AVAV - Earnings call transcript Q4 2021

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Steven Gitlin

Good afternoon, ladies and gentlemen and welcome to AeroVironment's Fourth Quarter and Full Fiscal Year 2021 Earnings Call. This is Stephen 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

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

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

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

Wahid Nawabi

presentation. to fiscal operational, X profitable I and Welcome That and full Steve. in innovation, we earnings quarter slide strategic of help of message emphasize commitments our AeroVironment's applied On number call, an its despite delivered will year customer this: In year financial, delivered AeroVironment value today's growth XXXX included again conference on our to our earnings fourth on of agility customers call. message you, is proud important the fiscal unique macroeconomic consecutive fourth and revenue a to and balance intimacy and the year significant midst XXXX, challenges. strategy expand succeed. our customers, We're our have our continued Thank and of stakeholders: shareholders. value value portfolio executed key employees, growth deployed our global and Today, successfully and solutions global strong, the sheet will fourth our the addressable and for created and markets. reliable, discuss three chosen demand for We pandemic. And preference innovative, of We the to battle-proven our I market our our year. fiscal full continued and during year fiscal segments. XXXX quarter performance our remains reflecting our achievements summarize solutions the leadership proposition our

I, take Next, goals detailed discussion of then, Kevin, year Steve, follow-up for your Kevin And performance year. brief questions. will fiscal XXXX financial and provide more a with in the will on summary our I before our a

X. to slide move let's on Now, year our included highlights number fiscal

contributions COVID-XX team delivering $XXX year top of profitable revenue has fiscal serving moments. fourth Full Our which record incredible focused staying in I quarter Arcturus of the X.X%, full increased growth, the acquired in despite revenue UAV job few and a and year during million done will from full on our a ISG including customers revenue line operating an year by year, of discuss businesses the record and We fiscal produced $XXX million. pandemic.

investments year Full an were related fiscal LLC accrual related guidance impairment from issues HAPS leaving for during earnings the the the compared $X.X of for quarter year of our XXXX majority below Mobile's legal some pandemic, $X.X fiscal year able were us diluted year, prevented Loon million and fourth share included full to we $X.XX our supply $X.XX objectives XXXX. While to the achieving issues per isolated to revenue manage us in Fiscal chain and year. achieving slightly adapting while acquiring for and businesses range. commend successfully to and per $XXX.X to financial XXXX, of results, our former during share the I increase for entire fiscal for diluted from AeroVironment Record new $X.XX team compared XX%. also three slightly these our ending them the of were EES funded rose year prior $X.XX for XXXX fiscal business. new ways working backlog Non-GAAP portfolio. solid earnings integrating to year into the year an fiscal of pandemic million million

I achievements review business fiscal our in XXXX. will Now, year

reshaped in UAV, multi-domain robotic foremost, systems. we significantly Arcturus a provide acquisitions Progeny and further by our customers Telerob our offering intelligent Systems portfolio fiscal year ISG. to acquiring XXXX, expand portfolio of our These and First

responders, Supporting Beyond others. and UAS defense of to visual homeland solutions systems appointed drive adoption infrastructure ensures to markets, first recommendations we're air personnel recently sight also deliver able on provide the use, robotics security and Committee Rulemaking Advisory were we that an to to combining adoption UAS of remain States. This for line of commercial managers, ground we the operations. valuable in focused United in FAA beyond a position broader

product organize lines, describe. we our of portfolio now I in strategic which will now result a six As our acquisitions

Unmanned million. line the Aircraft in of XX% Systems represented revenue small First, total or our year fiscal product $XXX

to and XX our We continued international category. our for U.S. secure reflecting and some leadership more in awards continue support global than this procurements of customers, allied new

more fiscal from awards from modification line support frequency In generated small during than the fiscal allies radio total, Army services. number and and U.S. number over approximately XXXX. for year of Raven for X% increase a year, year our of Raven product During revenue UAS received procurement million Puma and million that international a we the $XXX international in awards a contract for the $XX included

This our our fourth and Arcturus acquisition a transaction of UAV, fiscal full our Second, our the X Group product of services. line in new and or $XX X% UAS is UAS of the closed and year quarter of line revenue. Medium contributed product provider million result X

larger a support line segment services that Small market USSOCOM addresses the product opportunity Our and than continues contract. UAS IV our MEUAS is even its MUAS customer to on team the

