RCAT - Earnings call 3 2023 | Red Cat Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Red Cat Holdings Fiscal 2023 Third Quarter Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through June 7, 2023.

I would now like to turn the call over to Scott Gordon, President of CORE IR, the company's investor relations firm. ahead. go Please

Scott Gordon

Good us Kate. Third and you Call. thank Financial Thank the morning, Red joining Conference Update on and XXXX Cat for Results you, Corporate everyone, Holdings Quarter Fiscal

Red us Joseph and Financial Cat Joining Chief from Holdings Jeff Executive Hernon, Thompson, are Officer. Officer; Chief today

including future During operational performance statements, making results. this Red address be will that call, or Cat's management forward-looking statements expectations for

that may from statements cause results Forward-looking other involve materially and to those factors statements. risks differ actual

these about described most filed XX-K, information For accompanies refer factors cautionary particularly periodic Red please Form this more the risk in the that statements risks, in to on press and Red recently release in Form call, Cat's it. Cat's XX-Q reports

accurate as today, X, reflect that to information The this content of events by this required publicly any call. circumstances call disclaims is as XXXX. update March only contains any Except to Red or that time-sensitive Cat law, revise obligation after or of occur information

turn is Chief ahead. my It now please the pleasure Officer. call Jeff, Executive Jeff go Thompson, to over to

Jeffrey Thompson

third Thank XXXX our email just remarks we as was Welcome earnings conference to to my fiscal brief I year I'm questions. prepared a quite you. few have told keep call. Great. going quarter

soon. quorum, have So IPO and of sale we'll the the very deal. voting to status now cause April, the on closing now Machines -- later of this of Unusual let's proxy of this or results the the share and and would that the some a its out early I'll get expected the has And those vote has is the proxy housekeeping month way, start with Consumer division.

and customers, be cash of division military will will core and Red to responders. our and focus reminder, the Cat the the nondilutive sale As us allow raise first a on for Consumer event

and The factory. now go. a Salt is City We to factory state-of-the-art Lake ready complete have drone

this drone X per the only an and to has Teal the payload. capacity The Teal We in camera XX thousands team drones producing of now thousands new with months. chips make job the of month. drones, just have done completing we're produce new We to incredible have

gears Tranche about short-range of talk switch X reconnaissance SRR record. program Let's and or

has X. will previously next funds include into award have these the mentioned, And the pushed features X. not of been it we Army in Tranche from size the receive We the Tranche know I X happen should months. new of more into Tranche yet, but do As couple to

for This year Border after Teal feedback made significant on first a Next Patrol Patrol. from Border was Patrol. by systems in and orders additional up is very Border a are this is calendar We mid-January. few only our there We believe the encouraged the the XX to for weeks X. the new the shipment opportunity started production

indoor perfectly, and spaces. systems Skypersonic, SBIR, On project a SBIR, X where Skycopter and to just mentioned. it, our research March has I this we innovation Skypersonic, aerial opportunities matches program One is now. is X. significant drone actually Navy division, or Navy compact The being am This I tomorrow, small as small is coming business a for submitted for inspection and elevated the call a up.

get Skypersonic. program into to hoping we're another So through

has Act. Infrastructure pass to This $XXX bipartisan Senate House. expected passed the second The the is Drone Grant already million for is Inspection and that is grant the a soon

to we this well of are grant. positioned part believe be also We

the Leonardo Italy. So are campus. co-located Skypersonic's call I'm and This is, Torino, from office doing in is where we this

only is goals companies We contractor. defense meeting. and of last we great Italian large introduce had products. week, to invited we a X this small need governments were introductions, of In defense is Torino, to of organization that one And X presenters. the BOD DIANA to were the Leonardo NATO

team development Teal business a the different and myself drone response successful X weeks, and We very great to is it's have at operators been trip, a countries. from the been X least warfighters. X getting believe previous The and

little We well Red be to and sole-source a hundreds Cat log and jam also contract, opportunities detail for the in be Ukrainian of sole-source included the certified bit defense drones. finally, to catalog, European the believe I Q&A. the in received sell in countries. have able will the their to positioned Teal And be address country contract we identified awarded to we also warfighters, initial in we new are orders, became get to these X that to breaking to a European more

over City with call drones. the a build in hand supplies thousands to completed new have I state-of-the-art before factory summary, chip to Joseph, we Lake In Salt of

great We of best-in-class development as getting more and is response couple drone recently, the come have the military mostly on responders. weeks. that in We'll new from in next yesterday, market, to first the this have

next have We X new most exciting and company history our months material partnerships our be drones sales, to expect outdoor we the X customers, and months for with and indoor our drones the products. in military

