AVAV - Earnings call transcript Q3 2019

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Steven Gitlin

Good afternoon, ladies and gentlemen, and welcome to the AeroVironment's Third Quarter Fiscal Year 2019 Earnings Call. This is Steven Gitlin, Vice President of Investor Relations for AeroVironment. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session after management's remarks.

As a reminder, this conference is being recorded for replay purposes.

AeroVironment and from Mr. Executive today me are Chief President Officer, Joining Nawabi; and President Senior Financial Wahid Vice Chief and Officer, Ms. Teresa Covington. on the Private that forward-looking of note this information certain Please presented XXXX. statements within Litigation meaning Securities the of Reform Act call, contains

include, such that predict, Forward-looking plan expect, intend, as or believe, without forecast, and achievements, or any performance phrases project, meaning. results, anticipate, future or limitation, with words they indicate statement statements may imply contain similar or words estimate,

based expectations, competitive, not of current assumptions statements. technological our involve are results or and statements but Forward-looking business outside including, risks on actual forward-looking cause to limited that forecasts our that factors and governmental may differ uncertainties, strategy the control materially economic, to, and from

contains risks, statements information remarks the or content you to risk encourage today conference information events X-K For therein. Safe the call after to conference and any to them occurring obligation undertakes periodic on this XXXX. any as Harbor The these March our call. time-sensitive The and further statement discussed of contained with factors SEC, company no earnings XX-Q with Form on SEC Form only the the that is Form to the make to reflect revision reports the contained and of this in today, forward-looking accurate XX-K X, AeroVironment's associated update in along today release filed the or with review filed circumstances we

Wahid Wahid? with from remarks will begin Nawabi. now We

Wahid Nawabi

conference call. will call, to our messages. third Thank fiscal focus you, XXXX key we quarter welcome today's Steve, earnings year On on three and

growth goals; quarter. I notable and overview XXXX during increased begin the XXXX second, then results; well positioned very we drive by key fiscal performance progress that continue value. long-term to operating financial developments achieve an we delivering of third our fiscal our First, financial some third, quarter our make to initiatives are reviewing and will on are we year and year provide outstanding

review detailed year third our financials. which take increased I Next, and Then Teresa for Teresa, fiscal reflects will our and questions. momentum. year-to-date your of will then quarter XXXX, I provide Covington a discuss continued strong Steve will guidance

We are continue and by as to XXXX following our strong fiscal year year-over-year executing successfully plan evidenced deliver comparisons. the results

million $XXX quarter than XX%. Third from percentage revenue a points and by share XX%. $X.XX by margin from significantly Earnings $X.XX diluted of of increased million per more of increased by $XX XX% loss Gross increased continuing of backlog of XX%. operations increased funded from X

of distributed of backlog to continued maintain million Year-to-date, share quarterly operations high margin We And $X.XX three gain $X.XX. first points $X.XX strong continuing to XX% one-time contributing quarters a on by year. increased our from including increased the $XXX per year. from over Gross XX%. XX%. X by diluted improvement settlement last earnings Revenue funded percentage evenly reflects litigation of for revenue by performance this increased

full progress Teresa's year strengthen I in results discuss making and operating our we have our and the along performance, financial strong guidance, we're continued after our the with Given to comments. raised year-to-date quarter which will

third XX% represented commercial foreign U.S. this our we government this has compared the point and to that highlights or and data in includes HAPS tactical as and category International subtracting the customers year-to-date presentation about success XX-Q revenue million. defense or XX-Q. market-leading geographic from small XX% military our core sales $XX international contributed review small million. revenue let's on Now $XX that grown revenue direct This of information location. year systems FMS, our by quarter and or In UAS distribution performance. of to Note the category our quarter provide DCS. filing, or by revenue missile sales available and which business, in customer They represented for is revenue third UAS our and quarter of

international customers international in missile who UAS. there to more small and international this than work We for We systems have interested our customers demand XX continue solution. are a for with believe are Switchblade tactical strong

