Good morning, everyone. My name is Sheila Kahyaoglu with the Jefferies Aerospace Events and Airlines Equity Research team. Thank you so much for joining us for our fourth annual Jefferies Innovative Aerospace Virtual Summit. We've opened up the aperture a little bit with renaming this summit. Today, we're lucky enough to kick it off with BETA Technologies. For those of you who don't recognize the two men on my screen, it's Kyle Clark, who's Founder and Chief Executive Officer of BETA Technologies. Kyle, prior to BETA, co-founded Venture.co and was Director of Engineering at Dynapower, and if you haven't met him in person, I think you should because he's quite a superpower himself. We have Herman Cueto, who's the Chief Financial Officer of BETA Technologies. Herman brings over 30 years of global finance leadership across different industries, including medical technology and life sciences, and he's constantly keeping my numbers in check. A little bit about BETA. We were lucky enough to take the company public last fall. BETA was founded in 2017 and is a developer of electric aircraft and charging infrastructure, some pretty cool stuff. With that intro, Kyle and Herman, thank you so much for being here. We're very lucky to have you both. Maybe wanted to kick off with you guys telling us a little bit about BETA Technologies for those who might not be as familiar. Can you talk about the company? Pretty neat stuff you have going on. How do you differentiate BETA versus other players in the market? Awesome. Thanks for letting us kick off here, Sheila, and it's great to see you again. Sure. It's my favorite subject to talk about, BETA. We're an electric aerospace company as differentiated from an air taxi company. We are designing, building aircraft, both conventional take-off and landing and vertical take-off and landing aircraft, and all of the systems that go into enabling those things to fly, the motors, the computers, the batteries, the structure, and as you mentioned, the charging infrastructure. As a part of this overall OEM kind of development strategy, we're also selling the batteries, motors, inverters, and the chargers to other people. That is in stark contrast to the business model that others in the air taxi market are pursuing. With our customers at the helm, we are supporting them in launching, eventually, air taxi operations. Our market entry strategy with the customer is to offer them a product that flies cargo, medical, and logistics first, and then moves to passenger operations. I think the big differentiating kind of objective evidence pieces that BETA's doing this differently is we have been flying all over the world. We are doing operations, not demonstrations. We just finished a big military operation in Europe. We're flying regular flights, not for hire, but in real operational demonstrations, and we're launching in the eIPP later this year with for-hire operations. Just a couple little things that are very temporal and current. The Secretary of Transportation came just over a week ago and flew three sorties with us in different aircraft, and saw some pretty amazing things, and had his hands on the controls, and it was really quite an amazing experience, and I think there's a lot of validation that comes behind that. Would love to talk more about it. The company itself, the culture of the company is wildly different than, I think, a legacy aerospace company and certainly other folks in the AAM industry, where we're a company of aviators. I'm a flight instructor. I fly all of our experimental aircraft as well as a whole bunch of other types of airplanes, gliders, helicopters, seaplanes, and we do that throughout the entire company. Everybody here flies, either as a pilot or as a student pilot, and everybody participates deeply in the mission of the business. On the eIPP, which I know we'll touch on as we lean into the latter part of this year, which will be a really big proof point for this industry, BETA was named on seven out of the eight eIPP selections. We're an electric aerospace company. We are doing full-stack vertical integration. We're selling the components. We have a stepwise market entry strategy and a stepwise development strategy on the product itself, and we operate a business that I think is really fit to transform the way people fly. Sheila, if I could add just one thing for a second. When Kyle talks about the enabling technologies, I think one of the things that BETA did really well in the beginning was forward-think how the evolution of electric aviation would play out. Where BETA stands out is that it never wanted the customer to be stuck in the middle. It's one thing to have a great aircraft, it's another thing to have a mature ecosystem to support it, and I think the charging network development is the perfect example of the forward thinking that Kyle and the BETA team did in the early days. We can't hear you. We lost audio. Sorry. Sorry about that. I was trying to mute the background noise, but thank you for that. Maybe speaking to the differentiation, one of them has been the CTOL path, which de-risks the VTOL path in terms of certification. Since then, BETA has completed its first company-conforming CTOL aircraft and surpassed 85,000 hours of the H500A flight and ground testing, including lightning, icing, and durability conditions. What are the remaining items for ALIA CX300 as we think about the milestones to achieve certification for the rest of 2026 from here? Yeah. I'm glad you brought that up, Sheila. You're absolutely right. The CX300 is kind of in the middle of the stepwise certification strategy, where we started with the propulsion, already certified the propeller with Hartzell. We are in the final stages of the propulsion, so the