Eve Holding Inc.

Company Overview

Business Model: EVE HOLDING, INC. is an aerospace company focused on accelerating the Urban Air Mobility (UAM) ecosystem. Its comprehensive solution includes the design and production of electric vertical take-off and landing vehicles (eVTOLs), a portfolio of maintenance and support services (TechCare) for its own and third-party eVTOLs, and a new Urban Air Traffic Management (UATM) system (Vector) designed for safe and efficient eVTOL operations in dense urban airspace. To date, EVE HOLDING, INC. has not generated any revenue, as it continues to develop its eVTOL vehicles and other UAM solutions.

Market Position: EVE HOLDING, INC. positions itself as a leading developer of next-generation UAM solutions, leveraging its aviation heritage, strategic relationship with Embraer S.A., technology and intellectual property portfolio, and experienced management team. The company's eVTOL employs a "lift plus cruise" design, optimized for UAM missions with an expected range of 100km at entry into service, capable of addressing 99% of intra-city and intra-metro missions. EVE HOLDING, INC. has established an initial order pipeline of approximately 2,800 vehicles valued at $14 billion from 28 launch customers, based on non-binding agreements.

Recent Strategic Developments:

• eVTOL Development: Successfully completed engineering simulations, subscale test flights, wind tunnel tests, and full-scale ground tests. Expected entry-into-service in 2027.
• UATM System (Vector): Validating simulations of its fleet operations services model in Brazil and engaged with aviation organizations in Melbourne, Australia; Rio de Janeiro and São Paulo, Brazil; London, United Kingdom; Chicago and Miami, USA, to develop and simulate a concept of operation (CONOPS).
• Manufacturing Facility: Announced its first eVTOL production facility will be located in Taubaté, São Paulo, Brazil, with an eventual total expected output of up to 480 aircraft per year, planned for modular expansion.
• Regulatory Milestones:
  • ANAC (Brazil) accepted EVE HOLDING, INC.'s eVTOL Type Certificate application (February 3, 2022).
  • ANAC published the Final Airworthiness Criteria for EVE HOLDING, INC.'s eVTOL certification in Brazil (November 1, 2024).
  • The FAA issued the Special Federal Aviation Regulation (SFAR) detailing final rules for Advanced Air Mobility (AAM), covering eVTOL pilot certification and operations (October 22, 2024).
• Financing:
  • Entered into a credit agreement with Citibank, N.A. for $50 million (October 29, 2024).
  • Entered into a financing agreement with Banco Nacional de Desenvolvimento Econômico e Social – BNDES for four lines of credit totaling approximately $83.4 million (October 10, 2024).
  • Entered into a loan agreement with Banco Nacional de Desenvolvimento Econômico e Social – BNDES for R$200 million (approximately $32.3 million) (November 22, 2024).
  • Closed on subscription agreements, warrant agreements, and warrant exchange agreements with certain investors relating to a 2024 Private Placement, raising $95.6 million in new equity financing (July and September 2024).

Geographic Footprint: EVE HOLDING, INC. operates in Melbourne, Florida, and Brazil (São Paulo and Eugenio de Melo). Its manufacturing facility is planned for Taubaté, São Paulo, Brazil. The company's market access strategy is global, with CONOPS collaborations spanning Brazil, the United Kingdom, Australia, and the USA, and certification efforts involving ANAC, FAA, and EASA.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: Not Applicable (No revenue)
• Operating Margin: Not Applicable (No revenue)
• Net Margin: Not Applicable (No revenue)

Investment in Growth:

• R&D Expenditure: $129,844 thousand (23% increase from $105,581 thousand in 2023)
• Capital Expenditures: $5,216 thousand (significantly increased from $168 thousand in 2023)
• Strategic Investments: Primary investments are in the design and development of the eVTOL aircraft, service and operations solutions, and the Urban Air Traffic Management system. This includes significant R&D efforts in battery systems and electric powertrain components, and a commitment to invest a minimum of R$15 million (approximately $2.4 million) in leasehold improvements for the Taubaté manufacturing facility.

