AVAV - Earnings call transcript Q3 2020

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Steven Gitlin

Good afternoon, ladies and gentlemen, and welcome to AeroVironment’s Third Quarter Fiscal Year 2020 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.

XXXX. note statements this the within Litigation Act please presented certain Private begin, Reform forward-looking contains the of we that call, on information Securities Before meaning of

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

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

in XX-Q information XX-K risks, statement For on with AeroVironment’s contained therein. with with to filed and we reports these earnings review along SEC, Harbor on today SEC, the X-K and filed you associated Form Form release and factors the the Form further encourage periodic the discussed the risk Safe

This the presentation a afternoon, posted the website avinc.com, at release our Events slide our in earnings we presentation Presentations to and section. with also & filed

events X, content circumstances obligation The in conference of time-sensitive March contains that company or this accurate today or forward-looking remarks call. The our to only revision today, the of occurring undertakes them call is no to any reflect to as contained make information any this XXXX. statements conference update to after

Officer, and and President McDonnell. Executive Chief Kevin are Mr. Mr. Vice Nawabi; Officer, AeroVironment from Chief today me Financial and Wahid Joining Senior President

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

Wahid Nawabi

Today, and year our I we fiscal posted third supplemental filed release our call. with and will conference website. to investor you, welcome the Steve, Thank our earnings presentation quarter to refer earnings to XXXX

key On presentation. today’s #X call, our of will on earnings Slide three topics that outlined discuss are I

momentum. track to year we third First, strong growth, objectives EPS reflect to increased our guidance deliver profitable year XXXX of fiscal today, achieve consecutive and our on our double-digit we’re our and

well-positioned based are maintain of beyond year trajectory XXXX, we Second, fiscal assessment our drivers. to on growth our demand

against significant stockholders. strategy long-term effectively third, delivering our for to creation our executing and value And we’re value

fiscal I’ll start by operational highlighting summarizing performance, while achievements third key and the during our quarter. our financial year XXXX quarter

our of a performance Financial will in your provide Kevin and the financial take year Officer, McDonnell, Kevin, increased will fiscal summary Steve our then I goals detailed quarter. more Chief new I XXXX Next, guidance for questions. before and discuss

on As the I consistent the about we quarter, stated last is #X. Slide in described we of expected quarter, $XX.X our with revenue which one-third million and second-half delivered third

per diluted Third diluted quarter Pulse $X.XX, share produced loss Aerospace reflects intangible of and loss in assets. related $X.XX amortization of XXXX per our which non-GAAP June revenue expenses acquisition and share to of

resulted the will revenue Higher in lower absorption. quarter in quarterly also improved Third plan fourth overhead which quarter impacted earnings. for revenue absorption, result

year-to-date, revenue continue increased fiscal improvement the reflect to was million not we This expect full For of growth $XXX the a modest year X% that top line fiscal compared higher the year. XXXX. the for to prior does

timing. declined awards $XXX of of from last a as a million result backlog quarter Funded contract

contract with million. increase the underway. contract at program the to backlog finalization funded which multiple currently $XXX are negotiations estimated expect We These of Army LMAMS negotiations, multi-year includes

U.S. provider allied team the quarter. progress nations. Group remains will more our Systems the of Aircraft and AeroVironment XX made government for the I the Unmanned Now in discuss go-to X third fixed-wing than

$XX allied international for million During customers. two we the orders totaling quarter, announced

heading strong quarter. into remains business international Our fourth our

AeroVironment item million LMAMS in Air requested Puma government released solutions. includes Corps fiscal about The procurement. and This million $XX Force and million total $XX Marine request for funding for of results in procurement recently budget XXXX line U.S. year a for $XXX

for requirements and U.S. line than potential Army million U.S. programs. requested solutions. funding for $XX more our for Reconnaissance, or believe Sensor, and represent SOCOM is million opportunities AeroVironment addition funding SBS these Marines items and requested Range for next-generation We Soldier In items Short there additional or unmanned SRR, requested in to Borne solutions, $XX new

our These enhanced developing user next-generation on machine with new projects we’re family this offer And vision will of of computer an greater systems. through will of our focused solutions experience capable AI, UAS, be autonomy in learning. focused family development tactical operating and and

will on Increased system the autonomy aerospace. reduce enable operation will cognitive help load operators denied in and

progress We’re remain focused this of family on area this and making in significant delivering next-generation systems.

