AVAV - Earnings call transcript Q1 2021

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Steven Gitlin

Good afternoon, ladies and gentlemen, and welcome to AeroVironment's First Quarter Fiscal Year 2021 Earnings Call. This is Steve Gitlin, Chief Marketing Officer and 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

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

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

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

Wahid Nawabi

to our emphasize Welcome fiscal year Steve. quarter #X earnings included key our call of will messages three earnings I conference on On Slide presentation. call. first today's you, also XXXX Thank

pandemic to resulting we year and are COVID-XX the despite global on challenges, track fiscal our objectives. achieve unprecedented First, economic XXXX

progress UAS, and our the are growth we'll will by And while quarter fiscal make then we long-term tactical third, on summarizing key to missile shareholders. within systems to value our executing I significant our our XXXX strategy initiatives start Second, growth successfully year continue delivering performance during HAPS discuss quarter. our product we our achievements first lines. first tactical and

take Next, year for I provide then will outlook of performance more our will Kevin, the Kevin a XXXX summary quarter, fiscal detailed financial your discuss questions. and I before in Steve and

year. $X.XX operations $X.XX financial diluted Slide earnings during was fiscal performance we year in a per Full from mix revenue our quarter the summarized the $X.XX of presentation. to shared primarily our per fiscal compared from resulting for we Now call. year our earnings $X.XX for which was XXXX prior quarter million fourth with earnings delivered continuing shift you for year have expectations conference revenue let's year to with on quarter expected. earnings share Non-GAAP which consistent review the difference We $XX.X we operations diluted the #X compared XXXX prior first from continuing share a in of

robust plan our for continued highly executing are meeting solutions. differentiated global demand while AeroVironment's We effectively

achievements business Now, I will review first our in the quarter.

revenue systems small XX% total of aircraft quarter. in represented Our first the unmanned line product

our Wasp the and Raven, in global battle for Demand solutions Puma Importantly, market we remain for proven strong. remain small UAS. the leader

other more Puma customers LE a footprint Group orders fly in for to X Additionally, customers now time lower cost at X engage with than Group six system LE's fly our This extended capabilities a have continuously can we which and Puma of the and for number continued substantially half X growing provides with solutions. even received Group hours.

to customers radiofrequency in these such Recon enhancing Quantix system data deliver operations. features its silent fully advance and to a advanced one human operation, launch, We require continue mission. unmanned who of demonstrate compelling Quantix operator's is collection, as flight are landing, on cognitive operators. focused intelligence We capabilities are planning, are customers who not on the autonomy believe first automated interested and load Recon to the attention a during level capabilities and does reducing systems of that its to

our capabilities these to expand in define unmanned continue systems. expect We future solutions increasingly to and of the to

at work provide our generation next hard tactical Our our teams for customers. of to UAS features creating to are these

Next our revenue. Tactical about Systems Missile product quarter line XX% first of represented

on award LMAMS for during year anticipate of contract are award first our received our We've executing in year this of end from recognizing the against million fiscal we XXXX. million recognized million XXXX, as of quarter fiscal we $X of XXXX, XX. another total revenue that Switchblade about April We the $XX record and $XX about a year fiscal

this into of momentum a continued support fiscal strong number funding. developing Our and largest tests demonstrations, year Switchblade and our last successful variant customer with continued year

deployment As a this part customers year. variance to we plan for of our fiscal deliver of this operational systems to maturation, number

establishing our with customers. initial expectations We rate the [ph] are of also low production consistent capability

than currently We government Switchblade fiscal this such as and $X and a dominated Javelin, larger TOW legacy by missiles solution believe disrupt variant procurement to enacted These larger segment more the represents for billion changing of funding continue a missile Hellfire, DoD legacy accounted year XXXX. game a to missiles. market systems in

that which longer of higher successfully represent flight Moving completed quarter. quarter were we was phase. fourth expansion the Sunglider first during tests also in than the of following envelope HAPS, process solar revenue, test XX% execution flew first newly demonstration we named this HAPS the previous the a to flight now This

testing this and certification current a our expect phase transition full year to program the of to end toward We XXXX. fiscal

alliance capability technology leaders to about telecommunications, awareness with momentum joining HAPS result, HAPS or global a of million. the expanding aerospace to fiscal realize a this rate revenues continues build us and should potential. with its As emerging for forces our From to XXXX broader year and this similar run produce $XX of and/ perspective, HAPS in

build the positioned and related pioneer platform space, capabilities AeroVironment and will a establish very As HAPS in and relationships market. leader bring is that to this to well