motor itself, along with the inverters and controls. We are on to the CX300 certification, which as you said, is all of the pieces in the CX300 are ported directly into the A250. When we look at progress on the A250, the certification of the pusher propeller actually directly feeds into the VTOL or the A250. The motor, of course, does, but less obvious, but very insightful, the airplane feeds directly into the A250. Same wing, same fuselage, same training curriculum by the way, same avionics, same flight controllers, same actuators. Everything's the same in that airplane. To answer your question, what is left? In March, as you know, we completed our company conforming CX300. We have more in the works right now, and those create a subset of data points that we submit to the FAA as safety validation. They get complemented with software validation and of course, with a conforming airplane. Those three elements make TIA. We're working through all of those things. The software development is going extremely well. I don't know if we'll get to it, but a lot of folks are adopting AI for sense and avoid, detect and avoid in future autonomous flying. We decided to build the foundation first, and we've developed tools, and as you probably saw, we acquired two AI companies, one more recently when we were a public company. Those tools are used for validation and verification through the DO-178C software development process for safety critical software. We've reduced the time of software development by roughly 50% at this point, and I think there's a lot more go get, and in it is amazing set of tools. It's not as sexy as sense and avoid and detect and avoid, but it's something we can use today to address the very hardest problem in our industry, which is certification. That's like the second piece of the puzzle. We're flying all the time, generating the safety of flight data. We have this software stuff, and the last part, to answer your question, is building the conforming airplanes. We have a whole bunch of them. We have four of them. One of them is called a cast one that goes into structural tests. It doesn't fly. The other three go out flying. We started that late last year, building these conforming airplanes, and those piece parts with the designated airworthiness representatives from the FAA inspecting on site at our suppliers for small piece of composites and other stuff. All the way up through what we're building in our factory right now, which is fully conforming aircraft. When those are complete, we'll have the three elements necessary for TIA. The last step, Sheila, is to repeat all the tests that we've already done through 823 Charlie, which is a standard for handling and flying characteristics of an airplane for certification on the TIA aircraft, which then we submit to the Type Certification Board. We have a little ways to go, but we've done the hardest work, and we've certainly flown and tested all of the subsystems and the airplanes in a non-conforming way to show that we have super high confidence to walk through that. It takes time, but the risk is really well managed. Just to remind folks, when is certification set for, and how do we think about the next step as we think about summer, fall? Yeah. It's interesting. I won't avoid the question, but I'll give you an answer beyond just we anticipate certification of the airplane within the year next year. Okay. I say that with a little bit of hedging and cautiousness because one thing I've learned is that this is a wedding that both the bride and the groom have to show up to, and the FAA is the bride here. We can set the table, we can make everything nice, but as is with the H500A certification, there's a couple nuanced policy interpretation issues where the policy was written for turbine engines, and they're attempting to apply it to an electric engine. There are no failures. There's no safety events. It just takes time for that to go through the process at the FAA, and those things have a high degree of variability, but they do get closed in time. I would characterize it as we are super confident in the certification, but the time is the biggest variable, and I know investors don't want to hear that, but the fortunate thing is that we have a plan. We are getting increasing amounts of revenue from non-aircraft sales. The FAA is really accelerating its adoption of AAM. With the secretary here last week, with the deputy administrator here, with Jessica Jones, the head of all AAM integration, there's a ton of momentum in the FAA, and we expect this to really turn to the positive in the near future. The exact timing requires the FAA to play with us. And just- Sheila, one thing. Oh, no. No, that's okay. Go ahead. I didn't mean to speak over you. Just to clarify with Secretary Duffy's visit and some media reports that can commercial operations start before type certification? It's a great question. Yes, they can through this new eIPP. It's an eVTOL integration pilot program, which allows within limited geographies with specific operators to do for hire operations, and we're starting with medical and cargo, which the FAA has opined on and said, "That is the thing that we say you can get revenue for. We aren't sure for passenger." It's a totally new paradigm, and if you ask me when was the first time a customer can fly for hire, I would've been six months to one year post type certification because they have to take our airplane, put it on the Part 135 certificate, and then fly in commercial operations. With eIPP, we get to not only put it on their ticket before it's type certified, but they get to advance their Part 135 operational procedures such that it's on their ticket before it's type certified. It's a double goodness. It's pretty