Eve Holding, Inc. (NYSE:EVEX) Q4 2023 Earnings Call Transcript

Eve Holding, Inc. (NYSE:EVEX) Q4 2023 Earnings Call Transcript March 8, 2024

Eve Holding, Inc. beats earnings expectations. Reported EPS is $-0.14, expectations were $-0.23. Eve Holding, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Eve Holding, Inc., Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Lucio Aldworth, Director of Investor Relations for Eve Holding. Thank you. You may begin.

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 fourth quarter 2023 and full-year earnings conference call. I have here with me our CEO, Johann Bordais; CFO, Eduardo Couto; and our Chief Technology Officer, Luiz Valentini. After their initial remarks, we’re going to open the call for questions. We have a deck with a few slides and additional information on our website at ir.eveairmobility.com, so please feel free to download it and tag along. Let me first start this 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. The words believe, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify these forward-looking statements and we undertake no obligation to update publicly or revise any forward-looking statement because of new information, future events, or other factors. With that, the future events and circumstances discussed in this presentation may not occur and actual results could differ substantially from those anticipated in our forward-looking statements. With that, I wanted to turn the presentation over to Johann.

Johann?

Johann Bordais: Thank you, Lucio. Good morning all, and thank you for joining us for this call today. We had a very busy 2023 year with several important achievements. And among the milestone last year, I would like to highlight the one that the most directly influenced our program. Starting with the selection of our suppliers and the signing of the binding contracts, which define technically all the specifications for each of the components as well as all commercial aspect with the volume and the unit price, including by the way, aftermarket support conditions. We defined the architecture of our eVTOL in June of last year with the definition of the flight critical components like the electrical motors, the energy management system, the propellers, especially when it comes to the dimension and the requirements for the subsystem of each of these parts.

This enabled us to start the building process of our first full-scale non-conforming prototype. As a reminder, I would like to say that we have a unique approach that was [indiscernible] by Embraer proven methodology. We test the system and the components independently and only then we incorporate them in the design once we find an optimal configuration. This allows us to quicker — to be quicker and efficiently involved with the design and reduce the program development schedule, but also the cost. So up until the initial assembly of the prototype we already had tested individual system with the rigs under different conditions and configurations. We also started the September — the Joint Definition Phase, what we also call internally the JDP.

This is when our engineer interacts closely with their counterpart of the suppliers we have selected to go over all the details and how each component will work and interact with each other for a seamless and integrated system. I’m going to give you an example here, I think it’s a little bit more concrete. During the JDP, where the team we’ll define the multiple sensors and which will feed the airspeed data, temperature, relative humidity into the avionics and how the flight control system will interpret the data in order to control the flight surface after the pilot command. This of course will be supported by the fly-by-wire system that we are putting in place. So as you can see, it is a very complex task that involves several different processes impacting each other with a lot of moving parts and interactions.

So the focus here is to design the systems to work seamlessly and safely. Now going to Slide 3. It shows us the latest development and includes the five-day exercise that we conducted in the UK to test the Urban Air Traffic Management, the ATM software with the partner FlexJet, Halo. It was used to validate and refine the software. We deployed it in parallel with the incumbent software that they already have in operation — right now in their operation, but to simulate all typical functions in the Air Traffic Management operation. We successfully run some tests under normal conditions, but also under different conditions, which is such as the delay, the bad weather, and it was a very concrete operation and we could learn from it, and, obviously, just make the software better afterwards, so quite excited about this.

Now moving to the next slide, a couple of slides. We have — we’re bringing here several pictures that we just took from the test facility in Gaviao Peixoto in Brazil, in State — Sao Paulo State, where you can see the process of our full-scale prototype. You can see the harness, which are the all electrical and electronic connectors that we will place soon inside the wings and the empennage. These also carry all the information and the comments back and forth between the flight computers, sensors, and actuators. You can also see the early stage of the structure and the fuselage, the wing, the detail of the vertical stabilizer of the empennage. If you go to the next slide here, which show you the prototype is getting really the final stage.

We have positioned the wing and the empennage in the fuselage. We call it internally the junction, but also, even like in a nice way, we call it a marriage, just the marriage between the fuselage and the wing. We now still have to install the actuators, the control surface on the wings on the empennage, and the composite of the skin of the eVTOL, which we expect to be concluded in the next few weeks. And once we receive the electrical motors, also in the second semester, we’ll perform the necessary ground test and we plan to start the test fly campaign later on this year. Going to Slide number 6. Now this is showing you here the latest additions to our component suppliers list, which we will start to use for the first of our five conforming prototypes.