SoftBank strong for and on progress HAPSMobile global deliver with and shareholder with Inc. provide foundation HAPS our payload our create Our a collaboration joint solid means Sunglider's Loon realization [ph] the Alphabet's to relationship and Corporation, continued a venture, communication as of connectivity value.

our I Now, COVID-XX impact to business. address would like of the on

and delays some international as contracting experiencing our their continue are We remote customers working domestic own customer adjust to in decisions situations.

annual assumptions resulting which about XX% half experiencing When year year. loaded pandemic. the about with it is of is impact the we delays also in areas slightly from second of some we are plan why of included revenue the in pandemic the supply our the fiscal chain fiscal XXXX our We limited of backend developed

an are is next fluid will very and calendar remotely pandemic continue this delivering in the majority will year of to mitigate from COVID-XX emerge our track and and well on persist our situation, we and uncertainties while even for objectives and positioned While employees, the team focus to vast as its unprecedented Thanks stronger the growth fellow we this year year and maintaining the commitments achieve of pandemic long-term. on confident are a the fiscal shareholders. pandemic, regarding the company. The operate members are impact our ahead to over XXXX unwavering remain into that to for our we to prepared likelihood well people customers, positioned on the business. our we our Despite are

to and of different year Great the culture. AeroVironment, XXX% the the were overall work. Place assessment, fairness, views questions to Hispanic As working as about of credibility, recently a a people very members and certified respect other look in Work of XX% organization a to of methodology how great of groups Great LATINX, our XX% American-Americans, justice, year. is to of completed how by When place for XX% place The at dimensions the a year anonymous the involves of measure of second a score survey environment LGBT team Place agree AeroVironment to we and a our a row. great about sending our people to assess our to work [indiscernible] we Great responded relating rose survey or from feel to of Work to Place detailed their company's on all at and XX% feel who AeroVironment members demographic survey Work XX% Asian through company this last significantly of within workplace that number

While we and these best-in-class work is that very do. to there are scores, more realize high

to earnings within groups underrepresented last of our remain increasing on and African-American discussed call, we promoting diversity representation committed we and AeroVironment. other As

and has AeroVironment This designed our meeting new relating committee from a committee company diversity of XX about been calendar includes Our and issues diversity. has awareness and of regular for representing internal members to a basis on backgrounds to raise team identities. across a broad spectrum events developed inclusion

minorities and religious origin and efforts people to beliefs, mental programs team both of the serving institutions, Our most education diversifying through gender, country continuing or continue carry also in our further recruiting talented and efforts regardless of seek team in outreach include local ethnicity, committed partners race, STEM objective advance our we orientation. to directly. generally our more plan the We [ph] to sexual out and remain communities. of We're to to to our join

a summary financials. over McDonnell quarter Now the for turn I call will to Kevin of Kevin? first

Kevin McDonnell

revenue financial presentation. of details $XX.X quarter million. first press for of increase reviewing I by of slightly our some Today will performance. first I XXXX be the of only the presentation. the our I XXXX both is deviate will and and on referring quarter earnings Wahid. contained past in metrics Slide our X% revenue and financial website. first will was breakdown presentation an $XX.X of products the the my practice of by release fiscal addressing from leaving the quarter X the Thank fiscal earnings key remarks you, quarterly of press of The earnings to available on release be highlights from million, of Revenue

the up revenue. strength been revenues from by was In lower During domestic saw offset most and impacted we has XX% general visibility same our international XX%. COVID. was were This developmental last which small year HAPSMobile UAS small largely period in the UAS international up quarter by which

strong expectations. Turning $XX.X last with to our first margin and X The revenue gross quarter an margin was gross overall quarter service The earnings line the in mix exceptionally XX% XX% gross million in product of outlier million with was mix. of or overall or last XX% past Gross over margin first year for $XX.X quarterly revenue, was gross the year the shows of this the our compared trends quarter service of year. gross favorable for product margins Slide product XX% XX% fiscal margins the to five first quarters. presentation margin and in

a expense for $XX FY million SG&A first compared SG&A expense expenses. quarter of FY was will quarter show to for first revenue trade COVID XX% to lower XXXX. expenses operating I expense the quarter is large R&D $XX.X revenue current expense travel R&D Next, $XX.X of compared spend revenue million of $X.X The of turn related result of million to restrictions. reduction for of revenue the the or of million the to quarter in related of XX% in XX% of the as or was quarter XX% or part for XXXX. and in the or first first

variants UAS enable investments. growth investments drive These additions. the investments future TMS UAS our of in make small small current lines to and product will space product both include products, longer term. product to lines continue and continuous the these at and near new leadership significant believe R&D and enhancements We We within

tax SG&A to million decrease Net positively tax was share attributable increased to Looking per net and fiscal related in at at the excess expense lower in of for diluted $X.X investment of due the tax of XXXX. rate $X.XX due lower the of interest quarter The from per was primarily first impacted reduction income $X.X bottom compared which of year to increase diluted income benefit policies. for R&D of first $XX.X XX.X%. AeroVironment largely to million quarter XXXX were line, mentioned X.X% million previously The more equity and a reduced $XX.X of reduced prior million versus net $X.XX reduced to margin was investment million $X $X.X gross or million investments conservative yield share income of or was income $X.X dollars and rate by fiscal result in million awards. the an

