Ageagle Aerial Systems Inc (UAVS) 2021 Q3 法說會逐字稿

Good day, everyone, and thank you for participating in today's conference call. Joining us today from AgEagle is Chief Executive Officer and Board member, Brandon Torres Declet; and Chief Financial Officer, Nicole Fernandez-McGovern. Following Brandon's prepared remarks, both company officers will respond to questions that were previously submitted via e-mail by analysts and investors.

Before I introduce Brandon, I remind you that today's call, including the question-and-answer session, statements that are not historical facts, including any projections, statements regarding future events or future financial performance, or statements of intent or belief, are forward-looking statements and are covered by the Safe Harbor disclaimers contained in the company's public filings with the SEC. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.

With that said, I'll turn the call over to AgEagle's CEO, Brandon. Please go ahead, sir.

Thank you, and good afternoon, everyone. It's been almost seven months since I was appointed CEO of AgEagle, and I'm incredibly proud of how much progress we've made in such a short amount of time. We've taken the helm, and we've been hard at work, building toward our goal of becoming a global billion-dollar drone company.

More specifically, we completed three major acquisitions in 2021. The most recent, one of the world's leading fixed wing drone companies, senseFly. We are laser-focused on investing resources into our best-in-class products and solutions and continue to bring them to market at breakneck speed.

We joined the Russell 3000 Index. We successfully had several frivolous lawsuit dismissed. We continue to add some of the best industry talent to the team in sales, marketing, and engineering. On top of all that, we've been able to fortify our balance sheet, through our capital-raising efforts with Stifel and Raymond James, to adequately support the abundant growth opportunities on the horizon.

As I look at how much we've been able to accomplish over the last six months, I have the utmost confidence in our ability to drive sustainable growth going forward and meaningfully increase shareholder value. This is really just the beginning.

We believe we have a clear path towards organic growth. We are one of the few US companies that can offer customers a full-stack drone solution. This unique value proposition gives us confidence in our ability to capitalize on the ever-growing need for autonomous drone solutions across a variety of industries and applications, with a particular focus on the energy, construction, agriculture, and government markets. I'll go into more detail regarding what we've accomplished within each segment during the quarter, along with operational highlights, during the call.

But first, I'd like to turn it over to our CFO, Nicole, to review our financial results for the quarter. Then to conclude the webcast, we'll answer questions that have been submitted by our shareholders. Nicole, over to you.

Thanks, Brandon. And thank you all for joining us today. This past Friday, we filed our 10-Q with the SEC, which is accessible on the SEC.gov and on our Investor Relations section of the AgEagle website. Additionally, we announced some key highlights from the report via a press release this morning, which I'd like to recap here.

For the three months ended September 30, 2021, total revenues climbed 169% to approximately $2.0 million from approximately $750,000 in the prior year period. As we look further into the revenue result, sensor sales for the RedEdge and Altum product lines totaled approximately $1.9 million compared to 0 in the prior year period. Software sales increased to approximately $175,000 compared to only $17,000 in the prior year period. This increase was primarily driven by the benefit of having sales from the Measure Ground Control, which we acquired in the second quarter of this year.

Our gross profit margin on the total revenues for the third quarter was 39% compared to 43% in the prior year period. This decrease is largely attributed to the shift in the product mix of our product offerings. Our net loss available to common stockholders was approximately $3.8 million, or $0.05 loss per share, compared to a net loss available to common stockholders of approximately $579,000, or $0.01 loss per share, for the prior year period.

Now, looking at the results for the nine months ended September 30, 2021, total revenues increased nearly 400% to $5.7 million compared to $1.2 million in the prior year's nine-month period. Breaking down the nine-month revenue results, sales of our RedEdge and Altum sensors totaled $5.3 million, and Measure Ground Control and HempOverview software subscriptions totaled approximately $372,000.

Consolidated gross profit margin on total revenues increased 260 basis points to 49%, up from a gross margin of 46% in the same nine months in 2020. The primary factor contributing to the increase in our gross profit margin was our shift in mix of products we offer customers in the new markets we serve.

Now, moving to the bottom line. AgEagle's net loss available to common stockholders was $11.4 million, or $0.17 loss per share, for the nine months ended September 30, 2021, compared to a net loss available to common stockholders of approximately $11.3 million, or $0.33 loss per share, for the same nine-month period in 2020.

