AeroVironment Q4 FY26 earnings call AVAV

AV delivered record Q4 revenue of ~$642M (31% organic growth, its strongest quarterly rate of the year) and record full-year revenue of ~$2B (30% organic growth). Full-year bookings reached $2.7B and full-year adjusted EBITDA of $286M (14% margin) came in above the high end of revised guidance, with non-GAAP EPS of $3.31. Q4 adjusted EBITDA of $140M (22% of revenue) more than doubled year over year, demonstrating profitability leverage at higher volume. Management framed FY26 as a milestone year built on the BlueHalo combination that nearly doubled the company's size.

The Precision Strike and Defense Systems operating group grew 80% over FY25 pro forma to $333M in Q4, led by the Switchblade family, RedDragon one-way attack, and Titan RF counter-UAS. Switchblade 400 won a LASSO program award; MAYHEM 10 (a Launched Effects/common-launch-tube system carrying up to 10 lb lethal or non-lethal payloads) debuted; and RedDragon received a $17M Q4 production contract. The $990M Army Switchblade IDIQ is roughly two-thirds to three-quarters fulfilled with government options to extend or raise the ceiling, and Switchblade 600 Block 1 is at historic production levels with capacity for several thousand units per year.

Management describes a multilayered counter-UAS approach worth ~$200M in FY26 today. RF detect-and-defeat Titan sales more than doubled YoY. LOCUST directed-energy (under $10/shot, 'unlimited magazine') hit milestones including a 100% intercept rate aboard USS George H.W. Bush and FAA clearance in May to operate in domestic airspace; LOCUST X3 launched and full-rate production is targeted this year. Freedom Eagle 1 (FE1), a low-cost kinetic interceptor targeted at $100K-$150K per copy, won a $96M development contract last fall (long-range Kinetic Intercept) with Congress adding funds to accelerate; flight testing is ~12 months out and the opportunity is framed at close to $1B over several years.

The SCDE segment fell 8% pro forma to $150M in Q4 on the March SCAR termination for convenience and government-shutdown funding delays that hit Cyber & Mission Solutions (down 26% pro forma). Within the segment, Space and Directed Energy grew 23% YoY on LOCUST demand. SCAR-related revenue was $31M in Q4 and $121M for FY26. Bright spots include a $240M long-haul laser communication terminal contract (awarded last fall), a $43M PANTHER telemetry award on DoW's SkyRange platforms, and $20M ceramic-materials and $25M human-performance research awards. Management remains bullish on optical laser comms and phased-array technology as early-cycle, highly differentiated opportunities.

AV disclosed an $89M incremental, non-cash goodwill impairment tied to the SCAR termination, restating Q3 FY26. It stemmed from an error by a third-party accounting firm in the Q3 impairment calculation (excluding an estimated allocation of goodwill associated with acquired tax attributes), detected and corrected by management in Q4. It did not affect current assets/liabilities, revenue, operating cash flow, or non-GAAP measures. A material weakness in internal controls over the impairment analysis was identified; enhanced controls were implemented but require testing over additional quarters to remediate the SOX control. Remaining SCDE goodwill is $1.2B, of which $291M is the Space business unit.

FY27 guidance sets revenue at $2.125B-$2.225B (~10% growth) and adjusted EBITDA at $305M-$325M, with CapEx of 12-14% of revenue and R&D of 7-9% funding a broad production buildout (Salt Lake City, Huntsville, Albuquerque, Dayton). Free cash flow is expected to be negative for the year. Guidance deliberately assumes FY27 government funding arrives late — management expects a continuing resolution, a budget passed around December/January, and dollars not reaching the services until ~March — plus an uncertain $350B reconciliation bill. Revenue and profit are back-half weighted^⚖️ (45/55 revenue split).