AeroVironment, Inc.

Welcome to the ArrowVironment fourth quarter and full fiscal year 2026 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, Denise Pacioni, Head of Investor Relations. Please go ahead.

Thank you and good afternoon, ladies and gentlemen. Welcome to AV's fourth quarter and full fiscal year 2026 earnings call. My name is Denise Pacioni, Head of Investor Relations for AV. 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 AeroVironment website, 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, June 29, 2026. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Joining me today from AV are Chairman, President, and Chief Executive Officer, Mr. Wahid Nawabi, and Executive Vice President and Chief Financial Officer, Mr. Sean Woodward. We will now begin with remarks from Wahid Nawabi. Wahid?

Thank you, Denise. Welcome everyone to our fourth quarter and full fiscal year 2026 earnings conference call. I will begin by summarizing our quarterly and full year performance, followed by Sean, who will review our financial results in greater detail, and then discuss guidance for fiscal year 2027. After this, Sean, Denise, and I will take your questions. I'm pleased to report record fourth quarter results across several key financial performance metrics. delivering AV's strongest financial performance to date. We reported fourth quarter revenues of nearly $642 million with increased funded backlog of $1.2 billion, strong adjusted EBITDA of $140 million, and bookings of $572 million. For the full fiscal year, we delivered revenue of nearly $2 billion ahead of our most recent quarterly guidance and in line with our initial guidance from about a year ago and bookings of $2.7 billion. Full-year adjusted EBITDA of $286 million came in above the high end of our most recent guidance range, and non-GAAP EPS was $3.31 per share Well above the higher end of our guidance. With demand for our solutions continuing to rise, our work over the past year has positioned AV as a stronger, more resilient, and diversified company. Before outlining several opportunities and key growth drivers that will help us reach our strategic goals for fiscal year 2027 and beyond, Let me first cover some key highlights from the fourth quarter and full fiscal year 2026. First, we achieved record fourth quarter revenue of $642 million and record full year revenue of nearly $2 billion. Organic revenue growth for the quarter was 31% and 30% for the full fiscal year. Second, We delivered strong fourth quarter adjusted EBITDA of $140 million, or 22% of revenue, on higher sales volume, demonstrating AV's profitability potential with increased volume. Third, we developed and launched several new products, won several key program awards, and made strong software advancements that will strategically facilitate growth for AV into the future. Fourth, we successfully diversified our portfolio with the transformational acquisition of Blue Halo, nearly doubling in size and adding additional capabilities in counter UAS platforms, space technologies, cyber and advanced solutions. And fifth, looking ahead, we're establishing fiscal year 2027 revenue guidance to between $2.125 billion and $2.225 billion. Adjusted EBITDA guidance for fiscal year 2027 is set between $305 million and $325 million. Our confidence in fiscal year 2027 is grounded in the momentum we built this past year and the significant wins we have achieved across our platforms. In lethal drones, we introduced several new products, including Switchblade 400 and Mayhem 10. Our new one-way attack solution, Red Dragon, was awarded several contracts and we're preparing to bring additional switchblade production online at our Salt Lake City facility at the beginning of next calendar year. Our non-lethal drones reached several successful milestones as well. AVP-550 was selected for the U.S. Army's long-range reconnaissance program. Jump 20X secured multiple contract awards, and Vapor CLE won a significant award for the U.S. Army's medium-range reconnaissance program. Encounter UAS orders for our Titan family of RF detect and defeat systems more than doubled this year, while demand for this differentiated solution continues to rise. and our Locust Laser Weapon System achieved a series of key milestones that are setting the stage for significant future contract awards. These wins reflect the core strengths that AV is set apart from others. We believe there are several important depreciating factors that best position AV to capture a significant portion of the anticipated rising demand in our served markets. We have a strong install base that is unrivaled across several of our product lines. For decades, our customers have confidently relied on AV to deliver best-in-class solutions while giving them an advantage over our adversaries. Our solutions are battle proven in today's critical conflicts. This dependability, along with our ability to quickly scale manufacturing, differentiates us from many of our competitors, especially new entrants. In fiscal year 2027, we are investing additional capital to further increase our manufacturing capacity across several products and platforms to meet anticipated rising demand. We are sensing strong customer indications that our solutions will receive significant contract wins in the next 12 to 24 months. AV is very well positioned for these unprecedented levels of demand in our served markets. Now I will turn to segment