Quarter 1
Q4 2025 Earnings Call — March 9, 2026
Analyst: Christine Leeweg (Morgan Stanley): Morning, everyone. You know, Kyle, this is from the last week in San Francisco. I was wondering, you know, with the IPO proceeds, you were able to raise more than double the capital you initially thought you would. Can you talk about how much the incremental capital changed your plan and your business model?
Executive: Kyle (CEO): Sure. I mean, fundamentally, it did not change our business model at all. It allowed us to advance a few things, though. We've increased our investment in vertical integration, specifically around things that we did not previously call core and enabling technologies, but have become clear that we need to be world class at. So in the past, fully vertically integrated on the motors, the propulsion systems, the batteries, the controls, the software. And we've extended that outward to have full vertical integration on the structures and other big bone elements of the aircraft. So that's one big investment in vertical integration. And the second thing is really pulling in our MV250. The proceeds were, I think, partially a product of these large engagements we've had with General Electric and General Dynamics and Embraer. And those not only created the proceeds, but they also created really, really clear and valuable partnerships. In the turbo generator with GE, having clarity and confidence of the propulsion systems for the MV250, coupled that with the structure and a large reuse of the A250 components allowed us to pull that in. So the financial investment in pulling in the MV250 fundamentally advances that portion of our business model as compared to what we outlined in the IPO, which is a direct result of the proceeds. Herman, do you have anything on that?
Executive: Herman (CFO): Yeah. Christine, good morning. How are you? Just maybe two points I would want to emphasize. So when we were together in September of 2025, and we were going through the analyst model, we had CapEx in 2026 for about 70 million, and in 2027, about 130 million. So the 200 at the midpoint that we're talking about is really just a pull-in of the 2027. So none of this is new spend. It's all contemplated spend. It's just pulling it in by about a year. And as we had talked about, the strong balance sheet puts us in the perfect position to do this.
Analyst: Christine Leeweg (Morgan Stanley): And following up, you know, Kyle, in your prepared remarks, you mentioned that the EIPC program pretty much brings forward, you know, the business model one year. Can you talk about what would be, you know, the most desired outcome out of EIPP? I mean, how many flights, what could this look like in the summer and what could this look like in three years?
Executive: Kyle (CEO): Sure. I mean, just a couple points on that. The EIPP program isn't just about aircraft for us. You know, it starts with the revenue and the clarity that we're already getting on the charging system deployments and the engagement with our customers. Remember, Beta's model is to sell the airplane directly to customers. So that really accelerated the engagement with those customers on things that are maybe a little less obvious like service maintenance training and all weather operations and getting to cadence with the aircraft earlier than we expect. But on the business model itself, which was really interesting is that, Our baseline business model had completion of type certification, and then all of those materials would go to our operator partners that would then apply for a 135 certificate or similar, and that would take ConOps development and a whole lot of other systems, and then there would be a ramp into operation or entry into service.
The EIPP system allows us to pull all of that forward and concurrently develop with our partners in the 135s all of the ConOps suspects while we ramp our production and ramping the production, anybody who's been in production for a long time knows you don't go from zero to a hundred on one day. That is an engineering effort as well. It's a development effort, supply chain maturity, quality systems, supplier quality, all of those things have to mature. And what EIPP does, it allows us to take that ramp and again, overlay it with the aircraft type certification program, the 135 development, and the ramp into production. So it really has a very nonlinear effect of taking things out of series, but also overlapping things and advancing the time. So I think it's a conservative estimate to say it advances our business by a year. It could be more than that.
Analyst: Ronald Epstein (Bank of America): Hey, good morning, guys. How should we think about the potential investment that would be required if things end up being very successful with EIPP, just to give folks a sense of maybe how to model that if indeed beta is successful, which we all hope in the future?
Executive: Kyle (CEO): Yeah, Ron, I'm anxiously awaiting to see where the ultimate awards come in. But if we were very successful in the EIPP, you could see an investment somewhere between, I'm going to give a wide range, $75 million to $125 million, something like that.
Executive: Herman (CFO): Yeah, and expanding on that, Herman said it earlier, that investment isn't a new investment. It's an advancing investment that we would have been making at a later point in time. And just like the ramping of production, the cost out curve of early rate, low rate initial production aircraft to full rate production aircraft will happen faster as well. So a lot of that investment, again, would have happened anyway. And now we get to advance that and build those aircraft while we're working through type certification.
Analyst: Ronald Epstein (Bank of America): Got it. Got it. Super clear. And Kyle, you mentioned this on the call, the engineering effort needed to ramp. Can you maybe peel back in on that a little bit just to give folks a feel for some of the work through to get a production system where you need it to be for when you think it'll need to be there?
Executive: Kyle (CEO): Yeah, for sure. So I think one of the insights that Sean Donovan, our chief of operations, brought to Beta from Tesla was that we needed to expose the issues in production early. So our strategy is to set up a production line. Take, for example, our battery line or our wing line, run it at full rate for a period of time. So if we had the battery line running for five days at full rate, then stopped for five weeks, we allow ourselves to expose the pinch points in the line. And then you apply the engineering resources, typically production or manufacturing engineering resources, sometimes design, but mostly production and manufacturing, where we find those pinch points in the line, whether it's data processing, actual assembly time, inspection, robotics, any of those things, and we address them. And that takes engineering. So if we have a laser welder that needs a cool down time, we expose that very early. And then we apply automation in the right places. Just recently on our battery line, for example, a plasma surface preparation system was fully automated because it was found to be a pinch point unexpectedly.
