AVAV - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the AeroVironment Fiscal 2022 First Quarter Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference is being recorded for replay purposes. [Operator Instructions] I would now like to hand the conference over to Jonah Teeter-Balin. you. Thank sir. ahead, go Please

Jonah Teeter-Balin

Relations and good fiscal is Welcome AeroVironment's and and Teeter-Balin, afternoon, XXXX first ladies Investor Development year Corporate This Director gentlemen. AeroVironment. quarter Senior to of Thanks for earnings Jonah call.

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

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

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

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

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

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

Wahid Nawabi

XXXX performance quarter quarter XXXX year and call. quarter. I call, achievements during Welcome our Thank summarize first year you, fiscal our our of earnings the will Jonah. first conference to fiscal today's On discuss

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

four X earnings included which are emphasize of me key our number presentation. Slide on Let messages

First, quarterly communicated in with our line we achieved expectations. strong results previously

have we organic included record in inorganic business. another Second, secured backlog both which our and growth

remain to continued businesses. integrate we year our And of three result fiscal achieve year of to delivering successfully acquired top another plans a XXXX Third, line we growth. fourth, on recently on the the profitable strong as track momentum, while

business segments summarize that the we $XXX is with first record shipments compared revenue first line Now, core XX% in results Aircraft the recent Systems Medium financial part primarily Unmanned and the due We last let's our for another quarter. a and year increases, million along offset negative new segment. Systems other quarter, Aircraft Unmanned million million $XX These, sales, which product wins revenue The backlog across which organic from by expected growth our impact was Small especially lower year-over-year. multiple yet delivered driven of our of to segment. acquisition incremental our achieved from acquisitions. by in increase in We particularly to $XXX

financial sequentially on path will enable XX% fourth than continued fiscal are to our we and backlog more year us of value and increased backlog objectives XXXX. record strong Our for growth our This from the ensure creation. quarter achieve

gross segments, note including visibility across we income. revenue, four now increased reportable Finally, please provide and margin financial that

data While to provide insights investors, quarter for more significantly this segment extra will will vary performance quarter.

on an be annual basis. data this would reason, For assessed that better

and We Force which UAS would orders color Air as various AE our price segments. where Puma the product Unmanned totaling leading our $XX.X U.S. unmanned I'll million positioned X announced start Aircraft award spares. AeroVironment global from current fixed like I Systems line well player. spares is the as Raven provide for firm the two regarding Small Moving aircraft with our within some on, now of recently systems and to developments as largest is

In systems, addition available payloads. in introduction complete UAS all major systems, adaptable intuitive and control make the enhancing solution. meet platforms, load effectiveness situational an ground positions Crysalis an operating to a awareness elements development all in easier our and operating Crysalis ever. that command and the burden, next-generation innovation and simplifying interface robotic cutting-edge for training AeroVironment's is Wasp. Crysalis designed control UAS new was to while opportunities reduce our of and user while to overall collaboration. will turnkey both and making battlefield Crysalis cognitive wins, experience exciting value for It's with training and user AeroVironment requirements in station as creation these Raven for mission growth systems field Compatible Crysalis small related the it leader and systems than with across continues covert features AeroVironment. making modular advanced and specific Puma, which standardizes requirements. This is another improve we and of control to decision opening operations recent tactical believe streamline offering the

our segment, Missile in made in Next, quarter. Systems Tactical solid strategy we on progress the our

with to progress a segment's becoming XXX this domestic while profitability. our contributor larger overseas. those Switchblade to which making our customers We on traction is revenue and gaining Switchblade to also deliver We're XXX continued strong key

integration the continue production the through operational for Switchblade Special We vessels U.S. launched produce the it's also of version for developing quantities Operations initial rate while naval ground Command. to fielding into low maritime XXX

versatility of Unmanned quarter where and order task integrate contract services our million successfully The operations, milestone Special Systems $XX business MEUAS with awareness unmanned multiple line Medium for contract first performance, of with Command includes achieved level future UAS follow as our of for for our segment, years providing the option in winning continued well IDIQ opportunities ISR period. XX onto that medium expanded The and to on using we into XX-month from customers. portfolio key systems. delivers Aircraft an part when our another the and have initial secured Moving which reach a situational of the SATCOM-enabled we beyond we bodes after IV Operations XX JUMP unmatched U.S. initial operations JUMP aircraft sight the

