Eve Holding, Inc. — Q3 2023 Form 10-Q
Business context and period. The filing covers the quarter and nine months ended September 30, 2023. Eve is a pre-revenue aerospace company developing an electric vertical take-off and landing (eVTOL) aircraft, urban air traffic management software, and related services. It operates in the eVTOL, UATM, and Service and Support segments and relies on Embraer for significant development and shared services.
Financial performance and position
| Metric | Q3 2023 / September 30, 2023 | Comparable period / December 31, 2022 |
|---|---|---|
| Revenue | No revenue generated | No revenue generated to date |
| Research and development | $28.6 million for Q3; $72.0 million for nine months | $14.3 million and $33.8 million, respectively, in 2022 |
| Selling, general and administrative | $5.0 million for Q3; $17.8 million for nine months | $6.8 million and $23.9 million, respectively, in 2022 |
| Net loss | $31.2 million for Q3; $88.4 million for nine months | $36.7 million and $154.0 million, respectively, in 2022 |
| Net loss per share | $0.11 for Q3; $0.32 for nine months | $0.14 and $0.62, respectively, in 2022 |
| Operating cash flow | Used $70.0 million in the first nine months | Used $38.7 million in the first nine months of 2022 |
| Cash and cash equivalents | $10.1 million | $49.1 million at December 31, 2022 |
| Financial investments | $164.4 million | $178.8 million at December 31, 2022 |
| Related-party loan receivable | $81.8 million | $82.7 million at December 31, 2022 |
| Debt | $11.3 million long-term debt carrying value | No long-term debt reported |
| Total assets / total liabilities | $261.6 million / $59.5 million | $312.9 million / $26.0 million at December 31, 2022 |
Margins are not meaningful because Eve has not generated revenue. Net loss improved year over year, principally reflecting the absence of 2022 New Warrants expenses ($17.4 million in Q3 and $104.8 million for the nine-month period). The nine-month operating loss was $89.8 million, versus $162.5 million in 2022. R&D spending rose sharply as headcount, engineering services, prototype development, and supplier milestone activity increased; SG&A declined, largely because prior-year listing-related costs did not recur.
Operating cash use increased year over year, primarily with higher R&D spending, partly offset by increased related-party payables. Investing cash flow was a $19.8 million source in the first nine months of 2023, including $72.5 million of investment redemptions and $52.5 million of investment purchases; it was not cash generated by operations. Financing provided $10.7 million, including BNDES loan proceeds. Cash and cash equivalents fell by $39.0 million over the period.
The reported liquidity position also includes the related-party loan receivable and undrawn borrowing capacity, not just cash. Management reported approximately $342.5 million of total liquidity, including $164.4 million of financial investments, an approximately $81.8 million related-party loan receivable, and $86.2 million available under the BNDES facilities. The loan receivable is from Embraer’s subsidiary EAH; its term was extended to August 1, 2024, at 5.97% interest. The BNDES facilities total approximately R$490 million (about $98 million); the first draw occurred in September 2023, and further availability is subject to contractual and other conditions.
Outlook, risks and notable items
- Management expects the reported liquidity to fund its current operating plan for at least the next 12 months, but also states that existing funds may not be sufficient to complete development and commercially launch the aircraft. Eve expects continued losses and negative operating cash flows and may need additional debt or equity financing; financing may not be available on acceptable terms or at all.
- The company anticipates Service and Support and UATM revenue beginning in 2025, with eVTOL production expected to begin in 2025 and aircraft sales revenue in 2026. These are forward-looking expectations, not reported results. Eve has signed non-binding letters of intent for more than 2,850 aircraft.
- Key risks include development and certification delays or failure, uncertain demand and commercialization economics, competition, dependence on Embraer and other third parties, Brazilian political, currency and economic conditions, and the need for further financing. The filing reports no material legal proceedings as of September 30, 2023.
- The fair-value liability for Private Placement Warrants rose to $13.4 million from $3.6 million at year-end, producing a $9.8 million nine-month expense. This is a derivative liability, not borrowing.
- Disclosure controls were not effective at September 30, 2023 because previously reported material weaknesses in internal controls had not been remediated. Management described ongoing remediation measures, including outside advisers and additional qualified personnel.
- After quarter-end, Chief Strategy Officer André Duarte Stein resigned effective November 1, 2023, without a reported disagreement with the company. Eve expects an approximately $1.3 million fourth-quarter reversal of accrued payroll expense.
Important facts for investors to verify
- Whether cash burn and R&D spending remain consistent with management’s operating plan and the stated 12-month liquidity estimate.
- Availability and conditions for drawing the remaining BNDES financing, and the repayment and collectability terms of the EAH related-party loan.
- Progress against eVTOL development, certification, production and commercialization timelines, including whether non-binding customer interest converts into binding orders.
- Future funding needs, potential financing terms and resulting dilution or senior claims on assets and cash flows.
- Remediation and independent assessment of the disclosed internal-control material weaknesses.