AeroVironment [AVAV] on Monday reported record third quarter sales driven by its loitering munitions and unmanned systems products and the company is expecting more of the same in its next fiscal year.
Sales of loitering munitions, namely the Switchblade 600 and 300 systems, more than doubled to a record $57.7 million and prospects for further Defense Department and international growth continue to grow, company officials said on an earnings call after the close of markets on Monday. Revenue in the Loitering Munitions Systems (LMS) segment a year ago was $24 million.
AeroVironment is “well positioned” for two existing DoD programs of record, the Marine Corps Organic Precision Fires and the Army Low Altitude Stalking and Strike Ordnance, and the Defense Innovation Unit’s new Replicator Initiative, which all offer the company “significant long-term opportunities,” Wahid Nawabi, chairman, president and CEO, said during the call.
There are also platform integration opportunities ahead, including on Army helicopters for the Long-Range Precision Munition program and the service’s Optionally Manned Fighting Vehicle, Nawabi said.
“We believe platform integrations will be a significant component of LMS revenues and future years,” he said.
AeroVironment has “significantly increased our Switchblade production capacity over the past several quarters” and has sufficient capacity to meet demand for the next two years but the company is evaluating the need to expand facilities, supply chain partners, and move into new geographies to meet the longer-term outlook for the munitions, Nawabi said.
AeroVironment believes it is the only company in the world that is currently producing loitering munitions by the thousands and in the last two years has delivered thousands, he said.
Nawabi declined to discuss the company’s international customers for Switchblade, although the Defense Department has said that it has acquired the munitions for Ukraine’s armed forces.
Demand for the company’s small and medium unmanned aircraft systems remains robust. The Unmanned Systems segment, AeroVironment’s largest, posted $113.3 million in sales, up 23 percent from a year ago. Sales drivers were the Puma 3 hand-launched, and the JUMP 20 vertical take-off-and-landing fixed-wing aircraft for domestic and international customers.
Over the past year, AeroVironment has shipped more than $400 million worth of Puma 3s, Nawabi said.
Overall, in the third quarter sales increased 39 percent to $186.6 million from $134.4 million a year ago on the higher product sales. Net income was $13.9 million, 50 cents earnings per share (EPS), versus a $700,000 (3 cents EPS) loss a year ago.
Based on results so far in fiscal year 2024, AeroVironment increased and narrowed its top line guidance to between $700 million and $710 million versus the prior outlook of between $685 million and $705 million in sales. Net income is forecast in the range of $51 million ($1.86 EPS) and $55 million ($2 EPS) versus the prior range of $45 million ($1.66 EPS) and $51 million ($1.90 EPS).
Funded backlog at the end of the quarter stood at $462.8 million, up 9 percent from $424.1 million at the end of fiscal year 2023 last April.
AeroVironment will provide its fiscal year 2025 outlook at the end of FY ’24 but is expected continued double-digit sales growth, Nawabi said. Growth in the LMS segment will continue to pace the top-line expansion.