New Horizon Aircraft Ltd. (HOVR) Earnings Call Transcript

Hello. This is Craig Brelsford with Red Chip Companies. Thank you for joining today's event with new Horizon aircraft, which trades on the NASDAQ under the ticker HOVR. With us today, we have Brandon Robinson, Chief Executive and Founder. We will begin with a brief presentation in a moment, and then we'll open the event to your questions. Welcome to everyone joining us today on x YouTube, LinkedIn and other social media platforms. [Operator Instructions] Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. Brandon, please go ahead.

Okay. Thanks, Craig. Really appreciate it. And thanks, folks. Really appreciate your time today. So if you take nothing more away from this presentation, it is that we are building this aircraft that's on the primary screen right now. So for those uninitiated, this aircraft can take off and land vertically just like a normal helicopter. When it moves forward, it can transition with some really cool technology to change into that of just a typical aircraft, which is a lot faster than a typical helicopter and a lot safer in many different ways. So essentially, a helicopter capability, so vital capability, but about twice as fast, about 5x the range of the electric vitals in this space. and very much a complementary service. Anyone is building out a portfolio in this space, some of the major players, Job Archer bet. I mean, they're going to do some great work over shorter ranges. This machine is built for bad weather, cold weather, longer distances and has a lot more fuel reserves on board, and we can touch on that. And instead of within cities, this is very much a between cities, tough machine built by a company led by an ex-fighter pilot that is pretty excited about it. So been through a flight test program on a large-scale prototype. We are building the full-scale aircraft right now, and it's going to, I think, get the markets by surprise win. And several months, we rolled this full-scale aircraft out of the hanger and start flying. Okay. So for those who don't know and haven't done as much research, that is totally cool, what is Horizon Aircraft. So I was a fighter pilot in the Air Force for the better part of 2 decades. At the peak of my career planning and leading NATO coalition missions going to -- in training, recovering down pilots from beyond enemy lines, that sort of thing. And we always were limited in some of those more complex missions to the slowest vertical take-off and landing aircraft in the fleet. A lot of these helicopters amazing Black Hawks, Bell helicopters are fantastic, but they're slow and they break a lot. Near the end of my career, my father and I my father was running a high-tech aerospace company that was doing a lot of really cool stuff in the general aviation space, a lot of electrification of older systems, modernizing some of the more antiquated general aviation aircraft. We got very interested in this advanced mobility space that Jovy and Archer and Beta we're designing concepts for. When we looked into it, we saw a little bit of a gap forming whereby a lot of these architectures were all electric, carrying a few thousand pounds of batteries on board and sort of in a place where the range and their operational utility would be confined to good weather. And so we could very much build a complementary prototype that, like I said, a set of within cities, this can go between cities, twice as fast, 5x the range. It has an internal combustion engine on board, which we're pretty proud about. We'll talk about that in a bit. And like I said, without much competition in this space, the way the architecture came together, founded the company, produced the concept, and we made some incredible progress that is going to culminate in a really, really interesting next 6 months for us. But again, we roll out a full-scale aircraft from the Hanger begin testing, joining an elite group of companies in this space. So instead of an all-electric architecture, again, that was a little bit of a crowded space. We came up with a hybrid electric architecture. So this aircraft has a [ Pratt ] turbine engine at the heart of it, with a generator on board that produces electricity. And is [indiscernible] back, 1 person upfront with a jump seat for training also can go up to 250 miles an hour, 500 miles range at mid loads with enough fuel reserves when you get there, to your destination to give you a lot of options. It is planned to be all weather, so it can fly in clouds. Very few helicopters in the world are certified and very few operations for flying helicopters in cloud. So that's quite unique. And as a hybrid electric machine it can charge itself after a take off when it vertically takes off. It transitions to the forward flight, the generator onboard recharges the batteries. And then again, side thousands of pounds of batteries. We have hundreds of pounds of batteries on board. When it gets to this destination, it starts its landing with full battery power. And when you land in the middle of nowhere to do a lot of really cool missions that we'll talk about, it is able to recharge itself as long as there's fuel on board, which I'll remind everyone is technically oriented to fuel, jet fuel in this case, still has 330x amount of energy in it than the same mass of battery wood. So 12,000 watt hours per kilogram instead of 200-watt hours per kilogram. So once you account for efficiencies, it's about 30x to 40x, which is pretty incredible. That gives us superior range speed and a lot more operational flexibility to go those longer distance at higher speed. Now how does the technology work? And why does it work? So you see in the main wings and in the small wings at the front called the [ Kennards ] those are electrically powered lift fans. Those spin up, they produce enough lift to lift the aircraft off the ground. Then that push our prop at the back, we'll spin up that props attached directly to the PT6 that pushes the aircraft forward. And at a safe speed, the wings in the [ Kanards ] will transform. Just like we're tracking the flaps and slats in any sort of commercial aircraft, this happens. So in this configuration, the aircraft flies 98% of its mission. I would highly encourage anyone to go check our YouTube video on it and see a large-scale prototype flying and going through transition, which is the hardest phase of the flight for any vital modern Vital company. Ours is very simple, very safe. We stressed about it, and it turned out to be the biggest nonevent ever. It's for our proprietary technology, and it works like a charm. So this is again how the aircraft flies, 98% of its mission as a single-engine turboprop aircraft carrying against 6 passengers with the pilot upfront and up to 1,500 pounds of useful load, which is a pretty incredible statistics. So with superior performance