performance for the quarter and full fiscal year. Our autonomous system segment, or AXS, continues to drive revenue growth for the company. During the fourth quarter, AXS contributed $492 million, or 76% of total company revenue, and for the full fiscal year, AXS contributed $1.3 billion, or 69% of total company revenue. This is a strong validation that our solutions are well positioned for the current needs of our nations and our allies across the globe. Our Group 1-3 Uncruised Aircraft Systems operating group won several key awards during the quarter and made progress on several key initiatives. For example, AV's Vapor 55 CLE unmanned helicopter was awarded a nearly $15 million U.S. Army company-level UAS-directed requirement tranche two production contract. This is a significant win, and we believe it opens the door for additional future long-term awards for the medium reconnaissance program. Just after the quarter closed, our P-550 Group II drone was awarded a $117 million contract by the U.S. Army under the Long Range Reconnaissance, or LRR, program. We believe that these two key contract wins will help set AV up for future contract awards on large program of record within the U.S. Army. In addition to these successes, our Group 3 medium UAS solutions, namely JUM20 and JUM20X, continue to make significant strides both operationally and with new demand. Our JUM20X successfully demonstrated two special missions in Yuma, Arizona, and is deployed in support of Operation Epic Fury. Our precision strike and defense systems operating group continues to drive growth for the company. During the quarter, our loitering munitions team made significant progress in several strategic areas of the company. For example, the Switchblade 400 received a key award from the U.S. Army for its Low Altitude Stalking and Strike Ordinance, or LASSO program. Built specifically for this program, The SwitchBlade 400 combines the compact attributes of our SwitchBlade 300 with the warhead capabilities of a SwitchBlade 600. Also during the quarter, we debuted our latest multi-role launched effects system, AV's Mayhem 10, which is built on the foundation and success of our SwitchBlade family of products. Designed for the U.S. Army's launched effects program of record, Mayhem 10 has the ability to fly autonomously and has a versatile forward payload option that can accommodate lethal and nonlethal payloads up to 10 pounds. Our Mayhem 10 addresses a significant capability gap for the U.S. Army. It can be launched from the ground in maritime conditions or from a manned or unmanned aircraft. These unique features positions Mayhem 10 as a very compelling solution for the future needs of our customers. Slightly over a year ago, we announced our one-way attack solution, Red Dragon. Red Dragon most recently received a $17 million production contract for the U.S. Army during the fourth quarter. We anticipate significant increased demand for this product and are expanding production levels to ensure we can meet our customers' anticipated needs. Progress continues on our solid acidic manufacturing facility, which has the potential to produce more than $2 billion worth of switchblades or other AV products per year. We're on track to begin production in the spring of calendar year 2027. As a reminder, two of our counter UAS products we acquired with Blue Halo reside in this operating group. Our RF jamming detect and defeat family of counter UAS solution, Titan, continues to play a critical role in the company's growth. In fact, Titan sales more than doubled this past fiscal year on a pro forma basis. We expanded production rates during the fourth quarter and anticipate demand for this product to rise through 2027 and beyond. In addition to this counter UAS offering, we're also making progress on our Freedom Eagle One or FE1 program with the U.S. Army, which, as you may recall, was awarded a $96 million contract last fall for the U.S. Army's long-range kinetic intercept program. We are progressing on that development contract and moving toward flight testing in approximately 12 months. This program represents close to $1 billion of market opportunity for AV over the next several years, with an even larger opportunity in the years that follow. We're among one of the very few new missile producers in the last 30 years and are confident that our cost-effective solution will be well received by our customers. The momentum behind this program is building, with Congress increasing funding to accelerate production due to a gap in low-cost missile production. Given these demand signals, this past quarter we announced efforts to expand our manufacturing facility in Huntsville, Alabama to scale production of this groundbreaking capability in anticipation of increased demand. We're also seeing increased traction in our space, cyber, and directed energy segment, which represents an important new phase of AV's multi-domain growth strategy. This segment reported revenues of $150 million for the quarter and $619 million for the full fiscal year. Despite some near-term disruptions during the third and fourth quarter due to the government shutdown and SCAR contract termination for convenience, we remain very optimistic about several opportunities within this segment, including directed energy counter UAS, long-haul laser communications, space technologies, and other advanced solutions. During the fourth quarter, our Locust directed energy