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Good morning, and welcome to the Eve Air Mobility First Quarter 2023 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, today's conference is being recorded. I will now turn the call over to Lucio Aldworth, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, everyone. This is Lucio Aldworth, the Director of Investor Relations at Eve. And I wanted to welcome everyone to our first quarter 2023 earnings conference call. I have here with me, Co-CEO, Gerard DeMuro, André Stein as well as our CFO, Eduardo Couto. After their initial remarks, we're going to open the call for questions. We have prepared the deck with a few slides and additional information. This is available at our Investor Relations website at ir.eveairmobility.com. So please feel free to download it. Let me first start by mentioning that this presentation includes forward-looking statements or statements about events or circumstances that have not yet occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and their future financial performance. The forward-looking statements are subject to risks, uncertainties and assumptions, including among other things, general economic, political and business conditions both in Brazil and in our market. The words believe, may, will, estimates, continues, anticipates intends, expects and similar words are intended to identify forward-looking statements. We take no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking statements and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to Jerry. Jerry?

Thank you, Stein. Now moving to Slide 8, Eve is a pre operational company and our financial results for now reflect mostly the costs associated with the development of our EBITDA program. I would like to start with the income statement highlights. We invested almost $22 million during the first quarter 2023 in our program development versus $9 million a year ago. The majority was invested to develop our eVTOL and a portion for our service and support solutions and the development of our Urban Air Traffic Management System. In addition to the development expenses, we also deployed $6 million in SG&A during the quarter versus $1 million last year. Keep in mind that the [indiscernible] dedicated to the eVTOL development have been growing as the program evolves. Eve also reported around $4 million in financial revenues during the first quarter, mostly due to the return of our cash investments. We have a very conservative financial policy keeping our money vested in short term deposits with big banks. With that, we reported a net loss of $26 million in the first quarter of 2023. Now moving to cash flow, our operations consumed $20 million in the quarter driven by higher R&D expenses and an increase in direct indirect headcount to our master service agreement with Embraer. We had a positive impact on our cash flow coming from accounts payable that increased $6 million during the quarter. Most of this is related to the service agreement with Embraer which is typically paid after 45 days of service being rendered. With that, we ended the first quarter with around $295 million in cash but when we consider the standby credit line from the Brazilian development bank of almost $100 million that will start to access this year. Our total liquidity exceeds $390 million and it's enough to fund our operations into 2025. Finally, Slide 9 summarizes our milestones for 2023. And I wanted to reaffirm our commitments to this year's goals. We plan on defining the primary suppliers of some of the most critical components like motors, batteries and propellers. Once we define these suppliers, in detail of the specifications of each component like weight, power, size, required subsystems, we can freeze the design details. We also will start building our first full scale prototype, which we plan to start testing next year. We also plan on launching a trial software on our Urban Air Traffic Management System by the end of the year and we estimate a total cash consumption in 2023 between $130 million and $150 million. With that, we conclude our remarks and I would like to open the call for questions. Operator?

Thank you. [Operator Instructions]. The first question comes from Savi Syth of Raymond James. Please go ahead.

Hey. Good morning, everyone. As you kind of work through the supplier selection here, I was wondering if you're able to share any kind of early indications on how some of these agreements might be structured in terms of kind of guaranteed supply or escalators? Or just kind of any early indications as you've had these conversations?

That that makes sense and helpful. If I might along those lines, just any kind of early thoughts on how many of the full scale prototypes you plan on building in 2023 and 2024. And just curious, I'm guessing there's going to be some nonrecurring engineering costs related to that. I'm guessing that's probably picks up in the second half and then kind of maybe build into 2024, but any color on that really appreciate it.

Yeah. Just to add one point here in time, its Edu here, Savi. I think that’s already reflected in our projections for the year, right? We burn $20 million in the first quarter. And if you look to full year expect the $130 million to $150 million. So there will be a pickup in our expenses throughout the year and part of that comes from this no returns as well.

Makes sense. Alright. Thank you.

Thank you. The next question comes from Cai von Rumohr of Cowen. Please go ahead.

Good morning and excuse me for the cold I've got. So, Jerry, as you know, Billy Nolan of the FAA is about to retire and sometimes it takes a while to get another administrator into the seat. And while you're basically going to certify first with ANAC, what impact do you think that might have in terms of coordination with the FAA?