XX% Looking at the full year, year-end XX%. between we rate tax and the be expect to

per fiscal quarter GAAP the diluted In related share was Aerospace. shows first reconciliation first share associated integration Non-GAAP includes $X.XX diluted acquisition adjusted acquisition Slide share terms expense quarter diluted of expense of amortization non-GAAP per of share share, of the with for Pulse per deal EPS, $X.XX EPS. $X.XX to share associated XX earnings and the for which was and per our of diluted per diluted per earnings excludes and Pulse XXXX of intangible with and fiscal $X.XX diluted costs, Non-GAAP intangible adjusted expenses amortization of excludes our XXXX Aerospace.

primarily Turning the of and cash cash activities during the improvements XXXX. a improvements of bonus which the offset equivalents was working quarter we lower of $XX.X quarter a was to ended other at Total lower accrued activities. the position. accounts fiscal accounts of liabilities result decrease from sheet, working came and partially the again a receivable, payable operating Cash, by end flow capital of end of balance of capital as remainder payouts. once million $XXX.X first fiscal and XXXX result operating yearend from totaled million cash reduced the $XX.X million, strong $XX.X investments from million from the quarter in The

In expenditures terms of we spent the quarter. million during $X.X capital

Now highlight some of our to I'd backlog like metrics.

of $XXX.X XXXX $XXX.X the fiscal a the fiscal XXXX $XX.X was $XX.X and a million, decrease quarter QX decrease backlog million of of backlog at the of funded from of from Our of million quarter fourth million. first end

anticipate in anticipate quarter-to-date execute This million. the of million, that fiscal is anticipate of or of fiscal range. revenues X on XXXX XX% backlog we first fiscal highlighted funded $XX visibility, million of up execute $XXX of we ending terms million, from bookings to which contracts $XX $XXX midpoint year to fiscal as balance recognize unfunded revenue earnings revenue we to we In of have of that our XXXX XXXX during incrementally the guidance XXXX $XX million, today, adds the of quarter presentation, of year-to-date to backlogs in Slide

it Wahid. turn to back let's Now

Wahid Nawabi

strategy Thanks, on Kevin. AeroVironment's growth is innovation. based

investments research Our last typically investments. and of solutions are the each R&D These and XX% result development year XX%. totaled our strategic revenue of exceed year

our our of and We profitable model. target of markets successful pioneer the value are leader the demonstrates and creation one growth strength of our every in track business record and

and continue with capabilities and solutions and invest labs. innovation to Works growth through in engineering new We advancing MacCready our

these of seek Some efforts existing enhance solutions. development to

Some to end introduce for and target new markets. markets, new some solutions existing new capabilities

more of valuable portfolio customer address a our to expanding broader are We and missions. range

new a And Customers support business Switchblade tools new our customers. we are our LE strategy we are DoDs Puma We're integrating of protect example, robotics, technologies For variant on smarter largest and to doing and shareholders and to potentially and capabilities, software demonstrating and rely and customer’s more our and to capable the and our forces. valuable the solutions developing to within enable to are contested autonomous our and sensors, U.S. environments. portfolio multi segments. solutions permissive new addressing equip unmanned By offer new aggressively missions analytics to against market and solutions executing connectivity our grow missions our we much customers that with adversaries innovative systems more value solutions the believe continue to continue so, even to and greater unmanned win. U.S. deliver will domain

uncertainty. continued we these for budget who compared to difficult provided U.S. DoD's are that the great given categories there and is offer confidence the upcoming priority, by attractive suppliers. defense unmanned our the the to times balance our developing solutions in By support remain solutions. is budgetary investments. budget of a robust $XX and supply Government's funding likely in for example, that Yet economic we're the the the future, presidential economics legacy we among attractive the It during and procurement sheet now of as future in contrast, impact solutions. believe receive defense the of pandemic. For long-term seek like signals partners massive time the election and the is generate bipartisan the AeroVironment segment systems into budget of We Government assistance In Federal are confident strong fiscal to the high know XXXX year fit to customers that proposed million and most U.S.