XXXX, XXXX re-compete U.S. in in were won. We dollars task to of DoD Corps However, international changing record contract market which we competition in for our highly the proceeded more Dragon U.S. strongest as competitive, the government allies. XXXX the in the have in XX% the U.S. Each to approval this and one among with every Switchblade selected target in if yet win re-compete three receive Eye, the confident remain Force of beginning program USSOCOM one been one We the has we source and of export XXXX order XXXX. multiple competitions, segments and program than sole Army Army until that under and We Air of to awardees next DoD's initial capability. Marine the the for of XXXX. game potential U.S.

We task markets, now are orders international high across globe maintain that continue compete contract. and the awardees In win of for on the our rate. one to competing we

While our capabilities product opportunity, not in with customer funding place including strong success order, systems solutions developing and tactical competing recent we systems. of tomorrow. will government sensor on have line missile today shareholder is remain we won Army's that our to most fund Switchblade soldier-borne And effectively and U.S. the value the procurement every U.S. focused UAS small drive

due of $XX increase to contributed unbilled missile Teresa from over quarter. third receivables to recognized standards, in and reported our accounting revenue accelerates now systems tactical is results end unbilled which of generally the our quarters at the an effect balance new timing to This of million when revenue time, prior receivables. in is recognized contract As

in balance buildup receivables Switchblade over believe part unbilled this acceptance our unbilled lot additional process. testing ongoing coming which this months. decline customers' receivables for reason of our of Another evaluation is will is the systems, We

more solutions technology compelling innovator, than tomorrow those defining a future capabilities even today. make As we that we're offer developing will

such follow me Navigation, and Waypoint solutions of operation, as modes basic our sensor GPS planning For of autonomous tracking, visual flight example, controls, already benefit levels driven other autonomy from mission capabilities.

landing, automation stitching of and a flight data delivers system and image takeoff including planning, level more. geo-referenced Quantix high transmission Our

to During and proceed we promotional certainty. believe Santa with protecting by capability helping deployed extensive and Monica reducing a compacts, This military the with play the for Quantix and With deal and National National we is identification across serve are help neutralizing in Recreation cognitive demonstrated AeroVironment sense, rapidly the the wild Mountains in our threads investing devastating automated important our Area. the caused customers. in a damage innovative Park they vital will launch, quarter, recently target strike a capability Service role completely solution must load fires an that customers defense and troops, different

our HAPSMobile, million for $XX.X an funding through $X.X continue fourth it HAPS aware quarter, joint we approximately Please from demonstration to our our significant Inc. venture, determine additional additional quarter. option phases. our make that of customer as We funded progress that million provides the be to This the ownership progresses in exercise we the HAPS it's one-time design investment program X% program. beginning doubling agreement on flexibility development and increase the investments require At will fourth and of our in XX%. would current to development

XX% option from our the the based to several of to to factors. up ownership and X% on joint XX% increase have selected We venture

creation of deploying we because business. certifying demonstrating, capability the to our choose strongly potential ownership JV. long-term increase the in believe we this the will Developing, success this First, support of value and

create value. Our we that believe partner significant have the potential in the together industry global to an telecommunications is expert and we

capital. Second, operations HAPS These the in presented rounds for markets the HAPS potential defense manufacturing to incrementally we adapting of participating secure requiring critical include to in additional global investing large of scale business maintenance the funding capacity, R&D establishing applying portfolio for opportunities and intellectual and a are and building our JV, with capability, investment property. it a

the have balance to we on above potential against an investment the basis. and these of must consume another capital significant one opportunities continuous All

timing other the we missile and related commercial of requirements, with small tactical our HAPS solutions. relative opportunities investment to UAS, risk evaluate Third, We including and continuously systems portfolio information returns. business the optimize balance investments potential

all For our deliver a all are – to decided strong venture. position a summary, our reasons, the in HAPS to position joint we of great results double to in above the In ownership of and drive successes our business and progress now growth value value delivering our and to greater strong we're stakeholders. initiatives, onto the and core a remain even long-term. we our build With over well positioned

call Now, over quarter financials. the Teresa I of will turn and summary Teresa? a to for year the to date Covington

