Eve Holding, Inc. (“Eve”) (NYSE: EVEX and EVEXW) reports its fourth quarter and fiscal year 2022 earnings results.
The year of 2022 was particularly eventful for Eve as we accomplished several milestones on our journey to shape the global Urban Air Mobility (UAM) ecosystem, listed the company in the public market, and brought several new partners to our project. Eve is the first company to graduate from EmbraerX – after having unveiled our first eVTOL (electric Vertical Take Off and Landing) solution in May 2018. As a separate company, Eve now has the resources, agility and autonomy to continue pursuing innovations to be a protagonist in the UAM market.
During last year, Eve debuted in the New York Stock Exchange (NYSE) as a public company under the symbol EVEX with a de-SPAC transaction that raised net proceeds of approximately $355 million, including PIPE investors and an additional strategic investment by United Airlines Ventures. Also, we secured two distinct credit lines with Brazil’s National Development Bank – the BNDES, for an additional $92.5 million. With our total liquidity now in excess of $400 million, we feel comfortable that our financial position is sufficient to fund our Research & Development (R&D) requirements as well as operations well into 2025 given the cost advantages we enjoy through our strategic partnership with Embraer.
Our engineers continue to refine our eVTOL design as the program matures. We are leveraging Embraer’s proven development practices, testing subsystems through various methodologies to validate Proofs of Concept (POC’s) and advance towards full-scale prototype of our commercial vehicle for the certification process. Our agile, model-based approach allows us to validate components and airframe features independently or on a systems-basis allowing us to vary configurations as new solutions are identified in a quick and efficient manner. The goal is to develop a safe and reliable eVTOL solution with the most affordable operation and maintenance cost profile, which we believe will be achieved through our Lift + Cruise design configuration.
We have initiated the certification process of our eVTOL with Brazil’s aviation authority – ANAC, and we expect the validation process for the Type Certification (TC) in Brazil to be followed by the FAA (United States Federal Aviation Authority) targeting a dual certification and entry into services in 2026. In parallel, we are in discussions with EASA in Europe and other certification authorities. The Brazilian authorities have a long history of collaboration through bi-lateral agreements with other certification authorities – whereby other certification authorities globally accept and validate the majority of work done by ANAC, typically with reduced additional tests. We believe this combination puts Eve on a clear path to global certification, particularly when combined with our expertise in certification, simple design solutions and undivided attention from the Brazilian authorities.
We continued to conduct simulations with conventional helicopters to test potential applications and use cases of our eVTOL in real urban areas – the most recent ones were a pilot project operated by Blade India with four daily flights from the Bangalore international airport to the city’s business center as well as two weeks of flight simulations in Chicago with the participation of multiple partners including airlines, rotorcraft operators, infrastructure companies and local authorities. After a similar simulation in Rio de Janeiro, we continue to gather market intelligence that will be critical for the proper design of the UAM ecosystem and necessary infrastructure to help scale the business globally and offer a safe and comfortable passenger experience.
Additionally, we are advancing in the selection of the industrial and development partners of critical technologies and components such as battery, propulsion, avionics, manufacturing, among others that we expect to conclude throughout this year. Some of our partners are also investors in Eve, which provides strong alignment with our interests to develop the UAM market and our aircraft. Moreover, they bring strategic know-how to support the development of specific components of our aircraft and our suite of products and services for UAM.
The result of Eve’s strengths is the largest and most diversified backlog (by number of customers and regions) in the industry today. In total, we have non-binding LOIs (Letter of Intent) for 2,770 aircraft, from 26 different customers spread over 12 countries and different markets. We believe this preliminary pipeline offers strong long-term revenue visibility and will help Eve to smooth cash-flow consumption in the years to come as we start to convert the existing letters of intention into firm orders and collect pre-delivery payments (PDP).
We believe Eve has the right partners and development team, which coupled with strong liquidity provide the foundation for success in the design, certification and support of eVTOLs and the UAM market in the years ahead.