Since the third quarter 2023, we have announced several suppliers. We have selected the FACC to provide the control surface and empennage; Aciturri, a Spanish provider for the wings; Crouzet for the pilot control, we call it also a joystick; and then we also have signed deal with Thales for the sensors and Honeywell for guidance and navigation; and lastly Recaro for the seats. These new suppliers are actually joining the select group of the industry leaders of our eVTOL. Really important to highlight here that we have the best-of-breed approach to bring suppliers with their expansion, aviation, and certification, and importantly, will support us in the certification campaign and throughout the eVTOL lifecycle, not only for the certification and delivery, but also in the lifecycle process.

Lastly, these contracts will have defined the price, the quantity schedule with a scale function with reduction of the unit price as we reached the higher eVTOL volumes out of our production site, which will reduce the unit price of production, as we call economy of scales. These lates suppliers join Nidec to supply the electrical motors, the BAE that we already informed early on in 2023 for the energy management and DUC Helices for the propellers. We had also signed the Embraer for the Eve’s flight control computer, the FCC and systems, and with these fly-by-wire capabilities. Embraer will also assist us in designing, developing, and manufacturing all flight control hardware systems and provide support for certification. Garmin will supply also the fly deck with the high-resolution display of the flight deck and integrate the aircraft management with the flight control system.

We also selected Liebherr for the flight control actuators and Intergalactic to provide us the thermal management system for the equipment. We still have few suppliers to select, but as they’re not that critical for the aircraft performance like the transparencies, the cabin interior, we expect to conclude the selection process very soon. Okay, looking at the list, which is obviously increasing, we’re not up to 90%. I’m very confident that the level of safety and the certifiability and performance of our eVTOL. Moving on to the Slide 7, it shows that we are in an entire — what we are in entire master development phase. As I mentioned before, we’re currently in a joint definition phase to detail all the interface to link the different system and make sure that they integrate altogether.

This phase also includes the system of our manufacturing process as well. As a reminder, we have already selected our manufacturing site a few months ago. The site is currently being used by Embraer, but we will start soon to customize it to our own need later on this year. At the current pace and judging by the progress of the assembly of our prototype, we’re in really good shape to receive the certification, the Type certification and make the first delivery still in 2026. Moving on to the Slide number 8, it shows that currently what we have to believe is to be the largest and the most diversified backlog by number of customers, but also by region, by diversity in the whole industry today. In total, we have announced LOIs for 2,850 aircraft from 29 different customers spread over 13 countries and different businesses.

From the main lines to the regional airlines, to helicopter operators, ride-sharing platform, the leasing company, as you can see, it’s very complete. We’ll also have LOIs to offer our Urban Air Traffic Management system for 14 different customers and we also — we believe that this reflects the market-leading value proposition that we bring to our customers and our partners. Beyond this, we’re developing a strong network of partners in the area, such as the infrastructure energy to address one of the main challenge that we have in industry and the air mobility, it’s really to create the whole new ecosystem besides the simple development of aircraft. And important — and nothing more important than the vehicle, and obviously to me it’s [really dear] (ph).

It’s also we’re securing the contracts with 10 different customers for the maintenance, repair, overhaul for service and support. That will bring back about up to $660 million in revenues for Eve, over the course of the next five years — actually five years from the delivery — the first delivery in 2026. Importantly, these customers have placed LOIs and they represent 985 aircrafts, okay, and which is about 35% of our order book. So we can potentially expand this business within this customer base that I didn’t mention about the 2,850 aircraft. Because those are agnostic also, that means that we potentially, we can service the eVTOL of our competitors, service revenues could proceed actually aircraft sales. We believe that our pipeline is and the services for the vehicle, but also service and support contracts offer a strong long-term revenue visibility, and it will help Eve to smooth the cash flow consumption in the years to come as we start converting the existing letters of intent into orders and collect the pre-delivery payment known as PDPs. Now I’d like to invite Edu to go over our financial and the next milestones.