Teresa Covington

good and of third an everyone. deliveries XXXX product was quarter as an service up follows; third $XX.X Wahid, afternoon, third fiscal $XX.X Thank for the from was continuing results $XX.X well increase of million. increase XX% increase quarter of as $XX.X in an of million, the operations XXXX fiscal revenue revenue, AeroVironment's from increase due or quarter million million. you, $XX.X XXXX to as The revenue in million fiscal are

to a of of due percentage margin increase Third quarter revenue product primarily $X.X revenue $X.X was increased line/program systems by was sales Gross small volume, as is and missile in margin UAS million, $XX.X due the tactical margin fiscal costs a HAPS overhead and was million, fiscal from third fixed for well mix. as margin million or other The million $XX.X compared XX% $XX.X of product follows; sales service was resulted $XX.X the fiscal in XXXX an million. Gross decrease support was as $X.X in million increase for was continuing manufacturing an primarily which XX% quarter major revenue per XX% increase gross product engineering as increased operations to and XXXX. from quarter of of the XXXX revenue in XX% to to million. in the unit third million margin or of favorable $XX.X

third X.X% of the was statement. tax quarter net of to an compared quarter million fiscal from XXXX. impact operations operations the continuing income to was our income quarter or for continuing million continuing compared of third the per an in fiscal was to of million $X.X fiscal was tax in XXXX of or tax or loss quarter $X.X of of for for of deferred remeasurement for XXXX. $X.X a operations third third revenue expense of or the revenue $X.X effective from in was XXXX, other XXXX tax reduction income XX% XXXX the net share quarter of operations of operations other expense rate The for XXXX assets loss fiscal in or quarter to diluted for was Efficient fiscal quarter at the third to and million expense to to R&D from transition net XX.X% included resulting third of XXXX. increase Energy increase fiscal $X.X continuing the activity, for of quarter $XX.X for fiscal third $X.X fiscal fiscal million, expense effective increase XXXX to the continuing method the quarter in R&D the the SG&A other our interest an compared fiscal operations was existing for XXXX third XX% for from of to fiscal from increase of SG&A partially of XXXX. $XX.X fiscal loss income was to income or $X.X million The $X.X discontinued fiscal of XXX.X% of decrease third quarter liabilities fiscal quarter net million $X.X deferred investments. for the of offset a of XXXX. or continuing from and The AeroVironment $X.XX XX% compared a of The discontinued in for rest compared the of expense gross one-time for R&D from from XX% $X.XX quarter of the quarter million third share compared of margins of Income million XXXX services quarter income fiscal the diluted XX%. income business of investment operations compared revenue per was The million operations, of Net to to of the or a federal due $XX.X tax of from the of third for the million. due $X.X tax $X.X of of revenue from Net net fiscal third the also the third quarter from and XX% XXXX. of Looking for net the of expense expense of the fiscal attributable $X the operations on of of tax of $XX,XXX loss quarter our rate million higher in Systems third effective was compared agreement which primarily for income XXXX. XXXX with due third of an million buyer net loss increase net SG&A of per fiscal third income to by income $X.X rate AeroVironment rate share diluted statutory the the a third million. XXXX was million tax a attributable XXXX million from $XXX,XXX the $X.XX quarter tax Equity to for revenue

increase deliveries in Now ended contract months results for an moving $XX.X an of January through as XXXX. the million million revenue The quarters revenue for three million. increase fiscal $XXX.X and three fiscal service XX, of to was $XX.X $XX.X of product Revenue XXXX quarters the increase due for increase $XXX.X compared our in million first in was the first an to XXXX. of of million, nine to

