Eve Holding Inc (EVEX) 2024 Q3 法說會逐字稿

Good day and welcome to the Air Mobility third quarter, 2024 earnings conference call.

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I would now like to turn the conference over to Lucio Aldworth, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at E&I wanted to welcome everyone to our third quarter of 2024 earnings conference call, our CEO Johan Bode and CFO Eduardo call for joining me on the call today and after they prepared remarks, we will open the call for questions. At which point, Luiz Valentini, our Chief Technical Officer will also join us for more technical questions.

We have a deck with a few slides and additional features that show our achievements in the quarter as well as the testing phase of our full scale prototype. The deck is on our site at Ir dot and mobility dotcom. So please feel free to download it and follow along.

Let me just start by saying that this presentation includes forward-looking statements or statements about events or circumstances that have not yet occurred. These are largely based on our current expectations and projections about future events and financial trends affecting our business and our future financial performance.

These statements are subject to risks and certainties and assumptions including among other things, generic, economic, political and business conditions, both in Brazil and in our market.

The words believes may will estimates continues anticipates, intends, expects and similar words are intended to identify forward-looking statements and where they take no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors.

Would that 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 Johan, our CEO Johan.

Thanks Lucio, good morning, everyone and thank you for joining the call. Today.

We had an eventful third quarter. We continue to advance the development of our program and reach important milestones. As a reminder, we completed the assembly of the prototype and rolled it out at the hangar for the first time back in July this year. And we have started to test the vehicle ever since.

This is a full scale engineering prototype with no cabin and car picked. It has made, it's made of composite material that will be piloted remotely in the command and truck and control truck. This prototype will be used to validate and improve the accuracy of previous subscale and computer models and also will serve to build on the several rigs that we have for different individual components.

We have installed the batteries and already performed various tests which we'll be talking about later on in this presentation and we're now prepping up for the prototype to start the fly campaign.

We expect to start receiving the lift motors by next month in December. So the flight test can start early next year.

We will initially, we will initially perform hover flights tied up to the ground and gradually increase power and height. Then we'll move to the partial transition. This is when we engage the pusher without fully disengaging the lifters to continue controlling the aircraft originally and only then we will move to the full transition flight.

Another important milestone was publishing of the base of certification by Anac seals Civilian aviation Agency which establishes the standard EVO requirements we will have to respect in order to fly commercially in RL, the FAA published the SR in the United States, we which we view as a supportive to the industry and because we're working closely with both buying agencies, we continue working in the constructive path to certification.

Now on the services side, we launched the tech care which is fully integrated portfolio that includes all services for maintenance, logistics of spare parts, flat our program to pilot and mechanics training and the customer support.

Last but not least, we conducted a successful five day simulation of vector our air traffic coordination software in Sao Paulo with a very positive feedback from Rivo. Our partner and customer rivo also indicated interest in the use of vector flight operation for both the EV tools but also their fleet of helicopters.

Now on to the next slide, we're advancing with several tests in our engineering prototype. These are listed here, we completed the battery installation and because of our prototype as removable carbon fiber panels, this isn't an easy process.

The panels are easily detachable to give engineering access to whatever part needed for the maintenance or any services.

And of course, the panels then can be easily readjusted reinstalled.

So with the battery on, we conducted high and low voltage tests to make sure that there is no leakage in the system.

We also executed successfully the thermal runaway containment test in our energy pack. And the goal here was to demonstrate the containment, you know, the third away the turn away event, as I mentioned before, we expect to receive the lift or motors in December, they are currently being assembled and tested.

You include the motors themselves and the electronics components that will control each other's motors thrust.

Moreover, we're conducting auxiliary load test in the tool boom section with different blind configuration and different shapes to maximize the performance equation that is the trust versus the energy consumption and vibration. And also the noise emission, we have also integrated the multiple system of the EB tool to make sure that all operate, they all operate among each other smoothly.

And lastly, we integrated all of the command and control truck to the aircraft. The truck will house the pilots and the team of engineers.

We will measure and monitor several operating metrics during the flight. The truck is designed to track the easy tools during the test flight and is equipped with several sensors and cameras strategically placed throughout the fuselage for real time flight performance data and diagnostic.

The goal is to guarantee that all systems are working perfectly among each other.