to product helicopter unmanned our progress. small VAPOR make our to continue and strategy execute line, turning Now we good

products. manufacturing TMS We our other of VAPOR alongside Valley instead units producing now have Simi relocated UAS in are and and

VAPOR interest in systems approval customers is pioneering the for of in evaluated by becoming the from are use Our commercial also process their operations. VAPOR unmanned are who systems generating of the FAA commercial operations known for is but achieving collaboration This sight a commercial timing of visual progress towards certification. line specific yet, in with forward customer. look beyond continued we not to

leading We’re momentum missile provider of off Switchblades with seeing loitering we its the our government product U.S. the systems missile and patented continued wave where in to technology. are our line, tactical systems

in which The We happen of LMAMS it $XXX contract multi-year means are timing negotiations this the could award the end thereafter. towards our or for this million is requirement. quarter of customer with shortly currently uncertain,

allied we multiple create actively place discussions exports such In export the We government addition significant our with although, and is value confident U.S. capabilities, for engaged unique demand for opportunity to customers. not certain. remain creation, take timing are an will Switchblade in

Defense includes form XXXX million would award before I request the evaluation required issued. government $XX Historically, Army an like promote year program. the competitive that LMAMS has to competition be budget for could AeroVironment for fiscal this million of also to in some out $X.X point U.S. contract every

in These other competitions. LMAMS typically confident are more of startups. had ability competing success, been defense the our have record competitions to I’ve a compete very largest successfully contractors small and our contracts decade to and track Consistent future We success. great the of competitive than companies for some a from involve number for ranging world with in we of in win

to and to company, we research greatest a best of invest deliver have the our customers in technology value development and is our and stockholders. example As capabilities to continued enhance invest our capability in continually Switchblade to we solutions. an to product a

Our to investments deliver operations stockholders. results our to line our for us improve bottom favorable our to and position customers continue

prior we have mentioned our of make larger continue in on of variant I earnings progress solution. to and call, As development the a maturation Switchblade

We Warfighter. to our deliver continue invest alongside capability to strategically in this to customer the order

which addressable of for fiscal market is of year, increases significantly are but not this of a in flight introducing During it us game new a family this also product. moving market, systems. variant conducted This changer Switchblades tests, this to closer we series the the size only

opportunity our this about excited leadership We’re to extend position.

large which of progress on markets, global our the opportunity. Speaking HAPS we program, targeting connectivity continue make to is

next Hawk to flight testing. and for expand testing, the for have XX altitude, We’re deploy performance against validating now of where will flight preparing flight aircraft We we while two our round duration models.

Last thought the sensible Leaders unveiled and to the telecom from HAPS accelerate month, utilizing technology, collaboration industry emerging HAPSMobile the regulations, industries the Alliance and Alliance for and this provide growth to joined stratosphere. leadership promote education. was of aerospace commercial promote safety and cross advocate global industry adoption,

Deutsche HAPSMobile, over and time. create the Telekom, its China for Broad HAPS support other market will participating framework adoption addition Airbus, opportunity the to and companies the for and Telefonica. AeroVironment, In growth Telecom, and Loon, Ericsson, cross-industry Nokia help SoftBank Intelsat, Alphabet’s include power

This their leaders, But the other will customers. HAPS with working stockholders creation market we’re and opportunity long-term value solutions we still infancy. deployment in confident are by and advance together business of AeroVironment for industry for

AeroVironment’s and delighted to quarter, a I’m insights him thinker as value third a forward Officer. track creation of growth experience success. to CFO and Financial industries, Chief unique AeroVironment’s introduce extensive we of contributions AeroVironment’s long-term diverse our leadership and record summary and which is perspectives that brings across With that a as will support McDonnell strategic his Kevin to give Kevin demonstrated continued growth. with Kevin look

financial provide of will our third Kevin? Now quarter. Kevin overview detailed a

Kevin McDonnell

Thank you, Wahid.

