NASDAQ: HOVR
Brian Lantier, CFA: Good afternoon, everyone. My name is Brian Lantier. I'm a senior research analyst at Zacks Small Cap Research. Thank you for joining us for another one of our CEO chats. Today, we're joined by Brandon Robinson, CEO and founder at New Horizon Aircraft (NASDAQ: HOVR). New Horizon is designing a hybrid electric vertical takeoff and landing aircraft. We’ve been covering the stock for a little over a year, and it's done incredibly well during that time. Stock's trading about two and a quarter today, and we have a valuation target of three and a quarter on it, so with that, welcome, Brandon, and thank you for taking some time to join us today.
Brandon Robinson: Thanks, Brian. Really appreciate the opportunity.
BL: Maybe to kick things off, for people that are new to the story, give us a little bit on your background and particularly the gap in the regional aircraft market that you feel like you've identified that you and the team are working to address at HOVR.
BR: Yeah, so as far as my background goes, I was basically born in an airplane, which is a pretty interesting story. My grandfather was a World War II bomber pilot, which was a pretty cool thing. My father's been flying airplanes since he was 14 years old. I've been flying in airplanes since I was six months old and have been flying airplanes since I was three years old. As a kid, I would go to the shop, and there'd be an airplane that was being put together, an old Super Cub or whatever. All my uncles on both sides of the family have airplanes. It was a real sort of Robinson Air Force kind of thing when I was a kid, which was neat.
I joined the Air Force and went through school at our military academy. It's kind of like the US version of West Point, except it's all three services together. So, the Army, Navy, and Air Force all together. I went through academic training as a mechanical engineer. So, I have a mechanical engineering degree. Afterwards, I just streamed into the Air Force and started flying aircraft, and was lucky enough to meet a bunch of really interesting folks. I flew jets pretty much since the time I was in my early 20s for the next several decades, and was lucky enough to do the Canadian version of the Top Gun course here in Canada.
At the end of my career, it was sort of either up or out – and I love the Canadian Air Force; there are some exceptional human beings doing some great work – but I was always interested in mechanical engineering and also business at the same time. My father, as it so happens, had his own aerospace company where he was doing a lot of electrification in the general aviation space, a lot of unique modifications and work for general aviation aircraft; taking out older hydraulic systems, putting in newer electrical systems, modernizing things, making it simpler, cheaper, much safer for a lot of folks.
We were very interested in the advanced air mobility movement circa 2017 or 2018. Now, what happened was, when we took a really good look at it, we realized there was a pretty significant opportunity for us. So, when we did a deep dive on the emerging concepts, there were a lot of all-electric architectures, which are going to do fantastic work. The Jobys and the Archers and the Betas of the world are going to do some really amazing stuff. But over shorter distances and good weather, we saw a gap emerging where we could produce an EVTOL sort of 2.0 company focused around a concept that was hybrid electric that could go five times further, twice as fast, and be very much a complementary service to the shorter range, all-electric VTOLs that were currently being designed.
So, we started a little bit later. We came up with a pretty unique concept that’s hybrid electric, so it doesn't need to have any sort of charging infrastructure. It can go places, like I said, five times further, about twice as fast, and we thought that that was a pretty unique addition to this space. As it turns out, in 2026, it ends up being a pretty cool concept and something a lot of operators are really interested in right now.
BL: That's a perfect segue to my next question. I've really appreciated this about the way that you've approached the design of the aircraft: you have an operator's viewpoint when you're sitting down and working on the design. Can you talk about how that shaped your philosophy when you're building the aircraft?
BR: It's an excellent point. Like I said, I've been flying in aircraft since I was six months old, been flying them since I was three years old. A very visceral understanding of the harshness of the air operational environment is, I think, required in order to create a machine that's going to thrive in said environment. Here’s a great example: I've been numerous times in an airplane, in a fighter jet, or any sort of civil aircraft, where the unexpected happens. Bad weather comes in, maybe it's a lot colder than you thought, maybe there's some more headwinds, maybe you took off a little later, and it's a little darker than it should be when you're trying to land your airplane. So, the air environment is pretty unpredictable. We saw very much an opportunity to build a machine that was, again, going those longer distances, traveling those higher speeds, there would be a little more unpredictability, and going to places that don't have any charging infrastructure. So naturally, any place that a helicopter can go, our aircraft can go, except twice as fast and a lot cheaper per unit mile. We very much saw the ability with that sort of operational DNA to build something that was just a better mousetrap, quite frankly.