On the following slide, it shows some cameras that we just talked about and also the outside view of the truck, I believe on our earning calls which we published this morning. We're also showing the interior of the truck.

Now moving to the next slide, we're glad to see the certification environment is taking shape as well. The Brazilian Civil Aviation Authority just published the basis of certification for Ed doll in the country.

This is an important milestone for the E VTOL industry and we will and this will allow us to progress towards the inactive certification and seek validation with FAA in the US. In parallel, the FAA issued the special Federal air regulation, the S BAR that details the final rules of advanced air mobility and covers also the EV 12 in general.

We view that this announcement are supported by the industry and we're still analyzing the 880 pages technical document to evaluate the impact on our aircraft development and also operations in that basis of certification establishes the first set of bear within criteria's for EV to in Brazil and follows E application for TC back in 2022 it is a standard process for developing a new certification basis and an important milestone in the project eve has progressed in E VTO development. So far in 2024 the publication of certification basis by the Brazilian Aviation Authority in October.

As an important milestone to establish the essential guidelines for the R A VTO certification activities in the coming years can now advance the definition of the means of compliance by the Brazilian authorities and validation strategy with the FAA that will guide further detailing the vehicle and the flight test campaign.

Our current path to certification includes the first flight of our engineering prototype in early 2025 followed by several flight tests for knowledge gains and initiate the assembly of our conforming vehicles next year.

With the first conforming prototypes ready, we expect to start our final development and certification flight test campaign in 2026 which will normally take 12 to 18 months to be completed leading to an expected top certificate issuance in 2027. We believe that this is a realistic and achievable timeline based on our experience from previous programs.

Now moving to the next slide we show here some you know the highlights of our recent announcement on the customer services part of the business. We specially announce take care an all inclusive portfolio of services and support to our customers to aim to increase.

The eel availability and also reduce operating cost. Take care includes services such as health monitoring to run productive maintenance and schedule EV to downtime and amendment schedule which will allow to optimize the inventory management of components.

The system integrates operators, suppliers and also services centers for an easy use interface.

We are also going to offer an advanced training for pilots, maintenance crew and also ground handling personnel that will be powered by the JV, the joint venture between Embraer and C A training services called ECTs. This is a long standing and successful partnership with excellence in training for global operations since 2007.

I believe the tech here and factor showcases our holistic view of the U AM market since the beginning and how it adds value to our customers as the industry scales. And I have no doubt that this is one of the most distinguished differentiators. We look at U AM as a complete way on the next slide.

For some additional details of our latest vector simulation in Sao Paulo. We run a five day real life exercise in one of the busiest helicopter market in the world with our partner and customer we use the vector to shadow and monitor the total of 45 helicopters flight that carries 100 paying passengers and that average is 8 to 10 minutes. This is precisely the un market that we're targeting.

The exercise included operations in various scenarios, including delays or parts on departure or on destination airspace, weather constraints, the InLight deviation to alternate landing location and more.

And the goal was to validate the algorithm and protocols that are necessary for the to conduct a safe and reliable operations in high use case. This is the second exercise that we're doing. The first one was the UK about a year ago.

Now on to the slide 10, our traditional the total pre order backlog visibility where we stand now with approximately 2,900 aircraft for a total value of $14.4 billion based on the list price. These are the non binding letters of intent for 30 different customers spread over 13 countries and different businesses.

We also have LOIS for factor from 16 customers and secure contracts with 15 different customers for our tech care suite of after market product and services. This could bring up to $1.6 billion in revenues to eve over the first few years of operation. Now, I'd like to invite our CFO you to go over our financial along with the milestone checklist.

Thanks Johan. Now move to slide 9. I want to start with our most recent liquidity events. We have been very successful to attract new capital at ease, to continue to fund our development. In total. We raised 236 million since July in a mix of debt and equity. We believe that this balance capital structure will maximize value for our shareholders. Our formal liquidity of 445 million in the third quarter.

2024 including the industrialization and bank loans is equivalent to three years of 's current cash consumption which is above our peers and gives us confidence to advance the program to certification.

Now it's like 10, it is a pre operational company with our current financials reflecting mostly the cost associated with our program development that said I want to highlight some of our numbers.

