable urban air mobility ecosystem that will literally transform urban transportation on a global basis. Achieving these ambitions will require an incredible amount of talent and innovation. Having accomplished our initial goals of establishing Eve as a public enterprise and bringing that enterprise into practice, we are now going to focus on the immense challenge in the next phase and have added a very talented and seasoned executive to complement the existing team. This addition will also allow Stein, who will remain with Eve as our Chief Strategy Officer, to increase the leadership and focus on the diverse elements of operations, infrastructure and regulation that are absolutely essential if we are going to make UAM a reality.

I will remain with the team through the end of October to support Johann’s transition. And in parallel, Ken Ricky has announced his intention to resign from the Board in October, and it is intended that I would replace them at that time. I would note this change in leadership is really taking place now versus later in the year so that we can ensure a seamless transition of responsibilities and there is absolutely no rush moving forward. Now I would like to ask Stein to provide you more details on other important developments in the last quarter.

Andre Stein: Thanks, Jerry. We are excited to announce that you have just celebrated the completion of the first carbon fiber laminate material for our first eVTOL prototype as we plan to start assembling it now in the second half of the year. We continue to make important advancements in our development process. We continue to work in our dedicated rigs to test different modern propeller configurations under different conditions. This also uses to stress test and measure vibration in the entire system, sound profile and other metrics. We also built and we are running a truck mountain rig that is designed to travel down the runway and simulate that of vibration and the aerodynamic drag of the rotors under real-life conditions and it is used to validate and refine our modeling of router performance.

And lastly, we are also employing a series of additional rigs of batteries and motor as well as thermal management tasks that permit extensive independent testing of discrete subsystems. Again, this part of our testing protocol in which to test different components separately and allowing for a quick and relatively inexpensive development process. We can easily swap parts and change component configurations on to find our optimal solution. This would be not possible had we already committed to a prototype plan. Now on to Slide 6. Perhaps as importantly, we selected a few weeks ago where our initial factory will be in Brazil. We had announced last year after extensive studies of first consulting to define and optimize our industrialization strategy that our initial facility to be in Brazil.

And now we define the site in Taubate in the state of Sao Paulo. We are going to expand one of Embraer units, and the image shows the red existing building. The site is strategically important with easy access to major highways and the railway. It is also close to Embraer’s and Eve’s headquarters in San Jose Campos and our development teams and other human resources. We believe this will facilitate the development and sustainability of new production process and reinforce our agility and competitiveness. On top of that, this will be a cost-efficient way to maximize synergies with product development and experience and resources of Embraer. Slide 7 shows that you currently have what we believe to be the largest and most diversified backlog by a number of customers and regions in the industry today.

In total, we have announced LOIs for 850 aircraft from 28 different customers spread over 14 countries and different business from mainlines to regional airlines to helicopter operators, ride-sharing platform and leasing companies. We also have LOIs to offer our Uber attract management systems from nine customers, not to mention our portfolio of services and operation solutions, that is an integral part of Urban a mobility solutions and our discussions with our customers. We believe this reflects the state-of-the-art value proposition we bring to our partners and their clients. And there is more to come on that front. We believe this pipeline offers strong long-term revenue visibility and will help as to smooth cash flow consumption in the years to come as we start to convert the existing ladder of citations into firm orders and collect predelivery payments, known as PDPs. Beyond that, we are developing a strong network of partners in areas such as infrastructure and energy to address one of the largest challenges ahead of urban mobility, which is to create a whole new ecosystem decides simply developing an aircraft.

As part of this effort, we started to announce together with our customers, our focus cities where we will be accelerating these efforts. San Francisco [indiscernible] Airlines in U.S. and Rio and Helisul in Brazil, more to come on that front as well. Now I would like to invite Edu to talk about our financials and next milestones.

Eduardo Couto: Thanks, Stein. Now moving to Slide 8. It is a preoperational company, and our financial results reflect mostly the costs associated with the development of our eVTOL. Starting with income statement highlights. We invested almost $22 million during the second quarter of 2023 in our program development versus 10 million a year ago. The majority was invested to develop our eVTOL and a portion in Service and Support Solutions and the Urban Air traffic management system. In addition to development expenses, we also deployed $7 million in SG&A this quarter compared to $16 million last year. Important to say, last year, we had several IPOs and other nonrecurring expenses. Excluding that, our SG&A expenses are actually growing as we increased our corporate structure together with the program development.