for XX growth and fiscal JUMP look this updating candidate opportunity. the program for government Army's this system also 'XX UAS U.S. million forward over progressing We U.S. of Tactical well a to budget Future potential $XXX Additionally, is or remain program. record. of proposed Army's exciting funding positioned The FTUAS on for year calls you the

with new continue are previously of and product Force actively not We the first next-generation was and robot HAPS five aircraft through most and opportunities, program, recent integrating the the In a the agreement This SoftBank. created did acquisition moving line, part our the and robotic ground domestically cross-selling ground line designing leader of in new development while and unmanned significant we the of a closed new at ground terms year German with our Telerob, of business we discussed we We're transaction Air under the product pursue AeroVironment beginning as master footprint. to Our solutions of U.S. global portfolio the of into a systems. design our expansion this vehicle for future quarter the robotic excited Company domain optimistic EOD ahead intelligent, portfolio. successfully internationally. marks win our about multi-domain, remain in

third build secured the which a With last transitioning we order are and million to in initial next phase program expect extensive we testing continue this aircraft $XX quarter flight to it's certification. and

various with shown domestic have We interest capabilities. to defense are also customers Sunglider's engage unique in starting who

R&D engaged continues lead these advanced counterinsurgency and opportunity and our and group defense early characteristics represent solution. MacCready for projects peer/near-peer autonomy. performance for multiple Advanced both in robotic remain While way HAPS engagements solar conflicts. leadership nature, We And are the in which significant applications AV's industry Works paving continued AI Solutions a to market and in system our multi-domain are customer-funded finally, the

sent Exceeding NASA, been just expectations, Additionally, environmental extreme amaze which over helped Works all the Mars successful flight has for is for Ingenuity This AeroVironment it's for one yet is to perseverance. MacCready extreme competencies is Ingenuity another conditions design to It to withstanding now. months environmental Ingenuity atmosphere. Helicopter, being the conditions. designing of XXth and way and out which ruggedness solutions high our continues delivering Mars' six world. in completed scout core team the testament reliability for now Martian with

Company. would three like I The situation that directly global discuss disruptions. supply and COVID-XX the chain affect Afghanistan, global in pandemic issues Now, could important to

the are completed years As U.S. the I'm XX Afghanistan sure aware, from ground. it's after withdrawal listeners on our just

during of civilians sacrifice in from recent employees able thank our U.S. will in and for people and keep forever. our thoughts. safely We foremost, their pleased forces members we and lost incredibly our First were events the the to I'm Afghan and remain tragic the country. hearts service challenging time U.S. that evacuate these The Afghanistan this

While the not anticipated, forces Taliban's the was was withdrawal rapid of pace allied expected. of the takeover

serve will impact these operations. However, events our not have anticipate material markets the do any or we on we

While XXX various continue. support continued products that the strong budget year incumbent for $XX XXXX region, Switchblade our of believe missions, funding for in where our bipartisan we LMAMS well local products The solution. the army defense U.S. will were proposed our used procurement includes as fiscal government throughout million as is

growth. adequate backlog also record current Company's future the visibility our Additionally, provides into

watch closely situation. the to continue will We

As business. continues impacts battle our so to far, mitigated have to we world and the variants, it's minimized and COVID-XX material successfully

a AeroVironment results positioned International financial Our top running operations travel smoothly. are post believe fiscal year but to is and we still and well beyond. line solid growth this challenge remains

pandemic, prepared quickly. chain to situation is this get continue constraints the closely We ability react by Further, monitoring course, it. exacerbated Of to and shipping and their remain to products we impact bottlenecks supply and market. a fluid OEMs are global to

any to our are materialize. continue risks and We chain mitigate that to monitor working supply

for microprocessors, supply have to of shortages we we track the leading-edge challenges remain While achieve due had objectives on fiscal semiconductor to our year. some full chain

Lewis. organizations, XX at appointment of years Airborne more we During CEO strengthened Cindy our than including recently aerospace most experience quarter, Cindy Holdings. of leadership with Board as has the the Consolidated also of several

several stand XX. and after service Arnie We and day, endeavors. acumen, thrilled it's a future to first now Company's Kevin? wish decades Given that in Kevin we're to annual same board. the dedication meeting September Chairman, the detailed for and and I her well time, that, McDonnell retire at their numerous financials. to of and With them quarter expertise call for their he not thank the over the has we will of like to Tim Conver announced her both reelection have review for on of would on Company. At to turn contributions that On Tim Fishman shareholders decided retire and Arnie

