AeroVironment, Inc. (AVAV) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to AV's 2026 Investor Day. It's wonderful to see so many of you here in New York. We are very excited to share with you the progress we've made since our 2024 Investor Day just over 2 years ago. With a continued focus on innovation, we are more than ever intent on capturing opportunities in this high-growth sector as well as scaling the business and executing with excellence. We are excited to share with you some of our key strategic initiatives that will lead us toward achieving our fiscal year 2030 growth targets. Joining me here today are several key members of AV's leadership team, including our Chairman, President and CEO, Wahid Nawabi; our Chief Growth Officer, Church Hutton; and our 2 newest leadership team members; Sean Woodward, CFO; and Dr. Rob Smith, COO. In addition to presentations by these gentlemen, we will also have our 2 segment Presidents: Mary Clum and Trace Stevenson available for questions and answers at the end of today's session. Before we get started, please take a moment to review our safe harbor statement located on the screens to your left and right. As a reminder, this event is being webcast live and will be archived on our website under the Events & Presentations section. WiFi passwords are located on the tables in front of you, and we ask that you please silence your phones at this time. Before kicking things off today, please take a moment to watch this short video showcasing many of the exciting solutions AV has to offer. [Presentation]

It's now my pleasure to welcome Wahid Nawabi, AV's Chairman, President and CEO, to the podium.

