AeroVironment, Inc. (NASDAQ:AVAV) Q2 2019 Earnings Conference Call Transcript

Nov 29, 2018 • 04:30 pm ET


AeroVironment, Inc. (NASDAQ:AVAV) Q2 2019 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the AeroVironment, Incorporated Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after management's remarks. As a reminder, this conference is being recorded for replay purposes.

With us today from the company is the President and CEO, Mr. Wahid Nawabi; SVP and CFO, Ms. Teresa Covington; and VP of IR, Mr. Steven Gitlin.

And now, at this time, I would like turn the conference over to Mr. Gitlin. Please go ahead, sir.

Steven A. Gitlin

Thank you, Adrianne, and it's good to be with you today.

(Forward-Looking Cautionary Statements)

We will now begin with remarks from Wahid Nawabi.

Wahid Nawabi

Thank you, Steve. And welcome to our second quarter fiscal Year 2019 earnings conference call.

On today's call, we will focus on three key messages. First, our team is successfully executing our plan as reflected in our strong second quarter and first half results. Second, continued strong backlog and visibility keep us on track to achieve our fiscal year 2019 objectives. And third, robust customer demand for our innovative solutions, coupled with our strategy, support our long-term value creation goals.

Today, I will review our second quarter fiscal year 2019 financial and operating performance, and then provide an overview of some notable developments during the quarter. Next, Teresa Covington, will provide a detailed review of second quarter and year-to-date financials. Then, I will discuss our goals for fiscal year 2019, including our revised guidance, which reflects our strong momentum. Teresa, Steve and I will then take your question.

We are executing our fiscal year 2019 plan and continue to deliver strong results. Second quarter revenue of $73 million increased by 11% year-over-year. Earnings per diluted share from continuing operations was $0.29. Funded backlog increased by 44% from $113 million to $164 million year-over-year. It is important to note that over the last four quarters, we have consistently generated high funded backlog levels. This strong funded backlog is helping us level load quarterly revenue and our operations.

Year-to-date, our performance reflects strong improvement over last year. Revenue of $151 million increased by 51% over fiscal year 2018, and earnings per diluted share from continuing operations of $1.14, including a $0.26 one-time litigation settlement is up $1 over the same period last year. This strong year-over-year improvement significantly enhances our visibility as Teresa will detail shortly.

Now let's review some notable developments from the quarter. Within the US Department of Defense market, we remain the leader in small UAS and our growing loitering missile systems business is disrupting the Tactical Missile Systems category. The recently released 2018 (ph) US National Defense Strategy defines a number of initiatives designed in part to enhance the lethality of US military forces. These initiatives includes several supported by AeroVironment solutions, namely expanding surveillance, investing in infantry firepower and increasing the production of critical ammunition.

AeroVironment unmanned solutions deliver greater situational awareness and lethality to frontline troops more affordably than many legacy ISR