Kevin McDonnell

during Small performance, we earnings quarter business Wahid. is income Thank from refer which four on I business I Other. begin services engineering will and I'll and operations press which, XX-Q the highlights note, Today, segment of adjusted to first our operating our release you, like Other Form includes reviewing to the UAS; income have segment. In press ISG unmanned presentation comprised continue our newly reportable would now I each report segments: for that HAPS and business. The both revenue, release, our UAS; and will our acquired and Progeny we be Missile Medium Tactical margin, Systems; available ground occasionally of vehicles acquired our before to website. gross

provides of greatly For quarter-to-quarter I would for Slide on annual an of better would period. that our comparable $XXX breakdown revenue transparency was mentioned, Wahid mix as XXXX first the analyzed improved the by a provide will X line from so result of vary XX% million, performance but segment this basis. fiscal prior caution the and the for a volume, the it of be as increase presentation will business quarter earnings year's quarter. Revenue product a investor,

versus almost generated quarter after revenue. segment Our revenue $XX.X year's $XX decline first a business Small revenue in very of timing orders, fourth year-over-year of last of quarter million million. UAS $XX.X The reflects of particularly the strong million

plan. We Missile in our with from largely XXXX Medium which In a on timing base to slightly HAPS On of just our had solid million some of up test, businesses, The remain UAS Small the The both HAPS versus the service in result $X contributed during with Progeny revenue challenges million our the $XX.X of HAPS, Revenue approximately combined our includes decline from to XX%. acquired Small in continued basis, quarter business TMS from Tactical newly positive $X.X quarter. driving largely or segment quarter newly Other period. fiscal million which which quarter, the decrease track first contributed -- XXXX Systems XX% in of year-over-year in million UGV slowed a we year-over-year offset business. declined the summary, over partially and quarter. was business was of $XX.X $XX.X $XX.X fiscal fact in business quarter, million business additional business. more by business variance XX% the than in that Our under first to prior flight million the were on growth TMS million, the first of or the versus core the first expectations. the acquired line segment revenue ISG LTM the just revenue a ramping attributable at UAS grew year was first businesses up offsetting Consequently, over year's and The the UAS $XX prior TMS just from a our acquired were quarter, revenue.

intangible presentation mix mix have the business a gross jump intangible with numbers, margin consistent analysis the issues will out to products amortization as big versus three that the our historical service has chart margins remained product without but shows a service well the in adjust and our our strong amortization is impacting and because slide We as had have continue impact into the and product service core which margins. I on product When GAAP the earnings intangible and margins the you of acquisition model. picture gross normal margins gross now Before negative amortization.

With ISG service to Medium been service lower to Progeny business reminder, take have business. and than contract percentage some historically, there let's turn on the a term, drag a the the that there between historical service will gross In percentage difference the point our margins. extent point XX XX AV the margins said, the product and service numbers. short which absorb margins some we on UAS to as has As be

of the for profit year's representing of overall gross from is of fourth a mix well versus $XX.X in last split. of XX% conference million, million margin Our margin primarily XX% quarter high $XXX,XXX XX% revenue. gross in gross mentioned XX% quarter service the of profit XXXX in gross and was The intangible out of during $X service lower the margin When call. prior the of as back respectively, to a quarter The amortization to product gross as million you quarter first pipeline. compared and was XXXX. due quarter our historical anticipated year revenue XX% the as This to proportion XX% the compared current $XX.X XX/XX versus revenue was in consists first product revenue related or periods,

revenue last intangible Our the amortization margins. mix quarter was XX% higher the reflecting of impact negative year, without aggregate in XX% small versus lower of UAS margin first historically gross has which

margin, excluding and margins gross components Service decline XX% XXXX. product for gross amortization, attributable in to both amortization capabilities. backing the the XX% range Progeny again from expect project the largely percent to year. continue was lower mid-XXs the intangible provide intangible historical versus was mix quarter strategic AV be Arcturus to We in have which slightly but with The substantial acquisitions and fiscal margins ISG very service in out

total. and Over service in our been XXXX the two same past in margins the range for fiscal years, expect would low-XX% we the have

service prior to along margins, quarter. calls, service on product mix, explained will As with our quarter and our product and vary

partially result last for other quarter $XX,XXX deal quarter million operating last exclude quarter for the deal of $X Included increase year. year-over-year, first in and integration the $XX.X intangible amortization of you current expense a the of of by a expenses the costs as $X.X quarter Next, in lower newly the million million first impacted acquired SG&A million in fiscal for was XXXX. The remainder XX% SG&A operations XX% was compared expenses. the by compared intangible XXXX, were and When SG&A of to $XX expense in revenue year costs, turning to to versus SG&A first was offset the travel percentage fiscal year. amortization pandemic.