As customer a in bases. personnel our contract, hybrid and VTOL at their this reminder, ISR contractor-owned, to which model provides intelligence generate. provide services they our is overseas XX or JUMP under the systems business customers our a actionable This fixed wing AeroVironment contractor-operated COCO with operate

fiscal for year, and performance of the extension reflecting our an we and in program, proposition. customer this operational locations secured one During share the are strong gaining also award value

of Tactical for In program. Army's in Army soon the and Showcase a after Future FTUAS also we FTUAS the the calendar officials. Rodeo awards U.S. and UAS candidate fiscal or confident XXXX. procurement to is XX program system XX as advanced JUMP year in We Our February, participated year demonstrated positioning customer Army's leading the successfully capabilities our awards FTUAS in for and expect XXXX JUMP as remain announce prototype to the government the

systems missile represented revenue line year product tactical XX% XXXX fiscal of or our Third, $XX million.

year, million XXX support Army's the program. fiscal that we US a under award a LMAMS award over funded $XX and million of to worth million logistics procurement the During $XX $XXX up new years separately contract, three Switchblade for secured

year expect government approval first end allied U.S. to of Switchblade before fiscal an granted procurement XXXX. the XXX export order for deliver nation, by its the we Importantly, an

continue are in capabilities. XXX's work additional customers We interested who allied Switchblade to unique with

specialized fiscal vessels, of the XXX. introduced During USSOCOM a naval Switchblade for $XX This also into XXX capabilities contract year, AeroVironment million highlighting this April. Switchblade the XXX in integration awarded solution. The Switchblade we is for multi-domain of the award unique

Corps Marine track Phase DoD not U.S. do II and this continuing we the we win programs. RDT&E are and award, OPF-M While pursue other to

grow continues or another move to production And year forward the its this applications units allies product benefit game-changing phase to line We represents capability forefront traditional In and cross-selling product with announce the and $XX XXXX, Additionally, of year with in the U.S. and from of announced to fiscal We including leader low-rate of order their their highlighted represented the line General our neutralize to deployment loitering our acquired with Reconnaissance the this next-generation for year. new UAS Unmanned capability. this missiles our HAPS Azerbaijan pursuing its all who potential this for portfolio. team submarine test we're and Under new of received integration stands armored for reporting German or on our of our recently Small fiscal a contract. UAS into Dynamics to third ready its and the opportunities five-year Vehicles Land leadership and of We're to conflict we Ground on Armed decision TMS our and a successful continue aircraft vehicles. $XX.X we Switchblade retained learning The flights. the Telerob in the Systems work entered transition remains XXXX will robotics the to to Telerob, closed product Armenia solutions customer AeroVironment our loitering HAPS prior succeed end large Unmanned U.S. robotic battle-proven, SoftBank and adopt our May. new missile not the their delivering multi-domain Fourth, financial integration our not the patented we be our SLUAS operational that in fiscal new million. Blackwing the work effort platform Since UGV continue transaction and build to continue we armored and gain have order Telerob's of EOD early that Switchblade ongoing other results solar master, to with XXX development military agreement, in Systems across the confident to and of five at capability Navy to year to programs or and program fiscal support revenue employees opportunities, in Fifth, destructive into to between to Submarine-Launched line, Air XX% to internationally. new for of solutions. as Systems part still a the assets. program. U.S. XXX development agreement waiting up will fleet. and We're Blackwing across AeroVironment recent intent of design on Aerial the our number a initial adding million we're actively Force a ground next

intelligence important related altitude an and remain to Solar Sunglider MacCready toward the leader flights, flight with than ISG technologies. with develop committed completion development also Solutions We step for center our the of stratosphere. to the design, the team suppliers high the to to systems Systems' established LTE environments forward million a eight designed an expanded development Works, produced We three additional commercialization our represent for to We've creating an fiscal this Helicopter, Ingenuity JPL AI The as flights and acquisition computer perceptive celebrated innovation roadmap on vision, new of technology success of the received look program. and artificial UAS Solar robotic HAPS highlight order In of team Small on Sunglider years, two also supporting for HAPS, that historic and progress transformative In Ingenuity capabilities and only our line of agreement. Ingenuity product speak the operational successful are its development extreme recent built the our completed, product of our machine Mars customers partnering the their MacCready conducted and five ability value the but JPL connectivity. technology previous from test aircraft the part and in test into HAPS recently the learning demonstration. communication for flights autonomy Mars Ingenuity future. aircraft, has We demonstration first results. the solar made exploration. an low to culture potentially a for $X.X product planetary global of of not as tremendous successful With we our to Works We which in kind into less the facility, and broadband much our continued demonstrated confident sixth enabled and Also plan of Advanced ultimate well most incredible and transitioned achievements emerging year achieve of Progeny line, advancements of team, HAPS of introduce to NASA. opportunities enhancements with robotic our this with new category line highly continued a from capabilities designed we