So that required manufacturing production engineering to balance that line. That also reaches way back to kitting in supply chain and inventory management where we use a highly visual manufacturing system where we design tools so that when screws bolts and nuts show up on the line they are in a way that the assembly technician is going to use them it helps with our quality it helps with our speed and then the last thing that has been a big focus of engineering and production, Ron, has been the use of automated tools for inspection documentation. So utilizing Wi-Fi connected screwdrivers effectively to map the angle, the torque, and the position of every screw that we put in drastically minimizes the human checkboxes that have to happen. So those are the types of engineering investments we're making in manufacturing.
Analyst: Sheila Kayla (Jeffries): Good morning guys, and thank you for the time. Maybe just on two questions first I'll start off with the backlog you called out a backlog greater than 4 billion by the end of 26. Can you talk about some of the drivers of this and line of sight to that and how defense plays into it as well, please?
Executive: Kyle (CEO): Sure. I mean, look, we like real time during this meeting are getting extreme line of sight. There's a series of docs on my desk right now of deals that are ready to be executed. But we are in the fortunate position to make sure the terms of those deals are favorable and aligned with Beta's rollout strategy. And I just saw as we were getting ready for this call this morning that our counterparts executed an agreement that takes a good bite out of that backlog goal for this year for aircraft. So we have very good line of sight. When we were preparing the materials, we had a little less. Now it's even better. So that is with commercial operators that have found applications for the electric aircraft in places that we believe that are going to have very successful entry into service. High cadence, low cost, relatively short range, starting with cargo medical and logistics. And that's the type of operators that we're partnering with.
Executive: Herman (CFO): Yeah, Sheila, I just want to re-emphasize Kyle's last point. We set a very high bar on what goes into our backlog. We're very selective with our customers. We want good launch partners, and we want partners who are going to come with large orders and deposits. So it's a very high bar. And as Kyle said, we were excited to see some documents get signed early this morning that, again, will take a big chunk towards that $4 billion backlog. And we'll be announcing that shortly.
Analyst: Sheila Kayla (Jeffries): Got it. Thank you. And then can I ask on EBITDA, just the wide range from 305 to 395, how do we think about that? What changes post T1? Is it DNA? Is it R&D? How do we think about that?
Executive: Herman (CFO): What I would say is so in the first quarter, we're certainly going to be investing more just like we did in the fourth quarter where we're buying long lead time materials. So you'll see that continue into Q1 and then they'll settle out as we get into the second quarter in the back half of the year. The wide range is, you know, it's a fast moving business and we really do not want to ever be in a position where we have to slow things down. And there are always investments that come up and we just put that wide range in there just to make sure we have the flexibility to run the business the way we want.
Analyst: Andre Madrid (BTIG): Thanks for taking my question. Can you maybe just, do you have a sense of what the revenue contribution per EIPC could be? I mean, what could it look like if you went on the charges side or the aircraft side or both? Just any color asset, how material it'll be?
Executive: Herman (CFO): Yeah, Andre, it's Herman. I'll start and then maybe Kyle could jump in. I don't think we're in a position where we will talk about revenue numbers right now. The OTAs certainly need to be negotiated and we'll get more clarity. But the way to think about it is there could be potentially three revenue streams. One would be through charge. The second would be through training and maintenance. And then the third would be aircraft monetization. So whether the aircraft was rented or leased or ultimately bought, that's sort of how I would think about the revenue streams. And one important point is the operators who we partnered with for EIPP are actually our customers in the backlog. So I think that's an important call out.
Executive: Kyle (CEO): I don't know. Yeah, that's a great point. I mean, look, if a customer has a 25 or 50 unit order and we're putting three or five aircraft into their EIPP program, if we get a lease payment over the course of the 36 months of the program, that's great. But the real objective here is much more than short-term revenue. Just like in the General Dynamics, the Textron, the GE, the Embraer jobs, we're planting the seeds that will germinate into much larger orders in the future. Herman mentioned it a few minutes ago. You have to think about the EIPP the same way. We'll make good revenue on that. And by the way on a per unit basis on a margin per unit basis the propulsion systems that we've been selling they're very profitable on a per unit basis but that's not why we're doing it we're doing it because they grow into something much bigger getting these aircraft out in the world there's a lot more to operating aircraft than just the aircraft of course I think everybody knows that and big ones are like the service the training the maintenance the continuous high cadence operations and the trust we have to build with the industry and the market that electric aircraft do indeed achieve the economic benefits that we outlined. So yeah, I think that we should look at the revenue because it's real money, but it is not the exclusive focus here.
Analyst: Andre Madrid (BTIG): Got it. Got it. That's really helpful. And then if I could pivot back to the backlog, from my understanding, that for a build that you're targeting for the M26 is mainly focused on the aircraft. But could you maybe just talk about what growth you have earmarked for merchant supplier work and what that backlog looks like and what it could grow to by the end of the year?