fiscal should of to year. first of Again, expense operations. or in the to first revenue acquired range newly line the for the increase reflects the for revenue with year. quarter of R&D R&D intangible quarter a the for XXXX. was However, million the guidance of our XXXX or normalize revenue compared to SG&A, full percentage amortization R&D of of XX% be for XX% million XX% the $XX.X full fiscal in excluding XX% in X% as should $XX.X XX%

to quarter, loss related Looking at JV. equity recorded HAPSMobile loss a of method we million our in the the $X.X activity

we earlier, advancing of carry cover are joint In in disclosed the venture. that are of the in additional administrative commercialization. the to SoftBank to finding HAPSMobile and full of the partners venture AV As process form loans cost financial the the interim, funds

For financing accounting record and proportional are income. losses, up it's purposes, or previously losses of payments. JV. the Under is the amount be will obtained of when require repaid loans the and investments guaranteed be the any as of the loans stock agreement, buy terms to equity recorded are recognized repayment, the the considered method AV will loan, Upon to

QX full should record and year to be net expect losses minimal. to continue our earnings to QX but method We equity impact during the

fiscal of during tax share compared higher the were by bottom $X.X offset $XX.X in XXXX. and of fiscal tax fiscal our acquisition-related or SG&A $X.X for the net income million per $XX.X versus margin quarter loss of income unfavorable businesses, first per of benefit a the at provision of net net interest acquired Looking $XX.X XXXX. $XX of net first $X.XX line, expenses, a XXXX in $X.XX The for million million to million of or million due share to GAAP partially These incremental million quarter first expense. the from diluted was was quarter decrease $X.X million mix gross diluted

presentation of reconciliation XX per the fiscal In of $X.XX for of share of GAAP we was the as XXXX are XXXX. guidance the loss terms diluted The and adjusted call Company diluted an still expectations of $X.XX posted outlined we conference on non-GAAP EPS, earnings Slide quarter earnings EPS. our and loss on slightly the of adjusted first for per fiscal better quarter shows The adjusted of or versus quarter our share diluted for than outlined. the fourth track have first adjusted

to the million, a end and of investments $XX.X Turning balance end of growth $XXX.X decrease total from as of quarter cash sheet XXXX balance at strategic deployed for was fiscal sheet, the our the million the we opportunities.

During the in closed first net acquired. we to quarter, million, Telerob $XX outlays related May, the which total of had acquisition cash of approximately cash

million sheet We continue to $XXX strong $XXX have of a investments facility. working with over and and capital million balance cash

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

sequential Our Slide funded fiscal a the current XXXX million of backlog of quarter increase million of X at the first of XXXX. quarter of first of earnings fiscal summary was $XX.X and $XXX.X the our XXXX a presentation an increase of visibility. end the million, from fourth quarter $XXX.X provides fiscal the versus

visibility total million the XX%. toward $XXX today, midpoint is guidance of As million of range revenue our $XXX to

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

Wahid Nawabi

Kevin. Thanks,

our customers. of our our updates earlier, by now, Slide delivering the to As summarized our to earnings on guidance market this I X provide of fiscal I offering positions, midpoint Supported some our achieving our for would leading we're critical on range to milestones, and visibility year. strengthening guidance our presentation, mentioned expanding XX% number commitments like to and

$XXX are between million fiscal and guidance year reaffirming and $XXX adjusted of $XXX between and of XXXX We million. million full $XXX for revenue EBITDA million our

guidance purchase to GAAP our final Telerob the our to reflecting accounting revised for have $X.XX We EPS acquisition. $X.XX

per to this our last was completing between earnings and We're adjustments communicated $X.XX share amortization our guidance for GAAP other EPS quarter, assets accounting acquisition-related also intangible effort. contingent reaffirming guidance non-cash upon expenses, As $X.XX. acquired and prior excludes diluted we which non-GAAP of purchase be

recent margins as making leading as the to with let track results our solid the as our profitability another and gross our expand level. progress annual good goals key messages. We acquisitions. of solid shareholders. Before unmanned our In year our for We're up to guidance backlog me integrating and our three the sum quarter with over short, record robotic questions, And returns successfully in same we're to across line on to position increase before: we business; delivered turning the top call for build meet underlying growth strengthen remain deliver base systems and expected the the progresses. Company's landscape; fiscal yet