Beyond all team inclusion our at lines, the diversity made for have instituted focused on the in of culture we achievements we've members. team also and of furthering business our product six programs have our aimed

series a and established and programs of Committee Inclusion biases. Diversity Our issues awareness of critical designed has to raise implicit

populations and skills, while team ability that growth. including minority recruiting more promise organizations. minority us focused values, team AeroVironment's institutions the We're purpose, members our reach underserved live finding Our customer professional experience, and our to best with on serving based and their help contributing success organizations to working on is and to

Now, for the I McDonnell turn a Kevin will the summary over Kevin? full quarter year call to and financials. of

Kevin McDonnell

Thank which headlines revenue, here quarter was line of press referring a I'll the of last lines. the full-year business quarter flight in year-over-year. that Small Small at FY now in year-over-year XX% release FY quarter a quarter, our a the the versus and of increase down for contributed million out from $X.X be our was the included revenue fourth $X.X decline strong build our approximately provides presentation quarter This 'XX versus you, the million, of the ventures in of year. the highlights strong 'XX. Reflecting million, revenue both strong $XX.X the presentation and slight continued than Wahid. Slide from $XX.X for financial million, million the $XXX growth slightly offset of TMS the the year. million newly down I'll million. XXXX $XXX.X or was product reviewing quarter performance. joint revenue revenue which was from year revenue by $XXX.X of UAS our leadership the breakdown organic full fourth Arcturus Today, very quarter be revenue to but by website. strong to a ended facility. Revenue $X products, and X also revenue increase becomes is of for The available our $XXX.X on $XX.X earnings was fiscal year's fourth million revenue with UAS TMS we our fourth product increase Medium very, year Other UAF Revenue the quarter. the and in to additional of million. fiscal quarter acquired are a earnings XXXX revenue prior in which of XX% an the fourth HAPS product million experienced line more core X.X% the of combined XXXX test

HAPS million other this was However, largely in offset revenue. and $XX.X by decline

boosted growth revenue newly previously of As year. as X% to a consequence, the X.X% to contribution growth overall for overall noted. level the organic netted The acquired businesses

will million to gross revenue. to gross fourth the and intangible quarter margin cost QX $XX.X in continue for of or Turning sales, fourth margin, as which million impacted just for $X.X by amortization were quarter of Gross year's to last versus was million the FY part XX% included be was of compared $XX.X XX% margins of $XXX,XXX quarter over of expense, or 'XX. negatively of revenue

XXXX cost margin year-over-year. XXXX total Gross amortization were fourth about excluding sales, of gross quarter was $XXX.X as X% fiscal strong margins to we increased very or overall for Excluding purchase quarter. that which gross a included $X.X also under adjustments. product XX% margin cost for the intangible in fourth XX% revenue fiscal fiscal part the was versus should note year's also XX% million last of year XX.X% when of million, versus FY Also XX% I accounting amortization, for of strong other million intangible Total talk The versus by amortization ago. non-cash compared revenue was of this $XXX.X margins intangibles, million XXXX. for includes were at XX.X% 'XX. intangible dollars for at sales $X.X

remained XX% year strong Excluding in at is were versus Adjusted product which XX% gross the for for fiscal XX%, year. the year margin the line adjusted last XXXX. amortization, overall intangible with margins gross

revenue XX% Our of and has the service products mix over last roughly and service been XX% years. product two

which COCO forward, we to shift a service move product of XX% and service mix UAS our we ISR As closer XX% line's product Medium operation, will as revenue. this as expect classified result is to

gross the few high margins expect we stable X year-over-year be fairly percentage we decline as intangible amortization before As intangible Including year this points year excluding full product FX in will shift. a the a amortization, drop XX% percentage overall mix amortization will remain X percentage Accounting result points. margin between and full a and range. intangible aside result, of points expect

mix the expect normalize and in revenue lower margins, expectations. first product the year We quarterly full program our gross below to quarter. quarter margin second should in drive significantly This

compared in intangible where of compared expenses over $XX.X costs SG&A QX million expenses; for operate was to to for million, deal quarter the fourth $XX.X quarter FY the million integration amortization turn Included Now, the 'XX. $X.X in and to just $XXX,XXX SG&A for lower was by SG&A for of result quarter increase pandemic. year-over-year by 'XX, the expenses in operations newly which increase acquired other most of offset the SG&A. impacted remainder and QX The travel represented FY of the in a the

fiscal the of costs of million actually intangible in for to for integration included full year-over-year. million to Backing compared fiscal amortization was amortization fiscal year SG&A full XXXX. of out $XX.X the and XXXX compared declined costs, $XX.X terms fiscal SG&A In increase million, SG&A deal XXXX. million, the year, expense $X.X expenses intangible to $XX.X deal

to deal pandemic. costs, a improvement versus lower result So, XXXX of XXXX. when XX.X% trade revenue The was of travel and in you a intangible XX.X% expense in SG&A amortization percentage fiscal as can exclude the show and be year-over-year as attributed