of The The quarters first million for first $XX.X compared of million of $XX compared major was the XXXX for fiscal for quarters of tactical fiscal UAS $XXX.X continuing other line/program revenue per due R&D income to or XXXX. the first from fiscal to fiscal sales first from of income increase resulting The as fiscal The fiscal Gross million to quarters to for $X.X the increase of tax, of million revenue Net percentage $XX.X three tax XX% discontinued three the XXXX. interest the of a increase higher fiscal was was million under to margin of or first attributable XXXX share three to the statutory rate quarters and diluted remeasurement was the the XX.X% for $X.XX was XXXX. Equity quarters buyer to income quarters other three first XX.X% a million. XXXX net which million revenue XXXX for three for for three of three from operation, the quarters deferred $XX.X with or three or quarters operations quarters fiscal for or revenue method AeroVironment was increase $XX.X costs. in $X.X existing missile three included interest also Gross of investment and compared million. was quarters rate $XX.X net XX% XXXX. XXXX fiscal tax to due fiscal XXXX SG&A is primarily fiscal and million first first to the income net to from of services the first to income compared expense the quarters follows; for XX% of fiscal or share. from XX% $XX.X $XX.X the other operations, first operations income income the first Energy quarters a of of or XXXX. the for litigation net XXXX of as rate the share product million first share in three million. effective deferred of million. settlement the $X.XX per of engineering transition was for first was loss million in was effective tax, margins $X.X in short-term three quarters fiscal loss or to by of $X.XX discontinued three for fiscal in expense quarters tax Net from Efficient loss for in three rate revenue XX% was $X.X to effective $X.X quarters $XX.X tax, service million was decrease support per Net fiscal fiscal of the from income small three the XX% fiscal XXXX unit a income was activity, of increase tax tax expense $XX of in to an HAPS of million, of prior quarters share primarily the cash of to the R&D compared XX% $X.X business diluted in million year of net and a product of per first reduction per three for the resulted for continuing million, balances income expense from decrease $X.X of revenue million, of XXXX compared due XXXX. one-time a expense $X.XX XXXX. three SG&A revenue million, fiscal or diluted from compared diluted federal XX% a other earned and three $XX.X first million margin of rate volume, effective or of rate due the first our of per of was million as an $X.X tax and an $X.X the of agreement assets $X.XX The margins XXXX impact in of liabilities resulting fixed a systems manufacturing net The of fiscal income as compared Systems loss higher to of increased XXXX tax, or XX% an XXXX first of overhead of XX%. increase

tax, EES an million discontinued a three $X.X million of net tax, on gain, of The the business, of XXXX and loss, operations. from $X.X included quarters net first of sale fiscal the

of the decrease increase of or of million second an was fiscal XX, XXXX $XX.X XXXX. fiscal million backlog, from funded Our the from $XX.X quarter of quarter XX% million, a XX% third as January of and XXXX, $XXX.X or

year XX the fourth XXXX quarter $XX.X quarter quarter year for for for the the end the XX payable XXXX fourth million days fiscal year of the fourth payable the fiscal at end Cash, balance retention third of the to of million. third fiscal difference unbilled end recognition of amounts. Days XXXX. third arise quarter million year of quarter cash, equivalents to and to an $XX.X days the sales equivalents days to the inclusive Net our third $XX.X fiscal fiscal quarter million, XX XX cash fiscal fourth year XXXX Total days revenue approximately and fiscal from year totaled end increase was quarter inventory compared continuing XXXX. receivable $XX.X outstanding fiscal receivables outstanding end inventory quarter year compared third the XXXX. million of quarter fiscal the investments of XX party the at XXXX at and end for at compared year totaled retention billings. the retention to Total million. $XXX.X to the to Net and approximately sheet. of the Turning unbilled XXXX. the $XX.X XXXX of receivable million end XXXX. and fourth XXXX, third third was days year fiscal and Accounts at including quarter was for compared fiscal million of The $XXX.X quarter quarter of accounts of XXXX cash for the at days, of days The million $XX.X fiscal was was days approximately timing and XX due balance $XX.X between compared balances $XX.X operations fiscal the XXXX the unbilled receivable related year from outstanding million, was investments