amazing, and I actually think that that massive, radical change in the path to revenue-generating operations has not yet been realized or priced into BETA because we're doing operations. Remember, the other folks are doing demonstrations. Got it. That's super helpful. Sorry, Herman, if you had anything else to add. I was just going to go back. The one thing that I was going to point out, Sheila, is that the motor certification and the CX300 certification are two different programs within the FAA. On our last earnings call, we talked about the delay with the motor certification. I think it's important that the investor community understand that that doesn't necessarily mean that the CX300 is delayed. They're two different programs running in parallel together. We do have to get the motor certified to ultimately get the CX300 certified. Right now, that certification is not on the critical path. We continue to develop the CX300, work closely with the FAA to get that certified. Got it. No, that's super helpful. I guess Secretary Duffy just flew your aircraft last week, three sorties I think you said, Kyle. I'm sure he flew with you. What does that mean for your product and technology maturity? How do you think about- Yeah. ...what his reaction is? Mine was pretty positive, so I'm sure he- It was- ..loved it as well. It was great. It was funny because they had big Secret Service agents. We packed them all into the airplane, so it wasn't just me and him in the airplane. It was- Yeah. ...his security detail and cameraman. It was really neat. Really, the insight there, Sheila, is that the FAA does not take that lightly to put their boss's boss in our airplane. It required a ton of flight planning, a lot of conversations, but most importantly, a long-term stable configuration of the airplane, which obviously is the same safety proof that you need when you get into TIA. That was a big part of it. Also, there's just a lot of trust and transparency between BETA and the FAA. It is a regulating industry or regulating administration that is put in place to demand safety, fundamentally. For us to maintain such a good relationship that when the Secretary of Transportation says, "Whose airplane should I go fly?" It is the lesser-known company with the credibility, authenticity, and respect of the FAA that they make the recommendation for. I know I'm the only one that can say that. There won't be anybody at the FAA or DOT that can say that. The proof's in the pudding. Yeah. Yep. No, that's for sure. I wouldn't say lesser known. You've flown in a lot of different countries, different continents, including Asia, New Zealand. How are you able to have these small demonstrations? What's the path to certification with the FAA in other countries? Yeah, it's a great question. America is amazing because it has this experimental, non-standard airworthiness certification process that is fluid and easy, other countries leverage that. The other countries have a much higher, let's say, appetite and focus on sustainable aviation. When we go down to New Zealand, a big part of the story is sustainability. Although we've kind of forgotten about that here in the investing Americas, it's still very pervasive throughout the world. Up in the Nordics, we just did a major exercise in Sweden with NATO and the U.S. military, they really do care about fuel independence. They're stuck to the Russian fuel pipelines, anything that allows them to operate fuel-free is very valuable from a logistics standpoint. We've been flying, you're right, all over Europe. We spent a lot of time with the EASA up in Copenhagen, we did some demos in Japan recently. I don't know if you saw this, those were super successful with the most recognized logo in Japan, Yamato. It was really successful there, it's a perfect application for our aircraft. That's one of-- I think we've flown in 14 or something countries now. We've navigated with their authorities and gotten the tickets to fly. We flew with the Royal Mail in Scotland, all of these are yielding really positive commercial momentum. Some of them are already orders. That's great, maybe if we could just switch gears a little bit. In March, BETA announced a purchase agreement with Surf Air Mobility, who we're actually speaking to later this afternoon, for 25 firm ALIA aircraft, plus options for up to 75 more, alongside a plan to launch commercial electric passenger service into Hawaii and build out an exclusive factory-authorized service center there. I guess, what does this agreement mean? How did it come about? Why Surf Air? Tell us a little bit more about the MRO infrastructure as well as the charging infrastructure. Yeah, for sure. Surf Air is a really, really great company. Their CEO, Deanna, she's seen AAM from the inside of Wisk. She's seen operations. She gets how to exploit the benefits of electric aviation while respecting the detriments. There's the application. The islands of Hawaii are like the perfect application for this aircraft. Energy prices are extremely high. Fuel is expensive. The islands are close. I've done a lot of flying around the islands of Hawaii, installing large wind turbine and solar farms in my prior life. I used to fly my own little airplane around there. It is perfect for our scale of aircraft, starting with cargo and logistics. There's a boat, I think, once or twice a week to Lanai, hopping over there with cargo, it's a great application. Good company, good application. The last part is Surf Air Mobility has a unique empathy and understanding of service and maintenance and operations, and they've created their own platform, which is really powerful in predictive maintenance. You marry that with an airplane like ours, which is a data-rich environment, a self-aware aircraft, and