Q1 2025 AeroVironment Inc Earnings Call

September 4, 2024

Good day and thank you for standing by. Welcome to the Air Environment Fiscal 2025 First Quarter Conference call. At this time, all participants aren't a listen only moon.

Unknown Executive: At this school, 2025, first quarter conference call. At this time, all participants are in a listen-only mode.

Unknown Executive: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. Please be advised that today's conference is being recorded.

Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one 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 Balean. Please go ahead.

Jonah Teeter: I would now like to hand the conference over to your speaker today, Jonah Teeter-Bailant. Please go ahead.

Jonah Teeter: Thanks and good afternoon, ladies and gentlemen. Welcome to AeroVironment's fiscal year 2025, first quarter earnings call. This is Jonah Teeter-Bailant, by President of Corporate Development and Investor Relations.

Speaker Change: Thanks for getting after New Year's of Jones. Welcome to Arab Army's fiscal year 2025 1st quarter earnings call. This is Jonah Teeter Bailey and Vice President of Corporate Development and Investor Relations.

Jonah Teeter: 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 10-K and other files with the SEC, in particular in the risk factors and forward-looking statements sections of such files. Copies are available from the FBC on the AeroVironment website at www.avinc.com or from our Investor Relations team. This afternoon, we also filed a slide presentation with our earnings relief and posted the presentation to the investor section of our website under events and presentations.

Speaker Change: So, before we begin, please note that certain information presented on this call contains forward-looking statements within the meaning of the private security litigation report map of 1994.

Speaker Change: These statements involve many risks and uncertainties that could cause actual results to differ material from our expectations.

Speaker Change: Further information on these risks and uncertainties is contained in the company 10K and other violence with the FGC. In particular, in the risk factors and forward-looking statement sections, portions of that's violence.

Speaker Change: Copy's are available from the MBC on the Arab Army website at www.aviac.com or from our investor relationship team.

Speaker Change: This afternoon we also apply the blind presentation with our earnings relief and close to the presentation for the investor section of our website under a event in presentation.

Jonah Teeter: The content of this conference call contains tons of information that is accurate only as of today, September 4, 2024. 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 that currently have to this conference call.

Speaker Change: The content of this conference call contains time sensitive information that is accurate only at the today's December 4th, 2024. The company undertakes no obligation to make any remission to any forward-looking statements contained in our remarks today. For the U.S.A. Defense to reflect the events or circumstances occurring after this conference call.

Jonah Teeter: 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.

Speaker Change: Joining me today from Arab Army is our Chairman, President, and Chief Executive Officer Mr. Wahid Nawabi. And seeing your wife's President and Chief Financial Officer, Mr. Kevin McDonnell.

Wahid Nawabi: Waheed. Thank you, Jonah. Welcome, everyone, to our first quarter of fiscal year 2025, our next conference call. I will start by summarizing our performance and recent achievements, after which Kevin will review our financial results in greater detail. I will then provide our expectations for the remainder of fiscal year 2025, and finally, Kevin, Jonah, and I will take your questions. I'm pleased to report on another quarter of excellent results, in line with our expectations. Our key messages, which are included on slide number three of our earnings presentation, are as follows. First quarter revenue rose to 189.5 million dollars, a 24% increase from the same quarter last fiscal year, and set a new first quarter revenue record for the company.

Speaker Change: We will now begin with remarks from Wahid Nawabi.

Speaker Change: Wahid.

Speaker Change: Welcome everyone to our first quarter of fiscal year 2020 by our next conference call.

Wahid Nawabi: I'll start by summarizing our performance and meeting achievements after which Kevin will review our financial results in greater detail.

Speaker Change: I will then provide our expectations for the remainder of fiscal year 2025 and finally Kevin Johnnell will take the questions.

Kevin Johnnell: I'm pleased to report another quarter of excellent results in line with our expectations. Our team messages which are including unswaring number three of our early presentation, are as follows.

Unknown Executive: at this school, 2025, first quarter conference call. At this time, all participants are in a listen only move. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that today's conference is being recorded.

Kevin Johnnell: Alright?

Kevin Johnnell: 1st quarter revenue goes to 189.5 million dollars and 24% of these from the same quarter last year and set a new 1st quarter revenue record for the company.

Wahid Nawabi: Second, we're now starting to book key switchway opportunities, such as our recent US Army $1 billion IDIQ contract, and anticipate funded backlog to increase in coming quarters. Third, our lunar ammunition system segment continues its upward momentum, with record first quarter revenues of nearly $52 million at a 68% year-over-year increase. And fourth, given our strong execution, key program awards, and robust pipeline, we are reaffirming our previously stated guidance for fiscal year 2025. These first quarter results positioned up for another record fiscal year as demand for autonomous systems continues to rise. We remain focused on our core strength in agile innovation, manufacturing, and customer relationships, which is allowing us to extend our meeting position in this dynamic and growing market.

Jonah Teeter: I would now like to hand the conference over to your speaker today, Jonah Teeter-Bailant. Please go ahead. Thanks and good afternoon, ladies and gentlemen. Welcome to AeroVironment's fiscal year 2025, first quarter earnings call. This is Jonah Teeter-Bailant by President 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 security litigation reform act of 1995. These statements involve many risks and uncertainties that could cause actual results to differ materially from our expectations.

Kevin Johnnell: Second, we're now starting to book key switchway opportunities such as our recent US Army $1 billion IDIQ contract and that's a based on the backlog to increase in coming orders.

Kevin Johnnell: Third, our lower immune system's statement continues its upward momentum for the record per quarter revenues of nearly $50-$90 a 68% Euro-bearing increase.

Kevin Johnnell: and fourth, given our strong execution, key program awards and robust pipeline. We are reaffirming our previously stated guidance for fiscal year 2020.

Jonah Teeter: Further information on these risks and uncertainties is contained in the company 10K and other files with the SEC, in particular in the risk factors and forward-looking statements section portions of such files. Copies are available from the FBC on the AeroVironment website at www.avinc.com or from our investor relations team. This afternoon, we also file a slide presentation with our earnings relief and posted the presentation to the investor section of our website under events and presentations.

Kevin Johnnell: i

Kevin Johnnell: These first quarter results position up to another record fiscal year as the man for how an acceptance continues to rise.

Kevin Johnnell: We remain focused on our course strength and agile innovation, manufacturing, and practical relationships which is allowing us to extend our leaning position in this dynamic and growing market.

Wahid Nawabi: We were able to achieve strong revenue growth in the quarter while retaining high levels of product quality, performance, and profitability. As our pipeline expands, we continue increasing our production capacity to ensure we meet our customers' urgent needs through fiscal year 2025 and beyond. We believe AV is the strongest company and the defense tech sector. We have unrivaled battle-temptive solutions, a non-care-loved and large install of aid, industry-leading technology, trusted customer relationships, and robust manufacturing capacity equipped to handle urgent, growing demand across the globe. In short, we are well-positioned to meet our U.S. and international customers' growing needs.

Kevin Johnnell: We were able to achieve strong revenue growth in the water while retaining high levels of product quality, performance and profitability.

Jonah Teeter: The content of this conference calls contains tons of information that is accurate only as of today, September 4, 2024. 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 that currently have to this conference call.

Kevin Johnnell: As our pipeline expands, we continue increasing our production capacity to ensure we need our customer's urgent needs through fiscal year 2025 and beyond.

Speaker Change: We believe AV is the strongest company and is a fantastic doctor.

Speaker Change: We have unrivaled data types of solutions, un-tailed nodes and large install base, industry leading technology, trusted customer relationships, and robust manufacturing capacity equipped to handle urgent global demand across the globe.

Wahid Nawabi: 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.

Wahid Nawabi: Thank you, Jonah. Welcome, everyone, to our first quarter of fiscal year 2025, our next conference call. I will start by summarizing our performance and recent achievements, after which Kevin will review our financial results in greater detail. I will then provide our expectations for the remainder of fiscal year 2025, and finally, Kevin, Jonah, and I will take your questions. I'm pleased to report on another quarter of excellent results, in line with our expectations.

Speaker Change: And sure, we are well positioned to meet our U.S. and international customers growing needs.

Wahid Nawabi: Our include systems in moving munitions remain our key franchises, and we are proud to serve our customers and their violations.

Speaker Change: Our uncle systems and motor reunitions remain our key franchises and we're proud to serve our customers and their violations.

Wahid Nawabi: While we are pleased with our first quarter results, we are even more excited about what lies ahead for the remainder of fiscal year 2025 and beyond.

Wahid Nawabi: While we're pleased with our first quarter results, we're even more excited about Wahid Nawabi's ahead for the remainder of this period's 2025 and beyond.

Wahid Nawabi: Our lesson now discusses us all from each of our three business segments, starting with low-to-remunitions systems for LMS. As I mentioned earlier, LMS was our strongest growth driver for the first quarter of fiscal year 2025. LMS revenue grew 68 percent from the same quarter last fiscal year to $52 million. Demand for both Swiss Lake 300 and 600 remained strong, as demonstrated by recent wins, many of which are not yet reflected in our fund backlog. During the first quarter, Swiss Lake 600 was selected for Tranche 1 of the U.S. DOD's Replicator Initiative, and because of our robust manufacturing capacity, we were able to begin delivering almost immediately.

Speaker Change: Our welcome now to discuss with us on each of our three business segments, starting with over-reemination systems Cortalanas.

Wahid Nawabi: Our key messages, which are included on slide number three of our earnings presentation, are as follows. First quarter revenue rose to 189.5 million dollars, and 24% increase from the same quarter last fiscal year, and set a new first quarter revenue record for the company. Second, we're now starting to book key switchway opportunities, such as our recent US Army $1 billion IDIQ contract, and anticipate funded backlog to increase in coming quarters. Third, our lunar ammunition system segment continues its upward momentum, with record first quarter revenues of nearly $52 million at 68% year of year increase.

Speaker Change: A time-in-channel year, LMS was our strongest go-to either for the first quarter of fiscal year 2020 by. LMS was a degree 68% from the same quarter last fiscal year to 52 million dollars.

Speaker Change: The man for both switley 300 and 600 remained strong as demonstrated by recent wins, many of which are not yet reflected in our fun to battle.

Speaker Change: During the first quarter, Swiss weight 600 was selected for the launch one of the U.S. DOD's Replicator Initiative.

Speaker Change: And because of the Lord Wawah 93rd capacity, we were able to begin delivery almost immediately.

Wahid Nawabi: Additionally, the U.S. DOD announced the approval of an FMS sale to Taiwan for Swiss Lake 300. Just last week, we received a $128 million award under the U.S. Army Directive requirement for lethal unmanned systems, which is not reflected in our first quarter fund backlog. This award is the first task order that is thought of a five-year sole-source IDIQ contract with a ceiling value of nearly $1 billion. New terms will also allow for progress payments that will help improve our cash flow and working capital usage, and delivery for this task order will begin shortly. As a reminder, this is the large multi-year IDIQ contract I discussed on prior earnings calls.

Wahid Nawabi: And fourth, given our strong execution, key program awards, and robust pipeline, we are reaffirming our previously stated guidance for fiscal year 2025. These first quarter results positioned up for another record fiscal year as demand for autonomous systems continues to rise. We remain focused on our core strength in agile innovation, manufacturing, and customer relationships, which is allowing us to extend our meeting position in this dynamic and growing market. We were able to achieve strong revenue growth in the quarter while retaining high levels of product quality, performance, and profitability.

Speaker Change: Additionally, the U.S.D. will be announced via approval of an F1FMX sale to Taiwan for 6,300.

Speaker Change: Just last week, we received a 128 million dollar award under the U.S. Army Directed Requirement for Lithuanian Systems, which is not reflected on our first quarter funding backlog.

Speaker Change: This award is the first task order that is thought of a five year sole source IDIQ contract with a ceiling value of nearly one billion dollars.

Speaker Change: New turns will also allow for progress in that will have to prove our cash flow and work in capital usage. And the literally for this fast border will begin shortly.

Wahid Nawabi: As our pipeline expands, we continue increasing our production capacity to ensure we meet our customers' urgent needs through fiscal year 2025 and beyond. We believe AV is the strongest company and the defense tech sector. We have unrivaled battle-temptive solutions, a non-care-loved and large install of aid, industry-leading technology, trusted customer relationships, and robust manufacturing capacity equipped to handle urgent, growing demand across the globe. In short, we are well-positioned to meet our U.S, and international customers' growing needs.

Speaker Change: As a reminder, this is the Lord's Mokki Year I'd like you to contract I'd accept one fire burning skulls.

Wahid Nawabi: These important and significant wins validate our competitive positioning in the market, demonstrate the urgent need for our solutions in active conflict zones, and highlight our ability to deliver in volume as demand rises. The man for switch weight continues to rise both domestically and abroad, and A.V. has committed to meeting our customers and increasing expectations. Our manufacturing capacity is expanding to support more than $500 million in annual switch weight product revenue in fiscal year 2025, and we're prepared to support additional capacity growth in the future. We're also in the process of selecting an additional location where we can expand our load and munition manufacturing beyond Fiscal Year 2025.

Speaker Change: The important and significant wind's validate are competitive at positioning in the market. Devastate the urgent need for our solutions and act of conflict zones and highlight our ability to deliver and volume as demand rises.

Speaker Change: The man who was supposed to continue to rise both domestically and abroad, and A.V. is committed to meeting our customers in increasing expectations.