We've invested 32 million during the third quarter in our program development as R&D activities continue to speed up with more head counts and high engagement from suppliers. We also deployed 9 million in SG&A during the quarter and that reflects a bigger workforce. We have been controlling corporate expenses to focus our resources on the evito development, higher development expenses in the third quarter were partially offset by interest revenues of our invested cash with tier one banks and the market to market gains of our warrants resulting in a net loss of 36 million in the third quarter.

2024 moving to cash flow, our operations consume 34 million in the quarter and 101 million in the first nine months of 2024. That is in line with our guidance. It's important to highlight that we drew half of our cash consumption or around 50 million from our pre approved credit line with the Brazilian Development Bank significantly preserving our cash position.

We ended up third quarter with 280 million in cash which is 73 million more than the previous quarter due to the new equity raise in July, we still have approximately 25 million available from our R&D stand by low one resulting on a total liquidity of 305 million which adding with both the new industrialization finance and the bank lower recently announced in October would increase our total current resources to $445 million at slide 11. We remain on track to deliver our milestones for 2024.

We presented our assembled EV to in July and started several tests ahead of our first flight in parallel. Anac published the basis of certification as Johan already described and we secured the manufacturing finance for our Brazil factor in October.

We have consumed 101 million so far this year and expect to reach our guidance of 130 to 170 million in cash in 2024.

The higher Brazilian currency versus the US dollar has been helping us to stay at the low end of our guidance. As we have a lot of development expenses in Brazilian currency.

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

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So the first question comes from Savanthi Syth with Raymond James. Please go ahead.

Hey, good morning everyone. I appreciate all the kind of the color on what's been accomplished so far and, and it looks like maybe kind of the updated outlook in terms of type certification may have slipped a very little bit. You know, maybe from the end of 26 to 2027 but I was curious, you know, what was driving that and then just any implications for the timing of some of the revenue that could come in at like PDP and kind of other revenue sources that could come in before type certification.

Hi sa thank you so much for your question. Johan speaking here. Yeah, as as we mentioned in the presentation, I mean, we made some significant progress in the EBIT development this year including the steady progress of a full scale prototype. As we showed, you know, several pictures, the, you know, several design advances with the critical suppliers. We just also coming out of a phase which is joint definite definition phase with our suppliers that, you know, CS and, and test each of the component, but also the integration of those components together.

We went through a multiple wind tunnel tests. And, you know, always a challenging technology as we know, and at the end of the day, we want to bring the best the best value for our customers. So, you know, our, our, our goal is not to be, you know, we're not focused to be the first one, you know, for the last 13 months that I've been on the job. That's what I keep saying. I mean, we, we, we're, we're not focused on, you know, to be the first one, we're focused to be the right choice for our customers.

And the goal is to introduce a mature and reliable product that will be capable of meeting and exceeding also the expectation from the customer. So giving all that the path, you know, the certification that includes the first flight of our engineering prototype that we've been mentioned since we rolled out last year this year, sorry in, in, in July, in the in PB.

And and of course, you know what, we'll have to go for the for the first flight, but it's not to get ready for the first light only. It will be good for everyone. We, that's what we want, but we want to be ready also for all the test flight campaign, right? And with this, it will be, you know, in early 25 will be the first flight of the engineering prototype.

And then of course, we want gain the knowledge and we're going to start also to assemble the initial conforming vehicle. Once we have the conforming prototype ready, then we will start the flight test campaign of the conforming prototype in 2026 which we know by experience that we've done this at Embra Air many, many times.

You know, it takes about 12 to 18 months to be completed and this will lead us to certification in 2027. So as you can see, personally, I don't, I see, you know, as a normal update of a very innovative and challenging program given that now we have also a better visibility with the next steps.

In in terms of the the PDPS Savvy as I mentioned, it's to do here, you know, we are super engaged with our customers, they remain super supportive of eve they're excited, right? Because we are advancing, we are bringing them also for this developing. We are making sure that we are making the right vehicle right, that the customers really want to operate.

And of course, as we advance on the on those conversations and those negotiations, we expect to start to firm the Lois, right? We have almost 3,000 Lois, we have a lot of customers engaged. We believe we're going to start to firm the YOY very soon.

And once we firm the orders, of course, there will be bigger down payment, there is a a AP DP schedule. So you know anything it it's all normal, nothing has changed. We remain excited and we are moving forward.

