New Horizon Aircraft Q1 2027 Earnings Call: Complete Transcript

On Friday, New Horizon Aircraft (NASDAQ: HOVR ) discussed first-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 7 million, driven by engineering and development of the full-scale X7 demonstrator.

The company announced a non-binding LOI with VSTAR Power Lift Aviation for up to 100 aircraft, valued at approximately $600 million, highlighting strong demand for the X7's advanced capabilities. New Horizon Aircraft aims to complete its X7 demonstrator by the end of Q1 2027, with a focus on achieving certification through strategic partnerships and advanced testing protocols. The company maintains a strong liquidity position with over $70 million in cash, enabling continued investment in development without immediate fundraising pressures.

Management emphasized the X7's technological advantages, including all-weather capabilities and hybrid-electric design, which are attracting interest from both civilian and defense sectors. Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft fiscal first quarter 2027 earnings conference call. All participants are 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 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 on the call today are New Horizon Aircraft CEO Brandon Robinson and the company's CFO, Brian Merker. I would 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 10-K for the fiscal year ended May 31, 2026, filed on July 16, 2026 with the Securities and Exchange Commission, and on the company's profile on SEDAR+ in Canada. 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.

And now I'd like to turn the call over to our CEO, Brandon Robinson, for his prepared remarks. Brandon, please go ahead. Brandon Robinson, Chief Executive Officer Thank you, Matt, and good morning everyone. Thanks for joining us.

We entered our fiscal 2027 with clear priority to turn the X7's validated design into a full-scale aircraft, all ready to begin its formal test program by the spring of calendar 2027. Over the last several months it has been really exciting. We have advanced the work on the structure, the flight controls and other systems that will define the X7 demonstrator. The X7 is designed to combine the flexibility of vertical takeoff and landing with the speed, range and efficiency of conventional wingborne flight.

It is a hybrid electric aircraft that does not require any ground charging infrastructure whatsoever. With a faster speed, a longer range, more energy reserves and an all-weather capability, it will excel in a number of missions such as regional transport, emergency response, cargo and of course a number of interesting military operational missions. At New Horizon Aircraft we are currently building our full-scale Cavorite X7 demonstrator aircraft.

That means that we are in detailed design and production of all major systems including forward and vertical propulsion, flight controls, high and low voltage electrical systems, avionics, landing gear and primary and secondary structures. As Brian will explain later, that work has translated into significant increase in research and development spending this quarter and we expect to maintain a continued focus on engineering and design activity moving forward. Also exciting, our team has grown from 30 people a year ago to over 65 today and more than 85 FTEs including external contractors. This growth continues to fuel very significant progress across all major activities.

We continue to invest in systems and engineering resources needed for an aircraft designed with certification in mind. The full-scale demonstrator aircraft is intended to do more than simply achieve first flight. It is being designed and built with a level of sophistication that I'm very proud of and that is meant to facilitate certification. Plainly stated, by spending a little more attention up front, we are investing in a much shorter and more efficient certification process later.

A good example is Beta Technologies collaboration. We selected Beta's flight control computers and customized fly-by-wire software for the X7. Flight controls are critical for safety, handling and of course, certification. Beta brings a platform built specifically for modern VTOL aircraft and one that has flown in an aircraft for over 200,000 miles.

This is a more efficient way to deploy capital, of course, than developing every major system ourselves. We are also applying the flight dynamics and control model completed by Marshall Aerospace to the aircraft's development. That work helps us predict its response to pilot input, find control strategies and prepare for a disciplined test campaign. All of our collaborations with proven aerospace partners have distinct roles, but they will collectively serve the critical objective of producing a safe, capable and certifiable X7.

Our current target is to complete the demonstrator around the end of the first calendar quarter of 2027 and begin testing shortly thereafter. That initial phase will include ground runs, taxi work and progressively higher-speed taxi testing. The planned flight test sequence will begin with conventional takeoff and landing before we advance to vertical operations. Each step will be governed by test data and safety reviews and we will continue to report progress against those specific milestones.