record there. for backlog, stop enduring to strong and and we our us ever. have products best our Looking position our But the solutions, year won't sheet ahead, balance demand

customers. and of build to capabilities, provide execute to our a the key to on for than more continue confident interface relationships we tools integrating robotics, intuitive have We analytics before our the ever and broaden staff, strategy data am tomorrow. AeroVironment effective customer user technology I to

have and the and for your to speak meet our opportunity We over you thank AeroVironment. quarter the with investors enjoyed past in interest continued

virtual We investors excellence. and and conferences us on engagement Annual our as as been you September to speaking our our always shareholders and to customers, members for Meeting your and our have want for much team say and I at connecting Stockholders look challenging with XX. to our thank our ongoing to deliver possible increasing forward upcoming visibility

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

Operator

question And first Global. our from from Alembic Skibitski Instructions] comes [Operator Peter

now Your open. line is

Peter Skibitski

afternoon, Good fiscal have October. for Thank continuing guys. starting resolution, you. Guys, looks like certainly 'XX, we'll for in government a it Hey. federal the

us upgrade or else? then, would could it for for small the or Thank give to down? of ramp on that's fiscal you the between you me. balance Small just you in And the this a your for Was That's UAS to something UAS sense if color of guidance a any expect terms wondering, more provide was factored quarter gap of production maybe of year? due it level And you. into being cycles that maybe either can Just 'XX.

Wahid Nawabi

both you Thank the Yes, for could questions. on some Pete. light shed items. I Hi,

U.S. guidance. the believe into continuing the budget, we're have we situation could and fluid change with that but resolution the continuing considered that is In that government's a Obviously, I achieve our it into resolution, despite terms of to believe the we said as the second fourth as that call. track record really well us we third then, and our on and And obviously, on our well earlier backlog going fiscal sets quarter. results year for

the optics small quarter, for of of remarks, that's being I that on the growth because The UAS you see in the lower pretty on UAS picture, most business sure look at eye and first But chunks for longer-term quarter, Because contracts, specifically any in we it's next as will down the to have for timing of previous terms QX our it. In quarter TMS. small have those, of sort significant or in of large one make UAS mentioned of and year revenue was quarter. of individual the keep my on change core this important we of an picture longer-term a these the -- or you if businesses. either made those the of all could of contracts, especially timing up some optics specific that businesses, small is business really

the the in XX% roughly As in core line a mentioned his in Kevin our little businesses. than growth looks bit several remarks, last less quarters, trend

Kevin McDonnell

LTM basis.

Wahid Nawabi

grow this UAS year. we both LTM basis, to this right. guidance, over our businesses our and year, expect TMS our last small And year yes, in --

internationally and keep I updated overall, about good feel on it. We're domestically really and a you engaged both we'll opportunities, So lot that. actually in of

Peter Skibitski

is about travel guidance, That's kind guess, restrictions just, closing in appreciate COVID, then of still this -- any the your any international is in meaningful helpful. at And particular. for products of I I point? No, headwind for to that sales comment

Wahid Nawabi

has challenge. remained be a that Pete, Yes, to

challenges the far. on extremely I we as -- have addressed so We those remarks, well said have

the get Middle travel able teams the sites. terms visitors their still. allow very to and are That's in are still to overtime in and Many get of many a travel into We more folks still And the is country Many allowing their of of requirement and extremely as that lot true very are countries vaccination as customers and well, countries and to these they more to process sort but becomes but also allow their challenging. to East, to to government as duty. able change, cautious to in the as of hesitant well the are careful long limited sites to come in of obviously, the are U.S. sites. U.S. and across they we very expect difficult of

Peter Skibitski

update, Okay, for the Thanks guys. great.

Wahid Nawabi

Pete. welcome, You're

Kevin McDonnell

Thanks, Pete.

Operator

Thank you. And next Peter question from Baird. our comes from Arment

Your is line open. now

Peter Arment

Yes, Good Jonah. afternoon Wahid, Kevin, thanks.

Wahid Nawabi

Hi, Pete.