and versatility and a lot of layers of technology on board, I want you to focus on the column on the right. A lot of helicopter operations in Vital operations will be highly restricted and are highly restricted by weather conditions. Said plainly, helicopters in helicopter operations, like I said before, do not like to fly in clouds and a lot of helicopters are not certified for flight into cloud. And specifically, there's only a handful of helicopters and Vitals that are already flying that can fly into known icing conditions. It's called [indiscernible] Now this aircraft will be able to do so. We're targeting it to be able to do so which is a game changer from a modern vital type of machine. And that distills into an operational capability that is going to be very profitable and very safe for end users across a number of different missions. Like I mentioned in the Air Force, I would have loved to have one of these things. So a typical kilo will travel at half the speed and some of the faster ones, so the V-22 Osprey is an amazing piece of machinery, but they're complicated to work. They have had some problems with flight safety. They're very, very expensive. So 80,000 plus an hour just to operate. Our aircraft is a lot simpler. I would have had love to have had about 10 of these instead of 1 single V22 buying around. So on the dual use side, I love the fact that this will have an outstanding capability to support troops allied nations around the world. Of course, we essentially built a helicopter capability that, again, can fly bad weather, but it's twice as fast. So some of the really unique missions besides the military utility, which is going to be off the charts. Emergency medical services, so moving people, moving organs, moving any sort of time critical, maybe it's cancer, radioactive isotope drugs from hospital to hospital, with aircraft will get people to the hospital in almost half the time, lower from twice the distance in that critical hour. And a really critical item to understand here, and we can go through the cost model a little bit in the questions, it will be up to 75% cheaper per unit mile to operate than a helicopter that can carry the same amount of stuff. So essentially, the helicopter that's twice as fast, operating at 60% to 75% less cost per mile is going to be pretty transformative for any emergency medical services. And of course, we wouldn't want to travel in one of these things from point to point. So NASA did a really interesting study. There are 5,000 underutilized regional airports across the United States alone. Now for me, I live north of the border in Canada, I have to travel 2.5 hours to get to Toronto International Airport. I get there 2.5 hours early, and then I typically go through a very arduous process in an overcrowded underwhelming airport sort of experience. And then just to go 3 or 4 hours away and then reverse that process. I recently discovered that I could fly to certain locations from Porter Airlines, which operates out of the island, the regional smaller airport, just to the south of Pearson, along the North Shore of Lake Ontario, and it is what I can only describe as what line in the 1970s would have been like. It's so frictionless you'd walk in there, whatever, like 40 minutes early. Some guidance you're down to cool, you let them take a look at and make sure you have no sharp objects. They hand you a vodka soda and then you get on your plane 2 minutes later. It is amazing you fly directly where you want to go. And so with our economics and our speed and the lack of requirement for really long runways, they're really -- you can land anywhere that there's a helipad or a safe spot to land. That opens up some really unique passenger travel options as well from a business case analysis perspective. So pretty excited about that. I would like to buy one of these things, too, eventually, but I can afford it, once to become available, which we're getting a lot of interest these days. As a hybrid electric aircraft, again, it has the minimum amount of batteries on board. It still is an internal combustion engine and how is it generated on it, you can land this thing anywhere. So a great scenario whether it goes through maybe it's Louisiana or Florida knocks out the power to a large geographical area. You can fly these aircraft and rapidly deploy them. Again, they're cheaper and faster, and in many ways, safer than the helicopter that would do the same, you can land them. You can start saving lives or identifying places for extraction. You could with this generator on board, power, remote medical station, for example. So a lot of really interesting missions that could be accomplished on the disaster relief side. In Canada, connecting our remote communities is a big deal. So reaching out and touching some of those northern communities, people die on a yearly basis because they can't get medical suppliers that have run out or maybe it's a doctor to a remote community or an extraction from those remote communities, reaching and connecting the north, helping our northern communities here in Canada is a construct that works in a number of different geographies around the world, right? So again, just a pretty exciting mission set for a very unique aircraft and again, a complementary aircraft in this space. On the economic side, so I get about this. How is this possible? Like are you really 75% cheaper per mile than a typical kilo. The answer is yes, the numbers vary a little bit depending on payload range equations. But essentially, we're about 20% to 30% cheaper per hour. And during that hour, we traveled 1.8x further and so those 2 things stack up. And so you're not only cheaper per hour, but you're going almost twice the distance. And that's where you truly get your savings. So why the per hour savings in the first place, well, it's much simpler than a helicopter. So it looks complicated with a bunch of fans in the wings, but those are electric motors instead of internal combustion engine timing out at 2,000 hours, these motors could go 20,000 hours. There's electromagnetic waves turning them as amazing. Helicopter has one main rotor system to keep it airborne. That requires a lot of precision manufacturing. The blades are very expensive, there are extremely high maintenance requirements for all of that main rotor system and the gearbox associated with it. Tail rotor, if that thing -- anything happens to that thing, the airplane -- the typical helicopter won't sit straight anything breaks on any 1 of our main rotors, we can fly in the vertical condition with when we calculate up to 30% of rotor loss. Each one of them is protected from the other one. So there won't be any cascading -- shouldn't be any cascading failures, -- and so that's why. So cheaper per unit hour during that hour, travels almost twice as far. And that's some pretty