Our cash position as of September 30, 2021 was approximately $32.2 million, up from approximately $23.9 million as of the end of 2020. In addition, total stockholders' equity increased substantially to approximately $94.2 million as of September 30, 2021, compared to approximately $26.4 million as of the end of 2020.

Lastly, I want to provide an update on our capital raising efforts. From May 29, 2021, through September 30, 2021, we raised approximately $30.9 million by using our ATM with our co-agents, Stifel and Raymond James. These efforts have allowed us the resources to pursue our goal of building a full-stack solution that we believe will provide significant opportunities for growth access, our target verticals energy, construction, agriculture, and government, ultimately delivering increased substantial value to our shareholders.

Now, I'll pass it back to Brandon to go over a few details of our operational highlights for the quarter. Brandon?

Thanks, Nicole. During the third quarter, we focused on executing business strategies centered on designing and delivering a best-in-class, full-stack drone solution. This includes airframes, sensors, and software that address mission-critical applications in the energy, construction, agriculture, and government verticals. This focus has led the announcement of a number of material developments at AgEagle.

Let's start with our sensor sales, which are exceeding all of our expectations this year, and the exciting news that we have launched two new highly advanced drone sensors that I'd like to highlight. The first one we introduced was the RedEdge-P. This new sensor builds on the legacy of the RedEdge sensor, offering three times the capture speed, twice the spatial resolution, while adding the power of a panchromatic band to double the output data resolution.

The RedEdge-P is a single camera solution that is compatible with a wide array of drone aircraft, ranging from large to small, fixed wing to small multirotor. It captures multispectral and RGB imagery, with an optimized field-of-view and capture rate. This solution seamlessly integrates an all-color imager, with synchronized multispectral imagers, to enable pixel-aligned outputs at previously unattainable resolutions, all while maintaining the efficiency and reliability of its RedEdge legacy.

So RedEdge-P had been purpose-built to provide comprehensive, season-long, plant canopy analysis over larger acreage and at a spatial resolution that is considered among the highest in the industry. In addition, this new sensor is highly complementary to our Measure Ground Control software, enabling the delivery of actionable data outputs from the sensor.

The other sensor that we launched just last week was the new Altum-PT. This is an optimized three-in-one solution for advanced remote sensing and agricultural research. The new sensor seamlessly integrates an ultra-high-resolution panchromatic imager, a built-in radiometric thermal imager, and five discrete spectral bands to produce synchronized outputs, such as RGB color, crop vigor, heat maps, and high-resolution panchromatic in just one flight.

Offering twice the spatial resolution of the prior Altum sensor, Altum-PT will empower users with deeper analytical capabilities and broader, more diverse applications. These features will help enable them discern issues at the plant level, even in the early growth stages, and conduct early-stage stand counting as well as season-long soil monitoring, among other critical applications.

Overall, it's been exciting to see the eminent innovation coming out of MicaSense over the past couple of months. And I'm very proud of the team in Seattle. Based on strong sales and customer feedback, we believe that we have industry-leading sensor capabilities that are highly complementary to the other components of our full-stack drone solution.

Now, I'm really excited to talk about the incredible innovations coming out of our software division. This morning, we announced a game-changing partnership and collaboration with Wing, the drone delivery unit of Google's parent company, Alphabet. Through this partnership, we will seamlessly integrate OpenSky, Wing's aerospace access application into Measure Ground Control.

OpenSky makes it easy for our customers to comply with aerospace rules and regulations, and request authorization to fly in controlled airspace in real time wherever OpenSky is available. This collaboration is very important as we continue discussions with enterprise and government customers, which require accurate situational awareness to operate their drone programs safely and compliantly.

Integrating OpenSky from Wing into Measure Ground Control is expected to materially enhance the capabilities and underpinning valuation -- value proposition AgEagle offers to these customers. We believe our software will provide the backbone of our full-stack solution and provide the analytical capabilities necessary to realize the full value of our hardware, including our sensors and fixed wing drones.