Got it. And, excuse me, last one, what still has to be defined in terms of operating requirements? I know that the FAA basically is I think it's getting closer in terms of what they're going to require for type cert. But what for operating what key issues that you think they still have to define to kind of get the operating requirements set.

You are absolutely correct on that assumption. It's something that we’ve been worked very closely as well with both operators and regulatory authorities. As we come from -- what was the experience of certifying airplanes for the highest standards of operations with not only part 25 aircraft, but part [2121] (ph) operators. That helps, that helps understanding where it could go. The other aspect that helps is that the focus we have on safety requirements. That applies for operations as much as for the development of the aircraft itself. So we are planning for the highest standards. That definitely helps for future requirements. And we have been following that very closely as our operators.

Thank you. The next question comes from Sheila Kahyaoglu of Jefferies. Please go ahead.

Thank you, and good morning, everyone. So just on the supplier point as you guys are picking your suppliers, can you give us sort of an update on your prototype build later this year? Have there been findings from wind tunnel or truck mount testing, how is the design progressing as we think about first flight in 2024?

And then how are you working with your suppliers in terms of just the development funding. Is that some of your cash usage and how does those agreements work out?

Well, we as I'm sure -- we cannot disclose the commercial conditions of different suppliers. We are in the final process of selecting suppliers right now. What I can say though is that we've worked on both ways and previous programs of receiving funds from the suppliers as well. So it is something that we are using to so it's in the table as well. It it's all about what is the best combination between funding and recurring costs and that actual costs of the other product later on. So it's a balance. It will be a different balance with different suppliers. But I think it's progressing well at this point.

Okay. Great. Thank you so much.

They are excited, right, about the Urban Air Mobility similar to the OEMs, the suppliers, they also want to be in that business. And they understand that there are some needs that the OEMs have and I think they are going to be willing to put [skin in the game as well] (ph). Okay.

Yes. Just to reinforce that point that Edu makes, you'll note that we have a number technology partners who are already investors in the business and that will color perhaps the contractual arrangements that we have. We have unique products now being added such as the energy source being the battery. That provides an opportunity for different business models as you look forward. So again, Stein has said, each of these is kind of a unique situation, including the aftermarket arrangements which again because we have new products like batteries that may have a second life. Each of these has to be negotiated uniquely and that's taking a little bit of time, and we're investing that with each of the major suppliers.

Great. Thank you, guys.

Yeah.

Thank you. [Operator Instructions]. Our next question comes from Andres Sheppard of Cantor Fitzgerald. Please go ahead.

Hey, good morning, everyone. Congratulations on the quarter, and thanks for taking our question. A lot of our questions have been answered, but maybe a quick question on the backlog. I recall from the cabin mock up event that a lot of the emphasis this year was going to be placed on converting that order pipeline of the 2,770 LOIs into firm orders. So I'm just wondering maybe you can comment on that? Any progress there? When do you anticipate maybe making some announcements there? Just wanted to maybe better understand what that time line might look like. Thank you.

Got it. Thanks, Jerry, and André. Thanks so much. Maybe one last question for Edu. I know this was covered previously, but just help me better understand. So the cash spent for the quarter was below $20 million. And you're reaffirming a $130 million to $150 million, so just again, sorry if I know this was covered before, but just help me to better understand that higher cash spend in the later quarters, what is the primary reason for that? Thanks.

Yes. As we're discussing right, Andres. So we continue to ramp up our engagement. We are concluding now the supply selection. On the second half, we're going to start the works related to be a symbol of the first prototype. So the level of activity will continue to go up throughout the year. In the first quarter, we consumed $20 million a little bit less than $20 million, but definitely even if you look some of the accrued expenses, if you look the master service agreement we have in Embraer now, we're going to have a $60 million to pay now in the mid of May. So there will be higher payments in the upcoming quarters. And that's the reason we're anticipating this $20 million which would annualize $80 million ready to grow throughout the year and be between $130 million and $150 million.

Got it. Okay. Thanks very much everyone. Congrats again on the quarter and I'll pass it on. Thank you.

Thank you. [Operator Instructions] The next question is a follow-up from Savi Syth of Raymond James. Please go ahead.