compelling economics for about half of the helicopter fleet that simply travels from one place to another. And we've had these cost models verified by third-party auditors and built by people who have ran helicopter operations and fixed wing operations in companies for many, many years. So we're pretty proud of that. This is all publicly available information, of course. You can see we're pretty strong on the finances. Last reported $28 million plus in cash we're burning between and even look at this up $3 million to $5 million a quarter. And so the folks can do the math on that. Easily 24-plus months of runway to get through not only production of a full-scale prototype, but well into the testing and validation and technical risk reduction. We do have an active ATM facility that we're very careful about using. Our last raises were in the to USD 225 to USD 240 sort of mark. And we've been responsible with our very clean sort of any S1 type of -- or S3 type raises as well. So we really take care of retail investors. Every single one of my employees is a retail investor. And we're fortunate to have pretty strong strategic finance partners that, again, you guys can do the research on and look up. So a very strong financial position and in a really good spot from a technical development perspective. I always get asked about the developmental trajectory -- this slide speaks itself, you can pull it off the website. Bottom line, we've been through technical validation through the testing of a large-scale prototype, and we are building a full-scale aircraft right now with a lot of really strong partnerships, like I said, in hitting a bit of an inflection point. We built the company. I mean this time last year, we were under 50 folks, now we're close to 100 folks in terms of an equivalent basis, and we're continuing to grow very rapidly in this space. I just love this slide in terms of it's -- we're making sure that this aircraft is built to as a fighter, ex-fighter pilot, I've been in some pretty sticky scenarios where you'd fly in and there's unexpected snowstorms or weather in place. This is a tough machine that I would be happy to put my kids in and go line in and this is a rendering of course, of the remote lending, testing bad weather, cold weather, full instrument meteorological conditions. And of course, on the certification side, we are a Canadian company. Put plainly, we're a big fish in a small pond. Transport Canada has the highest of standards alongside the FAA for certification. But we can have their attention, right? In the U.S., it's a little bit of a busier space. FAA is doing some amazing work. But of course, they are inundated with a bunch of companies trying to do the same thing with, quite frankly, a lot of aircraft that look and feel the same. Our aircraft flies 98% of the mission, just like a normal airplane. And so the certification folks really, really do love that. We're trying to have this thing type certified early in 2030. Some amazing partners. I want to call out a few of them. [ Pratt Whinney ] Canada, we have the world's most reliable turbine engine as the beating heart of this airplane Whitney PT6 Series is incredible. We have a PT 6A. That is, again, formed sort of the core Forward propulsion system. Beta technologies, [indiscernible] and beta have done an amazing job building a very practical company with some incredible technologies that they're willing to share, and they're kind enough to share with us. They have a very similar architecture. You can look this up. They have an aircraft that lifts off the ground vertically and then a push or prop configuration that drives it forward. Their transition is when their blade stop rotating on the top in a very elegant way. And they fly 98% emission, almost just like a normal aircraft. That flight control system that they have developed, they're willing to help us out and take what is a very complicated development process. For those of you who don't know, and one of the blockers for early certification and start an incredible place. I mean, they've already flown 200,000-plus miles on their Alia aircraft. Yes, and I couldn't be prouder to partner with a company that has that type of technology that can turn something that is a technical risk into a technical strength. MHI RJ, ramp, North, Marshalls. I mean, number one, Canada has a surprising ecosystem from an aerospace development perspective. We're one of the only countries that can design, build produce test and certify clean sheet aircraft designs, and we have world-class partners to help us do so. And that's a pretty exciting thing. Yes, you probably looked at my profile. I don't like to go over too much flew Jet and the Air Force. [indiscernible] degree. You got a license to be dangerous and business. I have a valid ETPL, airline transport pilocicense, so I flew commercially as well. Although when a company -- an amazing company called Top ACEs and not for an airline. But I understand all the civilian rules, I know the military sort of rigor associated with test flying and have a pretty good network of folks that can help us along the way and have helped us, which is amazing. My father is the Chief Aircraft Architect and Co-Founder, yes, and he's been building and flying and fixing and cursing at airplanes since he was like 14 years old, pretty special individual, a lot of innovative ideas. On the CTO side, someone that's been there and done that from a technical development perspective. And on the financial side, we're extremely strong with Brian leading the way. Has been in the financial leadership of publicly traded companies before. We never file on late file our stuff late, and we are very, very solid on the deals that we do and how we execute on the financial side. Of course, Jason is -- got an incredible sort of experience in start-ups and scale-ups and helps us coordinate. There's a lot of more folks that are critical now. I should probably update this slide, but I'd spend all of it talking about the amazing team that we're building. Comes together pretty well. Like I said, we put safety first in everything. We're building an aircraft that is much more further along towards certification that anyone might think from a developmental perspective. It's got the performance and critically, it has the economics to really be attractive from an operational perspective. And that's it. So I really appreciate your time. We can move into some questions pretty much exactly on time. Yes. And like I said, for anyone building a portfolio in this space, it is a really unique that what we have been able to do in terms of a complementary type of machine as this advanced our mobility piece gets built out. So with that, we'll turn it back over to the red chip folks. Thanks, Craig. I appreciate the opportunity and happy to answer any and all questions like we always do.