position Additionally, our serve our visibility support midpoint a of opportunities of fiscal valuable our cash no inorganic million growth range, to of guidance $XXX our $XXX and earnings and the debt XXXX that full as summarized presentation. million XX% strategy. Slide Supported year strong to we by #X resource our guidance revenue on reaffirm between on as

and assumes XX% of ownership and of an venture. operating margin of guidance the to earnings financial We per expect X% This $X.XX HAPSMobile diluted $X.XX. approximately between XX.X% joint share

amortization earnings non-GAAP We XX% be which to $X.XX. expect to diluted midpoint revenue the per and range. excludes expect approximately still acquired $X.XX first account assets revenue share, half of guidance of between to We our intangible for

per first earnings diluted We XX% of share midpoint about diluted half the also EPS to expect represent range. our of guidance

mix earlier, mentioned fiscal to year prior percentage margin XXXX a compared revenue in the lower Kevin year. result As gross as will in

development XX% expect main we track are call, fiscal summary, revenue and achieve today's the COVID-XX and fiscal We to XXXX global year. between XX% year In of research and despite to range unprecedented objectives. pandemic, challenges, first investments reiterate points on for the our economic resulting our to this

Second, excellence. engagement our Systems are tactical our product growth team UAS, initiatives customers, Missile our we our within for to your ongoing significant make we value and and you and challenging shareholders on to to while deliver members executing Thank delivering Tactical lines. to long-term successfully us always progress key our shareholders. HAPS And growth our for continue third, strategy our

take your We I on proceed you questions. focus Steve, promise help and continue now our certainty. with on to delivering will to Kevin,

Steven Gitlin

you, Thank Wahid.

question from Ken Herbert of answer Instructions] We the question will Ken? Canaccord Our and this now comes Genuity. first [Operator afternoon session. begin

Ken Herbert

Kevin and good afternoon. Yes, Wahid, Steve. and hi

Wahid Nawabi

afternoon. Good

Steven Gitlin

afternoon. Good

Kevin McDonnell

Hello.

Ken Herbert

off, the first remainder you in execution on progressing which for cadence your just for would think LMAMS year. of quarter, through fiscal you I could million the provide that your that we million the remarks start I that more accounted Wahid. detail XXXX? in any about mentioned should $X wanted wondered how or Hey, is first the $XX to of revenues the of if on imply, I just think contract

Wahid Nawabi

Sure.

that my in XXXX, fourth of we fiscal million quarter, revenue I contract, quarter $XX fourth fiscal the what record that last quarter contract approximately on on on received year. last recognized was Ken remark year of we our said So worth our of

that, our first worth $X full addition quarter. this the recognized in of quarter, million then expect the of In we we million roughly about from revenue year, worth about revenue to LMAMS contract. And for $XX roughly

So the fourth to million $XX up expected contract value. that of $XX number roughly, recognize XXXX we're to if you worth million, to fiscal revenue the of $XX approximately going quarter, we against add year be, million

Ken Herbert

question detail through fourth for quarter XX and of was in first my can how this year second, more you that on and provide us? Okay, third the six with any quarter, the paces the

Wahid Nawabi

correction. So of first all, a quick

think quarter, for $X million $X mentioned the that the of I worth we not revenue set first million I earlier. recognized

of the on varies ASC rules. based XXX revenue recognition the it terms In really distribution,

have revenue. happen, as will specifically, towards recognize progress that, not you build customer and the We we acceptances see specified and the contract we could details products, of but we a

Ken Herbert

a maybe that that one dragging I of quarters? prior impact, followup, guess you COVID customers, especially your bit, the a revenue are $XX you as that part impact, customers? international you've you great. could million or years, compare give where that COVID maybe Okay, with the And I line. the as bit, second just Can provide you of down far you the XX% How maybe, or in full on quarter, international the were that I number, to towards down mentioned, obviously, quarter year ahead dragging booked that with this so if think does any especially prior

Wahid Nawabi

Sure.

for in So for cushion expecting. developed terms we we as the year, that some I and we our in COVID-XX and my year when that at made in end delays mentioned put buffer accounting overall plans remarks the last we sure were Ken, fiscal pandemic fiscal plan, of the of this

at the comprehended of year, that we some those that beginning the our of developed of fiscal mentioned. types or of before original plan the fiscal beginning the delays expectations those So of year I

track are last results and -- our with So and those quarter, since to that have on results results expectations first we're those quarter become to right within expectations we're so reality far. so pleased our far, so according the very we far you we then, communicated

But in bookings We business. to time. common and lighter for something had in expected be of business. again, a quarterly that That's in past. the bookings quarter We've long than business is first flow revenue had our very we've normal downs in distribution and ups our our natural this the very quite

