Eve Holding, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Eve is a pre-revenue aerospace company developing electric vertical take-off and landing aircraft (eVTOL), urban air traffic management (UATM), and service and support offerings.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $21.8 million | $10.4 million | $43.3 million | $19.5 million |
| Selling, general and administrative | $6.6 million | $15.7 million | $12.8 million | $17.0 million |
| Operating loss | $(28.5) million | $(113.5) million | $(56.1) million | $(123.9) million |
| Net loss | $(31.4) million | $(107.2) million | $(57.2) million | $(117.2) million |
| Net loss per share | $(0.11) | $(0.43) | $(0.21) | $(0.50) |
| Operating cash used | Not separately stated | Not separately stated | $(47.6) million | $(21.9) million |
- At June 30, 2023, cash and cash equivalents were $33.6 million, financial investments were $150.8 million, and the related-party loan receivable from Embraer Aircraft Holding was $84.6 million. Total assets were $271.9 million; stockholders’ equity was $231.7 million.
- The company reported no outstanding debt at quarter-end. It had not drawn on BNDES credit lines totaling approximately $101.7 million (R$490 million); access is subject to funding availability and other conditions. Management’s stated $370.7 million total liquidity includes these lines once drawn.
- Gross margin and profitability margins are not meaningful because Eve has not generated revenue. The filing reports no positive operating cash flow.
Changes versus the prior comparable period
- Q2 net loss narrowed by $75.8 million year over year; the six-month loss narrowed by $60.0 million. A major comparison factor is the $87.4 million New Warrants expense recognized in 2022, with none in 2023.
- R&D more than doubled year over year in both the quarter and six-month period, reflecting increased development staffing, engineering services and prototype-related parts and milestone costs.
- SG&A declined, principally because 2022 included nonrecurring public-listing and transaction-related expenses.
- Six-month operating cash use increased to $47.6 million from $21.9 million, primarily due to higher R&D spending, partly offset by higher amounts payable to Embraer.
- Cash and investments together decreased to $184.4 million from $227.9 million at December 31, 2022. The related-party loan receivable increased to $84.6 million from $82.7 million.
Outlook, risks and notable items
- Management expects service-and-support and UATM commercialization to begin in 2025, with initial eVTOL sales revenue anticipated in 2026. These are forward-looking targets, not guarantees; aircraft certification and commercialization remain pending.
- Management expects available liquidity to fund the current operating plan for at least 12 months, but also says existing funds may not suffice to complete development and commercial launch. Further financing may be needed; it could be unavailable or cause dilution or restrictive debt terms.
- Eve has signed non-binding letters of intent covering more than 2,850 aircraft. These are not binding sales contracts and do not establish future revenue.
- The $84.6 million Embraer-related loan receivable was due August 1, 2023, unless the parties mutually agreed to extend it. The filing does not state whether it was repaid or extended after quarter-end.
- Risks include obtaining regulatory approvals on schedule, an undeveloped UAM market, competition, development and manufacturing cost uncertainty, dependence on Embraer and other partners, financing needs, and Brazilian economic, currency and interest-rate exposure.
- Private-placement warrant liabilities rose to $12.5 million from $3.6 million at year-end, producing an $9.0 million six-month non-cash fair-value expense.
- Disclosure controls were deemed ineffective at June 30, 2023 because previously identified material weaknesses in financial reporting controls had not been remediated. Management reported remediation work was ongoing.
- After quarter-end, Eve announced Johann Bordais would become CEO effective September 1, 2023. The company reported no legal proceedings believed likely to have a material adverse effect.
Important facts for investors to verify
- Whether the Embraer-related loan due August 1, 2023 was repaid, extended or otherwise settled, and the related-party exposure and terms.
- Availability, conditions and timing of BNDES funding; the credit lines were undrawn at June 30, 2023.
- Cash-burn trajectory, funding requirements and whether management’s 12-month liquidity expectation remains valid.
- Progress against certification, development and 2025/2026 commercialization targets, including conversion of non-binding aircraft LOIs into binding orders.
- Progress in remediating material weaknesses in internal controls and whether the controls become demonstrably effective.