of As levels return normal, intangibles will expense anticipate deal return pre-pandemic to business before we costs to revenue SG&A our a percentage conditions as and XXXX. in

or $XX.X million of million be quarter compared amortization the or expected R&D was XXXX. expense or fiscal or are approximately to revenue $XX.X to R&D revenue R&D compared revenue FY fiscal for XX% million fourth of of of in fourth was to $XX.X XX% XX% XXXX costs XX% integration of point million the a and intangible a of $XX.X revenue $XX combined of As 'XX. for expense quarter XXXX. for for expense million reference,

by largely bottom gross of an higher expenses. fourth activities former the decrease accrual $XX.X $X.X million as GAAP equity million well was $X.X to The million line, quarter XXXX. share of and million net or income $XX.X the legal or investment at business EES Looking net compared per lower a fourth diluted gross of expenses partially diluted related acquisition-related income for $X.XX continuing the fiscal income as of $X.XX for quarter fiscal result operations from million. XXXX And in per share our taxes was offset of -- $X net method additional margin, lower of to

full to year reduction net of from $X.XX to the legal acquisition-related lower and margins the in accrual $XX.X For share of due income $XX.X Loon The $XX operations XXXX million fiscal portion per per $X.X diluted HAPSMobile the $XX mentioned million of million expenses, compared investment primarily fiscal previously, was our income from million gross million taxes. or offset higher by $X.XX continuing million XXXX. partially for diluted net share $X.X loss or in of impairment additional was

slide diluted of diluted non-GAAP fiscal was and GAAP per adjusted EPS. $X.XX Non-GAAP XXXX share the of share $X.XX. diluted the earnings adjusted of or of terms fourth per In XXXX XX reconciliation for versus for of shows a quarter EPS, diluted fiscal fourth share quarter per earnings

of 'XX fiscal was earnings year-over-year. diluted increase $X.XX, non-GAAP XX% for For per per fiscal $X.XX XXXX share earnings versus non-GAAP share a diluted

working the end $XXX.X of XXXX collection activities primarily total $XXX.X the we cash from the and which sheet, our was activities. a was for of opportunities. strategic million flow result balance from quarter $XX.X fiscal the million working balance Total at from decrease of end fiscal the from the for million growth the XXXX $XX.X million, improvement to receivables. as a investments of deployed cash sheet capital operating remainder operating Turning accounts came The of improvements capital of was

fiscal -- XXXX, XXXX capital on million spent $XX During we expenditures.

cash During of that cash had approximately February related million. the to outlays in two fourth total $XXX existing quarter, closed we acquisitions from

At revolving Arcturus and on drew close used the facility a term of conjunction additional close the the of loan XXX,XXX unused. Arcturus of facility Telerob issued outlays the in following of $XXX facility, down May stock banks. at was we that million related $XXX acquisition term million Arcturus $XXX of cash shareholders. which a acquisition, the remains approximately with fund group to in had an revolving million the entered million credit addition, Arcturus we -- In $XX of Telerob to the we credit to transaction, a into acquisition. million We facility loan shares earlier close transaction, acquisition. the the AV with the The $XXX to selling Also,

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

from $XXX.X provides in the of the the guidance end our current We of at the QX, an bringing backlog years. quarter XXXX level million. and 'XX XXXX the picked $X.X visibility. over an million million, FY quarter summary funded X million of of the XXXX of which end from for was to fiscal of Our of range the of five million earnings to increase highest fiscal quarter backlog since increase $XXX.X of fourth up a midpoint presentation XX%, third Page $XXX $XXX fourth our of bookings the past visibility total the our is of

to Now, back Wahid. to I'd turn like things

Wahid Nawabi

of celebrate which is our as team as we will to month, Thanks, next when Kevin. for our We're work AeroVironment's soon the also planning anniversary. of sites many return members XXth

opportunity. Our with rich growth is portfolio

ground, intelligence Our the capabilities. will will that on intelligent otherwise be work expanded in achieve possible. water effectively by AI and the more faster, and mission and systems than air, safer autonomy to success in robotic And our bolstered together the cost

request. and guidance the year of FTUAS and more the our solution. for our the XXX the autonomy evaluation where like for This intelligence, artificial the billion. incumbent of $XX and "New Security JUMP will distributed robotics in President's XXXX Additionally, a direction DoD fiscal National solution, lethal $XX technologies is U.S. or XXXX Army priorities we informs resulting the Strategic states, research, technologies warfare, for fiscal LMAMS This change government department's in for faster, the provides and Army development, year million million $X as procurement RDT&E MAUS terms In unmanned proposed Switchblade strategic environment, RDT&E, reflected defense well Guidance U.S. battlefield." budget to budget U.S. character includes which positioned with more are funding Interim testing exceeds procurement for and XX DoD

order Additionally, accelerate two program $XX in to FTUAS the list the Army by years. to added million their unfunded

and TMS, Robotics UAS set Army us of Beyond budget portfolio summary, Ground million. $XXX total million much XXXX the as request a funding gives In access and ever potential larger solutions before. of to GFY request, much expanded $XXX our DoD opportunities than

no our we Afghanistan. institutionalized with result have is a the Importantly, for which have procure our and way in seen become of decrease as military solutions in the the solutions operate. train, and TMS drawdown Small consistent in into customers This demand plan, manner UAS