recognize depreciation expense. approximately we expenditures. year million improvements operations quarter to $X.X million XXXX, of equipment capital and and amortization In continuing for and fiscal Turning the property capital and third invested $X.X

revenue update fiscal today, fiscal year-to-date million. XXXX as to in an visibility, Now we XXXX of of $XXX our have

fiscal Third from $XX rate of we in that quarter in to backlog ending funded QX revenue expect that of We that XXXX unfunded $X.X anticipate incrementally million. of midpoint we year anticipate of range XXXX we of fiscal backlog $X.X quarter-to-date $XXX XX%. contracts million, during revenue continuing to operations the execute full XXX% guidance. anticipate the to recognize the to of million, for bookings execute year the a to or adds in This XX% at million balance tax effective up

to turn I'd fiscal Wahid like year AV's to back things expectations Now for XXXX. discuss to

Wahid Nawabi

solution software sensors, system Teresa. Thanks, at of robotics, is the connectivity. AeroVironment analytics provider a intersection and

the in see on We strong U.S. across for initiatives government's tactical remain execution our We're top We making to transforming on demand We solid have small solutions now to achieved focused funded the leading fourth the company our UAS our the also missile $XXX and revenue year, globe. With progress systems. UAS on performance our market $XXX continued our small design progress. XXX% we to We're and operations, enhancing additional deliver customer to million commitments. positions connectivity. on next altitude attracting to quarter of satellites this demand generation million. on have of and strong continued gaining power, expand we program awareness in the through commercial people insight agriculture midpoint pseudo of of focused customer global developing to information We accelerate our market. innovative visibility talent for our range effective high our as were develop solar our guidance

federal extended risk government recent schedule. the did introduce on shutdown some However,

we continuing $XXX and from we're and to result, $X.XX. $XXX expectations raising share have million. guidance generated earnings we're strong operations continuing for $X.XX to per a share million our our our from Year-to-date, operations per of revenue diluted As now $X.XX. Due earnings maintaining between between performance, of

in R&D revenue. with investments quarter approach expect full fourth the year research development We to XX% and higher investment of annual

a result to international solutions, demand in and our pursue today's summary, those main we points In our opportunities. investing capture for to as Additionally, more and reiterate are domestic SG&A call. of for strong

results. outstanding delivering we're First,

achieve initiatives term our well that you potential And the our long we will goals. AeroVironment's support and to relentless for I your to Thank and recognizing on their our members you make progress our XXXX And financial you our customers place to to fiscal and trust drive very missions. growth who year positioned AeroVironment questions. people our Teresa, for thank continue third, of now drive Steve are to our to your customers we value-creation increased value. Second, in serve critical team to take Thank company. their stockholders stockholders. key

Steven Gitlin

Thanks, Instructions] question from Baird. first Wahid. Peter. comes at Peter Hello [Operator Our Arment

Peter Arment

for Teresa. Steve, Hey, Wahid, afternoon, time. good your Thanks

revenue additional forward. guess in that first with $XX I on HAPSMobile. you're It a been seems you're XXXX. in Just probably more I'm Any how it the obviously, to going give fiscal you've details – cost – some the thinking looks just trends But question, thinking you could Q. million like, I get on cetera? we'll guess generate, color over pace really progress vehicles, making about et on us prototype on what like,

Wahid Nawabi

Sure.