Okay. Good morning, everybody. Welcome to this beautiful day in New York City here at the Westin Times Square. I want to thank all of you for actually taking the time to be here with us today, number one. Number two, the last time we were together like this was actually about 2 years ago. I'm not sure if some of you remember, and it's been 2 years since we actually came in a venue like this and have an event like this. So it's a great pleasure for me to actually see most of you who were here 2 years ago. And also, I've got a couple of slides to show you what we've done since last 2 years and what we promised then and where we are today. And so hopefully, it will be a good barometer of what we're going to talk about today for the future of AV. We have a full agenda today and essentially, I'm going to walk you through the company as to who we are and what really is relevant about our company and our competitive differentiators. Then our Chief Growth Officer is going to walk you through the growth strategy, so how are we going to capture the growth that really is in front of us in this market. And then we have our Chief Operating Officer, Rob, who is going to cover the actual execution part of how do we execute in scaling and capturing the market. And then lastly, Sean Woodward, our CFO, is going to talk to you about the financials and the long-term targets. And then, of course, we'll have plenty of time for Q&A as well at the end of the presentations at that time. First and foremost, let me talk about the company overview. For those of you who are not familiar with us, we are a growth company squarely designed to meet the rising demand of what's considered to be the top key strategic priorities of our Department of War as well as our 50 or 60 different allies around the world. We have not gone here by accident. We have built our portfolio very deliberately to meet the rising demands of the pretty much highest priority items that are in the U.S. Department of War's strategic needs and capability gaps. And we've got a fantastic track record as an organization. If you go back the last multiple decades of what we say we're going to do, what we're going to focus on that we're going to go do and then how we actually execute to capture that and deliver on that, that is something that is unmatched in the industry within our peers in that regard. And we've done that in a very diversified, very methodical, very judicious approach of investing in different areas, and also in making sure that we actually set a realistic milestone for us to be able to achieve as part of our growth strategy. We're organized in 2 business segments: AxS or Autonomous Systems and Space, Cyber and Directed Energy business, which is the 2 segments. The AxS segment is roughly about 2x the size, roughly speaking. And the combined, as you saw our financial results a couple of weeks ago, it's about a $2 billion business for us today. We are spread around multiple sites across the country and overseas, about 4,000 employees in total. And one thing that I really take a tremendous amount of pride is the number of systems that we have fielded successfully in the world, not just the United States, with 55-plus countries, over 60,000 systems, 60,000 different units of our ground -- air robots, ground robots, et cetera, et cetera, and all the domains that we play in. And even more interesting and important in that is in the last 2 decades, we've been involved in every single conflict that the U.S. has faced around the globe. And our solutions have been critical, not just a small piece, but a critical part of the U.S.'s track record of success in competing in these markets and actually fighting these conflicts over the last 2 decades, consecutive conflicts. So we have a battle-proven solution set. We have a track record that our customers understand, the value of our solutions that they can believe in the operational capability of our systems. And we iterate on that over and over again to bring new products to the market as we go forward. So the way I'd like you to think about our business, which is something a little bit new today, I'm going to cover it, is essentially the 4 different areas or portfolio categories that we play into, which is multi-mission ISR, this is predominantly considered as nonlethal drones, but there's now the missions are changing and evolving. And some of the nonlethal -- almost all the nonlethal platforms are capable of doing lethal or other type emissions as well. Then it's all of our strike solution sets such as our leading munitions, our one-way attack in Freedom Eagle 1; our counter-UAS solutions, that's counter drones; and then lastly, the space and advanced technologies that has products in that category. So if you look at the overall company portfolio, I would make a case that we're really organized in these 4 key mission areas that's really relevant to our customers' need. What's the investment thesis? What's most critical about the investment thesis for AV? First and foremost, we are a trusted defense partner for our customers, not only the U.S. military, but 55 allies around the world. We're not an unproven name with an unproven track record of performing or an unproven track record of delivering to our customers' expectations. It is one of the key strategic differentiators that sets us apart from hundreds, if not thousands, of companies that I've seen in this industry over the last 2 decades. In the last 1.5 decades, I've seen over 1,000 different companies come and compete with us in this market, and what really sets us apart, besides many other things that I'm going to talk a little more, is the fact that we have been around, our solutions are relevant, we're trusted by our customers. When they place their confidence at AV, we deliver on their missions and their expectations. Number two is the diversified mission-aligned portfolio. Our portfolio has been developed and we continue to invest in expanding this portfolio deliberately to meet the highest needs of our customers' priorities. These are areas that are incredibly critical in the future of conflicts that you see around the world today and in the future as well. So it's not an accident that things that we are in, the categories that we're in is relevant to what's happening in this, what I call, transformation in the defense industry. And as a defense tech player, we are leading that transformation with category-leading solutions. And every single one of these categories that I'm going to walk you through, you'll see our solution is category defining. In some cases, we've actually invented the category. And there are some multiple examples of that as you see throughout this presentation. Third is our strong balance sheet. We've been around for 50-plus years, and we've been profitable as an entity, and we're going to continue to do that. That is also somewhat unique, because our customers and our investors can count on us being around and having a balance sheet that can actually execute our strategy. And it's deliberate. We intentionally want to make sure that we're a company that not only delivers, but we have the ability to continue and have longevity for our customers to trust us for years to come. And that trust and that confidence is also very important for our other 2 stakeholders: our investors and our employees as well. And then lastly, we are built for growth. We have built our company and the capabilities that we have specifically focused on growth. And you've seen from our record over the last decade plus what our growth rate has been, and I'm going to share some of the details of that for you in a few minutes. But we also are building ourselves for the future growth of the company and positioning ourselves really well. For example, the products that we are investing in are relevant, not only today, but we feel very strongly that these are the capabilities that are going to be in need over the next decade or so. Two is our production capacity and our ability to deliver. The world is changing. The customers are expecting fast turnaround, and that is a recipe that AV has perfected over the last decade consistently and very successfully. And so these 4 theses sets the foundation of a unique value that we offer as a company for investors as well as for our customers, and our employees. I said that we were here together about 2 years ago, in this ZIP code, and I wanted to share with you what we've said we're going to do and how we did, okay? And so let me walk you through some of the specifics of this slide or these topics in a [ scorched ] fashion. Number one, is we said that we targeted long-term organic growth of about 10% to 15%. That's been roughly our target over the last couple of years. Well, our organic growth has been around 20% over the last 2 years that we were here, okay? We said here. The second thing was that our TAM is a certain size. It was roughly about $30 billion market TAM at that time. That TAM, the total addressable market, has grown to well over $80 billion today, okay? We said we're going to grow our capacity and build world-class products. In the last 2 years, we have launched over half a dozen category-leading, industry-winning track record in terms of track record of winning products, innovative products to the market. And you see examples of that almost every month or every quarter that is being announced by awards and successful contract wins for AV against our competitors. Vast majority of those wins that we get are usually sole-source wins by our customers, whether it's domestic or international. That has been our track record, and you'll see that examples throughout today as well. We also transformed our company over the last 2 years, by adding the key other domains, which were capability gaps in our portfolio, and we, both organically and inorganically, we have filled those gaps to increase our portfolio and enable us to actually be offering our customers complex end-to-end mission capabilities to their mission needs. So for example, we added the category of counter-UAS. We were not a strong player plus years ago in the space industry, right, space tech. We are one of the leading players now in terms of the solution sets that we have in that area. Cybersecurity, we are at the most critical cybersecurity missions that is being executed within our military across all the areas or the geographies of the world that the U.S. operates. And so over the last 2 years, we've created an enormous amount of value, we believe, on our capacity increases, in our footprint, in our portfolio and our size of the market and our growth rate. And I genuinely believe that most of that value is not reflected in the valuation of our company in the stock market price. So there is significant value in our company left in terms of what we've achieved in the last 2 years and where the valuations are for our business in that regard. Okay. So let's just spend a little bit of time on these 4 areas that I would like you to sort of think of AV as a company. We have a lot of products and we do a lot of different things and we have a diversified portfolio. But if you look at it from a simplistic, holistic way, we're in these 4 critical areas. First, multi-mission ISR. We have the world's, not only leading, but award-winning products, innovative capabilities that we have launched over the last several years in this area. In my estimation, in my assessment of the market, we've got the largest and most unique portfolio in terms of competitive advantages in the market. The Puma series, it's a massively successful franchise globally, right? The Puma, Puma AE, Puma LE, [ Puma Vital]. We also have our JUMP 20 and JUMP 20-X in this category, which is also the leading Group III drone in the market globally, and it continues to win program records, allied customers, domestically and internationally. And lastly, you saw the P550, which is here in the room, on the left -- on my left, your right. That is a product that we just launched less than a year ago. And we were just awarded a very significant contract a couple of weeks ago, less than 2 weeks ago I believe it was, by the U.S. Army for the long-range reconnaissance program of record. So $117 million initial contract, and the value of that program is expected to be over about $0.5 billion to $1 billion again, okay? So we are a dominant world player when it comes to multi-mission ISR portfolio and solution set focused on our customers globally. And we provide these things to not only U.S. domestic customers, all branches of the military, but also to 55-plus allies around the world. The next category is our strike solutions or strike capabilities. And that includes products such as our Switchblade family of [ loading ] munitions, which is a category that we essentially invented in the market. I vividly remember, 10 years ago, if I walked into a room of customers or even investors and asked them what's loading munition, more than half of them didn't know what it was. Today, it's a household name around the world. And Switchblade is known around the entire globe as to what it does and how it actually performs. So that's the product set that fits in there. Our one-way attack drone is another set of innovation that AV launched to the market less than about a year ago. And we've got multiple awards in that product set as well from our U.S. customers. It's the Red Dragon family of one-way attack. And then I also want to add in this category, we have our kinetic kill solutions called -- our strike solutions called the Freedom Eagle 1. And we're aggressively accelerating the completion of the development of that product so we can transition into a full rate production -- initial rate production, low rate initial production within about 12 to 18 months from now. We've got a contract, we've been awarded. We've been down-selected by the U.S. military, U.S. Army, a program called Next-Generation Counter-UAS Missile, or there's a new name for it, LRK. And that program is also something that is critical to the U.S. DoD success. That's the second category. Third is our counter drone business, our counter-UAS system. That's where we have our multilayer solution sets, including our jamming systems, the Titan series of RF jamming solutions, Detect and Defeat. And then we have our laser weapon systems called the LOCUST system, that you see on the right -- my right side here. And X3 is a new product we just launched less than a couple of months ago or about 2 or 3 months ago. And we believe that these solution sets -- and the last piece on that counter-UAS is also our kinetic kill solution called the Freedom Eagle 1, which was actually designed and developed for that specific mission for counter-UAS, but it has applications beyond just counter-UAS. Again, so this is another category that I want you to think about our portfolio set as to how AV is into another category with market-leading positions. And then lastly, in the space and advanced technologies, we're focused on things is our phased array solutions called the Badger series, and the WASP. We also have our capabilities and the laser communication terminals, which is also on my right, one small solution set on the right side next to the Titan series. It's basically ability to communicate via optical laser communication on very long distances. We're talking 50,000 plus miles away from earth. So essentially, every satellite that you can imagine that the U.S. has in its possession, our laser communication systems are relevant to be able to actually increase capacity of communication and bandwidth to those systems and make them also more -- less susceptible to jamming and defeat. So think about the business. And the other thing that goes into this category is also our cybersecurity systems and solutions, plus a series of new innovations that I am certain, in the next few years, you will see new innovations that we launch in the market that gets us into new categories. And then lastly, another piece that's in the advanced technology is also software solution set. That's the foundation layer that's across all of our products. That's not even one of the -- it's not in one of these 4 categories. It's across all of them that connects these systems, that enable these systems to be more intelligent to do missions more effectively for our customers and also to reduce the cognitive load on our -- the war fighter. And that's the foundation layer software ecosystem called AV Halo that we launched last year. And as you could see, 2 years ago, this was a much more narrow set of capabilities, portfolio offering and solution set versus what you see today in the market that we've launched. Okay. So let's talk a little bit about the products, the innovations that we have launched to the market and the 4 investment theses. The first one, as I said, is lead with innovation. What really sets us apart in this area is the fact that we invest a higher percentage of our revenue on R&D to begin with, roughly between 6% to 8% of our revenue on an annual basis we continue to invest in R&D. And that R&D not only is, relatively speaking to industry standards, higher. But another unique characteristic of AV is the speed and time to market. We invest ahead of our customers' needs and requirements. We anticipate where the need and the requirement is going to be, where demand is going to be. And we invest our dollars very judiciously to develop solutions to launch to address those markets and those customer needs effectively. That is something that is very unique to AV, and it's been talked about today in the entire industry. We've been doing that for 2-plus decades. And not only we've been doing it, we've been doing it very successfully. If you look at our portfolio of products that we offer in this particular topic, it's remarkable. Remarkable, literally. Just in the Switchblade family, the solutions that we have today that we've just launched in the last 2 years is remarkable. We've added Switchblade 600. We're on a second-generation Switchblade 300. We're in a second-generation Switchblade 600. Most competitors are actually just starting to develop a solution set. We're in our second, third generation products. We have introduced Switchblade 400 this past year. And we introduced Mayhem 10, which is sitting on my right again, which is another category killing product targeted on specific programs of record for our customers. So we are incredibly close with our customers. It's part of a recipe, to be able to know what the customer needs are going to be, what the capability gaps are in the market. And then we invest in developing solutions quickly, and then scaling production we can be ready when the customers' needs and dollars are available. That is unique to AV as a strategy, and it's been in the past as well. And then I don't want to underestimate or undermine the other capabilities that you see on this slide as examples, okay? So for example, the one with [ Tactrum ], the Red Dragon. We launched that product or announced it to the market, I would say, roughly about a year ago, not even a year ago. And we have secured several contract wins in this product line already, okay? I'm not able to talk about the details because of the sensitivity of this product, but we have done that. We launched LOCUST X3, on my right again, just this year. And we're continuing to improve and upgrade, and Rob is going to cover this in more detail in some of his remarks and presentations later today. So investing in R&D, having a fast speed to market and doing it ahead of our customers and investing heavily in here in a judicious way is a critical part of our strategy and it's intentional, and has proven to deliver results for us time and time and time over and over again, okay? There's lots of examples, here you could see the JUMP 20, JUMP 20-X. You also see our LOCUST Systems, our AV Halo, HaloShield for the Golden Dome initiative, our P550, the Group III drone that I mentioned, on the left side. And then our Titan 4, which is, again we're on our fourth generation product for Titan, the counter-UAS jamming solution that's sitting on my right again as well there. Okay. So leading with innovation for us really is 1 of the critical part, and capacity is another part of the critical component of the strategy. But other than that, I also want to mention, let's talk about a little bit of the future, the strategic priorities. What is the strategic plan and what's our priority in terms of how do we go do that? And how can we simplify that to our investors so they can understand it really well? And it's got 3 key pillars, 3 key pillars. If there's one thing I want you to remember about our strategy for the future, it's got 3 things. First, lead with innovation. Second is capture the growth. And then third is execute with excellence. And execute -- so first is, are we focused on the right markets with leading capabilities and offerings that addresses our customers' needs? Are we uniquely qualified to be able to compete and win? That's one. That's why we invest in R&D. That's why we invest in capacity. That's why we have the world's biggest capacity in these categories that you see today. That's why we have an installed base that is unmatched in the industry. We keep building on that momentum. And that keeps -- make it set us apart from our competitors. Second is then that allows us and positions us to be able to capture the growth. And what are those growth opportunities? Church is going to walk you through that in more detail in a few minutes. And then lastly, as we capture the opportunities with the market-leading innovation and products, can we deliver and execute on that? And Rob is going to cover that for you. How do we do that? What are the secret sauce for AV that sets us apart and uniquely positions us to be able to do that? So those are the 3 key pieces of our strategy. Let me walk you through those 3 in a little bit more detail. I mentioned about leading with innovation, right? This picture just tells the story itself. We look at the solution sets that we have launched to the market just in the last 12 to 24 months alone, alone, right, I don't think you're going to find another company in the market, in the entire market that we serve, that has this type of a market-leading solution set that's innovative, that is relevant to the conflicts and it meets the highest priorities of our customers. That is very unique to AV. And let me also remind you something else. These are not prototype products that we're in the development today. These are products that are relevant to the complex, we produce them, majority of them today in full rate production. They are fielded. They're on second, third, even fourth generation iteration of innovation and products to the market. So we know how to do this. These are not unproven capabilities. That's very unique to us. It's not about what we could be. It's what we have already done. And we're just repeating, the rinse and repeat, the same strategy and the same recipe that we've had. And it gives us a huge advantage in the market. Because when customers look at us and they assess us, they recognize there's a huge difference in the amount of risk they would take by selecting AV. And that's part of the deliberate strategy of making sure that we have an advantage in this area, not in terms of time to market so we can develop solutions fast; not just because we invest a lot, that's also unique to us relative to the market; but also that they know that if they select AV, we can deliver, and we have delivered. And that's very unique to AV. Second is capturing the growth, okay? This -- you know about this more than I do because you understand this industry incredibly well. It's not a secret that investments in global defense is going to continue to grow at a fairly, fairly fast pace. The U.S. Department of War just submitted a proposal or a budget that is up 74% roughly. And it's not proved yet -- approved yet, and it may not end up being a 74% increase year-over-year. But whatever the number is going to be, it's going to be a significant increase. It's most likely going to be over 10% to 20% growth just for next year, government fiscal year, right? And the same thing is through across the entire globe. Not only that, we're in the categories that are growing faster than even the market. We're in the categories that's relevant to our customers' needs globally. Not just domestically, globally. So is there growth in this market? You bet there is. Are we positioned effectively against that growth? There's no question. There's really no question in my view. Is our portfolio optimized to capture that growth? I showed you the solution sets, you already saw that, okay? It didn't get there by accident. We have deliberately invested in these categories to get to the position that we're in today. And then lastly, I want to say about this growth is also that we have a deliberate intent to this year and the next 3 years to aggressively increase our presence in the international markets. Not only do we have that intent, but our customers are asking us. They want us to be more intimate and closer to them geographically in these markets. And it's going to be a significant part of our growth strategy, and you'll see that covered more with Church and Rob in the next few sessions today. And then lastly, our [ SOM ], not SAM, not TAM, which is the smallest subset of those 3, is expected to grow about 18% CAGR, okay? So that's a pretty industry-leading growth rates for the market. And we'll give you more details as to what our expectations are and our plans and what we expect to grow and what our targets are for us, ourselves. Okay. So the next thing is the third piece of that growth strategy is executing with excellence, okay? We have announced over the last several years, 2 years, at least go back just 2 years, capacity expansions in several of our facilities. We've put capital down to expand production of Switchblade, of P550, of our Titan series, of our LOCUST Systems that are happening right now, okay, our one-way attack drones. All of that has been deliberate to make sure that we capture the growth and we can execute and deliver on our customers' expectations. And it sets AV uniquely apart because when customers says, can you produce these now because I've got needs? One company that stands out again and again and again is AV. It stands out. We are the one that produce these things by the thousands now. Not next year, not the year after. We're doing it today. And we are investing in that capacity to be able to double, triple, quadruple, in some cases, increase that capacity by 10x, over the next 2 to 4 years, okay? And that allows us to be positioned for the opportunities and for the needs that our customers, we anticipate that they're going to have. And we also judiciously do this across not one site, multiple sites. We announced the site in Salt Lake City, AV Frontier. That is going to be operational towards the beginning of this next calendar year -- end of this calendar year, beginning of next calendar year. That adds, just that facility alone, which roughly -- Sean is going to walk you through it, about $60 million, $65 million worth of investments, it's going to give us $2 billion worth of production capacity for our Switchblade family of products, and we can also make other products in that facility. So these are the examples of how we judiciously place bets and invest and areas that we believe is going to improve our odds to deliver and execute on our customers' needs and the demand that we expect in the market that's out there. Okay. With that, I want to take a minute to introduce Church Hutton, who's our Chief Growth Officer. Church has been with us now for 3-plus years. He's an industry veteran. Some of you have known him for many years. And he's going to walk you through those 3 investment theses that we talked about, is that how do we capture the growth? Church?