Speaker Change: Our manufacturing capacity is expanding the support more than $500 million in annual switch weight product revenue in this year 2020 buy and were prepared to support additional capacity growth in the future.

Wahid Nawabi: Our include systems in moving munitions remain our key franchises, and we are proud to serve our customers and their violations. While we are pleased with our first quarter results, we are even more excited about what lies ahead for the remainder of fiscal year 2025 and beyond.

Speaker Change: We're also in the process of selecting an additional location where we can expand or avoid remunition and evasion beyond the school year 2025.

Wahid Nawabi: We're confident that the LMS business is only at the beginning stages of this strong growth cycle, and we anticipate continuing momentum beyond this fiscal year.

Speaker Change: will confident that the LMS is only at the beginning stages of the strong growth cycle. In the anticipated continued momentum beyond this first go here.

Wahid Nawabi: Now onto our uncruased system segment. Revenue for the first quarter was $120 million, an increase of 22% from the same quarter last year. Our uncruased system segment remains our strongest revenue and profit driver due largely to our Puma franchise and jump 25 platforms. Puma has continuously demonstrated its importance and effectiveness in current conflicts as the dominant ISR workforce. In fact, we just recently completed our 475 deliveries to Ukraine, and we have anticipated booking additional commorters as part of the recently announced Ukraine 8 package. We're also optimistic about the advantages and capabilities of our latest small U.S.

Speaker Change: Now, on tour on a two six and a seven

Speaker Change: Gravity for the first quarter was $120 million, an increase of 22% from the same quarter last year.

Speaker Change: Our unprocedive statement remains our strongest revenue and profit driver due to a larger need to offer a full month budget and jump 20 but five months.

Wahid Nawabi: During the first quarter, Swiss Lake 600 was selected for tranche 1 of the U.S. DOD's Replicator Initiative, and because of our robust manufacturing capacity, we were able to begin delivering almost immediately. Additionally, the U.S. DOD announced the approval of an FMS sale to Taiwan for Swiss Lake 300. Just last week, we received a $128 million award under the U.S. Army Directive requirement for lethal unmanned systems, which is not reflected in our first quarter fund backlog.

Speaker Change: Pula has continuously demonstrated its importance and effectiveness in current conflict as the dominant Aristotle workforce.

Speaker Change: In fact, we just recently completed a 475th delivery to Ukraine, and we accept a page booking additional commuters as part of the region we announce Ukraine 8 package.

Speaker Change: We're also optimistic about the advantages and capabilities of our latest, small, new way of experience called the P550.

Wahid Nawabi: variant called the PCI 50. This enhanced Root 2 platform is purchased still for long-range reconnaissance missions and features advanced AI and autonomous capabilities with maximum payload versatility. The PCI 50 is part of our recently submitted proposal for the U.S. Army's long-range reconnaissance program or LRR. We anticipate strong global demand for this product beyond the U.S. Army's program of practice. In addition, our jump 20 systems continue to make progress in this market, and we're still actively engaged on multiple domestic and international opportunities. Given favorable feedback on our Puma, Jump 20 and PCI 50 platforms, we anticipate domestic and international demand for U.S.

Speaker Change: This enhanced Ruth Tue platform is purpose still for long-race reconnaissance missions and features advanced AI and autonomous capabilities with maximum payload virtualability.

Wahid Nawabi: This award is the first task order that is thought of a five-year sole-source IDIQ contract with a ceiling value of nearly $1 billion. New terms will also allow for progress payments that will help improve our cash flow and working capital usage, and delivery for this task order will begin shortly. As a reminder, this is the large multi-year IDIQ contract I discussed on prior earnings calls. These important and significant wins validate our competitive positioning in the market, demonstrate the urgent need for our solutions and active conflict zones, and highlight our ability to deliver in volume as demand rises.

Speaker Change: The P-550 is part of our recently submitted proposals for the U.S. Army's Long Range Reconocours Program for L-R-R.

Speaker Change: We anticipate strong global demand for this product beyond the U.S. Army's program of record.

Speaker Change: In addition, our John 20s have continued to lay progress in this market and were still actively engaged on multiple domestic and international opportunities.

Speaker Change: Give us a little feedback on our program, John 20 and T550 platforms. We anticipate domestic international demand for U.S. solutions to increase in fiscal year 2025 and beyond.

Wahid Nawabi: S solutions to increase in fiscal year 2025 and beyond.

Wahid Nawabi: The man for switch weight continues to rise both domestically and abroad, and A.V, has committed to meeting our customers and increasing expectations. Our manufacturing capacity is expanding to support more than $500 million than an annual switch weight product revenue in fiscal year 2025, and we're prepared to support additional capacity growth in the future. We're also in the process of selecting an additional location where we can expand our load and munition manufacturing beyond fiscal year 2025. We're confident that the LMS business is only at the beginning stages of this strong growth cycle and we anticipate continuing momentum beyond this fiscal year.

Wahid Nawabi: Moving now to our McCraady Works segment, technology developments within McCraady Works continue to derive our long-term growth opportunities. This past quarter, we made meaningful progress toward developing next-generation solutions and expanding our AI and autonomous capabilities. For example, during our investor day this past June, we had a live demonstration highlighting our ability to send mission objectives from NASDAQ headquarters in New York City to include systems operating in California and Kansas, thousands of miles away. Our U.S. were then able to complete those missions for the autonomous without any user intervention. This live demonstration showcases our ability to test hundreds of uncooled systems from thousands of miles away while these systems operate autonomously in contested environments.

Speaker Change: Moving out to our Macredor segment, technology developments within the Macredor's creatures to their lives are long-term growth opportunities.

Speaker Change: The past quarter, we made meaningful progress toward developing next generation solutions in expanding our AI and autonomous capabilities.

Speaker Change: For example, during our investigative past June, we had a live demonstration highlighting our ability to send mission objectives from NASDAQ headquarters in New York City to UNCOOST systems, operating in California and Kansas, thousands of miles away.

Speaker Change: or you are yet more than able to complete those missions for your farmers without any user intervention.

Wahid Nawabi: Now onto our uncruased system segment. Revenue for the first quarter was $120 million, an increase of 22% from the same quarter last year. Our uncruased system segment remains our strongest revenue and profit driver due largely to our Puma franchise and jump 25 platforms. Puma has continuously demonstrated its importance and effectiveness in current conflicts as the dominant ISR workforce. In fact, we just recently completed our 475 deliveries to Ukraine and we have anticipated booking additional commorters as part of the recently announced Ukraine 8 package.

Speaker Change: This live demonstration showcases our ability to tap hundreds of inclusions from thousands of miles away while the systems operate autonomously in contestant environments.

Speaker Change: This demonstration was a powerful example of how we're pushing the boundaries of what's possible in our common sense.

McDonnell: Another key priority for McDonnell is Dartmouth and Salary Program focused on UAS design for shift-based operations.

Wahid Nawabi: As maritime missions become more important to our customers, McCready Works will continue to focus on developing next-generation solutions for this market.

McDonnell: As maritime missions become more important to our customers, the creative works will continue to focus on developing next-generation solutions for this market.

Wahid Nawabi: We're also optimistic about the advantages and capabilities of our latest small U.S, variant called the PCI 50. This enhanced root 2 platform is purchased still for long-range reconnaissance missions and features advanced AI and autonomous capabilities with maximum payload versatility. The PCI 50 is part of our recently submitted proposal for the U.S. Army's long-range reconnaissance program or LRR. We anticipate strong global demand for this product beyond the U.S. Army's program of practice.

Wahid Nawabi: And finally, McCready Works was awarded a $25 million follow-on contract from South Bank to continue the development of the half-slap one. Half continues to make good progress on developing systems for both commercial and defense applications. The innovative solutions generated by the business segment create significant advantages for our customers and play a critical role in fueling our growth well beyond fiscal year 2025. McCready Works continues to fulfill its mission and will look forward to multiple exciting announcements later this fiscal year.

Speaker Change: And finally, McGrady Works was awarded a $25 million follow-on contract from South Bank to continue the development of the Half-Splatform.

Speaker Change: Have continued to make good progress on developing systems for both commercial and defense applications.

Speaker Change: and Summary, the innovative solution generated by this business segment, creates significant advantages for our customers and play a critical role in fueling our growth, well beyond fiscal year 2020.

Speaker Change: But creating works, creating is the whole village mission, and we're forward to multiple exciting announcements later this month for you.

Wahid Nawabi: In addition, our jump 20 systems continue to make progress in this market and we're still actively engaged on multiple domestic and international opportunities. Given favorable feedback on our Puma, jump 20 and PCI 50 platforms, we anticipate domestic and international demand for U.S. S solutions to increase in fiscal year 2025 and beyond.

Kevin Mcdonnell: With that, I would like to now turn the call over to Kevin McDonnell for a review of our first quarter financials. Kevin, thank you for what he did down reviewing the highlights of our first quarter performance, during which I will occasionally approach both our press release and earnings presentation available on our website. Overall, we had another outstanding financial quarter with record first quarter revenues and a second highest quarter revenue in the company history. Adjusted growth margins and adjusted the dollar are also strong. As what he mentioned, remarks revenue for the first quarter of fiscal 2025 was $189.5 million and increased to 24% as compared to $152.3 million for the first quarter of fiscal 2024.

Kevin Mcdonnell: With that, I would like to now turn the call over to Kevin McDonnell for a review of our first quarter financials.

Kevin Mcdonnell: Kevin, thank you Wahid, today I will be reviewing the highlights of our first quarter performance, very much I will occasionally refer to both our press release and earnings presentation available on our website.

Speaker Change: Overall, we had another outstanding financial quarter with record first quarter of Ramon Eden and the second highest quarter of Ramon Eden in the country's history.

Speaker Change: A Jessica Smart isn't a Jessica Dahab or also strong.

Speaker Change: As Wahid mentioned his remarks, revenue for the first quarter of fiscal $0.25, was $189.5 million, and increased of 24% as compared to the 152.3 million for the first quarter of fiscal $0.24.

Kevin Mcdonnell: Slide five of the earnings presentation provides a breakdown of revenue by the second for the quarter. Our largest segment during the quarter was fund group systems are UXF, which is a combination of our small UIS, medium UIS, and UGB businesses. UXF that revenue of 120 million in the quarter, which is up 22% from last year's total of 98.2 million. Who was the man remains strong and kind of for 78% of UXF's revenues. But we also saw meaningful contributions of our ground, vehicle, raven, and jump 20 products during the quarter. Our Lord and the addition system segment for an LMS recorder revenue of 52 million at 68% increase is compared to 30.9 million in last year during the first quarter.

Speaker Change: So, I'm five of the earnings presentation provided a breakdown of the FBb by the second for the quarter. Our largest segment during the quarter was the unfuncrued systems, or U-XF, which is a combination of our small UAS, medium UAS, and U-G-B businesses.

Wahid Nawabi: Our U.S, were then able to complete those missions for the autonomous without any user intervention. This live demonstration showcases our ability to test hundreds of uncooled systems from thousands of miles away while these systems operate autonomously in contested environments. As maritime missions become more important to our customers, McCready Works will continue to focus on developing next-generation solutions for this market. And finally, McCready Works was awarded a $25 million follow-on contract from South Bank to continue the development of the half-slap one, half continues to make good progress on developing systems for both commercial and defense applications.

Speaker Change: U.S. that gravity of 120 million in a quarter, which is up 22 percent from last year's total 98.2 million. Kuma's a man-made strong, a kind of 70 percent of U.S. that's revenue, but we also have five meaningful contributions on my ground, BFO, Raven, and Jeff 25 extra in a quarter.

Speaker Change: Programming of 52 million at 68% increases compared to 3.9 million in last year during the first quarter.

Kevin Mcdonnell: Most of the LMS product revenue recognized during the quarter is for orders in which the contract has not been identified. Meaning the customer has placed the firm order for the equipment or services without a final price. The price will be determined when the contract is finalized, which we expect to occur in the next couple of quarters. LMS margins were negatively impacted by the undivided size orders during the quarter. However, we still accept full-year improvements in LMS adjusted growth margin and adjusted EBITDA margin over last. year. More than half of the Alameda revenue came with switch plate 600 products and services, while the remainder is primarily from the switch plate 300 products.

Speaker Change: Most of the LMS fog gravity recognized during the quarter is for orders in which the contract has not been identified. Meaning the customer has placed the firm order for the equipment or services without a final price. The price will be determined when the contract is finalized, which we expect to occur in the next couple of quarters.

Speaker Change: Bell on that smartness, or negatively impacted by the undefeated size order during the quarter. Powerful to still accept fully improvedness and element adjusted growth margin and adjusted even down margin over the last year.

Speaker Change: More than half of an album after our music game was switched between 600 products and services, while the remainder is primarily from the switch play 300 products.

Wahid Nawabi: The innovative solutions generated by the business segment create significant advantages for our customers and play a critical role in fueling our growth well beyond fiscal year 2025. McCready Works continues to fulfill its mission and will look forward to multiple exciting announcements later this fiscal year.

Kevin Mcdonnell: Revenue from a trading work segment came in at 17.5 million as a decrease of 24% as compared to the 23.2 million from the first quarter of last year, driven partially by US government-related rules impacting award timing.

Speaker Change: For our new former trading work segment, came in at 17.5 million and decreased at 24% as compared to the 23.2 million for the first quarter of last year, driven partially by U.S. government-related cruel impacting the work timing.

