Eve Holding, Inc. — Q1 2024 Form 10-Q
Business context and period. Unaudited results cover the three months ended March 31, 2024, with balance-sheet comparisons to December 31, 2023 and operating comparisons to Q1 2023. Eve is developing eVTOL aircraft, related services and urban air traffic management software. It has generated no revenue and remains in a pre-commercial development stage. Embraer owns approximately 90% of its common stock.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $27.5 million | $21.5 million |
| Selling, general and administrative expense | $6.5 million | $6.2 million |
| Operating loss | $33.9 million | $27.7 million |
| Net loss | $25.3 million | $25.8 million |
| Net loss per share | $0.09 | $0.09 |
| Cash used in operating activities | $35.8 million | $19.9 million |
| Cash and cash equivalents | $23.6 million | $46.9 million at Dec. 31, 2023 |
| Financial investments | $114.7 million | $111.2 million at Dec. 31, 2023 |
| Related-party loan receivable | $84.3 million | $83.0 million at Dec. 31, 2023 |
| Long-term debt, net | $40.0 million | $25.8 million at Dec. 31, 2023 |
Gross and operating margins are not meaningful because Eve has no revenue. At March 31, current assets were $224.3 million and current liabilities were $45.2 million. Management cited approximately $280 million of total liquidity, including cash, financial investments, the related-party loan receivable and $57.5 million of available BNDES borrowing. Management expects this liquidity to fund the current operating plan for at least 12 months, but also cautioned that available funds are likely insufficient to complete development and commercially launch the aircraft.
Material changes and notable items
- R&D expense rose $5.9 million year over year, principally from higher headcount, Embraer and Atech engineering services, prototype supplies and supplier milestone payments. Management expects R&D spending to increase significantly as development advances.
- Operating cash use increased $15.9 million year over year, reflecting higher working-capital use and development spending. Cash declined $23.3 million during the quarter; BNDES borrowings provided $15.0 million of financing cash.
- Net loss improved by $0.5 million despite a higher operating loss, mainly because the fair-value change in Private Placement Warrants produced a $6.3 million gain, versus a $2.2 million loss in Q1 2023. This non-cash item was driven by warrant valuation changes.
- BNDES debt principal was $40.6 million at quarter-end, with $57.5 million still available to draw. Borrowings support the eVTOL development program and are subject to facility conditions and availability.
- Related-party expenses were $21.6 million in Q1 2024, compared with $15.7 million a year earlier. The related-party loan from Embraer Aircraft Holdings bears 5.97% interest and is scheduled to mature August 1, 2024, unless extended by mutual agreement.
Outlook, risks and contingencies
Eve anticipates commercializing services and support beginning in 2025 and initial eVTOL aircraft sales in the second half of 2026; these are expectations, not assurances. It has signed non-binding letters of intent covering more than 2,900 aircraft, which are not binding sales commitments. Continued development, certification and launch require substantial investment, and Eve expects further losses and negative operating cash flow until sustainable commercial operations begin.
Key risks include obtaining aviation and production certifications on schedule; developing and commercializing the aircraft and related offerings; uncertain UAM demand and competition; raising additional capital on acceptable terms; dependence on Embraer and other partners; and Brazilian economic, currency and interest-rate volatility. Additional funding may be required and could dilute shareholders or add debt restrictions. The filing reports no material legal proceedings and no material changes to the risk factors in the 2023 Form 10-K. Management stated disclosure controls were effective as of March 31, 2024.
Important facts for investors to verify
- Whether the related-party loan receivable is repaid or extended by its August 2024 maturity, and the associated counterparty exposure.
- Actual cash burn, available liquidity and financing needs relative to the stated 12-month operating-plan runway and the longer path to commercialization.
- Conditions, draw timing and remaining availability under the BNDES facility.
- Progress toward eVTOL certification and the stated 2025 services and second-half 2026 aircraft-sales timelines.
- Whether non-binding aircraft letters of intent convert into binding orders, and the potential effect of outstanding warrants and future financing on share dilution.