AeroVironment (AVAV) Q4 FY26 earnings call: guidance and Q&A

How big is the counter-UAS business today and its growth profile, and how should we think about the remaining $1.2B goodwill and SCAR into FY27?

Wahid sized counter-UAS at ~$200M in FY26 (Titan doubled), described a three-layer strategy (Titan RF, LOCUST directed energy, FE1 kinetic) and predicted DE/counter-UAS could become 2-3x the size of the ~$0.5B loitering-munition business in 3-5 years. Sean explained the $89M impairment was a Q3 calculation error on acquired tax-attribute goodwill, not a cash-flow change, corrected in Q4, leaving $1.2B SCDE goodwill ($291M Space).

“It will not surprise me in the next 3 to 5 years that our directed energy and our counter UAS business would be equally as large, if not 2 to 3x bigger.”

asked by Sheila Kahyaoglu · answered by Wahid Nawabi

Which reconciliation are you referencing for revenue timing, and where will FY27 free cash flow land?

Wahid said guidance assumes a continuing resolution with a full defense budget likely not passed until December/January and dollars not reaching the services until ~March; the company lives off current backlog until then but still expects a growth year. Sean confirmed FY27 FCF is not expected to be positive given the heavy CapEx.

“we're not assuming funding arrives early in the government fiscal year 2027”

asked by Seth Seifman · answered by Wahid Nawabi

Could Switchblade/FE1 be excluded from the 'exquisite missile' quadrupling push, and should Switchblade production rise regardless?

Wahid was bullish that AV's loitering-munition and one-way-attack categories will get outsized funding growth regardless of the exquisite/non-exquisite characterization, are not directly competing with high-end missiles for dollars, and are being expanded aggressively across Salt Lake City (Switchblade, ~$2B/yr), RedDragon, and Huntsville (FE1, ~$100M awarded).

“I really don't know which way it's going to go, but I would argue that this category of our systems is going to get a significant amount of funding over the next several years”

asked by Louie DiPalma · answered by Wahid Nawabi

What organic growth is implied in FY27 and how much did ESAero contribute; when does CMS turn around?

Sean gave ~10% total YoY growth at the midpoint (no sub-breakdown) and said ESAero contributed ~$20M to FY26 from acquisition. Wahid said CMS was hurt by the government shutdown and DOGE-driven service reductions, expects only slow growth there, and stressed portfolio diversification away from single-program dependence.

“ESAero contributed from the time of acquisition to the end of fiscal year '26, around $20 million to fiscal year '26 totals.”

asked by Andre Madrid · answered by Sean Woodward

Can the supply chain support the aggressive ramps, and can AV act as a merchant supplier (optical comms/components) into satellite constellations?

Wahid said yes, expanding both AV's footprint and supplier base is part of the CapEx plan, and framed scale-up capability as a two-decade competitive advantage. On satellites, he was very bullish that essentially all LEO/MEO/GEO satellites will upgrade to long-haul optical comms (AV secured a ~$0.25B contract) and that AV is actively engaged with partners as a potential merchant supplier, though early and partly on sensitive programs.

“we're way above and shoulder ahead of our competitors in this area, in my opinion”

asked by Michael Leshock · answered by Wahid Nawabi

Which BlueHalo products are you most excited about and how will demand ramp?

Wahid highlighted Titan (fastest-growing, most profitable), then LOCUST — a $1B-plus multibillion opportunity over 5+ years, with the Army's E-HEL enduring high-energy laser program of record (~$0.5B total) expected to be awarded in the next few months as a category-defining inflection point — plus laser comms and FE1 as a new full-round missile category reaching production in ~2 years.

“There is a very important program of record that the U.S. Army has called E-HEL... about $0.5 billion program in size total... they are going to announce that and award that in the next few months.”

asked by Brian Dobson · answered by Wahid Nawabi

Can you quantify the Q4 one-time negative EAC/forward-loss charge on the BlueHalo contract?

Sean described two one-time items — a CMS contract that was not awarded but on which expenses had been incurred, and an indirect-rate realignment causing a forward loss and one-time EAC adjustment in Precision Strike & Defense Systems — but did not provide a dollar figure, calling them one-time only events.

“Those are onetime only events.”

asked by Peter Skibitski · answered by Sean Woodward

If the up-to-$350B reconciliation bill passes before midterms and drives UAS demand, what gross-margin upside could result?

Wahid said the reconciliation bill carries historic dollars for AV's categories with a wide, favorable range of outcomes, but timing is hard to count on and is likely delayed by the election cycle, so guidance does not assume it; if it materializes it should benefit both revenue and profitability given competitive pricing and good product margins.

“the range of outcomes there, Austin, is very wide and quite favorable in many ways. But it's really hard to count on the timing of that.”

asked by Austin Moeller · answered by Wahid Nawabi