Kevin Mcdonnell: In slight five of the earnings presentation, there's a breakdown of between product and service revenue. Specifically during the first quarter of product revenue, account of 80% of total revenues, which is higher than the 70% we saw in the corresponding quarter of the previous year, primarily due to the strong product revenue from both our small EOF, LMS, and ground vehicle businesses. We've set product revenues as the percentage of revenue to remain above 80% for the foreseeable future.

Kevin Mcdonnell: With that, I would like to now turn the call over to Kevin McDonnell for a review of our first quarter financials. Kevin, thank you what he did down reviewing the highlights of our first quarter performance during which I will occasionally approach to both our press release and earnings presentation available on our website. Overall, we had another outstanding financial quarter with record first quarter revenues and a second highest quarter revenue in the company history.

Speaker Change: In 5-5 an early presentation, there's a breakdown of between product and service revenue.

Speaker Change: So, specifically, very the first quarter of bottom-cremely of kind of 80% of 84% of total revenues, which is higher than the 78% we saw in the first quarter of the previous year. Primarily due to the strong bottom-cremely from both our small EOF, have a map that ground vehicle businesses.

Speaker Change: We expect Black Grammys to add the percentage of revenue to remain above 80% of the foreseeable future.

Kevin Mcdonnell: Moving in gross margins, slight six of the earnings presentation shows the trend of adjusted product and service gross margins while flight 12 reconciled the gap gross margins to adjusted gross margins, which exclude intangible amnesty spent in other non-cash-versus-the-canny items. In the first quarter, the consolidated gap gross margins finished at 43% in line with the first quarter of last year. In terms of adjusted gross margins, first quarter adjusted gross margins were 45%, which is consistent with the same period last year. Adjusted product gross margins of quarter were 48% versus 49% in the first quarter of last year.

Kevin Mcdonnell: Adjusted growth margins and adjusted the dollar are also strong. As what he mentioned is remarks revenue for the first quarter of fiscal 2025 was $189.5 million and increased to 24% as compared to $152.3 million for the first quarter of fiscal 2024. Slide five of the earnings presentation provides a breakdown of revenue by the second for the quarter. Our largest segment during the quarter was fund group systems are UXF which is a combination of our small UIS, medium UIS and UGB businesses.

Speaker Change: Moving in gross margins, slide six of the earnings presentation shows the trend of adjusted product and service gross margins while flying 12 reconciled and gap gross margins to adjusted gross margins, which includes intangible evidation and stem, and other non-cash versus accounting items.

Speaker Change: In the first quarter, the following in the capitol smart and finished at 43% in line with the first quarter of last year.

Speaker Change: In terms of the Jessica Gross Marges, first quarter of Jessica Gross Marges, or 45% which is consistent with the same period last year.

Kevin Mcdonnell: UXF that revenue of 120 million in the quarter which is up 22% from last year's total of 98.2 million. Who was the man remains strong and kind of for 78% of UXF's revenues. But we also saw meaningful contributions of our ground, vehicle, raven and jump 20 products during the quarter. Our Lord and the addition system segment for an LMS recorder revenue of 52 million at 68% increase is compared to 30.9 million in last year during the first quarter.

Speaker Change: A just as product gross bodies with quarter were 48 percent versus 49 percent in the first quarter of laps this year. We had a strong U.S.S., we had strong U.S.S. revenue as both the first quarter of last year in this year with contributed to high adjusted product gross parts.

Kevin Mcdonnell: We had a strong UXS; we had strong UXS revenue as both the first quarter of last year and this year was contributed to high adjusted product gross margins. We do expect adjusted product gross margins to decline in coming quarters as we increase product revenues from LMS. In terms of adjusted service gross margins, the first quarter was at 29% versus 28% during the same quarter last year. We expect overall adjusted gross margins to be approximately 40% for the year.

Speaker Change: We do expect adjusted product growth smartness in flying and coming quarters as it has increased product revenue from LMAF.

Speaker Change: In terms of adjusted service growth margins, the first quarter was at 29% versus 28% during the same quarter last year.

Kevin Mcdonnell: Most of the LMS product revenue recognized during the quarter is for orders in which the contract has not been identified. Meaning the customer has placed the firm order for the equipment or services without a final price. The price will be determined when the contract is finalized which we expect to occur in the next couple of quarters. LMS margins were negatively impacted by the undivided size orders during the quarter. However, we still accept full year improvements in LMS adjusted growth margin and adjusted EBITDA margin over last, year.

Speaker Change: We expect overall productive growth smartness to be a 5% leap, 40% for the year.

Kevin Mcdonnell: In terms of adjusted EOF, flight 13 of our earnings presentation shows the reconciliation of GAAP net income to a adjusted EBITDA. In the first quarter of fiscal 2025, the adjusted EBITDA was $37 million, flat from the first quarter of last last year. The higher revenue gross margin were offset by increased investment in R&D and incremental FGNA expenses. FGNA expense, excluding intangible amnesty and acquisition of late expense, for the first quarter was $33 million or 70% of revenue. Compared to $22 million or 15% of revenue in the prior year, the increase in FGNA expense is primarily resulted in increase in sales and marketing expense, primarily generated by increase in bid and proposal activity along with employee-related costs to do an increase in the average headcount to help support the growth and expansion of our global sales teams. R&D for the first quarter was $25 million or 13% of revenue compared to $15 million or 10% of revenue in the prior year.

Speaker Change: In terms of a job to diva God, slide 13 of our earnings presentation, so the reconciliation of Gap didn't come to a job to diva God.

Speaker Change: In the first quarter of fiscal 2025, the Jeff and Emeagod was $37 million. Flat from the first quarter of last fiscal year, the entire revenue rose margin were offset by increased investment in R&D and incremental SGNA expenses.

Kevin Mcdonnell: More than half of the Alameda revenue came with switch plate 600 products and services while the remainder is primarily from the switch plate 300 products. Revenue from a trading work segment came in at 17.5 million as decrease of 24% as compared to the 23.2 million from the first quarter of last year, driven partially by US government-related rules impacting award timing. In slight five of the earnings presentation, there's a breakdown of between product and service revenue.

Speaker Change: The S.E.N.A. Excent, excluding the Intangible Ambulization and Acquisition Related Excent. For the first quarter, it was 33 million dollars or 70% of revenue, compared to 20 million or 15% of revenue in the prior year.

Speaker Change: The increase in FDA and expense is primarily resulted in increase in sales and marketing expense, primarily driven by increased and been in proposal activity, along with employee-related cost to do an increase in the average head count to help support the growth and expansion of our global sales teams.

Kevin Mcdonnell: Specifically during the first quarter of product revenue account of 80% of total revenues, which is higher than the 70% we saw in the corresponding quarter of the previous year, primarily due to the strong product revenue from both our small EOF, LMS, and ground vehicle businesses. We've set product revenues as the percentage of revenue to remain above 80% for the foreseeable future. Moving in gross margins, slight six of the earnings presentation shows the trend of adjusted product and service gross margins while flight 12 reconciled the gap gross margins to adjusted gross margins, which exclude intangible amnesty spent in other non-cash-versus-the-canny items.

Speaker Change: R&D for the first quarter was 25 billion from 13% of revenues compared to 15 million and 10% of revenues prior year.

Kevin Mcdonnell: The increase of R&D expenses in both dollar terms and percentage of revenue is due to an increase in development activities regarding hand-stake abilities for our products, development of new product lines, and support of our acquired business. Over half of our R&D expenditures are in the quarter related to our UX X business and includes the next generation Group 2 UAS, the P550, the Maritime, and the Maritime version of the Jump 20 and the incorporation of the Tomahawk controller into existing AV products. LMS continues to make investments across the Swiss blade product line, including new data. We still expect R&D for the entire company to be in a range of 12 to 13% per fiscal year 2025, as a result of continued investment in our long-term growth initiatives.

Speaker Change: The increase of R&D expenses in both dollar terms of percentage of revenue is due to an increase development activities regarding enhanced capabilities for our products, development of new product lines and support of our acquired businesses.

Kevin Mcdonnell: In the first quarter, the solidated gap gross margins finished at 43% in line with the first quarter of last year. In terms of adjusted gross margins, first quarter adjusted gross margins were 45%, which is consistent with the same period last year. Adjusted product gross margins of quarter were 48% versus 49% in the first quarter of last year. We had a strong UXS, we had strong UXS revenue as both the first quarter of last year and this year was contributed to high adjusted product gross margins.

Speaker Change: Over half of our army expenditures are in the quarter related to our U.S. ex business and includes the next generation group 2 U.A.S. the P-550, the maritime version of the jump 20 and the incorporation of the Tomahawk control into the 15AVs product.

F.: Hello, I'm F. Continues to make a best with the Cross-Sweet Played Sonic line, including new variants. We still expect RD for the entire company to be in a range of 12-15% for fiscal year 2025 as a result of continuing investment in our long-term growth initiatives.

Kevin Mcdonnell: Now, turning to Gafford, in the first quarter, the company generated net income of 21.2 million versus net income of 21.9 million recorded in the same period last year. The decrease in net income of 0.7 million can be attributed to several factors, namely a $10 million increase in SDA expenses, including intentional amortation, and a $9.1 million increase in justice and R&D. These are partially offset by a $15.8 million increase in gross margin, a $1.8 million increase in interest expense, a $0.9 million decrease in equity investment activity, and a $0.7 million decrease in deal and integration costs.

Speaker Change: Now I'm turning to Gaparding. In the first quarter, the company generated net income of 21.2 million versus net income of 21.9 million record in the same period last year.

Speaker Change: The degree for that exam, a point seven learning can be treated to several factors, namely a 10 million dollar increase in SGA expenses, including entitled amortization, and 9.1 million dollar increase in Dr. Bernardi.

Kevin Mcdonnell: We do expect adjusted product gross margins to decline in coming quarters as we increase product revenues from LMS. In terms of adjusted service gross margins, the first quarter was at 29% versus 28% during the same quarter last year. We expect overall adjusted gross margins to be approximately 40% for the year. In terms of adjusted EOF, flight 13 of our earnings presentation shows the reconciliation of gap net income to a adjusted EBITDA.

Speaker Change: These are partially offset by a $15.8 million dollar increase in gross margin, a $1.8 million decrease in interest expense, a $0.9 million decrease in equity investment activity, and a $0.7 million decrease in deal in a racial cost.

Kevin Mcdonnell: Slide 10 shows the reconciliation of Gaff and adjusted or non-Gaff deluded EPS. The company posted an adjusted early for share of 89 cents of the first quarter of the fiscal 2025 versus the dollar for the first quarter of the fiscal 2024.

Speaker Change: So I can show the reconciliation of Gap and a Justin or non Gap to the Luda GBS. The company posted a Justin earliest first share of 89 cents in the first quarter. The fiscal $20.25 versus a dollar for the lose share. But the first quarter of this will $20.24.

Kevin Mcdonnell: In the first quarter of fiscal 2025, the adjusted EBITDA was $37 million flat from the first quarter of last last year. The higher revenue gross margin were offset by increased investment in R&D and incremental FGNA expenses. FGNA expense, excluding intangible amnesty and acquisition of late expense, for the first quarter was $33 million or 70% of revenue. Compared to $22 million or 15% of revenue in the prior year, the increase in FGNA expense is primarily resulted in increase in sales and marketing expense, primarily generated by increase in bid and proposal activity along with employee-related costs to do an increase in the average headcount to help support the growth and expansion of our global sales teams.

Kevin Mcdonnell: Lastly, turning to our balance sheet. At the close of the first quarter, our total cash investments amounted to $103 million, compared to $94.3 million at the end of the fourth quarter of FY24. Three cash flow during the quarter was $23 million, which is largely a result of decreased inventory. We continue to carry a high amount of unbuilt receivable R2 attributable to our LMS business second. With the recently announced I'd gagged you from the US Army for switch late products, we'll start to see progress payments on new orders, and anticipate that we will see a reduction in unbuilt receivable in the coming quarters.

Speaker Change: Lastly, turning for our balance sheet.

Speaker Change: At the close of the first quarter, our total cash was about about a $200 trillion dollars compared to $94.3 million at the end of the fourth quarter, FY24. Free cash flow during the quarter was $23 billion, which was largely resolved to decrease inventory.

Kevin Mcdonnell: R&D for the first quarter was $25 million or 13% of revenue compared to $15 million or 10% of revenue in the prior year. The increase of R&D expenses in both dollar terms and percentage of revenue is due to an increase in development activities regarding hand-stake abilities for our products, development of new product lines, and support of our acquired business, over half of our R&D expenditures are in the quarter related to our UX X business and includes the next generation Group 2 UAS, the P550, the Maritime, and the Maritime version of the Jump 20 and the incorporation of the Tomahawk controller into existing AV products.

Speaker Change: We continue to carry a high amount of unknown receivables for our Chief Tribunal to our Alinaf's second.

Speaker Change: With the recently announced I get you from the U.S. Army for Switchblade Box, we'll start to see progress payments on new orders and anticipate that we will see a reduction in un-doubted seemable in the coming quarters.

Kevin Mcdonnell: We anticipate working capital uses to fluctuate quarter to quarter, but expect an overall reduction for the year as we collect revenue into the new Army payment terms. We also paid down an additional $10.5 million in the first quarter on our term loan facility.

Speaker Change: We anticipate working capital uses the fluctuating quarter to quarter but expect an overall reduction for the year as we collect revenue into the new Army payment terms.

