Archer Aviation (ACHR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - The company ended Q2 2024 with $360.4 million in cash and cash equivalents, along with$6.7 million in restricted cash [34] - Total operating expenses for Q2 2024 were $121.2 million on a GAAP basis, including$24.8 million in non-cash equity-related expenses [35] - Non-GAAP operating expenses for Q2 2024 were $96.4 million, slightly above the estimated range of$80 million to $95 million due to material expenses for aircraft production [35] - The company raised an additional$230 million in equity capital, bringing the total raised since the end of Q2 to $230 million [9][34] Business Line Data and Key Metrics - The Midnight aircraft completed its first transition flight in June, marking a significant milestone for the company [6][22] - The company has completed over 230 flights year-to-date and is on track to reach 400 flights by the end of the year [22] - The company is working towards demonstrating a commercial operations-like flight cadence, aiming for up to 15 flights per day [22][40] - The company delivered its first Midnight aircraft to the United States Air Force as part of a$142 million contract [20][23] Market Data and Key Metrics - The company has made significant progress in international markets, including India, Korea, and the UAE, with potential for expedited deployment [8][19] - The company has a nearly $6 billion indicative order book, including a planned purchase of 116 aircraft from Future Flight Global [13][14] - The company is developing air taxi networks in key markets such as the San Francisco Bay Area, Los Angeles, and in partnership with Southwest Airlines [15][16][17] Company Strategy and Industry Competition - The company is focused on a capital-efficient path to market, leveraging partnerships with Stellantis for manufacturing and United Airlines for deployment [5][10][11] - Stellantis has invested over$300 million in the company and will fund up to $400 million in labor and CapEx to scale Midnight manufacturing to 650 aircraft annually [11][12] - The company is targeting a gross margin of 40% to 50% at a production volume of 250 units, with plans to reduce unit costs through supply chain and manufacturing efficiencies [32][33] Management Commentary on Operating Environment and Future Outlook - The company believes the commercialization of electric aircraft is further ahead than many realize, with significant progress in certification and manufacturing [5][8] - The company is confident in its design maturity and is focused on executing its flight test program to bring the Midnight aircraft to market [53][54] - The company sees a unique opportunity for expedited deployment in international markets, particularly in the UAE, where regulatory support is strong [8][19] Other Important Information - The company has reached key regulatory milestones with the FAA, including the finalization of Midnight's airworthiness criteria and the receipt of a Part 135 certificate [7][24] - The company is constructing a high-volume manufacturing facility in Georgia, expected to support production volumes of up to 650 aircraft per year [28][29] - The company is working closely with the U.S. Air Force to explore different use cases for the Midnight aircraft, including medical evacuation and cargo transport [20][23] Q&A Session Summary Question: Flight testing progress and learnings from Midnight aircraft [38] - The company has completed over 230 flights year-to-date, with most flights focused on Midnight, gathering data for piloted flights and operational learnings [39][40] Question: Details on the capital raise and future capital needs [41] - The capital raise was led by institutional investors and strategic partners, including Stellantis and United Airlines, with the goal of reducing cash burn and increasing production capabilities [43][44] Question: Certification progress in the UAE and comparison to FAA [46] - The company is working with the GCAA in the UAE to validate data generated under the FAA certification program, with potential for expedited deployment [48][49] Question: Flight testing and modifications for piloted flights [50] - No modifications are needed for piloted flights, with the company focusing on integrating systems and preparing for real-deal flight testing [51][52] Question: Operational details of the Stellantis manufacturing agreement [56] - Stellantis will cover labor and CapEx costs, with Archer reimbursing Stellantis with stock over time, reducing cash burn and increasing production scalability [57][58] Question: Deposit payments and order book ramp-up [61] - The company expects pre-delivery payments to increase as it gets closer to launch dates, with initial deposits of 1% to 2% and up to 50% in pre-delivery payments [62] Question: Aircraft deployment in Los Angeles for major events [63] - The company is targeting the 2028 Olympics in Los Angeles, with plans to deploy hundreds of eVTOLs, showcasing America's leadership in aviation [64][65] Question: Noise levels in Midnight test flights [66] - Acoustic testing has been in line with predictions, with Midnight expected to be significantly quieter than helicopters [67] Question: Pilot training and certification framework [68] - The FAA is making progress on the SFAR, which will define training requirements, while the company is developing its own pilot training capability [69] Question: Order book and production allocation [70] - The company is focusing on direct sales and partnerships, with plans to introduce aircraft in multiple countries to accelerate global scaling [71][72] Question: Stellantis' equity stake and strategic investor comfort [74] - The relationship with Stellantis is focused on increasing the likelihood of reaching production levels and profitability, with Stellantis taking an increased equity stake [75][76] Question: For-credit testing progress [79] - The company is conducting for-credit testing on system components, with plans to move to for-credit flight testing next year [80][81]