Embraer Q3 2025: Contradictions Emerge on Cash Burn, Flight Testing Timelines, and Battery Technology

Business Commentary:

* Progress in Aircraft Development and Certifications: - Eve Holding, Inc. announced that its full-scale prototype has completed final tests and will start its first flight by the end of this year or early next year. - Embraer was selected as a primary system supplier for landing gear, strengthening Eve's manufacturing heritage and operational capabilities. - Emphasizing the middle market approach, Eve's engineering prototype will begin test flights by year-end, including hover flights and transition to cruise flights in 2027. - Eve's partnership with Bahrain aims to accelerate readiness in regulatory, operational, and infrastructure aspects for Urban Air Mobility, potentially leading to test flights in 2027.

• Financial Performance and Fundraising:
• Eve raised $230 million through a registered direct offering in August, extending its cash runway to approximately 2.5 years.
• With this funding, Eve's cash position reached a record $412 million, giving it sufficient liquidity to fund operations and R&D through 2027.

• Despite a net loss of $47 million in Q3, Eve's R&D and SG&A expenses are primarily associated with program development and increased engagement with suppliers.

• Backlog and Customer Engagement:

• Eve's pre-order backlog reached 2,800 aircraft, valued at nearly $14 billion, including nonbinding letters of intent from 28 customers and a firm order from Revo.
• The company secured contracts with 14 customers for the Eve TechCare suite of aftermarket products, potentially generating $1.6 billion in revenue over the first few years of operation.
• Eve continues to engage with customers through workshops and collaborative development, emphasizing customer input in vehicle design and operation strategies.

Contradiction Point 1

Cash Consumption and Burn Rate

It involves changes in financial forecasts, specifically regarding cash consumption and burn rate, which are critical for investors' understanding of the company's financial health and sustainability.

Is current cash flow considered the spending level for 2026? - Savanthi Syth (Raymond James & Associates, Inc., Research Division)

2025Q3: We consume around $60 million per quarter. We expect to close the year around $200 million and project consumption of around $250 million for 2026. - Eduardo Couto(CFO)

Will you be near the lower end of your cash consumption guidance range given the recent grants? - Savanthi Nipunika Prelis-Syth (Raymond James)

2025Q2: We are closely monitoring our expenses and leveraging Embraer's resources to optimize cash consumption. We are guiding towards the low end of the range, potentially slightly below $200 million. - Eduardo Couto(CFO)

Contradiction Point 2

Flight Testing Timeline and Prototype Phases

It involves changes in the company's developmental timeline, specifically regarding flight testing and prototype phases, which are critical for investors to assess the company's progress and milestones.

What’s the test flight program schedule for this year and next? - Andres Sheppard-Slinger (Cantor Fitzgerald & Co., Research Division)

2025Q3: Testing starts by year-end or early next year. It begins with simpler flights like hovering, gradually expanding flight tests to include transitions and fixed-wing flying. - Luiz Valentini(VP of Engineering & Technology)

Could you detail the test flight campaign's ramp-up and planned prototype count? - Andres Juan Sheppard-Slinger (Cantor)

2025Q2: We are still planning for the engineering prototype flight in the next few months, leading to the certification campaign in 2027. - Luiz Valentini(VP of Engineering & Technology)

Contradiction Point 3

Battery Technology and Prototype

It involves inconsistencies in the description of the battery technology used in the prototypes, which could impact perceptions of the vehicle's readiness and safety.

Why do you expect cash burn to be near the lower end of guidance? - Sameer Joshi (H.C. Wainwright & Co., LLC, Research Division)

2025Q3: The battery is not exactly the same. But it builds very much on the same technology and very similar cells to the ones that we will use for the commercial vehicle. - Luiz Valentini(CTO)

Will the battery used in the prototype currently undergoing testing be the same as those used in the certification aircraft scheduled for later this year? - Savi Syth (Raymond James)

2025Q1: We have now a prototype that we are testing with an actual battery pack that is representative of the one that we will use for the production aircraft. - Luiz Valentini(CTO)

Contradiction Point 4

Cash Consumption and Runway

It involves different explanations for cash consumption levels and funding runway, which could impact investor confidence in the company's financial management.

Is the current cash flow indicative of spending levels for 2026? - Savanthi Syth (Raymond James & Associates, Inc., Research Division)

2025Q3: We consume around $60 million per quarter. We expect to close the year around $200 million and project consumption of around $250 million for 2026. - Eduardo Couto(CFO)

Can you clarify the cash burn cadence for the year given the $425 million Q1 usage vs $200-250 million guidance and how the $410 million liquidity is being managed? - Sheila Kahyaoglu (Jefferies)

2025Q1: We consumed $25 million in the quarter, including a $15 million invoice. If you annualize that, it would be around $160 million. We believe the quarters ahead in terms of cash, they may be a little higher than the adjusted $40 million we should have had in the first quarter. - Eduardo Couto(CFO)

Contradiction Point 5

Regulatory and Certification Strategy

It involves changes in regulatory and certification strategies, which are critical for product launch timelines and market access.

Can you commercialize products in the Middle East before FAA certification? - Andres Sheppard-Slinger(Cantor Fitzgerald & Co., Research Division)

2025Q3: Our primary authority remains ANAC, which will work with FAA through bilateral agreements. We encourage ANAC certification acceptance globally to expedite validation by other authorities. - Johann Christian Jean Bordais(CEO)

Has ANAC begun establishing a framework to harmonize certification with non-FAA regulators such as EASA and CAA? - Austin Moeller(Canaccord)

2024Q4: ANAC is actively working with other authorities to ensure similar if not harmonized certification basis. This includes collaboration with FAA, EASA and TCCA, as well as bilateral agreements with other certification authorities to align eVTOL certification requirements. - Luiz Valentini(CTO)