Speaker Change: We also paid down additional $10.5 million in the first quarter on our turn mode facility. Now I'd like to turn things back to what you need.

Wahid Nawabi: Now I can turn things back to what he is.

Wahid Nawabi: Thanks, Kevin. Given our strong execution, key contract awards, and robust pipeline, we are reaffirming our previously stated guidance for fiscal year 2025. Our healthy backlog and recent order rate visibility to 80% of the midpoint of our fiscal year 2025 revenue guidance. We continue to expect first half revenue to represent about 45% of the full fiscal year. We're confident in achieving our full-year guidance and are focused on converting these awards and other opportunities in our pipeline into orders and revenues. In summary, as global demand increases for our autonomous AI and able-unproof solutions, we anticipate strong revenue growth to continue across our business areas.

Kevin: Thank you, Kevin

Speaker Change: Give it our strong execution, key contract awards, and the robots pipeline, we are reaffirming our previously stated guidance for fiscal year 2025.

Speaker Change: Our healthy backlog and recent order rate is limited to 80% of the midpoint of our fiscal year 2020 by Germany's guidance.

Kevin Mcdonnell: LMS continues to make investments across the Swiss blade product line, including new data. We still expect R&D for the entire company to be in a range of 12 to 13% per fiscal year 2025 as a result of continued investment in our long-term growth initiatives. Now, turning to Gafford, in the first quarter of the company generated net income of 21.2 million versus net income of 21.9 million recorded in the same period last year.

Speaker Change: We continue to expect first half revenue to represent about 45% of the total fiscal year.

Speaker Change: We're confident that keeping our fully united and our focus on converting these awards and other opportunities and our pipeline into awards and revenue.

Speaker Change: In summary, a global demand increases for our autonomous AIA-able uncultivisions. We anticipate strong revenue to continue across our business segments.

Kevin Mcdonnell: The decrease in net income of 0.7 million can be attributed to several factors, namely a $10 million increase in SDA expenses, including intentional amortation and $9.1 million increase in justice and R&D. These are partially offset by a $15.8 million increase in gross margin, a $1.8 million increase in interest expense, a $0.9 million decrease in equity investment activity, and a $0.7 million decrease in deal and integration costs. Slide 10 shows the reconciliation of Gaff and adjusted or non-Gaff deluded EPS. The company posted an adjusted early for share of 89 cents of the first quarter of the fiscal 2025 versus the dollar for the first quarter of the fiscal 2024.

Wahid Nawabi: Our strong start, this quarter, supports our belief that fiscal year 2025 will be a great year for our investors, employees, and customers. For a well-positioned to benefit from USUD budget priorities and are encouraged by an increase in international demand, especially for Switchblade and our Jump-20 solutions. Our strong, anticipated growth led itself to shareholder value creation that extends well beyond fiscal year 2025.

Speaker Change: Our songs start, this quarter supports our belief that fiscal year 2025 will be a great year for our investors and 20th and customers.

Speaker Change: For well-positioned to benefit from U.S. U.D. budget priorities and are encouraged by an increase in international demand, especially for switch play in our John 20 solutions.

Speaker Change: For strong anticipated growth, learn the self to share over value, creation that extends well beyond the story of 2025.

Wahid Nawabi: Before trying to call over for questions, let me summarize the key takeaways from today's call. First, first quarter fiscal year 2025 revenue grew to 189.5 million dollars, sending a new first quarter record. Second, we are now starting to book key Switchblade opportunities such as our recent USRE $1 billion IDIQ contract and anticipate fund is backflow to increase in timing quarters. Third, our load and munition system segment continues to be the key growth driver for the company to our fiscal year 2025. And fourth, the fundamentals of our business have never been stronger, and we anticipate that fiscal year 2025 will be another record sitting here for the company.

Speaker Change: Before trying to call over for questions, let me summarize the key takeaways from today's call. First,

Speaker Change: First quarter, fiscal year 2025 revenue includes $189 for $5 million, sending a new first quarter record.

Speaker Change: Second, we are now starting to book keys which laid out opportunities such as for reasons you have already won a building dollar IDIP contract, and anticipate fund is back up to increase in time and quarters.

Speaker Change: Third, our low-region system segment continues to be the key growth driver for the company through our first call year 2020.

Speaker Change: and for the fun and loss of our business have never been stronger and we anticipate that this will be a 20-25, will be a never-reference in a year for the company.

Wahid Nawabi: I would like to thank the incredible AeroVironment team that provides our customers with the solutions they need to achieve their vital missions. Thank you also to our shareholders and customers for your continued support. We're excited for what's ahead and grateful to serve our country and our life at this critical time.

Speaker Change: I would like to thank the incredible air of our routines that provide our customers with the solutions they need to achieve their bio-missions.

Speaker Change: Thank you all so to our shareholders and customers for your continued support.

Wahid Nawabi: Now I can turn things back to what he is.

Speaker Change: We're excited for what's ahead and grateful to serve our country and ally of this critical time.

Wahid Nawabi: Thanks, Kevin. Given our strong execution, key contract awards and robust pipeline, we are reaffirming our previously stated guidance for fiscal year 2025. Our healthy backlog and recent order rate visibility to 80% of the midpoint of our fiscal year 2025 revenue guidance. We continue to expect first half revenue to represent about 45% of the full fiscal year. We're confident in achieving our full year guidance and are focused on converting these awards and other opportunities in our pipeline into orders and revenues.

Unknown Executive: And with that, Kevin Jr. And I will now take your questions. Thank you. As a reminder to ask a question, you will need to press star 111 on your telephone. We respectfully ask that callers limit themselves to two questions and return to the queue to ask additional questions. Please stand by while we compile the Q&A roster.

Speaker Change: and with that Kevin June and I will now take you to God's Presence.

Speaker Change: Thank you, as a reminder to ask a question you will need to press star 1-1 on your telephone. We respectfully ask that callers limit themselves to two questions and return to the Q to ask additional questions. Please stand by while we compile the Q&A roster.

Ken Herbert: Our first question will come from the line of Ken Herbert with RBC Capital Markets. Please proceed with your question. Yeah, good afternoon. Well, he, Kevin and Jonah, nice quarter. Thank you.

Speaker Change: [inaudible]

Speaker Change: Our first question will come from the line of Ken Harbor with RBC Capital Markets. Please proceed with your question.

Wahid Nawabi: In summary, as global demand increases for our autonomous AI and able-unproof solutions, we anticipate strong revenue growth to continue across our business areas. Our strong start, this quarter supports our belief that fiscal year 2025 will be a great year for our investors, employees, and customers. For a well-positioned to benefit from USUD budget priorities and are encouraged by an increase in international demand, especially for Switchblade and our jump-20 solutions. Our strong, anticipated growth led itself to shareholder value, creation that extends well beyond fiscal year 2025.

Ken Harbor: Good afternoon, Wahid Kevin and Jonah, nice quarter.

Wahid Nawabi: Hey, well, he maybe just first I wanted to ask you, obviously, maintain the full year guide with the IDIQ contract. You were able to sign last week or announced last week. How should we think about the task order timing and amounts under that in fiscal 25? And I'm guessing it's fair to assume that a lot of the IDIQ initial visibility or funding has was basically already factored into the 25 outlook. Ken, that's correct. So overall, we're very pleased with the $1 billion solar source IDIQ contract. Just this past week, we were able to book the first task order for approximately $128 million against that.

Speaker Change: Thank you.

Ken Harbor: Hey Wahid, maybe just first I wanted to ask you obviously maintain the full-year guide with the IDIC contract you were able to sign last week or else last week.

Speaker Change: How should we think about the task order timing and amounts under that in fiscal 25? And I'm guessing it's fair to assume that a lot of the IDIQ initial visibility or funding has was basically already factored into the 25 outlook.

Speaker Change: Kim, that's correct. So overall we're very pleased with the $1 billion at source source idea to contract.

Wahid Nawabi: Before trying to call over for questions, let me summarize the key takeaways from today's call. First, first quarter fiscal year 2025 revenue grew to 189.5 million dollars, sending a new first quarter record. Second, we are now starting to book key Switchblade opportunities such as our recent USRE $1 billion IDIQ contract and anticipate fund is backflow to increase in timing quarters. Third, our load and munition system segment continues to be the key growth driver for the company to our fiscal year 2025. And fourth, the fundamentals of our business have never been stronger and we anticipate that fiscal year 2025 will be another record sitting here for the company.

Speaker Change: Just this past week, we were able to book the first half quarter.

Wahid Nawabi: And there's several really key benefits to this new contract, one that the ceiling of it is fairly higher record for the company ever before. Second, there's also better payment terms in terms of mild progress payments in terms of the cashflow equation. And lastly, yes, some of this was baked into our guidance, and then there is a lot of. So this is only our first quarter. So we got three more quarters ahead of ourselves, number one, number two. There's an election coming up, and there's also a possibility of potentially a CR continuing resolution for the U.S.

Speaker Change: for approximately $128 million, I guess that.

Speaker Change: and there's several really key benefits to the Steve Contra. One that they seem to love it as fairly high at records for the company ever before. Second, there's also better payment terms in terms of mild progress payments in terms of the cash flow equation.

Speaker Change: And lastly, yes, some of this was built into our...

Speaker Change: Guidance, and then there is a lot of, so this is only our first quarter, so we got three more quarters ahead of ourselves number one and we're two, there's there's an election coming up and there's also a possibility potentially a CR, continuing the solution for the USD do need budget.

Wahid Nawabi: to do these budgets. We do expect additional contracts in task orders under this IDIQ. Although the timing of that again is questionable based on the customer's ability to be able to convert these things to contract and the level of workload that is the former customer overall.

Speaker Change: We do expect additional contracts and cash quarters under this IDIQ.

Speaker Change: On the time of that, again, is questionable based on the customers' ability to be able to convert these things to contract and their local workload that is the former customer. Overall, I think we had a fantastic quarter and we're looking forward to keeping you updated in for the rest of the year as well.

Wahid Nawabi: I think we had a fantastic quarter, and we're looking forward to keeping you updated for the rest of the year. as well.

Unknown Executive: And with that, Kevin Jr, and I will now take your questions. Thank you. As a reminder to ask a question, you will need to press star 111 on your telephone. We respectfully ask that caller's limit themselves to two questions and return to the queue to ask additional questions. Please stand by while we compile the Q&A roster.

Wahid Nawabi: Okay, thanks, Wahid. And if I could, you made a few comments regarding some uncertainty on pricing or some of the switchblade contracts that are yet to be finalized. Is it possible to maybe range or bracket some of the discussions you're having around pricing and how should we think about maybe pricing on the three in the 600 moving forward, considering some of the uncertainty around some of these more recent contracts? Well, hopefully that Kenneth's Kevin certainly will be cleared up here in the next quarter or two. And as I said, you know, when we look at with a possibility as we think overall for the year, are well, there are jobs that go as margins and the jobs that even dog margins for that business will show improvement.

Speaker Change: Okay, thanks Wahid, and if I could, you made it a few comments regarding some uncertainty on pricing.

Speaker Change: or some of the switchblade contracts that are yet to be finalized.

Speaker Change: is a possible to maybe range or bracket some of the discussions you're having around pricing and how should we think about maybe pricing on the three and the six hundred moving forward, considering some of the uncertainty around some of these more recent contracts.

Kenneth Herbert: Our first question will come from the line of Ken Herbert with RBC capital markets. Please proceed with your question. Yeah, good afternoon. Well, he Kevin and Jonah, nice quarter. Thank you. Hey, well, he maybe just first I wanted to ask you obviously maintain the full year guide with the the IDIQ contract. You were able to sign last week or announced last week. How should we think about the task order timing and amounts under that in fiscal 25?

Kevin: So hopefully the Kevin's Kevin's certainly will be cleared up here in the next

Speaker Change: Quarter or two, and as I said...

Speaker Change: And when we look at what the possibilities we think overall for the year are, well, there are a job to go as far as just, and the job to even dog margins from that business will show improvement. So we're optimistic that that will all turn out the right way for us. But we can't really speed the specific dollar amount to think like that.

Wahid Nawabi: So we're optimistic that that'll all turn out the right way for us. But we can't really speak the specific dollar amounts of things like that. Okay, thank you. Thank you.

Peter Arment: One moment for our next question. And that will come from the line of Peter Arment with Baird. Your line is open. Yeah, good afternoon, Wahid, Kevin, Jonah. Hey, Wahid, you mentioned, yeah, you mentioned you released that, you know, regarding like the replicator lasso in organic precision fires, that only initial funding was released. So do you expect other releases or tranches during this fiscal year out of those programs? We do. We still have the recall last quarter; I specifically mentioned that there's close to $300 million worth of potential orders for Switch Play alone that we're expecting.

Speaker Change: Okay, thank you.

Kenneth Herbert: And I'm guessing it's fair to assume that a lot of the IDIQ initial visibility or funding has was basically already factored into the 25 outlook. Ken, that's correct. So overall, we're very pleased with the $1 billion solar source IDIQ contract. Just this past week, we were able to book the first task order for approximately $128 million against that. And there's several really key benefits to this new contract, one that the ceiling of it is fairly higher record for the company ever before.

Speaker Change: Thank you. One moment for our next question.

Speaker Change: And that will come from the line of Peter Arment, with spared, your line is open.

