AeroVironment, Inc. (NASDAQ:AVAV) Q4 2023 Earnings Call Transcript

In terms of how many countries do I think it’s going to happen? I think this is going to follow a very similar trend, although it might be a little bit faster as our Small UAS has gone through over the last decade. Over the last decade, if you recall, our Small UAS has grown from a very small number of countries to well over 50 countries now. And I think that the TMS business or Loitering Munition that we’re going to call it in the future, has a similar potential. We’re actively engaged with several countries, several countries across the world, both Europe and Asia and many of them have interest in acquiring and getting this capability. So I think over the next year or two, we’re going to continue to increase the number of countries and this business is set up for a very healthy growth in the years to come.

Kenneth Herbert: Great. Thanks, Wahid. I’ll pass it back there.

Wahid Nawabi: You’re welcome, Ken.

Kevin McDonnell: Thanks, Ken.

Operator: Thank you. Our next question comes from Louie DiPalma with William Blair. You may proceed.

Louie DiPalma: Wahid, Kevin and Jonah, good afternoon.

Jonah Teeter-Balin: Hi, Louie.

Wahid Nawabi: Hi, there, Louie.

Louie DiPalma: Wahid, at your Analyst Day, you discussed how you are working on development of several new products, including a vertical takeoff and landing Puma, a VAPOR helicopter capable of carrying a small munitions payload and also the Jackal turbojet air-launched loitering munition. Can you provide an update on the development of some of these new products?

Wahid Nawabi: Sure, Louie. That is very much accurate what you just mentioned. We have introduced several new products in our last Analyst Day. And we are here to — pleased to report that we’ve actually started to ship some of those products to our customers and received orders for them as well. And so as I mentioned in my remarks, a decent portion of our future SUAS product line revenue will be based on these new enhancements and new products that we’re launching to the market. Obviously, it’s going to take some time for that to ramp up because of the customers’ acquisition cycle and time frames. But so far, the feedback from our customers has been very strong. The products also are category industry best in terms of their performance of VAPOR MX 55 that we just launched.

It is a helicopter, electrically powered that is, we have even demonstrated its capability to launch Switchblades off of it. So that by itself is a pretty critical capability that is, so far, to my knowledge, is not really matched in that size and shape or form. The Jackal, of course, is a product that we’re partnering with Northrop Grumman for a specific opportunity with the US Army, a program of record name called Long Range Precision Munition, LRPM. And obviously, we’re making solid progress that is in the years to come, it’s not immediate. And it is a large program that we’re going after that. And that’s obviously a version of Switchblade as roughly the size of the Switchblade 600 that is more of a sprint loiter. So it actually travels on high speeds and then when it gets to the destination or target, it slows down, which gives it a significant other set of capabilities and advantages in the battlefield.

And obviously, the Puma VTOL allows us to launch Puma’s without runway and without hand launching them. So these products, amongst many others, is where we’ve been investing in the years ahead, and we’ll continue to invest because we see the need for these systems and our customers’ demand for them going up, not down. And we’re in a great position to capitalize on that, especially given a very large installed base of customers. So I also want to mention that another area that we’ve been investing over the last several years that I mentioned in my remarks, is our AI, autonomy and software analytics, allowing these systems to work in GPS-denied operations without communications at all and being able to find targets and do automatic target recognition.