About half of the global helicopter missions simply go from one place to another. If you're using a helicopter and you're just going from point A to point B, or if you're delivering critical organs or people to the hospital during that golden hour, or you're doing a number of critical sorts of things, a machine that can now finally be built that can actually fly twice as fast is cheaper and better a lot safer, seems to make a lot of sense. And we're pretty proud of that. It's a bad weather machine. It's a cold-weather machine. You can fly it, hopefully, into known icy conditions. We're looking to certify for that. So, a lot of advantages for our current concept when it comes together, and we'll have a full-scale aircraft in the next six to nine months coming out of the hangar, which is pretty cool.
BL: It's incredibly exciting times, for sure, at HOVR. You'd mentioned the progress that a lot of the other companies are making in the advanced air mobility space. Joby flew two weeks ago from JFK, landed on the West Side, and I saw the aircraft in the air, which was pretty incredible, but I think there are some important distinctions, and I think you've alluded to them a bit. Can you talk a little bit about those differences in both your aircraft, principally, and then also in the business model versus the Jobys, Betas, and Archers of the world?
BR: As far as the aircraft goes, and this is a fantastic question. Joby, Archer, and Beta are building some beautiful aircraft. They're going to do some amazing work. Those aircraft are all electric aircraft. They contain between 2,000 and 3,000 pounds of batteries on board. They will operate over shorter distances, higher frequency routes, lower margin type of Point A to Point B, back and forth within a city or within a small geographical area.
Our aircraft is a hybrid, which means that we have a gas turbine engine on board. The gas that we have on board is currently about 40x the energy density of the best batteries. So, instead of having 3000 pounds of batteries on board, divide that by 40. So, we have very significant advantages in burning an energy source that is much more energy-dense currently. That allows us to go about five times further and about twice as fast as those all-electric machines.
Now, fundamentally, that doesn't mean that we're a competitor to these folks. It means we are very much a complementary service. We're all together making this incredible new world where we can move around the planet in a much more efficient way. Again, Joby's S4, Archer's Midnight, Beta's Alia, they all move things around at a shorter distance. We can help complement that by moving things between cities; 500 miles instead of 50 miles, 200 miles an hour instead of 100 miles an hour, using similar technologies in terms of batteries and electric motors, but then leveraging a hybrid electric technology that does not require any infrastructure whatsoever. When you land, you don't have to find a giant charger cable and plug it in. It's very much a complementary machine to this really exciting space that's, that's evolving. So that's kind of our model.
We're also not, in terms of business model, going to act initially as an air taxi service ourselves. We're just laser-focused on building an awesome machine. There is a ton of demand for it already. Once we build this amazing machine, we can either lease it to lessors or sell it to operators, and then they can do some amazing service around the world.
BL: I think that's a really important distinction, and we've covered a lot of that in our reports, but I think your approach is differentiated enough that it's going to draw a lot of attention. I think it's important to note also that you're building this not in a vacuum; you're building it inside a country that has a rich history in aviation. The Canadian aviation industry is very strong, and for those that don't know, you sort of alluded earlier to some of the people that you've known and worked with in the past that now hold roles across this industry in Canada. Can you talk about how that's boosting and accelerating your development pipeline?
BR: Canada is amazing when it comes to aviation history. Canada is one of the only countries that has end-to-end design, build, test, and certify brand new commercial aircraft designs. Transport Canada Civil Aviation is a leading organization across the world, globally recognized for its talents, special abilities in vertical lift, which is interesting, and a thriving aerospace engineering ecosystem in Canada. Centered in Montreal, there's some great stuff in Toronto that's going on, in southern Ontario, in the London area, in the Waterloo area; there are a lot of excellent companies. Bombardier, Bombardier Defense, and Mitsubishi Heavy Industries do some amazing work here in Canada as well, and we're happy to be partnered with them going forward.