Peter Arment: Good afternoon, Wahid Kevin, Jonah, Wahid, you mentioned, yeah, you mentioned you released that

Peter Arment: You know, regarding like the replicator Lazo and organic precision fires that only initial funding was released. So, do you expect other releases or trenches during this fiscal year out of those programs?

Speaker Change: We do. We still have the recall last quarter I specifically mentioned that there are those close to $300 million worth of potential orders for switched way to home that we're expecting. We just booked for example the first one which was the 128 million last quarter against the 990 million dollar the IQ.

Kenneth Herbert: Second, there's also better payment terms in terms of mild progress payments in terms of the cashflow equation. And lastly, yes, some of this was baked into our guidance and then there is a lot of so this is only our first quarter. So we got three more quarters ahead of ourselves, number one, number two. There's an election coming up and there's also a possibility of potentially a CR continuing resolution for the U.S, to do these budgets.

Wahid Nawabi: We just booked, for example, the first one, which was the $128 million cash for, again, the $990 million IDIQ. There's more coming. We definitely expect a lot more throughout the fiscal year. And we can say, we believe that this fiscal year again will be another record year for our switch play segment in our recording munitions. The time of those is again, you know, it's a very difficult thing to predict the exact timing. Although I believe that within this fiscal year, we expect multiple additional switch play orders that are in the process with our customers to be converted into a task order under the existing contract umbrella ceiling or additional new contracts.

Speaker Change: There's more coming. We definitely looked exactly a lot more throughout the fiscal year. And we believe that this fiscal year again will be another record year for our source-blade segment in our Lord of Munitions.

Kenneth Herbert: We do expect additional contracts in task orders under this IDIQ. Although the timing of that again is questionable based on the customer's ability to be able to convert these things to contract and the level of workload that is the former customer overall.

Speaker Change: The time of those is, again, you know, it's a very difficult thing to predict the exact timing.

Speaker Change: Although I believe that within this fiscal year, we've set multiple additional switch weight orders that is in the process with our customers to be converted into a hash order under the existing contract umbrella ceiling or additional new contracts.

Wahid Nawabi: They're both possibly the we expect this fiscal year. Okay.

Wahid Nawabi: I think we had a fantastic quarter and we're looking forward to keeping you updated for the rest of the year, as well.

Speaker Change: They're both possible in the respect of the school year.

Wahid Nawabi: And then you mentioned also in your preferred marks that there's a pretty healthy pipeline or other opportunities. Maybe is that on the international front, maybe could you talk to the demand signals you're getting from an FMS perspective, I guess, maybe tied to LMS in particular. Yeah, so we believe that as the year progresses, not only the demand for switch play, that orders for switch play will continue to come in from our domestic customers. We also have a growing pipeline of potential opportunities that we're actively working and engaged with on the international front. You mentioned, I mentioned specifically on the call earlier, like more Taiwan's announcement by the State Department that US approved for Taiwan.

Wahid Nawabi: Okay, thanks Wahid, and if I could, you made a few comments regarding some uncertainty on pricing or some of the switchblade contracts that are yet to be finalized. Is it possible to maybe range or bracket some of the discussions you're having around pricing and how should we think about maybe pricing on the three in the 600 moving forward, considering some of the uncertainty around some of these more recent contracts? Well, hopefully that Kenneth's Kevin certainly will be cleared up here in the next quarter or two.

Speaker Change: Okay, and then you mentioned also in your prepared marks that there's a pretty healthy pipeline or other opportunities. Maybe is that on the international front, maybe could you talk to the demand signals you're getting from an FMS perspective, I guess, maybe tied to LMS in particular.

Wahid Nawabi: And as I said, you know, when we look at with a possibility as we think overall for the year are, well, there are jobs that go as margins and the jobs that even dog margins for that business will show improvement. So we're optimistic that that'll all turn out the right way for us. But we can't really speak the specific dollar amounts of things like that. Okay, thank you. Thank you.

Speaker Change: So we believe that as the year progresses, not only the demands for switch played and orders for switch played will continue to come in from all of the domestic customers, we also have a growing pipeline of potential opportunities.

Speaker Change: There were actively working and engaged with on international front. You mentioned...

Speaker Change: So I mentioned specifically on the call earlier, you might be more.

Speaker Change: and High Wands announcement by the State Department.

Wahid Nawabi: There are several additional countries beyond and the size of Taiwan that were engaged in. Again, it is incredibly challenging to predict the exact timing of when those opportunities are going to convert to an order, but it's more a matter of when versus if we believe that these customers have a very, very strong desire. They're actively engaged with us in the State Department and with our military side as well. US military, and they've got budgets lined up to be able to eventually procure this. It's just a matter of going through the process. The process is long, and it takes time.

Speaker Change: that you have a food for Taiwan. There are several additional countries beyond and the size of Taiwan that were gazing. Again, it is incredibly challenging to predict the exact timing of when those opportunities are going to go to an order.

Wahid Nawabi: One moment for our next question. And that will come from the line of Peter Arment with Baird. Your line is open. Yeah, good afternoon, Wahid, Kevin, Jonah. Hey, Wahid, you mentioned, yeah, you mentioned you released that, you know, regarding like the replicator lasso in organic precision fires, that only initial funding was released. So do you expect other releases or tranches during this fiscal year out of those programs? We do. We still have the recall last quarter, I specifically mentioned that there's close to $300 million worth of potential orders for switch play alone that we're expecting.

Speaker Change: But it's more a matter of when versus f.

Speaker Change: We believe that these customers have a very, very strong desire. They're actively engaged with us in the State Department and with our military side as well.

Speaker Change: U.S. military, and they've got budgets wind up to be able to eventually procure this, it's just a matter of going through the process. The process is long, and it takes time. But we do expect those to come in throughout the year, and even beyond with the school years long.

Wahid Nawabi: But we do expect those to come in throughout the year and even beyond the as well.

Wahid Nawabi: Great. I'll leave it there. Nice results. Thank you.

Louis Dipalma: And one moment for our next question. And that will come from the line of Louis DiPalma with William Blair. Your line is open. Wahid, Kevin, and Jonah, good afternoon. I really can go too.

Speaker Change: Great, I'll leave it there, nice results.

Speaker Change: Thank you very much.

Speaker Change: and one moment for our next question.

Wahid Nawabi: We just booked, for example, the first one, which was the $128 million cash for again, the $990 million IDIQ. There's more coming. We definitely expect a lot more throughout the fiscal year. And we can say, we believe that this fiscal year again will be another record year for our switch play segment in our recording munitions. The time of those is again, you know, it's a very difficult thing to predict the exact timing.

Speaker Change: And that will come from the line of Louis Depama with William Blair, your line is open.

Louis Depama: Wahid, Kevin, and Jonah, get afternoon.

Wahid Nawabi: What programs are associated with the $990 million Switchblade IDIQ? Should we think of it as the successor to the L-MAMS program, or is L-MAMS going to be a separate contract that you could be awarded next year? And it is last so, and replicator also outside of the $990 million IDIQ vehicle. Great questions. Let me try to elaborate a little bit and clarify some of these. So the $990 million contract IDIQ SoulSource essentially is similar to the previous IDIQ contract that we received under the terminology called L-MAMS. So the US Army calls it now Loss or Lethal Unmanned Systems. And so this category of lethal or loitering unmanned systems is really the category that replaces the L-MAMS acronym that you used before.

Louis Depama: I literally go to...

Louis Depama: to

Louis Depama: What programs are associated with the $990 million switchblade IDIQ should we think of it as the successor?

Wahid Nawabi: Although I believe that within this fiscal year, we expect multiple additional switch play orders that is in the process with our customers to be converted into a task order under the existing contract umbrella ceiling or additional new contracts. They're both possibly the we expect this fiscal year. Okay. And then you mentioned also in your preferred marks that there's a pretty healthy pipeline or other opportunities.

Speaker Change: To the L-MAMS program, or is L-MAMS.

Speaker Change: going to be a separate contract that you could be awarded next year. And it is last so and replicator also outside of the $990 million IDIQ vehicle.

Wahid Nawabi: Maybe is that on the international front, maybe could you talk to the demand signals you're getting from an FMS perspective, I guess, maybe tied to LMS in particular. Yeah, so we believe that as the year progresses, not only the demand for switch play that orders for switch play will continue to come in from our domestic customers. We also have a growing pipeline of potential opportunities that were actively working and engaged with on international front.

Speaker Change: So, great questions, we let me try to elaborate a little bit in clarified somebody. So, the 99 or 90 million dollar contract, the IDIQ, sole source, is essentially a similar to the previous.

Speaker Change: The idea to contract that we received under the terminology called LMAO. Do you have Army calls it now a loss or lethal unmanned systems?

Speaker Change: and so this category of lethal, we're going to ring on Metsis, so this is really the category that replaces the L-man's acronym that he used before.

Wahid Nawabi: You mentioned, I mentioned specifically on the call earlier like more Taiwan's announcement by the State Department that US approved for Taiwan. There are several additional countries beyond and the size of Taiwan that were engaged in. Again, it is incredibly challenging to predict the exact timing of when those opportunities are going to convert to an order, but it's more a matter of when versus if we believe that these customers have a very, very strong desire.

Wahid Nawabi: The umbrella contract is intended to be such that multiple different opportunities and needs of our customers can be contracted and procured under this contract. So examples of those are the US Army's all-need for loaded munitions, both Switchblade 300 and 600. Needs for the US eight packages to Ukraine could be also possible through this as the US AI is called the United Ukraine Security Assistance Initiatives. So those potential options need that also if Ukraine requests them in the US wants to give them can be procured under this. The replicator nation is another one for the US Army. Specifically, the replicator nation has needs that could also be procured under this contract through the US Army.

Speaker Change: I'm well contracted and tend to be such that multiple different opportunities and needs of our customers.

Speaker Change: can be contracted and procured under this contract.

Speaker Change: So, examples of those are the U.S. Army's only for low-range munitions, both which weigh 300-600.

Speaker Change: [inaudible] Ukraine's security assistance initiatives.

Wahid Nawabi: They're actively engaged with us in the State Department and with our military side as well. US military and they've got budgets lined up to be able to eventually procure this. It's just a matter of going through the process. The process is long and it takes time. But we do expect those to come in throughout the year and even beyond the as well. Great. I'll leave it there. Nice results. Thank you.

Speaker Change: So those potential option is that also if you're praying to request them in the U.S. once they give them, can you put your gun in this? The Replicator Nation is another one. For the U.S. Army, specifically, the Replicator Nation has needs could also be put your gun under this contract through the U.S. Army.

Wahid Nawabi: However, if US Marine Corps and US Air Force and other services have needs, they can also place orders with us under additional suffered contracts outside of this IDIQ. So what the IDIQ gives us is a vehicle for the US Army. You need to buy a lot of stuff, but it doesn't limit us just to that. We have multiple other opportunities besides that, and having that, we can secure orders going forward for the loaded munitions. And our portfolios are the demand is grown and the request and opportunities that will engage on for our loaded munitions actually keeps expanding.

Speaker Change: However, if you are Marine Corps and you as Air Force and other services have me, they can also...

Speaker Change: Placed orders with us under additional suffered contracts outside of this idea.

Speaker Change: So, for the idea, you get a vehicle.

Speaker Change: For the U.S. Army, you need to buy a lot of stuff, but it doesn't limit it just to that. We have multiple other opportunities besides that, and having is the week secure or is going forward.

Speaker Change: For the lawyer munitions, and our portfolios grown are the demand as grown, and the request and opportunities that were engaged in the law of lawyer munitions actually keeps expanding. It's a very, very robust pipeline that continues to expand.

Wahid Nawabi: What programs are associated with the $990 million switchblade IDIQ? Should we think of it as the successor to the L-MAMS program, or is L-MAMS going to be a separate contract that you could be awarded next year? And it is last so, and replicator also outside of the $990 million IDIQ vehicle. Great questions. Let me try to elaborate a little bit and clarify some of these. So the $990 million contract IDIQ SoulSource essentially is similar to the previous IDIQ contract that we received under the terminology called L-MAMS.

Wahid Nawabi: It's a very, very robust pipeline that continues to expand, besides the fact that we continue to book actually really sizable orders so far and the first couple of orders so far.

Speaker Change: Besides the fact that we continue to book actually really sizable orders so far in the first couple of orders so far.

Kevin Mcdonnell: Great, well, he that is that is helpful, and Kevin, just to clarify, did you say that the margins for the new switchblade contract are higher than the traditional margins? So you, well, I speak well, you could kind of say that, but basically I was speaking to you looking at last year's margin based upon the volumes we had and this year's margins. These are just gross margins or EBITDA margins, and, you know, because of additional volume, due contract, et cetera, we expect improvement in both the adjusted gross margins and the EBITDA margins. And Louis, as our volume grows and as this business continues to grow at a very high pace, we do think that the overall profitability profile of our voting munitions should improve and will improve over time.

Speaker Change: Great Wahid, that is helpful. Kevin, just to clarify, did you say that the margins for the new switchblade contract are higher than the traditional?

Speaker Change: Margins, so you were able to successfully negotiate better, I think, terms.

Wahid Nawabi: So the US Army calls it now loss or lethal unmanned systems. And so this category of lethal or loitering unmanned systems is really the category that replaces the L-MAMS acronym that you used before. The umbrella contract is intended to be such that multiple different opportunities and needs of our customers can be contracted and procured under this contract. So examples of those are the US Army's all-need for loaded munitions, both switchblade 300 and 600.