Eve also reported around $7 million in noncash expenses related to the mark-to-market of our warrants as our shares went up during the quarter, and we also had $4 million in financial revenues during the second quarter, mostly due to the financial return of invested cash as interest rates are higher. We have a very conservative financial policy, keeping our money invested in short-term deposits with Big Bank. With that, we reported a net loss of $31 million in the second quarter of 2023. Now moving to cash flow. Our operations consumed $28 million in the quarter versus $20 million last year, mostly driven by the higher R&D expenses in the agreement with Embraer or the eVTOL development. In total, our cash consumption in the first 6 months of the year was $48 million.

This is more than twice the $22 million of the first semester of 2022. This increase was already expected and shows higher R&D efforts. With that, we ended the second quarter with $269 million in cash, but when we consider the standby credit line from the Brazilian development bank of around $100 million that we are going to start to access now in September, our total liquidity exceeds $370 million, and it is enough to fund our operations into 2025. Finally, Slide 9 summarizes our short-term milestones, and we want to reaffirm our commitment. As mentioned before, we concluded the first 2 milestones selecting primary suppliers for critical components of our aircraft and freezing the configuration of our eVTOL. We have also started to manufacture some of the individual components of our first prototype and should begin to assemble these individual parts later this year.

With that, we plan to initiate the test campaign next year. We also continue to work in the trial software of our urban air traffic management system. Lastly, we reaffirmed our total cash consumption between $130 million and $150 million in 2023, which is a result of all our development efforts.

Operator:

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Savanthi Syth Raymond James.

Unidentified Analyst: This is [Matt] (Ph) filling in for Savanthi. First, congrats to Stein and Jerry alike. I’m leaving the company thus far in the new roles. And Jerry, I believe this will be your last call, if my calendar is correct. So thank you for all the knowledge on the way, and we have really enjoyed speaking with you. That being said, for my questions, with the aircraft configuration now set, do you have any early thoughts on what the aircraft performance specifications and production or operating costs will look like or is that more of the event after you finalize more of the suppliers?

Gerard DeMuro: Good question, Matt. First, thank you for that on behalf of Stein as well, and I will turn it over to him. We are still targeting the same high-level numbers that we have been advertising since inception, roughly the 100-kilometer range, et cetera. So I will pass it over to Stein for a little more detail, if you like.

Andre Stein: Absolutely. But that is the message. We are on track. And now with more confidence that the goal is set for the aircraft are feasible. We are talking about 100 miles of maximum range. We are talking about pilot 4 passengers with their carry-on on board. So that is all in good place and we are moving forward to that. So there was no change. The configuration is closed now. We have been working with it for a while. We just opened and closed as we select the motors. So that also gives us more comfort to talk about it with an actual supplier in place. That makes a lot of difference, both for the motors and for the batteries. So we keep on moving with the confidence that we are on the right track.

Unidentified Analyst: And then maybe for Edu or whoever may want to take it. Now with more of the main suppliers selected, are you able to discuss at a high level on how those agreements are set up and when we could expect certain deliverables and payment timing to it.

Eduardo Couto: Yes, as you mentioned, right, Matthew, we signed the primary suppliers, right? We are finalizing some other key components in the short term. Those are, of course, long negotiations, right? They may require some payments from the lead side. But those payments are highly connected with the eVTOL development, right. We pay part of the development from some suppliers and this payment is connected to the different phases of the development, right. The more we progress, whereas we advance, we do those payments, all of that is already included in our short-term forecast. And we feel comfortable with the cash level we have a plant of cash for, I would say, way into 2025.

Unidentified Analyst: So basically, no real non-recurring cost timing or lumpiness that we should really consider it more as you progress.

Gerard DeMuro: Yes. Matt, I think just to highlight what Edu said, if you look at our cash burn in the first half versus the second half, there is an increase in the second half, and that is directly attributable in a major way with now stepping up the development program with the vendors, supplier payments. The product deliveries really won’t be until well into next year. So that is really one of the main reasons why you see the increase in the cash second half over first half. The second issue, which we are working very aggressively to manage cash is the beginning of the industrialization of the Taubate site, as Stine alluded to. So they are the main drivers there, but payments related to product really will be more in next year than this year. We are still developing.

