New Horizon Aircraft (NASDAQ:HOVR) held its third-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Access the full call at https://www.webcaster5.com/Webcast/Page/3155/53804
Summary
New Horizon Aircraft reported a strong financial position with $20 million in cash, providing a capital runway in excess of 12 months.
The company is focused on completing the full-scale prototype of the Cavorite X7 by the end of the year, aiming for flight testing by early 2027.
Strategic partnerships with Rampf Group, North Aircraft Industries, and Mitsubishi Heavy Industries are enhancing the production and technical capabilities for the Cavorite X7.
The hybrid-electric architecture of the Cavorite X7 is highlighted as a key differentiator, offering operational flexibility and lower operating costs compared to competitors.
Management emphasized the supportive regulatory environment in Canada and the U.S., which is favorable for the advancement of advanced air mobility technologies.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft fiscal third quarter 2022 earnings conference call. All participants are present in a listen only mode following management’s prepared remarks. Instructions will be given for the question and answer session. For operator assistance during the conference, please press Star zero. As a reminder, this conference is being recorded and will be available for replay on the company’s website at www.horizonaircraft.com later today. I would now like to turn the call over to Matt Chesler. Matt, please go ahead.
Matt Chesler (Investor Relations)
Thank you Operator and good morning everyone. Joining me today on the call are Horizon Aircraft CEO Brandon Robinson and the Company’s CFO Brian Merker. Before we get started, I’d like to remind you that we will be making forward looking statements during today’s call. These statements involve risks and uncertainties that may cause actual results to differ materially. For more information about these risks and uncertainties, please refer to the risk Factors section of our annual report on Form 10K for the fiscal year ended May 31, 2025 and filed on August 22, 2025 as well as the Form 10Q filed with the SEC today, all with the securities and Exchange Commission and under the Company’s profile on SEDAR Plus in Canada as well as other documents filed by New Horizon Aircraft and the SEC under the Company’s profile on SEDAR Plus in Canada. From time to time, any forward looking statements we make are based on assumptions. As of today, we undertake no obligation to update these statements as a result of new information or future events. Now I would like to turn over the call to our CEO Brandon Robinson for his prepared remarks. Brandon, please go ahead.
Brandon Robinson (Chief Executive Officer)
Thanks Matt. Good morning everyone and thank you for joining us today. I’ll start off by saying that we believe the advanced air mobility sector continues to grow in a very constructive way. What began as a concept driven phase just a few short years ago for many companies is now shifting towards practical execution where real world performance, certification pathways and economic viability are becoming the defining factors for long term success. At Horizon Aircraft we’ve always taken a pragmatic approach to this market. Our focus remains on building an aircraft that solves real operational challenges. We are building an aircraft for operators that will offer meaningful improvements in cost, performance, reliability and safety across a number of missions. That laser focus on developing an operational tough, high performance aircraft continues to guide our progress on the Cavorite X7. So a little bit about technical progress and developmental roadmap. So from a developmental standpoint, our primary focus is now on the continued design and production of our full scale aircraft prototype. Very exciting. Our intentions remain to complete the full scale aircraft by the end of the year, which is the single most important engineering milestone for the company over the next nine months. This will position us to begin ground testing and ultimately flight testing in early 2027. Our hybrid electric architecture that we incorporated into our aircraft from the very beginning continues to be a key differentiator. By combining a turbine based power system with electric propulsion, we have the best of both worlds. We’re able to deliver a level of performance, safety and operational flexibility that we believe is not achievable at regional distances over 100 miles with pure electric propulsion aircraft in this space. So the hybrid electric core power system, the X7, will have the ability to operate independently of any ground charging infrastructure, so no need for any lagging vertiport construction to hold back initial operations while airborne. And after landing, the aircraft will be able to recharge itself. Adding to safety, we also plan on pursuing full IFR capabilities so flight into clouds and also flight into known icing certification capabilities that are essential for many commercial and defense applications and unlikely for almost any of the other EVTOL concepts. In addition, a leading independent audit firm has also verified that the Cavorite X7 is expected to deliver up to 75% lower operating costs measured on a per mile basis, versus both conventional helicopters and some advanced air mobility aircraft being produced by our peers, all while offering superior speed, range, safety and payload capacity. So on to Partnerships in recent months we’ve made some really meaningful progress in furthering key strategic partnerships. We contracted the production of our fuselage structure to Rampf Group, an international manufacturing company with over 900 employees that specializes in advanced composites. This marks a very significant shift into the production of our full scale aircraft, something extremely exciting to report. In parallel, we have contracted production of our