achieve Before unique analysts Chief meeting our to and the sharing in future. a Financial look leadership research of look thank moment exciting Wahid, forward Board to also company a quarter the our with opportunity I like growth leadership with value for objectives. This third take AeroVironment’s potential. results, the and serve financial to our – Officer. team team Directors, stockholders the stakeholders as and our I’d near I to our is forward to tremendous working creation to

third $XX.X as XXXX QX turn quarter on due decrease million. from or X XXXX million, $XX.X The the presentation. deliveries results posted to XX% was Revenue $XX.X of was for highlighted to the fiscal the in decrease fiscal let’s $XX.X product revenue decrease million. of Page a a of Now of third quarter of million, of the

HAPS revenue; was follows: or Third of $XX was line quarter XX%; and other product million, or million, or million, Small X%. and program or fiscal as $X.X XXXX was was XX% total by revenue is $X.X $XX.X million, XX%; UAS TMS major

outline is program. and remaining total of design $XX.X unfunded. which $X.X million of that the million status Let million. the There contracts million, program currently under all me The take for efforts. current moment of a with includes HAPS and $XXX.X and portion $XXX preliminary for consists Inception-to-date, development contracts other-related the which million is value from is HAPS a $XXX.X design contracts, HAPSMobile on is these revenue to

revenue quarter of to fiscal $X.X The by was of back million, financial for product third $XX.X or million, performance the XXXX. compared of $XX.X Gross XX% due quarter offset partially was service in to in margin for million. of million, the margin primarily quarter. third the decrease of margin increase margin gross of Turning a for XXXX to the XX% in decrease fiscal $X an or revenue,

to in of margin decreased of total Gross primarily decrease the revenue XX%, revenue. XX% to due revenue as product proportion percentage from to a a

were for sales fiscal quarter fiscal highlighted XXXX. on third XX% X, to XXXX, the sales Slide total third compared of XX% As the of quarter product in of

income third for XXXX. results, the the of $X.XX from was loss share, compared net quarter of $X.XX quarter diluted fiscal line or per terms of XXXX $X share net In or million, bottom fiscal per to million, the of diluted $X.X third

was Energy income of result operating for expenses services included other HAPSMobile performed income the reduced of Efficient business. income transition margin our million loss former net be of million, fiscal quarter and increased should $X from noted The $X.X services It income other XXXX that buyer reduced third Systems $X.X of for net method million. lower $X.X gross a investment equity of higher million, activity of

Non-GAAP was share, exclude the third $X.XX $X.XX amortization intangible per diluted fiscal share diluted quarter the earnings with of diluted non-GAAP associated Aerospace. share for costs integration of our and for fiscal XXXX of and for quarter Pulse $X.XX. XXXX expense per per was GAAP loss third per share and diluted acquisition

first million for three was from the Revenue for fiscal XXXX. results fiscal XXXX our the to decrease service in first XXXX. an revenue of $XXX.X recognized first through $X.X fiscal moving XXXX by of $X.X increase contract revenue the million. deliveries million, the in an increase was $X.X million, – in to partially of quarters of due increase The million a three quarters of product $XXX.X Now offset in of three quarters

is The other program of $XXX.X UAS by revenue; major first quarters of as revenue was was fiscal or million, or and or follows: and million, product XX% TMS total Small three XX%; HAPS X%; $XX.X was line $XX.X XXXX X%. million, $XX.X million, or was

million for first of in margin service three XX% $XX.X was to three increase of the dollars or The XXXX. the million. XX% $X.X $X.X for compared XXXX revenue, due product million, quarters of to margin of in Gross first in was margin of of an increase $XX.X increase the revenue fiscal or quarters and million, fiscal as

percentage revenue product of proportion to of XX% favorable increased an mix primarily XX%, total to in due increase a from as revenue. revenue and margin to the Gross product

was The year-to-date $X.XX XXXX three from compared year-to-date bottom income the XX fiscal net – diluted share income diluted discontinued per diluted million, XXXX. per quarter operations. of per per share, third diluted for of $XX.X quarters the or $X.XX earnings excludes terms or $XX.X share line, of $X.XX In million, to share first fiscal