As the exciting progress continues, we are also progressing all-weather utility for the X7 in the sector. This is a very unique technological capability that will dramatically increase its operational utility and underlying economics. We intend to pursue IFR capabilities — so the ability to fly in clouds, something nearly all helicopters strictly avoid, and a capability that will challenge modern eVTOL aircraft. We also intend to pursue certification for flight into known icing conditions, a capability that only a handful of even helicopter types in the world actually possess.

For operators that need to serve remote communities, respond to emergencies in bad or cold weather, or maintain dependable schedule, all-weather capability is critical for portable operations. 4 million INSAT project. This is an important initial step and considerable testing and regulatory work remain. Our certification work with Transport Canada continues alongside the engineering program.

We expect to advance to the next steps in that process over the winter with focus on completing our certification basis and means of compliance. Moving away from our technical progress and roadmap, in July we announced a non-binding letter of intent with VSTAR Power Lift Aviation, an Australian operator with experience in emergency services, covering up to 100 aircraft to the potential value of approximately $600 million. The intended application for the X7 at VSTAR is quite appealing to us.

This operator is focused on medical response and regional missions and sees value in an aircraft intended to travel further and faster than conventional helicopters while also retaining the ability to serve locations without runway or any sort of charging infrastructure. In a country as vast as Australia with large regions of uninhabited area, the technical attributes and advantages of the X7 are quite potent to say the least. To date, our signed LOIs across all customers account for potential purchases of up to 200 X7s, including options, with more than $1 billion in indicated potential sales value.

Additionally, we have an LOI for the potential lease of five additional X7 aircraft and that's only the beginning. We also recently signed an LOI with an Ontario-based Great Lakes Helicopter to support future X7 operations through maintenance, repair and overhaul services as well as pilot training. This LOI also contemplates potential additional aircraft purchases by Great Lakes Helicopters. We continue to speak with prospective operators and potential industry and manufacturing partners across a range of missions.

Our near-term focus is on earning those relationships through technical progress. A full-scale demonstrator aircraft and flight test data should give potential customers and manufacturing partners a much more tangible and defined basis for discussing potential orders. From a more generic point of view, the broader eVTOL industry is becoming more tangible and realistic with each passing week and month. The FAA's eVTOL Integrated Pilot Program, so EIPP, is putting new aircraft and mission concepts into real-world demonstrations to gather information to inform future rules and governments.

While that alone does not confer type certification on the X7 or guarantee its commercial authorization for Horizon, it does show that regulators and public partners are engaging the industry with practical questions about how advanced air mobility will operate. We also see an exciting and growing focus on regional connectivity, emergency response and runway-independent capabilities, and public and defense discussions. The X7's combination of conventional and vertical operations, targeted range and onboard power is relevant to those needs.

Defense applications for eVTOL aircraft are becoming more topical and while we are not announcing any defense procurement program today, we are of course building an aircraft whose utility, we believe, can address both civil and government military missions. Over the coming quarters we expect to share meaningful engineering progress, additional supplier relationships as they are formalized, and certification-related developments. The central measure of execution remains the aircraft itself, completing the full-scale demonstrator aircraft and progressing through ground and flight testing in a responsible sequence.

Now I would like to pass the call over to our CFO, Brian Merker, to discuss the financial results and our capital position in more detail. Brian, take it away. Brian Merker, Chief Financial Officer Thank you, Brandon, and good morning, everyone. All financial figures are presented in Canadian dollars unless noted otherwise.

Our results this morning for the first quarter represent an obvious expansion in effort toward the aircraft development work that Brandon just described. 7 million a year ago. The increase was concentrated in engineering and development work on the full-scale aircraft, including prototype manufacturing, flight software, and analysis. 3 million in the comparable quarter a year ago.

