AV Secures $990M Contract to Supply U.S. Army with Switchblade Loitering Munitions

Rhea-AI Summary

AeroVironment (AVAV) has secured a significant $990 million contract from the U.S. Army for its Switchblade loitering munition systems. This 5-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract is part of the Army's Directed Requirement for Lethal Unmanned Systems (LUS). The combat-proven Switchblade systems will enhance soldiers' capabilities with precision flight control, greater lethality against fortified targets, and the ability to track moving non-line-of-sight targets.

This contract follows a previous award in December 2023 and underscores AeroVironment's strategic position in rapidly producing and delivering advanced unmanned solutions. The Switchblade represents the next generation of extended-range loitering munition systems, capable of multi-domain operations.

Positive

• Secured a $990 million contract with the U.S. Army
• 5-year IDIQ contract for Switchblade loitering munition systems
• Strengthens AeroVironment's position as a leading provider of unmanned solutions
• Demonstrates the maturity and effectiveness of AeroVironment's technology
• Potential for increased revenue and market share in the defense sector

Negative

• None.

Insights

Defense Industry Analyst

This $990M contract for AeroVironment (AV) is a significant win in the defense sector. The 5-year IDIQ agreement for Switchblade loitering munitions demonstrates the U.S. Army's commitment to modernizing infantry capabilities. This deal positions AV as a key player in the emerging field of man-portable loitering munitions.

The contract's size and scope suggest a substantial revenue stream for AV over the next five years. Investors should note the potential for follow-on orders and the possibility of increased interest from other military branches or international allies. However, it's important to consider the political and ethical implications of supplying advanced weaponry, which could impact AV's public perception and long-term sustainability.

Military Technology Expert

The Switchblade system represents a leap forward in infantry capabilities. Its ability to engage non-line-of-sight and armored targets significantly enhances the tactical flexibility of infantry units. The system's precision and extended loitering endurance address critical gaps in current military capabilities.

This contract signals a broader shift in military doctrine towards more agile, unmanned systems. It's likely to spur further innovation in this space, potentially leading to new market opportunities for AV and its competitors. However, the rapid evolution of counter-drone technologies could pose future challenges to the effectiveness and longevity of such systems.

Financial Analyst

This $990 million contract is a major financial boost for AeroVironment. With deliveries expected to begin soon, it should have an immediate positive impact on the company's revenue and potentially its profit margins. The IDIQ nature of the contract provides flexibility and potential for additional orders within the $990 million ceiling.

Investors should watch for improved financial metrics in upcoming quarters, including revenue growth and potentially enhanced profitability. However, it's important to consider the company's ability to scale production rapidly and manage potential supply chain challenges. The contract's size relative to AV's current market cap suggests this could be a transformative deal for the company's financial outlook.

AV selected to deliver Switchblade systems for the U.S. Army's lethal unmanned systems requirement

ARLINGTON, Va.--(BUSINESS WIRE)-- AeroVironment (AV) has been awarded a contract for the U.S. Army’s Directed Requirement (DR) for Lethal Unmanned Systems (LUS). The 5-year contract from Army Contracting Command-Aberdeen Proving Ground is Indefinite Delivery, Indefinite Quantity (IDIQ) with a contract ceiling value of $990M. Deliveries of the Switchblade® systems are expected to begin in months.

The U.S. Army has awarded AeroVironment a contract for its Lethal Unmanned Systems Directed Requirement (Photo: AeroVironment)

The LUS Directed Requirement is the Army’s first effort to equip soldiers in infantry battalions with lethal, man-portable loitering munition systems. The combat-proven Switchblade systems will enhance soldiers' capabilities with precision flight control, greater lethality against fortified targets such as armored vehicles and tanks, and the ability to track and engage moving non-line-of-sight targets. AV was awarded a contract for the LUS Directed Requirement in December 2023 and is currently delivering systems under that contract.

“AV is proud to have been selected to provide Switchblade for this critical and urgent Army requirement,” said Brett Hush, AV’s senior vice president and general manager of Loitering Munition Systems. “This latest contract underscores the unmatched maturity and effectiveness of our system, as well as AV’s strategic positioning to rapidly produce and deliver these cutting-edge solutions to operators in the field.”

Switchblade represents the next generation of extended-range loitering munition systems, providing operators in the field with a multi-mission loitering munition system capable of multi-domain operations. The combat-proven system also features high-precision optics and extended loitering endurance.

“Starting with the LUS Directed Requirement, we are well positioned to meet the Army’s emerging needs, leveraging our robust production capability and supply chain capacity to ensure rapid fielding and enhanced combat overmatch for our soldiers,” continued Hush.

This contract further solidifies AV’s role as a leading provider of innovative unmanned solutions. The company remains committed to supporting the U.S. Army’s mission by delivering advanced technology that ensures operational superiority and enhances the safety and effectiveness of our military personnel.

ABOUT AEROVIRONMENT, INC.

AeroVironment (NASDAQ: AVAV) is a global leader in intelligent multi-domain robotic systems, uncrewed aircraft and ground systems, sensors, software analytics and connectivity. Headquartered in Arlington, Virginia, AeroVironment delivers actionable intelligence so our customers can proceed with certainty. For more information, visit www.avinc.com.

SAFE HARBOR STATEMENT

Certain statements in this press release may constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from those expressed or implied. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, our ability to definitize and execute contracts on favorable terms and to perform under existing contracts and obtain additional contracts; changes in the regulatory environment; the activities of competitors; failure of the markets in which we operate to grow; failure to expand into new markets; failure to develop new products or integrate new technology with current products; and general economic and business conditions in the United States and elsewhere in the world. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240828490861/en/

Ashley Riser

AeroVironment

+1 (805) 750-6176

pr@avinc.com

Source: AeroVironment, Inc.

FAQ

What is the value of AeroVironment's (AVAV) new contract with the U.S. Army?

AeroVironment (AVAV) has secured a $990 million contract with the U.S. Army for its Switchblade loitering munition systems.

What is the duration of AeroVironment's (AVAV) new contract for Switchblade systems?

The contract is a 5-year Indefinite Delivery, Indefinite Quantity (IDIQ) agreement with the U.S. Army.

What capabilities will the Switchblade systems provide to U.S. Army soldiers?

The Switchblade systems will enhance soldiers' capabilities with precision flight control, greater lethality against fortified targets, and the ability to track moving non-line-of-sight targets.

When did AeroVironment (AVAV) receive its previous contract for the LUS Directed Requirement?

AeroVironment (AVAV) was awarded a contract for the LUS Directed Requirement in December 2023.