Appreciate the color and if I might just on the 80 to 90 million in the production facility, how should we think about like the timing of that CapEx flowing through? I recognize that you have the financing for it.

So that's not a concern but just curious about the timing of that and what that means for. I know in the past you said, you know, cash burn steps up next year, but not a big step up. So I was just kind of curious if you have any early thoughts into, into kind of that cash burn as well into 26.

Yeah, we, we secure the finance right for our, brazilian facility. It's around $90 million. Right. It's a very long term finance. We're talking about 16 years. There is a four year grace period where we don't pay any interest and no amortization. So that's really the type of finance that fits very well with our, with our company and our profile, the peak of the investments on the facility.

They are going to happen in 2026 there will be investments next year. So probably something around 20 million, but the peak is 2026 as we get, you know, closer to certification entering into service. So that that's kind of the profile.

Okay. And so we should kind of expect like a similar maybe and a little bit more step up on maybe R&D as well for next year. So those are the two things that will drive the step up.

Yeah, this year, as I mentioned, we are burning around 100 3,100 and 40 next year, it may go up a little the 26 kind of flat versus 25. And you know that that's, that's pretty much where we, we may end up.

Very helpful. Thank you.

The next question comes from Marcelo Malta with JP Morgan. Please go ahead.

Hi, everyone. Good morning, two questions on, on our side as well. Just to follow up on the, the TOBA plant. You know, you comment on the release, you know, you have had a model, you know, one model two models when we think about the Capex, the that you guys' comment about, you know, 80 to 90. This is like, what size exactly is the 120 or, you know, can you go up to the 480 then, you know, for the additional models, if that is the case, what is the, the additional Capex there?

And then finally, second question on liquidity, I mean, of course, you have a comfortable position for the next three years but just wondering, you know, given what happened to some peers in the industry, if you think about the trend even more your liquidity in the short term, you know, just to have a bigger question of cash if necessary or how are you guys thinking about, you know, new credit facilities or, or how should we think about that? Thank you.

Thanks Marcelo. First regarding Tabata, right? Our facility, it's you know, the, the this 80 to 90 million that we got, it's most of the investment that we're going to be doing that with this 80 to 90 million, we can get probably half of the capacity 240 tows to get that 480 right, which would be the full capacity we may need, I think we need to add an extra shift and also put some tool in the extra machines.

There may be another 30 million or 40 million, but you know the bulk of the investment and half of the capacity 240 we already get with the finance we have, that gives us a lot of comfort, right? So as we said, since the beginning, we have this project together with embraer that's very efficient in terms of capital investment, right? We we hired the engineers from Embra, we only pay for them when they are working for us. Once the work is done, they go back to the Empire Pool on the industrialization.

We are using existing facility of Embraer. We're just buying the tool in the machine, it's very efficient, right? So that's the reason we spent 8,090 some of the competitors are spending hundreds of millions only on the industrialization in terms of the liquidity, we are feeling super good, right? As I mentioned in my presentation, we closed the quarter with $450 million in liquidity.

It's our, it's our highest liquidity ever, right? It never had so much cash on its hands. We, as I said, we, we control costs very seriously, right? And we really focus our resources on the development that gives us, you know these three years, almost three years of runway, which is the longest runway in terms of cash consumption in the market among all peers. So we're feeling good. We have money for the years ahead. We're not planning new new capital raises, but we are always evaluating. But at this point, nothing is on the table. We're not looking new funding in the short term.

Okay, perfect. Thank you very.

Much.

The next question comes from Andre Shepard with Cantor Fitzgerald. Please go ahead.

Hey, good morning, everyone. Congratulations on the quarter and thanks for taking our question.

I wanted to maybe touch on the fr regulations. So, you know, you mentioned that obviously this is supportive. I'm curious, you know, what did you see as the number one or number two most supportive regulation as it pertains to eve or, or the EV to industry? You know, what, what was it that you thought was most significant there? Thank you.

Yes, good morning, Andres. This is Luiz Valentini. Thank you for the question.

I think first of all, it's important for us to have the rules clear, right? So we were with the draft of the SR for around a year and, and it's very hard to develop the project and it's the same for us as is the for the rest of the industry. It's very hard to move ahead at the pace.