Eduardo Couto: And Matt, if I can complement your question, I didn’t mention about the operational costs that you also asked. So like with the performance, the selection of the suppliers and the fees in the configuration help us to be comfortable that when it comes to cash operational costs, how much you are going to cost to operate the aircraft. And our internal analysts put us with a clear advantage against the competitors. At least double-digit advantage when it comes to cash operational costs. And again, with the suppliers, the performance as well as even the cost of goods sold becomes more mature and we believe we are like with the performance in the right track towards that as well.

Operator: And our next question comes from the line of Cai von Rumohr with TD Cowen & Co.

Cai von Rumohr: Jerry and Stein, great work. So as for suppliers in air transport programs, it is not unusual to have pay-to-play provisions for the suppliers contribute to the development and that sometimes they get paid after the articles are actually delivered to end customers. I know you are not going to talk about individual agreements. But just philosophically, can you give us a little more color on how those agreements are structured and what they imply in terms of cash contributions from suppliers and cash flows.

Gerard DeMuro: So I will give a very high level, Cai. The typical launch assistance, we are staying away from that. But these agreements are very comprehensive. They cover the development phase, the production phase. And to-date, each of them addresses the aftermarket and how we will manage the support to the aircraft and customers after that. But other than that, though, the development in production are set up pretty traditionally, as you might in any product manufacturing and little, if any, real, what I would call, launch assistance. Stine, do you want to expand on that at all?

Andre Stein: You touched the main points, but the rationale here is not to get any surprise in the aftermarket. So we are really cautious on how we are set in that deal. So we can deliver back to my – the previous questions, aircraft that is the leader in the market, it comes to cash operational costs. So there is always a trade-off there, and we are very savvy about it. Given our own experience from previous programs with something that we do bring from the [Murray] (Ph) company, right?

Cai von Rumohr: And I think you mentioned, Stein, you think you have an operating cash operating cost advantage versus the competitors. Can you expand on that a little bit why roughly what sort of range of magnitude that might be?

Andre Stein: Sure. So what is the rationale behind it? Our simple design, there is a reason why we decided to go, so avoiding complexities that increased maintenance costs, for example, our performance being tailored towards urban and mobility, there is no freelance. You want to apply for [indiscernible], that comes at a cost. So when add this simplicity of design, there is a performance base that aircraft as well that you care were designed for a given mission. You add our understanding of design for maintainability, designing for manufacturing and even how we are talking with our suppliers and assuring that you have a competitive aircraft event, when you do our own internal analysis and compare what you would be if you were doing a different aircraft.

And we have done that since the beginning, right. We look at different trade-offs in terms of adding totes or increasing the complexity. If look at that. And the final conclusion we got that we are on the right track to create that differentiation. It will vary from operator-to-operator, maybe in some case, 10%, some case, 15%, in some cases, it could be a bit less. But there is a clear advantage there even again, the simplicity of design, our design for maintainability, our know-how, designing and building aircraft towards that. Keep in mind that the main – one of the main points for any regional aircraft is exactly that philosophy, how you are designed for the mission and assuring that you have a reliable aircraft, which helps with increased utilization that also helps reducing the operational costs at a lower cost of operation, keeping the user experience in mind as well.

So that is how you are reaching that.

Cai von Rumohr: And one other one. So with Johann joining, you get bring additional support expertise. And I think you are different than your competitors and you have much more focus on offering support and service. I think your initial IPO plans called in 2030. Roughly 45% of revenues would come from service and support. Can you give us any color in terms of – because you are going to be slower or after your competitors in terms of entry into service, how you intend on building up the support effort? And I assume that is going to be the earliest revenues that you will recognize.

Gerard DeMuro: Cai I will probably turn it over to Stein. I’m not sure we accept your characterization that we will be substantially behind others. There is quite a bit to be accomplished, as you well know, to get these products through certification and then actually in operations. And without mentioning a specific competitor, when you look at their business plan, it is for two handfuls of these products to be delivered in the first couple of years. So I’m not sure that material difference is going to exist. Having said that, I think you are exactly right that this team with this experience supporting aircraft around the world is focused on that part of the role. And Stein has been very, very involved with the teams. He mentioned the launch cities. Quite a bit of planning is going into that. And it is also one of the reasons why we are bringing on the level of expertise that we are. Stein.