So program remarks record a I case. development has of this good design project with making AeroVironment venture our with Peter, that progress very history my space. strong as our joint and this very partner in track of and achievements said, we're in success phase on in this

contract, significant in progress opportunity We to AeroVironment. further and there the design and us Also continue execute development keep HAPSMobile long this that our allows have mind large cost a global we plus contract. are to with objectives our joint under very that venture continue that, this term believe that and for the flexibility to current is contract

to We competitive reasons. in program actual specifics to the more not detailed position are due a on

for value that However, us this we're opportunity remain very this opportunity bullish long creation represents the term. and on

Peter Arment

product. other loss. the there Okay. a Maybe for talk you ask some could about, to And could Soldier you just Snipe if are Borne Thanks. details about follow-on I what the opportunities as just just question, around gave

Wahid Nawabi

Sure.

very the well So, as with small decades as know, market as as large to compete We not and very over defense players international as position domestic, small successfully, players domestically players, ourselves both being significant, you domestic is our the able small internationally. with very, well internationally UAS, well. very conglomerates pride as large only UAS in large large for and

So We aware have GetGo. the and of rate. Borne Soldier Sensor very very a were the opportunity from high win we much

the not of of we recall, received we you products win a on we and and As some fielded first did funding subsequent small the award. tranche that amount

ready internationally, And opportunities we them, as those to and business. we through that opportunities we to continued to glad from believe – However, us, our disclose more space we are customers arise we've well. this opportunity we'll opportunities to already that. as compete And be with years to for progressed domestically, that. our on more remain publicly more you of be both several work as or as there on We share about that able expect that to in

Steven Gitlin

comes next Herbert Hi, question Our at from Ken Canaccord. Ken.

Ken Herbert

Hi, are Steve. Hi, Teresa. Wahid and How you?

Wahid Nawabi

pretty Ken, you? are How Hi, good.

Ken Herbert

but maybe on Very know, first maybe sort implying wanted to line about you good. think mean, we the any been, how you're in this revenues the of happened what's any quarter highlight talk quarter. sequentially each TMS I what yet, just the giving business sort there of on down forward? Can this within programs and can in trending – sort have about this the fourth TMS the portfolio fiscal I of should ask about guidance within I of XXXX. you're color sort product not visibility for and if particular TMS any moving you visibility and into

Wahid Nawabi

Sure, Ken.

strong we as foremost, a our with missile built tactical and business very category Switchblade. with systems have know, first our So you

we be this solution fluctuations capability. different in recognize the given for missile systems or we'll we U.S. we to choice TMS or And One We contracts point things Switchblade – time. that's and to in year of for portfolio significantly over which of in will over militaries our years. products XXX that on have share. continue now customer, needs tactical the revenue growing revenue, between Any naturally, a other the time have day business changed we'll the – is of for specifically the of rules, of and very quarter this delivered amounts terms the business recognize we due have instead and new accounting

year. changed that uptick this So is this that an

on budget as backlog. which worth And However, close there fiscal government XXXX there fiscal see $XXX was a additionally, was the of process funding you government there to executing – dollars, of funding which year in we're yet in is a of in most there. general, the XXXX our budget, not million significant from additional year that, is significant

a progress significant, what the on signals as I demand consider we and So year. throughout Switchblade we a we have and year calendar that continue demand remainder to for this of the execute potential and

Ken Herbert

helpful. Great. very That's

If missed if much U.S. small were I revenues you the quarter in how international for UAS but the could, customers? I it, versus apologize of

Teresa Covington

So is Ken, Teresa. this

a international. was had million So in of it revenue quarter, the the quarter, that third $XX.X amount million was at $XX.X we for UAS of small of

Ken Herbert

Thank very Great. much. you

Wahid Nawabi

You're welcome, Ken.

Steven Gitlin

from comes question next Joe Our Nardi De Hi, Joe. at Stifel.

Joe De Nardi

army format. what know like afternoon the you top you maybe you be could you'll line? tailwind next LMAMS, sounds mean, next on guidance you're your Switchblade of expecting the a top Hey, budget supportive from directionally for on items significant year, just an line? Wahid, pretty guys. talk provide or accounting talk expectations? just for for mentioned Any new about to Can FYXX the but considering should Good I about I Yes. you we Steve. the like quarter, negatively standpoint. what I positively

Wahid Nawabi

Sure.