Executive: Kyle (CEO): Your read of how we define the backlog is correct. We are reporting the KPI and aircraft backlog. That's the prime mover of the business and we expect that to grow with high certainty now to $4 billion and beyond. On the merchant supply itself, one of the cool things about the way this is materialized, as Herman said, we developed a couple of prototypes, we delivered them to a customer that resulted in a large order. That order is made up of a couple of parts. Between now and type certification, we of course deliver a bunch more propulsion systems, and the research development documentation and other engineering assets and artifacts to support those programs. That grows and each of these things, one of them that is classified, we can't talk much about the details of it, but from a revenue perspective, each of the phases is about 10 times bigger than the prior phase.
And like we're not just we're not a job shop we're not taking this work for the short-term revenue we're taking it because it steps up in that order you know our revenue as a company has doubled year over year the valuation of our company across the four rounds from one to two and all the way up to eight effectively doubles at each round and that's how we're thinking about the merchant supply as well we're planting the seeds now we're delivering a handful of motors eight ten motors whatever need the customer needs and they select us for the subsequent phases on the merits of the technology, the reliability and the performance first and foremost, and of course on beta's ability to deliver.
Analyst: Andres Shepherd (Cantor Fitzgerald): Hey, everyone. Good morning, and congratulations on all the great achievements last year and so far this year, and thanks for taking our questions. You know, I think a lot of our questions have been asked by now, but maybe coming back to the EIPP, Kyle, I'm just curious if you could maybe share, how do you see the program unfolding? You know, once the programs have been announced, once the participants have been announced, do you foresee all projects starting at the same time, maybe one at a time? Do you foresee multiple OEMs participating in each project simultaneously? Just curious how you're thinking about it as we get closer and closer to those projects being announced. Thank you.
Executive: Kyle (CEO): Yeah, great question. So I think it's really important to define the difference between a demonstration and an operation. So when we entered into this we focused on operations we did not want to go out with one aircraft and go to five different states we wanted to provide five aircraft to one state and three aircraft to another state and two aircraft to another straight five aircraft to another state so that those aircraft can get into high cadence operations every single day in all weather however that doesn't happen on day one. No to answer your very specific questions are all OEMs going at the same time of course not beta right now has had more real world flying experience with customers than any other company in this industry. I had to sign an attestation to the Department of Transportation that within 90 days of the negotiation of these OTA contracts, we could be in service. Now, that's so that Beta can lead the deployment into these states and applications. This is because of the maturity of the aircraft, our charging network, and the fact that we're starting with cargo and medical first, and then moving to passenger.
And we're engaged with customers that have safe and reliable operations. That's different than other folks who have applied for this application. So, like, you know, the states selected this. The states selected the aircraft, and we start with Part 91, we go and we do route validation, then we move to 135, and if everything goes well, we will then start revenue-producing applications for cargo medical logistics, then we'll move to the VTOL, and then we'll move to passenger thereafter. Beta is fundamentally different than other folks because of the real world opportunities that we've uncorked internationally and domestically, and we intend to continue to do that.
Analyst: Andres Shepherd (Cantor Fitzgerald): Wonderful. Thanks, Kyle. That's super helpful. I really appreciate all that color. Maybe the last one, one for Hernan. Can you give us a sense perhaps on cash use for this year? How are you thinking about that? I realize you guided or are targeting a CapEx number for the year just wondering if you can maybe help us complete the picture how should we think about cash use particularly as you begin to ramp up production of your aircraft and get to four and a half per month by year end thank you.
Executive: Herman (CFO): Yeah, thanks for the question, Andre. I would say right now with this guide excluding EIPP, the cash use will be about 500 million. So if you were to look at about 200 million for CapEx at the midpoint, and if you take the EBITDA range at the midpoint of 350, we'll have some interest income that'll kind of offset some of that. But when you put those three pieces together, you probably get to about 500 million before an EIPP investment.
Analyst: Chris Pierce (Needham): Hey, good morning, everyone. If I look at the deck and the VTOL certification slide, I just want to get a sense of what that should look like over this year. I know that you sort of hit on in the remarks. We shouldn't expect, I just want to confirm, we shouldn't expect movement here, but we should expect movement on the CTOL slide. And that, in turn, allows the VTOL slide to move faster when it begins to move. Is that the right way to think about it?
Executive: Kyle (CEO): Yeah, I'd say it a little bit differently, but conceptually, that is exactly the right way to think about it. Let me give you an example. On the CTOL, if we were tracking the progress of the propulsion system contained within those bars, then of course the bars move much quicker because we built, I believe we're the only company in the industry that's built conforming hardware that's gone into four credit testing. We've done that pervasively across a large number of units in the motor. In fact, just this morning, I got a report out from the team that we've completed the durability test with over 1300 flight cycles for credit in a bunch of different environments. That is exclusively shown on the AH-500A engine certification test bars. It is not shown on the CTOL. And by way of extension, on the VTOL bars, there's a small delta, about 15% of requirements planning, and a little bit larger delta on the implementation when we move from CTOL to VTOL. So those bars are separated to give absolute transparency to all of you on the things that need to happen for each of these certification programs.
But the things that need to happen are contained to the deltas between the prior validation verification or certification activities and the subsequent ones. So you should expect to see movement on the A250 certification program this year. We have done a ton of vertical flying, a lot of different experimentation. I believe we're the first company to actually get delegation for our lift props with a DER. We've gotten additional delegations across the CX300. I think we achieved somewhere near 80 delegations in the last month. So these are really important, I would say, non-directly measured elements of progress that result in measured elements of progress as well. But fundamentally to your question, you will see movement on all fronts and the movement is representing the delta required between the propulsion to the airplane, the airplane to the aircraft.
