AeroVironment, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the AeroVironment fiscal 2022 first quarter conference call. At this time, our participants' lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded for replay purposes. If you require any further assistance, please press star 0. I would now like to hand the conference over to Jonah Teeter, Balan, thank you. Please go ahead, sir.

Thanks, and good afternoon, ladies and gentlemen. Welcome to AeroVironment's fiscal year 2022 first quarter earnings call. This is Jonah Teeter-Balin, Senior Director of Corporate Development and Investor Relations for AeroVironment. Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases with similar meaning. Forward-looking statements are based on current expectations. forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors outside of our control that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. For further information on these risks, we encourage you to review the risk factors discussed in Air Environment's periodic reports on Form 10-K and other filings with the SEC, along with the associated earnings release and safe harbor statement contained therein. This afternoon, we also filed a slide presentation with our earnings release and posted the presentation on our website at avinc.com in the events and presentations section. The content of this conference call contains time-sensitive information that is accurate only as of today, September 8th, 2021. The company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today, or to update them to reflect the events or circumstances occurring after this conference call. Joining me today from AeroVironment, our President and Chief Executive Officer, Mr. Waheed Nawabi, and Senior Vice President and Chief Financial Officer, Mr. Kevin McDonald. We will now begin with remarks from Waheed Nawabi. Waheed?

Thank you, Jonah. Welcome to our fiscal year 2022 first quarter earnings conference call. On today's call, I will summarize our first quarter fiscal year 2022 performance and discuss our achievements during the quarter. Next, Kevin will provide a more detailed summary of our financial performance in the year, and then I will follow up with a brief discussion of our goals for fiscal year 2022 before Kevin, Jonah, and I take your questions. Let me emphasize four key messages, which are included on slide number three of our earnings presentation. we achieved strong quarterly results in line with our previously communicated expectations. Second, we have secured another record backlog, which included both organic and inorganic growth in our business. Third, we continue to successfully integrate the three recently acquired businesses. And fourth, as a result of this strong momentum, we remain on track to achieve our fiscal year 2022 plans while delivering on another year of profitable top line growth. Now let's summarize our financial results for the first quarter. We delivered revenue of $101 million compared to $88 million last year, which is a 16% increase year over year. The revenue growth was primarily due to incremental sales, particularly in our medium unmanned aircraft system segment. These, along with other organic and acquisition-led increases, offset the negative impact from lower core product line shipments, which we expected in the first quarter, especially from our small unmanned aircraft system segment. We achieved yet another record backlog of $258 million, driven by new wins across multiple business segments and in part by our recent acquisitions. Our backlog increased more than 20% sequentially from the fourth quarter of fiscal year 2021. This record backlog will enable us to achieve our financial objectives and ensure we are on our path for continued strong growth and value creation. Finally, please note that we now provide increased financial visibility across four reportable segments, including revenue, gross margin, and income. While this extra data will provide more insights for investors, segment performance will significantly vary quarter by quarter. For that reason, this data would be better assessed on an annual basis. Moving on, now I would like to provide some color regarding current developments within our various segments. I'll start with our small unmanned aircraft systems, which is our largest product line and where AeroVironment is positioned as the leading global player. We recently announced the award of two firm fixed price orders totaling $15.9 million from the U.S. Air Force for Puma 3AE unmanned aircraft systems and spares, as well as Raven UAS spares. In addition to these wins, our innovation continues with the recent introduction of our Chrysalis Next Generation Ground Control Station solution. This is another advanced cutting-edge offering, which positions AeroVarmin as a leader in tactical and covert control systems for UAS and related payloads. Chrysalis was designed to make operating robotic systems easier than ever. Chrysalis is available in both modular elements and complete turnkey systems, making it adaptable to meet specific mission requirements. Compatible with all major operating systems, Chrysalis features an intuitive user interface to reduce cognitive load and training burden while enhancing situational awareness and battlefield collaboration. Chrysalis standardizes the user experience across all air environment small UAS platforms, simplifying the training requirements and operations of PUMA, RAVEN, and WASP. It's an exciting development that we believe will streamline command and control decision-making and improve overall effectiveness in the field while opening new opportunities for growth and value creation for our environment. Next, in our tactical missile systems segment, we made solid progress on our strategy in the quarter. We continue to deliver Switchblade 300 to our key domestic customers while gaining traction with those overseas. We're also making strong progress on our Switchblade 600, which is becoming a larger contributor to this segment's revenue and profitability. We continue to produce low-rate initial production quantities for operational fielding of the ground-launched Switchblade 600, while also developing the maritime version through its integration into naval vessels for the U.S. Special Operations Command. Moving on to our medium unmanned aircraft system segment, where we have continued to