services buyer gain a equal other business. In of performed per to a for Systems transition litigation Efficient income addition, former diluted the one-time fiscal share settlement Energy $X.XX includes net the XXXX quarters from first and of three our from

from to In margin $X.X addition loss fiscal decreased $X.X increased income million. equity activity by XXXX expenses investment a HAPSMobile $XX.X higher result method partially of increased the offset of year-to-date of million, above, gross net operating as of million,

rate for should I XX.X% quarters note an was for fiscal the of the rate fiscal to tax tax that of compared XXXX. income three first also three quarters XXXX, effective XX.X% the effective of first

associated intangible Non-GAAP share amortization $X.XX share expense, and quarters diluted earnings Pulse with for the was acquisition three costs per XXXX of integration deal for our $X.XX first and share fiscal Aerospace. per excludes of per

settlement and earnings from was $X.XX fiscal three a share share of excludes per Non-GAAP first XXXX of fiscal one-time per per litigation diluted for $X.XX the share quarters gain XXXX.

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

to restricted the the would sheet like in at fiscal balance as fiscal as million acquisition Pulse the of primarily cash to in the of – our few the decrease – venture. XXXX some from a million, investment $XX.X equivalents, $XXX.X key I million. decrease end our take cash HAPS year-end The increased joint of $XXX.X was Now of Aerospace, HAPSMobile of related from fiscal of moments balance our totaled cash to end XXXX well accounts. third Cash, investments highlight quarter and a of

unbilled retention $XX.X end million $XXX.X receivables and which year. receivable, at the party of Unbilled of of by receivables the the be related fiscal $XX.X accounts and this expect end totaled of the retentions was to including fiscal paid and current XXXX amounts, quarter million. Net includes third million, we

XXX for the of continuing XXXX quarter Net to was days third end of of XXXX $XX.X the for fourth to fiscal approximately XXXX. XX operations end quarter of third days the quarter compared the XXXX. the compared was at days, fiscal Total for fiscal outstanding at million, $XX.X million of inventory fiscal

U.S. outstanding fourth fiscal of Army fulfill the like of approximately Assistance of contracts in quarter third of contract. Brigades inventory Raven days, and XXXX. for the reflects LMAMS the fiscal the increase Days days quarter up a was Force inventory The from for number the to inventory QX Security in XX the build to and XXX contracts, XXXX compared

In and new and property invested amortization expense. quarter the in and in terms product to of $X.X approximately $X.X launches support we growth of million and capital XXXX, million capital equipment expenditure third our recognized depreciation improvements of activity

summarize highlighted our Lastly, supplemental I’d X to Page visibility, the of like on as fiscal charts. XXXX

As revenue million. fiscal in of today, have we $XXX year-to-date of XXXX

we XXXX execute execute million. we that quarter-to-date backlog $XX that in QX in ending million. anticipate of quarter anticipate XXXX $XX to Third to of fiscal bookings fiscal

fiscal revenue from funded contracts This We recognize $XXX balance we XXXX midpoint unfunded currently the incrementally or our guidance. no have to backlog that of rounds revenue year. anticipate the approximately during of million, to XX%

due higher XXXX anticipate credits. equity is rate effective approximately tax of rate benefits tax excess do lower of We to full-year This a fiscal XX%. than awards primarily anticipated tax full-year X%, the tax from and other

to I’d like turn Now, to the back call Wahid.

Wahid Nawabi

Kevin. Thanks,

our and on consecutive plan on are objectives to third executing fiscal top profitable track We’re line year of deliver double-digit and a our and growth. exceed achieve XXXX year

our million negotiations on midpoint $XXX described With reiterate visibility full-year number revenue range, to the underway, we Slide our to and revenue. #X, as of XX% of contract guidance guidance a $XXX of million in

#X. and mix improvements, raising favorable described As of Slide as on are anticipated a guidance, earnings revenue our result operational we

$X.XX between $X.XX and non-GAAP in between diluted and $X.XX $X.XX EPS. was in earnings guidance previous and EPS Our diluted