Analyst: Chris Pierce (Needham): Okay, perfect. Thank you. And then, did I hear you correctly that on EITP you might fly CTOL and VTOL aircraft? Or, you know, I guess my thinking was it would mostly be CTOL, but is there a possibility for VTOL flying in this program as well this year?
Executive: Kyle (CEO): Yeah, in fact, every single one of the applications we put in have both CTOL and VTOL aircraft. I apologize if I focused on CTOL because that's what we're launching first with. We directly go into VTOL thereafter. It's how our entire business model is designed. And the beauty of that is that our customers get exposure to training in electric aircraft, charging, managing batteries, flying with a fly-by-wire system, which is of course universal to all our aircraft. And then they step into VTOL. In fact, our training team, and I think I mentioned this to you or another analyst earlier, has developed the full training curriculum for the VTOL aircraft. It has five modules. The first three of five modules are the CTOL aircraft, where the systems, the fly-by-wire system, all of the things associated with flying the ILEA aircraft are learned in those three modules. And then there's two additional modules for vertical takeoff and landing variants. So for our customers, that gives them a very easy pathway. Of course, the charging is the same and the maintenance is about the same.
So yes, we will be flying eVTOL aircraft should we be selected for the eVTOL integration pilot program. And just to put a fire point on that, I think there's huge advantages with this program, especially for the VTOL market year where, you know, it's going to be advantageous for us, for our customers to be able to do all the things that Kyle talked about there in one of the previous questions and pulling in those training timelines and whatnot ahead of full type certification to get these into service earlier. So it has tremendous benefits to us, to the customers and the industry as a whole.
Executive: Kyle (CEO): Thank you for your questions. I will now turn the call over to Kyle Clark for closing remarks.
Executive: Kyle (CEO): Thank you, everybody. I appreciate you guys sticking around on this call. I think just as kind of closing remarks, what is awesome to us here at Beta is that the pieces are falling into place and our strategy of a stepwise approach into the market is being respected and mirrored. with the ATC modernization efforts, the Department of Transportation, the FAA. I mean, we've got great leadership there with Duffy and Roshlo and Bedford and Edwards, all stepping up, doing what they said they're going to do, and giving us a platform and a canvas to deploy advanced air mobility. I think we've positioned ourselves to win on the EIPP. Our manufacturing's in place, our training's there, our service and support is ready to go, and we have a track record of safe and reliable flight operations. And that's all, of course, positioned us for CERT, but it's positioned us to deploy these aircraft early. And I think the insight of our business model is becoming clear. There's an energy here at Beta that is like, you can feel it. You can feel it when you walk into the facilities.
We are focused on getting through this H500A certification and it's not without challenges, but we are driving right through all of those challenges on a day to day basis. And the seeds that we planted over the last several years with customers are maturing right now. And these second phase and third phase programs are in our line of sight. And we're just excited about executing on them and seeing our revenue grow, seeing our products mature, and of course getting through the certification. I'm jazzed and I really appreciate all y'all are doing for us and with us and asking the questions and critiquing our business because I think y'all will come to the same realization as time goes by. This concludes today's call. Thank you for attending.
Quarter 2
Q3 2025 Earnings Call — December 4, 2025
Anthony Valentini (Goldman Sachs): Hey guys, thanks for the question. Kyle, appreciate all the color you provided. I think the transparency is going to be really welcomed by the entire industry here. I just want to focus a little bit on the certification metrics that you guys provided. It might be helpful just to talk through the metrics here. I'm looking at page 15 and beyond in the deck. Are these numbers provided to you by the FAA or are these metrics that you guys are kind of coming up with on your own just to give people an idea of how far along you are?
Kyle (Executive): Hey, Anthony. Thanks for the question. So we decided to track metrics that are directly aligned with FAA Order 8110 as opposed to coming up with our own stages. So these stages directly track for the FAA. The second thing that we did is we ensured that these metrics are measuring not just beta's progress or the FAA's progress. It's actually a simulation of both. You know, for example, in the CX300, you see the tracking, for example, our compliance planning. But for additional color, we've submitted 13 of 20 plans. So nearly 70%, 65% completed the submissions. And the FAA has accepted six of those plans for certification. So what we're doing is we're looking at it as both parties have to show up and agree to a final acceptance as opposed to just tracking what we've done on our end, knowing that this particular industry, due to the regulatory oversight, requires that we both show up.
And I could go into each detail on each piece, but largely one of the things that I think we should mention also is that in the implementation phase, which is about half of the total certification time in our estimation, will be broken up into four discrete metrics in the coming quarters as we work through these TIA aircraft. and do the company conforming builds matched with the SOI phase three, which is stage of involvement for software audits that both have to converge at the same place in the same time in order to enter the last stage of implementation, which is the flight test. So again, like the percent complete is based on what has been accepted, not what's been submitted.
Anthony Valentini (Goldman Sachs): Got it. Okay, that's incredibly helpful. Follow up on that. In terms of the engine, I think when we were going through, you know, the process, you guys had mentioned that you were targeting end of 2025, early 2026 on the motor. And now I'm noticing that it's early 2026. Did it get kicked to the right a little bit because of the government shutdown? Or can you just talk a little bit about that?