Good morning. I'm Church Hutton. I've been in this role as Chief Growth Officer for about a year now. I've been with the company, as Wahid said, for about 3 years. Wahid talked to you about our industry market CAGR, what we're seeing from a SOM perspective, what we're seeing in terms of defense domestic and international budget growth. So I'm going to tell you how we are going to achieve our piece of that, how we're going to 2x our business over the course of the '27 through '30 period. There are 3 pieces to it. The first is products, the second is customers, and the third is winning program offerings. Products. As Wahid said, we have more than 20 products either in production now or in development, getting ready for production, tested, fielded, combat-proven systems. We provide those products into a distributed installed customer base with whom we have had long-standing relationships, sometimes for decades. Those products are able to be used by multiple adjacent customers where we have market entry into a single customer, the Army for a new product, and then applicability into the Air Force, into the Navy, into the international customer base. That installed customer base is incredible leverage for us as we iterate and generate new products at a relatively high cyclic rate. And the third piece is our positioning to win programs. Let's talk about products first. What you see here is a set of large dollar awards in the last 12 months for franchise programs as well as new offerings and new entrants into the market where we are seeing incredible customer commitment. Starting on the left, P550. Wahid talked to you about the win for Army long-range reconnaissance, $117 million announced recently. That is our initial customer, our anchor customer for that product. with applicability across multiples. Switchblade 600, of course, won a recent $186 million task order on our Lethal Unmanned Systems directed requirement contract, continues to be a mainstay for AV. On the bottom left, JUMP 20, won a competitive spot on the Navy's broad agency announcement for contractor-owned, contractor-operated ISR. And that built on an earlier foundation of multiple programs of record in Europe. We see domestic and international demand for this very, very strong. Red Dragon, we have our first public award of this one-way attack capability to the Army, $17 million in the last 6 months. The LOCUST Laser Weapon System has now been cleared safe for use domestically by the Federal Aviation Administration and cleared for export by the State Department. Very exciting, of course. That product is competing -- we are competing in that product for the Army's enduring high-energy laser potentially $0.5 billion competitive award. The Titan system, RF, radio frequency counter-UAS jamming system has had a fantastic FY '26 and will FY '27. You saw last week the announcement from the Joint Interagency Task Force of a $500 million sole-source IDIQ for RF counter UAS. We're supporting there with our Titan system. And we've already received the first delivery order earlier this week, $81 million for that, with line of sight to the next delivery order. Laser communications, now we get into some sensitive territory, but enormous win, more than $350 million, almost $400 million in the last fiscal year, with incredible capability and opportunity as we move forward through the period. We continue to win large, often sole-source IDIQ advanced research and development awards. Helmsman is one particular example from the Air Force Research Laboratory. And a set of other new offerings and products: Switchblade 400 for the Army's LASSO program, that's the low-altitude stocking strike ordinance program for the Army; and FE1 Freedom Eagle 1, which Wahid mentioned, competitively selected against long-standing incumbents to provide a new counter-UAS missile. The Army calls it the long-range Kinetic Intercept Program. You are looking at now the newest missile maker for the U.S. Department of War. Those products are provided by AV into a distributed customer base across all of the services, federal and state agencies in the U.S. and to 55 or more countries internationally. What you -- what I'd like to point out on this slide is that you see the same products being provided to multiple customers. Those customer relationships allows us to penetrate those same customers with new product offerings on a regular basis because we have that installed base. That's critical for us. You can see Titan, right, across the board, JUMP 20s, Switchblades, Puma's, our AV Halo common control software, multiple customers. And then as you look at new program offerings, new product offerings, including P550, including LOCUST, including Freedom Eagle 1, we have new opportunities to begin with an anchor customer and grow into adjacent customers. That distributed installed customer base is critical to us. We've had a great deal of success and expect much more. On the international front, the geostrategic environment continues to be dynamic. In Europe, they are positioning themselves for a deterrence such as we haven't seen since the Cold War. In Latin America, the Counter Narcoterrorism program continues with our southern neighbors and allies. In the Middle East, they are rebuilding a set of defensive capabilities that was exposed 4, 5 months ago in Operation Urgent Fury, and there's a strong demand for defensive systems. In the Asia Pacific, our allies and partners there are reinforcing their force structure in the face of a rising China. And so from all of those key regions, we see strong demand for counter-UAS, for strike, for long-range multi-mission ISR. These are our core categories. We have a distributed, installed customer base with 55 countries that we have sold to with whom we have relationships. And in FY '26, more than $500 million in sales. We are working with customers we know, relationships that we have, products that they need to solve problems that are their highest priorities. Pivoting from customers to programs. We think about budgets. I came from the DC budget and oversight world in Congress way back when, and I think about budgets first and foremost. And what we see across our international and domestic customers is significant growth in top line budgets, but also in our 4 categories very specifically. So as you look at the serviceable, addressable markets within our key categories, you see double growth over the course of the period, right, through FY '30. That gives us the opportunity to double our business as well as we provide those key products into those customers. How are we going to do it? How are we going to realize this growth? So you see here our 4 categories. You see the products that are aligned against those categories. You see a wide variety of customers. And you see the specific programs that we have line of sight to, and many more. This is a finite list of a much larger -- a finite subset of a much larger list. Key programs that we'll be competing for over the FY '27 to FY '30 period. And those programs represent, in total, more than $35 billion of opportunity for us to compete and win with our products. I'll talk about just a couple of them quickly. Across the Army, the Navy and the Marine Corps, strong demand unnamed programs for medium-range and long-range UAS. As we are delivering here with P550, you know about JUMP 20-x. In the strike category, we're competing for Army-launched effects. We're competing for the Army's LASSO program. We're competing or will be competing for the next iteration of the Marine Corps' Organic Precision Fires effort. And the Department of War has now stood up a DRPM, a Direct Reporting Portfolio Manager, for uncrewed systems. That person hasn't been named yet, there's an acting person there. And they are the funnel through which a lot of new DoD spending will be accelerated in the UAS space both for multimission ISR and for strike. And so they have initiatives underway as well. Of course, those initiatives are not quite as well detailed in normal Department of War justification documents -- budget justification documents. But we're very close to those operators, we understand what we're looking at there, and the opportunities are significant. On the counter-UAS side, we already talked about LOCUST competing for the Army's enduring high-energy laser program. That's a big one. The Army's long-range Kinetic Interceptor effort, which is Freedom Eagle 1 already competed for and won there, in developmental test, has a massive opportunity over the course of the period. Both the Marine Corps and SOCOM and DHS and others all have counter-UAS initiatives, which we are competing for and winning, first with our Titan family, soon with our LOCUST laser weapon system. And on the space and advanced technology side, much of this gets into sensitive and classified territory, but the opportunities for long-haul laser communications, other space components is large. In total, again, we expect to be competing for opportunities worth a total of up to $35 billion or more over the period. It's an incredible opportunity for us. We're very excited about it. So I'll go back to the -- where I started. Trusted products, more than 20 in production or entering production, that are combat-proven, fielded, and new products coming online at a high rate of speed, being provided into an installed, distributed customer base, customers with whom we have enduring relationships, understand their needs, and are capable of providing these products into and cross-selling into new adjacent customers and positioning ourselves to compete and win for programs with a total opportunity value of up to $35 billion or more over the period. Our products are fit for the needs of the war fighter today and going forward, and we expect this to drive between 15% and 20% organic growth over the period. So with that, I will transition and introduce Dr. Rob Smith, my newest colleague and our Chief Operating Officer.