$X.XX at guidance diluted share and Our in increase of between non-GAAP $X.XX between the the $X.XX and $X.XX $X.XX This ranges. an of in is EPS represents EPS. per midpoint and new diluted earnings of earnings

revenue As producing of fourth earlier, customers for bottom midpoint strong delivering and our I year noted implies $XXX are fiscal guidance our our quarter line revenue investments range stockholders. XXXX of and results results million. The favorable our

quarters, this have it the delivered than is our lower is higher each past. last in we While of three than

to in extend creation. are track of achieve our We our targets confident our and record value ability

fiscal to to of X% to capital and expect we to X% consistent to with internal plans, our about revenue invest Consistent revenue. growth. in be year full-year of expenditures support strong on are spending We XX% continue this track our R&D

of XXXX have full We financial year expectations presentation. on Slide our summarized fiscal #X supplemental our

Importantly, we closely. coronavirus are situation monitoring the

virus Our effects at business any the time. adverse experiencing not is due this to

our international chain for supply abundance almost and limiting a priority caution is top remains travel of entirely some Safety Our by U.S.-based. AeroVironment we’re out of people.

we third from takeaways would reiterate AeroVironment’s Before like questions, fiscal I quarter. your key to our take

today, to objectives growth, a consecutive guidance increased are of year our we strong third momentum. track and our double-digit and achieve our First, on XXXX we year to profitable fiscal deliver reflect EPS

maintain we’re drivers. beyond demand year assessment XXXX, well-positioned to growth our our trajectory of fiscal Second, on based

And value our our effectively value for we’re creation delivering stockholders. third, executing against and long-term significant strategy to

for I you your for would our and deliver and thank our take employees team focus our effective continuously like and to support to in our confidence for customers to success, to us their their this mission opportunity dedication, the plans. most our stockholders challenging solutions

We with are certainty. helping dedicated to you proceed

Steve take Kevin, I now will your questions. and

Steven Gitlin

Wahid. Thank you,

questions reenter request comes begin you Our further now Alembic Instructions] your from any to first question-and-answer to questions. will at We that Skibitski session. ask please [Operator two Global. Instructions] respectfully We Pete queue limit Pete? and [Operator the the question

Pete Skibitski

guys. afternoon, good Hi,

Wahid Nawabi

Good afternoon, Pete.

Pete Skibitski

of point, leaning of range Wahid, maybe what with you the are pieces guidance maybe of could can are one or towards tell your high-end the about within the range quarter us, you low-end you this revenue moving at sort talk that range? And left? the

Wahid Nawabi

Peter. Sure,

in remarks, So revenue said the on what of year. third my we second during the as a I second-half mentioned first the our quarter, third to delivered of on. which quarter commented About closely – I be very third for the quarter and will actually earnings we the call,

multiple customers. at Secondly, a that as looked number opportunities we with well negotiating have contracts, domestic we as of and have both we’re international

$XXX that on of now, about that to achieve to should result a range million confident and the our based revenue million, ability our that that, have we a $XXX information on outcome. believe the we As remain guidance we’re

as see the as $X.XX favorable GAAP In guidance our EPS as that that our by we revenue as GAAP well on mix based non-GAAP. we the year, the this – believe EPS, terms on we both that well in increased operations, of in the improvements

third again, will year of double-digit line consecutive profitable the be, top growth. So this

you We’re quarter our to confident – we’ll throughout change, but quarter Should ability achieve call. those next targets. about and or otherwise, updated any keep the

Pete Skibitski

My came follow-up in down in gross for your strong the first-half fourth margins They third obviously expected. the first-half? on year. of expectations color the that I it we from Okay. to margins, your quarter, terms are Thanks. increase be appreciated? third in quarter? very any sequential sort of, would about Should think gross of quarter, the think, Would a the compare there the fourth Just How be as will quarter? the

Wahid Nawabi

Sure.

primarily the remarks, because top So revenue and in EPS. you’re the type on correct quarter. That’s for and we, our which revenue of mix volume, as of timing stated expected only as of on mix, the line on of absolutely GAAP non-GAAP bottom And revenue that optically this the I and we line we the contracts, we guide that services based products third QX, quarter. as contract lower only for versus had the well third the the

most quarter both at gross full-year, results, based and full-year higher and that on and the slightly percentages look if with that’s For achieve R&D guidance raised to would the believe the the as the spending why reason full-year likely margin our for confident and the GAAP that indicate our revenue on the number, guidance. you we’re fourth as we non-GAAP, EPS EPS well Obviously, we at it.