With that in mind, we will soon make available to current and new customers the integration of our Atlas software capabilities into Measure Ground Control. This new capability and integration with MicaSense sensors will include superior tools for flight planning, autonomous data capture, multispectral image processing, analysis and collaboration, enterprise integrations, and much more.

Now, everyone from the individual farmer to the large agribusiness can benefit from fully integrated sensor and software solutions. And we're looking forward to launching that new product at the end of Q4.

Although we are still in the early days with Wing and our integration with MicaSense and senseFly, we are very optimistic with the progress we've made so far, and look forward to the growth opportunities that we believe will come with the enhanced capabilities of our software solutions.

Last but not least, I'd like to highlight the significant progress we've made on the drone manufacturing side of our business. As many of you are aware, in mid-October, we announced that we acquired senseFly from Parrot, making it our third major acquisition this year.

senseFly was founded in 2009, and has since developed a strong reputation as one of the world's leading fixed wing drone manufacturers. In 2020, senseFly generated total revenues of approximately $12.5 million, and employs approximately 90 highly talented members at Lausanne, Switzerland and Raleigh, North Carolina.

The company develops and produces a proprietary line of eBee-branded, high-performance fixed wing drones. These drones are ultralight and can be operated autonomously, allowing them to be utilized by thousands of customers around the world in energy, construction, agriculture, and government, amongst other industry verticals, to collect actionable aerial intelligence.

Adding senseFly to the AgEagle family is an ideal strategic fit for our company, as it is expected to accelerate our core growth strategy, which is focused on delivering full-stack drone solutions across multiple industries and end markets.

In addition, senseFly brings AgEagle solid aerospace engineering talent that excels at advanced research and development, a well-established global reseller network, and a strong portfolio of intellectual property. We firmly believe that this acquisition rounds out our full-stack solution. And we look forward to the growth opportunities that we believe having these new capabilities will open up.

Our acquisition of senseFly has also given our government vertical a strong start. On October 29 of this year, we announced that senseFly has been named to the Blue sUAS 2.0 list by Department of Defense's Defense Innovation Unit, or DIU. As part of the Blue sUAS 2.0 registration qualification process, senseFly has successfully completed two demonstrations for US government officials to highlight the unique strengths and capabilities of the eBee TAC.

In late July 2021, an initial technical demonstration took place at Fort Hunter Liggett, the US Army Reserves' largest training installation, where senseFly's eBee TAC underwent various types of testing and evaluation.

In mid-September 2021, senseFly conducted a second demonstration at the US Air Force Academy in Colorado, consisting of various flight demos of the eBee TAC, for the purpose of testing and evaluating the system's capabilities in adverse and high-altitude environments. The drones performed incredibly well in these initial tests, and we expect to complete the registration process prior to the end of this year, completely opening up opportunities throughout the United States government.

Through senseFly's innovative eBee TAC, senseFly will become an important player in drone domestic industrial base of the US and its allies, helping to ensure delivery of secure tactical mapping and ISR solutions that the Department of Defense and other government entities will come to depend on.

Now, just some of the corporate initiatives we're working. In addition to the tremendous talent and expertise we've added to the AgEagle team through acquisitions this year, we are also expanding our team through a number of key hires. Recently, we welcomed several new engineers and developers to our sensor and software teams, and we expanded our corporate team to include a new VP of People and a Corporate Controller.

Having a capable workforce that is invigorated by the growth opportunities in front of us is going to be vital to the success of this company. And we are confident in the team that we are putting together. We are still actively seeking A players, and I encourage folks to view our career opportunities on the AgEagle website to learn more about these exciting positions.

As we're hard at work, expanding our team and integrating these recent acquisitions, we are also focused on maintaining a culture that is focused on one company with one vision. Unifying MicaSense, Measure, senseFly, and AgEagle will create powerful synergies and efficiencies, allowing us to provide customers with truly world-class, full-stack drone solutions that are scalable, help to optimize workflow productivity and workforce safety, and provide tangible cost benefits and swift returns on our customers' drone program investments.

Moreover, by teaming with other best-in-class technology solutions providers, such as Wing, we can work together to achieve broad global market adoption of drone solutions.

Before we move to the Q&A portion of the call, I would like to come on -- comment on President Biden's signing of the landmark $1.2 trillion infrastructure investment and Jobs Act today, a bill approved by both the US House of Representatives and the US Senate.