Eve is a pre-operational company dedicated to the development of an eVTOL (Eletric Vertical Takeoff and Landing Vehicle) and the Urban Air Mobility (UAM) ecosystem that includes the vehicle development, air traffic management systems and services and support. Eve doesn’t expect meaningful revenues during the development phase of its vehicle and its financial results are mostly related to costs associated with the program development.
Eve reported a net loss of $20.1 million in 4Q22 versus $8.3 million in 4Q21. For 2022, net loss was $174.0 million, compared with net loss of $18.3 million reported in 2021. Setting aside non-recurring, non-cash expenses of (1) $104.8 million associated with warrant expenses and (2) $6.2 million related to transaction costs and the business combination with Zanite Acquisition Corp. – the higher net losses in 2022, compared to 2021, were driven by higher Research & Development (R&D) expenses and costs activities necessary to progress the eVTOL design, including the Master Service Agreement (MSA) with Embraer and an increase in Selling, General & Administrative (SG&A) expenses.
R&D expenses were $18.0 million in 4Q22, compared with $6.6 million in 4Q21. For 2022, R&D reached $51.9 million or almost four times the $13.3 million invested in the program in 2021. Our R&D efforts are primarily driven by the MSA with Embraer that performs several developmental works for Eve, which reached $38.6 million in 2022. These efforts intensified in the last year as the design of Eve’s eVTOL advances, as did Eve’s internal design and development structure.
SG&A expenses increased from $1.6 in the 4Q21 to $9.0 million in the 4Q22 and from $4.9 million in 2021 to $32.9 million in 2022, mainly due to the growth in the number of direct employees at Eve, who perform critical corporate functions including program management, strategy, sales and finance activities.
Including employees contracted through its master services agreement (MSA) with Embraer and its subsidiaries, Eve now has approximately 470 team members engaged in the development of its eVTOL and other elements of the UAM ecosystem versus approximately 120 in the end of 2021.
During the fourth quarter of 2022, Eve’s total cash consumption was $20.8 million of cash, versus $7.4 million in 4Q21. During 2022, Eve consumed $59.9 million of cash, versus $14.9 million in 2021. Net cash provided by financing activities reached $352.7 million in 2022, on a combination of the proceeds from the listing in the NYSE and the United Airlines Ventures (UAV) investment in Eve.
At the end of 2022, Eve had $310.6 million in total liquidity (cash, cash equivalents, financial investments and intercompany loan) versus $329.9 million at the beginning of 4Q22. R&D expenses associated with Eve’s aircraft and SG&A were the main contributors for the cash consumption during the quarter. Lastly, accounts payable – mostly related to the MSA agreement with Embraer, increased by $1.4 million in the quarter, totaling $23.3 million in the end of 2022.
As of 4Q22, Eve did not have any debt on its balance sheet. The proceeds from the business combination with Zanite Acquisition Corp., and strategic PIPE investors combined with potential advances from customers and future finance lines are important sources of capital to fund Eve’s development and certification of its eVTOL.
As already mentioned, in the end of the 4Q22 Eve announced the support of the Brazilian Development Bank (BNDES) to its eVTOL development efforts with two distinct credit lines, totaling $92.5 million that we expect to gradually access during 2023 and 2024. Both credit lines offer beneficial conditions with 12-year maturity and amortization grace period. The support from BNDES is an ideal fit for our project with long-term profile that matches Eve’s cash-flow needs and strengthens our balance sheet.
Eve’s 4Q22 total liquidity (cash and equivalents, and financial investments with private banks and Embraer) of $310.6 million does not include the available BNDES finance to be disbursed throughout 2023 and 2024. Including the BNDES credit lines, Eve’s total current liquidity exceeds $400 million.
As Eve continues to advance its eVTOL program, it expects portions of its non-binding order backlog to be gradually converted into firm contracts during the development phase. Those firm orders may result in significant cash advances and inflows to the company through pre-delivery payments that are expected to occur prior to the final eVTOL delivery.
For additional information, please access the full 4Q22 and FY2022 Earnings release, available in the Investor Relations website at ir.eveairmobility.com
This press release was prepared and distributed by Eve Air Mobility.