Thank you, Brandon. [Operator Instructions] Will we see images of the prototype before full assembly? Will the company be releasing any updates prior to reveal?

Yes. So I mean, we -- I think we do a decent job communicating. We don't overcommunicate. I mean there's a lot of people that -- a lot of, I'd say, releases in the space that I want to talk about every single little thing -- we like to put out major milestones. We like to talk about where we're going to go and give presentations, et cetera. So as we build it out towards the great reveal, if that makes any sense, there will be technical updates where you'll see maybe it's the iron bird that's been testing core critical flight control systems and all of the electrical components for electromagnetic interference. Maybe it's the simulator one where we show the sophistication of the incredible simulator that we're building to prove out some of the aerodynamics and flight controls in the beginning. Yes, and more, of course, potential releases on major strategic partnerships as well, of course, as we continue to prove and develop. There's more and more serious players very curious about what we're doing. So yes, the answer is yes, we're going to talk about are going to keep folks updated at the right cadence for military applications, how will the Horizon aircraft compare in performance specs with the Archer and [ Dorel ] Tilt rotor design. Well, any tilt rotor design is a difficult thing to make work. So that [indiscernible] design is a little bit smaller Tilt rotor mechanisms are heavy. The blades are heavy, and they're not built for speed for the most part. Now the V22 was a very special big military aircraft that's still in the 230 not sort of range, maybe a bit quicker. I'd have to recheck the specs on that. So ours will have much superior straight-line speed as I'm just simply a much slicker airplane that has been purpose built for speed and range over something that's been converted -- but again, it's -- we'd be very much complementary to that type of end drill, type of machine that we've seen. So on the military side, yes, we're pretty happy with the spot that we're in.