successfully integrate that business into our portfolio and operations, we achieved a key milestone in the quarter when we secured another contract from the U.S. Special Operations Command for ISR services using Jump 20 medium unmanned aircraft systems. The initial task order of $22 million includes the first SAPCOM-enabled UAS for beyond line-of-sight operations as part of our NEUAS IV IDIQ contract, with multiple follow-on option years after the initial 12-month period. The Jump 20 delivers an unmatched level of versatility and performance, providing expanded reach in situational awareness, which bodes well for winning future opportunities with our customers. Additionally, the Jump 20 system is also a candidate for the U.S. Army's Future Tactical UAS or F2UAS program. The U.S. Army's proposed government fiscal year 22 budget calls for over $140 million of funding for progressing this potential program of record. We remain well positioned and look forward to updating you on this exciting growth opportunity. Our new unmanned ground vehicle product line was created through our most recent acquisition of Telerob, a German leader in ground robotic solutions with a global footprint. This transaction closed at the beginning of the first quarter and marks a significant expansion into the ground domain for our portfolio of intelligent multi-domain robotic systems. We're successfully integrating the company, and while we did not win the previously discussed U.S. Air Force EOD robot program, we continue to actively pursue new cross-selling opportunities domestically and internationally. We remain excited and optimistic about the future of this business as part of the air environment portfolio. In our HAFS product line, we are moving ahead in designing the next generation aircraft under the terms of our new five-year master design and development agreement with SoftBank. With the initial $51 million order secured last quarter, we are transitioning this program to its next phase, in which we expect to build a third aircraft and continue extensive flight testing and certification. We're also starting to engage with various domestic defense customers who have shown interest in SunGlider's unique capabilities. While these engagements are early in nature, our solar HAF's performance characteristics represent a significant market opportunity in defense applications for both counterinsurgency and near-peer conflicts. And finally, our McCready Works Advanced Solutions Group continues to lead the industry in AI and autonomy. We remain engaged in multiple advanced customer-funded R&D projects, which are paving the way for AIV's continued leadership in multi-domain robotic system solution. Additionally, the Mars helicopter Ingenuity, which our MacReadyWorks team helped design for NASA, continues to amaze the world. Exceeding all expectations, Ingenuity has been withstanding extreme Martian environmental conditions for over six months now. It just completed its 12th successful flight in Mars' atmosphere. Ingenuity is now being sent out to scout the way for perseverance. This is yet another testament to one of AeroVironment's core competencies, which is designing and delivering solutions with high reliability and ruggedness for extreme environmental conditions. Now I would like to discuss three important global issues that could directly affect the company. the situation in Afghanistan, COVID-19 pandemic, and global supply chain disruptions. As I'm sure our listeners are aware, the U.S. just completed its withdrawal from Afghanistan after 20 years on the ground. First and foremost, I'm pleased that we were able to safely evacuate our employees from the country. We thank the U.S. forces for their sacrifice during this incredibly challenging time and keep the people of Afghanistan in our thoughts. The US service members and Afghan civilians lost in these recent tragic events will remain in our hearts forever. While the withdrawal of allied forces was anticipated, the rapid pace of the Taliban's takeover was not expected. However, we do not anticipate these events will have any material impact on the markets we serve or our operations. While our products were used in various local missions, as well as throughout the region, we believe that strong bipartisan support for our products will continue. The proposed U.S. government fiscal year 2022 defense budget includes $68 million of continued funding for Army LMAMS procurement, where our Switchblade 300 is the incumbent solution. Additionally, our current record backlog also provides adequate visibility into the company's future growth. We will continue to closely watch the situation. As the world continues to battle COVID-19 and its variants, so far we have successfully mitigated and minimized material impacts to our business. Our operations are running smoothly. International travel still remains a challenge, but we believe our environment is well positioned to post top-line growth and solid financial results this fiscal year and beyond. Of course, this is a fluid situation, and we are closely monitoring it. We remain prepared to react quickly. Further, supply chain bottlenecks and shipping constraints exacerbated by the pandemic continue to impact global OEMs and their ability to get products to market. We continue to monitor our supply chain and are working to mitigate any risks that materialize. While we have had some supply chain challenges due to shortages of leading-edge semiconductor microprocessors, we remain on track to achieve our objectives for the full fiscal year. During the quarter, we also strengthened our board with the appointment of Cindy Lewis. Cindy has more than 30 years of leadership experience at several aerospace organizations. including most recently as CEO of Airborne Consolidated Holdings. Given her expertise and acumen, we're thrilled to have her on board. At the same time, we announced that Arnie Fishman has decided to retire and not stand for re-election of the company's annual meeting of its shareholders on September 24th. On that day, both he and Chairman Tim Conver will retire after several decades of service to the company. We thank Tim and Arnie for their dedication and numerous contributions and wish them well in their future endeavors. With that, I would like to now turn the call over to Kevin McDonald for a detailed review of first quarter financials. Kevin?