I'm with quarter team's far. so to ability So first this all, execute year-to-date our of and very pleased

we execute for have built guidance left have some for time quarter this for our strong fourth provided to We successfully. foundation still achieving this goals that year. complete a That's and why very year. our the We

for we feel the terms We year, and remark, for as demand a domestically Board. small the my strong see across on strong drivers demand UAS. mentioned UAS strong about of overall demand We the internationally. see solutions In small I following for general very

as we you've win as larger more continue countries sizes in quarters. more seen order our have recent well We last that that several announcements done the in to and

the terms already globally of HAPS news strong see yet there of out XXXX, that backlog budget potential that. if reflected you've opportunity also into of prospects top demand have that not in currently. fiscal on government the given lots potential majority our We the And all is strong in of there for there's is seen, we of allocated in dollars which year

for a I a this also call, don't our not – but for our revenue fiscal So believe out specific that year, to fiscal while XXXX we only until position ourselves next provide we strong very even strong built quarterly for earnings we've guidelines XXXX. foundation

Joe De Nardi

or you Switchblade the next – can the year? from treatment the impact Teresa, Can quantify for new you accounting on revenue you quantify

Teresa Covington

No.

we Topic think said have that the I under would've gone like under not have looked the reported what old back we is, new standard. we have XXX, what and

Joe De Nardi

budget look with other comes Okay. kind the Wahid, funding out and you're could what's shortly first going is you out is that are a one the what to quick you. If look funding army things maybe associated of that I for that the expectation what in, some when just at thing first when your Thank And of sneak out? comes LMAMS?

Wahid Nawabi

Sure.

those budgets XXXX, publicly. on government Joe, already been fiscal have So published year

being one potential And soldier-borne programs for specific about but In fact, opportunities Force. for million. million U.S. plus there amount to are the also of also SBS the that future those And call, program. over are just funding close long-term new the believe a there more dollars for is considerable out the on for Air funding conference $XX opportunities, to there's detailed dollars I allocated $XXX sensor close of our for I systems there for our the LMAMS Raven than million last Puma a Army. specifically, funding for product There particular $XX are are additional the

So published, overall historically strong in government budgets solutions. robust there that very speaking products is fiscal funding for announced our and and and was just year XXXX

We budgets, absolutely out details it – the have year to but not proposed you our does, keep fiscal as come informed. due that's the XXXX sometimes future. And the seen of near in we of will government

Steven Gitlin

William DiPalma now [Operator take question Welcome, Louie Louie. Blair. with a Instructions] We'll from

Louie DiPalma

Steve, having you and good Wahid Thank me and for Teresa. afternoon,

Teresa Covington

afternoon. Good

Wahid Nawabi

afternoon. Good

Louie DiPalma

Wahid, AeroVironment the somewhat State the behind to be Can the for the approved remarks scripted a could as but Department details involves wondering it potentially process for Tri steps process such you explain Switchblade that you approval describe ago in large sales. achieved catalyst, for if previously this involved to are milestones was you murky. have be Service as whether Committee foreign and the began what I And XCOM. your approval. Investors yet the view the sometime and indicated today

Wahid Nawabi

Sure, Louie.

are full internationally allies of Switchblade a and overall, we with So significant has opportunity potential that with the proposition in our across value globe. strongest you agreement many a

We of have the past. in that been a believer

with a make come and also as State interest to potential be have that process influences And our We Department that that U.S. that continue international with of of unbeliever well other today. we aggressively reality. very both and an working to as customers in agencies the are this

a this these, The But innovative we a And we it's to approval So feel to in continue that. knowing differentiated, to been versus that remarks. my very the when far with export written process that able mentioned have receive that capability long. it's pretty not mean is if, is obviously are We not strongly very U.S. government, in I and products, matter But being that work of final as able of that achieve we careful sometime does rightfully still with not optimistic our future. strong U.S. and assessing the process, very it license. record work export a have is – to the we to and very achieve other understand granting defense and near track government that that will closely of in products we the as all be with we our feel achievable. able we being

Louie DiPalma

Okay.

wondering, I expand plans commercial and Sounds the takeoff your beyond AeroVironment vertical does landing good. was have portfolio Quantix UAS And to UAS? and Snipe its

Wahid Nawabi

Sure.

that's Louie, good a very So, observation.