Eduardo Couto: Thanks, Johann. Now moving to Slide 9. Eve is a pre-operational company developing its eVTOL and the ecosystem around it. Currently, our financials reflect mostly the costs associated with our program development. With that in mind, I want to highlight some of our 2023 financials. Eve had invested $34 million during the fourth quarter 2023 in our program development and $106 in the full year. The majority was invested to develop our eVTOL and a smaller portion went to our service and support solutions and the Urban Air Traffic Management system. We are the only eVTOL company with a complete solution that includes design, development, manufacturing, and sale of an aircraft, as well as maintenance services and air traffic control software.

We also deployed $5 million in SG&A during the quarter and $23 million in the year. Including R&D and SG&A, we reported a net loss of $39 million in the quarter, and $127 million in the year. Now moving to cash flow, our operations consumed $25 million in the quarter and a total of $95 million in the year. We ended the fourth quarter with $241 million in cash, down just $15 million from the third quarter 2023. As we also drew around $15 million from the preapproved credit line with the Brazilian Development Bank. We still have around $75 million available from this line that we expect to access still in 2024. Eve is highly comfortable with its total liquidity of $316 million as of the end of 2023, and believe our current liquidity would be enough to sustain our operations into the end of 2025.

It’s important to say that we anticipate an increase in our cash consumption in 2024 as we intensify our development with different rigs to test systems and components, wind tunnel tests to validate our models, and now we’re assembling our first full-scale prototype, and have selected most of our suppliers, which involves higher payments going forward. Now moving to Slide 10 with a checklist of our previously announced milestones. I’m happy to say that we have either met or exceeded our milestones for 2023. We selected the primary suppliers for critical components of our aircraft and froze the configuration of our eVTOL around the first semester of last year. And as Johann showed a few slides ago, we are advanced in the assembly of our first prototype.

We have also successfully conducted a trial run of our UATM software under real-life conditions in the UK late last year. And lastly, we invested $95 million in our program during 2023, which is lower than anticipated than our guidance of $130 million to $150 million range given the three main factors: First, our continuous discipline on cost control as a pre-operational company; second, we managed to extract savings from synergies with Embraer; and third, we moved some of supplier payments from 2023 to the years ahead. The last slide lays the upcoming milestones for 2024 that includes the conclusion of our full-scale prototype and initial tests. In parallel, we expect to conclude the basis of certification and means of compliance with the Brazilian certification authorities.

It’s important to remind we have Brazil as our primary certification authority that we work in alignment with the FAA to achieve the dual-type certificate in Brazil and in the US in 2026. We also start working in preparation for our first eVTOL manufacturing plant in an existing site of Embraer in Brazil. We’re also working to secure the necessary funding through a long-term financing to this site. Finally, for 2024, we expect all of our efforts to consume between $130 million and $170 million in cash this year. With that, we conclude our remarks, and I would like to open the call for questions. Operator, please proceed.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Savi Syth with Raymond James. Please proceed with your question.

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Q&A Session

Savanthi Syth: Hey, good morning, everyone. I wonder if I can — on the cash burn outlook here, if you can give a little bit of color around the timing throughout the year, if that steps up and what component of that might be CapEx?

Eduardo Couto: Hey. Hi, Savi. How are you? It’s Edu here. So basically, this cash consumption will be mostly on the development, right, which includes the payment to suppliers as well. There is a component for the manufacturing of our facility, right? We have selected an existing Embraer facility in Sao Paulo. We’re going to start to buy some machinery and tooling for our first site. But I would say maybe around $20 million will go to this first facility, the remaining of the cash consumption will be really focused on the development, that is really moving at full speed.

Savanthi Syth: And that steps up through the year, Edu, or is it fairly steady?

Eduardo Couto: Generally, we burn more in the second half than in the first, but I believe probably it will be like 40% — 35%, 40% in the first half and 60%, 65% in the second.

Savanthi Syth: That’s helpful. And if I might just mind on the BNDES loan, thoughts on like how much of the $75 million you might kind of tap into in 2024? And just to clarify, that’s not in the cash burn guidance, right, that should lower the cash burn?

Eduardo Couto: That’s correct. When we say that we’re going to burn $130 million to $170 million, around $150, right, for the full year. That means our cash will only go down half of that right, because the other half, $75 million, we’re going to access from the — we’re going to withdraw from the BNDES line, that’s a big advantage, right. We have this line that we are accessing since last year. We already took $25 million that hold our cash position pretty well in the fourth quarter and this is going to continue in all the upcoming quarters of this year. So our cash will go down very little right around $75 million, if you do the simple math, right, $150 million, $75 milion is BNDES, the other $75 million comes from our current cash, that’s how it should work.