Our contributing profile our increase to XXXX. acquisitions with our portfolio significantly revenue growth expectations significant expand for along three fiscal our year a in revenue

we slide in X fiscal backlog confidence revenue described XX% ahead, funded presentation. have to and Looking very ability earnings objectives. us on our visibility This good year number total achieve earnings and visibility our of with into annual of strong gives our XXXX

between million per expect As presentation, XXXX, with million $X.XX. of $XXX $X.XX fiscal million, and our summarized of X deliver of line year a earnings $XXX earnings EBITDA and growth of adjusted revenue year $XXX profitable slide $XXX share consecutive on to for we and diluted top number fifth to million between of

increase XX% of of revenue. timing, revenue total year EBITDA. be to non-GAAP adjusted a contract on This $X.XX XXXX fiscal $X.XX. which a revenue intangible between to expect for we pandemic per the increase in XX% represents and of amortization guidance We first Because earnings half diluted and the acquired in excludes impact assets account expect XX% of approximately share,

first first quarter and as non-GAAP to revenue And represent our of loss quarter the expect about of also We result first $X.XX revenue. XX% EPS mix $X.XX effects. approximately to of half a volume

expect X% this and research fiscal about revenue. investments XX% development to year's to be We of

overall decline his expect to gross We Kevin XXXX described as XX%, a margin comments. year in about to XX% fiscal in

that business. for could risks We supply are our carefully chain any monitoring affect our

call, the strategic example, the operational, ongoing summary, financial, global of an delivered commitments may despite chip our shortage for its message As our challenges. AeroVironment semiconductor programs. some macroeconomic and on to impact today's again main reiterate continued In

new into fiscal growth continued company. for ahead the our for success I look I and year, As the see potential

to to in been like in with with my many look for XXXX the has the adapted to team stronger. virtually. fiscal and in confidence members. year I well never express forward expanded working with all deep person we meeting our others of Our and We our as future you pandemic. us, many AeroVironment and to you as its trusting appreciation customers team Thank to all incredible would

inspired serving Your even our so customers to me, and year. our dedication purpose to but has always more past this

Planning, the my us and Conver, today for to You AeroVironment market we're would perseverance, vision would Annual have our the Chairman and you us will contributions. AeroVironment solution have Tim last achieved former throughout positions well as questions. With is the Communications last has AeroVironment. many Marketing AeroVironment delivered shareholders fiscal who Strategic of in future what honestly leader wish grateful The Gitlin, our industry. and AeroVironment's month have so positioned who without Directors Steve appreciation which I Meeting. and and his and Investor him his have thank decades, success. Tim's to significant far that, A team him responsibilities, once entire decades. strategy instrumental for not of Steve be and made future I two the endeavors. I and Steve's including mentorship pursue it opportunities Chief outside Officer, XXXX. Relations, Steve state AeroVironment retire achieving now been next Internal all Among continued CEO, more for provider. decade. in candidly his great year without I our roles at to We robotics momentum Steve not leaving and our is special of and express I intelligent very your Steve and robotic also and guidance inside his visionary of and to am the throughout leadership always best. represented the Throughout could we Tim's Kevin, from like contributions at achieved defining this Board an family has to two last the will the in grateful multi-domain end wished take effective voice

Steven Gitlin

Thank you, Wahid.

Wahid Nawabi

sir. welcome, You're

Steven Gitlin

Global. [Operator Pete of comes Skibitski today question Instructions] Our first Alembic Pete? from

Pete Skibitski

afternoon, well. doing good Hope Hey you're guys.