Kyle (Executive): Yeah for sure it is early 26 that we're tracking to right now we are in durability endurance testing which is the longest poll of all that testing that just takes time to get done and that's one of the reasons we provided a range getting into that durability endurance testing which we're running again right now requires um ultimately thousands of hours of testing and we're testing to the maximum extent possible in time um so that is uh planned for the first half of next year. And that four credit testing, just by way of example, we built a whole lot of company conforming articles and have 11 FAA conformed articles. So when we're talking about the equivalency of TIA testing in airplanes, fully conformed articles and four credit testing is the electric engine equivalent. That is all complete. and in test right now, and we started with the tests that take the longest to achieve, and we're performing the other tests. And one other kind of piece of color on that is, of course, this isn't the first time we run those tests. It's the first time we run them in front of the FAA. So we run and vet them over and over again internally, and the FAA comes to see them early, but to formally witness them is what's happening now.
Anthony Valentini (Goldman Sachs): Okay, great. Thanks so much, Kyle. I appreciate it.
Kyle (Executive): Thanks, Anthony.
Christine Lewag (Morgan Stanley): Hey, good morning, everyone, and congratulations on the IPO, and thank you for the call you provided on the prepared remarks, Kyle. So maybe on the EIPP that you noted, You said you could have flights as early as next summer. Can you provide more details on what this pilot project could look like? What types of operations do you intend to support? And is this with the CTOL or both the CTOL and the VTOL?
Kyle (Executive): Yeah, great question, Christine. So it is both the CTOL and the VTOL in time. The CTOL goes first. So the general time is that the FAA, the DOT and the White House earlier this summer issued the executive order. The FAA then put that into some amount of clarity with the DOT in September. Applications go in actually next week. And the application, the formal front of the application is a state. So the state applies for this, and that includes an operator, of course the aircraft provider, and the chargers. We are in, I believe, most all of the applications by us and all of our peers in the industry for the chargers. We are in at least 10 applications with the states right now, and some of those states are pairing up multiple states together. We get selected sometime before March of next year. Now, we've positioned ourselves to be able to deliver our first aircrafts into that within 90 days of that selection. And naturally, that means that we've had to actually manage our supply chain, our production, our labor, our tooling, so that we can deliver this on time.
The part that's, you know, I think being worked out right now is what level of maturity and cert is included in these aircraft. And we're at a really advanced state for the cargo medical logistics, and that's our focus initially with these states, particularly rural access, before we go to urban passenger, urban air. mobility with the vertical takeoff and landing aircraft. So it's a phased approach, much like the balance of our business. And we're in a wide range of applications that will start as early as June of next year.
Christine Lewag (Morgan Stanley): Wow, super helpful color. And you said that the VTOL will follow after the CTOL. So with the June 2026 for the CTOL, how much faster or how quickly could you get the VTOL to also be on this program?
Kyle (Executive): Yeah. So everything around the design of the stepwise approach of certification manufacturing and the EIPP has just under a 12-month lag from the CTOLE to the VTOLE. Remember, our first CTOLE came off the production line last November. Our first VTOLE came off the production line in August. All of the engineering assets or production assets are set up to do this type of cadence, learning from the conformities of the motor into the CTOLE, learning from the conformities of CTOLE into the VTOLE. We will be able to provide a direct date on that or a firm date on that when we understand the level of conformity and maturity that is demanded in those applications. But in my opinion, we will achieve that sooner by focusing on cargo medical logistics because the FAA and their safety first approach really likes applications that have a lower risk. And that's where we're starting. So about a year phase shifted is the answer to your question, probably less.
Christine Lewag (Morgan Stanley): Great. Thank you very much.
Ron Epstein (Bank of America): Yeah, hey, good morning, guys, and congratulations on the IPO. Maybe following up on some of your comments, Kyle, on supply chain and labor, how are you thinking about that with regard to the ramp? How are you thinking about recruiting personnel to have enough people on the floor to build aircraft? And then two, what challenges do you foresee in the supply chain in order to ramp the way you want to?
Kyle (Executive): Yeah, great question. So the first part of it is a heavy focus on vertical integration to manage our supply chain. So we are largely in control of our own destiny when it comes to delivering the products from our primary manufacturing, which is, of course, the welding, machining, composites. There was a post recently you may have seen that we've achieved conformity of our composites in our own composite shop. We also leverage supply chain to kind of come together to create our composite structure. That has been a big focal point. In parallel with that, we focused on magnets, semiconductors, and batteries. For semiconductors, for example, we pre-bought both the safety-critical semiconductors for controls and also our power semiconductors for everything we needed through development certification and initial deliveries. So there are certain strategies in certain places, vertical integration, pre-buy. We have also focused on our labor. So we had a pretty phenomenal turnout at a recent career day where we had to shut the doors at around 600 people who showed up to attempt to work here at Beta.