Joseph. So to over the hand I with to I'm your going questions. forward that, look call to

Joseph Hernon

Thank the and quarter, call of ended XX, January our provide you, review through Jeff, on financial our to will which now a fiscal XXXX. today. everyone I results joining for

first manufacturing Gross increased fiscal a fiscal second X scale have for in year-to-date expanded the in million $X and of X basis Salt to exceeded the we at margin City. continue compared XXXX our to Lake than challenged of facility refine more XXXX. quarters on and Revenues remained XX% quarters as

XX% of subsided. expenses its facility quarter nonrecurring compared forward as associated costs prior margins processes. gross level the expansion increase decreased have of second product the quarter, we efficiency of improve the almost head expect and with assembly We the quarter, to the manufacturing third count to as manufacturing the the improve shipments going in Teal and Operating our and

the per from quarter million operating more representing of build-out facility expect manufacturing through XXXX. prior compared totaled prior to $X.XX share, the the than fiscal than year balance head increase X% at quarter stabilize a size We of well the Teal end significant or year. third as costs directly for the decrease of more to Net is fiscal the to of third and related the and of the tripling for a loss quarter and fiscal $X.X as its the count. doubling a doubling in That the

the third with fiscal million and We approximately $XX ended quarter in cash investments.

million In product materials, including addition, invested and we Teal. have chips, in finished $X in raw drones production for

yield We strong expect in balance to over sales support investment inventory year. the of this the and

repeat manufacturing Teal calendar we expansion expanding, our are of the built over XXXX. balance the been completed, and force our building has and point, to forward trained, has this and At pipeline looking is and been sales facility sales orders new

now to operator will over turn call for the I questions. the

Operator

The first Instructions] Scott private [Operator investor. a [ Michael question is ], from

Unknown Attendee

reserve? Can you of clarify chips that we have the number in

Jeffrey Thompson

since hasn't we we'll -- they're not initial number to in over put the of years X,XXX XXX% Well, order you chipsets give the approximately -- almost going Yes. now, which changed yield. ago X

going it X,XXX You're don't X,XXX that to that some drones. and have could scrap. produce up end between make think But and those we

Unknown Attendee

we source production for large we have a Do any chips? this get orders Should Okay. capability? that exceeds

Jeffrey Thompson

chain shape that at not by shipments that orders certain better. watching in Yes. people It's form. they're the Well, way, know or I mean, news understands large put is But certain times. any perfect to yet the going everyone get supply

day an drones then. drones, more -- x, give You order drones X,XXX for you'll extra X,XXX get you'll us on get X,XXX

get next right It's be the orders we're us, about factory the and at to, big as not concerned able now. about high key we supply it the getting item more to But first shift, a, fully line if -- having capacities we second for and another for we get continue the in then add running it. to shift

We to room have do so. the

So that's all now. there

all in people the their of that, of own invested They're actually now the sitting engineers top We've offices. on factory and inventory. the work and aren't

We flying have a area now.

stuff like while the of of because was now the to difficult that doing all is house reconstruction, we're do over. living So a basically in middle construction, you're kind in a

And so will that the we orders large capability we to meet any have receive.

Unknown Attendee

questions. Two Okay. more

will have of award would combined. to X You in Or testing the the have regarding of it I that the that that of read I said suggesting the article X until this X if the we suggest Tranche fall that Army Is into this that read not an soldier you size? was couple it months. end next may other that was incorrectly. next and there day Was is of are Because statement, in referenced your being there Tranche be And pertaining would or that a award? should Tranche that be To news correctly. the year, the X or accurate? posted beginning that me, year year.