Thank you. Good morning. How is everyone doing? Well, Wahid was able to talk about our strategy and what we're doing there. And then Church came and talked a lot about our growth, the markets and how we're going to get to that $4 billion 2030 marker that we put out there. Now I'm going to talk a little bit about -- initially, I'm going to talk about -- a little bit more about the segments. I'm not going to spend a lot of time on that. Wahid obviously hit the products, hit the company. I'll just talk a little bit there. But really, the focus on mine is how we are going to scale, the investments that we're going to put into manufacturing and into IRAD to be able to get that additional capacity that we need because the demand is going to be there and we need to be ready for it. Okay. So we have an amazing market position, as Wahid said. And we need to leverage that position and continue to drive synergies. And what do I mean by that? We have a $2 billion enterprise approximately and we are bringing best practices across the whole enterprise. And that includes our ERP system, that includes what we're doing for our MRP. That includes what we're bringing to autonomy. We can -- to deliver something once and then we can push it across all of our business. And that's really powerful because that drives down the price of what it costs to do the development as well as what it makes to actually produce the product once we produce it. I think what most of you are probably interested in for me talking about is the scaling for future growth. I'm going to talk about our investments in capital. I'm going to give you some numbers. I'm going to talk about the facilities that we are investing in. And I'm going to also talk about -- a little bit about our IRAD and kind of what we think about how we're investing our IRAD both in new products and new capabilities as well as in continuing to enhance our current products. Like Wahid talked about, we're in second, third, fourth generation of our products. We're going to continue to invest in our current products to keep them relevant and keep growing market share. Okay. We go to market in 2 segments, as I expect many of you know. But we're one AV. And that's the way we think about it. We have products across the company and we're about $1.4 billion in revenue in the Autonomous Systems and $600 million in Space, Cyber and Directed Energy. In our Autonomous Systems business, we go to market or we report in 3 segments or 3 subsegments. The precision strike and defensive systems. So think of this as the [ loading ] munitions, the one-way attack, and 2 of our 3 counter-UAS products, the Freedom Eagle, the missile, is in that business, as well as our RF Titan system. The LOCUST system is actually in Space, Cyber and Directed Energy. I should also make a point that I've heard, as I've talked to investors as I've been in the role for about 3 months, that they equate Space, Cyber and Directed Energy to heritage BlueHalo and they equate Autonomous Systems to heritage AV. And I just wanted to make sure you all recognize that that's not right. There have been products, as a matter of fact, both of the counter-UAS products that are now in our AxS segment came from the BlueHalo acquisition. So over on the Space, Cyber and Directed Energy, again, Wahid talked about this, just the Space and the Directed Energy. Let me just say something about the Directed Energy. I think you're all probably aware of this, but I think it's worth highlighting. We are the most battle-tested directed energy product in the world. No question. We have been -- we are deployed operationally. And we've also been tested through both the Navy as well as in white sands with the Army. And for those that don't know, when you're on a Navy platform, we were on the USS George Bush, with 100% success rate with the -- what the Navy threw at us for threats. That is a hard environment. The boat is moving, and you have to have a really sophisticated system to be able to track and pinpoint and be able to destroy threats. And we were 100%. That is amazing. I don't know of any other company that's been able to do that. So we have a layered system for counter-UAS. And so you've got the RF, then you've got the lasers and then you've got kinetic. We have it all. And it's all tied together through our Halo software that has C2, autonomy, automatic target recognition, just a very impressive capability for our counter-UAS. A little bit more about Autonomous Systems, AxS. I already mentioned, it's about $1.4 billion in revenue, 42,000 platforms fielded. Think about that. Again, I don't know any other company that can talk to that kind of scope and scale. And Church also mentioned it, he talked about we have established customer relationships, we've got products that are out there. And the key is going to be scaling up our manufacturing and continuing to develop our products to be able to capture this massive growth that we have in our markets. The only other piece that maybe I'll talk about, maybe 2 other quick things, the market is huge. Church talked about the market, I want to highlight it here about a $32 billion SOM, $30 billion. We're at $1.4 billion. So there's plenty of opportunity for us to grow and take market share with our products. Additionally, I would say there's a lot of room for a lot of winners in this market. We have 22% growth on that SOM. 22%. That's a nice tailwind for a company like us who has leading products in these market segments deploying today. You see a number of large-scale program opportunities there. Those are a mix of things that we want, like at the bottom where you see the Titan, the [ Giatta ] 401 domestic shield. You probably saw that IDIQ was awarded with an $80.5 million initial task order. Again, just customers showing us by giving us critical programs where we're sitting in the market. And then there's ones that we're competing for, like the U.S. Marine Corps OPF program. That's been pre-RFP, so we're shaping that RFIs and looking forward to that award. And then the others are a mix of ones that we've already won or ones that were multiple ODs on a contract and potential down-selects in the future. Space, Cyber and Directed Energy, about a $600 million business, a little bit smaller SOM, call it, [ $20 million ]. Still 12%. When you look at versus the AxS statement, you might say, well, that's not -- that's not -- that segment has grown more. But still, that's double-digit growth. That's a significant growth for us. Wahid talked about Badger. I talked about LOCUST. We can't say too much about our cyber solutions business. But I just -- this biological and nano scale, we do a lot there. And I don't -- we don't usually talk about it as much, but we won a $499 million IDIQ 10 years. Church mentioned [ Helmsman]. That is viewing advanced materials to protect critical products and infrastructure from -- in contested environments. We can't talk too much about it in detail, but it's really great technology, some that we would expect to get to, I'm going to call it, commercialization where we're actually producing these. And that's one of the products that Wahid said in that space, over the years, you're likely going to see other products come out that we're going to have. That's one of -- and there's some others as well. So we're investing in a few key strategic areas and places where we can [ commercalize ] to capture that growth. The biologic and nanoscale, the element, that's actually also pretty interesting. That is -- think of it as an ink that has -- it's highly conductive that you can -- that is very adhesive that you can print, so you can put it into close, you can put it into other devices and get -- do a lot of important things for our customers. So I love the way our Space, Cyber and Directed Energy business is positioned. And what we're doing in the cyber mission solutions, as Wahid said, makes a difference to our war fighter and really makes a difference and protects citizens. And it's a great business where there's a lot of cash on cash, quick recovery cycle. So I think it's really good. And it brings a lot of capabilities. The other thing, Wahid talked about our capabilities and talked about more from a vertical of our products. I'm going to talk about it a little bit different just so I can give you a different flavor. I want to talk about it from the domains that we're in. Our company, we're in space, we're in air, we're in ground, we're in marine and we're in subsurface. We're in cyber. We're in EW. All of those capabilities coming together is what makes us such a powerful company, because we have all the capabilities resident within our business and within our company to be able to provide solutions to customers. We were recently at Jail Break, and that's the Army -- if you don't know, the Army put that on. And it was about interoperable solutions across the different Army platforms. We were there and we showed we can interoperate with many of our competitors. We jailbreak, it's breaking the systems open to be able to work across the platform so that the war fighter gets what they need. We were able to show that we could work with other providers and our solutions are interoperable. And that's something you're going to see later, I'll talk a little more about. We're going to continue to invest in that interoperability. It's really important for our customers. Okay. So now I'm going to talk a little bit more about what we're doing to get the synergies across the business. Shared resources. This is what I was talking about earlier. This is having a single ERP system, enterprise research planning system. This is having a purchasing system. This is looking at our supply chain, and I'm going to talk more about our supply chain, I'm going to have a slide on it, so I'm going to give you a little bit more detail on our supply chain. But this is taking our supply chain and bringing it and optimizing it so for the scale-up. Some of that means we want to have less suppliers and bring that number down, so we have more leverage with and can get bulk buys. And in some cases, we want to do multisource and dual-source. So we have a strategy around that and I'll talk to you a little bit more about that. It's also when we have these systems that are across our whole business, we're able to develop something once and deploy it across the enterprise, whether that's some type of automation, whether that's some type of an AI tool, you pick it. So we're spending a lot of time bringing best practices -- manufacturing best practices across our company and all of our facilities. Interoperable solutions, this is what I was mentioning earlier. Taking our products and making sure that they can interoperate with one another and provide a solution to a customer and operate with other companies' products and then operate with us. For example, if a customer has AV Halo deployed, we want to be able to have other products so that the customers get a unified picture. We are all in on that as a company. It's what the customers want, that's what the customers need, and that's what we're doing. Unified technology. This is either put IRAD in and create something that can then be used across the board. And it's also qualification. A lot of our products have to be heavily qualed. So if we can qual a product, a battery, a sensor, a subsystem one time and then use it across the whole enterprise, that is a very, very powerful thing to do, and we're spending a lot of time looking at doing that. Scott Bowman, our CTO, has done a fantastic job with a strategy around making sure that we have technology that we're investing in, and then that technology being deployed out across and spending maybe a little bit more money upfront to develop that technology, so it has a little bit -- it has enhanced capabilities so that it can be the product that goes into many of -- our subproduct that goes into many of our products. Okay. Now this is what I suspected many of you wanted to talk about. So we're here, next couple of slides. So how are we going to get this growth? So Sean will talk more about it, but we've said $4 billion in 2030. Wahid showed you the strategy and how we're positioned, where we need to be in the right markets. Church talked about the massive just total market value and the growth associated with that. So if you believe that the demand is going to be there and we're in the right markets, and I think it's hard to not believe that we're in the right markets and the demand is going to be there, then how we have to scale up. Well, it's -- for the scale-up of the manufacturing, it's really 2 pieces. The first piece is the investment in CapEx. The second piece is the investment in the supply chain and the supply chain strategy. And then the third piece is the IRAD and what we're going to do there. And that's the next 3 charts that I have, and then I'll get off the stage. The way I think about our investment in CapEx, I think about it from a facility standpoint and then maybe you might call it an equipment standpoint. So facilities, think of that as buildings, AC, water, power, everything you need to have the facilities infrastructure to be able to support your manufacturing. We're going to spend $65 million about this year across the facility. I should also note that you'll see some different numbers when Sean briefs because this is -- I am focused solely on what we are spending in order to capitalize on production growth. Sean has others in there, which the more maintenance capital and consolidations and things that we're doing. And he will talk more about that. $65 million. Albuquerque, New Mexico, $25 million. That's predominantly laser weapon system, also a little bit of space. Salt Lake City, Wahid talked about that. That's going to be for the Switchblade. That's a massive $20 million investment to be able to scale up to about $2 billion of additional capacity. And then Huntsville is the Freedom Eagle predominantly. So that's in our budget. That's -- and I will say also that with our expenditures, we are on target and on budget and on time. And that might surprise some of you, especially when you think about Salt Lake City, which will be done by the end of the year, and then we'll be able to produce next year in that facility. I don't know many of you how many of you have seen capital projects. They are typically late and over budget. We're not. And I'm really proud of our execution and what the team has been able to do there. And then we've got $10 million of some other smaller sites with some of our other products. So that's a $65 million in CapEx that we're going to spend. Then the other piece of it is facilitizing it. So think of this as production equipment and supporting to be able to actually bring the line up to produce the products. We're going to spend about $60 million on our strike portfolio. Wahid talked about the products that are in there, and that's about $2 billion of additional capacity at -- looking at it from a revenue perspective. Multi-mission ISR, we're going to spend about $50 million, and that will give us $1 billion of additional capacity. And then the counter-UAS and our other products, about $20 million. For a total spend of $130 million. This is $4 million of manufacturing capacity that we're investing in today. And we've got to do this. The customers today, it's not like it used to be where a customer will put you under contract and say, hey, deliver me this 2 years from now. It doesn't work. We have to have many times a prototype, you have to demonstrate that it can work, and then a customer will fund you to be able to continue. And so for us, it's critical that we get this capacity because the demand is going to be there. And if we wait, the market will pass us by. And that's what Wahid said and I'm just foot-stomping it. Okay, supply chain. So my message on the prior slide was we funded and are investing and executing on the capacity that we need at AV to be able to get to $4 billion of additional capacity. Now I'm going to say the other piece of it is supply chain. As you know, we spend a lot in the supply chain. Supply chain is very important. So what are we doing there? Today, we have about 1,400 suppliers. A year ago, it was over 3,000. So the team has done a fantastic job getting the number of suppliers down. 1,400 is still too many, so we're still going to look to where we have very small suppliers, how we can bring those together to be able to have more buying power and be able to buy in bulk to get better pricing. Well, on the other -- and 92% right now of our parts are dual-sourced, meaning we have at least 2, maybe more suppliers that we can go to. That's on a parts number. We have some high-value parts that are still sole-sourced that we're looking for a strategy around what are we going to do there. In some cases, we will dual-source those. In other cases, we are working long-term agreements, and we may do both. We may have long-term agreements and sole source. But the long-term agreements, we're working with our large vendors that are doing high value, and putting long-term agreements in place and negotiating them that says, here's what our demand is going to be, here's what we need you to facilitize for. They get some assurances of buying at scale in the future so that they will invest. And at the same time, we get some price stability and pricing out. So we're in negotiations to do that. And that's going to be really important over the next couple of years. 98% NDAA compliant, meaning made in the U.S. So it's a little bit of a bifurcated strategy. It's continued to consolidate on the -- more of the commodity small-scale side. And then it's sole sourced, where we were sole source, look at those long-term agreements and potential other dual-source initiatives. This should expand our margins, increase our supply chain agility and really optimize the supplier base. So this is a big focus, and I'm really proud of the progress we've made and the progress that we're going to make over the next year. Okay. IRAD. We're going to spend, we guided 7% to 9% of sales, for IRAD. And that is our plan. We are going to be investing in IRAD across our space. So we have investments planned for multimission ISR, strike, counter-UAS, space and advanced tech as well as Halo, which again, that's our you call it our C2 system that brings it all together that Wahid talked about. We're balancing our IRAD between new capabilities and new technologies, along with investing in our current products to make sure that they remain viable and we grow market share. You can think of things in that category like enhanced capability, integration of a new sensor, integration of a better battery, what have you. You can think of that as we need a prototype so that we can demo it so customers can see it, so they will fund it and buy it for LRIP and full rate production. And you can think of that as looking at, and I mentioned this earlier, just reiterating it, investing in core technologies or subsystems that can then be used across our broad portfolio. So a really important part of what we do. And again, Wahid said it, just the success -- and I know 7% to 9% is a lot of IRAD, but our success rate in turning IRAD into products and into revenue is unmatched. So this will be no different. We've looked at the IRAD, we have a strategy around the IRAD. We're continuing to refine business cases and we'll continue to make the capital allocation decisions to maximize the IRAD that we're spending for the markets and the returns to our shareholders. So with that, I would just like to say we're in a great position to be able to -- we're in the right markets. We have the right products. We're across all of the different domains. We have the investments. We're very fortunate to be such as strong company, to have the financial flexibility to be able to scale today for our future growth and to be able to invest in our facilities, in our supply chain as well as in our products and capabilities. And with the IRAD to be able to leverage on that. So really excited about the future. I look forward to taking your questions later on in the day, and in the future, being able to come up and talk to you about the successes that we've had across the portfolio. And I'm sure you'll be reading a lot of them in the news or talking to Denise and others or Wahid or me about it in future investor conferences. So I'd like to say thanks. I am so excited to be part of this company and this leadership team. For those who don't know, I've been here about 3 months. I mean I was impressed with the interview process and what I knew publicly. And now that I'm on the leadership team and being able to see it first hand, there's not one place where I went, oh, my gosh, I just got more and more juice and excited about what we're going to do for our customers, the war fighter, for our employees as well as for our shareholders. So thank you very much. I look forward to taking your questions in the future. At this point, we're going to take a 15-minute break. And then the star of the show is going to come up, who is Sean, who's going to give the financial overview and take what Wahid, Church and I said, and then put that into numbers for you, so you can get a sense of what we're thinking over the next couple of years. Thank you. [Break]