Business Segment Analysis

eVTOL

Financial Performance:

• Revenue: $0 (No revenue generated to date)
• Operating Margin: Not Applicable (No revenue)
• Key Growth Drivers: The segment's growth is driven by the ongoing design and certification of its eVTOL aircraft, which has successfully completed engineering simulations, subscale test flights, wind tunnel tests, and full-scale ground tests. The expected entry-into-service is 2027, supported by an initial order pipeline of approximately 2,800 non-binding vehicle orders valued at $14 billion. The strategic relationship with Embraer S.A. provides access to critical engineering, flight test infrastructure, and manufacturing resources.

Product Portfolio: The core product is an eVTOL aircraft featuring a "lift plus cruise" design with eight redundant rotors for vertical flight and a separate forward propulsion system with a fixed wing for efficient cruising. It is designed to initially carry four passengers and a pilot, with future autonomy enabling up to six passengers.

Market Dynamics: EVE HOLDING, INC. plans to market its eVTOLs globally to UAM service operators, including fixed-wing and helicopter operators, and aircraft lessors. It also aims to partner with ridesharing platforms to secure committed operational hours. The company emphasizes its practical design, proven certification experience (leveraging Embraer S.A.), and holistic UAM solution as key differentiators.

Service and Operations Solutions (TechCare)

Financial Performance:

• Revenue: $0 (No revenue generated to date)
• Operating Margin: Not Applicable (No revenue)
• Key Growth Drivers: This segment is focused on developing a comprehensive suite of eVTOL service and support capabilities. Its growth is underpinned by leveraging Embraer S.A.'s established global support network to ensure efficient, cost-effective, and scalable deployment of services. The services are designed to be agnostic, supporting both EVE HOLDING, INC.'s eVTOLs and those produced by third parties.

Product Portfolio: The TechCare portfolio includes material services, maintenance, technical support, training, ground handling, and data services for eVTOL aircraft.

Market Dynamics: EVE HOLDING, INC. targets UAM fleet operators, recognizing that high-quality and responsive support services are crucial for effective and safe UAM operations and a key purchasing consideration for its customers.

Urban Air Traffic Management (Vector)

Financial Performance:

• Revenue: $0 (No revenue generated to date)
• Operating Margin: Not Applicable (No revenue)
• Key Growth Drivers: The development of Vector, a next-generation UATM system, is a primary growth driver. This system is being developed in partnership with Atech-Negócios em Tecnologias S.A., a subsidiary of Embraer S.A. known for developing Brazil's air traffic control system. Validation of the UATM approach is ongoing through CONOPS collaborations with stakeholders in various global cities.

Product Portfolio: Vector is a UATM software platform designed to enable eVTOLs to operate safely and efficiently in dense urban airspace alongside conventional aircraft and drones. Its features include urban aeronautical information management, vertiport information management, flight planning and authorization, traffic flow management, weather management, and collaborative situation awareness.

Market Dynamics: EVE HOLDING, INC. intends to offer Vector to air navigation service providers, fleet operators, and vertiport operators, aiming to facilitate the safe scalability of the UAM industry by addressing increased air traffic volume.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not explicitly disclosed for 2024.
• Dividend Payments: $0 (EVE HOLDING, INC. has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain future earnings for business development and growth).
• Dividend Yield: 0.0%
• Future Capital Return Commitments: No specific future capital return commitments are disclosed.