Wahid Nawabi

Pete. Hi,

Pete Skibitski

million me, quarter about be down I just It was Quick was year-over-year I surprise and will guys? should half the into Was to the that due to by to question HAPS a to in kind excuse almost year-over-year. to thought stable fourth extrapolate to expectation maybe up like going little revenue. seemed $XX think the Was I'm know then, it that kind million it awards my for of but of fiscal $XX expectations HAPS. completely you revenue seemed XXXX? be kind And versus on, of soft looks change? a on 'XX, model fiscal we but contract due it contract it

Wahid Nawabi

organically consecutive So also of comment. obviously, growth, Steve, with well as the pleased year is to positioned line this fourth inorganically. we're And expected. In the consecutive record both Thanks regards XXXX growth extremely as we're year for fiscal of with another year top well Wahid. your profitable question, very for

year, specific all issues extremely a few we minor fact the a were extremely, In that fourth in quarter, addressed year organically we visibility, items record and some quarter -- that and fourth for throughout the you year, we're record delays were a top growth and that looking we'll addressed entire terms And specifically. chain, But record also forward year. which supply quarter, high-growth another faced year very addressed well. our Again, issues We that. keep of revenue on those some quite pandemic and line sort inorganically, record both the of challenges and most of we we next caused there past that on updated to the well. given backlog, record few

able slightly - to has pandemic that slower, terms and travel should to affected really revenue that significant. go bit have In the again, up - we travel internationally program some on right. fluctuations HAPS But not or depends partner are the is our been program, year. been global But and able that's was the customer more of R&D program you're extent and which to HAPS, customer-funded by it not not a either. Year-over-year, really a the HAPS little next was

effect of on as So, fourth well some there's the been that quarter.

Pete Skibitski

you. got Okay,

Okay, guys. I'll back queue. Thanks, the into get

Wahid Nawabi

welcome. You're

Steven Gitlin

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

Peter Arment

Kevin, Wahid, see Do program? for export you -- Wahid, could maybe mentioned what's you Switchblade there Steve. that that expect the to the on were there talk forward XXX, and interested. potential you you do orders afternoon, path the with were good others maybe Hey, Hey about when -- that

Wahid Nawabi

Sure, Peter.

last that year. been a a outlined year. the So some year obviously, our will they of Kevin next for performance to and as growth year pleased us we're us very be continue toward growth of It's business next growth and I TMF with for year,

did one In I'm XXX, terms fiscal of -- Switchblade that before sorry, and for XXX the the export are receive we we license to this of the expect -- Switchblade first end we expect year. ship

unique this in whom countries additional very is capability exactly. an The to We and predict are have its interests proposition. timing and other difficult all very value again talking export of awards to licenses receiving interest multiple allies, and of that patented

XXX progressed this we'll significant. internationally, believe expand and strategy few throughout fact we success that Switchblade higher However, we we the to allies. a if insight. our position well Switchblade probability exports for the international consider We received and years, additional with does that next the the quite and continue Switchblade XXX first of license as XXX markets I have that think our to us allows as we And had export execute

Peter Arment

Yes.

Just Navy follow-up DoD? initial including Can the that some was you other from XXX least you as at mentioned incorporated the if comment, interest Switchblade talk services about vessels award. in there's any a to being or the

Wahid Nawabi

Sure.

really remarks. product a mentioned export of year made fiscal lot XXX. in I in $XX-plus-million in great progress which also of the TMS secured contract, We the XXXX number our on But line tune of for we in awards for LMAMS So, general. license Switchblade a my

off for our means. placed existing for we couple to launched of really they another us $XX believe very customer an variant differentiated of this orders And In That for for the XXX One is secured of be ability additional Switchblade a million additionally, terms the operational the solution vessels. the of key of contract the the capability received downrange, product set. of Switchblade deployments, which means development is maturity to for and we deliver units in over maritime positive of awards. the XXX,

Switchblade So, of and our development which contract, with so work variant with development pleased XXX, a us. maritime a us this is continues was which customer is far and to

time proposition it our and this that to assets. for Now, development goes a the capability game-changing but which take value bit this the show this customers us is of desire of will agreement a obviously of little

the or Lastly, Army and other I would branches or be mention and missiles all with embedded Corps maritime ground assets. Marine are at integrated basically Navy various to U.S. the the loitering including types U.S. of other that looking also services of the

it's very this the very theory war supports and game-changing our with that long-term strategy consistent for capability be and U.S. our fighters. very, our So, belief it could

Steven Gitlin

Peter. you, Thank

question next Joe. DeNardi Our Joe from at Hi, Stifel. comes

Joseph DeNardi

you afternoon. good go. Hey, Steve, And see sorry to

guys You're in one the of missed. good the industry be you'll and

Steven Gitlin

Joe. you, Thank

Wahid Nawabi

That's very true.

miss him will well, Joe. We as

Joseph DeNardi

call if Steve not the since Wahid, embedded every the has guidance? FY us been give assumption think you the But anyway, revenue can in -- 'XX the organic on I growth IPO mistaken. just I'm

Wahid Nawabi

Sure.

will fiscal set SUAS that core that profitable comments, updated. businesses, keep midst we've is achieve both provide And line remain going margins still as growth our as also as done businesses. as still sure next line be on I color first growth you on you expect fiscal top which tell strong, outcomes the businesses in that if really businesses we our for can our well but you acquisitions, we of to XXXX, going as expect break we -- heard of year what product we growth. we time, out to on we'll organic get organic consecutive that next be well. more TMS not organic will growth year our for be my XXXX our remains the We're healthy all acquired, And by earnings. -- general product core acquisitions just quarter well the on both In this So would are gross able our that double specific businesses year. of we into so year the and stable for I'm ourselves, the of the integration going and and we're we've if fifth a when

Joseph DeNardi

the growth Is organic greater than XX% at least?

