Aerovironment, Inc. · NASDAQ:AVAV
Aerovironment — Investor Day (June 2018)
69 slides from Aerovironment's investor day presentation, Jun 27, 2018
Slide 1: Welcome
Welcome Steve Gitlin, VP Corporate Strategy and Investor Relations
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this presentation may constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imp
Slide 3: Interpretive Notes to the Financial Presentation
Interpretive Notes to the Financial Presentation Unless otherwise noted, the amounts presented in this presentation reflect the results from continuing operations. Efficient Energy Systems (“EES”) business is reclassified to discontinued operations for all periods presented, unless otherwise noted.
Slide 4: Agenda
Agenda Topic Time Presenter Welcome 8:30 - 8:40 Steve Gitlin Tomorrow, Together 8:40 - 9:10 Wahid Nawabi UAS Overview 9:10 - 9:40 Kirk Flittie Break 9:40 – 9:55 Financials 9:55 - 10:30 Teresa Covington Customer Panel 10:30 – 11:00 Steve Gitlin Flemming Olstroem, Major, Danish Army Ulf Bogdawa, CEO S
Slide 5: Tomorrow, Together
Tomorrow, Together Wahid Nawabi, President and Chief Executive Officer
Slide 6: Technology Solutions Provider at the Intersection of Future-Defining Capabilities
AeroVironment is a Technology Solutions Provider at the Intersection of Future-Defining Capabilities Commercial Applications Defense Applications Broadband communications Infrastructure monitoring Crop analysis Disaster damage assessment Public safety Environmental protection Target acquisition Effe
Slide 7: Growing Patent Portfolio Protects our Unique IP
Growing Patent Portfolio Protects our Unique IP 155 U.S. patents issued Additional 67 applications pending Does not include trade secrets Dedicated internal and external IP counsel Percentage of U.S. Patents Issued to AeroVironment by Business
Slide 8: Strong Fiscal 2018 Performance
Strong Fiscal 2018 Performance $271 million revenue from continuing operations ($309 with discontinued operations) Exceeded revenue, earnings per share guidance Record fourth quarter-ending funded backlog of $174 million Strong international demand – 40% of company revenue Strong DoD funding evident
Slide 9: Strategic Actions Taken
Strategic Actions Taken Focus on UAS and TMS - EES divestiture Equity investment in HAPSMobile, Inc. – likely to require significantly higher investments in future Partnering with others to pursue our business objectives Continuously evaluating deploying our balance sheet for strategic investments
Slide 10: The Pioneer and Leader in Small UAS
The Pioneer and Leader in Small UAS
Slide 11: Small UAS Market Potential
Small UAS Market Potential Potential small unmanned aircraft fleet size – U.S.: Approximately 1,281,900 active duty troops1 Approximately 9,500 Raven B Puma AE and Wasp small unmanned aircraft in DoD as of 2013 2 Calculated ratio of 135 troops per AeroVironment small unmanned aircraft Potential flee
Slide 12: The Pioneer and Leader in Loitering Munitions (TMS)
The Pioneer and Leader in Loitering Munitions (TMS) Switchblade Blackwing Rapid Response, High-Precision, Wave-Off Capability
Slide 13: TMS Market Potential
TMS Market Potential Based on current Switchblade adoption: Approximately 450,000 active duty U.S. Army soldiers 1 1,318 LMAMS rounds budgeted for fiscal 2019 procurement 2 Calculated ratio of 341 soldiers per LMAMS round Potential procurement opportunity at ratio of 100 soldiers to LMAMS round = 4,
Slide 14: The Pioneer and Leader in HAPS
The Pioneer and Leader in HAPS 5G set to massively boost IT infrastructure spending of $326B by 2025. - Forbes, February 2018 Upgrade to 5G costs $200 Billion a year - Bloomberg, December 2017 U.S. mobile operators will spend $100B on 5G by 2020, study says. - GSMA, March 2018 Dish Could Spend Up to
Slide 15: HAPSMobile Joint Venture Business Relationship