Balance Sheet Position:

• Cash and Equivalents: $56,366 thousand (as of December 31, 2024)
• Total Debt: $132,011 thousand (net of unamortized debt issuance costs, as of December 31, 2024)
• Net Cash Position: $(75,645) thousand (Cash and Equivalents minus Total Debt)
• Credit Rating: Not disclosed.
• Debt Maturity Profile (Principal Borrowed):
  • 2025: $0
  • 2026: $1,196 thousand
  • 2027: $33,063 thousand
  • 2028: $35,272 thousand
  • 2029: $10,272 thousand
  • 2030 and Thereafter: $53,811 thousand
  • Total: $133,615 thousand

Cash Flow Generation:

• Operating Cash Flow: $(135,966) thousand (Net cash used by operating activities in 2024)
• Free Cash Flow: $(141,182) thousand (Operating Cash Flow of $(135,966) thousand minus Capital Expenditures of $5,216 thousand)
• Cash Conversion Metrics: The company is in a pre-revenue stage, with significant negative operating cash flow reflecting substantial investments in research and development, capital expenditures for manufacturing expansion, and scaling operations.

Operational Excellence

Production & Service Model: EVE HOLDING, INC.'s operational philosophy centers on developing a comprehensive UAM solution. eVTOL production is currently in the development phase, with initial flight-test prototypes and the start of series production expected to occur at existing Embraer S.A. facilities in Brazil. The company plans to transition serial manufacturing to its own modular facilities, with the first production facility in Taubaté, São Paulo, Brazil, aiming for an eventual output of up to 480 aircraft per year. Service delivery for TechCare solutions will leverage Embraer S.A.'s global support network, offered on an agnostic basis. The UATM system, Vector, is being developed in partnership with Atech-Negócios em Tecnologias S.A.

Supply Chain Architecture: Key Suppliers & Partners:

• Engineering & Manufacturing Support: Embraer S.A. provides engineering services, flight test infrastructure, manufacturing resources, and aftermarket network support, acting as a subcontractor for eVTOL integrated product development.
• Software Development: Atech-Negócios em Tecnologias S.A. (a wholly owned subsidiary of Embraer S.A.) is a partner for UATM system development.
• Component Technology: BAE Systems, Thales Group, Nidec are key technology partners.
• Renewable Energy: Acciona, EDP Group, Florida Power & Light are partners in renewable energy.
• Vertiports: Heathrow Airport, Jetex, London City Airport, Pentastar Aviation, Rio de Janeiro International, Signature Aviation, Skyports, Universal Aviation are partners in ground infrastructure.
• Financing: Banco Nacional de Desenvolvimento Econômico e Social – BNDES and Bradesco BBI are financing partners.

Facility Network:

• Operations: Primary operational facilities are in Melbourne, Florida, and Eugenio de Melo, Brazil.
• Manufacturing: EVE HOLDING, INC. has leases for facilities in Gavião Peixoto and Taubaté, Brazil, with the Taubaté site designated for its eVTOL production facility. All facilities are located on land owned or leased by Embraer S.A.
• Research & Development: R&D activities, including the development of proof-of-concept vehicles and testbeds, are conducted in one of Embraer S.A.'s existing facilities in Brazil.

Operational Metrics: While specific operational efficiency metrics are not extensively disclosed, the company's strategy emphasizes a disciplined, capital-efficient investment approach for manufacturing expansion and maintaining a high daily aircraft utilization rate for future commercial services.

Market Access & Customer Relationships

Go-to-Market Strategy: EVE HOLDING, INC. employs a multi-faceted go-to-market strategy focused on global reach and strategic partnerships. Distribution Channels:

• Direct Sales: The company plans to market its eVTOLs directly to operators of UAM services, including existing fixed-wing and helicopter operators, as well as aircraft lessors globally.
• Channel Partners: EVE HOLDING, INC. engages with operators of ridesharing platforms to secure committed hours of operation for its eVTOLs and collaborates with helicopter and fixed-wing operators for fleet operation services.
• Digital Platforms: The UATM system, Vector, is a software platform intended for air navigation service providers, fleet operators, and vertiport operators.