Steven Gitlin

Hi, comes Herbert And Pete. our you, Ken Thank next from Ken. Canaccord of question Genuity.

Ken Herbert

good afternoon, I or morning, good Steve welcome, and Kevin. Wahid Hi, and

Kevin McDonnell

you. Thank

Wahid Nawabi

Hello there, Ken.

Ken Herbert

there’s Maybe a wrapping contract provide some the some expect first between seeing some fiscal the XXXX, uncertainty just contract. bit and – up? It LMAMS see around just to Hey, pieces into slips in like on of little maybe what Wahid, it moving color that that potential finalized in the Or sounds fiscal it? when maybe or more XXXX? now handicap wanted you’d you timing. you’re if that still and I ask Can just the to

Wahid Nawabi

Sure.

a as mentioned Ken, the So, the in you we’re of stated, Obviously, is and in I largest TMS multi-year on business. much history yes, very contract, as that the this of negotiations contract contract. thick remark, our on the the

significant it’s us. for contract a So

the quite take contract good although progress. does of such long And definitizing process We’re time. negotiating making significantly a and a

the or this this close to either of fiscal year end expect the next. of beginning We contract towards

ask me. So really, timing optics a if it’s situation you

as full-year. that, of to are opportunities EPS achieve we the with as of for we for portfolio the well range on that based a we increased believe Regardless guidance have, that the full-year, that our ability confident provide our that we guidance revenue

range likely So a contracts look and we time. the at is that factors different and quarter most outcomes we of at of to number opportunities believe for the this determine

Ken Herbert

this you Thank you. that I provide if Can to to maybe could variant And anymore indicated, fairly a you a market. larger Okay. contract, you’d Wahid, getting on be follow-up any your which this of detail larger on Switchblade target detail, call, maybe this I about when just as you’ve view talked these Thank your for addressable you’ve Switchblade, you. sounds some opportunity on market expect larger or under other interesting? think

Ken Herbert

No problem, Sure. Ken.

U.S. sure course, that been we I and as and essentially shareholders every almost competitions in contract to decade has successfully open investors that entire the yes, providing that of and I’d we wanted introduced that on competitive Switchblade now initial competition single our So, our we’ve military the and analysts. won a make – to our our over contract been to open competition clarify history. for

in a and original much impact. longer bigger larger are of obviously, further the fly variant or and we larger of mission two, our variant, carries mission Switchblade. of the a This midst development effects Number

addressable so the for increases what Switchblade does, missile market size the systems that actually tactical significantly. of And and it

And to – develop part customer the for conducted we’re they And and of as exciting exciting that we’re We market to introducing we’ll it’s looking obviously with a introduce for successfully next-generation alongside we capabilities which a deliver and But you the series product in of deliver near it, ready Warfighter have forward make already progress we’re effort. the to which the this update and very flight of that development at time. us. it’s co-funding very capability, need is our more to and tests, the future.

Steven Gitlin

Thank you, Ken.

Troy. Jensen question Our Troy next Piper at comes Jaffray. Hi, from

Troy Jensen

and Congratulations profitability. better gentlemen. nice on Hello, the results

Wahid Nawabi

you. Thank

Kevin McDonnell

Troy. you, Thank

Troy Jensen

$X.X the all, clarification. that Did segment was you of first say HAPS million? so Hey,

Wahid Nawabi

I revenue that mean, segment, $XX.X on I believe that revenue Kevin HAPS mentioned his HAPS million. – the you say remarks, was Hey,

Troy Jensen

$XX.X million.

million? $X.X was TMS So

Troy Jensen

All right, perfect. All right.

that question next just few there’s would would looking listed be is, it test And I like international curious there, the Telefonica, of for? a would and seems perhaps the be Alliance, HAPS I to follow-up HAPS be, – service the next should know a then about just flights more then So milestones the love these – timing to carriers Deutsche if interest China the at provider just look Teleco Telekom, the and but on U.S. in partnerships? you think

Wahid Nawabi

Sure.