[Presentation]

Welcome back, everybody. It is now my pleasure to introduce you to our CFO, Sean Woodward.

Good morning, everyone. I'm Sean Woodward, I am the Chief Financial Officer. Recently stepped into the role effective May 1 of this year, but I've been with the company for over 16 years. So I know the insides and out of this company. I've been around for quite a long time. Before I dive into my slides, I want to first kind of recap what we've heard so far this morning. Wahid came up and discussed kind of what the company is, what we've been doing, what we've been focused on these last 2 years since our prior Investor Day. He talked about the markets that we're in, the products that we offer and our growth expectations. Church then came up and talked about our customers, our products and the programs that we're focused on, all-in areas are expected to grow with a doubling of our SOM over the next 4 years. Rob discussed how we're going to execute with excellence and the investments we're going to be making in research and development and CapEx that are going to allow us to achieve that growth rate. I'm going to bring it all together and talk about how that translates into our financials and what we expect from a financial return from now through fiscal year '30. I view my primary role as the CFO is adding value to our shareholders. We do that based on 3 key foundations. First, investing in research and development above industry peers, staying ahead of the competition and ahead of emerging threats. Next, targeting that investment into high-growth markets, placing our bets on where the highest priorities are for our customers' needs, developing solutions in advance of their requirements and bringing those solutions to a scalable production. Third, executing with excellence utilizing our proven business model of developing technology, commercializing the intellectual property and selling that across our installed base has been a proven business model that we've had for years, and we plan on continuing to do that to improve our overall profitability. Recapping the slide that was presented earlier by Wahid, our track record of making bets and investments is unmatched in the industry. We're able to predict exactly what is needed from a customer's perspective in advance of the need. We've invested in key technologies that has allowed us to be in winning positions in all the markets that we operate in. Those investments are critical in anticipation of current demand and future demand over the years to come. Rob mentioned the investments we're making in CapEx. We provided some visibility on this in our call last week on our earnings call. We guided between 12% and 14% of investments in CapEx in fiscal year '27. That is a significant amount of CapEx. We have not spent nearly $300 million in CapEx before. Our company, in general, is not a capital-intensive type of company. We see the demand coming and we are expecting to scale to meet that demand. The investments we're making are in key 4 critical areas. We're investing and building out our Salt Lake facility in Utah that is to support our Switchblade product line. We're investing in our Albuquerque, New Mexico facility to ramp up production of our LOCUST directed energy solutions. We're further expanding in Huntsville, Alabama for our kinetic counter-UAS interceptor missile program to meet the customers' requirements there. And additionally, we're expanding in our Northern and Southern California facilities to support our UAS and counter-UAS RF capabilities. These capital expansions, we expect to be in fiscal year '27 to add $4 billion of incremental additional revenue capacity. We anticipate the capital levels to return to more historical levels post fiscal year '27. It's a near-term injection of capital into our facilities and our infrastructure. In addition to the facilities build-out and the production equipment build-out, we're also investing in our IT infrastructure, ERP and MRP systems. We've picked and selected world-class cloud providers of all the key systems to be able to scale with our business and further allow us to integrate M&A activities much quicker and easier, into robust systems that are constantly updated and staying current and modern. It's important to note that within the CapEx expenditures next year, our real estate purchase that we plan on making. In key markets where we have been for many decades and we plan on staying for many decades, and customized facilities to meet our production requirements, we plan on purchasing real estate, which is included in the figures shown in our guidance. With that, I'm excited to go through our fiscal year 2030 targets and our framework for where we expect our growth to be. First, I want to recap where we ended fiscal year '26, provide an update on our fiscal '27 guidance, and then we'll talk about fiscal year '30 targets. Fiscal year '26 was a remarkable year. We had nearly $2 billion of revenue. We ended the year with $2.7 billion of total backlog. We contributed 6% to R&D investment. And we ended the year with 14.5% adjusted EBITDA margins. During the call last week, we provided guidance to fiscal year '27. With that, we're expecting top line growth to be 10% at the midpoint of our range. That 10% excludes any revenues related to our [ Scar Badger ] program. It also excludes any revenues related to incremental additional Ukraine. Those have been removed from our plan, and we're still growing at 10%. We've increased the investment in research and development with a guidance of 7% to 9%, which reflects a $50 million increase in the dollars focused on research and development. We're doing that by delivering a $305 million to $325 million of adjusted EBITDA. Those investments we're making in fiscal year '27 from a research and development and from a CapEx perspective are going to allow us to scale to our 2030 targets. 2030, we're expecting revenues to grow at a compound rate between 15% and 20%. That essentially doubles our revenue from fiscal year '26 actuals. We're doing that while maintaining between 7% and 9% of research and development throughout the planning years. Further, we're expecting our adjusted EBITDA to improve to 18% to 20% by the end of the decade. That's a 350 to 550 basis point improvement from where we ended fiscal year '26. Where that revenue is going to be coming from, we've broken down on the chart here. Ending at $2 billion and expecting to go to $4 billion is a significant increase in overall revenues. Looking at our operating groups and how we report our financials. The first one is our Precision Strike & Defensive Systems Group. This business just ended quarter 4 of fiscal year '26 with an 80% year-over-year growth rate. We're not expecting 80% continued in the future, but we are expecting between 15% and 20% growth rate in Precision Strike & Defensive Systems. It is our largest business, so the growth rate of 15% to 20% adds significant amount of revenue dollars over the planning period. Our next operating group is our Space and Directed Energy business, while a smaller starting point than the Precision Strike, it is expected to grow at a higher rate, between 29% and 33%, led by our LOCUST systems in Directed Energy. Next is our UAS business. This is our Group I through III platforms as well as our common controller. We're expecting that growth rate between 13% and 19% over the planning years, led by our P550, our JUMP 20-X and our common control capabilities. Next, our Cyber & Mission Systems business is expected to grow at a more modest 7% to 10% after seeing improvements in fiscal year '27 versus fiscal year '26 results. These cyber and intel services provide critical infrastructure and services to our most important intelligence agencies. Finally, in the other categories, this is what rounds out our all-domain solutions, this is our drown robot and our UUV business, our underwater vehicles, expected to grow between 8% and 11% over the planning period. In total, that takes us to a $3.5 billion to $4 billion revenue range by fiscal year '30 or a 15% to 20% growth on a compound annual growth rate. In terms of the improvements that we're expecting on adjusted EBITDA, we have 4 main focuses that we're keyed on to improve the overall percentage as well as dollar value. Going from $286 million ending in fiscal year '26 up to $630 million to $800 million is also a significant increase in overall profitability for the company. That's going to come through 4 things. First, organic revenue growth. As the business doubles in size, we're going to add significant amount of additional adjusted EBITDA, purely by the size of the revenues that are coming into the company. Second is the mix or the margin improvement. We're expecting to increase our overall product-related sales, increase our international and commercial related sales as a percentage of the total, increase our firm fixed price contracts versus cost-type contracts, and utilize some operating leverage on our SG&A from the investments we're making in our IT business systems. We're doing this with the assumption that we maintain between 7% and 9% in research and development across the years. Finally, the capital investments that we're making, we're expecting that to improve our overall utilizations, the throughput and the volume and the yields on our new production capabilities over the next 4 years. These investments that we're making and the focus on our adjusted EBITDA should expand us 350 to 550 basis points over the planning period. In summary, the value that we're adding to our shareholders is based on these 3 foundations: investing above industry level rates in research and development. Focusing that R&D dollars on high-growth markets, our SOM is doubling in size over the next 4 years, and we have bets on all of those key technologies currently developed, currently won and expected to win in the future. And finally, executing with excellence. Improving the overall mix of our business, bringing more products to the market, distributing those across our installed base and improving the overall mix of products versus services will improve our adjusted EBITDA by 350 to 550 basis points by the end of the decade. With that, I think we'll turn it over to the Q&A session.