Customer Portfolio: Enterprise Customers:

• Launch Customers: EVE HOLDING, INC. has secured an initial order pipeline of approximately 2,800 vehicles valued at $14 billion from 28 launch customers, based on non-binding agreements. This includes:
  • Fixed Wing Operators: United Airlines, Republic Airways, SkyWest, Sydney Seaplanes, FlyBIS, Voar Aviation.
  • Helicopter Operators: Avantto, Bristow Group, Halo Aviation, Helisul Aviação, Nautilus Aviation, Omni Helicopters International, Helispirit, Microflite, Falcon Aviation, Air-X, Heli Inc.
  • Aircraft Lessors: Azorra, Falko, NAC.
  • Ride Sharing Platforms: Blade Urban Air Mobility, Blade India, Flapper.
• Strategic Partnerships: The company has built a global partner network of over 30 industry leaders spanning infrastructure, operations, platforms, utilities, and financing, which provides commercial leverage and broad market access.

Geographic Revenue Distribution: As EVE HOLDING, INC. has not generated revenue to date, there is no geographic revenue distribution to report. However, the company's market development initiatives and CONOPS collaborations are global in scope, including Brazil, the United Kingdom, Australia, and the USA, indicating a broad international focus for future revenue generation.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The UAM market is an emerging and rapidly evolving sector, driven by increasing urbanization, traffic congestion, and advancements in autonomous mobility technologies. Global efforts to reduce carbon emissions are fostering a trend towards electrification in transportation, creating favorable conditions for eVTOL development. The market is characterized by a compelling consumer value proposition, offering reduced transit times at competitive prices compared to ground transportation, with studies indicating high consumer willingness to adopt UAM services. UAM also aims to overcome the limitations of traditional helicopter operations by offering lower operating costs, enhanced safety, and a reduced noise footprint.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Focused UAM developers: Archer Aviation, Beta Technologies, Ehang, Joby Aviation, Lilium, Vertical Aerospace, Volocopter, Wisk.
• Established aerospace and automotive companies: Airbus, Bell Textron, Honda, and Hyundai.

Emerging Competitive Threats:

• Service and Operations Solutions: Established aerospace companies like Airbus, Bell Textron, and The Boeing Company, which possess extensive service and support networks.
• UATM: Companies developing Unmanned Traffic Management (UTM) systems for drones, which could potentially compete if enhanced to meet the higher safety standards required for piloted, passenger-carrying aircraft.

Competitive Response Strategy: EVE HOLDING, INC.'s strategy to maintain its competitive advantage includes focusing on its optimal vehicle design, leveraging Embraer S.A.'s proven aircraft certification experience, offering a holistic UAM solution (eVTOL, TechCare, Vector), benefiting from strategic support from Embraer S.A., and expanding its powerful global partner network. The company aims to combine a startup's agility and innovation with established execution skills, utilize a hybrid innovation approach, and follow proven development and certification practices. It also plans to selectively evaluate strategic acquisitions to bolster organic growth.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The UAM market is still emerging and its growth potential is uncertain, with possible consumer reluctance to adopt, unwillingness to pay projected prices, or local community rejection of eVTOL operations due to perceived safety or burden. Current airspace regulations may not be modified to accommodate increased air traffic, leading to capacity limitations. The UATM solution may underperform or be delayed, impacting scalability. Changes in consumer preferences, discretionary spending, or broader economic conditions could adversely affect demand for UAM services. Technology Disruption: Future advancements in critical technologies like autonomy or battery density may not mature or become commercially available as projected, impacting service volume and end-user pricing. Customer Concentration: The company's initial order pipeline is based on non-binding agreements, and failure to convert these into definitive agreements or meet conditions could harm prospects.