For certification, we're lucky enough to have a gentleman by the name of Dr. John Maris on our board. He's the founder of a company called Certification Center Canada. Essentially, all the best certification folks from the public sector were brought into a private company that specializes in certification of new aircraft and or modifications to current commercial aircraft. In Canada, unlike the FAA, which is fantastic and they do a bunch of amazing work, but they're quite inundated with a lot of these new technologies that have a Silicon Valley or the like. There are a lot of different companies looking to get their aircraft certified by the FAA. In Canada, quite frankly, we're a bigger fish in a smaller pond, so we can move forward a lot more efficiently. There’s a rich history in Canada with the aerospace community. It's thriving. It's a great place to do aerospace business, and we're very fortunate to be situated where we are.
BL: Now you've spent the past year doing a number of things, making a lot of introductions, talking to a lot of people in the industry, and attending a number of conferences. Where do you see the feedback that you're getting from the industry, from potential partners, and from potential customers? What are the standout features on the aircraft that are drawing people to pick up the phone and reach out to you?
BR: I think the number one thing that resonates is the fact that instead of doing what's popular, we did what makes the most sense for the end user. We figured if we could build a product, build a better machine where end users, operational folks that were doing hard jobs in difficult locations, could take our machine and do it in a faster, safer, and cheaper way, the rest would build itself. If you can build a fundamentally better machine that is significantly more efficient across a number of metrics, then the success will follow. A lot of companies, quite frankly, are taking the "If you build it, they will come" approach. "Look what I can build with this new technology," and then try to fit it into different places, and the operational realities hit you pretty hard in the aerospace community, where you're looking at bad weather and cold weather and flying in clouds sometimes to make things work.
Focusing on the end user, focusing on the operators, building a machine that's faster, safer, cheaper to use, I think, fundamentally, is resonating in 2026. It was not that popular, three or four, or five years ago, with our gas-burning turbine engine on board when everyone else had these flashy all-electric designs. If you look across the industry now, there are a lot of companies that are doing hybrid electric where they are putting gas turbines on board. That's a significant retrofit. Five years from now, when batteries have this magical breakthrough, we'll be able to go all-electric with our machine. It's relatively straightforward.
That's been a key to success for us: being a grounded and deeply operational-savvy company, talking to operators with our understanding. I was talking to a company the other day that needed helicopter service for dropping people off and picking up from oil rigs. We understand helicopter performance categories, how they shoot approaches, the type of weather, and the type of environments in which they operate. Understanding every little piece of DNA and some of those operational missions, I think, has been a success for us in terms of translating that to a machine that's quite well calibrated for the end user.
BL: Well said. That's exactly what I think the investors are looking to hear: that you've got that approach when it comes to the market. With all of our early-stage technology companies, we talk milestones. You’ve got, I think, in your case, technical milestones and financial milestones. Last week, you achieved another significant financial milestone with a major capital raise. Can you talk a little bit about what that does in terms of your cash runway, and then also maybe touch on, in a year when we're having this conversation, where we are and what we're looking at. Where will Horizon Aircraft be in a year or 18 months? What sort of milestones should we be looking for over the next year?
BR: This is a particularly exciting time for us, right? We just did our transition with our large-scale prototype, and we are, to use a military term, in afterburner, going after the full-scale product development at this point. So, in six to nine months, we will have a full-scale aircraft rolling out of the hangar for initial ground testing. Any investors, if they look across the industry, any company that has a full-scale aircraft in this space, not to mention one of our capabilities, is a significant market cap, lots of potential upside. Obviously, do your own research, not financial advice, all of those caveats. But this is the point where we've proven it at a certain large-scale size, and we're proving it at the full-scale aircraft size. We'll be flying an aircraft relatively shortly. So, in terms of technical milestones, again, it's a particularly exciting next six to nine to 12 months.
From a financial milestone perspective, we didn't have to raise. I've been very straightforward with the entire community. We did not need to raise at this time. But it made a lot of sense, and it was financially responsible for us to do so with excellent partners. The Titan Group is particularly well suited at putting together very high-quality industry partners for this type of investment, long-term holders that are not going to hurt retail investors, which is my primary focus and our entire team's primary focus. There are a lot of retail investors. I've said it before, I'm on record. I'm particularly sensitive when it comes to taking care of those folks.
All of our employees, 50-plus employees, it's going to be a hundred by then, over the next year. Every single one of them is a Horizon Aircraft shareholder. We have an employee share purchase program where they graciously put a certain percentage of their after-tax money towards buying stock every month. All of them do it. They all support the company. So, when I say the entire team is really cautious and respectful of retail shareholders, I mean, we're talking about family at this point, and so I don't want to do any deals that disrupt that.