Peter Arment

recent Wahid, your kind a as come how business know some this demand. -- question of you've How just of we is kind get less do come business. out characterize? more out theater, MUAS boots lot on of to theater boots of kind regarding for won in services of awards you positioned that I perform

Wahid Nawabi

Sure.

obviously first results so So delivered. business, Peter, in the for terms quarter. The the far that has already with business we've grown of our MUAS we were pleased very

this today. to We really large that MEUAS IV on U.S. expect continue we're the year. SOCOM's that gaining business position to share contract, grow a and The very opportunity,

signs I region increase actually We drawdown regions and So, signals services expect and around quite positive. the ISR is that could that that in U.S. The SOCOM other continue. from world. believe many the to the

on to boots is to extent, the ground, services actually the for reconnaissance, do those data expected, U.S. and As need less analytics starts general. intelligence, better in some have types surveillance to and of

that for UAS good our in MUAS as general. feel as business about both So, for small we well

Peter Arment

latest that opportunities. Okay, on export the can Maybe that's for update about? helpful. of gave you what's there an just kind you talk TMS quarter And us last

Wahid Nawabi

Sure.

it customer. you in to first and as our We're our we've export So shipping the know, building received license. process product of that actually

the but we with engaged a in multiple that countries. I countries interest acquisitions who capability process have for shown multiple are additional request said, We as making started have only of that are process actually not with, also starting and

countries a to well. seen international now of of Switchblade. the in to going more get XXX, Switchblade announcement -- the as if international it to before, customers since our countries related when As We've we're join is our Switchblade interest that also launched I matter XXX. XXX ground we've said versus from Switchblade for That's specifically

While for that with boots earlier Peter, also themselves that but we themselves and in international to us capability in protected. significant process pretty keep the more countries a the opportunity order ground, actually having on think of And that's this long represents it's defend less term. troops much would have needs U.S.

Peter Arment

kind last revenue? the guidance, for second the on in half, mix the are one Kevin, Thanks. expecting XX% first just of XX% just And a you half us in of terms me, calibrate to Okay. still of

Kevin McDonnell

We haven't that. changed

Peter Arment

you. Okay, thank

Operator

And Instructions] our [Operator Canaccord. you. Thank from question next Austin [ph] comes from

now is open. line Your

Unidentified Analyst

you? How Hi, are Wahid.

Wahid Nawabi

good. Hi, about yourself? How Austin. Pretty

Unidentified Analyst

good Pretty here.

at Just If Tactical for you here, SOCOM or most upcoming MEUAS backlog contract we the you UAS opportunity the be consider look my the significant guys to program? Army's the the IV pipeline Future first question. do in

Wahid Nawabi

of incumbents opportunities And you of has Austin, our are quarters, have been against last for major in -- those incumbents significant years. -- AeroVironment. opportunities both are Arcturus So, They they contract. that two have The there represent gained several newcomer long-term that a -- MEUAS, primary the for two can over significant as us. both both two acquisition for the last contract the into consistently share see the

to that enjoy, and I that. or about position to in the that I we gaining in going it's market-leading competitive. more is fact a we the And that either believe expect position very actually same aggressive that's good that to But so, we grow And continue a future. and and continue. stay share more competition definitely feel Obviously, get the the we're

government. next one we brand-new which that, we growth. program for U.S. downselects over program our TMS are expect the for a record. grow of of for as to that The [ph] Army be UAS long-term has sort us expect grow, Additionally, to million fiscal in dollar we to $XXX of beyond. well Small acquisitions we've of the But the multi-hundred that close XXXX budget the that's significant a to on million and done this that government And other year regardless opportunity to accelerate also our is the and year our in side, FTUAS to as grow,

Unidentified Analyst

Do toward you more more about Pacific anticipate, Switchblade for here, as potentially budget X and we either or of the great. And bidding bearing for been is or you the China. have of -- when the for think guys being platforms? just Okay, warfare Blackwing naval TMS countering Ship on the sort pivoted XXX

Wahid Nawabi

Sure.

have contract. official three more that expect of well. continue to and have secured or on of is adoption the Blackwing our with over now deployment The the very actually contract into Blackwing gone essentially increase satisfied the capability the an record the two. We extremely Austin, we Navy that with last actually for years actual years, we Navy U.S. So are to U.S. a two submarines. next year to They In Blackwing. program for and more of has

opportunity. However, submarine the that business, because not size large or significant of is large, is very fleet very the a not

maritime ships, XXX Switchblade vessels, integrated as have for opportunity itself in have as but several already terms In with in that as large as are interest small ground mentioned by both there We I us. medium-sized services maritime, remarks, a that with independently assets. and contract as a well of well my an additional definitely other that's SOCOM platform, U.S. U.S.

we're that TMS progress aggressively. I for to continue to actually for significant because the So, us the And growth feel a about for to work opportunity and it's good those going business. long those to going continue run be

Unidentified Analyst

Okay, for great. the Thank interesting. That's you color very there.