We have no lack of access to really, really good talent when it comes to building things. But one piece of really important insight is we're not doing this without focusing on the economics of our product, the cost to build materials, for example, where we continue to focus on reducing the total touch time, labor, and floor time of every single component. Recently, we took our fastened wing, which had 14,000 fasteners, 580 parts, took six weeks to build, and we redesigned it to be a bonded wing. Which reduced it to less than 250 parts, went to zero fasteners. It took four days to build, and of course, it's significantly less expensive. And by the way, it lost 18 pounds and became stiffer. So that's what we're applying to the major commodities that drive our cost to build materials. And of course, cost generally directly tracks with the reliance on labor. So vertical integration, pre-buy in some cases, and focusing on reduction of labor has given us a strategy that we're seeing our ability to produce the aircraft that we promised.
Ron Epstein (Bank of America): That's great, great. And then maybe just one last follow-on from one of your comments. In your prepared remarks, you talked about deposited backlog. Can you mention why you framed it that way, deposited backlog as opposed to just backlog?
Kyle (Executive): Yeah, thank you. It's actually a really big deal for us. We have to plan our production around something that has high-level surety. Naturally, engagement with customers starts with memorands of understanding, letters of intent, then may go to term sheet. At some point in that, with those kind of pre-orders, you get to the point where you get a deposit. So it's a financial commitment from these businesses that we want to buy N number of aircraft for X dollars. That is where we trigger a backlog kind of checkmark. So that deposit backlog, each of those are tied to some financial commitment. The last phase, which we're in now, and this is one of the things we're tracking very acutely internally, is converting those deposit backlogs to actual serial numbers with a delivery date so that we can start exercising our progress payments. So that's one step further than the deposit backlog. So those APAs or aircraft purchase agreements exactly solidify that schedule, and then we start getting those milestone payments. I'm sure Herman can talk to the recognition of revenue on that, but that's an important cash management tool for us.
Herman (Executive): Yeah. So, Ron, you know, I think when we talked about working capital a couple of months ago, you know, we have set it up in a way where we get a deposit upon the firm order about a year before we begin manufacturing. We begin, we get another deposit. And then three months before we begin manufacturing, we get another deposit. And when you sum it all up, it's about 50% of the selling price of the aircraft so that puts us in a very good position from a working capital perspective and then ultimately we get the final payment when we deliver the aircraft to the customer and we recognize a hundred percent of the revenue once the customer signs off on it so it's it's a very easy and pragmatic revenue recognition approach.
Ron Epstein (Bank of America): Got it thank you very much.
Sheila Caglioglu (Jefferies): Good morning, guys, and congratulations on the IPO. Maybe two questions on the partnerships you announced. For the first on GD and the undersea propulsion systems, can you discuss the timing of that opportunity and how we think about overall marine for BETA?
Kyle (Executive): Sure. So that program, much like our other propulsion programs, started because, in this case, DARPA and GED got wind of what we were doing and had hosted them here. I toured them personally around the business, showed them all the technologies. What really triggered the initiation of that program was Beta's ownership of the software, the hardware, the control electronics, the electromagnetics, putting that all together into something that could meet the national security needs because of that initiative. that full ownership. But the second part was the performance. And the performance of our propulsion systems won us that job. Now, it started with a relatively small job. And for round numbers, $3 to $5 million. The next phase of that particular program is approximately 10 times greater than that, and the next phase is 10 times greater than that. So it's a classified program, so I can't speak specifically to the technologies, but that's the progression over the next two and a half years of that program.
And I was, you know, just down at DARPA headquarters getting some classified briefs on the extension of that so because of the successful deliverables that we just had we've been exposed to two more major programs um that are both classified as well so to answer the second part of your question we are expanding our undersea applications and as i mentioned in the prepared remarks like people in the air i'm a pilot as you know i mean we flew together but the um we did yeah that was an awesome flight in the in the electric airplane the uh we can't tolerate failures in the air. We can't tolerate a system that we don't understand every part of it. You can't tolerate those failures when you're under the sea, when you're under the Arctic ice shelf ever. And if there are any issues, you need to have a backup system or redundancy that allows you to continue the mission. So although the tech is just a little bit different, of course the cooling systems are different, The requirements are actually remarkably similar for those different types of applications. So I think you will see us expand into more marine applications, specifically the safety critical and mission critical undersea work.
Sheila Caglioglu (Jefferies): Got it. No, really neat stuff. And then maybe one on the EVE partnership, just because it progressed this quarter to a full-on agreement. And I think you mentioned a billion dollars in the backlog for it. So just how do we think about that and are there more to come?
Kyle (Executive): Yeah for sure there are more to come um we uh you know those those those those relationships don't evolve overnight in every case and i think there's about five of them that we've identified um with with you guys uh these these air framers um typically kind of start evaluating the market they may choose somebody else maybe they have some successes maybe they have some failures and they end up back looking at our propulsion because of its path to certification, its performance, and the ability to rely on us as a production partner in the future. We delivered a bunch of motors down to Brazil that allowed EVE to step into their flight test program, and that earned us the production contract. And again, it's just for the pusher right now. That production contract... was only awarded after some pretty thorough risk assessment on our ability to produce. Here in Vermont, our quality management systems, our certification plan, and this is where I do need to openly compliment the rigor and the thoroughness of their engineering leadership and their supply chain leadership working with them. So the actual deal itself, yeah, it's approximately a billion dollars based on their current backlog, and that's about 60-40 split between the initial sale of motors and the in-service agreed to kind of pay-per-hour fees that are associated with the use of that motor, kind of totaling about a billion dollars.
Sheila Caglioglu (Jefferies): Got it. Thank you so much.
