Peter Arment: Appreciate it. Thanks.
Wahid Nawabi: You’re welcome, Peter.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Ken Herbert from RBC. Your line is open.
Ken Herbert : Yeah. Good afternoon. Hey, Wahid. I wanted to see if I could start out and ask a question on the backlog again. Is it possible to parse out how much of the growth in backlog is maybe direct with U.S. aid to Ukraine versus maybe international customers or other U.S. domestic opportunities?
Wahid Nawabi: Ken, unfortunately, because of customer sensitivity, I’m not able to go further deeper into the colors of the backlog and what, but I what I could say is that in general, our backlog is really strong in all three of our business segments. Our Unmanned Systems segment, our Loitering Munitions segment and our MacCready Works segment. So, we have seen significant growth in all of them. The backlog for Loitering Munitions is made up primarily because we only sell those to the U.S. government, including for international opportunities, U.S. DoD has so far decided to sell those requests all through an FMS or U.S. AI case, FMS cases coming through the U.S. army. So really the contracting office that handles our Switchblade family of systems for both domestic and international customers has been and remains to be the U.S. military and U.S. army.
The mix of customers in that area is pretty broad. I’m not able to comment on a specific contract or the amounts of them because of the sensitivity of the conflict that we have around the world and our customers. But it’s healthy across the board. And I believe that it’s going to stay that way for the foreseeable next this year and beyond, hopefully as well. Because, as I said, we’ll continue to build on our momentum That’s one of our fundamental goal, and priority last several years to continue to build our backlog to also level load our revenue based on a quarterly basis. And as you could see, we expect this year to be nearly fifty-fifty between first half and second half of the year, primarily because of our backlog.
Ken Herbert : That’s great. Thanks, Wahid. And if I could, there’s been a lot of press recently around some newer starts within the United States whether it’d be the Vaso program or replicator or others. I’m not sure how much you could talk about these, but can you maybe just talk about how well you believe you’re positioned from some of the newer efforts, with the U.S. army and the Marine Corps and other parts of the U.S. government on some of these new competitions and how meaningful they can perhaps be in ‘24 and fiscal ‘25 for you?
Wahid Nawabi: So, Ken, I could not agree more with you in terms of the relevance of these large, very high priority focus areas for the U.S. DoD. You mentioned a couple, Lasso that’s been recently been announced by the U.S. Army. We’re tracking all of these. We’re engaged with our customers very closely. One of the things that we pride ourselves is that we spend a lot of energy making sure that we’re very, very close an intimate to our customers so we can solve their problems the best way possible better than anybody. And some of these requirements are squarely focused around the area that we as a business are offering as a pure play player. There’s no one on this planet that I can think of that has the breadth and the depth of our portfolio when it comes to unmanned systems and robotics.
So, the replicator, which was just recently announced by the U.S. DoD and Pentagon, is very much another example of the type of capabilities that are defense customers, U.S. DoD specifically, is looking to sort of acquire over the next several years that’s very much focused around our system. So, I think we’re positioned really well. I believe we will be able to participate in these opportunities. The details of that, of course, I’m not able to disclose right now because it’s quite early and sensitive to our customer’s operations and business.
Ken Herbert : Thanks, Wahid.
Wahid Nawabi: You’re welcome, Ken.
Operator: Thank you. One moment for next question. And our next question will come from the line of Bryce Sandberg from William Blair. Your line is open.
Bryce Sandberg: Wahid, Kevin and Jonah. Good afternoon.
Wahid Nawabi: Good afternoon.
Bryce Sandberg: Wahid, you referenced how the $176 million Ukraine Puma IDIQ is nearly fully drawn. Do you expect to be able to renew this contract?
Wahid Nawabi: So, the answer is we are already engaged on additional contracts. So the short answer is yes. Is it going to be exactly the same type of contract and the same exact amount? No. But there’s definitely a lot of demand for our system for Ukraine. As you all know, as I mentioned before, Ukraine has made many public statements that our Puma system is the workhorse in Ukraine and our Switchblade family systems is also one of their very critical capabilities that has helped them defend their nation and defend their independence against Ukraine so far. I believe that that’s going to continue, we are engaged with the U.S. DoD on a very, very close and regular basis. There are several additional requests for our systems and the U.S. DoD is working with us to be able to fulfil those needs as they see appropriate.
As you can see, some of that is also in fact, reflected our backlog today. So, the strong backlog does include additional orders for our unmanned systems in small UAS as well as Loitering Munitions. But I expect that to grow and continue to expand over the next several quarters as we move forward because I think that, as I said, there’s an inflection point. Many of these countries, including Ukraine, want to have more and more of our types of systems, which are far less expensive than much more expand other platforms and they’re much more effective in what they’re trying to do and how they’re fighting their conflict with Russia.
Bryce Sandberg: Great. Thanks, Wahid.
Wahid Nawabi: You’re welcome.
Operator: Thank you. [Operator Instructions]. And our next question comes from the line of Pete Skibitski from Alembic Global. Your line is open.
Pete Skibitski : Nice quarter guys.
Wahid Nawabi: Thanks, Pete.
Pete Skibitski : I guess, Wahid, you touched in your opening comments, I think, supply chain issues. Can you update us on what you’re seeing in terms of, as you’re ramping volume issues with GUIs, any other components that you’re having whose lead times are extended?
Wahid Nawabi: So, Pete, we believe that the revised guidance we gave, we’re in pretty — we’re confident that based on our indicators today, we’re going to be able to achieve the revised increased guidance on the top line. We have secured pretty much most of our long lead items. And as Kevin mentioned in his remarks, we have intentionally raised our inventory levels to some extent, primarily because our systems are in high demand and sense of urgency, but within our U.S. DoD as well as our allies is very high. As soon as they contract with us, they would like us to deliver the systems. So, it’s never a perfect situation. The supply chain is a game of, I call it a [whack a mole] (ph) game. Every day, every week, there’s some sort of a new issue.
But overall, we have handled this and managed this extremely well throughout the entire years of the COVID pandemic, the supply chain constraint, etcetera. So, for fiscal 2024, overall, we’re in a very good position. and but there’s challenges that arise every day and we try to address them. And we’ve actually done a really good job of managing those things. Another challenge that we are also facing, that we’re tackling is not only do we have to manage the supply chain and making sure the parts are there, our revenue has grown considerably over the last two or three years. And with this growth, we need to also make sure that we bring up the production capacity of some of our smaller suppliers. And that is something that doesn’t happen overnight.
