RCAT - Earnings call 1 2024 | Red Cat Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the Red Cat Holdings Fiscal First Quarter 2024 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference is being broadcast live over the internet and a webcast replay of the call will be available approximately 1 hour after the end of the call through December 18, 2023.

I would now like to turn the call over to Joey Delahoussaye, Vice President of CORE IR, the company's Investor Relations firm. Please go ahead, sir.

Joey Delahoussaye

Sarah. you, Thank everyone. Good afternoon, you Holdings for Business the thank us Conference joining First Quarter Cat Fiscal and Red XXXX Call. And for Financial Update Results

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

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

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

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

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

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

Jeffrey Thompson

Welcome, related fiscal Thank which, financial and I'll XXXX Call. will year Quarter Joey. our First outlook our and provide results, fiscal our After we review Conference everyone, by will information performance your I then to and questions. Earnings then summarizing recent year achievements, XXXX. take to for start our Thanks, Joseph you. will

year-end. April the Drones few that announced and America getting before at is We revenue was XX, on drone to Army X fiscal a as X X pleased Teal fiscal drone million. nighttime QX days Association capable unique $X.XX the for Teal in the Teal a of our welcome am most report the Conference The I the Aviation class. warm Group

in and was if a year-over-year in would comparison revenue on a follow-through, did the $X launched first were run, that We brand-new start-up a not specifically, update. quarter, there exist. home cannot our more million be X and in product considered But your almost it guidance if you did make Teal but a because

are that sure And background Joey you lines and We're Joseph, some hearing make your muted. can noise.

met -- lot we've to got of new of we've the investors So and a story. with them a recently are lot

going I'm markets of regulatory discuss status. helped create the States that tailwinds up back United some of and the to current So kind growing

XXXX, December manufacturer So on planet, entity largest the DJI, put U.S. the the on drone list. was government's

passed also DJI Fast December In it we put American forward the unanimously, expect and months. few in the was next be XXXX, blacklist. to ASDA, XXXX, to the the economic on Securities Drone July Senate Act, law

far. X was August receives XXXX, to achievement, remote Cat's FAA. get over from Teal for few they requirement certification the pages, off, certification Only of ID the us delayed This difficult so documents the difficult from Red pull that XXX the FAA. it It's actually have a not and could months. a X very it huge done companies the and status most so

build in large not it's large just fill. at anyone by it's law what #X So only vacuum has This the manufacturer by created fire all market, means can Defense, the Federal the dollars. U.S. to no receives Federal and the largest market receive It's that that be what it a Department things that Well, local scale us groups, a in of bought regulatory with United it's mean? longer tailwinds all other one manufacturer dollars. drone these do departments, very the very world, these for -- that States, whose anyone do can

opportunity happen. that doesn't unique this always a is very So

announced discuss I revenue as at replicator DoD that and into record, or the Now I'll look move our midterm on newly and growth tailwinds. in going revenue. will organic to I'm investment discuss current initiative. revenue revenue funded the then of We then it immediate is And months. SRR but program. for most program XX-year program happen, is people to which on a the X next significant waiting call record X this this to Short are a very the and of Reconnaissance, Range

So reported QX revenue. in backlog. million we let's for our revenue organic Today, $X.XX in start our with

Our organic growth. $X sequential for million, is QX XX% guidance

this X is us just at after the This amazing selling run the XX% revenue guidance months. purchase growth to Our QX it growth rate for and million and top based sequential puts Teal more entire is X This expect would thank million story for next happen. like we sequential for XX $X the an growth. on XX% on is Teal a $XX days. $X amazing team million, making guidance signed under of orders, in QX of --

So now to let's months. and next we move Pentagon new X radical thousands A replicator the autonomous of on a smart in unveiled The across are XX XX believe on initiative. focused X which to midterm cheap, within has military. revenue drones strategy China's to fielding multiple opportunities, counter domains war to months

Defense, develop be Overall, of Hicks, said to "The interview. Tuesday's counter Kathleen plans Hicks Wall to Department China systems countries." from smart to cheap other Journal, of Secretary going and during delivering to intended be thousands, AI According said, the Defense and Street threats the we're to small, Deputy in

accelerating we week, announced domain attributable of the systems. scaling beginning valley effort Last to death replicator the with our overcome latest autonomous of the initiative, production the all

war very disposable to orders X next means to most delivered believe does the X to We which this need what are we contact fighter in Tens XX positioned to of already or to mean? months, of the thousands need drones months. be in these likely well with this be in vendors delivered So program.