Thank you, Sean. Thank you, all the presenters, AV leadership team. Now it's time for us to have the Q&A session. I want to ask our leadership team to come to the stage. And we'll, obviously, we'll take your questions as you go. Why don't you guys come over through here and grab a seat here and here? You met a few of our members. You met a couple of other members of our key teams. Trace Stevenson, who is the President of our AxS or Autonomous Systems segment, he's been with the company for well over -- how many, 16-plus years? 22 years. He looks very young, but don't be deceived. And then, of course, Mary. Mary has been with the company, and she's the President of our Space and Cyber business, and Direct Energy. And she came to AV as part of the BlueHalo team and has been with the firm since the inception of BlueHalo, to my knowledge, roughly. But 20-plus years of -- yes, experience in the industry. Let's just turn it into Q&A. I think, Ken, you had your hand up first. And I'm going to try to take the questions and also toss it to our team members who could actually best answer it for you.

Great. Thanks, Wahid. Yes, Ken Herbert with RBC Capital Markets. Maybe for Wahid or Sean in particular, appreciate the margin expansion path you just outlined. The '27 guide, maybe there's some conservatism there, but implies sort of flattish margins over '26. So clearly, '28, '29, '30 is where you see the ramp. If you're holding R&D sort of flat, maybe get a little CapEx relief, can you provide a little bit more detail on either mix or sort of the volume and the absorption benefits and how we think about or should think about the margin ramp '28, '29, '30? Because it implies a pretty significant step-up over those 3 years.

Sure. Yes, Ken. Yes, we're expecting to see our adjusted gross margins to improve over the years. As we increase the overall product-related mix versus services, more fixed-price commercial terms, expanding commercially and internationally versus domestically, all those are drivers to improve gross margins, and we're expecting it to ramp throughout the years. So that will end fiscal year '30 at that 18% to 20% of adjusted EBITDA. We're also expecting the operating leverage -- the investments we're making in our IT infrastructure is going to allow us to scale with a smaller overall team. We're not going to have to spend as much on SG&A. As you mentioned, fiscal year '27 adjusted EBITDA is expected to be flat essentially year-over-year. And that's because we're incrementally increasing in research and development. We're also increasing in SG&A as we see in the international markets and domestic markets growing rapidly. We're going to make those investments to yield the future growth over fiscal years '28 through '30.

And so fiscal '27, as Sean mentioned, is an investment year, primarily because we see so much growth coming our way. And as you go throughout the next 3, 4 years, I believe we're going to end up improving the profitability profile based on the factors that Sean mentioned specifically. . Go ahead. Sorry.

Andre Madrid from BTIG. I kind of wanted to dive in real quick because we just talked about it, the -- I guess, the revenue step-up. I think the most surprising thing there was maybe the CMS business. I know a lot of that is classified so you can't really tell too much about what's going on there. But given that it was a laggard this past year, I guess, just what gives conviction, like you said, Sean, that it's going to be so much better in FY '27? And then maybe how do we get to that 7% to 10% CAGR? It seems a bit aggressive compared to what we've seen at that business before, but I might be wrong.

Yes. So look, the cybersecurity and mission services business is actually a critical part of our overall portfolio. We're in these categories deliberately because of what we see in the market and how it actually helps us overall in our portfolio with our customers. And that's a business that Mary runs within her portfolio. There's a few things I mentioned, and Mary can add to it as well if I missed anything. First is that business has been under what I call pressure last year, last couple of years, actually, primarily because of the 2 effects. It was a DOGE effect that hurt services in general in the U.S. military and DoW and the intelligence community. And two was also the shutdown because there's a lot of that is customer-funded work with people on seats. So that hurt it. Mary and her team specifically has had a strategy to how we will adjust our strategy in that business. and, in fact, go after a very high-valued, product-related type services that is differentiated and technically in IP, and we have a lot of IP in that area. We can't talk about the details because of the sensitivity to our customers on that specific business. I wish I could, but we're not allowed to do that, and we're obviously not going to do that. However, that portfolio of contracts and technology we offer is incredibly unique. We're not doing low-tech work. This is at the edge of the cyber missions and it's been offensive and defensive capabilities that we provide today. And so we do believe that there's growth in this market for us. We do believe that there is synergy between that business and the rest of our businesses. And we also believe that our customers want us in there because it actually helps the rest of our strategy as part of what other capabilities we should develop on other products to help the customer because we're in the operations ourselves. So that's really the -- and we do believe that these plans were developed from bottoms-up through our own team. That's how we've been doing this planning and our long-range planning process for many, many, many years. And we believe that we have a very sound approach. You saw our results and the track record from the past. And so we've been very reliable and accurate in being able to predict where we're going to end up in all these markets. And that's really part of the strategy.

Mary, anything? I think, Andre, that was a very good question. One thing to add when you look at our service technology within that area and the underlying IP is it's -- there's a moat of over a dozen technologies to look at how do we productize. And that is what, as a company, we're really good at when we talk about the One AV. So that's the strategic approach that we're doing. We have brought in new leaders with that background. And I believe that 7% to higher percent CAGR is realistic.

Let me make 2 points. One is we have streamlined that business as well and made some decisions to do that. And two, to pull the thread on what Wahid said, just to give you an example of how the cyber business fits so well into our other products. It's really important that you're cyber hardened for example, and we have world-renowned experts in our cyber business that can [ red-team ] our products and others to make sure that what we're providing will, in the most contested environment, still work and perform. So like Wahid said, it's really important not just for what it delivers to our customer and financially to our shareholders, but also the capabilities that it gives us to be able to leverage and utilize across our business.

Sheila had her hand up before.

Maybe if you could just talk about what was the growth accelerating to 20% from fiscal '28 to fiscal '30 that's in line with the addressable market? So what new technologies do you bring on? How do you think about the incremental wins? Is it just share gains? Or is it new technology? Or is it more international growth?

Yes. So when we do our planning process, and we do this every year and we look at our past as well, we end up coming up with a range of outcomes. We have a very, in my view, fairly robust process and a system that we approach and apply to it methodology-wise too. And so the number you see that we have targeted is essentially what we refer to as our base plan, okay? Could the outcomes be better than that? Absolutely. Absolutely. But we don't commit to that. We commit based on our base plan, which is what we call the highest, most reliable, highest confidence numbers that we have in terms of what we believe is closer to the [ pit ]. Where does that growth come from? It's not just 1 customer or 1 product or 1 region. We have, as you saw from Church's slides, a slew of opportunities within the domestic U.S. DoW, dozens and dozens of programs that he pointed out, it equals to $30-plus billion worth of opportunities. Just opportunities. These are programs that the U.S. specifically has publicly announced, and you saw a list of those. So that's one category. The second one is we have an incredible portfolio today, and we're investing in R&D to keep continuing to expand that. That is a competitive differentiator. So new products for new programs that are coming up is part of our pipeline. We've got a very exciting pipeline, and you've seen it from years you've covered us, how we go develop products, how we launch those, how we commercialize that, how we scale that, how we capture the opportunities. It's a recipe that I think AV is literally the poster child of the industry in that regard. And it's a recipe that has been copied by the entire defense tech sort of portfolio of companies that are out there, private and public. It is unique to AV and we've been doing it for well over 2 decades. Most likely 3 decades, if you ask me, okay? So ever since we've been public. Last thing is also that besides the U.S. domestic opportunities and programs that Church put out there, there is an equal, if not bigger, set of opportunities internationally as well. And it utilizes essentially almost exactly the same portfolio of capabilities that we have. And he pointed it out, that when we develop a product for LRR, like P550, or LOCUST for the laser weapon system, or Titan for a counter-UAS opportunity we just received a $0.5 billion award that we were talking about from [ Jayativ ], that same product has applicability to 55 to 60 different allies around the world. And since we have those relationships and we have a very strong, solid track record with them, it puts us in an advantageous position with our customers relative to competitors. So you will see growth in those categories from international customers as well. So those 3 or 4 factors really make up the majority of the growth that we are. And it's not like we have to invent a whole new market category or go into a new market, a new customer that we're not known. It's products we're very good at. It's customers that we know really well. It's programs that we've already identified that we can go after and attack and compete and have a good, high win rate. Great question. Austin. Sorry. This way. Okay. Go ahead. We'll take [indiscernible] after that, and then Peter after that.

Yes. Thanks, Wahid. Austin Moeller, Canaccord Genuity. So can we talk a little bit about the TAM and the market opportunity for LOCUST specifically, right? I mean we did the Navy test in October with LOCUST on the deck of an aircraft carrier. You just did the white sand test. Both examples, you had 100% interception success rate. So because the new version of the system is designed to be modular and mobile, should we be thinking about this beyond just putting it point defense at fixed basis? Like if -- could that -- could this potentially compete with like [ Falinks], Century and CRAM because you need a direct line of sight for that? If maybe shipbuilding budget increases, do you see that as an opportunity for retrofits or OEM upgrades onto Navy ships?

The answer is absolutely yes, and I'm going to let Mary elaborate even further on that. .

I know. You've asked such a good question because it's right in line with what we are seeing, is the growth area -- so just if I look at the Navy alone, what you're hearing right now is we want to containerize. Interacting with systems like a [ Falinks ] are integrated into a system. What was very differentiated about the USS Bush demonstration is the container actually rolls on, rolls off. So when you think about all of the ships, you have the ability to transport those between the ships. And being able to do that on an aircraft carrier to a frontline destroyer definitely shows its capability when you have systems like Falinks like you had mentioned. So absolutely, in terms of total addressable market. You talked about point defense for air-based air defense, but the modularity also comes with modularity with vehicles. So currently, we're on 3 different vehicles: the [ JLT], the ISV and infantry squad vehicle and the [ Stryker]. And that modularity helps us be more multipurpose with all of those. See what Trace has done with the P550, you can actually see batteries move in and out. We have taken just what we have learned across our company and done that for our systems, so they're maintainable in the field as well. So really taking what Rob said about commonality across the company and applying that to all of our systems.

Church?

200-plus capital ships, right, in the Navy inventory? Hundreds of priority, right, asset infrastructure sites within the Department of War's, right, registry? Every air base, right, every critical site. Now with FAA clearance for safe domestic usage. Massive DHS, right, federal, state opportunities there. And the international customer demand, we're already filling it. Watch this space, right, because the opportunities there are just as big.