you end up with basically an entire paradigm shift in how people think about the service and maintenance of an aircraft. You do it preemptively. You do it with a ton of awareness. It's less expensive. Not only do you have an airplane that needs less maintenance, the maintenance that you do have is very planned and aware before the aircraft ever gets on the ground. They're, I think, a really solid partner, a great application, and it's the right technology fit between the airplane and some forward-leaning software they've developed. I'm curious how Deanna answers that same question, though. We'll have to see. We'll have to see what she says about you. In terms of BETA's first quarter results, you guys added about $375 million to the backlog during the quarter. How are you thinking about the backlog growing from here, and what tends to move a customer from interest options into the backlog? As we ended the first quarter, the backlog is now approaching $4 billion. Sheila, the $375 million that you just described was largely the Surf Air order. The one thing that I think is most exciting about that order in particular is that when you look at the $4 billion backlog, it is now approaching 50/50 between VTOL aircraft and CTOL aircraft, which is great when you think about near-term revenue opportunity for BETA. Maybe just as we see the year play out, our KPI goal for backlog in 2026 was about $4 billion, so we feel really good about where we are right now, sitting at about $3.9 billion. There are other customers who we're currently working with, and we hope to make some announcements earlier this summer. Got it. Is that what you're talking about? No, I'm kidding. One of the things, Sheila, that I think is really important to know in the interest of intellectual honesty, we have consistently said this is a backlog for the purchase of airplanes. Aircraft, VTOL and CTOL aircraft. As you know, the real secret sauce to our business model is the service and support thereafter, especially the aftermarket of batteries. Every $4 million-$5 million airplane you sell, you've got about $13 million of batteries over the life of the airframe. We don't count that. We also didn't count the $1 billion order from Embraer for engines. That's right. All the smaller General Dynamics and GE and other programs that are not aircraft. The KPI is specifically defined as airplanes themselves, the more insightful people looking at the prospects of our finances will include those other things that are actually higher margin and higher total quantum as well. The KPI we chose that sets the baseline to get access to that is the airplanes themselves. I know that's a nuance there, but it's just you don't take the total dollar figure and make your forecast on that. You have to look at the total package. Right. Got it. That's super helpful. Military is not included in the backlog either? No. Okay. Can we talk about the charging stations? I think you have 16 sites. You added 16 sites to the charging network in Q1. By the way, I still have the BETA app where I could see all the charging stations, so it's just pretty neat. How should investors think about the charging network evolving from here and being a strategic enabler to more visible revenue stream? Yeah, the strategic enabler is the baseline. The ability to control the flow of energy into the future of aviation is the broader vision. This year, actually, eIPP catalyzed an order for 34 more chargers that we've been shipping all quarter long, the second quarter, down to Florida, and other states are stepping up beyond the Florida Department of Transportation with SunTrax, who ordered those chargers for other states that want eIPP. It's creating a really nice trickling of revenue on the front end because a lot of these things are purchased through grants or programs, but we maintain operational control of them, so we get access to the long-term revenue. That foundation that we set, the standardization, the data aggregation, and really something that I think is underappreciated is that once you put one of these on an airport, it's really hard for somebody else to put it on an airport, because of minimum standards, because of the interconnection requirements and power allocations from the local substations, and of course, there's less commercial incentive for somebody to put them in. Really getting way ahead of the industry on deploying hundreds and hundreds of chargers is a strategy, I think, that wins all around. We hit, I think, 30,000 sessions or something last year, so we have statistically relevant data to chew on, and mostly, by the way, ground vehicles at airports that are charging- Yeah. ...their operational trucks, of course, a fair amount from our own flying. Your question about how do I think about it's I do believe the airplanes and the technology in the airplanes is going to be the ultimate highest value thing, but it's not that far behind that the charging network's going to be super valuable as well. Got it. That's super helpful. Then maybe just talk about, as we're being conscious of time, on the defense side, I just want to hit upon that for a little bit. In Q1, you secured additional undersea propulsion work with GD and completed PDR on the hybrid electric turbo generator with GE, which is initially set to support the MV250 VTOL. How are you balancing everything going on your CTOL certification and commercial with the military, how do we think about military generating revenues as well? Yeah. Look, when you have a mass of engineers, we got 300 or 400 engineers here. There are engineers who never want to do the same thing twice. They're research and development, high-level PhDs who want to toe on the edge of physics. They want to push the limits of physics