Hey, thanks for the follow-up. Just actually two. First, just following up on Andres question, I realized that you're going to -- have good ideas on kind of partners and needs and things like that. When do you think some of those would be kind of formalized and maybe announced kind of in conjunction with your certification. Is that more like a second half 2024 type timing or just curious as to when some of those get more finalized. I'm guessing you had to wait till some of your specs are finalized with the prototype.

And sadly again getting back to Andres question in yours earlier, once we get those selections done and we launch into what Stein talked about this final joint development working out the systems of systems issues. That's why we really anticipate along with the accrued expenses and the prototypes and the supplier costs, that's why we expect the expenditures to ramp up as we go through the last two quarters of this year.

Makes sense. Yeah. That was actually super helpful answer. I was curious more on the first cities and the launch partners when it is, this is super helpful as well.

Okay. No, these I think as I said, we are in good shape. We do have a few cities that are likely to be the early ones. And when I say that, it because both the operator by the end of the day, we are not the operator. So it is our customers. It's up to our customers to select in which market they will start but we are able to bring together the customer, the community representatives of the city, energy providers and infrastructure providers that we will be looking at the verticals, for example, to the same discussion. And we do have a few series in the pipeline. Stay tuned that we will probably will be able to disclose before the final agreement with customers.

Okay. Interesting. And then just one last question, I was curious regarding the Urban ATM solution. The evolution of kind of FA's initial blueprint for [air taxi] (ph) operations. And how does that compare to your expectations on the kind of the timing and need for that Urban ATM kind solution that you're providing?

I think it's pretty inline. We're not talking about the overnight traffic management software, it applies for both the navigation service providers, the PSUs, but also the [red boards] (ph), the operators. So all of them have applications. Some of them need to be certified. Some of them they are more optimization software solutions really that do not require certification necessarily. So that ones we do expect to have earlier on, one of the things we mentioned that we will have some deployment this year. Right? That in terms of trials, we are in the second half of this year. We're going to apply and have trials with parts of the software that will be in conditions for that already. We've done that last year in Chicago as well, had trials there, used at our Urban traffic management software too for trials and so on. So some of the blocks, the building blocks and the functionalities of the software might come even before what's going to be a final certified solution. But to your point, yeah, we are not seeing anything different either on that side. There was a question -- early question on operations. Same operations, actually FAA is supposed to issue the startup, the conditions end of this summer just to clarify a bit more on my last comment. They have already published the conops last week. So far, it has been in line with the discussions we had before. That's not by coincidence. It's exactly this early engagement process that we keep track of everything that's going, we keep discussing. So when it comes, it doesn't come as a surprise.

Makes sense. Thank you very much.

Thank you. The next question comes from the line of [Marcelo Mata] (ph) of JPMorgan. Please go ahead.

Hi, everyone. Thank you very much for taking my question. A couple of follow ups in a sense, I mean, first if there is anything that you guys would like to comment about sales campaign. I mean, I know that the focus is more on getting the prototype open running, select the supplies, but just wondering if there is a possibility of seeing new orders or new partners maybe on the supply and selection that will come up with to be added to the backlog. And the second question is regarding liquidity. I mean, as I do mention in all the company, you have very comfortable position until 2025, there is [BNBS] (ph) standby line, but just wondering if you guys have been looking for maybe another sources of cheap funding, funds related to renewables to [indiscernible]. So if we could expect you guys continue to add more standby lines just to take advantage of the ramp up of the company. Thank you.

Just to add, I think Jerry. The short term focus is really the standby facility with the [Brazil Development Bank], we still need to open. To access that, we have $100 million there available for us. We are working to make sure we start to withdraw this money now in the beginning of the second half. So the big focus is to make sure we access the Brazilian Development Bank money that we already have available.

No. Perfect. Super clear. Thank you very much.

Thank you. Our next question comes from Marvin Fong of BTIG. Please go ahead.

Thank you. All of my questions were answered, actually. Thank you.

Thanks, Marvin.

Thank you. That was an end of our questions. I'll turn the callback over to our speakers for any closing remarks.

All right. Well, thank you all for attending. And as always, you can reach out to Lucio Aldworth, he'll be available for any follow-up questions you may have or any detailed information you may require. And we look forward to talking to you again in the not too distant future.