However, it's nice to have. And for everyone that is paying attention, we now have 24 plus months of development financing in the bank. That's a big deal. That will help us accelerate our trajectory, bring on world-class folks like we've been doing, and continue to make some pretty epic technical milestones happen in a very short period of time. Hopefully, for the folks that are paying attention to the details of the deal, they understand it's a very quality deal and that it's very good for the company.
BL: One of the other things that's changed a great deal over the last year is the commitment to defense spending around the globe, particularly in Canada. There's going to be a higher level of defense spending, and there appears to be a commitment to spending a greater proportion of those dollars with companies that have Canadian roots. I don't think we've talked much yet about the potential defense industry applications for the aircraft. Could you touch on that briefly?
BR: Well, Canada has this new defense industrial strategy that's been rolled out, where they are absolutely committed to up to 5% of GDP on defense spending. Money is going into the right places, into the contracting mechanisms through the treasury. It's buy, build, partner: buy Canadian, build here if we can, and partner and bring folks in to support defense spending here in Canada. So, only when we can't do the first two, we'll do the third.
A company like Horizon Aircraft that's building a machine that would be incredibly useful across a number of missions in the Air Force, in the Navy, and in the Army, this machine would be so useful across so many different military missions. Essentially, if you build a helicopter that can go twice as fast and is stealthier and safer, you couldn't sell enough of them to the forces. From a dual-use perspective, it's going to be incredibly useful, and right at the same time that we're rolling this out, there's been a significant defense spending increase here in Canada. They have a real commitment to do so, and a number of programs are being rolled out. That speaks to several different things: development support, of course, and non-dilutive support for continuing along the technological trajectory we're on, which helps with retail investors and keeping them safe and profitable. It's just a time that makes sense for us. Again, we were pretty happy to land on a design that made sense for dual use, and it's pretty incredible.
BL: That's very well said. In closing, there are a lot of easier ways to spend this portion of your career than sitting down with a piece of paper, drawing up a design, and then figuring out a way to build an aircraft and then get it certified. I think you have a tremendous passion for this. What excites you and the rest of the team about getting up and going into work every day?
BR: Fundamentally, it comes down to just trying to build a better future. Maybe I think about things a little bit differently. I've always been a little strange from that perspective. It's not an easy thing to do at all, but it's very meaningful for me, and I've always sought that for whatever reason – learning, growing, trying to get better as I go forward, and just trying to make the world just a little bit better place.
Anyone who has kids instantly understands this. I'm going to hand this world to my children; I have a four-year-old, an eight-year-old, and a 10-year-old right now, all way smarter than their dad is. But the opportunity to hand them a slightly better world than I grew up in, or at least a more advanced world where things are more efficient, and they have more opportunities and more people are safe or protected, or new communities are connected from the thing that we're doing, that's something I can get behind.
BL: Incredibly well said, and it really speaks to sort of a guiding philosophy behind everything that you're doing there. With that, if anyone has any questions, feel free to reach out. They have an excellent IR team. You can reach out to the IR team for New Horizon, or you can reach out to me, Brian Lantier, and ask me any questions at all. Thank you again, Brandon.
BR: Thanks, Brian. Really appreciate it. I would suggest to anyone who’s interested that we have a pretty active YouTube channel, Horizon Aircraft on YouTube. I'm active on LinkedIn. Please reach out to any one of our IR team or through LinkedIn and/or YouTube, because I like to respond in the comments there as well. It's a pretty exciting time. Thank you very much for the opportunity, Brian.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks Investment Awareness (ZIA) is a Zacks SCR product. The Zacks SCR analyst conducting this Chat hereby certifies that the views expressed accurately reflect the personal views of the analyst about the subject securities and issuer. Zacks SCR certifies that no part of any analyst’s compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this Chat. Zacks SCR believes the information used for the creation of this Chat has been obtained from sources considered to be reliable, but we can neither guarantee nor represent the completeness or accuracy of the information herewith. Such information and the opinions expressed are subject to change without notice.
This text is not a verbatim transcript. This transcript has been edited and does not reflect the video-recording exactly. You may find the video recording in its entirety here. Full Disclaimer HERE.