wings to North Aircraft Industries. Their world class expertise in precision aerostructures and complex wing structures in particular support both performance optimization and production readiness. As we move closer to full scale assembly later this year, we also recently announced key collaboration with Mitsubishi Heavy Industries Regional Jet Aviation Group MHIRJ (Mitsubishi Heavy Industries Regional Jet Aviation Group) for short, a company that brings decades of experience in aircraft development, certification and support stemming from its history with the CRJ Regional Jet program. This collaboration brings highly specialized engineering support to the Cavalry X7 program, particularly in the area of flight test instrumentation, which will be critical as we move towards our flight test program in early 2027. These strategic collaborations significantly strengthen our technical roadmap and is a very meaningful step forward in developmental capability technical progress and sophistication of our program. And of course, as we continue to be actively engaged in discussions with several additional potential strategic partners to join Horizon Aircraft mission and vision, we are encouraged by a significant level of interest with a range of companies that include the best across aerospace and defense and manufacturing sectors. These discussions are ongoing and we remain disciplined in pursuing opportunities that align with long term shareholder value. As for our financial position and capital Runway, Brian will shortly explain this in more detail. Our financial performance demonstrates that we remain disciplined and focused on capital efficiency. We ended the third quarter with approximately $20 million in cash providing us with working capital Runway in excess of 12 months based on our current operating plan. Importantly, our development strategy is intentionally structured to be significantly more capital efficient than many of our peers by focusing on a hybrid architecture, levering strategic partnerships and by not implementing an air taxi service strategy. So being an OEM versus an operator, we are able to advance the program without a level of capital intensity typically associated with the all electric EVTOL development in this space. In addition, with the requirements of the Canadian Federal Government to increase its spending to defense of up to 5% of GDP or an increase of approximately 15 to 20 billion dollars each year, we continue to pursue non dilutive sources of funding similar to the $10.4 million insight grant we previously we expect those types of opportunities to remain an important part of our broader funding strategy going forward. We also have very significant government tailwinds that are building. So if we take a step back from our near term objective of building the Cavarite X7 prototype, we are seeing increasingly supportive regulatory and policy developments for the advanced Air Mobility sector in Canada. As I just alluded to, the recently announced Defense Industrial Strategy outlines a substantial increase in long term defense spending with a clear focus on innovation and next generation technologies just like ours. We believe this creates a multi year tailwind for companies like Horizon Aircraft, particularly given the dual use nature of our platform across both commercial and defense applications in the United States. Recent developments from the Department of Transportation and the FAA around the advancement of EVTOL Integration Pilot program represent another important step forward. Government support at this level helps accelerate the path forward towards integration of EVTOL aircraft into national airspace systems and ultimately supports broader adoption across the industry. So taken together, these developments reinforce our view that the regulatory environment is moving in the right direction and that our timing is perfect, very well aligned with the broader industry tailwinds. With that said, I’d like to now pass it over to our CFO Brian Merker to discuss the financials in more detail. So Brian, over to you. Great.
Brian Merker (Chief Financial Officer)
Thanks Brandon and good morning everyone. On the financial side, we closed the quarter with $20 million of cash, continuing with our healthy liquidity and longer term working capital availability. We always strive to be patient and careful with our fundraising activities. Using a combination of our at the market program, non dilutive grants and warrant exercises, we have raised $25 million at an average price of $2.03 per share thus far into the year. This has put us in a position to focus on our engineering progress and the development of important partnerships as we plan for the manufacturing phase of our business. These Q3 financial results reflect our continued investment in aircraft design, build and plan certification. More specifically, total operating expenses were 7.6 million for the quarter, up from 3.6 million in the same period last year. Notably, admin costs were largely flat with our spend on aircraft development costs up from 0.4 million a year ago to 4.3 million in the current period. Similarly, on a year to date basis, operating costs nearly doubled to 19 million from 10 million this time last year, again with admin costs relatively flat, while our aircraft development costs increased from 1.2 million to 9.6 million. These aircraft development costs are directly related to people, components and tooling connected to building our full scale aircraft that we expect to complete by the end of 2026. On the liquidity side, cash used in operations totaled $12 million for the nine month period ending February 28th. This was higher as compared to the same period in the prior year driven by our amplified investment in building our full scale aircraft. Looking ahead, we’re anticipating our cash from operations to remain consistent or modestly increase as …
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