counter UAS platform achieved several key milestones. As global threats continue to evolve, directed energy has emerged as an essential and cost-effective solution for countering high-volume, low-cost drone attacks. At under $10 per shot, Locust flips the cost advantage between offensive and defensive systems and provides the warfighter with an unlimited magazine. We believe our Locust directed energy solution is a game-changing capability, which is at the very early stages of a large and strong market adoption cycle. Building on this foundation, we introduced Locust X3 during the fourth quarter. One of the critical differentiators that sets LOCUST apart is that its modularity allows detection and defeat while on the move onboard a ground vehicle or ship. The precision with our ability to pin and track is what makes LOCUST as accurate when targeting adversarial drones. In parallel, a demonstration aboard the USS George H. W. Bush validated LOCUS in an operational maritime environment. During this exercise, our LOCUS system was able to shoot down incoming drones with a 100% success rate, showing that our laser weapon systems can protect ships against drone threats. This is an unprecedented level of success with such laser weapon systems on real maritime operations. Our Army and Navy need this capability desperately, and we're aggressively expanding its manufacturing capacity to meet this demand. Additionally, in early May, the FAA cleared the way for directed energy systems such as our LOCUS to operate in domestic national airspace to protect critical assets in the homeland. The LOCUS laser weapon system is included in our offering to the U.S. Department of War as part of the nation's Golden Dome program. Our proposed system, called Halo Shield, includes other AV counter UAS solutions such as Titan SV and Titan IV to work in conjunction with LOCUS as well as our AV Halo software ecosystem to protect critical assets from drone threats, which includes swarming attack scenarios. We look forward to providing additional updates on this important initiative. We're confident our Locust laser weapon system provides a solution for our customers on the modern battlefield. We recently announced a $30 million investment to significantly expand manufacturing operations in our Albuquerque, New Mexico facility. We're preparing to transition LOCUS to full-rate production this year, and we expect significant demand for this product line on several fronts. In addition to counter UAS, we have also made strides with our long-haul laser communication terminals. It's worth highlighting that we were awarded a $240 million contract last fall for our long-haul laser communication terminals, one of the largest awards on record. These terminals will be deployed on orbit for critical national security missions. Subsequent to the quarter closing, the US Department of War selected AV for a $43 million contract through its Test Resource Management Center to integrate our phased array next generation telemetry hypersonic emitter receiver, or PANTHER product, on DOW's SkyRange platforms. The award reflects our growing strategic position within the DOW. Looking ahead, we intend to invest in our Badger and WASP phased array antenna technology platforms by developing a more commercialized solution that will compete on the US Space Force's upcoming program, as well as look to broaden our offering to other commercial customers. This past quarter, our cyber and mission solutions business received a $20 million contract to advance ceramic materials research for the US Air Force and Space Force. The $20 million contract represents a vital investment in technologies that will preserve America's advantage across air and space domains by advancing next-generation ceramic materials and manufacturing processes that enhance mission readiness, extend operational endurance, and strengthen the technological superiority of the air and space forces. In addition, this group also received the $25 million award from the Air Force Research Laboratory to mature human health and performance technologies for warfighter readiness. We're continuing to expand our AV Halo software platform and recently announced two new modules. AV Halo Instinct, which provides an autonomous software framework and AV Halo Detect, which delivers autonomous RF detection in contested environments. Today, they enable our customers to deliver synchronized autonomy, faster decision making, and more effective mission execution. We remain highly confident that continuing to invest in our leading platforms is the best path to keeping our advantages in our dynamic industry and to drive long-term value creation. Before turning the call over to Sean, let me summarize with the following comments. We delivered record financial performance in fiscal year 2026, with strong revenue growth, expanding profitability, an increased backlog, demonstrating the strength and scalability of our business. Demand across our portfolio remains robust, supported by a growing pipeline of awards and $2.7 billion total year-to-date bookings, positioning us for continued growth in fiscal year 2027 and beyond. And we continue to invest in our highly differentiated solutions, which enables us to continue our strong growth and value creation trajectory. With that, I would like to now turn the call over to Sean Woodward for a review of our fourth quarter and full fiscal year 2026 financials.