Eve stock remains buy as company on track after Q1


Eve Air Mobility’s stock remains positive and the OEM remains on track to meet certification plans after the first quarter. 

The Florida-based AAM subsidiary of Embraer reported is results for the first quarter (Q1) 2023 today posting losses of $25.8m, up from $10m in Q122. In a press release Eve said the company is “not yet producing revenues” and does not expect “meaningful revenues during the development phase”. Therefore financial results should be “mostly related to costs associated with the programme development”. Losses were largely driven by higher R&D expenses, including the master service agreement with Embraer, and an increase in selling, general & administrative (SG&A) expenses. Those higher expenses were partly offset by investment income and FX gains of $4.3m. 

R&D expenses were $21.5m in 1Q23, compared with $9.1m in Q122. Cost that translate into key areas including internal design, engineering, and programme development and testing infrastructure. SG&A expenses increased from $1.3m in Q122 to $6.2m in Q123, mainly due to the growth in the number of direct employees at Eve. Including employees contracted through the MSA with Embraer and its subsidiaries, Eve now has approximately 600 staff versus approximately 400 in 1Q22.

Eve’s total cash consumption was $19.9m, versus $1.9m in Q122. This was partly offset by an increase in accounts payable, mostly related to the MSA agreement with Embraer and higher accrued expenses – these grew by $5.7m in Q1, totalling $28.1m at the end of Q123. Leaving the firm with a liquidity position of $294.6m versus $310.6m at the end of Q422. Eve also no debt on its balance sheet. 

The proceeds from the business combination with Zanite Acquisition Corp. plus PIPE investors raised in 2022, combined with potential advances from customers and current and future finance lines are now the main sources of capital to fund Eve’s development and certification.

As noted, programme development milestones and financial estimates for 2023 remain unchanged. Eve said its expects to conclude the selection of main equipment suppliers in the first half of 2023 (H123) and start the assembly of the first full-scale eVTOL prototype during the second half of the year, followed by the test campaign in 2024. Eve’s total cash consumption expected for 2023 remains in a range of $130m to $150m.

The firm will confirm its selection of primary suppliers in the first half of 2023 with the first prototype to be built in H223. The first supplier selections will focus on critical systems such as motors, batteries, and propellers. Then the prototype testing campaign, scheduled to begin in 2024, should support early pre-delivery payments and the firming of orders.