Wahid Nawabi

later have UAVs of a portfolio these And first ground, and will assets water, is would product in we we're of I key we and point are that line, company feel customers the sizes, businesses. call, really the and pretty of that our our We've growth air, in mention very provide different well-diversified We growth details the different in quarter our the on that and Joe. But acquisitions by another good got UGVs and the earnings now. about capabilities geographies. specific in

base, So customer better us diversity geographic portfolio, have of to our more footprint a -- allows higher-growth the a a business and and business. all

Kevin McDonnell

and was I HAPS Yes. core us down organically growth business. the was and TMS combined of for year-over-year, dragged And organic UAS other revenue. Small products, the kind and mentioned, that's as XX% service What

Steven Gitlin

question, Herbert Joe. at from [Operator Instructions] Canaccord. Hi, Thank next you comes for question And our your Ken Ken.

Ken Herbert

Wanted Kevin. Steve, dig in. afternoon, to and first Good Wahid, Hey.

Wahid Nawabi

afternoon. Good

Ken Herbert

into is first when a your business seems How what months consistent about how around wanted and I than think few business. that anything -- And organic that run track opportunity bit we that should little or, FTUAS you detail, 'XX, Is Wahid, really on just if growth to I'm the or after for see you quarter maybe sorry, third you've into about like the to quarter we opportunity? on that a more it -- lower the run quarter some is Yes. Arcturus, bit year, now first type rate that. 'XX? late 'XX little the of and ownership? maybe to guided think discuss could with rate in a you're fiscal your this fiscal But it fiscal the fourth the acquired timing dig maybe but should

Wahid Nawabi

Sure.

Arcturus that very so UAV, terms in happened later the Ken, significant. was in of quite quarter, actual late that of revenue pleased somewhat with not contributions So, acquisition. deal Obviously, the on the the quarter, in close the the and very we're

to we XXXX, year it's fiscal expect business grow, positioned. that really For really, and well

comments, the the renewal As year our And program in MEUAS sites there XXXX, fiscal and share strongly. of our in of one quarter, gaining I last been customers even solution have value the we're we mentioned against for many the of kind IV of see that received our that our very, a at really years. on incumbents very

U.S. for mentioned process -- my mentioned FTUAS there tell in order the little additional XXXX of I or budget, is the FTUAS, to of proposed What hands is line items And have that sort whole In Army. is year even in program those you timing what the government line in by U.S. as items is of of in all I expedite a terms this remarks. increased the the they actually the the that Army can expedite fiscal bit.

$XX million the to are unfunded these in to on that the $XX additional accelerate is the million happen. future program. list Now, is in order But FTUAS RDT&E FTUAS obviously like amount combined and the all needs budget for for

selected you that know down on We FTUAS are program. as

very like focused we is we a and making it on compete to a our in win. order We chances. well large positioned But competitive we're very it's and And program. program are sure very that

everything share So and program in international SOCOM penetration in in to contract addition in that interested. for potential gain is and our market that other customers us a gain MUAS are

Ken Herbert

Okay. That was…

Kevin McDonnell

I division deployments. bumps have the would revenue some for that that they add that have in year they'll during as

the So bump revenue. that'll recurring also up

Ken Herbert

greater to 'XX Okay, guidance of the you get flat EBITDA As sort 'XX the total guide, contribution higher from that's on implies roughly a 'XX the fiscal could margin some in great. of I margin And over much if headwind a we margins half something else should of Arcturus, there in the like to revenues or it is as is lower 'XX? fair headwind about coming thinking would that businesses say be be from

Kevin McDonnell

them businesses. think we these We're together. acquiring putting were I

on I best margin think percentage to our we've do the estimating tried is. what

there. over time see we'll leverage think I more

Steven Gitlin

you question, very your for Thank much Ken.