Speaker Change: Well, I speak throughout, you could kind of say that, but based on that, I would speak if you're looking at last year's margin based upon the volumes we had.

Speaker Change: and this year's margins, these are just to grow smarts and so on. Because of the digital volume, due contract, etc., we expect improvement in both the objectives, margins and the EBITDA margins.

Speaker Change: and Louis has our volume growth and as this business continue to grow at a very high pace, we do think that the overall profitability profile of our body management is to try to improve and will improve over time.

Kevin Mcdonnell: But, you know, on a quarter of basis, you'll see fluctuations primarily because of the lumpiness of the business and the size of these contracts that are coming in. In addition to that, I also mentioned on the call of my remarks that the payment terms is much more favorable because our customers prefer for us to deliver quickly and they have very urgent needs, and the contracting process takes time. We have to a lot of times plan things in advance. And to do so, we wanted to make sure that the government recognizes that and actually pays us based on progress payments rather than just revenue and payments at the end of the whole process, when they receive the product.

Speaker Change: But you know, on a quarter of basis, you'll see fluctuations primarily because of the lumpiness of the business and decide to be contracts that are coming in.

Speaker Change: and additions to that, I also mentioned on the call on my remarks that the payment terms is much more favorable because our customers, we can do it.

Wahid Nawabi: Needs for the US eight packages to Ukraine could be also possible through this as the US AI is called the United Ukraine Security Assistance Initiatives. So those potential options need that also if Ukraine requests them in the US wants to give them can be procured under this. The replicator nation is another one for the US Army specifically the replicator nation has needs could also be procured under this contract through the US Army.

Speaker Change: Prefer for us to deliver quickly and they have very urgent need.

Speaker Change: and the contracting process takes time. We have to a lot of times plant things in advance. And to do so, we want to make sure that the government recognizes that and actually pay the based on progress payments rather than just revenue and payments at the end of their process.

Wahid Nawabi: However if US Marine Corps and US Air Force and other services have needs they can also place orders with us under additional suffered contracts outside of this IDIQ. So what the IDIQ gives us is a vehicle for the US Army you need to buy a lot of stuff but it doesn't limit us just to that. We have multiple other opportunities besides that and having that we can secure orders going forward for the loaded munitions.

Kevin Mcdonnell: That's right. So, as we recognize revenue, we're going to be able to actually invoice our customers based on progress payments, and that's a very favorable term for us in this $990 million contract. I believe that our customers recognize the value that we deliver to them for the speedy delivery that we are doing and the ability process to turn around and ship things to them quickly. And that, obviously, we recognize that and allow us to get progress payments on. Great. So, those progress payments, those should be positive for the working capital dynamic, is that what you're saying?

Speaker Change: when they received the product, which are more at stake with the revenue recognition. That's right. So, as you recognize Renew, we're going to be able to actually enforce our customers based on progress payments, and that's a very favorable term for us in this 990 million dollar contract. I believe that our customers recognize the value that we deliver to them.

Speaker Change: for the speed, delivery that we were doing, and the speed of the ability of the people to turn around and shifting to them quickly, and that obviously, they've recognized that and allowed us to get focusing on the solid.

Wahid Nawabi: And our portfolios are the demand is grown and the request and opportunities that will engage on for our loaded munitions actually keeps expanding. It's a very very robust pipeline that continues to expand besides the fact that we continue to book actually really sizable orders so far and the first couple of orders so far. Great well he that is that is helpful and Kevin just to clarify did you say that the margins for the new switchblade contract are higher than the traditional margins so you Well, I speak well, you could kind of say that, but basically I was speaking to you looking at last year's margin based upon the volumes we had and this year's margins, these are just a gross margins or EBITDA margins and, you know, because of additional volume, due contract, et cetera, we expect improvement in both the adjusted gross margins and the EBITDA margins.

Speaker Change: Great, so those progress payments, those should be positive for the working capital dynamic, is that what you're saying?

Louis Dipalma: Exactly. Very much so. I mean, it's not all going to happen overnight, but over the next several quarters, we can start seeing the reduction, even with increased volumes in the unbuilt receivables. Awesome. Thanks, Kevin, while he didn't join us. Thank you, Luis. Thanks, Luis. Thank you.

Speaker Change: is very much so. Again, it's on and off and I have put over the, but over the next several quarters, we can start seeing that reduction, even with increased volumes in the undilvered sea of pools.

Speaker Change: Awesome, thanks Kevin Wahid and Jonah.

Pete Skibitski: One moment for our next question. And that will come from the line of Pete Skavitsky with LMB Global. Your line is open. Hey, good afternoon, guys. A couple of program questions just to ask further on the whole LUS versus LASO area. Is it correct to understand it will the less contract basically be largely your legacy switch play 300 and 600 variants as opposed to LASO. Well, maybe the army has kind of updated requirements coming out of Ukraine. And so you'll have newer Switch played variants delivered under LASO. Is that the right way to think about it?

Speaker Change #100: Thank you, what we say for it. Thank you, one moment for our next question.

Speaker Change #101: And that will come from the line of Pete Skivicki with LMBig Global, your line is open.

Pete Skivicki: Hey, good afternoon guys

Pete Skivicki: Combo Program questions, just to ask further on the whole LUS versus LASO.

Speaker Change #103: Area is it!

Pete Skivicki: Is it correct to understand, will the lust contract basically be largely your legacy, which play it 300 and 600 variants?

Wahid Nawabi: And Louis, as our volume grows and as this business continues to grow at a very high pace, we do think that the overall profitability profile of our voting munitions should improve and will improve over time. But, you know, on a quarter of basis, you'll see fluctuations primarily because of the lumpiness of the business and the size of these contracts that are coming in. In addition to that, I also mentioned on the call of my remarks that the payment terms is much more favorable because our customers prefer for us to deliver quickly and they have very urgent needs and the contracting process takes time, we have to a lot of times plan things in advance.

Speaker Change #104: as opposed to last, so maybe the Army has kind of, you know, updated requirements coming out of Ukraine, and so you'll have newer Twitch played variants delivered under last, so is that the right way to think about it, or would you, would you color that a little bit different?

Wahid Nawabi: Or would you would you call it that a little bit different? So slight tweak to that. What I would say is that LUS is what the terminology that U.S. Army uses to fulfill their immediate urgent needs. Today, if they have needs to have some looting munitions and have a quarter of a force structure, LUS is the terminology they're using. Long term, they have actually publicly announced a code on record type specific requirement called LASO, which stands for Lethal, Aerial, Strike, and Stalking and Strike Ordinance. I believe that's what it stands for, LASO. And so LASO is their long term intention of acquiring looting munitions, both switch play 300 and 600 type, or maybe additional variants of it that goes beyond just the next year or two.

Speaker Change #105: So, like Twitter that what I would say is that a lot is what the terminology that U.S. Army uses to fulfill their immediate urgent needs. Today, if they have needs to have some looting munitions and have much further forescructure, lots is the terminology they're using.

Speaker Change #106: Long-term, they have actually publicly announced a prognor lucker type.

Speaker Change #106: Specific requirement called Lassel.

Wahid Nawabi: And to do so, we wanted to make sure that the government recognizes that and actually pays us based on progress payments rather than just revenue and payments at the end of the whole process, when they receive the product. That's right. So, as we recognize revenue, we're going to be able to actually invoice our customers based on progress payments, and that's a very favorable term for us in this $990 million contract. I believe that our customers recognize the value that we deliver to them for the speedy delivery that we are doing and the ability process to turn around and ship things to them quickly.

Speaker Change #106: which stands for lethal area.

Speaker Change #106: Swipe and...

Speaker Change #107: is stalking in strike ordinance. I believe that's what it stands for. And so, the last so is there long term?

Speaker Change #107: Intention of acquiring the Lord in Munitions both which lay 300 and 600 types, or maybe even additional variants of it.

Wahid Nawabi: It goes up to a 10-plus year cycle. And so they have already decided to procure air environment switch plays for the initial purchases under the terminology of LUS. Long-term, it'll be called LASO, according to the US Army today, and that's a multi-year program record for multiple variants of Switchblade that goes on for a decade plus over time. So the good news is that we're in a great position. A, US Army recognizes the need and the requirement; B, they've already selected that for the initial purchases; and C, they have put out a blanket purchase order in place for us, and an IDIQ ceiling was close to a billion dollars, so it allows us to procure a lot more Switchblade over the next several years.

Speaker Change #107: that goes beyond just the next year or two. It goes up to a ten plus year cycle. And so, they have already decided to procure air environment switch-lays for the initial purchases under the terminology of lust.

Wahid Nawabi: And that, obviously, we recognize that and allow us to get progress payments on. Great. So, those progress payments, those should be positive for the working capital dynamic, is that what you're saying? Exactly. Very much so. I mean, it's not all going to happen overnight, but over the next several quarters, we can start seeing the reduction, even with increased volumes in the unbuilt receivables. Awesome. Thanks, Kevin, while he didn't join us. Thank you, Luis. Thanks, Luis.

Wahid Nawabi: Thank you.

Speaker Change #108: Long term it'll be called LASO, according to the US Army today, and that's a multi-year total record for multiple variants of switch late that goes on for a decade plus over time.

Speaker Change #109: So, the witnesses are one of great positions, A, U.S. Army recognizes the need and the requirement, B, they've already selected that for the initial purchases.

Speaker Change #110: and see they have put a blanket percester order in place for us at an IDIQ ceiling with close to a billion dollars so it allows them to procure a lot more switch blades over the next several years.

Wahid Nawabi: One moment for our next question. And that will come from the line of Pete Skavitsky with LMB Global. Your line is open. Hey, good afternoon, guys. A couple of program questions just to ask further on the whole LUS versus LASO area. Is it correct to understand it will the less contract basically be largely your legacy switch play 300 and 600 variants as opposed to LASO. Well, maybe the army has kind of updated requirements coming out of Ukraine.

Wahid Nawabi: And so all of that really is a very positive indicator to the strength of our relationship with the US Army. There's satisfaction with us in our product performance in the battlefield.

Speaker Change #110: And so all of that really is very positive indicator to the strength of our relationship with US Army. There's satisfaction with us in our product's performance in the battlefields.

Pete Skibitski: Okay, I appreciate it. Second question for me is, you know, coming out of Ukraine, you hear this term at PV, a first person view, I think, for some of the small UAS, and it seems like a newer thing. I'm just trying to find out, do your current small UAS have that capability, and, you know, I said DAU has this blue UAS refresh challenge, and they talk about first-person view, but they also talk about bigger UAVs, one, two, three, so I just wonder if you can maybe give us some color there in terms of what you guys possess with FPV, is that kind of a new requirement, or, and if you guys expect to play, you know, there in addition to, you know, some of the other DAU opportunities.

Wahid Nawabi: And so you'll have newer switch played variants delivered under LASO. Is that the right way to think about it? Or would you would you call it that a little bit different? So slight tweak to that. What I would say is that LUS is what the terminology that U.S. Army uses to fulfill their immediate urgent needs. Today, if they have needs to have some looting munitions and have a quarter of a force structure, LUS is the terminology they're using.

Speaker Change #111: Okay, I appreciate that second question for me is, um...

Speaker Change #112: You know, coming out of Ukraine, you hear this term at P.B. First person B, I think, for some of the small UAS.

Speaker Change #113: and I think it seems like a newer thing. I'm just trying to find out, do your current small UAS have that capability and, you know, I said, D.A.U. has this blue UAS repressed challenge.

Speaker Change #113: and they talk about first-person view, but they also talk about bigger UAVs, 1, 2, 3, so this wonder if you can maybe give us some color there in terms of what you guys possess with that FBB, is that kind of a new requirement or if you guys expect to play there in addition to some of the other DIY opportunities.

Wahid Nawabi: Sure, Pete. So, FPV or first-person view drone, that is either armed or unarmed, is essentially a category that has existed for a while. It is a very different set of capability and different sets of missions than a loyalty mission. What switchway can do is very, very different than what an FPV drone can do, and Switchblade is considered a much more sophisticated, much more capable system in terms of its load and capability, et cetera. An FPV drone, whether it's armed or not, most of the time it's armed, and you've grown nowadays, essentially, is a mandible process of taking a quadcopter or multi-loader, attacking some kind of a munition or a warheader that is supposed to do it, and then essentially flying it manually to a target.

Speaker Change #114: So, STD, your first person view drunken that is either armed or unarmed is essentially a category that is existed for a while. It is a very different set of capability and different sets of missions that are ordered in the mission. What's what I can do is...

Wahid Nawabi: Long term, they have actually publicly announced a code on record type specific requirement called LASO, which stands for lethal, aerial, strike, and stalking and strike ordinance. I believe that's what it stands for LASO. And so LASO is their long term intention of acquiring looting munitions both switch play 300 and 600 type or maybe additional variants of it that goes beyond just the next year or two. It goes up to a 10 plus year cycle.

Speaker Change #114: Very, very different than Wahid Nawabi, which won't do

Speaker Change #114: and switchblade is considered a much more sophisticated, much more capable system in terms of its motor capability, et cetera. And after you meet wrong, whether it's armed or not, most of the time it's armed with Ukraine nowadays, it's actually is a manual process of taking a cross-copter or multi-loader, attacking some kind of a munition or a warhead or explosive suit, and then it's essentially flying it manually to a target.