Savanthi Syth: Perfect. Thank you.

Operator: Thank you. Our next question comes from the line of Cai von Rumohr with TD Cowen. Please proceed with your question.

Cai von Rumohr: Yeah. Thank so much. Could you maybe update us on the certification environment? And what I mean by that is, you probably read that the FAA basically has harmonized with EASA regarding what they’re going to require Joby to do, which looks like good news. And yet if you look at some of the major aircraft, G700, I mean, everything seems to take longer and longer. So maybe tell us about the environment and particularly with respect to ANAC and the fact that you basically are going to be certifying there? Thank you.

Johann Bordais: Hello, Cai. Johann speaking. Thank you. Thank you for your question. This is obviously an important topic that we were following closely, and also Valentini will be responding in more detail. But as you remember well, our primary certification will be with ANAC and this is really with the authority that we are discussing. They very recently end of last year, they opened for public consultation and we’ll see exactly. They actually extended that period to the end of this month. And we expect to have a lot of feedback, but also alignment, as we’re going to have input, including probably from the FAA and the other association — airline associations. So we’re quite confident that we’re going to the right direction and we’ll know more by then. Valentini?

Luiz Valentini: Sure. So thank you. Hi, Cai, good to talk to you again.

Cai von Rumohr: Yes. Hello.

Luiz Valentini: So, complementing what Johann said, we feel that we have good traction with ANAC, with the publication of our certification basis for public comment, both in the sense that it gives maturity to the requirements that we have set with them, but also that it allows us to go, as Johann mentioned, in this direction of aligning. We’re not saying harmonization in the sense that they would not necessarily be exactly the same, but that it helps us to align both with the FAA basis and also with EASA basis in which we have more visibility to, right? So the publication of the Joby basis yesterday, still not final, but another publication helps us to make sure that we are indeed following this path of alignment and makes us confident, as we have mentioned before, that with the availability of ANAC to work on this project, that we will be able to maintain the timelines as we have established.

Cai von Rumohr: Terrific. And then my last one. So talking recently with one of your competitors, they were talking about a market, a potential retail market, by which they mean, a guy flies to a regional airport, he maybe has his home 40 miles away, but he takes his eVTOL to fly from the regional airport to his home and back or to his business, so that there might be sort of a shorter range bizjet type of application. Have you put any thought into that kind of use or any of your customers looking at that as a potential market?

Johann Bordais: Thanks, Cai. Just a question there. When you say his own eVTOL, you mean that he will buy his own eVTOL and fly his own eVTOL, just like you’re doing with cars, is that what you’re referring to?

Cai von Rumohr: Yes, exactly, exactly.

Johann Bordais: Yeah. No, no we don’t see this. We do see the air taxi or what we call it, commonly call the first mile, last mile type of service that maybe an airline would offer. And it’s exactly the model that we’re working on with public for Orlando, where the premium customer will be — they will go to their house or very close to their house, where there will be a vertical port, but at the very beginning, we don’t see this happening anytime soon unless you have the autonomous functionality. We don’t want to be putting people just driving cars and driving flying eVTOL. Valentini?

Cai von Rumohr: Okay.

Luiz Valentini: Yeah. Just one more point. I think that it’s important to understand that, that wouldn’t at least from what the authorities have published so far, that wouldn’t change significantly the certification basis in terms of safety level and things like that Cai. Because it would still be considered, at least if it’s around the urban mobility areas, the urban centers, it will still be a flight over densely populated areas, which is being considered by the authorities as one of the triggers to meet higher safety levels, right. So I think that it’s just important to understand that in terms of the certification and consequently the design, I don’t see that changing the vehicles so much, and so that wouldn’t have so much of an effect on the certification path.

Cai von Rumohr: Okay, great. Thanks so much.

Johann Bordais: Thanks, Cai.

Operator: Thank you. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question.

Sheila Kahyaoglu: Hi. Good morning, guys. Just to — one of Savi’s questions, you mentioned five additional prototypes this year, with testing to begin in the second half. So just kind of, how do we think about the build-out and what’s the CapEx need to support that? Hello, can you hear me?