customer So know, in essentially that testing, as refer terms the, flight development provide design, what agreement, airplanes of the and our demonstration perhaps make the we or the design being also et venture. milestones joint you two to to we develop of those et a And flights, achieve cetera. cetera, we as we’re means of to certain deliver under and that, airplane, and to HAPSMobile which it, part have produce have two

are plan, altitude business of towards And test, higher multiphase flight, we series war, increases this coming going we’re of currently to be which it envelope, light phase multiple, well as of for flying this and that what the flight it as both the near end Troy. terms preparing of higher. of in airplane of duration essentially does, We’re a

of of then goal binary our a is all it’s successfully. situation. a obviously those achieve And sort to not And

so effort. is our progress represents with we That from essentially flight with we’re and we very and transition are phase – where this to that significant this going results development We’re the another far aircraft and airplane, this certification development which a and pleased believe of And in area. to opportunity. testing of we’re significant making the long-term is very design

step of very the second Alliance, of terms question Telecom HAPS is as the it what HAPS Loon. – The a stratosphere and opening formed adoption HAPS connectivity. as major, AeroVironment, three the I the Japan, for Alphabet’s that partners call, of Alliance the well initial SoftBank was the XG your yes, In towards Alliance, essentially,

this have with essentially And well since bring this do other is technology, this and stratosphere as and joined from the launched That intent capable do to essentially global XG – realistically bring both Alliance. and is multiple as platform. forward we main how of already, the to industries of global have movement. companies, topic intent here And make harness now, we how connectivity telecom, we HAPS able we that HAPS the

We’re very pleased the alliance, progressing this is actually and already vision to joining one forward that to us we endeavor bringing this our around of look world efforts multiple and has become this day. parties and from reality in members

Steven Gitlin

Thank you, Troy. Louie. at [Operator Blair. William Hello, Instructions] Louie comes Our next from DiPalma question

Louie DiPalma

Wahid, and Kevin Steve, afternoon. Good hello.

Wahid Nawabi

Good afternoon. Hello, Louie.

Louie DiPalma

for $XXX guidance related Kevin. of LMAMS end the And range bottom of revenue and to XXXX the April? First one between top difference the the start the those million the to Is contract? before expected are shipments

Kevin McDonnell

Yes.

and that we I have opportunities think, earlier. possibilities. Wahid a of had addressed range different Basically,

early into we’ve next either obviously So year or taken that account as look we to sign this that year.

Wahid Nawabi

Yes.

a different what’s we this the likely make expect of variables number range and all at opportunities, one time. believe one we look and Louie, determine we – achieve the most to outcomes different situation for break us. by factors neither or at range of one of our we specific that is the different So And we

essentially And it’s of the we quarter. is, But the the And and of profitable by confirm which range. us consecutive to are our still of the delivering we why of growth achieve line here. at may not the contract could expectation happen double-digit either of XX%, that quarter top next in terms fiscal bottom of end case, close process confident makes this it line the we about third going this our that’s year on increased definitizing. top line to its the our end beginning guidance either or since or our to part ability We year happen as believe

Louie DiPalma

budget And, the for have so wants seeks you against competed to to successfully LMAMS? LMAMS that large which or the Do good. you your that the was a fruition, that of years. you that past actually to just come Wahid, request second the achieve Do that feel source over the keep toes? they Sounds benefits budget that the request, you in think not eight or for but reason may customer put you diversity, many noted there do on contractors you think

Wahid Nawabi

So I’m question. we glad clearly, where let me asked answer based the question this you see very it, on Louie,

and both technology startup those. U.S. companies but single ours just First LMAMS of DoD competition Open defense other – that the and and have large every historically, UAS of competed DoD, foremost, one, have a non-defense companies. the received on multiple whole from competing, and parties competitions contract with we award not as with products we small for world.

at that record had this plus we’ve almost, losses you all, usually that any last Number And I’m track are of months could record significantly are budget one. and documents advance. my decade in knowledge of the number in see the developed to in familiar our a from and strong we’ve probably our formed months space advance when had over way they not two, track knowledge, aware to today, formed,

