AeroVironment Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ken Herbert - RBC Capital Markets - Analyst : Wahid, maybe just first, I wanted to ask, you obviously maintained the full year guide with the IDIQ contract you were able to sign last week or announced last week, how should we think about the task order timing and amounts under that in fiscal '25? And I'm guessing, it's fair to assume that a lot of the IDIQ initial visibility or funding was basically already factored into the '25 outlook?

Question: Ken Herbert - RBC Capital Markets - Analyst : And if I could, you made a few comments regarding some uncertainty on pricing for some of the Switchblade contracts that are yet to be finalized. Is it possible to maybe range or bracket some of the discussions you're having around pricing? And how should we think about maybe pricing on the 300 and the 600 moving forward, considering some of the uncertainty around some of these more recent contracts?

Question: Peter Arment - Robert W Baird & Co Inc. - Analyst : Wahid, you mentioned you released that regarding like the Replicator LASSO and Organic Precision Fires, that only initial funding was released. So do you expect other releases or tranches during this fiscal year out of those programs?

Question: Peter Arment - Robert W Baird & Co Inc. - Analyst : And then you mentioned also in your prepared remarks that there's a pretty healthy pipeline or other opportunities. Maybe is that on the international front, maybe could you talk to the demand signals you're getting from an FMS perspective, I guess, maybe tied to LMS in particular?

Question: Louie DiPalma - William Blair & Company, L.L.C. - Analyst : What programs are associated with the $990 million Switchblade IDIQ? Should we think of it as the successor to the LMAMS program? Or is LMAMS going to be a separate contract that you could be awarded next year? And is LASSO and Replicator also outside of the $990 million IDIQ vehicle?

Question: Louie DiPalma - William Blair & Company, L.L.C. - Analyst : Wahib, that is helpful. And Kevin, just to clarify, did you say that the margins for the new Switchblade contract are higher than the traditional margins so you were able to successfully negotiate better pricing terms?

Question: Louie DiPalma - William Blair & Company, L.L.C. - Analyst : So those progress payments, those should be positive for the working capital dynamic, is that what you're saying?

Question: Pete Skibitski - Alembic Global Advisors LLC. - Analyst : A couple of program questions. Just to ask further on the whole LUS versus LASSO area, is it correct to understand -- will the LUS contract basically be largely your legacy Switchblade 300 and 600 variants as opposed to LASSO? Maybe the Army has kind of updated requirements coming out of Ukraine and so you'll have newer Switchblade variants delivered under LASSO? Is that the right way to think about it? Or would you color that a little bit different? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 8:30PM, AVAV.OQ - Q1 2025 AeroVironment Inc Earnings Call

Question: Pete Skibitski - Alembic Global Advisors LLC. - Analyst : Second question for me is coming out of Ukraine, you hear this term, FPV, a first-person view, I think, for some of the small UAS. And I'm just -- it seems like a newer saying, I'm just trying to find out do your current small UAS has that capability? And I saw DIU has this Blue UAS refresh challenge, and they talk about first person view, but they also talk about bigger UAVs, 1, 2, 3. So I just wonder if you can maybe give us some color there in terms of what you guys possess with FPV. Is that kind of a new requirement or -- and if you guys expect to play there in addition to some of the other DIU opportunities?

Question: Pete Skibitski - Alembic Global Advisors LLC. - Analyst : Okay. Yeah. Sounds like FPV or COTS-type or a modified COTS type -- almost, I see what you're saying.

Question: Andre Madrid - BTIG, LLC - Analyst : Hey, guys. Thanks for taking my question. Kind of wanted to go back and talk about the FMS pipeline in particular for Switchblade. I think on the last earnings call, Wahid, you mention that roughly half a dozen countries right now are in various stages of acquisition. Has this figure grown or is it roughly still around the same? And how could we expect it to trend moving forward? Again, I know the timing is uncertain, but any color there would be appreciated.

Question: Andre Madrid - BTIG, LLC - Analyst : Definitely. No, I appreciate the color there. Thank you. And I guess following up on that even further, I know that this IDIQ was something that you had highlighted previously multiple times over, and it said that not only would this help facilitate international sales to Ukraine, but also possibly to other foreign countries. Could this IDIQ vehicle that was provided by the US Army, could this help be -- could this be used for that? And is the expectation to still do so?

Question: Peter Arment - Robert W Baird & Co Inc. - Analyst : Yeah, thanks. Wahid, given that all these different partners can basically kind of use or leverage the IDIQ contract, it sounds like you're going to be bumping up against potentially your capacity sooner than kind of expect or at least you're going to be close? So when do you expect to make a move and how much of an additional capacity do you need to put in place to support that? That's my first question.

Question: Peter Arment - Robert W Baird & Co Inc. - Analyst : Okay. And then, just for clarification -- go ahead, Kevin. Sorry.

Question: Peter Arment - Robert W Baird & Co Inc. - Analyst : Right. And just for clarification, the Taiwan FMS order that was cleared, is that not in your funded backlog yet, or just trying to get some clarification there?