Kevin McDonnell

where last We at. is right did years, pretty a we're but in the that's better little XX-XX much bit Yes. line. how in of couple it's --

Ken Herbert

And is visibility at the visibility time in a previous line from perspective, this years. in point with in visibility current

Kevin McDonnell

been We've in where now. last -- Right. been we're XX, right at that's low XX the few the have years percents, and

Ken Herbert

All you. Great, thank right, good. very

Wahid Nawabi

Yes.

as have Ken our the the contracting we've which our as year. quite with according plans and we're customer expectations our nicely, quarter. keep both suppliers, some plans, of it's for noticed we'll to very in as so quarter throughout and all some we the our and well on we of side, the you So specific expectations, updated on year progress much line first first our far throughout accounted certainly, delays and Obviously, progressing in

Ken Herbert

thank Great, you.

Wahid Nawabi

Thank you.

Steven Gitlin

you, Ken. Thank

you Our next to there. I'm off going question, cut

question comes De Joe Joe? from Next Stifel. Nardi at

Joseph De Nardi

on LMAMS the more variant and Wahid, thank you've of color some helpful. Hey, the guidance additional that's you and provided, good the for afternoon. granular

Wahid Nawabi

You’re welcome.

Joseph De Nardi

year? game changer. I you think, this expect preparing I you for LRIP You adopted award year the when would that, capability. as is capability fiscal characterize would think revenue if the with and a associated next And sometime you a described that game AeroVironment is mentioned benefit to then being wondering from variant also I'm that the or changing Thanks. LMAMS

Wahid Nawabi

Sure, Joe.

high provide within information to and So at thanks. our we the level a business. much confidence We we try to as could, accuracy can best of as do

TOW, we this that do of reason larger is of of terms The we roughly believe current a billion. larger Hellfire was year that we which the current the year budget the market Switchblade, of in or game or $X changing that amount In because a variant spending size, this about Javelin a why U.S. for is compared believe DoD's a capability. variant to last

supplier increases our us, size producer success significantly Switchblade. seen for that and it had we primary believe customer. relative opportunity that for it as and so been this additional you've market two, of variant, market very record bigger to progress. with a far and our we're larger original U.S. Switchblade said, variant I us, Government for contracts, the So co-funded to as making opens that, up good a We've far, much and tremendous Number one. original by the so we've the We, is us with this number

manufacturing terms and progress the initial endeavor an is maturing our footprint. a development setup longer for capability, We're effort. we'll updated. making the of good And you capability keep and for developing are really the it, in term Obviously, low and production this about We designs already us. progressing and rate but started demonstrating in gain we've initially excited

for and potential, revenue It and is We there. a be long there. significant. is out execute terms market the there. The because play couldn't deliver to the hopefully quite itself. In funding will is run, in The just rest capability potential dollars have the the of game are it us changer

Joseph De Nardi

And then the an award? timing on LRIP

Wahid Nawabi

of in terms the investment manufacturer. all are generally So because is program. on we're The co-funded part our we manufacturing currently this for

as go the forward. you updated awards we on keep will We

in I in growth and mentioned customers low the remarks, right for quantities limited As already my are process our building deployment now operations. initial of we

the I on of with customer. that have As it mentioned our the part and my program we is remarks, effort

can we share to have we that share, when information be So with more you course. will glad of we that

Steven Gitlin

you, Joe. Thank

Skibitski comes Pete question next Our Global. from Pete? at Alembic

Pete Skibitski

good afternoon Hey guys.

questions. Just a couple

two, get year First be? Recon, next kind your term is I guys the you it expect in record you one, play perspective think I -- in contributor this how of to terms wanted of Quantix and to I near of overall, think on a do a of, program could or into a revenue sense do guess interesting. the

Wahid Nawabi

Sure.

but asked is customers. So way changing that with a believe such asking who why that able be desires key that addresses to the some Pete, engaged and programs is silent really, know comment There go do and and the and Quantix wish we literally to and on those have position system And not game conduct operation, really is Recon, to and would I have this autonomous where mission believe that a a you of into operates, radio system Essentially, with is specific in know a operation communication have We're radio specifically. as for, navigation a we a long we actually a requirements the for reason an silent attractive. time. any operator not of or no for area customers mission and automatic is program capability. customers and planning have I'm you can while been this fundamentally achieve and record, for in designed then because really the our a capability this terms of flight

and in more to of other systems. a to as strategy system our that the delivering we're keep We those another time family We'll progresses bars customers of over customers. of hopefully to solution process and it's our you again of, customers offering our have some as overall delivered some strategy part updated of