Yes. And so just to add one more comment to that, Austin and the rest of the team. I've known many of you for a long time. If you recall about 6, 7 years ago, Switchblade was a small business for us. And loading munition was not even well known in the market. And so we were investing. In fact, prior to Ukraine, there was not a single public video of a Switchblade hitting a target, because the U.S. didn't want to have it out and we respected that, and we didn't really publicly put out anything like that. Since the Ukraine conflict, the public videos of Switchblade being successful has been phenomenal, right? You see the Ukrainians putting it on YouTube and everything else. This -- and so now it's about $0.5 billion business, growing to be much bigger than that. And this industry has grown. I feel that the laser weapon systems for counter-UAS is in a very similar inflection point and a similar stage of its adoption cycle. It would not surprise me in 3 to 5 years that this market is in the billions and billions of dollars, number one, because it is the -- we have studied all the technologies that is going to be effective in defeating and defending against a drone war, a drone conflict, which is the most likely scenario in the future for every single conflict. You can see there, right? And laser weapon systems, there's technically 3 or 4 key technologies. It's kinetic, the feed, it's RF jamming, it's directed energy and it's high-power [ microwave]. Directed energy has got the biggest, in my view, potential and relevance of being the -- a fairly large, if not the largest chunk of that market opportunity. And so that's one. That's the backdrop. Number two, AV's position in this market is incredibly compelling. Not only do we have systems that are validated in the field with a test that Mary mentioned and Church mentioned in these operations that have a phenomenal track record, but we're also -- their systems are designed, as she said, modular, so we can put it on a whole different types of platforms, for the variety of different types of targets and missions and sites that protect. And the safety record of our systems is remarkable. FAA just recently did a test. And they specifically mentioned our system, the Department of War did, as a result of that. And so I think we're at the cusp of a very large market adoption with a very unique capability and IP. There's a lot of IP capability. It's not something that somebody can copy overnight. It will take you half a decade to a decade to even become a player in the space to be relevant in the space, in my view. And then lastly, I would say that a critical inflection point market mover, in my view, adoption-wise is the U.S. Army's EHEL program that Church mentioned, the enduring high-energy laser program. They have announced that it's going to be roughly about $0.5 billion contract. We're competing for that. It's not been decided yet and announced. We believe we have the strong, strong potential success or opportunity -- yes, the odds of succeeding in that. And they've said that it's most likely going to be a single-source award for that contract. That is the first contract, to my knowledge, for a production-level laser weapon system in the U.S. Department of War's entire history. They've spent money in developing things and testing, but they haven't actually awarded a contract for production yet, to our knowledge. And this would be a game changer. So that category, the counter-UAS, led by the LOCUST and Titan series, is poised to really grow over the next 5 years plus very handsomely. I think we had -- yes, William, go ahead. Back there, sorry. I have Vivian and...

It's Colin Canfield, Cantor. Maybe if you could talk about the growth categories and where you're taking a haircut versus '27 requests and kind of walk through by each subject area where have you taken the most haircut, which areas are most of that risk? And then if you could also talk through the cash flow trends over the multiyear period, maybe walk us through what you're assuming in terms of working capital and CapEx?

Okay. Let me take the first part and then you guys add to it for the second too. In terms of haircut, this is one part that's really complicated about the government fiscal year '27 budget. Historically, the U.S. Department of War has submitted a budget, which a vast majority of the spend has been in the base budget. The base budget, not the supplemental part, right? Discretionary part. This year, they've done something very unique. Because these categories are getting outsized amount of additional investments, they have taken dollars out of the base budget and lumped it into the discretionary category as a much larger dollars and they've increased the amount significantly, right? So if you look at the base budget line items, which usually have very specific details in the budget, it looks like perceived as, oh, there's a reduction here for small UAS, there's a reduction here for this. In reality, that's not true. I don't recall any category as a total budget, if you look at both supplemental and the base budget, that we're getting a haircut. No. In fact, all of them are up, up, up, up. The department has intentionally chosen the strategy to put more dollars into one larger bucket so they can have more flexibility on what they're going to buy and how many of which. And that, in my opinion, the number one reason for that is because the department is not very clear yet on how many of what they're going to buy, because these categories are expanding and growing very rapidly and their requirement process and the acquisition process is behind the actual budgeting process. And so I don't believe that there's any category that we're getting a haircut in terms of the government spending dollars overall. It's just moving into the different colors that makes the optics look a little bit complex. Sean?

Yes. In terms of the free cash flow, great question on that. So last week during our earnings call, we provided some guidance around our free cash flows for fiscal year '27. We know it's an investment year. We're not expecting to be positive on a free cash flow perspective. We have a strong balance sheet. We're able to self-fund that. And throughout these planning years, we expect '27 to be the peak of our capital, and we expect that to come down to more historical levels. Working capital will rise over those years, but we're seeing improvements in our cash conversion and our shortening of our cash conversion. So we're expecting to turn positive in free cash flow and continue that positive trend throughout fiscal year '30.

Okay. I think, Peter was next before that, who submitted.

Peter Arment from Baird. Wahid, thanks for that on the kind of budget discussion. But maybe if you think about some of the faster-growing areas, Precision Strike or Space and Directed Energy, are there certain milestones here that are coming up over, say, the next 12 months, but are going to need budget to be approved in order for things to move forward? Could you talk about maybe some of the programs that you're expecting to hit some milestones but may be tied up in budget activity because of CRs, et cetera?

Yes. So one of the reasons our guidance for this fiscal year is about 10% top line growth despite the fact that the ask for the government is quite high is because we believe that the likelihood of a government budget passing as a full budget for the Department of War on time, which is usually supposed to be end of September, beginning of October, is lower probability. And so there's a strong likelihood in our view, and I think the industry agrees with that too, that there's going to be some delay in actual approval of the budget, which means some of these dollars are not going to hit the accounts of our customers. Our assessment is sometime early calendar year '27. And then by the time the money actually makes it to each department to actually issue contracts or award a task order, you're talking about almost March time frame, probably. And so that's towards like the end of our fiscal year, F '27. So for that reason, we have been more realistic about the expectations there. In terms of milestones, there are several, several milestones it. All the programs that you saw that Church had outlined has, to some extent, public disclosures from the customers that says we're going to do the following thing by this date, and a bunch of it is not public. And we're not in a position to openly disclose the information that our customer hasn't disclosed themselves. But there's numerous milestones. One great example is the one that I mentioned on EHEL. Our customer, U.S. Army, has, we're in contact with them very regularly. We're in very close discussions with them. They are intending to award that, they've made public statements, within the next 3 to 6 months. Our expectation is probably during our second quarter will probably be some announcement by the government. So that's just one example. LASSO has several programs, [indiscernible] has several programs. And in those 2 buckets, the Directed Energy and also in the loading munition/precision systems and in Directed Energy, we are very well positioned as several milestones. Another thing I want to add is that for both of those 2, besides the U.S. -- the milestones and awards and announcement that might be coming up in the next 3 to 6 months, there's also several international opportunities and customers of allies that we're actively working with that we expect decisions from them throughout this fiscal year. And we're going to keep you updated on it on that regard. Anything else you want to add, Church?

No, I think you're exactly right.

Byron?

Cool. Maybe just a question on the investments for Rob and Sean. Just a couple of here just to make sure we kind of understand. So with this incremental $4 billion of revenue, so kind of think about the company in 2030 being kind of a $4 billion revenue company with like $6 billion-ish of production capacity grow into in the subsequent years, A, if that's correct. And then, B, I think, Rob, you mentioned the difference between the total CapEx and the production expansion, but still kind of if we look at the -- I think it was like 3/4 of the CapEx was going to production expansion, that's still about $200 million versus the $130 million that you talked about. And so what's sort of the delta there? And then lastly, just kind of how you guys think about the return on investment here? If you think about the $130 million of CapEx leading to $4 billion of revenue at some acceptable margin, that seems like a pretty massive ROI, but there's probably more -- maybe there's some tail end of the CapEx as well to think about. When you guys think about ROI there, how do you think about it?

Yes. So I guess I'll start and then Sean and I can tag-team it. You have to look on my chart, you have to look at the left and the right side. So it's more than just $130 million for the facilities for our total CapEx. The real delta if you take that 75-ish percent times our total spending and look at that for facilities, the big delta is some other purchases that we're doing in Simi Valley. So that's the difference. So the numbers tie out. You're spot on with the $4 billion of total revenue capability versus we're projecting $2 billion. So we have some opportunity to, as Wahid said, if there's some additional upside, or the things go into different market categories than what we would anticipate today, we can support that. And Sean, I don't know what else you want to add and maybe I'll follow up.

No, I agree with all of that. And in terms of ROI, we look at through all of our detailed plans. We look at the investments we're making, both in the research and development as well as CapEx, to measure the returns. So we place those bets in appropriate areas. We have a good track record of doing that. We understand where the markets are going and the size of these markets, and we believe that it's a return a good amount for our shareholders.

There's one other point I should make, because you might be -- I'm anticipating what's behind the question. And you might be thinking, well, why would you do $4 billion if you think you're only going to need $2 billion? And a lot of that comes as a lucky strike extra, right? You have to facilitize the line and you have to have one -- at least one shift. And you can get that additional capacity by adding additional shifts without additional CapEx. So we've scaled our CapEx, and we're getting the additional revenue from that $2 billion to $4 billion, but it's not like we're spending twice the money to get the $4 billion from the $2 billion. I just thought that was an important point that I should make sure everyone understood.

That is actually a very critical point, which is, one, we have to plan for not just our base plan; we have to have optionality for increased demand, which we believe that there is a higher likelihood than lower likelihood, right, given on the downside side, A. B, what Rob just mentioned, some of the base investments like it's way beyond 4 years' worth of planning. When you build a facility to manufacture things, we've done the math and we looked at alternatives, buying the land and buying the building and building that is very advantageous for us actually long term. It's part of our sort of recipe for success too. And so that is a 10-plus year investment. We're not going to have to buy new building, put up walls. The incremental additional investment to go even beyond $6 billion over the next 10 years is much smaller than the initial capital that it takes to build the foundation. And so we've been around, we intend to be around, and these are sound investments that we believe that is going to give us leverage long term. And it is an advantage that we have in the market. Because our facilities, we turn them around and get them to operational levels in 12 to 24 months, from a literally clean sheet of paper. And that is quite remarkable to get to a $2 billion additional capacity in 12 to 18 months for our production line. I think you guys are going to decide -- yes, Byron.

Byron Callan, Capital Alpha Partners. Three questions on international. First, what's the share of international when you get to FY '30? Is it still around that 30% or much higher? And then, Church, the international strategy, you're selling product, but is there an opportunity to sell complete systems with AV Halo, wrapping your other products inside that offering? And then, Scott, can you talk about international facilitization? A lot of people want localization. Where does that fit in your thinking about what you might need to do from an international footprint?

I think I'll take the second part first. So providing systems like Titan, providing systems like LOCUST, right, on the counter-UAS side, providing systems like JUMP 20 and, in the future, P550 on multimission ISR side gives us that anchor capability that always has to be networked into some larger framework, right, larger architecture. We now have that larger architecture and are feeling the demand for that. And it's an open architecture that will nest within national architectures, right, already instantiated architectures that have been deployed elsewhere. We're doing that domestically. We're doing that internationally. I think that the opportunities that we have over the period for providing not just products but full solutions, right, multicomponent solutions, is going to grow. And that will be a first for AV providing this.