That we are going without having, you know clarity on what the rules would be. So, so having the final document out is really good for us to really have the rules in the hand and be able to discuss with the authorities as well as setting up our operation, our vehicle operation with the operators that will have them. Specifically, I can mention, for example, the issue about the training that in the original draft of the SR was mentioned, that would be required to have a flight hours with an instructor on board, that would require the vehicles to have two command positions that you know, an instructor could be occupying.

At the same time that the pilot that is in training was occupying and that would be for our vehicle as for others in the industry. a necessity of creating a specific vehicle for training since our vehicle has only one command post for pilot on the newer version on the final version of the it's stated still that you need flight hours for training, but those are not required to be made in dual those aircraft.

The pilot can be trained in the simulator and then can go to the vehicle with an observer on board. But this observer does not necessarily have to have the controls.

And so that was a simplification that was made we believe that it was the correct move. This was something that the industry asked the fa to evolve to. So we were specifically satisfied with this one. It's, it's now a matter of creating a training a, a training program together with the simulation devices that will allow for the proficiency of the pilot. But we believe this is a better path than what is on the, the draft of the document.

Got it. That's.

Very helpful. I appreciate all that context. And maybe just as a quick follow up, you know, with with certification now expected in 2027 just trying to understand, you know, what is driving that move into 2027 you know, understanding that the the test flights will will ramp up in 12 to 18 months. But from the regulatory perspective, what are you seeing from, from AEC and from the FAA that you know, that that makes it seem like the certification is more realistic in 2027? Thank you.

Yeah. So as as Johan mentioned earlier, we believe that this is a time line that fits our development. This together with the publishing of the certification basis last week by AMAC and the flight test program as Johan mentioned. So the first slide of the engineering prototype in the beginning of next year and then our conforming prototypes in 2026 we believe that that's a robust timeline that we can follow considering all the challenges and the novelties that there is that there are in this project, right?

So Johan mentioned, we build very much on the experience of Embra Air in creating these timelines and creating the process for development of the vehicle. But we also have new technology that's being brought in a new requirements we just mentioned, right, the ASR in addition to the certification basis. So all of these together make for this timeline that we just published a more realistic timeline in our view.

Got it. Thanks again. Congrats on the quarter, I'll pass it on. Thank.

You.

Thank you. Thanks. All.

The next question comes from Sheila Kahyaoglu with Jefferies. Please go ahead.

Hi, how are you? Congrats on the quarter guys and just maybe just wanted to fine tune this a little bit because there's been a lot thrown out there, and appreciate the additional funding. Does when we think about the flight test program and the final development, kicking off in 2026 does that mean, you know, with another 12 to 18 months to complete it? Does that mean EIS is pushed out about, you know, a year and a half? Is that fair to say? And that's what's driving the additional funding?

Oh, sure. Thank you. Thank you for the question, the comment. But no, no, it's, it's, it's not 12 to 18 months. No push out. No, it's really, you know, from 26 to 27 we're not, you know, giving you know, when a quarter at this stage, but we have to count, you know, the 27 and it's not, again, it was, it's.

Up to 12.

Months. Right. Push back. Right. That's what we're looking at.

Okay.

And then just on the loys, obviously, we don't expect that to really move until, you get closer to EIS, but they're flat from last quarter at 2,900 aircraft. But services revenues is picking up up 30% Q over Q to 1.6 billion in the backlog. So maybe if you could just talk about how you're selling that to your customers and how we should think about that shift in customer conversations as you build, you know, lifetime revenue model.

Sorry, we, we had just a little bit of problem, I'm here just to cut up for for ten seconds. So can you just.

Yeah, sure.

Sure.

Sure Lois are basically flat at 2,900 aircraft in the backlog or 14 billion. But you've seen revenue momentum in the services side of the business up 30% Q over Q just curious how you're selling that. Are you going to or should we see services backlog, start picking up more? So?

Yeah. Okay. Thank you. Sorry. Okay. No, in fact, right, we're 2,900 aircraft under the LO I, this is a strategy that we've been having for the last four years is really going around, you know, in the world and, and showing our solution, our solution is not only insisted very big and we say this is not only the vehicle, but we know that guaranteeing the availability of the aircraft but also the most optimized operating cost will be the key of success, especially at the beginning, right? We really want to focus on service few cities make it work, make it work for the operator and then we can replicate as much as possible.