HAPSMobile Joint Venture Business Relationship HAPSMobile, Inc. ($100 million initial capitalization) AeroVironment SoftBank 5% Equity ($5 million) 95% Equity ($95 million) Development and demonstration CRAD contract (revenue) Report 5% of gain/loss on AeroVironment P&L Manufacture and supply solar
Slide 16: The First "Drone as an App" Integrated Commercial Information Solution
The First “Drone as an App” Integrated Commercial Information Solution AV Decision Support System
Slide 17: Strategic Takeaways
Strategic Takeaways AeroVironment is a pure-play solutions company focused on robotics, sensors, analytics and connectivity technologies Excellent fiscal 2018 results We are at the forefront of multiple large, promising global value creation opportunities Strong financial position that enables our g
Slide 18: Unmanned Aircraft Systems
Unmanned Aircraft Systems Kirk Flittie, VP and General Manager
Slide 19: AeroVironment Capability Roadmap
COMMERCIAL DEFENSE AEROVIRONMENT CAPABILITY ROADMAP June 2018 TODAY NEXT GEN ADVANCED UAS FAMILY-OF-SYSTEMS Shrike 2 Hybrid & VTOL Puma LE Next Gen GCS Hawk 30 Telecom Platform Quantix™ Sensor to Shooter System TOMORROW MULTI-DOMAIN, DISTRIBUTED, NETWORKED, AND INTEGRATED SYSTEMS Ground Robot-Aircra
Slide 20: AeroVironment Strategic Roadmap June 2018
AEROVIRONMENT GROWTH AEROVIRONMENT PURPOSE To secure lives and advance sustainability through transformative innovation AEROVIRONMENT STRATEGIC ROADMAP June 2018 TUAS 40+ Countries TMS Rapid Growth Launch Quantix Win HAPS TUAS Puma Long Endurance TMS Family of Systems Quantix Adoption Build 2 protot
Slide 21: Technology Solutions Provider at the Intersection of Future-Defining Capabilities
AeroVironment is a Technology Solutions Provider at the Intersection of Future-Defining Capabilities Commercial Applications Defense Applications Broadband communications Infrastructure monitoring Crop analysis Disaster damage assessment Public safety Environmental protection Target acquisition Effe
Slide 22: Integrated, Highly Engineered System Designed for Real-World Military Operations
Integrated, Highly Engineered System Designed for Real-World Military Operations Maximum Portability Hand-launch and auto-land: no additional launch or landing equipment required No tools required for assembly or dis-assembly Modular design permits in-field maintenance and upgrade Smart Battery (Aer
Slide 23: Leading Supplier of UAS to the U.S. Department of Defense
AeroVironment is the Leading Supplier of UAS to the U.S. Department of Defense (DoD) Family of rugged, secure, interoperable systems More than 85% share of DoD UAS fleet * Winner of five DoD small UAS programs of record Secured more than 90% of Army ID/IQ task order dollars since December 2012 New p
Slide 24: Small UAS: Growing International UAS Footprint
45 ALLIED COUNTRIES (AS OF JUNE 2018): Afghanistan, Australia, Belgium, Bulgaria, Burundi, Canada, Colombia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Jordan, Kenya, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Netherl
Slide 25: Small UAS Future: U.S. Army Embracing Robotics & Autonomous Systems
Small UAS Future: The U.S. Army is Embracing Robotics & Autonomous Systems (RAS) Objectives: Increase situational awareness Lighten the Soldiers’ physical and cognitive workloads Sustain the force with increased distribution, throughput, and efficiency Facilitate movement and maneuver Protect the fo
Slide 26: Tactical Missile Systems: Smarter Missile Technology
Tactical Missile Systems: Smarter Missile Technology $111 million in orders from August 2017 through May 2018 from U.S. Army and Marine Corps $113 million in proposed procurement funding for Switchblade in GFY19 DoD budget request Variants include Blackwing™ submarine-launched reconnaissance and con
Slide 27: HAPS Opportunity