Eduardo Couto: Yes, Valentini you go first on the — yes, we can. Hello, Sheila. Valentini, can you elaborate on the first prototype and the others to come, and then I can comment on the CapEx.

Johann Bordais: Yes.

Luiz Valentini: Sure. So, the first prototype, the one we will start testing this year is the one that Johann described as being a non-conforming prototype, which means that it doesn’t have exactly the final configuration that the commercial vehicle will have. And so it will allow us to bring technical knowledge to validate some of the solutions that we’re currently developing with some anticipation, with respect to the time when we have to make the commitments for the commercial vehicle. The tests of the prototypes of the commercial vehicle will not start until next year. And so then, for those prototypes, we have a different set of specifications — product specifications, and they connect to the suppliers that Johann described in the presentation. And those will be the ones that will be used for the certification campaign and then to reach the type certificates. So the investment then on these prototypes will come later on then I think Edu can mention on it.

Eduardo Couto: Yes. In terms of investment, when we mentioned about the $150 million per year, right, expected for this year, it does include the investment on the development itself, right, on the engineers and the whole development program and it also does include the prototypes, right? This year we are assembling — we have already started to assemble. We’re going to conclude the assembly and start the test of the first prototype or may also start to receive some parts for the other prototypes, but all of that is already included on the guidance to consume $150 million and have in mind, we still have $75 million available from the long-term finance from BNDES. So the actual burn in cash will be only half of this $150 million.

Sheila Kahyaoglu: Okay, great. Thank you. And then maybe if I could ask about the suppliers that you guys brought on. How is that relationship working with the suppliers?

Johann Bordais: Well, thanks, Sheila, for the question. Yes, the relationship is great. Well, as you can see, most of them is actually suppliers that we’ve known from the Embraer time also, right? They are partners of Embraer, some of them are not, but we do have throughout and very well-proven methodology to engage. And like I said, the negotiation is not only about the conforming prototype and the production [indiscernible] it’s also with the customer support and services. So those are very detailed discussion and negotiation that we do for the whole lifetime cycle. And then we automatically engage in a JDP we started on the last 20th of September and we engage in all the engineering. So it’s a physical presence in San Francisco between the engineering of Eve with Embraer, but also the engineering of the suppliers.

So we can really and I explained this in my presentation, where there’s this big interaction and how one system impacts the other. So I think it’s really good and it’s been proving quite efficient.

Sheila Kahyaoglu: Great.

Eduardo Couto: If I may add, Johan, regarding the suppliers, Sheila. So just to reinforce how they believe in our program, right. We have long-term contracts, right? We’re talking about more than 10-year, 15-year contracts with those suppliers. It’s not only for the development, but the contracts we sign it. They go throughout the whole series of delivers, right? This is one big difference that we have. And also in terms of payments, we’re going to have payments that will happen really down the road. So I would say pretty much all suppliers, they accepted that we spread the payments to them over several years. I think it shows the confidence, right, that they have on Eve, on Embraer, and our ability to succeed in this program, and the contracts we sign with them, it fully reflects that, which is different from some other contracts we have seen out there.

Sheila Kahyaoglu: Okay. Thank you.

Johann Bordais: Thank you, Sheila.

Operator: Thank you. Our next question comes from the line of Austin Moeller with Canaccord Genuity. Please proceed with your question.

Austin Moeller: Hi, good morning, Johann and Edu. Just my first question here, do you have any plans right now to thermally condition the battery either using coolant or cooling the charging system itself to enable high volume, high throughput flight activity during the day?

Johann Bordais: Thanks, Austin. Thank you for the question. This is going deep there, and I’m glad we have our CTO with us, so he can really get — walk you through the answer there. Go ahead, Valentini.

Luiz Valentini: Sure. Thank you. Thank you, Austin, for the question. So, the cooling of the battery, the thermal management in general is a very big part of how the eVTOLs work, right? So we are considering that we will need cooling, especially in the cases in which we’re seeking shorter turnaround times on the ground between flights and faster charging. So for those cases, we’re definitely considering having a cooling system that will allow us to condition the battery before starting to charge it, because that makes a big difference on the life cycle of the battery. So it postpones the degradation or it slows the degradation of the battery as we charge it and discharge it, which then in turn results in a reduction of our operational cost.

