• Revenue: $167.6 million, a decrease of 10% compared to $186.6 million in Q3 fiscal 2024.
• Loitering Munitions Systems Revenue: $83.9 million, a 46% increase from $57.7 million in the previous year.
• UnCrewed Systems Revenue: $63.8 million, down 44% from $113.3 million last year.
• MacCready Works Revenue: $20 million, a 28% increase from $15.6 million last year.
• Adjusted Gross Margin: 40%, up from 38% in the previous year.
• Adjusted EBITDA: $21.8 million, down from $28.8 million in Q3 fiscal 2024.
• Net Loss: $1.8 million compared to net income of $13.9 million last year.
• Adjusted EPS: $0.30, down from $0.63 in the previous year.
• Cash and Investments: $72.5 million, down from $91.9 million at the end of Q2 fiscal 2025.
• Backlog: Record $763.5 million.
• Fiscal Year 2025 Guidance: Revenue of $780 million to $795 million; Adjusted EBITDA of $135 million to $142 million; Non-GAAP EPS of $2.92 to $3.13.

• Warning! GuruFocus has detected 4 Warning Signs with AVAV.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AeroVironment Inc (NASDAQ:AVAV) secured large contract awards, including a $288 million order under a $990 million IDIQ contract, marking the largest award in the company's history.
• The company reported a record backlog of $764 million, indicating strong future revenue potential.
• AeroVironment Inc (NASDAQ:AVAV) is expanding its production capacity, including a new Switchblade production facility in Utah, which will be five times larger than the current plant.
• The company is making disciplined investments in innovative products and new capabilities, reinforcing its market leadership in defense technology.
• AeroVironment Inc (NASDAQ:AVAV) is well-positioned for future growth with a focus on AI-driven autonomous defense solutions, aligning with US Department of Defense priorities.

Negative Points

• Third-quarter financial performance was below expectations due to unprecedented LA windstorms, impacting manufacturing and supply chain logistics.
• The company lowered its fiscal year 2025 guidance due to recent challenges, including stop-work orders on foreign military sales contracts.
• Revenue for the third quarter decreased by 10% compared to the same period last year, primarily due to a decline in Ukraine-related revenues.
• AeroVironment Inc (NASDAQ:AVAV) experienced higher SG&A expenses, impacting profitability, partly due to increased sales and marketing expenses.
• The company faced challenges with production issues related to shutdowns and sporadic supplier challenges, affecting revenue and profitability.

Q & A Highlights

Q: How is AeroVironment planning for fiscal year 2026 given the current backlog and the situation in Ukraine? A: Wahid Nawabi, CEO, stated that AeroVironment is well-positioned for strong growth in fiscal 2026, with a record backlog of nearly $750 million. The company expects to exit Q4 with $240 million to $250 million in revenue, setting up for a nearly $1 billion year. Despite uncertainties, the demand for their systems is growing globally, supported by a strong pipeline and favorable market conditions.

Q: What are the anticipated growth areas for BlueHalo after the acquisition closes? A: Wahid Nawabi highlighted that the BlueHalo acquisition will transform AeroVironment by adding complementary capabilities. Key growth areas include counter-UAS business, space communication, and cyber and intelligence sectors. These areas are expected to drive significant growth for the combined entity, enhancing market leadership and profitability.

Q: Can you provide more details on the work stoppage related to foreign military sales contracts? A: Wahid Nawabi explained that the US Department of Defense issued stop-work orders on four foreign military sales contracts, totaling about $13 million. The situation is fluid, and it's unclear if the stoppage is temporary or permanent. AeroVironment has adjusted its Q4 guidance accordingly but remains confident in its growth prospects for the next year.

Q: How is AeroVironment's UnCrewed Systems segment expected to perform in fiscal 2026? A: Wahid Nawabi expressed confidence in the UnCrewed Systems segment, citing strong demand drivers and new product introductions like the P550. The segment is expected to grow significantly, driven by new US DoD programs and international demand, despite transitioning away from Ukraine-related revenue.

Q: Are the revenue projections for BlueHalo in fiscal 2026 still current? A: Wahid Nawabi confirmed that the projections in the S-4 filing are current and have been vetted by third-party experts. BlueHalo is expected to continue its growth trajectory, complementing AeroVironment's organic growth and positioning the combined entity for success in the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.