Operational & Execution Risks

Supply Chain Vulnerabilities: EVE HOLDING, INC. is substantially reliant on Embraer S.A. for development, certification, and supply of critical services, products, parts, and components, exposing it to risks of delays, disruptions, capacity constraints, or quality control issues. Reliance on sole source suppliers for certain components also presents risks. Production & Capacity Constraints: Significant challenges exist in mass producing aircraft in projected volumes, including large capital requirements, long lead times, and specialized expertise. Delays in design, engineering, component procurement, testing, and manufacturing could impact production timelines. Aircraft Performance & Defects: The eVTOL aircraft may not perform as expected (e.g., higher noise, lower payload/range, higher unit/operating costs, discomfort, shorter useful lives) or may contain design/manufacturing defects, including in complex software. Test flying prototypes is inherently risky, with potential for crashes or incidents. Workforce & Talent: A shortage of qualified pilots and mechanics could increase operating costs and hinder service deployment at scale. Competition for highly skilled personnel, especially engineers, could slow development efforts. Maintenance & Utilization: Aircraft may require more frequent or costly maintenance than anticipated. Aircraft utilization rates could be lower than expected due to adverse weather conditions, security requirements, air traffic congestion, or unscheduled maintenance.

Financial & Regulatory Risks

Market & Financial Risks: EVE HOLDING, INC. is an early-stage company with a history of significant losses and expects to incur further losses, with no assurance of achieving or maintaining profitability. Available capital resources may be insufficient, requiring additional capital raising that could dilute stockholders or impose restrictive debt covenants. The company's insurance coverage may be inadequate or unavailable at reasonable prices. Payments under the Tax Receivable Agreement (TRA) to Embraer Aircraft Holding, Inc. could be substantial, potentially exceeding actual tax benefits or being accelerated, negatively impacting liquidity. The market price and trading volume of its securities may be volatile. Regulatory & Compliance Risks: Commercialization requires various regulatory authorizations and certifications (Type, Production, Operating) from ANAC, FAA, EASA, and other authorities, which may not be obtained on anticipated timelines. Changes in government regulation could increase operating costs or delay services. Stringent U.S. export/import control laws and economic sanctions, as well as similar foreign laws, could restrict operations or lead to penalties. Compliance with rapidly evolving data privacy and security laws is a rigorous and costly process, with potential for non-compliance to harm the business. Legal Proceedings: A shareholder derivative action was filed on March 3, 2025, against Embraer Aircraft Holding, Inc. and EVE HOLDING, INC.'s directors and executive officers, asserting breach of fiduciary duty claims related to the 2024 Private Placement. EVE HOLDING, INC. is a nominal defendant, and the ultimate outcome or potential loss is unpredictable.

Geopolitical & External Risks

Geopolitical Exposure: EVE HOLDING, INC.'s business is directly impacted by Brazilian political and economic conditions, including government intervention, inflation, exchange rate volatility, and political instability, which could adversely affect financial results. A downgrade of Brazil's credit rating could increase investor risk perception and debt costs. Trade Relations: Changes in government-sponsored customer financing programs in Brazil, or increased subsidies for competitors, could reduce the competitiveness of EVE HOLDING, INC.'s aircraft. Climate Change: Risks associated with climate change, such as increased frequency and severity of severe weather events, could affect operations and infrastructure, potentially incurring significant costs for climate resiliency.

Innovation & Technology Leadership

Research & Development Focus: EVE HOLDING, INC.'s R&D efforts are concentrated on advancing its UAM solutions. Core Technology Areas:

• eVTOL Design: Focused on the design and development of the eVTOL aircraft, including extensive engineering simulations, subscale test flights, wind tunnel tests, and full-scale ground tests.
• Battery Systems & Electric Powertrain: Significant investment in R&D for battery systems and electric powertrain components to optimize aircraft performance.
• Flight Control Systems: Leverages Embraer S.A.'s proven fifth-generation fly-by-wire systems, combined with a proprietary man-machine interface.
• Autonomous Flight: Developing autonomous capabilities for eVTOLs, with a planned evolution from piloted to uncrewed operations.
• UATM Software: Developing Vector, a next-generation UATM software platform.

Innovation Pipeline: The company's innovation pipeline is centered on the commercialization of its eVTOL aircraft by 2027 and the continuous development of its TechCare and Vector UATM solutions. It employs a hybrid innovation approach, combining Embraer S.A.'s extensive background intellectual property with its own proprietary innovations to accelerate development and focus resources on differentiated design elements.