So we do have both inside the vehicle, a cooling system that will enable us to do that. And we are working with the charging infrastructure and the charging equipment to provide that coolant and that thermal exchange for us to keep the temperature of the battery while we charge it.

Austin Moeller: Great. And then should we expect manned flight testing of the first prototype or would that be on the follow-ons? And should we think about manned flight testing is more of a 2025 action item?

Luiz Valentini: Yes. So we will start the testing with an uncrewed vehicle, piloting it remotely from a ground station in the Embraer test facility in Gaviao Peixoto here in Sao Paulo in Brazil. And the whole testing of this first prototype that we described will be made without a person on board. So only an uncrewed vehicle. The prototypes that we mentioned that will be used for certification, then those will be piloted, and so the test campaign with those will have a pilot on board, but this first prototype is only an uncrewed vehicle.

Austin Moeller: Great. Thanks for all the color.

Luiz Valentini: You’re welcome.

Johann Bordais: Thanks, Austin.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald. Please proceed with your question.

Andres Sheppard: Hi. Good morning, everyone. Congratulations on the quarter, and thanks for taking our questions. I wanted to touch on your service and support revenue stream. This is obviously an area that you’re placing a large emphasis on or at least have mentioned it in the past. I’m curious, what are the kind of developments there, particularly as some of your peers might be targeting, entering into service in 2025? So what might we expect from the service and support revenue stream maybe next year and onwards? And what are the latest developments there? Thank you.

Johann Bordais: Thanks, Andres. Great question. Obviously, it’s dear to my heart, when it comes to service and support, so I will take this one. As you could see, we’re up to $660 million worth of service and support that we pre-sold. It’s really linked to the operation, and we need to have the certified aircraft and then enter into service, so we can really kick-in with those services. There’s one revenue stream that could happen before, it’s with the ATM software that we are developing and it is agnostic. So, yes, but that’s part of the same concept where we want to make sure that we have the vehicle, but also the operation very smooth. And we believe there is one way to do it, is to be with our customers on ground — boots on the ground, and to make sure that they have all the support to operate and guaranteed availability.

That’s the ultimate goal, availability. So we demonstrate the segments, the aircraft operation, reliability, and then obviously the customer can make money with the vehicle. So this is very important. And then we can replicate. So we are really looking at the full spectrum, exactly what has been done. And this is another heritage that we have from Embraer, engineering, manufacturing, but service and support, we’ve learned all those years, and we’re going to be applying all those lesson learned, let’s say, right away with a full total package, a very much ala carte service. There are operators that have their own MRO, they want to train their mechanics, they want to be able to perform the maintenance, and that’s fine. And then they want to go for a fly-by-hour program, having the engineering support, having the spare parts support, having also the whole package.

I think what differs a little bit from the traditional market of service and support is the battery. And this is something, and this is exactly the model that we’re studying right now. And how’s it going to be the support and the charging with the recycling also, what’s going to happen with the battery as we’re going to be changing it every year, we’re going to get to the 80% power and remaining. So we’ll have to look at what we’re going to be doing. So right now we’re really focusing on this. The rest is very traditional model and it depends on what the customer choice, some other or very much executive jet type of support is, turnkey solution, and then others are way more independent and then we’ll support the way that they want us to be supported.

Andres Sheppard: Got it. That’s super helpful. I appreciate all that context. Maybe one quick follow-up question for Edu. So within your cash consumption guidance of $130 million to $170 million, I’m wondering if we can maybe get a little more color on how much of that do you expect will translate into CapEx, particularly as you’re building some of these units now? How should we think about CapEx for this year and also maybe what’s the best way to think about OpEx for this year as well? Thank you.

Eduardo Couto: The majority of the development, right, that includes, as I said, the engineers and the prototype may spend around $20 million, 30 million on the prototype. And I would say the majority is really the development of the upcoming vehicles. This is important to mention. We are of course, focused on the first prototype that is coming, but we are also at full speed on the development of the additional five that will come in 2025 to start the full flight test campaign. So there is a lot of money that we are putting on that. It’s not only this upcoming vehicle. And we may spend some money on the manufacturing facility., our first plant in Brazil, but it shouldn’t be that much in 2024. So it should be more in 2025, but there will be some investments on CapEx on the facility as well. But I would say that the majority of the investments are still engineering development for the multiple vehicles that we bring for the flight test campaign.

