AeroVironment(AVAV) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 fiscal 2025 was $167.6 million, a decrease of 10% compared to$ 186.6 million in Q3 fiscal 2024 [39] - Adjusted EBITDA for Q3 was $21.8 million, down from$ 28.8 million in the same quarter last year [45] - The company reported a net loss of $1.8 million for Q3, compared to a net income of$ 13.9 million in the same period last year [49] - Funded backlog at the end of Q3 reached a record $763.5 million [54] Business Segment Data and Key Metrics Changes - The Loitering Munitions Systems (LMS) segment recorded revenue of$ 83.9 million, a 46% increase from $57.7 million in the previous year [40] - The Uncrewed Systems (UXS) segment generated$ 53.8 million in revenue, down 44% from $113.3 million, primarily due to a decrease in Ukraine-related revenue [41] - Revenue from the Macready Works segment was$ 20 million, an increase of 28% compared to $15.6 million in the same quarter last year [43] Market Data and Key Metrics Changes - Approximately$ 40 million worth of Switchblade 600 deployments in Ukraine resulted in the destruction of nearly $3 billion worth of enemy military assets [15] - Shipments to Ukraine are expected to represent only 17% of revenues for the full fiscal year, down from 38% last fiscal year [15] Company Strategy and Development Direction - The company is focused on expanding production capacity and launching innovative products while leveraging acquisitions to strengthen market leadership [10] - The BlueHalo transaction is expected to enhance the company's technology and capabilities, adding space technologies, counter-UAS, directed energy, electronic warfare, and cyber solutions to its portfolio [17] - The company aims to achieve more than 10% revenue growth and$ 1 billion in orders in fiscal year 2025 [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term challenges due to unprecedented high winds and fires in Los Angeles, which impacted operations and financial performance [20][21] - Despite these challenges, management remains confident in achieving record fourth-quarter revenue and accelerating growth in fiscal year 2026 [10][56] - The evolving global security landscape is driving demand for cost-effective AI-driven autonomous defense solutions, aligning with the company's core offerings [12] Other Important Information - The company has received stop work orders on four foreign military sales contracts, representing about $13 million in orders [22] - The company is preparing for the integration of BlueHalo and has secured key regulatory approvals for the transaction [18] Q&A Session Summary Question: Thoughts on fiscal year 2026 growth - Management expressed confidence in achieving strong growth in fiscal year 2026, supported by a record backlog and expected revenue run rate of$ 240 to $250 million in Q4 [65][66] Question: Details on BlueHalo growth areas - Management highlighted excitement around BlueHalo's counter-UAS business, space communication capabilities, and advanced cyber solutions as key growth areas post-acquisition [70][72] Question: Clarification on work stoppage for FMS contracts - Management indicated that the stop work orders are related to foreign military sales contracts and are currently unclear if they are temporary or permanent [78][80] Question: Demand environment for uncrewed systems - Management expressed confidence in the uncrewed systems business, citing strong demand drivers and new capabilities expected to drive growth over the next several years [84][85] Question: Update on international sales and negotiations - Management reported firm orders from approximately six countries and ongoing engagement with an additional twenty countries for Switchblade systems [112][114]