Intellectual Property Portfolio:

• Patent Strategy: As of December 31, 2024, EVE HOLDING, INC. had filed 33 patent and industry design applications and had been granted 10 patents and 10 designs, primarily related to eVTOL vehicle technology (e.g., rotor configurations, cruise rotor control, flight control solutions). The company regularly assesses new inventions for patentability.
• Trademark Strategy: As of December 31, 2024, the company held 41 granted trademark registrations and 66 pending trademark registrations across the U.S., Brazil, and other global markets.
• Licensing Programs: EVE HOLDING, INC. benefits from a royalty-free license to access Embraer S.A.'s intellectual property for use within the UAM market.
• IP Litigation: No material IP litigation is disclosed.

Technology Partnerships: EVE HOLDING, INC. engages in strategic alliances and research collaborations, notably with Embraer S.A. for engineering and manufacturing support, and Atech-Negócios em Tecnologias S.A. for UATM software development. Key component technology partners include BAE Systems, Thales Group, and Nidec.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The senior leadership team is comprised of individuals handpicked from Embraer S.A., with experience leading over 30 successful aircraft projects. The Board of Directors includes experienced professionals from the aviation industry and other sectors, contributing to the company's strategic direction.

Board Composition: The Board of Directors includes Luis Carlos Affonso (SVP, Engineering, Technology and Strategy at Embraer S.A.), Michael Amalfitano (CEO of Embraer S.A.'s executive aircraft division), Marion Clifton Blakey (Former CEO of Rolls-Royce North America and Former FAA Administrator), María Cordón (Director of Strategy & Corporate Development at Acciona, S.A.), Gerard J. DeMuro (former Co-CEO of Eve), Paul Eremenko (CEO of Universal Hydrogen and Former CTO of Airbus), and Sergio Pedreiro (former Chief Operating Officer of Revlon, Inc.).

Human Capital Strategy

Workforce Composition:

• Total Employees: 174 full-time employees as of December 31, 2024.
• Geographic Distribution: Employees are located in Melbourne, Florida, and Brazil, with most employees based in Brazil.
• Skill Mix: 53 of the full-time employees are members of the engineering workforce.

Talent Management: Acquisition & Retention: EVE HOLDING, INC. maintains a lean and agile direct employee team, focusing on high-value engineering, project management, and business development. This team is supplemented by first-priority access to approximately 725 Embraer S.A. employees under Master Service Agreements, providing flexible and cost-effective resource utilization. The company aims to attract entrepreneurial talent by combining the agility of a technology disrupter with the support and resources of Embraer S.A. Diversity & Development: EVE HOLDING, INC. reports good relationships with its employees and has not experienced interruptions due to labor disagreements. All Brazilian employees are unionized. The company emphasizes mandatory safety training and reporting procedures through its Human Resources and Safety team.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: EVE HOLDING, INC. is committed to developing an efficient, electric aircraft with zero local carbon emissions and a low noise footprint, aiming to contribute meaningfully to addressing traffic congestion and climate change. The company is pursuing a life cycle assessment of its manufacturing processes to monitor and mitigate emissions, waste, and natural resource consumption. Supply Chain Sustainability: The company's Sustainability Team works with operating units to track material inputs and outputs, build strategies for chemical reduction, and review proper handling and disposal of materials. Responsible sourcing and conflict minerals compliance are focus areas.

Social Impact Initiatives: EVE HOLDING, INC. promotes a culture of inclusion and prioritizes health and safety. It believes in the democratization of urban air mobility by developing UAM solutions that are affordable, green, and accessible. The company also engages in community investment through philanthropic programs and local community support.