Andres Sheppard: Okay. Great. That’s helpful. Thank you very much. Congrats again, and I’ll pass it on. Thank you.

Eduardo Couto: Thank you, Andres.

Andres Sheppard: Thank you.

Operator: Our next question is a follow-up from the line of Savi Syth with Raymond James. Please proceed with your question.

Savanthi Syth: Hi. Just a clarification on the PDPs. Is there kind of a certain milestone? Is it when the first prototype is kind of flying or perhaps next year, when you’re flying the other five prototypes, that you’ll be able to kind of go and solidify those LOIs or even what might contribute to kind of first PDP flow?

Johann Bordais: Thanks. Savy.

Eduardo Couto: Yes, we have…

Johann Bordais: Go ahead, Edu, go ahead.

Eduardo Couto: No, you start. You start.

Johann Bordais: Go ahead.

Eduardo Couto: Okay. No, I was just going to say Savi, the — we have multiple campaigns in discussion. We have multiple customers, as you can see by the largest backlog in the industry. The focus is to start to convert those LOIs into firm orders, which also translates into deposits, right, and pre-delivery payments as you referred to. So this is going to start to come right, this year, next ’26, we’re going to receive a lot of down payments and pre-delivery payments. But I would say Johann can add, but I think the most important thing is really the engagement with those customers. Make sure they’re comfortable with the number of eVOTLm these lots, they’re going to be taking those vehicles and where they’re going to be deploying them, but the cash is going to come, the PDPs and the deferred orders are going to come this year and in the upcoming years.

Johann Bordais: Absolutely, Edu. I think this is really important in what we want to have and convert some of those LOI into the first purchase agreement is just to make sure that we have our customers engaged. The whole ecosystem, it takes time, it takes people, resources, and it’s not so much because of the customer, but it’s because of the whole ecosystem. It’s not a traditional aircraft you’re adding to your fleet. I mean, it’s really — it’s more than this and I think we’ve been discussing very much with the customers on this. And we need to engage, get what we call the skin in the game from all the stakeholders and this is what the PA is about. And they’re the one asking for this, right. So it’s not like we have to sign those purchase agreement this year from a cash need perspective, but definitely from an engagement.

Savanthi Syth: Very helpful. Thank you.

Johann Bordais: Thank you.

Eduardo Couto: Thank you, Savi.

Operator: Thank you. Our next question is a follow-up from the line of Cai von Rumohr with TD Cowen. Please proceed with your question.

Cai von Rumohr: Yes, thanks so much. So of the $660 million kind of service contracts, how much of that is with your competitors or with customers of your competitors?

Johann Bordais: None, Cai. None. It’s all on the eVTOL. And what we’re offering, of course, in this to be able to go for agnostic, but it’s really all the LOIs are based on the current aircraft LOIs, okay.

Cai von Rumohr: But given that Joby and Archer indicate they hope to be certified ahead of you. How are you doing in your efforts to kind of sell services either to them or to their ultimate customer, given that you have a long history of service capability and they don’t?

Johann Bordais: Yes, we do have common operators or customers that have been asking, and I’m sure you know and it does make sense from an operator standpoint of view when it comes to customer support and services. You want to have one point of contact. You don’t want to multiply your contracts of same nature. If you go for MRO, then you might as well just have one provider for the different vehicle. That’s a concept, It does exist today, where there are independent MRO or when you have agnostic MRO that can offer this type of service. So we’re open. We’ve been having few conversations through United, as a matter of fact, that’s one example, where they’ve been asking us to sit down with other eVTOL OEM and start talking about how it’s going to look like on the service and support. And you’re right, we do have the expertise when it comes to service and support. So it will be natural that we’ll take the lead on this, but nothing more concrete at this stage.

Cai von Rumohr: Great. Thank you.

Johann Bordais: Thank you. Thank you, Cai.

Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I’ll turn the floor back to Mr. Aldworth for any final comments.

Lucio Aldworth: Thank you, Melissa. And I want to thank everyone who joined the call today. As you can see, we accomplished several important milestones this past year. We’re fully engaged and, of course, there is much more to come. So we do look forward. We’re going to continue updating you on our progress throughout the next few quarters, and of course, look forward to you, to meeting all of you in the upcoming events we’re going to attend. As always, if you have any questions, don’t hesitate to reach out. Thanks and have a good day. Thank you.

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