Kevin McDonnell

products, record also led that how products. worth we Systems, could could those those new of record. programs define put were in began the across we introduced the ultimately be of small Missile how capability. if UAS, maybe used, some there began We in and operations understand look a and noting those they into portfolio programs those It's We no add hands Tactical and competitions Switchblade, in to and value They of they when customers. cases, to to when our you

number offers of quite it the the before years. of Recon what that unique been Switchblade follows was and a Raven a the capabilities adopted model like adopted, is looked like similar Quantix to what we've successfully So before nature of following looked set for years it was

Pete Skibitski

just Switchblade this TOW essentially, Okay, a follow from fair all talking system? on your as those, variant replacement, lower You or head as didn't to maybe get a see right? about as opposed or me I'm powered it point. and Javelin up really missiles, mention Hellfire replacement more more higher into guys, missile because kind deliberate? point a of one you're larger just Was programs trying price motors. motor point Do replacement to that for of it of price you

Wahid Nawabi

those generally capability why a known. capability. broad, three and the category fits we highlight missiles is is of they're well to just and chose warheads size in This of reason So Pete, that because very

are the nature is a is of to the Switchblade what of is. of you number sense in size a that terms capability have works, into mentioned, disruptive that same. besides comparable very or and form three there that some or no what it. give the try So look how obviously I something that we other could built they're and of of we as guys this exactly that We mentioned, to like how believe really and of by technology it's absolutely way, its qualify means ones innovative in the that shape a designed the peer and here But market is idea type

position we forward we in to more through process, obviously a as in you progress. progress do this more details about we'll and we're with and goes As detail time that it share

Kevin McDonnell

question, that to Switchblade in scalability. Pete. nature The of one thought response systems of is your just And emerging to add the family to

example. targets. an Switchblade infantry significant farther, is the solution small warhead are start variant along kinds different obviously portable certain of can The backpack, that missions you targets of not effects if points designed soft [ph] on of type addressing for kind man So facing. with bigger, more original for larger that and customers there different scale, deliver And all larger opportunities for longer, fly a much carry are our just

mission designed systems a we're early across this to ultimately unique family stage very is deliver able evolution of So at be of of a broad to the capabilities sets. that of range

Steven Gitlin

comes next please? Baird. from Peter, Our question at Arment Peter

Peter Arment

good afternoon and Kevin, Steve. Hey Wahid,

Wahid Nawabi

Good afternoon.

Peter Arment

of kind probably progressed, of kind but the on into commentary there because now and little we bit are XX%, that about, you mentioned expecting you improve contracting a some since have international as you were, of the also quite fall? of some gave I Wahid visibility, in to visibility of you've summer a Hi, get got has that UAS seen, guys bit we've COVID. guess, How small the around --- delays as that of you

Wahid Nawabi

Sure.

So, the our Peter, specifics the time on this of line remarks, much Kevin in is, a at as I of mentioned outlined the visibility year, this do with historical we XX% have pretty levels. that

COVID-XX essentially customers everybody there, situation delays to seen primarily deem have our that. adjusting the contracting do We with is on out and us, they out and of because normal they're how used some getting activities figuring to

balance position, our in say And funding There's mentioned, of business call, category close overall a as fortunate dose general, budgets, there's proposed contracts long-term, a we ourselves chiasm these takes million our quite [ph] domestic has on so are outcomes feel very on and customers, very growth International, domestically would products seems at set final that of to fiscal worth this of line, on and feel sort I I of be strong because this our and the a this over the business. year. a government profitable of $XX guidance goals that we're that them At all all data going ourselves our contacts that we expectations across for know, for get both that healthy as And the achieve year our these positive. as very the that drivers of over sheet quite category internationally. systems earlier. the over company get another We systems it we've to to, not overall And and we all and time, have have, we a and to for today. the year we ‘XX great with to confident also and in based why we about good been approved the we the the demand of you customers, know of stage same we the on speak the can defense but demand yet, provided That's very have same that what over family we're awards. in of is the reaffirmed close when plans we time, crossing is and attractive types which our

Peter Arment

going phase. on just HAPS, Okay, kind that, that's new follow-up of helpful. And a was mentioned entering as a the be you to

it get So to I how so assume this contract little maybe that that's that you've more the there's out? into does you've that you play in would anticipate bit or modification, of the slides, you a mentioned new just phase insight on more XX, as believe, had we we going I