And then of course, we're, you know, our portfolio that we're creating that we've been creating is the biggest one when it comes to. And, and again, there's a of course, but you know, the customers are telling us, look, you know, you got a good solution.

I know you're not thinking only about the thinking about only the, the vehicle, but also the service and support, which is very, it's paramount for the customers.

They understand it's a, it's a new aircraft, it's a new ecosystem that we're working on. And they, you know, they, they want to make sure they're backed up by not any service provider but definitely by the OEM who's got, you know what we call the skin in the game. They really want, you know, everyone wants to make sure that the operation will be, will be working. So yes, lo I and plus the service and support is a big component of our solution.

And this is the reason why now one thing that we've been working hard is the you know, that we announced recently the the launch of the tech care, which is really the all in one services platform, which exactly the customer have been asking us for strongly based on the experience, you know, one flat hour program or whatever is going to be designed. But, you know, with, with, with a la carte services that fits the operation of the customers. And also we keep, you know, working hard just on the ecosystem side.

And we launched Vector as you know, our uhm and last week we were in Sao Paulo and we were shadowing their operation with the helicopter more than 4 to 5 flights we've done in, in a couple of days and, and the intent was to demonstrate that our software made for the operator, not only for the veto, but also the helicopter operation will allow to save, you know, the organizational time be more optimized, weather condition can impact the operation and how you anticipate as much as possible. So this is going to be also very important for the operation of the Evito and when we launch them.

Thank you.

The next question comes from Cai Von Rumohr with Cowen. Please go ahead.

Yes. Thank you so much. And so congratulations on the sr So I I've read the thing. Can you go through the diversion requirements, flight diversion requirements, whether those are totally in line because they looked a little confusing and any vertiport requirements that are spelled out there?

Yes, good morning Kai. So on the energy reserves, we, we believe that it's clear a path that the FAA has been putting out, which is to be very, very in line with what is in operation today.

So we see that the FAA, very careful on building what is today valid and what's working, of course, adapting where it's necessary for the EV tolls but very much trying to build on the basis that is operational today.

And I mentioned this because it specifically says that if the UV Tos can land vertically at any moment during the route, then they can use the reserves that are today and use for helicopters. So 20 minutes for VFR flights and 30 minutes for Ifr.

It also states that if you have the operators as a 135 permit, then you can have, they can have approved routes and not necessarily use the 20 minutes but use whatever is necessary to land at the predetermined landing zones on that specifically approved route.

So we believe that this was a good arrangement in the sense that it builds on something that already exists and and it works today in aviation, but also leaves the door open for operators to not use, you know, the general 20 minute rule and, use something specific if they have the approved route. So that's what we believe that is the best way to go.

So you don't have to have, excess energy left in the battery for, you know, the general 20 minute reserve. You can really have a more tailored and, and more adjusted reserve for the roads that you'll be operating. So this is something that the operators will have to do. Of course.

We can support them in approving the roads. And, and we have the experience of Embra area in doing that, but this is going to be something that they can do. And again, that, that will make them more fit in terms of their energy used to the routes where they would be operating with respect to the 40 ports.

I don't see any major points in the SR at this moment that changes our point of view and the infrastructure on the ground. So we believe that this this the energy reserve as it's stated, will work with the, with the type of reports that we are expecting to see.

Terrific. And then on the issue of service, at one point, you were going to you know, make available service to EV tools of your competitors particularly, I believe Archer. So, so where are you in that process? And secondly, as you think about the service opportunity, who are the people who you view as potential competitors, if any.

Hi, thanks for the question. Yes, indeed. We've been discussing with other ev all but through the customers. Really the focus here is to make sure that we have the first operation going with our customers and working on the internet service. We also understand that a particular customer can elect various OEM, right, for their operation to be complementary, right?

Depending on the performance of the EV to. And so that's something that we entertain and that we are always willing to, you know, discuss.

That's what we've been doing indeed with our church, but we've been also doing on, you know, on requested by our customers with you know, with other customers but with other OEM, we fully understand that, you know, we're creating an industry, this is the novelty. So you know, we understand also that the market there will be big enough so that we have several OEM.

And we want to create this industry and especially on the charging base, for example, you know, we're very in favor of having a company standard when it comes to recharging a device, for example, you know, and just to give as much as capital of our power grid and the possibility to really get the EV to lounge and wrap up as much as possible. So this, this is something that we're looking at and we keep having discussion with our other o ems indeed.