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

Louie DiPalma

on Steve, afternoon, Kevin. and Wahid, Good endeavors. Steve, your And, future luck good

Steven Gitlin

you. Louie. you, Thank Thank

Louie DiPalma

significantly addressable your total three Wahid, expanded how market. acquisitions you discussed the

today a pipeline three pipeline bidding you mentioned that how and the was what FTUAS, with pipeline as to compare ago, acquisitions? opportunities year that such if to has your compare were you changed the that to you all If were now it

Wahid Nawabi

and even have And line, An we solutions capability up increases opportunities today in. And in the UAV, our be that like exist us based customers' to alone past offers requirements course the market UGV our have. acquisitions opens Obviously, portfolio thing of. on new position. so of and of together larger needs proposition that further line the to we our TXX that market similar business which today. total Louie, that those and to business doesn't the we or a we our a our But obviously going ability we addresses we're able that XX in for have And participate We and could value three that's know very didn't two now space even be which a on the addressable Arcturus platforms. in We have transformed market. solution. position the to product and the disruptive integrating access compete that also billion us. to about really is dollar-plus our example to smaller product key a player really apply Jump much like ideas a opportunity

besides technologies. in And really specific has AI also has access size say computer to dramatically So of what long integration markets autonomy would in transformed is I'm markets it front really ISGs, increased vision artificial that term pleased opportunity portfolio. I our our the with and and just of us intelligence general, these It us. giving and

opportunities We more will up run. open us our be and to even the deliver in long able customers value more for

us. quiet for pretty transformative it's So

Louie DiPalma

Great. Thanks, Wahid.

Wahid Nawabi

Louie. You're welcome,

Steven Gitlin

Louie. Joe We Joe, have Thank a DeNardi. question from go ahead. Instructions] follow-up [Operator please you,

Joseph DeNardi

you. [ph]. for OPSM I on just of often so Wahid, thanks. was I a very mean, that a doesn't imagine surprise AeroVironment lose Yes, would bit

what you've if what, lost? And there? happened So just about talk kind can of why you learned you

Wahid Nawabi

Sure.

we second phase. customer So the we as our that's phase very of To we that knowledge, not an not worth has program, is receive. estimate program. is not won of -- have the $XX-ish-million mentioned our not my that, were awarded about roughly disclosed publicly specific which that that winner by the obviously. were contract the surprised To of winner the customer did and knowledge, not the of has And disclosed I publicly Joe, that we award

updated customer's to awarded, we on we right learn feedback and not learn as the about you we it, So they think will that seek and more were continue continue more to keep why we that although from different sensitive contractors also which being mention something to position where announcement I customer to able with are communicate the now would probably in a is else they you're right. they a until make somehow. public

is XXX and in areas support win win We however, opportunities, thesis does extremely other our rate market on the other adoption it. did, which Switchblade high. Our larger-size and of

to is does third related Corps Marine in out Marine production U.S. the on While that which base for made rule and operational not for contracts, has the deployment ability really acquisition for and this a the compete yet. the Corps, activity it any really U.S. statements and development our was to not larger come

operational units to secured existing that's So contract one. is, today Two customers. we've deliver our a with for use

there's of systems order it already we're in customer for systems then, additional that lastly, tune are, contract, our variant development also value solutions placed for deploying $XX-plus-million the which tracking. additional has operational use. have a this in we're And while for our opportunities the contract an was So a seen lot they of other of maritime so

that but not very disappointed close yet. is like given it, not awarded, that. eye and and were we've you over we're war We on So, up said, not we're on that, with keeping

Joseph DeNardi

impact And then, embedded -- I more programs briefly semiconductor the that's could acute? you. And where that may in mean is guidance? Are you there be? helpful. mentioned that's can certain that Okay, your meaningful How you shortage

Wahid Nawabi

Sure.

terms the and use of say our processors, in greatest portfolio. cross latest we So, latest, microprocessors company let components because the solutions all me the computer edge that graphics, are, our we in vision, of that technology cutting greatest

well vast and majority fiscal in XXXX, far of really challenges So we effectively. advance those address in year quite

that production that's products likely And development still contracts comprehended shortage we of well. use already so systems the really new get far development development as more it likely think well bad shortage as fiscal there's is affect in timing on lot of that for new XXXX, we or to have impact less also guidance. it how our of know, a managed global So and unpredictable. could we activities parts. But a far our where some these and of that's in year managed is But contracts engineering so because you There's far, the most these unknown that for extent our to we've of capabilities. and of

a upfront. communicate sure there's to However, that and on you wanted all I risk that I that make always to of

Steven Gitlin

Thank you the question follow-up for Joe.

interest AeroVironment. to represent no looks On here a and industry our and a this community for of forward I the with the been to have value on all time. be again real questions to at your note, AeroVironment SEC version you and news the and entire your you can call, truly found following We with AeroVironment We speaking privilege for archived website avinc.com. the filings years. team the company in this further quarter's An And and developed wish investment you team it's next attention personal past investment the relationships for results. XX day. a good Thank I community. relevant at

AeroVironment (AVAV) 30 Jun 212021 Q4 Earnings call transcript