Range record. opportunities. Now SRR of Short let's program Reconnaissance to on revenue move long-term or

Just contract was SRR million contract. contract. X,XXX a couple supposed tranche X, X. X would tranche on $XXX set the then X a production have over and drones. The and ago call, same to program years investors awarded years to to X the tranches: were happen a are was That awarded production ago started contract, was for X record Tranche X. and and Tranche originally prototype not for that tranche We X review contract X to of and new or of prototype we're production for have

us but they're tranche months putting final to U.S. was the last ago, supposed X into notified said get Army Tranche to the into accelerate, X war tranche the to started how initiatives. replicator and awarded be December hands. and This everyone's of due fighter's are. the the also was war small mostly actually, understanding because what Ukraine drones important product And that's X

selection, the next December this XX,XXX the So on contract which for $XXX is is, early of next tranche X down combined end We drones. don't actual announce X, is amount selection believe, at the but now is million and $XXX X,XXX for if which January, they or was down the remaining time. know on for drones, what amount -- contract drones million the was I

that the going for we this of but to I'm linear be drones. constant the now if I billion sized saying, for thousands going it's And of award, doing not $X.X drones, math. need don't a need be not significant. saying with to am will because this is I'm small know be up

now over to to hand look your forward call the I Joseph. questions. I will

Joseph Hernon

and 'XX focus ended provide beyond. and Thank leave you, operating today. us on which the the Jeff, for call My milestones comments strongly going of and to positioned balance review quarter, now to are first XXXX. everyone fiscal results for for July events, a number a XX, financial-based on which joining of I fiscal our of the will

agreement I Unusual we in many to sell As The cash know, of have which UM. UM. Machines, segment payment also as includes refer shares pending our a you sales plus Consumer an to of million $X will price million immediate of to $XX

working favorable adjustment be receive a capital million, to We also expect will which approximately additional $X in stock. of payable

significantly the upon to the contingent initial is us and an segment have SEC, process public with major Consumer an UM stock universal they the that recently of advised exchange. machines they on sale registration quarter. second expect a our IPO fiscal offering The during completing complete has that completed

likely the to accounting the months, Consumer under next to within segment operations. require close discontinued XX accounting rules rules the Therefore, the the since report is us as transaction

of much and The of have Rotor operating into reported. accounting which consisting of our historically continuing which of discontinued Consumer our Skypersonic our line reporting our with Basically, separate literally condensed There operations, have amounts related and Riot Fat segment, financial consists segment is Rotor and Consumer is for of combining Riot been consisting operations each we segment than financial what is Teal different Shark Fat in is the no and which results our statements. Enterprise one of operations, discontinued to our Shark.

$XXX,XXX. receive brief review at strong $XX Consumer we us will million growth expect the very The were approximately will in segment, the Since than QX revenues results QX was a by for at a less Consumer which provide to a modest operating Rotor for shareholder, level. operating of Riot, almost significant at record make driven of loss UM, I shares

our opportunities We there represent will that to that current value continue its market segment a under believes Red frankly, UM relative are the and shares in multiple growing significant Cat's have to stewardship. hidden UM Consumer capitalization. long-term value believe

Turning Enterprise the now segment. to

believe of fiscal just sales Enterprise start record sales XXXX. higher Teal As of in and April. We be for each Jeff that before segment noted, meaningful. in will market response fiscal immediate XXXX quarter has XXXX, been the throughout the The X we the late reported launched fiscal quarter reported and first the

orders We repeat million. already $X have approximately and an receive of are backlog beginning presently order to

Dr. actions approximately the chain inventory X,XXX our sales at X, million reasonable of positioned million response high $XX today. in and our by led components $XX at based we move million when that savvy which initially supply on COO, existing chips Evans, to established base us convert Thank noted our very to were we As estimate Evans. With These relatively have time challenges well drone. hard price $XX,XXX emerged you, enabled per prior in cost we to for a will That electronic it us approximately COVID-XX. of very that other calls, into escalating drones, leaves of and inventory secure prices. demand they during revenues procure $X represents levels Teal Allan to

represents in of expect $XX cash a will This net one cash number fiscal realize XXXX. we conversion and sources that of proceeds of inventory approximately generate million to