John Godin (Citigroup): Hey, guys. Thanks for taking my question, and congratulations. Kyle, you made a comment that there were hundreds more aircraft in active negotiation when you were talking about the backlog. And I was just hoping to kind of spend an additional second on that and understand what the contours of that may look like. Is that seat toll? Is that V toll? Is that engines? Like you just mentioned, there were some other airframers interested. existing customers, new customers, whatever you can share. I feel like you wouldn't have made that comment if there wasn't some visibility and confidence to it.
Kyle (Executive): Yeah, I guess maybe I'll point to one that was quite public at the Paris Air Show with the second largest kind of regional carrier in the country, which is Republic Airways. And, you know, we openly allow people to track our aircraft. It's funny, like early this morning, about 3 a.m., I saw our aircraft landed with a bunch of pilots that have been flying like a continuous flight. 70-hour mission. They are flying in the rain, the sleet, the snow up here. And that is with one of those customers that we're trying to convert from an MOU into deposit-backed orders. And that would add a couple hundred aircraft to the backlog alone. Now, that will start with CTOL and go to VTOL. And what we've seen in our backlog, especially over the last quarter, is that the majority of the orders are coming in for conventional takeoff and landing or CTOL aircraft. And with an intention to go to VTOL. And the reason is, is that the infrastructure exists today. The pilot licensing is clear and very, very attainable for their existing pilots. And they consume it on the routes that make sense for them, especially when they start with cargo and logistics.
And the performance of the aircraft, and I do want to note something, one of the things that everybody, I mean, you've got to make airplanes light, you've got to make them reliable, you've got to make them meet the mission. Our sea-toll aircraft right now actually has payload margin. That means that when we say it carries 1,250 pounds, there's actually, it can carry more than that, even within its max gross takeoff weight. And it was a bit of a conservative engineering miss that we're going to leverage into the next aircraft released. So I bring up that example to say that when we go out and say we can fly this mission, we're covering that and more. So the sea toll is in obvious order right now for those folks based on the operational economics of it. And that's where we're seeing the biggest growth in our backlog.
John Godin (Citigroup): Yeah, that's great. It sounds like there's a lot of activity out there. And given that you're willing to kind of offer some of those KPIs, I feel like, you know, it's likely and it sounds like you would say, you know, we should see more orders every quarter for the next few quarters. It sounds like there's a lot of activity. Is that what we should expect every quarter? Kind of, you know, some more of these orders coming in?
Kyle (Executive): Yeah, that's what we expect. We're seeing those come in. Given the success we're having, it gives us actually a little more leverage on the pricing because those orders are coming in and they're starting to get a little bit of urgency around securing those production slots through APA. So we're not just counting the number of aircraft. Now we're really focusing on the quality of the orders. That is both the terms that we agreed to, of course, the pricing being one of them, and other secondary and tertiary terms to those contracts. But also the quality of the operators that we're deploying into. We get asked a lot about MRO services and pilot training and other things. And as you probably know, we really do focus on the large, credible operators that already have those things in place and can be successful partners, especially in the early days of these launches. So, yes, you should see increased orders, but also please note the quality of the orders that we're pursuing and the level of which those engagements produce near-term revenue through the CTOL aircraft building into the VTOL.
John Godin (Citigroup): Great. And if I could slip just one more in. You know, you had that comment that the aftermarket backlog was four times the size of the backlog, if I heard that correctly. You know, that may not be perfectly quantified, but I just thought that was a fantastic data point. Do you guys have any plans to maybe, you know, dig into that, elaborate on that, firm that up? Is there a way to kind of do that contractually? You know, I think the aftermarket piece is obviously a big part of the story, and that was just a great data point.
Kyle (Executive): Yeah, let me just correct that for one second. The aftermarket backlog is three times higher than the sale of the aircraft. What I mentioned was the total backlog is four times higher because you have the one unit plus three times. That's the total backlog. So just to – I hate to be the engineering nerd of being very precise with language, but the total backlog is four times higher. But to elaborate a little bit more on the qualitative portion of that, which is the – In certain contracts, we have a contractual price for the aftermarket battery. In other contracts, one that was made very public with Air New Zealand, for example, it's a leased aircraft, and they're doing power or energy by the hour. So that backlog will come in two forms, selling of the aftermarket product on a per-unit basis basis, where we provide a core refund for the return batteries and a charge for an overhaul battery and in our energy by the hour. And we're being very thoughtfully cautious about getting extended too far on anything that is a per flight hour payment. But that's where these APAs come in to make sure that we're protected, the customer gets a lower cost of operation, and an ever-increasing performance in the battery. But we estimate for each $4 to $4.5 million airplane, there's about $13 million of backlog, excuse me, of aftermarket fuel.
Herman (Executive): Yeah. And one thing, John, as we had spoken about in the past, the aircraft is a working aircraft. It'll fly for 20 years, 35,000 hours. And if the aircraft is flown like that, the battery will be changed about once a year. And that aftermarket, if you look in the slide deck that we shared today, you see, we call it the double whaleback chart, you see how big and durable that aftermarket revenue is. And it goes on for close to 20 years. So, it's a meaningful part of our business. It's a wonderful gross margin opportunity for our business. And I think it's important that that point is made on that aftermarket. So it's extremely durable.
Kyle (Executive): Excellent. Kyle Herman, thank you.