Wahid Nawabi

wanted HAPS, really so initiative. program some what so demonstrations four this and that We've and of Peter had specifically communicate successful flights, over last the progress two is I we're years on positioned making well. flights or We're Yes, consecutive this so, great the far. terms in to

which coming one delivered the business the airplanes have We sort transition of phase phase, of essentially of that we're expect to year. a end the and fiscal from the this the transition this by And and an developed very to towards -- certification one smooth is we next two is we're and of phase phase extensive plan. happen end transition testing and sometimes

last Obviously throughout -- case, to process either contract tried process basis, be is close expect this you to have expect that existing SoftBank we we year. that, or this good contract. I on that is HAPS with business partner, rate articulate order roughly the we our for achieve hand run what million year have The what do the have, in in we very gives that to have be this get we're to and revenue to part order you so. a around to whole glove daily our a or to we on we that idea in modifications year, to so to our know we we done. get what this work new in equivalent of an that, $XX fiscal which is in And as And

the creation we we're value in will well. long-term the program, So that good and here a address jointly for position of as needs depending on as the we go forward,

Steven Gitlin

Peter. question, that for you Thank

Our from Good next William Blair. afternoon, DiPalma question from Louie comes Louie.

Louie DiPalma

and that hours. translate I Thanks, you wondering compare of Kevin, aforementioned guys potential was Wahid LE six question. for has the achieve range range approximately variant? the that how does Good that to could to the you stamina with afternoon. Puma mentioned Steve, and endurance does that how the taking Switchblade long

Wahid Nawabi

X believe glad on continuous Louis, a question. fly considerations do than operate Puma a a are Group great up you and half flight a asked LE, that really conventional capability in is this, LE single of I'm to a single is a use and it out so, logistically, well package footprint, economics, which hours a systems Group system battery and as the either question. now X can Puma financial flight easier as that far our to far, six X Right, any We Group there.

XX allows range. so what as In terms antenna, typically some of longer slightly we as of it's the it close it kilometers. for, is XX Antenna LRTA. And much does bigger the system, have to to standard pretty have, the XX but fly fly to antenna it could kilometers, does, almost essentially range what refer that it the Tracking as do Range Puma Long with we XX, XX, that We a

ability to years, SATCOM the a satellite the be able even to over through Additionally, demonstrated and Puma we've communicate communication. control

demonstrated So our already year that developed ago. systems we a have with capability Puma and more than

Range great to a go even Antenna, much the satellite capability itself, these endurance and even one, own longer Puma connect great way that expanded existing range number communication with further. so by And and it beyond exists the and their Tracking And also Long ranges. for

Louie DiPalma

Sunglider could connect to Thanks, and have yes, the Antenna. Right? you Puma but a potentially

Wahid Nawabi

family absolutely I type state is future that of unmanned vision accurately the capabilities. very accurate of systems of That encompasses these statement, Louie. our mean, systems, robotic

Louie DiPalma

In are was million part late you trying you size just This won final And aircraft ceiling that XXX this? that's $XXX wondering what under for you system that's of other the control there was $XX has domains one it the July, announced I for award of IDIQ six a that your for is, IDIQ This award army to this. one. here. of of $XX I'm domains And said your total what are domain million Raven that Great. a million. and last the remaining IDIQ I was is is potential also opportunity for, and year think and currently

Wahid Nawabi

Sure.

it's, you're was want or been is Steve, or a That years called have Steve contract. there's right. award. the get basically six IDIQ contract specifics encompasses that you a And And are. years small that contract of the many couple the it's underneath number to…? orders task FCS of did that an So the so. It maybe five categories portion for what absolutely We do now, that of UAS. does

Steven Gitlin

Sure, Louie.

Other FCS? and Systems, were contract. So components, go spares, RQ-XXA million, those are the Puma six all Those by Owned Yes, domains army code, Tactical IDIQ five defined spares Open they year as type $XXX.X Architecture systems, that RQ-XXB TOGA. Government ahead. fall under domains flight major control Raven six

Louie DiPalma

part have dollar won of far of this. vendors IDIQ? renders. But thus as other this aware, you know were for Sorry as five were, I the you're this four the have other far I vast amount as they IDIQ think majority been they and even might for

Wahid Nawabi

this maybe on at accurate, five, players Louie, There comments IDIQ is accurate. inception. that are six from least different both are contract

We done all the awards awards that. orders against we've have contract believe against have the of majority We been the the majority amount of for the years as dollars. of and on we've the won, amount that that math task won that of competed we've them, against that based vast vast that issued

as as it of essentially, so record see our high consistent within internationally. track win both a rate having And domestically very with is well you can category, our that