Wahid Nawabi

Austin. you, Thank

Kevin McDonnell

Austin. you, Thank

Operator

Skibitski Thank from you. Alembic a we have follow-up And Global. question Peter from

Your line is now open.

Peter Skibitski

guys. Thanks, Yes.

-- production? make financial a so for to sponsors more much the do How development? at. understand financial complete I testing design? you HAPS, the new is on more backing when looking of of I for where to and of are kind we're more for you'll sure want sorry, is any, And finish it design development? think Or if follow-on needed, you Just Or

Wahid Nawabi

Sure.

sort a for that it's deserves and it glad critical growth us color because Pete, asked you it. question, very opportunity that so some I'm of So, on

already with have year, We a last Essentially, agreement AeroVironment. to five -- quarter over this secured orders year five secured with the for years last fiscal master agreement toward end SoftBank. in blanket the allows the of master SoftBank multiple place next we very

one and pursue agencies fund is of that design during set last that those on few The take ultimate contract essentially just purpose to or opportunity quarter and performance contract certifiable this the next world. $XX amount our and The by SoftBank the five roughly to us committed is months. good the another of which the flights was around fiscal design FAA XX investor for we secured entities a days learnings is period other essentially the to then of to going we not, design whether orders -- XX months. million That own. about incorporate that a of of sufficient. first funding airplane, also the last is first last AeroVironment the the will next-generation regardless And year year, as The of into recently of be get is basically or that of such a

that HAPSMobile completed, business we for parties In because start we've if investors which could investment, with and see engage come when that the and unbiased -- global after around X and venture joint successfully people is to we that HAPSMobile venture. service entity both of they we to the started SoftBank, for for primarily was world. of additional join terms the The to look HAPSMobile agreed connect formed want plan reason joint Phase the billions believe now additional will a

we that. the invest telecom have and committed still investors and and interest be in financial So it AeroVironment that SoftBank open we're Both we'll was strategic an one. eager down investors OK the most likely not path. other is But way both that there and going original to will SoftBank get it. stays at don't, we to If go that's operators, continue to investor, Should because plan AeroVironment to not are. other to

part to to phase and the the it, how a XX that sure as with expect chain started is build XX the can FAA. which done and design months. this so, make also last basis we the we we expect the of supply issues And finished with with to to we've be the question timely long to be airplane. your that will the months we're manner. And of on working we is materials certification already within another And to FAA airplane process going This build be another that airplane third

Peter Skibitski

color. all Okay, that sense. the I makes appreciate

Wahid Nawabi

You're welcome.

Peter Skibitski

ask -- Valkyrie, Switchblade to that trying you integrate XXX, also you're a another Can I update. some with the give if me follow-up. Let Kratos recall. program

coming Just you're and along scheduled was there's a wondering date kind that's if for that completion to of hit that? how

Wahid Nawabi

Sure.

first that because, they with say Switchblade drones, other is platforms, short development they platform. That's early. that positive in capability. So, such the with program with competing have the interactions, is engagement future. OMFV, -- Both really Army General reason but their That also on and just for feedback and And that Dynamics of for more U.S. our Kratos for of why integrating The engagement and with AeroVironment have we're win integrated many. to that term. a we're Valkyrie to doing integrate very it's ground our engaged one it part with rather process they're and going that missiles well. are program, which slower for Vehicle believe is that the their their XXX that. early win to foremost, both long-term a Kratos still the customer, based programs platform well U.S. some is loitering be the in especially programs working as multiple Their than it's Manned to platforms of record Optionally Fighting many as opportunities on on and obviously really I We're Switchblade XXX but Air Systems Force pursuing. a Land going start they that And to then, a of be

Peter Skibitski

they a too feel was for Corps those us, looking -- two prefer chance debriefed Telerob you've the you necessarily kind with -- And about at you the didn't a then do Okay, great. learned OPF-M, what set has the sounds or sort you but the competition. out, get Air debrief I selected time Force prefer two competition customer like last get on a EOD And get hadn't for Marine around of without for that on gotten what Did point? It yet? a to the last feel those competitive from the yet sharing not of it this guys you you two of competitions promise, reported one losses, customer me. lot with to programs and much have

Wahid Nawabi

Yes To much and hard abilities, to as our of best learn the can. really we've tried as we no.

some have We gotten feedback.