Relative to takeoff and landing noise generation, how does the horizon compare with the all-electric Jobi and Archer EV tolls?

So we compare ourselves primarily to helicopters. So we will be 3 to 5 decibels. So call it, 5x quieter than a helicopter during hover. And of course, we were cheaters in overflight. So for 98% of the mission, we have the wings covered up, and you're just a single-engine turboprop that has noise shielded by the deck at the back of the airplane. And so we're up to 20 decibels. So 100x quieter than a helicopter in overflight. I am not sure that we have accurate data in terms of comparing apples-to-apples from all the major OEMs. So I don't really want to comment on that. Now we will have higher disk loading. So that lends to a bit more noise, but the noise has shielded in the DUCs. So it reduces tip forties and noise is generated from a number of different areas in an aircraft. So anyway, I won't comment on that in terms of direct comparison to some of the all EV all-electric details, but certainly much quieter, especially an overflight than the typical helicopter. Matana Sullen, please go ahead.

Brandon, hi, everyone. I have a question regarding the San and Wing technology. I've always wondered you can't add any flaps or ailerons to them. And because we always compare the efficiency of a plane, Typically, planes have Alloronce and flaps. Obviously, that's a trade-off we due to the fan and Wing technology you can't add. Is there any negatives to not having that? And then is there any other trade-offs maybe you can point to?

So first of all, we do have ailerons and flaps. Yes, we do, we do. We have a really clever light and robust mechanism. It's fly by wire. So the actuators are back there. We have a set of flaps and instead of [ Alarance. ] We're looking at just a longer one called Flapper on. It's a combination of the 2. So if you couldn't open up the wings for whatever reason, and fire up your vertical propulsion system, and you still need it to land. This aircraft can land and operate just like a normal airplane. So it has all the traditional flight controls. It has 2 routers. It has an elevator. It has Aileron. So we really get the best of both worlds from that perspective. What the realistic trade-off is with this design because we want it to be as efficient on route as possible, is that we have higher disc loading, and that's why we put them inside the wings in ducts. When you put a fan inside of a duct, ours are 32 inches in diameter. You dramatically reduce the drag, and therefore, you alter the [indiscernible] calculation, and that really benefits our configuration. So helicopters essentially spend most of the time paying for the fact that they can take off and land vertically. Half of the helicopters in the world go from 1 place to another, and they're very aerodynamically inefficient. We reversed that equation and said, listen, we have plenty of takeoff and landing capability with the hybrid system and the amount of over time that we've calculated makes sense. But for 98% of the trip, you're much faster and much more efficient up to 4x more efficient 3 to 4x more efficient aerodynamically than a helicopter that spends a lot of time trying to beat the air into submission when it's traveling site in trip or taking a passenger to the hospital, et cetera. So great question, but we're very much like a traditional aircraft for 98% of the time with all of the traditional aircraft stuff on it, including the landing gear and the flaps and all the traditional flight controls. Craig, you're on mute, if you're going to read out another question?