Jeffrey Thompson

Yes.

I was, basically, first company January they that that I get So on flew they initial they heads that. a We the -- what article. And day. up the actually where X, did test, talked for about alpha which was saw started each same think,

is not alpha product. report our that drone team an And can the to anyone flawlessly Very the knows the the day. of drones close great Teal team, But usually in that in that proud as we I the engineering could team, flew a had demo flew day. get What you case. industry that's

ago. prototype referring I we the prototype to X has contract. almost contract did a typically what contract, win But production Tranches, contract Tranche there a Tranche was won which for production years in is and was X We X every Tranche X and a not originally

X prototype of us contract, so there's that And won Tranche X a that. had and

to going after they there. was Tranche And then X, awarded was into start pushed Tranche which X,

the been would X. going about that in X for So to for year, to Tranche to have everyone's X get receive X, Tranche money you which a typically months

of So that in couple next award probably months. will happen the

Unknown Attendee

that, one awarded among to a Vantage Excellent. and Is be which there I to possibility believe be the X, possibility split is going there it's that And that is will simply Skypersonic? entity? award up

Jeffrey Thompson

it's -- you, I to Skypersonic. not it's believe to -- it's And want going We It's one actually don't but Skydio. correct entity. it's be

Unknown Attendee

bad. my sorry, I'm

that. about Sorry

Jeffrey Thompson

Yes, that's okay.

if but financing $XXX -- don't So X-point-something or they did got Skydio, know I for valuation. they a you million billion recently saw,

And off. our going alarm makes us that the an right got in here, Someone's inexpensive I industry. think, look position considering, really

for That's solely that we're with. they Tranche X, believe customers on just deal of military. one well and we we the focus But positioned the

to don't well other consumers they're nature, and is sole first has even things make and reconnaissance of guidance I positioned to some missile warfighter that and are stuff our think or now. do tools companies mostly do. with help want that to sure the purpose the responder think to I something doing for But the

Unknown Attendee

final DoD for country I been to One sales? have that any so do sign trip-ups X the in The interest our NATO NATO or time. going interest have to on not signed NATO wait to DoD we're any of appreciate off the question. on Or have potential we contracts, product? we terms off Excellent. your in

Jeffrey Thompson

through got all the to We sold for proper have all we one hoops. we the paperwork the of that like No, NATO the drones original countries.

them, So we the all all orders someone all away. regulations, of those things are and squared ITAR get through

So nothing in will hold aspect. that us up

Operator

call will concludes Instructions] question-and-answer call Scott? the of participants. to session [Operator IR This now I to read pre-submitted CORE Gordon questions Scott for the from management. return

Scott Gordon

a for you and would Thanks again, received from Kate. few to address we've investors forum be thought Jeff, this good recently a questions them.

in them? Do sales you update So kind of have initial I'll following Patrol? the contract Patrol Border XX just the these expect sequence. more on an the Do to shipment of to Border you ask drones

Jeffrey Thompson

one January. program. Yes. Well, great start just about which we users. in They every of we've the first super getting lot me folks, fly feedback agents receive learned We're month. the this, fly, know and Air thousands in after these a Force. let from of we them, of order, getting some to did hours with that these some is think, the And They shipped are I tens border

They're by there heroes. sometimes are drones. out themselves flying guys These these

them. to products help happy can them give So very that we're

Specifically they one on thermal sneaks make no cameras, that up can sure them.

that But Patrol, they we've and the typically make those or service, so they to other meetings market drones about are XXX from XXX our address have Border of to service. sure XXX gathered from need always what stay drones have in to is in

the in close months. Border for saying for be to these flying. that's getting that drones. couple I drone But we're an think older addressable the market could up the We're possibly replace is Patrol So not next XXX XXX that, of we option drones they've believe to -- that order total been

Scott Gordon

Ukraine bit, you've other or some. mean, Europe? you to do countries, that have Ukraine anything over with obviously, you to maybe share success NATO from I your think can Excellent. touched countries? trip Switching you to little recent on a shared NATO I other Any amplify. and but

