AeroVironment, Inc.

Good day and thank you for standing by. Welcome to the AeroVironment fiscal year 2024 first quarter conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jonah Teeter-Baylen. Please go ahead.

Thanks and good afternoon, ladies and gentlemen. Welcome to Air Environment's Fiscal Year 2024 First Quarter Earnings Call. This is Jonah Peter-Valin, Senior Director of Corporate Development and Investor Relations. Before we begin, please note that certain information presented on this call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve many risks and uncertainties that could cause actual results to differ materially from our expectations. Further information on these risks and uncertainties is contained in the company's 10-K and other filings with the SEC, in particular in the risk factors and forward-looking statement portions of such filings. Copies are available from the SEC on the Air Environment website at www.avinc.com or from our investor relations team. This afternoon, we also filed a slide presentation with our earnings release and posted the presentation to the investor section of our website under Events and Presentations. The content of this conference call contains time-sensitive information that is accurate only as of today, September 5th, 2023. 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 are Chairman, 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, everyone, to our fiscal year 2024 first quarter earnings conference call. I'll start by summarizing our performance and recent achievements, after which Kevin will review our financial results in the greater detail. I will then provide information related to the outlook for fiscal year 2024, after which Kevin, Jonah, and I will take your questions. I'm pleased to report that we are off to a very strong first quarter, and we believe we're on track for our best year ever. Our key messages, which are also included on slide number three of our earnings presentation, are as follows. First, first quarter revenue rose to $152 million, a 40% increase year over year, and our best Q1 in AB's history. This reflects robust demand for market leading intelligent unmanned systems domestically and abroad. Second, our funded backlog rose to a new record at $540 million, up from $424 million at the start of fiscal year 2024. This backlog reflects $268 million of new bookings during the first quarter. Third, we recently announced that AV will purchase privately held Tomahawk robotics enabling multi-domain control of a wide variety of unmanned solutions from one user interface. And fourth, we're raising our previously issued guidance for fiscal year 2024, which I will cover later in more detail. Gross margin for the first quarter was $65.7 million, an increase of 95% versus last fiscal year's $33.7 million. and our gross margin as a percentage of sales rose to 43% from 31% in fiscal year 2023. We continue to expect gross margins to remain strong in fiscal year 2024 as our revenue mix shifts to more favorable product sales. Overall, fiscal year 2024 is off to a great start, and we're squarely on track to meet our increased outlook for the full year. Global trends continue to support broader long-term adoption of our solutions, and we aim to take the company to new levels in both scale and performance this year and beyond. In line with our strategy, we recently agreed to acquire Tomahawk Robotics for $120 million, a leader in AI-enabled robotic common control systems and open standard communication technologies. We believe this transaction will enable AV to provide a deeper, broader, and simpler integration between our own and other unmanned solutions, making it easier for our customers to successfully operate a variety of unmanned solutions in the field. Tomahawk's technology will streamline the operation of AV's family of unmanned systems, enabling our users to achieve their missions with greater efficiency and simplicity. Tomahawk's Kinesis ecosystem provides unmatched tactical capabilities utilizing an AI-enhanced open architecture control system that seamlessly integrates any unmanned asset, providing a common operating picture for the operator. We expect Kinesis to enable AV's products to achieve an elevated modular open systems approach, which is in high demand by customers across the globe. In addition, combining features of AV's Crystalis operating system with the Kinesis platform means pairing the best common controller technology with the most ubiquitous unmanned systems on the market today. AV and Tomahawk have been working together over the past few years, integrating Tomahawk's Kinesis control system with AV's small unmanned aircraft family of systems, including Raven B and Puma 3AE. Through our partnership, we have gained firsthand knowledge of the solutions that Tomahawk offers, And we're confident that the combined experience and expertise of our two teams will result in a variety of unmatched, unmanned