And lastly, I mean, are you the, the only guy kind of with this major focus on service? Obviously, other guys are going to, you know, support their own vehicles. But are you the only one who is sort of taking this broader approach toward, you know, looking at, at, at servicing competitor vehicles?

I think we're the only one who's been talking about it since the very beginning as the whole industry is moving forward and eventually we'll get the certification and we passed that, you know, hype about the prototype flying around. I think it's natural and now customers are the one also asking, well, how is the readiness, the readiness of the, of the ecosystem?

So more and more the industry, but also the market or anyone involved in the AM is, is thinking about what's going to be, you know, looking, look the internet service and this is why, you know, we, we're ready, we're at the back of obviously of Embraer and , and all the customer support and services experience for the last 55 years. So, I mean, it got to the point where we also have agreements with our suppliers.

which is not only for the production of prototype or the confirming prototype or the production, but it's also to ensure that, you know, we have the service and support operation ready. So this is something that we believe it's in our DNA. One thing is to talk about it. The other is to get ready for it and, and, and, and know what it takes to really, you know, have a reliable, reliable operation on a day to day. So I understand that eve has the DNA for the customer support and services and it's going to make a difference very soon, very soon at the internet service.

Terrific. Thank you very much.

Thank you. Great. Thank you. Got.

It. Thank you.

The next question comes from Austin Moeller with Canaccord. Please go ahead.

Hi, good morning, Johan. And I do just my first question here on the SR does the 20 minutes of battery reserve for flight required by the FAA which was less than the 30 minutes expected benefit the TAM and potential routes for your aircraft in the US.

This is Luis Valentin.

About the 20 minutes. It's, it's a first, it's only applicable in the US, right? So other authorities, for example, a AA and, and even in A and Brazil are are looking at different requirements. But we, we believe that for the Urban Mobility mission, which is our focus, the 20 minutes are not necessary. I think that the 20 minutes, my opinion, in our opinion here at Eve is that the 20 minutes and, and the concept of having a general number of, of, you know, of time for reserves is more applicable when you have, let's say a less structured operation when you're flying in distant areas. For example, where you don't know where landing sites will be available. In our case with the urban mobility missions or sightseeing missions.

For example, that we are prioritizing, you will have a more well known environment where you'll be flying. And that's why I mentioned the possibility of approving routes. The operator is doing that which then will make you use predetermined landing zones and not use the 20 minutes.

And so you don't have to keep that much energy on the battery. So for you to have a reference, our our whole missions today are expected to last approximately 20 minutes, right? So it's not necessary to have another full mission of energy in the battery. You can use these predetermined areas and, and I'm giving just a reference of the time, the duration of each mission, right?

So of course, each one will have a different duration, but just to have a feel for how much 20 minutes means. And so that's why we think that again for the Urban Mobility mission, which is our focus, it's more reasonable to use the pre approved routes and the the predetermined landing zones than the 20 minutes, we think that makes more sense.

Great and just a follow up. Have you had any new conversations with potential customers in the last couple of weeks about their orders coming over to your book now that there's been a recent shake out among competitors.

Good thanks Austin. We're always, you know, discussing, we have, we're flushing out our our pipeline on a regular basis. We announced also the rival of a new CCO and she's coming with a lot of energy and, and definitely, you know, eager to talk to our customer base, which we've been doing with our team of B DS.

This is, this has been a natural, I mean, I it would be weird, you know, for BTY, a team of hunters as I call them, you know, not just going after, you know, every single opportunity and being in touch with the, you know, with the customer base, the broader one, and even the one that is closed for OEM or the OEM for the moment. Oev all. So I can tell you that.

Yes, we're on a hunting base. We do talk to all of, you know, the EV to, let's say, prospect, right? Including the one you know of, of OEM that, that yes, that, that might not be in the market, you know, for long or design to, to to, to, to go bankrupt. So, or file for insolvency. So, so, yeah, this is, this is part of the DNA. We want to be present especially on the urban mobility.

All right, this is what we're focusing on on the shuttle from point of from point to point sightseeing. And this is what the team has been doing different.

Fantastic. Thanks for all the details.

