AeroVironment Inc Q4 2024 Earnings Call Transcript

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

Question: Greg Konrad - Jefferies LLC - Analyst : Good evening. You called out annual production capacity for LMS greater than $500 million, which is about 2.5 or more than 2.5 times the fiscal year '24 sales. Can you maybe give a timeline given that you called out continued growth in LMS of kind of reaching that annual production capacity?

Question: Greg Konrad - Jefferies LLC - Analyst : And then maybe just as a follow-up, if I look at the guidance, EBITDA margins are up about 60 bps at the midpoint in '25. You called out expect R&D to stay in the 12% to 13% range in fiscal year '25. But can you maybe talk about the drivers? How much of that is LMS mix? Do you expect margin expansion within LMS or just some of the moving pieces of the margin expansion?

Question: Greg Konrad - Jefferies LLC - Analyst : I'll leave it at that. Thanks.

Question: Peter Arment - Robert W. Baird & Co. Inc - Analyst : Hey, thanks. Good afternoon, Wahid, Kevin, and Jonah. Nice results. Wahid, you mentioned that $300 million, you kind of listed them all off, LASSO, Replicator, OPF-L, some of that was in the Ukraine. I think Lithuania was also mentioned. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 26, 2024 / 8:30PM, AVAV.OQ - Q4 2024 AeroVironment Inc Earnings Call So you just talked about that fourth quarter run rate. So how do we think about that $300 million rolling through LMS? Is it kind of like an 18-month period, and then we're going to see additional orders from domestic customers? Just how do we think about how those contracts roll through?

Question: Peter Arment - Robert W. Baird & Co. Inc - Analyst : Understood. And just as a follow-up, Kevin, you mentioned the unbilled on your prepared remarks. So that was up for the year, about $95 million year-over-year. But does it continue to grow? You mentioned that you're going to have a new contract, and then that changes, I guess, maybe the terms. But how do we think about unbilled from here? And where that will go as we think about fiscal '25? Thanks.

Question: Peter Arment - Robert W. Baird & Co. Inc - Analyst : Got it. Thanks again.

Question: Ken Herbert - RBC Capital Markets - Analyst : Yeah. Hi, good morning or good afternoon, Wahid and Kevin.

Question: Ken Herbert - RBC Capital Markets - Analyst : Yeah. Hey, I just wanted to follow up on the -- for the top line outlook next year, if we apply some of the numbers you're talking about for the LMS segment, it implies limited growth, obviously, in the former UAS segment. So how do we think about growth respectively, maybe to put a finer point on it between the two segments in fiscal '25?

Question: Ken Herbert - RBC Capital Markets - Analyst : Okay. Helpful. Thank you. And maybe if I could just, obviously a lot more discussion these days around the shifting competitive landscape. And as we look at some of the potential volume from some of the recent foreign military sales for companies like Andrew and others seem to be -- they seem to be taking share fairly aggressively. Maybe, Wahid, you can just address the competitive landscape and where you view competitive strengths for AVAV in particular and how we should think about your ability to maybe continue to take share or as the market grows, just how we think about your growth relative to other companies? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 26, 2024 / 8:30PM, AVAV.OQ - Q4 2024 AeroVironment Inc Earnings Call

Question: Ken Herbert - RBC Capital Markets - Analyst : Great. Thanks, Wahid.

Question: Bryce Sandberg - William Blair & Company, LLC - Analyst : Wahid, Kevin, and Jonah, good afternoon. I'm wondering if you can talk a little bit about the P550 aircraft you announced, like what is the vision for that aircraft? And I guess, how does it differentiate from the long endurance Puma or the JUMP 20?

Question: Bryce Sandberg - William Blair & Company, LLC - Analyst : Yeah, just wondering if you can talk a little bit about the P550 aircraft you announced, like what the vision is for that aircraft and how does it differentiate from the long endurance Puma or the JUMP 20?

Question: Bryce Sandberg - William Blair & Company, LLC - Analyst : Great. Thanks, Wahid.

Question: Andre Madrid - BTIG, LLC - Analyst : Hey guys. Thanks for taking my question. I want to start first with maybe just talking a bit more about the Taiwanese FMS sale that was announced last week. So if you think about the mix of that program, with you and your competitor, I mean how marketable do you think Switchblade can be in the Indo-Pacific, just given the limited range relative to competitors and the focus that there is on range in such a vast region as the Indo-Pacific? And are there any thoughts then within that context of maybe expanding up the range as you move further on the Switchblade product line?

Question: Andre Madrid - BTIG, LLC - Analyst : Perfect. That's really helpful, color. Thank you. And then I guess just as we look more so on FMS and the prospect of further international sales and that mix shifting, I mean, what kind of quantitative metrics can you give as to the interest you've received, how much actual -- active conversations are going on? I know that's something that you've highlighted before with reference to the over 50 countries that you were approved for sales for. So maybe just some degree of quantitative color on how those conversations are advancing and how much more demand you're getting from incremental US allies?

Question: Andre Madrid - BTIG, LLC - Analyst : Super helpful. Thank you.