Wahid Nawabi: And there are lots and lots of challenges with that, although it is a capability that will most likely remain for the long run, but it's not the type of mission that Switchblade is designed for or it's used. Switchblade addresses a whole bunch of other, more sophisticated and complicated missions that an FPV drone or armed drone can't really address at all. And so, and there's lots of things that I can do in the detail in terms of its range, its endurance, loyalty capability, and precision, but the most important thing is mission success. The effectiveness of loitering munitions such as Switchblade is much, much higher than what you see on FPV drones.

Speaker Change #114: and there are lots and lots of challenges with that. Although in today's capability that will most likely remain for the long run, but it's not the type of mission that switch blade is designed for or it's used. Switch blade addresses a whole bunch of other more sophisticated and complicated missions that an FPV drone or arm drone can't really address it all.

Wahid Nawabi: And so they have already decided to procure air environment switch plays for the initial purchases under the terminology of LUS. Long-term, it'll be called LASO, according to the US Army today, and that's a multi-year program record for multiple variants of switchblade that goes on for a decade plus over time. So the good news is that we're in a great position. A, US Army recognizes the need and the requirement, B, they've already selected that for the initial purchases, and C, they have put out blanket purchase order in place for us, and an IDIQ ceiling was close to a billion dollars, so it allows us to procure a lot more switchblade over the next several years. And so all of that really is very positive indicator to the strength of our relationship with the US Army. There's satisfaction with us in our product performance in the battlefield.

Speaker Change #114: And so, and there's lots of things that I can do to detail in terms of its range, endurance, motoric capability, and precision. And for the most important thing is mission success. The effectiveness of motoric missions such as such a such a play is much much higher than what you see on FABG loans.

Wahid Nawabi: And so, A, that is the category, we intentionally decided not to plane that initially, although we're keeping an eye on it. But the missions that switchblade addresses are much larger, and the market for that is incredibly robust long-term. Okay, okay. Yeah, sounds like FPV or, you know, cost type, modified cost type almost. I see what you're saying. Okay, thanks very much, guys. That's right. Yeah, taking an armed drone and essentially strapping a bomb or an explosive to it, return them into an FPV drone that is really a low level of complexity and mission capable. Got it.

Speaker Change #114: and so, hey, that is the category. We intentionally decided not to claim that initially, although we're keeping an eye on it, but the mission that's pushed later to address as much larger and the market for that incredibly robust long term.

Speaker Change #115: Okay, okay, yeah sounds like a PV or you know

Wahid Nawabi: Okay, I appreciate it. Second question for me is, you know, coming out of Ukraine, you hear this term at PV, a first person view, I think, for some of the small UAS, and it seems like a newer thing. I'm just trying to find out, do your current small UAS have that capability, and, you know, I said DAU has this blue UAS refresh challenge, and they talk about first-person view, but they also talk about bigger UAVs, one, two, three, so I just wonder if you can maybe give us some color there in terms of what you guys possess with FPV, is that kind of a new requirement, or, and if you guys expect to play, you know, there in addition to, you know, some of the other DAU opportunities.

Karth: Karth, Marathain, Karth, Clay Bommel, I see what you're saying. Okay, thanks very much guys.

Pete Skibitski: Thanks, guys. Thank you.

Karth: God it, thanks guys.

Andre Madrid: One moment for our next question. And that will come from the line of Andre Madrid with BTIG. Your line is open. Hey guys, thanks for taking my question. Kind of wanted to go back and talk about the FMS pipeline in particular for Switchblade. I think on the last earnings call, we did you mention that roughly half a different country is right here. Right now, on various stages of acquisition, has this figure grown or is it roughly still around the same, and how could we expect it to trend moving forward. Again, I know the timing is uncertain, but any color there would be appreciated.

Karth: Thank you, me.

Karth: And that will come from the line of Andre Madrid with BTAG, your line is open.

Andre Madrid: Hey guys, thanks for taking my question.

Wahid Nawabi: Sure, Pete. So, FPV or first-person view drone, that is either armed or unarmed, is essentially a category that has existed for a while. It is a very different set of capability and different sets of missions than a loyalty mission. What switchway can do is very, very different than what an FPV drone can do, and switchblade is considered a much more sophisticated, much more capable system in terms of its load and capability, et cetera, an FPV drone, whether it's armed or not, most of the time it's armed and you've grown nowadays, essentially is a mandible process of taking a quadcopter or multi-loader, attacking some kind of a munition or a warheader that is supposed to do it, and then essentially flying it manually to a target.

Andre Madrid: kind of wanted to go back and talk about the FMS pipeline in particular for Switchblade. I think on the last earnings call we had you mentioned that.

Wahid Nawabi: And there are lots and lots of challenges with that, although it is a capability that will most likely remain for the long run, but it's not the type of mission that switchblade is designed for or it's used. Switchblade addresses a whole bunch of other more sophisticated and complicated missions that an FPV drone or armed drone can't really address at all. And so, and there's lots of things that I can do in the detail in terms of its range, its endurance, loyalty capability, and precision, and but the most important thing is mission success.

Speaker Change #118: Roughly, half a dealing country is right now, on various stages of acquisition. Has this figure grown or is it roughly still around the same? And how could we expect it to trend moving forward? Again, I know the timing is uncertain, but any color there would be appreciated.

Wahid Nawabi: Andre, so it is very true and that we are engaged with a half a dozen plus different countries. The list of countries that we've been approved to engage with is close to 50 countries, actually over 50 countries internationally. So that's a very, very strong positive start to begin with because, as the US government allows us and gives us approval to engage with them, it gives those countries and those allies a huge confidence that if they were to engage in that energy in this process, they will get a positive outcome, which is they can acquire Switchblade eventually.

Speaker Change #119: So it is very true and that we are engaged with the half a dozen plus.

Speaker Change #120: Deppercut cheese.

Speaker Change #121: The list of countries that we've been approved to engage with is close to 50 countries, actually over 50 countries internationally. So that's a very, very strong positive start to begin with.

Speaker Change #121: Because as the US government allows us and gives us a tool to engage with them and gives those countries and those allies a huge confidence that if they want to engage in that energy in this process, they will get a positive outcome which is they can acquire what's going to happen.

Wahid Nawabi: Number two, the list of active engaged customers that actually have a program or requirement and are in the process of getting authorization and approval is about a half a dozen plus, and the number of keeps growing. It is not shrinking. It's actually growing, and the pipeline keeps progressing forward in a very positive manner, meaning that there's a very long process by which we engage these customers to get it from when they ask they want to switchblade until they actually receive it. And that's a two plus year, three year process, and in many cases, we're engaged in different levels of that with each customer, each ally, and all of those are actually in general moving probably in the right direction.

Speaker Change #122: Number two, the list of active engaged customers that actually have a program or requirement and are in the process of getting authorization and approval is about a half a dozen plus. In a number of keeps growing.

Speaker Change #122: It is not shrinking it's actually growing and the pipeline

Speaker Change #122: keeps progressing forward in the very positive manner, meaning that there's a very long process by which we engage with these customers together from when they ask they want to switch way until they actually receive switch way. And that's a two plus year three year process and many cases.

Wahid Nawabi: The effectiveness of loitering munitions such as switchblade is much, much higher than what you see on FPV drones. And so, A, that is the category, we intentionally decided not to plane that initially, although we're keeping an eye on it, but the missions that switchblade addresses much larger and the market for that is incredibly robust, long-term. Okay, okay. Yeah, sounds like FPV or, you know, cost type, modified cost type almost, I see what you're saying.

Speaker Change #123: and word-games and different levels of that with each customer each ally and all of those are actually in general a moving totally within life direction.

Wahid Nawabi: What's really difficult to do is to predict the exact timing of when these contracts actually become award. The most recent one was the high one approval from the US government that was announced. We have other countries such as Australia who publicly announced, France has publicly announced, and a few others like Lithuania's publicly announced as well. The process for example, Lithuania was roughly about 18 months just to give an idea. So, in general, we've got a growing number of countries be moving in the right direction. See, we're very optimistic that over the next year or two, many of those that not all of those will convert to actual contracts and awards.

Speaker Change #124: What's really difficult to do is to predict the exact timing of when these contracts actually become a war. The most recent one was the high one approval from the US government that was announced.

Wahid Nawabi: Okay, thanks very much, guys. That's right. Yeah, taking an armed drone and essentially strapping a bomb or an explosive to it, return them into an FPV drone that is really a low level of complexity and mission capable. Got it. Thanks guys.

Unknown Executive: Thank you.

Speaker Change #124: We have other countries such as Australia who publicly announced

Speaker Change #124: France has publicly announced and a few others like his wayness publicly announced, as well. The process, for example, was when he was roughly about 18 months, just to get idea. So in general, A, we've got a growing number of countries.

Speaker Change #124: Be there moving in the light direction, see, or very optimistic that over the next year or two, many of those that's not all of those will convert to actual contracts and awards.

Andre Madrid: One moment for our next question. And that will come from the line of Andre Madrid with BTIG. Your line is open. Hey guys, thanks for taking my question. Kind of wanted to go back and talk about the FMS pipeline in particular for switchblade. I think on the last earnings call, we did you mention that roughly half a different country is right here. Right now on various stages of acquisition, has this figure grown or is it roughly still around the same and how could we expect it to trend moving forward.

Wahid Nawabi: And that's why I say that this momentum that we have in our voting munitions category will continue well beyond fiscal year 2025. We believe that we have a franchise here that is going to be very large over the next several years because we've just basically created a whole new category in the entire operations or doctrine of military warfare. And four structures are going to be all potentially equipped with voting munitions if you look forward to the next decade or so. That's a very, very large, robust, ship-submic ship in the marketplace for us. Very valuable. Definitely, definitely not.

Speaker Change #124: And that's why I think that this momentum that we have at our glory in the nation

Speaker Change #124: Category will continue well beyond fiscal year 2025. We believe that we have a franchise here that is going to be very large over the next several years, because this just basically created a whole new category.

Speaker Change #124: and the entire operations or doctrine of military warfare.

Speaker Change #124: and four structures are going to be all potentially equipped with boarding donations if you look forward to the next decade or so. That's a very, very large robust.

Andre Madrid: Again, I know the timing is uncertain, but any color there would be appreciated. Andre, so it is very true and that we are engaged with a half a dozen plus different countries. The list of countries that we've been approved to engage with is close to 50 countries actually over 50 countries internationally. So that's a very, very strong positive start to begin with because as the US government allows us and gives us approval to engage with them, it gives those countries and those allies a huge confidence that if they were to engage in that energy in this process, they will get a positive outcome, which is they can acquire switchblade eventually.

Speaker Change #125: Shift 70 Shift in the market by flash, very beautiful.

Wahid Nawabi: I appreciate the color, though. Thank you. And I guess following up on that even further, I know that this IDIQ was something that you had highlighted previously multiple times over. And it said that not only would this help facilitate international sales to Ukraine, but also possibly to other foreign countries. Could this IDIQ vehicle that was provided by the US Army? Could this help? Could this be used for that? And is the expectation to still do so? Absolutely, yes, Andre. I'm glad you brought that up because one of the reasons the US Army placed this contract, not the only reason, but one of many reasons, was to also allow in a comedy for any international SMS sales of switch late to be able to be placed under this contract under our acquisition purchase.

Speaker Change #126: Definitely, no, I appreciate the color to thank you and I guess following up on that even further I know I know that this IDI key was something that you had highlighted previously multiple times over and it said that not only would this help facilitate

Speaker Change #127: International sales to Ukraine, but also possibly to other foreign countries, because this IDIQ vehicle that was provided by the U.S. Army could this help?

Speaker Change #127: To this be used for that and is the expectation to still do so.

Andre Madrid: Number two, the list of active engaged customers that actually have a program or requirement and are in the process of getting authorization and approval is about a half a dozen plus in a number of keeps growing. It is not shrinking. It's actually growing and the pipeline keeps progressing forward in a very positive manner, meaning that there's a very long process by which we engage these customers to get it from when they ask they want to switchblade until they actually receive it.

Speaker Change #127: Actually, yes, Andre, I'm glad you brought that up because one of the reasons for the U.S. Army twice this contract, not the only reason but one of many reasons.

Speaker Change #128: was also allowed in a comedy for any international as a messaels of swiftly.

Andre Madrid: And that's a two plus year, three year process and many cases and we're engaged in different levels of that with each customer, each ally and all of those are actually in general moving probably in the right direction. What's really difficult to do is to predict the exact timing of when these contracts actually become award. The most recent one was the high one approval from the US government that was announced. We have other countries such as Australia who publicly announced, France has publicly announced and a few others like Lithuania's publicly announced as well.

Wahid Nawabi: Whether it's a foreign military funded program or a foreign military sales program, FMF or FMS, they all could be procured under this umbrella contract. And historically, we performed really well. And in general, if you look at the history of AeroVironment with the US Army and these types of sole source IG contracts, we've always achieved the limit, the ceiling limit, or even the customers increase the limit. Once you have a contract like this, it allows the customer in a much easier way to either increase the timeframe or increase the ceiling as we go forward. So it's very exciting, and the short answer is yes.

Speaker Change #129: to be able to be placed under this contract under our acquisition purchase. Whether it's a foreign military funder program or a foreign military sales program at FMS, they all could be procured under this concept umbrella contract.

Speaker Change #129: and historically we performed really well and in general we look at the history of our environment, with the U.S. Army, and these types of soldiers like you contract, we've always...

