AeroVironment(US:AVAV)2019-12-04 02:28Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2020 was $83.3 million, a 14% increase from $73 million in Q2 fiscal 2019 [7][18] - Gross profit was $35.2 million, up 24% from $28.4 million in the same quarter last year, with a gross margin of 42%, an increase of 3 percentage points [7][19] - GAAP earnings per diluted share increased to $0.31 from $0.29 year-over-year, while non-GAAP earnings per diluted share rose to $0.35 from $0.30 [8][22] - Funded backlog decreased by 10% to $146.7 million compared to the previous year, but remained high relative to historical averages [8][27] Business Line Data and Key Metrics Changes - Small UAS revenue was $59.2 million, accounting for 71% of total revenue, while HAPS contributed $13.4 million (16%), TMS $7.9 million (10%), and other $2.8 million (3%) [18] - The HAPS program has generated $103.2 million in revenue to date, with a total contract value of $148.9 million [18][19] Market Data and Key Metrics Changes - The company reported strong international demand for small UAS, with multiple awards totaling over $20 million from customers in Southeast Asia and the Middle East [12] - A $5 million contract was awarded for Puma systems to the U.S. Border Patrol, indicating ongoing procurement opportunities [12] Company Strategy and Development Direction - The company is focused on executing its growth strategy and achieving fiscal year 2020 objectives, with a commitment to innovation in small UAS and tactical missile systems [6][32] - The transition of VAPOR product line manufacturing to Simi Valley is on track, expected to be completed by the end of Q3 fiscal 2020 [12][60] - The company is also advancing its HAPS business, with a total contract value increase to $149 million, indicating strong growth potential in this area [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2020 revenue guidance of $350 million to $370 million, despite potential impacts from government funding resolutions [32][33] - The company anticipates a decline in gross margin in the latter half of the fiscal year due to a shift in revenue mix [32] - Management highlighted the importance of ongoing government support for international sales and the potential for expanding the customer base [72] Other Important Information - The company plans to invest 5% to 6% of revenue in capital expenditures to support growth strategies [33] - Cash and cash equivalents at the end of Q2 fiscal 2020 totaled $310.9 million, a decrease attributed to the acquisition of Pulse Aerospace and investments in HAPSMobile [27][28] Q&A Session Summary Question: How does the current 89% visibility compare to previous years? - Management noted that while the current visibility is lower than last year's 97%, it remains high compared to historical averages [36][38] Question: When can we expect a larger variant of the Switchblade? - Management is making progress on a larger variant but could not disclose specific timing for its market release [39][41] Question: What are the next steps for the LMAMS contract? - Management is engaged in sole-source negotiations with the U.S. government, with a potential contract value of $160 million [44][46] Question: What is the status of the HAPS program? - The company is transitioning from design and development to testing and certification, with multiple flights planned in the future [68][69] Question: How is the UAV adoption rate trending? - Management reported strong growth in small UAS internationally, supported by U.S. government export licenses [71][73]