Business Cyclicality & Seasonality

Demand Patterns: The UAM market is still emerging, and demand patterns are not yet fully established. The business is expected to be vulnerable to changes in consumer preferences, discretionary spending, and broader economic conditions, particularly if end-user pricing is at a premium to ground-based alternatives. Economic instability, such as recessionary periods, could lead to reduced consumer demand for air transportation or a shift to alternative methods. Planning & Forecasting: EVE HOLDING, INC.'s financial results are dependent on the timely certification and delivery of eVTOLs at a cost that supports returns at prices customers are willing to pay, based on the value derived from time and efficiency savings. The company's planning involves assessing the pace of UAM market adoption and managing significant investments leading up to commercialization.

Regulatory Environment & Compliance

Regulatory Framework: EVE HOLDING, INC. operates within a complex and evolving regulatory landscape for aerospace and transportation. Industry-Specific Regulations: The company is actively pursuing Type Certification for its eVTOL aircraft with ANAC (Brazil) as the primary authority, with plans for validation by the FAA (U.S.) and EASA (Europe). ANAC published the Final Airworthiness Criteria on November 1, 2024, and the FAA issued the SFAR for AAM on October 22, 2024. EVE HOLDING, INC. will also need to obtain Production Certification for manufacturing facilities and Operating Certification for new or existing infrastructure. Compliance with these extensive regulatory requirements involves significant costs. Trade & Export Controls: The company is subject to stringent U.S. export and import control laws and regulations (e.g., EAR, ITAR, OFAC economic sanctions) and similar laws in other jurisdictions. This includes requirements for licenses and authorizations for the cross-border transfer of products, software, technology, and services. Legal Proceedings: EVE HOLDING, INC. is not currently a party to any material legal proceedings. However, on March 3, 2025, a shareholder derivative action was filed against Embraer Aircraft Holding, Inc. and EVE HOLDING, INC.'s directors and executive officers, asserting breach of fiduciary duty claims related to the 2024 Private Placement. EVE HOLDING, INC. was named as a nominal defendant, and the ultimate outcome or potential loss is currently unpredictable.

Tax Strategy & Considerations

Tax Profile: EVE HOLDING, INC. calculates its income tax amounts using a separate return methodology. Its effective tax rate was (0.4)% in 2024, (1.2)% in 2023, and (0.5)% in 2022.

• Geographic Tax Planning: U.S. operations are a component of Embraer Aircraft Holding, Inc.'s U.S. federal consolidated group, while Eve Brazil files a separate income tax return in Brazil.
• Tax Reform Impact: The Brazilian tax reform enacted in December 2023 is a relevant factor.
• Deferred Tax Assets & Valuation Allowance: As of December 31, 2024, total deferred tax assets before valuation allowances were $431,507 thousand. A valuation allowance of $428,488 thousand was recognized, primarily due to the net operating loss for the year, increasing by $32.6 million in 2024. Net operating losses do not expire in the U.S. and Brazil.
• Unrecognized Tax Benefits: The company had approximately $70 thousand of unrecognized tax benefits as of December 31, 2024 and 2023.
• Tax Receivable Agreement (TRA): EVE HOLDING, INC. and Embraer Aircraft Holding, Inc. entered into a TRA, which generally provides for payments by EVE HOLDING, INC. of 75% of certain net tax benefits realized from increases in tax basis due to the Pre-Closing Restructuring and other tax benefits. These payments may be substantial and could exceed actual tax benefits or be accelerated under certain circumstances.

Insurance & Risk Transfer

Risk Management Framework: EVE HOLDING, INC. manages its operational and business risks through a framework that includes insurance coverage.

• Insurance Coverage: The company maintains general liability insurance, aviation flight testing insurance, aircraft liability coverage, and directors and officers insurance, among other policies, through Embraer S.A. The level of coverage is believed to be customary for the industry.
• Risk Transfer Mechanisms: Not explicitly detailed beyond the mentioned insurance coverages. The company acknowledges that its insurance needs and costs are expected to increase as it manufactures aircraft, establishes commercial operations, and expands into new markets.