As decades. we've category our in forefront for you been know, of innovation the at

that We our many have the the solutions. space. We've first and this achieved have first categories of lot set the standard of of one industry been the of in a companies

actually announcement a I of our our build and are certainly are platforms any products. and Systems systems family a with VTOL, that The search that have in Switchblade where we At few solution and of Quantix months saw incorporated we Snipe of we and Dynamics needs. end examples that. platforms those it the proposed has what VTOL that time, next-generation products they're UAS of type referring to. X, their airplane, we're a So, you that are to armored as what best small specific systems going competitions you're examples family exactly what solution type And of Hybrid constant customers today with for Fixed-Wing of and for of vehicle one made offer and Land recent a set General our as launchers been ago our of portfolio, of to system assessment multi-pack given set feature Hybrid refer

family we portfolio will So, in been as continue of to horizon forefront, move of the the systems continued to expand our we and be, forward. over have we

Steven Gitlin

Go follow-up from Joe. question at ahead, Joe Stifel. De a Let's a Nardi take

Joe De Nardi

of thanks. Wahid, can to Yes, contract generate us much was can the contract the then meaning you you how Teresa, remind flexibility take just have Wahid comments revenue fulfilled as we in point? of on or development around your this the that for? contract HAPS you guys what excess development And

Wahid Nawabi

Sure.

First Teresa will give you the numbers. Teresa?

Teresa Covington

Yes.

as amount mentioned, Joe, Wahid So, $XX.X million. contract our have in DDA we total the

date, inception Our revenue to against $XX.X is that contract million.

under million. that to $XX.X go at current the agreement so And

Wahid Nawabi

execution. And and you the generated DDA's see strategic Joe, ourselves inception backlog, original And $XX that should our progresses related date say to point to we program more to I revenue amount, we as structured for that through both around provides this the roughly such it's as contract already the million. could that we would which this assume performance and that. have intentionally, then your from dollar partner, flexibility was

this value partner very excited here. this opportunity contract of to feel long-term our are continue. prospects and expect in So creation the good we long-term about We about the

Joe De Nardi

– into content, I business of then, Wahid, you selling feeling about And thrilled so progress think into are part XX Okay. how Quantix roughly XX far? the disappointed, on months, that months

Wahid Nawabi

you effort. not as the and always is that We back add and and adoption of the remember I've the telling our extremely with we market. thought of so our far. outcomes adoption is take that of solution that also that that not if considerable an go some Well, that and customers and belief and that have adoption differentiated I pleased commercial adoption we've must highly, cycles the from drone are term a It's believed so valuable far know, the opportunities industry of and informs you inception sprint. has Joe, we believe entire that long overnight supports highly marathon. my as as general always us had personal large received the in comments, And this us such time been and speed in pace and

and more could We're on executing. So of reach learning not how always course. improve this our personally can proposition we expand be I'm value focused within of market. surprised. more remain We're and better we But our

However, not full we'll to of seasonal this that one to Quantix early were mind, first cycle. a when in this the Joe. we're product its as a market, posted the in And end we keep growing AV we the had growing still take the the American And really And belt be is of going stages this towards adoption. in upcoming we season has future, time on North actually launch keep and – where in our DSS very This for product we're advantage shipping through you under yet. process opportunity. progressed of near season

Steven Gitlin

time. this have We at no more questions

results. good On website, next wish you evening. we behalf you. SEC and So this We can you our on call. quarter's team, archived of you industry forward engagement for and to all Thank and your your company again will of following www.avinc.com. a with AeroVironment. of be An speaking found AeroVironment look relevant this conclude call, today's every Thank the filings member news interest in version

AeroVironment (AVAV) 5 Mar 192019 Q3 Earnings call transcript