Chris Pierce (Needham): Hey, good morning. I'd love to hear the early learnings you guys are getting from customer deployments and how this might help with more linear adoption. I mean, do you see partners feathering in orders as they turn over their fleets, or are they already running new routes to see sort of how they can expand their operating envelope? Whatever you could share on that.
Kyle (Executive): Yeah. So the biggest learnings, we're getting a lot out of our overseas deployments. We fly a lot in the U.S., of course. One of the learnings in Europe is that reserves really matter. The ATC and the efficiency of getting aircraft in, especially when there's high traffic regions, are really important to manage. So having adequate reserves and having acute knowledge of what those reserves are. So very technically, like we have a state of charge estimator within the battery. That state of charge estimator pretty pessimistic all the time because we have a conservative approach with the FAA for safety. So if you think you have 45 minutes of flight time remaining, you may have 60 or 120 in some cases. But learning to train the pilots to know under what conditions they can maximize those ranges and reserves and how to do that has been a really positive learning. And that goes in informing both the technology and the training regiments for the pilots. The second big thing is... is around the maintenance requirements.
So as we've been flying these things, we started in our first deployments earlier this year, we would deploy a couple maintainers, a couple pilots, usually a flight test engineer, and somebody to manage the chargers. We're down to deploying things overnight with just a pilot. And that is a product of understanding what that pilot needs to successfully and safely complete that mission, the next mission, and every mission after that. what do they need to inspect what do they need to maintain and it turns out to be very very little you know we we flew across the country and back numerous times now um and in our last run across the country the only thing we did is put a little bit of air in the tires so that's been a really phenomenal learning and more of a validation that electric aviation offers a safer and more reliable product um out in the real world uh we've learned a lot about charging and flight planning as well um but you know there hasn't big been any big ahas uh you know we we've of course got the little technical things like flying in the rain and the sleet and the snow we found a couple little leaks that we quickly remedied um with seals around gaskets and other things and um And, yeah, there hasn't been big ahas, but getting out in the real world just reminds us that aviation is a serious business. You've got to get the right reserves, and you've got to have the right flight planning in place, and that data is important to us.
Chris Pierce (Needham): Great. And how are they thinking about what are they telling you? Hey, this is great for our existing routes. This creates new routes we hadn't been able to consider before. What are you kind of hearing as far as how they might integrate the aircraft into their kind of route planning?
Kyle (Executive): Yeah, so there's two big, like, draws to the implementation of it. Yes, in their existing route planning, that's where the sea toll fits. You know, if you lower the cost of carriage for the packages, they're just simply, you know, they have an attrition problem with their existing aircraft where they're worn out, they can't get parts. They're begging for this airplane to just simply fulfill the feeder fleet network that they have today. There's no question with that. Some of the larger new orders see it as an augmentation to their existing business, but for a couple reasons. One of them is pretty interesting. It's to fulfill a gap in the pilot pipeline. So we have dual control side-by-side seating that allows a pilot to progress from primary training, they first learn how to an airplane, to get into a low-risk application like cargo and logistics with a captain in the left seat, a first officer in the right seat, or vice versa. As that pilot builds time, they move into what you'd consider the left seat. and they would move then into regional, you know, like jet transport, for example, or corporate flying. So that's a gap that exists today, and a lot of our customers see value in implementing the CTOA aircraft to fill that gap, provide a new service to their customers, and train their pilots. And that's a keen interest in our aircraft.
Andre Madrid (BTIG): Kyle, Herman, Devin, good morning. Thanks for taking my question.
Kyle (Executive): Hey, Andre.
Andre Madrid (BTIG): You've given a lot of color on the milestones to look ahead for on the CTOL and the VTOL variants, but can we maybe just dive a little deeper into MVTOL, the military variant? I mean, you know, what should we be looking out for, and could you fill us in on some of the recent updates there?
Kyle (Executive): Yeah, probably not going to go too deep on it, but I'll hit the top of the waves here. Our engagement with General Electric very strategically starts with the MV250, which is a military variant of the 250. It is an autonomous, unmanned, hybrid aircraft that has performance that exceeds existing vertical takeoff and landing aircraft. What I mean by performance is that it will go further and faster than a helicopter. It's really a totally different argument to the military than the one we were making previously, which was higher reliability, lower fuel dependency, low thermal signature, and low noise. Now we fundamentally have a product. that does more than the existing product. And we know that China is putting these things in the air right now. And if we unfortunately get into a fight in the South China Sea or in the first, second, third and island chains, we need a long range support vehicle for our troops. First, you know, aerial cargo logistics and then potentially other applications.
So the three pieces of that equation are the autonomy in the aircraft. beta owns 100 of that the autonomy outside the aircraft we partner with several partners one of them we announced was near earth autonomy the hybridization and as you know we've built several hybrid aircraft now we're moving into the big leagues with with ge who makes the best engines in the world coupled with our generator and now we have a turbo generator together mounted on top of our aircraft and uh built on exactly the same wing, boom, motors, flight control systems as our civil aircraft. So when we talk about this, it's no secret that whether you're carrying medical cargo, people, or military supplies, you want a safe, reliable, lightweight, and super high-performance system. So all you really do in this case is you change the fuselage. so that you can accommodate the loads of that particular mission, whether it be passenger, cargo, in this case, military. The beautiful thing about the mi