HAPS Opportunity Mobile connection, anytime, anywhere IoT and drones – ubiquitous link Safety and security – disaster areas Defense and monitoring – complements satellite coverage Island Areas Mountain Areas 100% Coverage for IoT devices Network & Traffic Control
Slide 28: HAPS Telecommunications Benefits
HAPS Telecommunications Benefits Deployable with existing handset technology Broader coverage (one aircraft = 1,800 towers) Flexible deployment (wherever, whenever) Enable and increase I0T revenue Enable and increase drone revenue Increase subscriber count Increase roaming revenue Rapid deployment/
Slide 29: HAPS Business Builds on Unique Experience with Solar-Powered High-Altitude UAS
Our HAPS Business Builds on AeroVironment’s Unique Experience with Solar-Powered High-Altitude UAS World’s first 3G and HDTV connectivity from stratosphere World’s highest flying aircraft in level flight World’s first solar-powered high altitude UAS Next Generation Solar-Powered Haps for global Tele
Slide 30: Commercial Information Solutions
Commercial Information Solutions Entered market with disruptive solution Building channel through agriculture dealers Gaining experience Opportunities for strategic partnerships to accelerate education and awareness Integrated ecosystem of hardware, sensors, software and connectivity
Slide 31: Strong Visibility in Government Fiscal 2019 Budget Request
Strong Visibility for AeroVironment Solutions in Government Fiscal 2019 Budget Request More than $100 million for Switchblade $46 million for Raven $13.5 million Puma $100 million proposed in GFY20-22 for Short Range Reconnaissance program Current Status - Congressional committee review: House and S
Slide 32: Strong Visibility in Government Fiscal 2019 Budget Request
Strong Visibility for AeroVironment Solutions in Government Fiscal 2019 Budget Request
Slide 33: Financial Overview
Financial Overview Teresa Covington, Senior VP and Chief Financial Officer
Slide 34: AeroVironment Strong Financial Position
AeroVironment Strong Financial Position Strong, profitable core business across a diverse global customer base Attractive growth portfolio opportunities Balance sheet provides flexibility to act decisively to support adoption of AeroVironment solutions Key Fiscal 2019 Expectations: Continued strengt
Slide 35: Delivered Strong Financial Performance in Fiscal 2018
Delivered Strong Financial Performance in Fiscal 2018 $M, excluding EPS FY17 FY18 * Variance Fiscal 2018 Guidance Revenue: Continuing Operations $228.9 $271.1 $42.2 Discontinued Operations $35.9 $37.9 $2 Total Revenue * $264.9 $309 $44.2 $280 - $300 - Exceeded Total Revenue Growth % NQ 16.6% R&D Exp
Slide 36: Revenue and EPS Growth After Sequestration
Revenue and EPS Growth After Sequestration FY15 – FY17 Investments driving profits and revenue growth Notes: Revenue presented includes revenue from both UAS Business Segment (continuing operations) and the EES Business (in FY18, reclassified to discontinued operations). Diluted EPS is the fully dil
Slide 37: FY18 Revenue Profile
FY18 Revenue Profile – TMS & International Becoming Cornerstones of Business; HAPS Growing FY 2018 Revenue $271 million (continuing operations)
Slide 38: Majority of Revenue Not Tied to DoD Procurement Budget Line Items
Majority of AeroVironment Revenue Not Historically Tied to DoD Procurement Budget Line Items 0% 10% 20% 30% 40% 50% 60% 70% Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 % of AV Fiscal Year Revenue 40% Average End of Qtr. Funded Backlog vs. AeroViron
Slide 39: Growing International Business, Mix Dominated by Fixed Price and Product Sales
A Growing International Business, and Mix Dominated by Fixed Price and Product Sales 69% 82% 83% 75% 76% 80% 31% 18% 17% 25% 24% 20% 0% 20% 40% 60% 80% 100% FY13 FY14 FY15 FY16 FY17 FY18 Revenue Mix by Contract Type Fixed Price Cost Plus 52% 76% 77% 69% 70% 72% 29% 11% 6% 8% 11% 9% 19% 14% 17% 23% 1
Slide 40: Gross Margin Trends