The next question comes from Amit Dayal with HC Wainwright, please. So please go ahead.

Thank you. Good morning, everyone. Good to see the liquidity position continue to be strengthened. You know, I just want to touch on the tech care offering again.

I know you've already provided some color on it, but you know what the significance is of launching this offering almost three years ahead? Is there any monetization that we can expect to take place?

You know, if you could just lay out all the milestones for the tech care offering are from here, you know, the next 23 years as you get ready for operational launch, you know, it would be helpful to just understand what you're trying to achieve. You know, with this today. Thank you.

Great. Thank you so much. Thank you.

I I think it's super important. It's all about the ecosystem, right? And 11 important a part of this ecosystem is definitely the the support and services. What will make this A V to operation work, as I mentioned before, it's to make sure that we have the availability, the reliability, this is what we've been building, which is what we're developing, making sure that's the right, the right aircraft for our customers. Right.

So, and I think building on this, the internet service, preparing, you know, the interest service to be a success is the key and you don't do this, whether it's the ecosystem, but also part of the customer support and services. You don't do this, you know, the day before, don't even do that on the normal service for an air aircraft. You do a 12 month prior the first arrival of the aircraft at the operators base.

So you can imagine that the EV to, you know, we gotta be ready now to engage, you know, the customer to engage the stakeholders. And that's why, you know, we've been, you know, launching this platform to tell the customers that we are preparing the operation.

This is all about, you know, the tech care is the whole solution. It's the customer support. You want to make sure you have your train and your, you know, your, your technician around the world or at least, you know, at the the first operation with a start up team when the operator will, will start operation, whether it's going to be in Brazil, it's going to be the US. You want to have deployed your team, make sure you have the technical solution. This is not trivial, but you need to have a 24 hour, you know, customer care center, I mean, with trained people with a process, it system that works.

I know it sounds, you know, obvious but, but it's not, you know, when you're going to be 24 hours and you're going to be flying those vehicle, you know, 1,000 1,000 hours a year. This is what we're looking at. We're going to be flying some 4,600 fly cycle a year. This will work to will work and we believe it will work with a high utilization vehicle and the high utilization, make sure that you have the reliable aircraft, you need to have the material, the battery solution.

All right, the Mro also, it's going to be a low maintenance, obviously, but still you need to have your technician the fly up solution and, and last and not, you know, the lead is, is definitely the training services. And this is exactly why we announced, you know, this, you know, this contract on the services. You just want to make sure that you have your simulators and, and all linked. And this is why Valentini just explain how important it is to have, you know, the S four is taking us to the next step and we know now, you know where to go. But, and this is why we just announced on the 31st of October, the contract with the ECTs the MC A E training services, which is really going to be also a planning for the training, the pilots, aircraft, pilots, but also the maintenance technician and the ground handling personnel. I mean, this is something that you need to be ready.

Now, otherwise we are running the risk and then we say we as the industry running risk just to work on our certification, focus only on the certification. And by the time that you would get the intern service, you're absolutely not ready for the operation. And this is the worst thing that could happen.

Then you deliver those dozens of the hundreds of EV to in the 1st year and then you're going to be grounded because you don't have the right technician and the right material or distribution, which is, by the way, it's way more cap then, you know, an aircraft operation, you can fly your aircraft across, you know, a continent or multiple states in the US to, to get your maintenance done.

That's not the case for all. So this is something that we're preparing right now. Customers understood this. This is why they want to buy from us, you know, with their, the service and support. And this is why also we wanted to give a name to this sort of solution which is to take care.

That makes a lot of sense, you know, good to see you thinking so far ahead. My other questions have been asked. I'll step off the queue and follow up offline. Thank you so much.

Thank you. Excellent. Thank.

You, Austin.

This concludes our question and answer session. I would like to turn the conference back over to Lucio Aldworth for any closing remarks.

Thanks. I see. And I wanted to thank everyone who joined the call today. As you can see, we accomplished several important milestones this past quarter. We're fully engaged and we continue to progress on our suite of products and services for the market and there's a whole lot more to come in next few quarters.

So we're going to continue updating you on our progress throughout the next few quarters. And we look forward to meeting all of you in the upcoming events. We're going to participate in the next few months as always, if you have any questions, don't hesitate to reach out to our team. Thanks and have a good day.

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