expeditionary vehicles that meet our customers' emerging needs and exacting standards. Once the transaction closes, which we expect to occur later this quarter, Tomahawk will operate as an additional product line reporting into our unmanned systems segment, led by Senior Vice President and General Manager Trey Stevenson. We expect this transaction to drive incremental revenues, adjacent market growth opportunities, and product performance synergies driven by the integration of our respective technologies. All of this should drive increased shareholder value. We will provide updated guidance during our second quarter earnings call reflecting the impact of this transaction to our anticipated fiscal year 2024 performance. Before turning to the product lines results, I want to remind everyone that we consolidated our businesses into three reporting segments at the beginning of this fiscal year. Unmanned Systems, Loitering Munitions, and McCready Works. Starting with our Unmanned Systems segment, revenue grew 45% year-over-year to a record $98.2 million. Shipments during the quarter were driven by strong demand across a broad range of products particularly our PUMA systems, which are urgently needed overseas. We continue to deliver PUMA LE and PUMA III AE systems through last year's large Ukraine foreign military sales order, but are nearly through the $176 million ceiling value, with a portion to be delivered in the second quarter. Looking ahead, our backlog remains robust. Moving to our Jump 20 system, We recently secured a $42 million contract from the U.S. Army for the Ukraine Security Assistance Initiative, or USAI. JUMP20 will be the first Group 3 UAS platform provided by the U.S. Department of Defense to Ukraine. This is also the largest aircraft platform that the U.S. DoD has provided to Ukraine so far. We plan to ship these systems during our second quarter of this fiscal year. we remain confident that our Jump 20 is the most mature and capable solution in its class. We also recently finalized a 10-year tactical assistant agreement with Mexico for our Jump 20 systems, allowing AVE to continue providing UAS support and training to the government of Mexico's armed forces through the foreseeable future. The Mexican armed forces continue to rely upon Jump 20 as the only Group 3 UAS platform in their operations. Within Unmanned Ground Vehicles, or UGV, we recently received an order from the Danish Ministry of Defense for 21 ground robot systems, a mix of Telemacs and Theodore products, which are the first for that nation. We've also delivered the initial batch of five UGV systems to the Netherlands under a prior 30 robot contract. At the same time, we continue to mark progress providing UGVs to Ukraine. on an accelerated schedule, which are performing life-saving EOD missions in the field. Given our growing backlog across the entire unmanned systems segment, we're confident we're on track for another great year. Moving to our loitering munitions segment, I'm pleased to say that growth continues, with sales up 34% euro per year. This reflects switchblade shipments to an expanding number of allied countries across the globe. Recent demand for Switchblade 300 and 600 systems has been largely driven through the latest US AI and the US government. The US Army recently awarded us another contract for Switchblade 600 loitering munitions in support of the US AI. At the same time, we anticipate the US government will continue to backfill and increase depleted DoD stockpiles. Additionally, we are responding to a request for information or RFI, related to the U.S. Marine Corps' Organic Precision Fire, or OPF, program. Overall, we anticipate both U.S. and international demand for our loitering munition systems to remain strong through the rest of fiscal year 2024. It is also important to mention that the last batch of our Switchblade 300 Block 10C configuration has been shipped, and we have transitioned to the next generation Block 20 variant. Switchblade 300 Block 20 features significantly more endurance, a tablet-based fire control system, and other enhanced performance capabilities. Switchblade 300 Block 20 has successfully completed the US Army Safety Confirmation Certification and is now being delivered to customers. Moving to our MacReadyWorks segment, I'm pleased to report that segment revenues also grew 31% year-over-year to $23.2 million. We're also making solid progress in our Stratospheric Solar HAPS program. We successfully completed further flight tests using a smaller-scale version of the new SunGlide aircraft. These tests allow our team to collect and analyze large amounts of data which could not otherwise be obtained from computer-based simulations. We will now apply these learnings to our next generation SunGlider, while at the same time working with the FAA for type certification. With that, I would like to now turn the call over to Kevin McDonald for a review of the first quarter financials.