Louie DiPalma

everyone. Thanks. Thanks,

Wahid Nawabi

you. Thank

Kevin McDonnell

much. very you Thank

Steven Gitlin

followup question We'll take question De Joe a our Nardi. from Joe? next again,

Joseph De Nardi

you million how difference million many making does coming that to, say so that in in contributed from are revenue Wahid that? is the LMAMS first the $X.X contract you said variants can variants? quarter, from so, the And think that TMS, $X.X So disclosed I mean if you

Wahid Nawabi

of systems million within we our provide a being recognize customers we of that vehicles worth for that, for revenue training what So, Joe, in or that. of, Systems our The We and to refer to customers said Missile fighters. about items, like of the of revenue to and Tactical existing as which revenue. one we categories Switchblade, related did in training very repair revenue $X made for insight. of the rounds -- also sustainment war There's up Switchblade chunk product good different of line original quarter that and we them training is new training is profile

Additionally, systems customer the the enhancements on for or the comes R&D that. new in that of maintenance there funded funding, example, is variants of dollars for similar

about much we've market are that the specific Obviously, that smaller, submarines, As of is that's and of the specific TMS bucket revenue of product other that's variant variants, but target line the in those types category. different market target spoken a publicly variant. the more in the Blackwing

Joseph De Nardi

around meeting tenure, Okay, okay. And But then revenue guidance. over timing a even Wahid back several a years, during track if and of record look that your you there with through, the last think, aren't challenge back predicting on been, magnitude adoption. and companies many I defense there's better

the the into side give So I have yourself credit maybe feel than revenue visibility like you better on for. business

longer track term, think financial five So the provide three you'll question be year Thank do to position given in a targets? is record to of strong you visibility, you. when the more

Wahid Nawabi

predictions. Joe So information best. and never our and consider to we thank always We for recognizing strive that noticing done-done. and it accurate better try be We you, for more

the given as in leading profitable so so much growth of that we track challenged fourth market of record the we've year, in well and us. far, for is sheet, believe the terms fortunate whole a pandemic have and every deliver will able growth all Yes, positions promises a that in year it's as in we with the the on positions that globe. we're been strong forward that's least the prosperity very markets look, In be these that our and position had around we that. the affecting balance of strong again, portfolio look one that plan to, that and and we're But consistent long-term this world given growth to our so a going these us at we've

We believe long-term, challenge really In large. the is of difficult year. a beyond fiscal that to terms do it see are markets these

We plan a a strategy. have

we executing informed keep to we very value. a we're aware pleased And our results and to far, you more that So sure delivering we make would more along accurate way, look on much have front. we absolutely in the and and as further that predict with ability forward

Joseph De Nardi

Okay, thank you.

Wahid Nawabi

You're welcome.

Steven Gitlin

Thank you, Ken from [Operator Canaccord comes question next Our Instructions] Herbert of Genuity. Joe. Ken?

Ken Herbert

you, you Kevin of maybe can say prior either Yes, way I coming working in like in the hi, years lower we talk free a the you're think and remainder of perhaps, helped know takes question quarter really looks conversion for But thanks. the than year. ask about really But conversions capital. sounds in the to good relative like for are you cash cash specifically on nice this should year, the fairly because out fiscal puts generation been wanted couple cash have to positioned delivered years and for income, the I quarter receivables rebound the volatile. And the it about to of it be year? key last this net maybe a and or of some it just can

Kevin McDonnell

mean, it year. flow in mean, range. drivers investment million is down The we're cash $XX running in That in unbilled I the positive receivables, receivables during I quarter. $XX we working of and the substantially items come been first at bring and key did the the looking that has down of high one unbilled kind somewhat million, a the very Yes, much capital like inventory close should CapEx as did that the throughout the should recognize other be but some We to quarter, next levels per the spend kinds their in year. expected million several current quarter would be of fairly probably of quarters. $X the spending the on of revenue there back same of year stay the contracts, year, the we but items the end potentially level could at by

expenditures could are things the investing and that so and through products the year. in new continue like We that

Ken Herbert

Okay, Kevin. thanks,

Steven Gitlin

And Thank Baird. next Arment our question comes, follow-up Peter? you, at a question Peter from Ken.

Peter Arment

on receivables. asked, just going Ken the was ask I actually, Yes, what

details. Thanks. in for So back I'll queue. jump Kevin the thanks, all the

Kevin McDonnell

You're welcome.

Steven Gitlin

We an time. appreciate engagement relevant filings SEC everybody’s Thanks no we news forward health can And afternoon. call, speaking our for attention. results on of and have further day good you with archived company to and safety. website industry you. quarter's wish that, good again www.avinc.com. all Thank interest. questions look and and And a be Good this next and at and continued your We this you found following version with

AeroVironment (AVAV) 9 Sep 202021 Q1 Earnings call transcript