$X of expected sale capital. another Our cash source from the million of is Consumer of proceeds

proceeds can't period we immediately sell begin UM, lockup XXXX. is $XX fiscal cash could and the While generate of in late XXX-day shares to short our relatively million

high certainty from orders. orders than greater our secured normal be will Due that the for financing of sources the orders, by source to for to revenues. continue the these expect We are most there us of of funding opportunities agencies secure government-based Enterprise to government

been facility our continues capital. is to With Finally, and huge now manufacturing scale precious is our has our our Salt assets one City. Lake of in facility XXXX, employees a manufacturing focus facility and The output. dedicated operational Teal greatest this building in management, fully of acquiring

targeted than gross At this time, manufacturing its fully we are not which margins. to lower leverage resulting able is capabilities, in

orders cash grow Jeff expect as X margins throughout to cost, XXXX, and which drones additional fiscal a unit just increase we However, flows. continue gross noted, and these we operating to the for will lower at manufacture Teal will

Our U.S.A., to military become with us the drones are made an in that a questions. believe that which to will growth. I competitive in operator more critically positioned government provides to important now for branches. is agencies long-term huge advantage turn We including the industry over this the the for significant continues call

Operator

Instructions] first Kumar with comes [Operator from Our question Ashok ThinkEquity.

Ashok Kumar

questions. Two

first The X parts. question,

there flow will your your near-term capital? is, the In to of position and million improving question part need given second cost is margins, cash close the And of terms current get and QX $X you burn, that cash structure to your fiscal raise of guidance that and a current positive.

SRR with Patrol bake-off program with The and Skydio You're then the second for and you're on the the front program is same Vantage a the on competitive in question Border competitors. competing

an on us Border the and opportunity So could give update you Patrol the program. please

Jeffrey Thompson

Sure.

So let and your here. last question with start me backwards go

Patrol. of year. from orders also, got had for yes, drones and about did order -- much a So this Vantage Border all X us order. Skydio We we smaller an million earlier robotics also got the

a bake-off we So their gain yes, to are in business.

exactly and against program We large for we're going of have SRR, but report, nothing Short up the to Reconnaissance it that's who is Range interesting, new record.

time day -- we hear and we if this be as first any soon be as know. we of is to the the So hear something, year the could -- you'll do hopefully,

we legitimate need we question I'll And do at at these gotten week. we've conferences were lot were we all raise a while that it's And Secondly, go last question capital. into question. your about a to

hired just But the the executives the outstanding. are C-level employees, guns. the of not almost and own employees, the with let start shares XX% me and company, The we we

the dilute and not if of So raises don't written guns. own dilute we've we're to we a bunch just do we're checks, shareholders X.X% hired almost. shareholders, We Because everybody. the and want half

want not do we So that. to do

the on this. me of So details some let go through

into couple done quarters. than we'll turning in over with In $XX more mentioned, Joseph about is dollars X millions our next shipped we've of quarters we'll million the year, posting, be sales last got even first just sales of where As all not inventory and yet. of revenue which be we're of

be So actually those could higher. numbers

We As $X.X few would and research million And he also that approximately to generate generate we also million capital. March. in be non-dilutive million expect through also as project to mentioned to $X Joseph we in approximately starting UMAC the that million. SRR November, also could $X have prototype getting $X next recently $X approximately our from inventory more. or goes in contracts close received And noticed, million will which $X weeks, the in million

week gotten last we are mentioned, sheets, as the recent based and debt expensive offerings, much we as lines On less term debt, which stated, -- top government exploring and Joseph small on today, our debt. not we've of as contracts, credit that, convertible

summarize models. raise add to this easily million months capital. So you debt next of if could it few small $X.X our $X offering next million, a the approximately non-dilutive offering, $X.X months, in to the goes from non-diluted million way in which X capital million over service is And we $X to of to

total going cash will to close a $X us darn million point. that than of million million capital, That's to projection that enough to at flow $XX.X not your for to question And We're get pretty cash positive. and us but QX, think $XX.X which flow non-dilutive tell more I is of to you make yet, of positive? can I it's revenue that get

all X your I So of I answered questions. think

Operator

comes Next question [Operator McIlree James. Jim with Instructions] from Dawson

James McIlree

I'm of gross the the suggests this What your in utilization margins about on So levels, factory. either expect? of that, reasonable that got it gross When a revenue get to you it the you've of commentary XX%. capacity utilized? that's margin a reasonable of million commentary burden because would assuming -- inventory fully in be $XX to about about or kind high