Speaker Change #129: Achieve the limit, the ceiling limit, or even in customers increase the limit. Once you have a contract like this, it allows the customers in a much easier way to either increase the time frame or increase the ceiling as we go forward. So, it's very exciting and they have to short answer this yes.

Unknown Executive: It's definitely going to accommodate international customers, and it could actually help improve the speed of that process as well. As always, thank you so much for the detail. Thank you. As a reminder, if you would like to ask a question, please press Star 11. One moment for our next question.

Andre Madrid: The process for example, Lithuania was roughly about 18 months just to give an idea. So in general, we've got a growing number of countries be moving in the right direction. See, we're very optimistic that over the next year or two, many of those that not all of those will convert to actual contract and awards. And that's why I say that this momentum that we have in our voting munitions category will continue well beyond fiscal year 2025.

Speaker Change #129: is definitely gonna accommodate international customers and it could actually help improve the speed of that process as well.

Speaker Change #130: We need, as always thank you so much for the detail.

Speaker Change #131: Thank you, as a reminder, if you would like to ask a question, please press star 11. One moment for our next question.

Peter Arment: And we do have a follow-up question from Peter Arment with Baird. Your line is open. Yeah, thanks.

Andre Madrid: We believe that we have a franchise here that is going to be very large over the next several years because we've just basically created a whole new category in the entire operations or doctrine of military warfare. And four structures are going to be all potentially equipped with voting munitions if you look forward to the next decade or so. That's a very, very large, robust, ship-submic ship in the marketplace for us. Very valuable.

Speaker Change #132: And we do have a follow-up question from Teeter Armant with Bear, your line is open.

Wahid Nawabi: Why he, you know, given that all these different, you know, partners, you know, can basically kind of use or leverage the IDIQ contract. It sounds like you're going to be bumping up against potentially your capacity, you know, sooner than kind of expect, or at least you're going to be close. So when do you expect to make a move, and how much of an additional capacity do you need to put in place to support that? That's my first question. So great question, Peter. I'm glad you asked because I made a specific comment on my remarks about the fact that currently in fiscal 2025, we have the capacity and the ability to deliver close to a half a billion dollar with a switch ways on product revenue, this fiscal year itself.

Teeter Armant: Yeah, thanks. Wahid, you know, given that all these different...

Teeter Armant: You know, partners, you know, can basically kind of use or leverage the IDIQ contract. It sounds like you're going to be bumping up against potentially your capacity, you know, sooner than kind of.

Speaker Change #134: Expect or at least you're going to be closed. So when do you expect to make a move and how much seven additional capacity do you need to put in place?

Andre Madrid: Definitely, definitely not. I appreciate the color, though. Thank you. And I guess following up on that even further, I know I know that this IDIQ was something that you had highlighted previously multiple times over. And it said that not only would this help facilitate international sales to Ukraine but also possibly to other foreign countries. Could this IDIQ vehicle that was provided by the US Army? Could this help? Could this be used for that?

Speaker Change #135: to support that. That's my first question.

Speaker Change #135: So, great question, Peter, I'm glad you asked me for like made a specific comment on my remarks about the fact that currently in fiscal 2025, we have the capacity and ability to deliver close to a half a billion dollar worth of switchways on product revenue, this fiscal year itself.

Wahid Nawabi: But we're not sitting still for that alone. We've been planning on this for a while, and we've been always in general ahead of the demand curve or cycle. And we're, and as I mentioned on the call, we're already actively engaged in multiple different other states and selecting the next slide to build our next large factories for switch ways. And I want to also add that we're still and the current factories that we have. One of the fundamental features of our production facilities is that they're very flexible. Meaning we can easily modify and accommodate scaling up or tweaking some of the production capacity of our non-native way of factories to loading conditions.

Speaker Change #135: But we're not sitting still for that at all. We've been planning on this for a while and we've been always in general ahead of the demand curve or cycle.

Andre Madrid: And is the expectation to still do so? Absolutely, yes, Andre. I'm glad you brought that up because one of the reasons of the US Army placed this contract, not the only reason, but one of many reasons, was to also allow in a comedy for any international SMS sales of switch late to be able to be placed under this contract under our acquisition purchase. Whether it's a foreign military funded program or a foreign military sales program, FMF or FMS, they all could be procured under this umbrella contract.

Speaker Change #135: and we're, and as I mentioned on the call, we're already actively engaged in multiple different other states.

Speaker Change #135: and selecting the next slide to build our next large factory persuasion.

Speaker Change #136: And I want to also add that word of soul and the current fact we thought we have.

Speaker Change #136: One of the fundamental features of the work of the production facility, Lord, and they are very flexible. Meaning we can easily modify and accommodate.

Speaker Change #136: Scaling up or tweaking some of the production capacity of our non-greetly U.S. factories to lower the emissions.

Andre Madrid: And historically, we performed really well. And in general, if you look at the history of AeroVironment with the US Army and these types of sole source IG contracts, we've always achieved the limit, the ceiling limit or even the customers increase the limit. Once you have a contract like this, it allows the customer in a much easier way to either increase the timeframe or increase the ceiling as we go forward. So it's very exciting and the short answer is yes. It's definitely going to accommodate international customers and it could actually help improve the speed of that process as well. As always, thank you so much for the detail. Thank you.

Wahid Nawabi: So, in general, we've got a lot of flexibility as part of our planning process when we design these things and we design our factories. In fact, it's one of our biggest, biggest, what I call competitive advantages in the market because we're the only ones we are aware of who can deliver a half a billion dollar worth of organizations at a USD with these reliability and performance levels, with a battle proven product life. And, being we're not sitting still, we're already looking at additional capacity in multiple ways. And see, I would say that overall the capital requirements for those extensions are not going to be monumental.

Speaker Change #136: So in general, we've got a lot of flexibility as part of our planning process when we design these things and we design our factories. In fact, it's one of our biggest biggest...

Speaker Change #137: What I call competitive managers in the market because what the only ones we are aware of who can deliver half a billion dollars in order to finish them. I do a few of these reliability and performance levels with a battle tool and product line.

Speaker Change #137: and being we're not getting so we're already looking at additional capacity in multiple ways.

Speaker Change #137: and see I would say that, oh, the capital requirements for those expansions are not going to be money now, they're going to be very affordable, we do this a very much within our existing cafes.

Kevin Mcdonnell: They're going to be very affordable. We do this and very much within our existing capics sort of percentage spends per year on percentage revenue, which is roughly around 5% or so on an annual basis.

Unknown Executive: As a reminder, if you would like to ask a question, please press star 11.

Speaker Change #137: Now, uh...

Peter Arment: One moment for our next question. And we do have a follow-up question from Peter Arment with Baird. Your line is open. Yeah, thanks. Why he, you know, given that all these different, you know, partners, you know, can basically kind of use or leverage the IDIQ contract. It sounds like you're going to be bumping up against potentially your capacity, you know, sooner than kind of expect or at least you're going to be close. So when do you expect to make a move and how much of an additional capacity do you need to put in place to support that? That's my first question.

Speaker Change #138: I'm sort of a percentage spent per year with a percentage of revenue, which is roughly one five percent assault on a animal basis

Kevin Mcdonnell: Okay, and then just for any clarification. So I had Kevin, sorry. I'm just saying to improve any of the terms of proper people. Right, right. And just for clarification, the Taiwan FMS order that was cleared is that not in your funded backlog yet? Or just trying to include clarification there? That's correct here. So, as I mentioned, the only thing that we booked that's added to our funded backlog at the end of Q1 was the $128 million dollar password or award from the US Army for their last week on it. That's for the US Army's own needs.

Speaker Change #139: Okay, and then just bring my vocation.

Speaker Change #139: So I had Kevin, sorry, I just didn't breathe in, I just didn't breathe in, I just didn't breathe in, I just didn't breathe in.

Speaker Change #140: Right, right. And just for clarification, the Taiwan FMS.

Speaker Change #141: Order that was cleared, and that is that not in your funded backlog yet or just trying to get some clarification there.

Speaker Change #141: That is correct Peter, so as I mentioned, the only thing that we booked that's down or that added to our fund at the end of the 21 was the $120 million.

Wahid Nawabi: So great question, Peter. I'm glad you asked because I made a specific comment on the my remarks about the fact that currently in fiscal 2025, we have the capacity and the ability to deliver close to a half a billion dollar with a switch ways on product revenue, this fiscal year itself. But we're not sitting still for that alone. We've been planning on this for a while and we've been always in general ahead of the demand curve or cycle.

Speaker Change #142: Have more awards from the U.S. Army for their last week on the U.S. Army's on-meat.

Wahid Nawabi: The order for Taiwan and many other additional switch-layed orders, both for example, OPS or replicator or Ukraine additional demands. We've claimed that it's been publicly announced by the USDOD is not reflected on a backlog. All of those potential orders were working them, and eventually they're going to make its way into an order backlog, which we expect to book most of those as not all those throughout the fiscal year. So our pipeline, as I said, for switch-layed remains quite robust, and we're just at the beginning of booking these additional demands that we've talked about, but we have not picked out of a particular backlog yet.

Speaker Change #142: The order for Taiwan and many other additional switchblade orders.

Speaker Change #143: Both for example, O-P-F

Speaker Change #143: or Replicator, or Ukraine additional advanced Ukraine that has been publicly announced by the U.S. DOD, is not just like that of a backlog. All of those potential orders were working them, and eventually they're going to make its way into an order of backlog, which we expect to, but most of those are not all those throughout the system here.

Wahid Nawabi: And we're and as I mentioned on the call, we're already actively engaged in multiple different other states and selecting the next slide to build our next large factories for switch ways. And I want to also add that we're still and the current factories that we have one of the fundamental features of our production facilities are that they're very flexible. Meaning we can easily modify and accommodate scaling up or tweaking some of the production capacity of our non-native way of factories to loading conditions.

Speaker Change #143: So, our pipeline is a set for switch-lade, bringing quite robust and we're just at the beginning of booking these additional demands that we've talked about but we have not, it's not a fucking old back one yet.

Wahid Nawabi: So in general, we've got a lot of flexibility as part of our planning process when we design these things and we design our factories. In fact, it's one of our biggest, biggest, what I call competitive advantages in the market because we're the only ones we are aware of who can deliver a half a billion dollar worth of organizations at a USD with these reliability and performance levels with a battle proven product life.

Unknown Executive: I just said thanks again, Wade. You're welcome to do this. Thank you. I'm showing no further questions in the queue at this time.

Speaker Change #143: I just said thanks again, Wahid

Wahid Nawabi: The Wahid Nawabi.

Speaker Change #144: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the conference back to Jonah for closing remarks.

Jonah: Thank you, and thank you once again for joining today conference call and for your interest in air environment. As a reminder, an archive version of this call, FTC file and development news can be found into the effects of our website.

Jonah Teeter: We hope you have a good evening, and look forward to speaking with you again following next quarter's results.

Jonah: We hope you have a good evening, and before you're speaking with you again, following next quarters of the day.

Unknown Executive: This concludes today's conference call. You may now disconnect. Thank you.

Speaker Change #146: This concludes today's conference call, you may now disconnect.

Wahid Nawabi: And being we're not sitting still, we're already looking at additional capacity in multiple ways. And see, I would say that overall the capital requirements for those extensions are not going to be monumental. They're going to be very affordable. We do this and very much within our existing capics sort of percentage spends per year on percentage revenue, which is roughly around 5% or so on an annual basis. Okay, and then just for any clarification.

Wahid Nawabi: So I had Kevin, sorry. I'm just saying to improve any of the terms of proper people. Right, right. And just for clarification, the Taiwan FMS order that was cleared, is that not in your funded backlog yet? Or just trying to include clarification there? That's correct here. So as I mentioned, the only thing that we booked that's added to our funded backlog at the end of the Q1 was the $128 million dollar password or award from the US Army for their last week on it.

Wahid Nawabi: That's for the US Army's own needs. The order for Taiwan and many other additional switch-layed orders, both for example, OPS or replicator or Ukraine additional demands. We've claimed that it's been publicly announced by the USDOD is not reflected on a backlog. All of those potential orders were working them, and eventually they're going to make its way into an order backlog, which we expect to book most of those as not all those throughout the fiscal year.

Speaker Change #147: [inaudible] you

Wahid Nawabi: So our pipeline, as I said, for switch-layed remains quite robust, and we're just at the beginning of booking these additional demands that we've talked about, but we have not picked out of a particular backlog yet. I just said thanks again, Wade. You're welcome to do this. Thank you. I'm showing no further questions in the queue at this time.

Jonah Teeter: I would now like to turn the conference back to Jonah for closing remarks. Thank you. And thank you once again for joining today's conference call and for your interest in air environment. As a reminder, an archived version of this call, STC, filing, and relevant news can be found into the investor section of our website. We hope you have a good evening, and look forward to speaking with you again following next quarter's results. This concludes today's conference call. You may now disconnect. Thank you.

Speaker Change #148: [inaudible] you

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know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know 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going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I don't know what I'm going to do, I

Unknown Executive: [inaudible] Peter Arment, Peter Arment, Peter Arment, Peter Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment, Peter Arment,[inaudible][inaudible] Peter Arment, Peter Skibitski, Kenneth Herbert, Gregory Konrad, Peter Arment, Peter Skibitski, Kenneth Herbert, Gregory Konrad,

Speaker Change #149: Thank you for watching!

Speaker Change #149: [inaudible] you

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