In terms of the international mix, just a year ago before the BlueHalo acquisition, we were more international revenue than we were domestic. That was based on selling those products across those 55 countries, selling across domestically and internationally. Through fiscal year '26, that mix changed around 28% international and 72% domestically. By fiscal year '30, we're expecting to see that improve and increase as a percentage, maybe not back to 55%, but improving beyond the 28% and lower than 55%.

Okay. Good. We'll come to you after that.

Thanks. Two things I wanted to ask a little bit more about, Wahid. You referenced the current less than traditional funding situation. So in the through 2030 forecast, can you talk more about what you actually assumed for reconciliation [ DOG ] marketplace? Or is it not even really like that? Is it very bottom-up product by product, program by program? And then second, competition. There's just every day, there's more companies talking about launch effect and loading munition and one-way attack and counter-UAS. How do you stave that off? And why should investors not be worried about win rate or pricing competition that flows to margins?

Yes. Great. Great questions. Let me answer the first 1 first, in terms of the budget and what our assumptions are -- it is more the latter that you described. We don't do our long-term planning process purely on the high -- like high level budget growth dollars. That to us is just a validation of whether these numbers will be real or not. The way that we develop actually our act plan details is purely from bottoms up. We look at product by product, customer by customer and program by program, opportunity by opportunity, and a vast, vast majority of our customers, while they don't get their funding for multiyear, almost all of them, they do plan their programs out 3, 4, 5, even 10 years out. So for example, LRR has been planned for several years, and it's expected to go for several more years. LASSO is the same. EHEL is the same. Every single program essentially you saw on the list that Church presented has a detailed sort of acquisition strategy, units for structured deployment, enablement, training, logistics for several, several years. And our team is very close to those customers and program offices and we get that information and that applies to our forecasting based on probability and all kinds of different things that we do to give us a forecast on what we think the range of outcomes are. That's, by far, the biggest driver on how we plan our long-term plans and even our [ AOP ] process for the annual years. In terms of competition, this -- I've been with AV for about 1.5 decades, 15 years or so, and this question has been with us since inception, since we've been actually public. And the argument has been -- or at least the argument is that there's lots of players in the space, how do you maintain your share and how do you maintain your advantage pricing wise and margin? Over the last 1.5 decades to 2 decades, as I said, there's one point that I actually counted, it was over 1,000 competitors in our space. 1,500. And then we stopped counting. This is a few years ago. And I would say 95% to 99% of those companies don't exist today. You don't even hear about them, okay? There's maybe a handful of them that's still around. And we have proven to be able to compete not against the large primes domestically and internationally, very successfully, for multiple decades, but also against start-ups that come into this market with huge, huge expectations and claims and arguments. I'm not saying that to be arrogant or to tout something that's not true. We understand the competitive landscape quite well. We assess and track that very carefully on every single market and product that we have. And we understand also what it takes to win. And we've been actually very successful, if you can look at our track record, being able to maintain that and deliver on that. Is there more competition at this phase in certain areas? Absolutely true. But the market is growing so fast, number one, that even if we do keep the same run rate, and you can see the run rate that we have is not very aggressive based on the opportunities, a $35-plus billion worth of opportunities that we're going after, we should do very, very well. The second thing is that our track record of being able to deliver and produce at volume reliably and have products that are relevant because of its battle-proven credibility gives us another advantage. And if you just look in the last 2 years when we were together, there's been several programs where our customers have intentionally have awarded it to us and someone else, 1 or 2 or 3 or 4 competitors. Or in some cases, we didn't get the initial award, and we didn't want to compromise. And we've come back -- and the customers have come back to us and says, no, we're going to cancel that, I want to go back to you. And for those of you who've known us for years, you have seen example after example after example of that. And it's because we're very careful on what we promise to and we're very, very intent on making sure that we deliver on that promise. That's not true in the industry with a lot of our competitors. And it's a no blame or fault, and I'm not saying that -- that's the fact. And it's proven by track record in the market and our track record in the market as well. So yes, we'll be competitive. We've got IP. We've got several, several moats in our solution offering that allows us to be able to compete successfully and execute and deliver on our expectations. And I think it's a very important point.

Yes. Just to add a little bit on that, Wahid, I mean we talked about it in previous presentations today, but our relationship and our intimacy with the customers gives us a huge advantage, right? They rely on us. But we also rely on them to tell us the problems that they have, and we go address those problems. And we compete on a regular basis. But we hear the requirements, we listen to their requirements, we listen to the things that they need and then we develop new systems like P550 that meet all those requirements, right? We show them a piece of paper and say, hey, if we build this, check a box. And the answer is always yes. And then we have to go and execute with excellence. And that's demonstrated by the previous award on P550. Do we compete with multiple competitors? Yes. Was there 2 awards? 82 systems to AV for P550, 8 systems to the competitor. And so that's our expectation, is yes, there will be competition, but because of our position and our relationship with our competitors, we will maintain that leading position. [ Vapor ] is another example. We did not win, as Wahid said, sometimes we don't win. And the customer comes back to us. We didn't win on the Army directed requirement, company-level director report for MRR on Tranche 1. But on Tranche 2, we did. And it was because the Army gave us feedback that says, these are the things that you need to change and then we will buy it. And then we went and made those changes and delivered on it and demonstrated it to the customer. And they said, you listened. You've heard us. And now we're going to buy it.

These are just 2 examples in the last 6 months alone. And if you go back, there's at least another half of those in examples of similar situations.

I think we can also -- sometimes people will think of the market as UAS or [indiscernible] systems, but there are submarket segments, and we're in differentiated submarket segments, in my view. And this stuff isn't easy. It's not easy to make Switchblade so that it works 100% of the time and it's tactically relevant. And it's not easy to scale up when you're having a prototype and then going to full rate manufacturing. We know how to do that. We've done it successfully. And you saw our investment strategy to be able to make sure that we can continue to do it going forward.

I hate to add this little color, but it's another evidence point. I was just back from an Asia Pacific trip 3 weeks ago. And a customer was specifically asking about Switchblade 600 and its ability to actually not only hit a tank, but destroy a tank, like penetrate the armor and go inside. And was asking, and I'm not going to disclose the details, but can you show me exactly how that's done in the field directly? And obviously, there's not just one but hundreds, if not more than hundreds, of videos that's out there. And so I asked the customer why? What is it so, so special about this particular thing you're so focused on? And the reason was that a competitor product has everything and they claim all that, but it doesn't actually achieve the mission. It hits the target, it cannot penetrate the tank and it does not destroy the tank. And that's not a very trivial thing. The way that the warhead is designed and the weapon or the loading munition comes and it hits the tank, the angle of attack, the spot you hit it in, the warhead that's used and how it does, there's a lot of secret sauce and expertise and know-how on that. It's taken us years and years of perfecting that. And so when we develop a product, we know how that works. And the competitor solution has failed to actually do it with several, several tests. And it's going to probably take them another 2 years to even get to that point. Would they figure it out? Most likely eventually. But that gives us an advantage, and that's a real example of my recent trip just Asia Pacific to 1 customer. And I can give examples of that left and right.

Anthony Valentini from Barclays. My first question is how can we think through that $4 billion number in 2030 in terms of like the different products? So how much of that is Switchblade and some of the other things? And then my second question is, how do you guys think about the strategy internally on IRAD? Meaning if you guys are spending an additional 5 percentage points on internal R&D, like what exactly are you getting for that? Is it you're getting 5 points of additional pricing? To me, it's like if you're getting 5 points of additional pricing but you're spending an additional 5 percentage points, it's a wash to the bottom line. And so there has to be more to that. So if we can just kind of walk through that and understand that, I think that would be helpful.

Let me take the second part of your question, and then, Sean, you can take the first part. On the second part, first and foremost, the appetite for R&D investments within our business, fortunately, this is a fortunate thing, is incredibly large. The reason why is because our market is growing and we have so many opportunities that we can invest in that, quite frankly, a lot of them have very, very favorable ROIs on them, in terms of success, the capability, its unique differentiated solution set, the market, the customer signal, et cetera, et cetera. So it's really a hard thing for us to make sure that we strike the right balance of where do we invest, how much do we invest and do we allocate that effectively. A. B, we have a process internally that we actually follow very rigorously on if we make a dollar worth of investment, what is the highest return on that dollar and the highest probability of success? We take that very seriously. Because if you look at this track record of AV and the products that we've actually invested in the past decade, not even 1 year or 2 years, I don't think it's actually matched by anybody in the industry. Getting it right, whether it's Switchblade 300, 600, Puma LE, P550, Vapor 55, I mean you go down the line of businesses here, we said we're going to invest in this area. We've had some, one that comes to my mind a few years ago, and that was because the market didn't develop, the commercial market, right? And we still quite well after that because we applied the product to our other platforms. So we have a fairly good -- it's part of our DNA that allows us to say, okay, this is where we're going to place the bet and here's why and why that makes sense. Is it perfect? No. It's never going to be perfect in my view. And we always tinker and we tweak and improve on it as we go. But we have a very deliberate process on that. And these are things that some of them upfront looks like, well, why do you invest in that? Take in point, P550, okay? I'll just take a few examples here. That development started about 1.5 years ago or so, roughly. And we knew that there is a program called LRR, and we knew that the requirements were very unique. We were the only player that I know of that said we need to develop this platform to ground up from a clean sheet of paper because the Army's requirements and the mission that is required to operate in is there's nothing out there that we provide or someone else provides that can meet it. So then we went down this path of investing in this and quickly coming up with a prototype and showing it to the customer. And the customer essentially, the U.S. Army came back, says like, you addressed our need. This is the only solution that we can think of today that's available that can make it. So if you go forward, you've got a good chance. That's the best they can tell you. And we still have to compete. We still have to execute. We do that. Now that product, we just got $117 million of contract, which is the initial award of this LRR that's potentially about -- if you look at the base of acquisitions, it could be between $0.5 billion to $1 billion, just U.S. Army. I firmly believe that this platform over the next 5 to 10 years is a $1 billion platform. It's a franchise that is going to be probably very similar to a Puma franchise or a Switchblade 300 franchise. And so you can't just assess this based on a $117 million contract award. That is an investment that is going to lead to several years of additional contract awards, international customers, programs, Army, Air Force, Navy, et cetera, et cetera. And that's how we do it. And so I think we have a deliberate process, and we're going to continue to do that, and there's appetite for even more. I'll go hand it to you for the second.