we're engaged matter assessment of that, still more of learning in is the have very portfolio and in and sort given time. opportunities of any truth lots that a about are diversified We of we lots it. The at now

of or optics with like one we of our obviously lessons In business and absolutely our the here There three we're So is opportunities a learned. changed don't the are probability there and bit. any little going two to or while losses, lessons and losses sort portfolio regards to are that specific have learned, growing, those them. several there

down actually been that We of having face-to-face that. seriously. one through is challenging. situation, have challenging we things process and difficult a the very little more thorough the very travel and COVID customer a sit of them the go to internally has because We meetings take And been have

both been And past. going expect two businesses and we to growing path. they continue these this regardless the However, year of to that, that have we're grow of in

us portfolio. market for our feel still rest about we for and good there the So, of opportunity overall the

Operator

next our And from from DiPalma William you. Louie Thank Blair. question comes

is line open. now Your

Louie DiPalma

Kevin recent do from good afternoon. to to view HAPSMobile's as Wahid, start-ups and signals AST satellite directly trying How cellular cellphones? to Jonah, such business space you SpaceMobile model compared broadcast

Wahid Nawabi

Sure.

on a space keep entire obviously the broadband terrestrial we So, close only not also developments the stratospheric related. space, on in but eye and

of opinion stratospheric of play platforms terrestrial, of they different there's takes this opinion is whether expert source really who invested who and all on all. this. in massive a it's new is space, sort winner all space, area, not and is domains, role. a The Their SoftBank, the essentially, an are really an in that market have one great

expect some specifics a solution. inferior a unique can a to I disruptive. they is very broadband. lot the of solar will proposition we lots any complementary to Sunglider extremely to in providing do actually and significant completely LEO believe do There a And while We However, SoftBank run replace them, it's completely but them role displace list as it's evident and through that HAPSMobile and role Sunglider's believe platform and even key our we why are and long we capabilities. very, to superior that and very advantages consider play the quite go satellites. a geosynchronous of than the value Sunglider not in players Sunglider that think satellite an of as rather from of got of

Louie DiPalma

you connectivity to in July, also with JUMP won And Great. IV to whether award any you in of competitors SATCOM Are the And satellite your it's put program connectivity, announced this are K-band if to disclose L-band you X of also satellite the connectivity Group the have that on MEUAS topic your that, capability? SOCOM connectivity? aware you satellite or on able XX. related

Wahid Nawabi

Louie, So those able about that specific I contracts. information disclose am actually not to

MEUAS of will site As win you not our to the IV of to and to be know, the the of the can first customer very talk but sensitive operations because safety. going first we're openly customers' is sensitivity of they're potentially I that. can't were the about speak tell allowed our we also really we terms one What and that in provide for customers' only in to the agreement, the to that. and provide not Are that to application try I that? others you confidentiality

Louie DiPalma

Sounds good. Thanks, Wahid.

Wahid Nawabi

You're welcome, Louie.

Kevin McDonnell

Thanks, Louie.

Operator

from comes next Brian Ruttenbur Imperial our And question from Capital. you. Thank

now Your is open. line

Brian Ruttenbur

asked something Yes. HAPS. wanted just that to the drill down bit clarify Pete Skibitski a Thank wanted to little and very much. I on you just had

to XX The can heard. you just produce months? -- it couple aircraft of down to a numbers that it you Maybe an re-highlight that. months out Or just just what trying next third is stuck a that guess just aircraft order? expect I'm number within I me. expect the aircraft and an I to you heard I narrow XX and third Is

Wahid Nawabi

this is Wahid. Brian, Sure.

is of the first the award the that have development of and aircraft. the already learnings the the five of we $XX million of third So aircraft start aircraft -- first of and scope the into also from production plus SoftBank. design implement third two secured flights a to contract The the third from the

months. in contract actually to the to a We expect secure make not XX airplane

less in than So usually, years give of to point the the we a reference, -- you two first two two we airplanes than less frame. two time year made airplanes that -- built

depends really, completed building FAA then as sure the it. locked serves the the that for and getting configuration start the on, the it make then and in first, and engaging buying to basis with and certification design airplane airplane So of material

Brian Ruttenbur

Great. very you much. Thank

Wahid Nawabi

Brian. welcome, You're

Operator

Thank concludes This today's participating. you. conference Thank for you call.

now You may disconnect.

Wahid Nawabi

Thank you, everybody.

AeroVironment (AVAV) 9 Sep 212022 Q1 Earnings call transcript