Q1 2027 AeroVironment, Inc. Earnings Call Transcript
Key Points
- Record first quarter revenue of $480 million and funded backlog of $1.5 billion, up 37% year-over-year, with bookings of $683 million and a book-to-bill ratio of 1.4x.
- Landmark contract wins in counter-UAS: nearly $465 million U.S. Army EHEL program for Locust directed energy system (first-ever production contract for direct energy in U.S. military history) and $500 million IDIQ for Titan RF jammers, including $80 million initial award for Golden Dome Initiative.
- Strong growth in uncrewed aircraft systems, with revenue up 71% year-over-year driven by P550, Jump 20X, and Puma; P550 selected for U.S. Army's Long-Range Reconnaissance program, expected to be a $1 billion program over the next few years.
- Adjusted EBITDA of $53 million (11% of revenue) and non-GAAP EPS of $0.59, up 84% year-over-year; adjusted product gross margin improved to 40% from 36%.
- Capacity expansion investments across multiple facilities (Southern California, Salt Lake City, Albuquerque, Huntsville) to support future growth, with strong domestic supply chain (98% domestic) providing competitive advantage against tariffs.
- Space, cyber, and directed energy segment revenue declined 21% year-over-year to $134 million, with adjusted EBITDA negative $9 million due to discontinued SCAR contract and under-absorption of fixed costs.
- Service gross margin dropped to 8% from 13% in the prior year quarter, impacted by $5 million revenue loss from discontinued programs and award delays in Cyber Mission Solutions.
- Adjusted SG&A increased to $85 million (18% of revenue) from $65 million (14% of revenue), including an unexpected $4.2 million non-recurring bad debt reserve and higher legal expenses.
- Free cash flow was negative $36 million in the quarter, and the company expects negative free cash flow for fiscal year 2027 due to increased capital expenditures.
- Uncertainty around timing of U.S. Congress budget approval for fiscal year 2027 poses a potential risk, though not expected to significantly impact current guidance; revenue and EBITDA are heavily weighted to the second half (55% and two-thirds, respectively).
Good day and thank you for standing by. Welcome to the AeroVironment first quarter fiscal year 2027 earnings call. At this time, all participants are in listen-only mode. After a speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, Denise Pacioni, Head of Investor Relations. Please go ahead.
Thank you, and good afternoon, ladies and gentlemen. Welcome to AV's first quarter fiscal year 2027 earnings call. My name is Denise Paciani, Head of Investor Relations for AZ.
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 1,995.
These statements involve
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