Excuse me. How is flight into known icing or FIKI attained on this design? Are all fans heated?

Okay. So I can speak conceptually to what would make sense for us to consider. I haven't released -- like that's a sensitive part of our technology. It is 100% a game changer. There's only a handful of helicopters in the world that can fly into known icing and for the most part, they avoid it like the plague. That's why you get helicopters avoiding clouds and flying too low and running into the ground and doing all sorts of things in operations. So -- and very much our aircraft will be able to fly. We anticipate it will be able to fly using normal commercial routes in clouds in IFR conditions, much like any single-engine turboprop that carries critical cargo and people around in the commercial air structure. So how could we do it? Theoretically. Okay. So we have a lot of electricity on board. It's easy to rectify that from the generator and send it different places. So electrothermal coatings would make a lot of sense. Maybe the fans spin up in the wings, even when the wings are closed, this is an easy thing to think about and conceptualize that generates heat. Maybe we have -- for those who don't know, this has been publicly released. We have 2 motors per fan, maybe 1 could run opposite to the other and generates more heat and electricity. And of course, we have bleed air on board. So we have 800-plus degree air on board from the turbine system that can heat the cabin that can heat various surfaces if we so choose. Yes. And so we have all the traditional ways of providing deicing, so getting rid of ice that's on the airplane and anti-icing, preventing eyes from accumulating in the first place. Our prop is especially designed for that, of course. And in addition to that, we have a lot of electricity on board, where we can just in a very efficient way and clever way, keep the various things that require heating for that. without getting into too much more of the technical detail.

Are you considering to talk to the armed forces to replace some of the twin orders in the Arctic from the Armed Forces replacement programs.

So I can't speak to any specific programs that haven't been released that we're talking to the Department of National Defense about. Of course, the twin orders have some advantages for the northern operations. I mean they can land -- some of them can land in water. They put them on skis and they can lend them frozen lake beds, et cetera. Our aircraft, of course, is not amphibious so lending and water, but it doesn't have to because it can really just land anywhere it wants to that's sort of flat. So it would make sense to consider another -- a number of different northern operational emissions delivering things to remote communities searching for people that are down, and we don't have the close runway infrastructure to take off and fly this massive mission on the military side. There's a lot of military, Canadian military, a lot of ranges in the north that need support as well. And so yes, that it's a great mission for it under prescribed conditions. I mean they're not going to just replace all of the 21 orders overnight. Twin Otter payload is much different than ours. So we have to do the math on what makes sense economically. But there's definitely a place -- especially for an airplane that's built in for those harsher climates.

Do you already have a fully working prototype or are these assumptions?

So what we do have is a large-scale prototype, not a full-scale prototype or X5, you can go take a look at YouTube of it flying. It's a beast of an aircraft as a 22-foot wingspan, it's not tiny little drone that we built as a flash proof of concept that won't scale up. We built it at the scale that we can get useful info from it. And we are currently building the full-scale aircraft, kind of like a Vital 2.0 company in this space, waiting a little bit, having the regulatory structure and some of the technology coalesce to make sense. And then roll out a full-scale prototype just like most of the big boys in this space very, very soon. And again, people can check to our YouTube channel for some videos from the flight test program that we did on the large-scale prototype.