Andre Stein: Again, I think you touch all the main points. But first of all, I completely agree that you have to be seen that we are coming after our competitors or not. And also the ramp-up plan that, in our case, it is sound. So it is not extreme that you are going to deliver thousands of aircraft in the first year. But at the same time, we are going to deliver enough aircraft to really create a good position for us in terms of market share. That is the plan. When it comes to service and operational solutions, beyond the experience, the assets we have with existing infrastructure, how we are overlapping and combining that with the discussions of the initial cities where you can deliver type of infrastructure preexists from Embraer structure partnerships and so on for number that can help us do that without an incredible amount of CapEx in the beginning.

That again, it is a clear differential that you always mentioned since the beginning that to achieve that network that a pre-existing network for Embraer it would take us – if you were to do it from scratch, it will take us decades and hundreds of millions of dollars in terms of investment. So we definitely have an edge there, and we had a lot of lessons learned on how to deliver to. And now with Johann coming, Johann has been running that organization since its creation actually on the beginning. A lot of expertise on that are, too.

Operator: And our next question is from Jonathan Koutras with JPMorgan.

Jonathan Koutras: Jerry, Stein, Lucio. Now that we have primary suppliers named on the test campaign will begin early next year, when should we expect LOIs that compose it a significant backlog be converted into from motors. Is this something we can expect once the prototype is completed, so mid to late next year? Or am I thinking about it wrong?

Lucio Aldworth: If I may, Jerry. The two things are not director related. That definition is more related to us maturing the development of aircraft, something we said from the beginning. Us doing the things on the right orders in terms of prototypes and so on, not flying too early just to show to the market. So that is one track. When it comes to that confirmation, it is exactly the work we are doing now on really getting this backlog we have and working for our customers to better understand their business case, where the craft will be deployed, what type of infrastructure needs to be there, what you need from our program as well, the confirmation we are having now supplier selection, that is a very key milestone because that allow us to have the right visibility in terms of both performance and costs, as we mentioned before.

So these are the key drivers for us to really start in converting this backlog in real orders in Rio deals. Jerry, not sure if you want to comment anything else there?

Gerard DeMuro: No, I think you are exactly right. While the two are not necessarily contingent on the other. The time frame that you mentioned is probably realistic. And the priority, as Stein said, will be first with our launch city and launch customers to convert them, and then we will move through the balance of the backlog. We are working right now to fill the first two-years of production slots. So they will be the priorities as we move through the first half of next year. And by that point, I think you will see some of those early ones convert it and then we will move through the balance.

Operator: And our next question is from Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu: Congratulations, guys. So I just wanted to talk about suppliers again and just the configuration of the Eve call. As you point out on Slide 3, you have made some finalizations and refinements. Maybe can you point out to us what was the most significant? And then what is left, if anything, on the configuration or this is final.

Gerard DeMuro: Good question, Sheila. It just so happens we have with us today our Chief Technology Officer. But I think Stine can probably give you a pretty high level. We expect some further refinements though, as we go along. We still have another set of wind title test, at least on the horizon, and we mentioned these test rigs. So there may be some minor tweaking of the wing, et cetera. Stein, do you want to talk to that?

Andre Stein: Sure. It is that the configuration of where the posture is, what do you actually see? That is what is defined. We have been working towards that for a while now, what it done in Paris just to disclose. And we timed that together with the selection of the – particularly the motors. So we could assure okay, there is a real offer there for us to move ahead of that. So we don’t expect anything that is really visible. But you are fine-tuning the shape of the wind, the shape of the blades of the propellers, the interactions of the systems, the noise profile of the aircraft to sound profile of the aircraft and tweaking these interactions. But visually, we won’t see and we don’t expect any change anything that is visually different really other than the fine-tuning of the control loss of the human machine interface as well, how exactly the cockpit have been interacting with future pilots and users to really refine that to optimize the battery consumption.

So that is ongoing. This level of refinement already with the suppliers on board that it is part of this phase of the project. But we don’t expect to see any change that can actually visually perceived in terms of aircraft other than the tails on the shape, you really need to go to be engineered and go and deep dive on the details of it to see any future difference there. But the configuration as a whole is set. That was part of the finalization of the current phase of the development.