And has remark, with it Pentagon the is specific qualify a the that. earlier I – different competitor or purposes I to there at to call include on it familiar dollars allocations a essentially, look my or mentioned very says for I items. second Usually, or contractor..We’re million, of for which million think, $X.X $X a

has with fact we We also are have this the and past familiar very very that competed happened the successfully. in

that last three our we’re customer not I ability contract at the to but to least, negotiation right now our years. that solutions mentioned another And for least deliver extends under

three-year a that’s contract. So

that has to that in competition. focused So that absolutely that and we are on look are this we past. one won argue sure forward position used win the as we to beyond tried for And we and that making could to we really

is is us. a growth And because for very again, this this a opportunity us to positive,

We capability. have developed this

missile this Switchblade patented And systems. that the that differentiation in to tactical our which space wave against such and we a solution competition. compelling in are as off all systems, capability, welcome is loitering technologies hold globally unique very we munition we within our believe the have and competitors our We

Steven Gitlin

you, Thank Louie.

from, with Peter, you next Alembic once us? Our again, Skibitski comes Global. Pete question are Pete? at

Pete Skibitski

I’m Yes, hear sorry. me? Can you

Steven Gitlin

Pete. Hi, can. we Yes,

Pete Skibitski

Sorry couple about follow-ups. of that. A

international was First the for Do housekeeping you have revenue one question. what a the is just quarter? guys

Wahid Nawabi

second. now, Peter, a to going up you that We’re for just right look

Pete Skibitski

one you second that while guys the Okay, up. great. look Well, maybe I’ll ask

sense of I Second figure for Army’s I’m the one I larger through budget, trying right in was the of of terms production. on funding in sort don’t a because know that, LMAMS to Switchblade for looking get you see kind anything guess, better there see the out, the variant Switchblade larger of funding. now a variant.

maybe do in beyond? run is you you production will and So, funded? budget, to I’m the guys be or larger missing it. hopeful But variant that that, it are it’s maybe fiscal sense Switchblade that added XXXX this

Wahid Nawabi

Sure.

product customer product our loitering this future launched So customer always we’ve and when the believe from believed co-funding inception was there we systems we We’ve and market. family is first And together. a believed of us of have and strategy tactical a always us missile line. that that business munition our the that funding with the of the that to

of terms opens a and Switchblade of endurance longer it up envelope So a effect, what this it It mission exciting our beyond further about and has is is missions flies capability. a one in flight also payload that, far bigger current its original because carries obviously, the duration. larger

are and dollars that addressable the look other spend category much it’s space, that DoD If larger systems that you market. in spend much, of at in

while and flight achieved had successfully so customer. tests this progress been in And we’ve I’m far series we made very those. So is that with incredibly our great, we have a the pleased co-investing we’ve of

granted. the for that do customer of lethal to and a loitering continue mission-critical munition, our is safety with and reliability We Warfighter nothing we utmost importance and obviously for take

series going product doing ready, could when market a the we And in hope you future. – to testing, introduce we’re we near through we’re so this of obviously, tell we’ll the And that that. we’re and

like new you introduced is with was as And there product, remember. Switchblade, like that in as that believe the of first just When market. a terms our we this nothing capability, case funding, it is well. we this In this the

them to obviously, so, with we them to have work capability. and And customer this educate our inform about

in And So long-term the value our they we for strategy. alongside new of this why one growth long-term. obviously, that’s the the of customer in this acquisition their can invested or dollars switch essentially creation and acquisition generally reasons the consumption dollars, for

Kevin McDonnell

the To the your million. was answer first revenue quarter in international third $XX.X question,

Pete Skibitski

guys. helpful, you Very much. Thank Okay. very

Wahid Nawabi

Peter. welcome, You’re

Steven Gitlin

We a this no of your and we Thank for further you An this call, for relevant have on questions. thank you At and you, results. archived again SEC company attention in Pete. filings version We interest AeroVironment. your time, all you website you. with day, next news our to Thank look be wish quarter’s found good and www.avinc.com. speaking we can forward industry following and

Operator

And Thank conference. thank for you, participating. ladies concludes and today’s gentlemen. This you

disconnect. now may You

AeroVironment (AVAV) 3 Mar 202020 Q3 Earnings call transcript