Gross Margin Trends – Sensitive to Mix and Volume Gross margin impacted by the mix between products and services and quarterly sales volume 43.1% 47.0% 47.5% 44.3% 42.7% 34.8% 35.8% 39.9% 35.4% 33.7% 41.1% 44.4% 45.2% 41.6% 40.2% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% FY14 FY15 FY16 FY17 FY18 Gro
Slide 41: Multi-Faceted Investment Strategy
Multi-Faceted Investment Strategy Levers P&L and Balance Sheet Uses of Capital: Internally Funded R&D Growth Working Capital Growth Capital Expenditures Inorganic Investments Return of value to stockholders Acquisitions JV, Licensing, Strategic Investments Investments Short Term Medium Term Long Ter
Slide 42: AeroVironment Compares Favorably to Small Cap Defense Peers
= Small Defense / Defense Tech Peers = Big A&D Peers (> $10B Market Cap.) AeroVironment Compares Favorably to Small Cap Defense/Defense Tech Peers Source: NASDAQ IR Insight, Company Filings
Slide 43: AeroVironment Compares Favorably to Small Cap Defense Peers
AeroVironment Compares Favorably to Small Cap Defense/Defense Tech Peers = Small Defense / Defense Tech Peers = Big A&D Peers (> $10B Market Cap.) Source: NASDAQ IR Insight, Company Filings
Slide 44: Return on Net Operating Assets (RNOA)
Return on Net Operating Assets (RNOA) - Improving Asset Utilization Aligned with Defense Technology Peers Source: NASDAQ IR Insight, Company Filings AVAV FY17 AVAV FY18 ESLT FLIR IRBT ATRO DCO OSIS VSAT TDG KVHI MRCY KEYW COL HRS BA GD NOC LMT RTN LLL -10% 0% 10% 20% 30% 40% 50% - 2.0 4.0 6.0 8.0 10
Slide 45: HAPS Financial Reporting
HAPS Financial Reporting * Notes: Excludes exchange loss on conversion to Japanese Yen Financial Reporting Joint Venture * FY18 Total Cash ($M) ($3.3) ($5.2) Other assets long-term ($M) $2.0 $5.2 Equity method (loss), net of tax ($M) ($1.3) ($5.2) Design Development Agreement FY18 Total Revenue ($M)
Slide 46: FY19 Financial Guidance
FY17* FY18 FY19 Guidance Revenue $228.9 $271.1 $290 - $310 Growth (2)% 18% 7% - 14% Growth Gross Profit $95.2 $108.9 Gross Margin 42% 40% R&D Expenses $28.5 $26.4 R&D 12% 10% 10% - 11% of Revenue Diluted EPS from Continuing Operations $0.72 $0.95 $1.10 - $1.40 @ 5% ownership of HAPS Mobile JV and in
Slide 47: Financial Takeaways
Financial Takeaways Strong financial position Increasingly diverse revenue streams Margin sensitivity to revenue mix and volume Increasing focus on strategic investments Anticipating continued growth
Slide 48: Tomorrow, Together: Customer Panel
Flemming Olstroem, Major, Branch Head IMINT&UAS Research and Development Division Danish Army Intelligence Centre Ulf Bogdawa, Director/CEO SkyDrones Tecnologia Aviônica S/A Tomorrow, Together: Customer Panel
Slide 49: Danish Army Unmanned Aerial Systems
UNCLASSIFIED may 22ND 2018 SUAS Danish Army since 2007 DANISH ARMY INTELLIGENCE CENTRE Danish Army Unmanned Aerial Systems DANISH DEFENCE
Slide 50: From Raven to Puma AE
2007 - 2013 Raven B (12.000(+) hrs) DNK SOF procurement DNK Army Troop trial (Afghanistan 2008-2013) 2012 - now Puma AE (9.000(+) hrs) DNK Army and SOCOM Organization Four man Section; three Sections/Platoon; two Platoons One Platoon supports one Battalion Intelligence, Surveillance & Reconnaissance
Slide 51: Puma AE Missions
Puma ae Missions ISAF (2013-2014) OIR (2015- ) OOS (2013-2015) Mali (2016) RECSYR (2016) SOCOM ARMY RECSYR: Removal of chemical weapons from Syria OOS: Operation Ocean Shield (pirate hunting off the Horn of Africa) OIR: Operation Inherent Resolve (Iraq) ISAF: International Security Assistance Force
Slide 52: Puma AE Mission Map
RECSYR: Removal of chemical weapons from Syria (005: Operation Ocean Shield (pirate hunting off the Horn of Africa) > SOCOM IR: Operation Inherent Resolve (Iraq) Gi ISAF: International Security Assistance Force (Afghanistan) Tee Sar 97 goa.) / /. Mali (2018) ONE: (ais) \ Banish verence UNAS sav aza0
Slide 53: Iraq
Iraq
Slide 54: [LOGO] June 27, 2018 2018 AeroVironment, Inc.