Jeffrey Thompson

well, let me It's Yes. bit. a up back -- little

in So place record of with that most happening been are sales have companies other for the -- are defense have years. programs that already of

the Switchblade. been and with that record would have that frankly, don't long-term like they've have and One of of be that, programs And sales Puma done of the But sold them record with did, AeroVironment dollars’ as good millions birds as of would nature we some FMS we payload probably hundreds place. our don't in we Ukraine program of of the drones If for a payload. in have worth invasion. have already things

since creative program Tranche So the Army. the to through of we into be have record don't -- Ukrainian have that to X, yet they to people drones have be get of

which -- of operators some know line allow night, we XX% horrible, what had that So on detection. are plus I drones. plus the to drone They right had want at Street can right want have Wall article if fly high-end very night. steps the we've at missions ones people The Journal great are done the out, to done using or they're of those are the you get to that all the missions -- found them read which great now to don't a a would use want. XX% on front thermal

So them we all to they the fly that can enable could give actually night. want them that tools

And also We is XX camera, magnificent. an FYI, a our megapixel, XX-megapixel. EO a think from I daytime just camera, our went

updates Our great has just made improvements. software

we So that to have drones then the -- capital, people operation incredible the drones tell people the get information to in they the the the over anyway, is the need daytime you want But also. DC. to that first, and to get they have

then actually that really we're checks the it $X been new of And need this, And billion, from the then going going over existing information once write drones. take thousands to this can DC, think be can $XXX close. that that's have people Even recently. can they're of aid million, in we to the we and part we we

results We've hope working here soon. now we in to very it, how and it works. some Europe we been know So over on have

Scott Gordon

gears. Switching

needs. So meet contract? question this financing addresses financing Cat to need to Red Will do a

Jeffrey Thompson

No.

that's A, the cash Cat have going to some there that of and Unusual just at do significant over going remind know to Red produce Machines. Army going But we don't we're division the also anyway. do things then the there And share margin people. XXX% just receive So of right And a Consumer a they to will ownership is to size shareholders team already to IPO. sale of probably give the great we're -- revenue X. actually something the Tranche

growing As you rapidly. very goggle actually see, Riot there. the Shark Rotor leading Fat out is is company

successful think part be I So will. I'll we they're going to to have and very that's IPO, to be Red Cat. of And a think going help happy And it. they only

thrive. excited going responders. help can focus have And X the So require can think they so them that I will their that pretty first get but are on they we're divisions they we IPO, and us to military and focus the need that so to

made to sales. a in even factory, start we quite that all between So I now of the things, now. ready revenue, that those Even going additional sales, focus bit and will all chipsets just on producing we with we've are those new investments capital, without runway that's have And the burn capital. bring sales, though years way to think, that's a and down, of sales, building

As years. going for we significant out XX couple that to to orders, a go of X is get runway first

now. a no right there financing of So is need

Scott Gordon

in the addressed was question last The Great. live Q&A.

our the concludes questions call Jeff Operator, thank back so turn closing submitted, you. that to So remarks. over for I'll

Jeffrey Thompson

employees. doing joining. Thanks, lot all Everyone to great. team. a has hard I dev We've of this Well, thank great been doing Thanks. everybody, a been work. want job, for the

We off, drones they flying our freezing with then off. fields I live sat hours butts in going for now what and artillery and through. go know

hard for just to thank the I want So everybody all work.

in kind I'm my just of now a my factory completed Salt new restate going And to Lake have in because we City. summary remarks state-of-the-art

of tons to drones. have of We thousands chips build

coming few now, drone military. over the the in have get best-in-class legs first responders the Our next Skypersonic news great its is a some getting is starting We'll And with response. weeks. to new

with opportunities, thanks very and of That's joining So be have. just exciting excited all I you, the here way. for coming your lots to I'm lots things of And call.

Operator

concluded. The today's conference has presentation. you attending for now Thank

now may disconnect. You

Red Cat (RCAT) 7 Mar 232023 Q3 Earnings call transcript