and the boundaries. Those are the folks that we put on these really complicated problems in electromagnetics and control theory and other things with these underwater applications, some of the GE applications, and other defense applications that have been coming very fast our way. They do that job once, and then that technology bleeds backwards into the main line of the business, which is building CTOL and VTOL airplanes. It may be a modeling technique, a multiphysics modeling technique, which I can't actually say the name of because it's classified, that we then use that technology to make our motors better, more efficient. Same thing with control theory and, of course, the material science that we get access to doing classified work. I believe we're the only company in our industry that has facility security clearances. Myself and a bunch of other engineers have security clearances. We get access to awesome technology, Sheila, and that goes directly over. How do we balance that? It is all part of the technology strategy of keeping really high-end stuff in the pipeline, and that team, 12, 15 people, comes back to a team of 60, 70 people that are design engineers and back to hundreds of people that are in production and manufacturing engineering. That's how we always have to operate that peloton with somebody right at the front end and others really pushing the mass forward. That aside, the revenue we get from that is very high margin, it's got great potential in the future. Each of those jobs, despite the technology bleeding into our main line, goes from a couple million bucks to tens of millions of dollars to hundreds of millions of dollars on a per project basis, Herman has never complained to me about that. I know we're running out of time, I'm going to try to squeeze in two more. You touched on this a little bit, Kyle, We talked about it last time we spoke. How is BETA utilizing AI? The primary thing is in software validation verification. On a business-wise front, we are considering ourselves a massive early adopter of every technology that we can get access to. We have hundreds and hundreds of citizen developers. We've created an internal program called Forge that allows everybody access to developing their own apps. We have an internal in-house app store that people can go to and get everything as something as boring as part management databases to some really fun, interesting things that allow us to share flight training with each other and have it searchable, filterable, served to employees at a very high rate. It will allow us to do way more with less people. We're already in the industry right now, we spend half as much money, roughly, as our competitors, In my opinion, we do a hell of a lot more. The proper adoption of AI, not the façade, but the foundational adoption, an AI-first company as opposed to somebody who's just using it to harvest data, is going to allow us to do even more with less people. It doesn't mean that we're firing a bunch of people. It means that we get to grow faster and be more productive and more efficient. It was funny, I did an all-hands on Friday, somebody asked me, "Are you concerned with the amount of money we're spending on tokens?" I said, "Yeah, I am. You're not spending enough." I want every single person here to endeavor to spend $8,000, $10,000 a month on tokens. We're not even close to that yet. Right? It's like even our super users are spending less than $1,000 a day on tokens. We better up that tenfold because the productivity is spectacular. Yeah. It's proliferating, Sheila, across the organization. I recently had an opportunity to work on an ERM type project. In a prior life, we may have gone to a consulting company to do a bunch of work to get it off the ground. Inside of one hour, the AI team here at BETA was able to help the finance and accounting team work through something that was better than I had ever seen before and was able to be deployed almost instantly. Yeah. It's just amazing. We acquired two AI companies. They could've been our most valuable acquisition so far. We're going to keep developing it. That's great. Last one, just to wrap it up. It's kind of what are you most excited for as the industry moves to EIS? We're excited about EIS itself because- Right. ...That's a big deal. It's a big step for the industry. I personally am excited to see today I was driving into work, it was quarter to 5:00 A.M. in the morning, and I see one of our airplanes overhead. To have that in every community across the country is awesome. Unlocking revenue, we got to do that. That's a big step for our company and our industry to start flying for hire. I'm extremely excited about that. There's this proud moment when you hand off your aircraft to somebody else and they're operating it and they're flying it and they're servicing it, and you get the feedback from that to make a better and better product. That's something I'm personally really looking forward to see that happening. Yeah. There's so much goodness happening right now. I really do think building the foundation first instead of the façade is serving us well. In time, I think the market will start to understand that you got to do the hard work in aerospace. You got to be consistent in long-term thinking. We have a spectacular team here. Herman and I work together extremely well, and we complement each other on the financial and the technical side. I'm just excited about everything. I don't know. I could talk all day about it, Sheila, I won't bore you. That's super helpful. Thank you. We're excited for you guys as well. Thank you both for participating in this. Thank you everyone for listening in. That concludes our webcast. Sheila, thank you for having us today. Thank you, guys.