Jeffrey Thompson

the this Yes. Dr. Joseph I'll touch -- is and high last want level building -- for to been and right something review because with Evans factories might is I on the person XX for because the he's this years.

out absolutely literally and utilized XXX look gross factory, So correct. day from or you you're open it full factory. X, up XX this which we I'm the thousands were factory you're into we we get of or got of producing your margins that. At the burden going fully of drones, Having If top start horrible XX% margins. pumping a you to on recently, burden the the if can the beginning, put full drones, have because XX to of

here already material margins, XX% our typically in right with to the now but But range, we're we're XX% GAAP. doing

the can replicator produce those we could with contracts to of XX% saying those large So fully where up your initiative numbers margins. XX% type to are get utilize to to get once -- SRR

Joseph Hernon

to a top of add I don't that. on have Yes. lot

COVID Allan unable we in where the go the of of that had spend put fill wouldn't we're and orders perspective points out we situation. to scarcity to already a bought to money we couldn't of of these the be going lot frankly, of because bit electronic get unique the drones. typical make components components quite in material fiscal XXXX because that we price and, a trying That paid to because 'XX cost and to the much in produce I cash But a there be position think won't I was from and needed. raised for a that of already position in gouging was we've one us the on. flow foresight a have X,XXX a is

type of to So we companies that's that's built another utilization firing us. now. built, your that emerging which feel of for yes, behind all the is which we're fiscal and of our outlook kind position part behind like why with question, right for an about we're that unique cylinders, growth the reasons have a very a of -- of 'XX capacity emerging facility us just in so huge And dealing initial It's is challenge, that's as built, a common the on company good for us. we and That's beyond. rest step one

James McIlree

I If just great. one can That's ask here. another

So on these the the are fixed and SRR replicator or programs priced contracts, contracts.

is contract? time you a have margins and manufacturing, it your improve more or will improve you So the materials ability of to as

Jeffrey Thompson

No, you're are no. a sure business. is up time and I'm over bringing because horrible that Yes, plus the cost

adjust a We're fixed. even margins are our to our that be But will these Now not fixed yes, there's to typically dramatically. pricing. GSA volume. allowed unless improve large They'll

the orders we've GSA been that of have All announced before pricing.

-- when these is we SRR go will program be the front, funding with amount get the go don't as this didn't we drones us, replicator the program, again, that shareholders. being they small valley pricing. death, companies that which to which -- will when like, this the announcing expect of small paid based The a alleviates large something of death program, are which on of you're that valley really fixed is also dealing building into replicator dilution also sure making large up So these but into, government were for

the -- pricing we will So fixed be pricing.

James McIlree

last my $X good a is forward? in OpEx this going one quarter, That's great. And number that the million is

Jeffrey Thompson

would so. I Yes, say

Joseph Hernon

increases really and do so lot public of news these in consumer. good would Unfortunately, savings is higher Yes, I I there's a I a divesting Obviously, dramatic not that company, as with revenues see the substantial costs result a being think well. cost say associated don't in expenses. should fixed

quarter. expense can the in actually fiscal see operations first decreased You

that margin increase, be I both step to step dramatic leverage able gross in increases as in meaning don't our OpEx So revenues think see OpEx. going and I to we're

Operator

[Operator closing Jeff no session I for questions, Instructions] call. now question-and-answer to will this remarks. further return concludes call the Showing our of Thompson the

Jeffrey Thompson

mute. I want everybody, want to thank thank dev was thanks, team at the team. us. biz our on folks, Well, I to I Teal. Sorry, for joining

of a October. James the You guys the we'll early in are his plug lot be on seeing out. awesome. even I'll the lot you company, James' be and XXth, at and in Dawson and And be we'll Micro at we'll We're conferences, a LD Conference of

So please come see us.

Operator

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

disconnect. now may You

Red Cat (RCAT) 19 Sep 232024 Q1 Earnings call transcript