This spending relates to building the full-scale aircraft's fuselage, wings, and flight controls. We do expect development spending to remain elevated at these levels as design activity, engineering milestones, and testing activities continue to progress. 2 million a year ago, primarily because stock-based compensation costs were lower. We anticipate a similar mix of R&D versus G&A expenses on a prospective basis as well, as we commit ourselves to being efficient with our needs for administrative requirements, and this mix is important.

A larger share of our spending is dedicated to advancing the X7, and this compares quite favorably to many of our peers that carry significant administrative burdens in respect of liquidity. 4 million in the same period last year. 04. We finished the quarter with more than $70 million in cash.

This remains a very strong liquidity position for the company at this stage of development and reflects an industry-leading ratio of liquidity to operating cash usage. As many of our peers are fundraising as needs arise, we continue to be patient and efficient with our spending, leveraging non-dilutive sources and bringing in capital when market conditions are favorable. 29 per share, in the prior period. 1 million non-cash expense in the prior period.

As we plan the next phase of the development, we're managing expenditures against engineering milestones and the resources needed for integration and testing. We also continue to seek significant non-dilutive sources. Under our INSAT-supported project, we've already received close to half a million of reimbursed project costs, and those reimbursable project costs are anticipated to reach more than a million throughout the fiscal year. The SR&ED program here in Canada is expected to yield similar results.

There are many other developing non-dilutive opportunities in the sphere of defense and R&D that we're pursuing as well, recognizing the significant increase in federal government defense spending requirements beginning this year. To summarize as it is today, we have a healthy balance sheet, a disciplined development and certification strategy, and a team focused on putting resources into the work that moves the X7 forward. Brandon, back to you. Brandon Robinson, Chief Executive Officer Thank you, Brian.

This quarter brought progress where it matters most: the full-scale aircraft, the flight control architecture, the engineering work needed to test it, and significant demand tied to a clear operating use case. We also began evaluating ice protection technology for all-weather capability that will unlock operational capability across a broad spectrum of civil and military missions. We appreciate your interest in New Horizon Aircraft and look forward to updating you as we reach the next milestones. So that concludes our prepared remarks.

Operator, please open the call for questions. OPERATOR Certainly. Ladies and gentlemen, the floor is now open for questions. If you would like to join the queue to ask a question at this time, please press star one on your telephone keypad.

We do ask, if listening on speakerphone this morning, that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time. If you wish to join the queue to ask a question, please hold a moment while we poll for questions. And your first question this morning is coming from Josh Sullivan from JonesTrading.

Josh, your line is live. Please go ahead. Josh Sullivan, Analyst at JonesTrading Good morning. Just as we look at the Great Lakes relationship, can we just touch on pilot training and the MRO ecosystem?

I guess with pilot training, can you just outline some of the thoughts on requirements in the pool that you're kind of thinking about? Brandon Robinson, Chief Executive Officer Hi Josh. Yeah. Okay, so great question.

I think it's easy to get focused just on producing the machine. We're really focused on building out an entire ecosystem. So that includes maintenance, repair, and overhaul, so supporting the fleet that eventually is growing across the world, figuring out how to train pilots efficiently and effectively, and partnering with folks that have expertise in both of those areas. So, and that's Great Lakes Helicopter.

I mean, they train pilots, they have a lot of maintenance, repair, and overhaul activities. As it relates to pilot training specifically, the X7 is going to be a fly-by-wire aircraft. We'll get into that a little bit later. It is going to be one of the easiest airplanes possibly to fly in vertical mode.

I mean, we have kids come in and they're able to, you know, a 10-year-old is able to land it on an aircraft carrier first try, and that's with all the dynamics that we believe are going to comprise the full-scale aircraft. So that being said, we'll take a commercial, the idea is most likely we'll take a commercial fixed-wing sort of pilot. We'll bring them in, we'll get them type-rated on the X7, they'll get an endorsement as a possible way that that could work for, and again, working with partners to come up with that construct. Once they're rated on type, then they'll be able to go and do commercial operations.

So pretty exciting times, like I said, with an airplane that's going to be this easy to fly.