Sheila Kahyaoglu: Got it. And then on the suppliers, were they all competitive wins that you guys put out RFPs for. So a little bit to Cai’s question. And do they already have these products on any other eVTOL.

Lucio Aldworth: Absolutely. They were all completed. There was a very large funnel and an eventual down selection process to the final vendors. And frankly, I think as you have found with the other and speaking with the other eVTOL manufacturers, virtually every one of these solutions is bespoke to that particular aircraft, its configurations and its performance requirements. Stein, do you want to add anything to that?

Andre Stein: No, no, I think you said it all. We are on the right track on that, too.

Operator: And your next question is from Austin Moeller with Canaccord.

Austin Moeller: So just my first question here. What issues do you think other eVTOL OEMs will have in maintaining their aircraft once delivered to customers relative to Eve, which has access to Embraer’s global MRO shops and supply chain?

Lucio Aldworth: So Jerry, if I may start. There are a lot of issues related to logistics to managing the initial provision lease of materials, for example, the parts, having the CapEx in place even for the physical locations that we have earlier access not only on the existing infrastructure. As I mentioned, but even on the experience of understanding what comes first, so what you need to target first and logistics, it is one good example of that, particularly in a market like that, that will be – that will happen at city level. It is not like these aircraft, we will be able to fly cross-country, to go chat different MRO. So we really need to establish how we do that. So working with our customers as well. A lot of our customers have their own capabilities.

And one example of that, in Paris, we have also announced moving ahead in a fatal discussion with Helisul in Brazil, go more into detail to the – how the operation solutions will work here in Brazil, but the same applies for other operators. So it is the combination of the physical infrastructure, but the process know-how, logistics that we are bringing from the – on our DNA from the [indiscernible] company.

Austin Moeller: And do you expect to be able to collect PDPs after the first test sites are complete or closer to ANAC and FAA certification?

Gerard DeMuro: No, that is fine. I think we are both going to say the same thing. It will depend on the conversion of the LOIs into firm agreements. But generally, the PDPs will start about 18-months before roughly 18-months. Isn’t that redo before delivery of the aircraft. And then as we hit milestones through certification and build those progress payments increase. So roughly 18-months out.

Operator: And our next question is from Andres Sheppard with Cantor Fitzgerald.

Andres Sheppard: And congrats to Jerry and Andre. And Andre, as quite seeing you in Paris at the air show. A lot of our questions have been asked, but maybe one qualitative and one quantitative. On the qualitative side, I was just curious to get your thoughts on the recent FAA implementation guide that was published in late July. There is a lot of information there. So just wondering, maybe at a high level, what your preliminary thoughts around that were.

Gerard DeMuro: Stein.

Andre Stein: Yes, we had a deep dive on that, and we have been talking with FAA and with our peers as well to as an industry answer to that, I understanding even on discussions we had with them, that was quite preliminary. So very similar to what you see in our tax today with [Indiscernible] combustion engine aircraft and the expectations exactly for us as an industry to comment and come back on that. We are working closely, including gamma, to answer together. But there are a few points there that I think are relevant to highlight. We understand that we are focused on the Uber mobility operation. So we need to keep the highest safety level, highest safety standards. We are completely aligned with FAA that concern. We believe, though, there are different ways to show that we are complying with that level of safety that is required.

So in terms of reserves, keep in mind that when are talking about turbine mobility, we are talking about structure operations. So we take off, we knowing exactly where you need to go. You know exactly where your alternates are. Just to give you a bit of color on things you are talking about. It is different than when you are flying ad hoc and you need to – we need time to figure out in case of any emergencies still need to figure out where to land. Structural operations, you don’t require that. You know already before taking off all the potential alternate. So that is one example. Same as pilots. We need to apply the latest of technology to assure that you have the capable pilots on board, but there are different ways to do that, not necessarily experience from previous pipes and different types of aircraft is the best way.