[LOGO] 55 June 27, 2018 2018 AeroVironment, Inc.
Slide 55: SkyAgri – SkyDrones Farm Services
SkyAgri – SkyDrones Farm Services
Slide 56: It's All About Market Share in a US$12.2 Billion Business
IT’S ALL ABOUT MARKET SHARE IN A US$ 12,2 BILLION BUSINESS Chemical companies understand that to keep the Market Share they need information and they need to deliver more than chemicals Share 2017. Total U$$12,2 bi in BRA. Syngenta 16% Bayer (+Mons) 20% Basf 8% Brevant (Dw+Dp) 14% FMC 6% Adama 4% Nu
Slide 57: Focus: Provide Farm Services
Focus: Provide Farm Services Will get precise managerial crop information Will be able to use spraying drones in unreachable/unsafe areas or stop using manual spraying Will have this information integrated with Enterprise Resource Planning Software if needed Will have means to reduce costs and boost
Slide 58: Farmers Don't Want Flying Cameras, They Need Precise Information
FARMERS DON’T WANT FLYING CAMERAS, THEY NEED PRECISE INFORMATION. THEY DON’T WANT SPRAYING MACHINES, THEY NEED RESULTS (and this is how we are giving it to them)
Slide 59: Climate Field View - Monsanto
Climate Field View - Monsanto
Slide 60: Production Belts - Comparative
PRODUCTIONS BELTS - COMPARATIVE Belts EUA – Agricultural belts predominantly monoculture specialized in production Belts BRA – Agricultural belts in polyculture favored by climate Main Crops 2017 Corn – 33,34 hectares -> 357,26 mmt Soy – 35,85 hectares -> 115,80 mmt Main Crops 2017 Corn – 17,70 hect
Slide 61: It's All About Franchises
IT’S ALL ABOUT FRANCHISES To be cost-effective you need to be closest to the costumers as possible SKYDRONES Maintenance Center Flight Training School SKYAGRI Aerial Mapping Aerial Spraying Agro Consulting
Slide 62: AeroVironment Quantix
AeroVironment QUANTIX Ease of use Tested in the harsh conditions of Goias Unlimited supply (faster manufacturing) Cloud processing support SkyDrones Algorithms Can be customized to project standards Benefits
Slide 63: AeroVironment Decision Support System
AeroVironment Decision Support System
Slide 64: Algorithms for Agriculture
ALGORITHMS FOR AGRICULTURE PLANT LINES AND FAULTS PLANT FAILURE AREAS PLANT COUNTING WEED Sugar cane soy citrus coffee Sugar cane corn
Slide 65: Summary and Q&A
Summary and Q&A Wahid Nawabi, President and Chief Executive Officer Teresa Covington, Senior VP and Chief Financial Officer
Slide 66: Key Takeaways
Key Takeaways Pure-play solutions company focused on robotics, sensors, analytics and connectivity technologies Leader in multiple market segments with promising growth opportunities Strong fiscal 2018 financial and operational performance Balance sheet to support strategic investments for long-term
Slide 67: One More Thing!
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=video&cd=2&cad=rja&uact=8&ved=0ahUKEwiympSvkc_bAhVBHDQIHdS8BxgQtwIILTAB&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DoOMQOqKRWjU&usg=AOvVaw3k2MSePUxE5j5rhSHkDXTB One More Thing!
Slide 68: Thank You
Thank You
Slide 69: Thank You
7: | Va ITH AeroVironment™ | CERTAINTY Thank You