There was a comment about ATP pilots for eVTOL. We believe there are other ways to assure the same level of safety through different methods for training, use of technology for training to ensure that the pilot knows what he’s doing and is comfortable flying our eVTOL, reducing the pilot load and the eVTOL another key aspect of that. So I believe that it is going that as expected, the first issue of the far came in heavy. But again, I believe – and I believe based on all discussions we have, that was the intention for the industry now to position themselves and showing how we can deliver the highest tonnes of safety through different process, different technologies, different alignments. And there is a time line and actually, you are reaching the time for the – there is a time line for the industry comment.

It is the 14th of the month now. So we are in good – from our side, we have made our comments already.

Andres Sheppard: And maybe just one last quick one. A question for – maybe for Edu. With the $370 million in total liquidity, which includes the lines of credit, I’m just wondering, you are funded into 2025. You have said before that the certification process is expected to cost between $500 million and $600 million, which obviously you are well underway. I’m just wondering how you are thinking about capital raising opportunities. There is going to have to be a point where once you begin manufacturing and testing and as you go through all these three different certifications, I would expect some sort of capital raise at that point. So I’m just curious how you are thinking about that and anything you could say to that extent.

Eduardo Couto: Thanks, Andreas, for the question. As you mentioned, we are very well capitalized, right. We have this $370 million in liquidity. We have been working to start to access this $100 million long-term standby facility right from the present development bank line in September. We are in very good shape. That will be quite interested because we have been able to control our cash consumption, right. But with this line, our cash consumption should reduce even further, right, because a good amount of our expenses for the second half of this year and 2024, will be financed with this long-term R&D line. Regarding CapEx, we are also discussing some long-term finance. So I think overall, we are in a very good shape. We do not plan any capital raise in the short term because our liquidity is high.

We still have to access those finance lines and we are going to start to withdraw them now. So we are feeling good. Of course, as you mentioned, we have this $500 million, $600 million in total R&D. But we raised right – we already raised billion, including equity and debt. So we are in good shape.

Andres Sheppard: Got it. Congrats on the quarter again, and I will pass it on.

Operator: And our next question is from Marvin Fong with BTIG.

Marvin Fong: Congratulations and good luck on your next moves, Jerry and Stein. My question just kind of follow-up on what others have been asking about. Now that you have selected several of your suppliers and have visibility on some of the other ones. Are you still confident on sort of your earlier estimates on what it would cost to build the eVTOL? And could you comment on like what percentage now of like operating costs you have now kind of secured now that you selected suppliers, like, for instance, I believe propulsion is your largest operating cost and now that you have selected the suppliers for it. It seems like you have locked that in. So maybe just kind of comment on how much of your operating costs, you have sort of nailed down now you have actually seen the product and make the orders?

Gerard DeMuro: Sure. To your point, it is indeed assuring that the key suppliers help us a lot to understand that future. More than the proportion actually the battery, you think it is really the game changer in terms of operational cost for [Letco] (Ph) aviation, but both things are quite relevant and having now an actual supplier with a contract in place, it is not R&D partnership that you are going to know later on. It is an actual agreement like we have done in other programs. So that gives us considerably more confidence to understand our future numbers, we will not comment on the exact percentage that represents on that on the operational cost. But what I can say, and it will change from country to country, right, depending on pilot salaries and mechanic sellers and so on.

But battery kind of represents what fuel used to represent internal commission engines in terms of relevance. So having that in place really help us to see how that is going to play out in terms of operational costs. Also on another key aspect of the operational costs, it is, of course, the ownership cost of the eVTOL. So having select that suppliers and having a good understanding of the next phase as well because we are going through this process. Already with answers in hand even though some trough is you select more suppliers, but you are heavily engaged. So that gives us a lot of confidence on this future operational costs.

Andre Stein: We haven’t seen anything though that would change our basic estimate in terms of the cost of building the aircraft. So some are a little bit higher, some are a little bit lower. And it will be volume dependent, but we are not changing the original forecast.

Operator: There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Lucio Aldworth: Thank you, [Kamilla] (Ph). We look forward to updating you on our progress throughout the next few quarters as we achieve our operating milestones. And medium in the upcoming events were scheduled to attend. As always, if you have any questions, please don’t hesitate to reach to reach out to our team. Last but certainly not least, I wanted to thank Jerry and Stein personally for their friendship and contributions to over the last few years. I’m positive. We are only in the position we are in right now because of their leadership. So thanks to both of you and best of luck. So everyone else, thank you for participating in today’s conference call, and have a good day. Thank you.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.