With this new legislation allocating approximately $110 billion for construction, repair, and modernization of roads, railways, bridges, electric grids, and other major infrastructure projects, the US commercial drone industry should be bracing for potentially profound positive impact and growth acceleration.

Given that enterprise drone programs have already proven their valuable use in unmanned aerial inspections, surveying, and mapping, among other applications, within the construction, energy, and government sectors, [it should be] concluded that leading American-based drone solution providers, including AgEagle, are poised to benefit from the billions of dollars that will begin flowing into government-sponsored infrastructure projects over the next several years.

I look forward to keeping you all apprised on the progress we make throughout the journey to ultimately drive shareholder value. I'll return for some closing remarks. But I'd like to turn it back to Nicole for our prepared Q&A session. Nicole, over to you.

Thanks, Brandon. Let's address some questions that we've received in the earlier days.

Our first question, now that you have made three acquisitions to complete your full-stack solutions, do you anticipate any more M&A activity in the future? If so, what other solutions or components do you feel that you will need to buy rather than build out in-house? Brandon?

Thanks, Nicole. We've maintained, since the beginning of this year, that pursuing applications will remain a key growth strategy for AgEagle. However, we've also stated that we are taking a very thoughtful approach to every opportunity, ensuring that the potential acquisitions will support future organic growth and are additive to building best-in-class, full-stack drone solutions for our customers.

It's also very important that acquisitions create long-term shareholder value. And similar to the new relationship with Wing, we also intend to explore and pursue collaborative strategic partnerships with other technology companies, if and when it makes sense to do so, and add tangible value and improved functionality and capabilities to our products and value for our customers.

Thanks, Brandon. That was great. What are your plans for the Wichita manufacturing facility going forward?

Thanks, Nicole. This past week, I was proud to host Congressman Ron Estes, our local representative at the Wichita facility. I was joined by my fellow Board members and members of the Measure, MicaSense, and senseFly teams to provide a capability briefing and discuss how we can work with the Congress and the entire Kansas congressional delegation to further enhance our value proposition for government and customers.

At the heart of those capabilities is our ability to manufacture airframes and sensors here in the United States, enhancing our domestic industrial base and bringing high-tech, well-paying jobs wherever AgEagle has facilities. As we work on integrating MicaSense, Measure, and senseFly teams, we will share more news on how we're going to support that mission.

Great. Next question is, with your solutions being applicable across a variety of industries, are there any plans to rebrand the company away from its current ag-centric branding?

Thanks, Nicole. Having made three acquisitions and measurably increasing our headcount already this year, our current focus is and shall remain on integrating all of our business groups into one company.

That being said, we are listening to our customers, our shareholders, and the market on how we are perceived as a company and what we can do to improve our position and shareholder value.

Perfect. Next question. As you continue to expand your team in an incredibly tight labor market, have you run into issues finding or hiring people with the necessary skill sets?

So competition for top quality talent is fierce right now. We are working to make AgEagle one of the best places to work by offering competitive salaries, high-quality benefits, professional development opportunities, and, most importantly, the ability to make a mark in the exciting and fast-paced drone industry. We've enjoyed quite a bit of success in our recruiting and hiring efforts in 2021, and expect that this success will continue into 2022.

It is readily apparent that there are lots of qualified, talented people who are actively looking to capitalize on new career opportunities in the growing drone industry, and, in particular, with leading companies like AgEagle. Given that we now have business operations globally and on our high growth mode, we expect that we will be offering plenty of exciting opportunities well into the future. And I hope everyone checks out our website for those exciting openings.

So our last question for today is, can you speak to the supply chain constraints that are currently impacting, or that you anticipate impacting, your ability to deliver sensor or drone solutions to customers?

Thanks, Nicole. Well, this has been a top-of-mind for many people. And yes, like many companies, we've experienced our fair share of supply chain constraints. However, we continue to launch new products on or near schedule. And I remain confident that we can identify alternative suppliers, if and/or when necessary. We are keeping a very close eye on this critical issue, and we'll move quickly to address as necessary.

So this concludes the Q&A session. Before we end the webcast, I just want to reiterate our vision for the future.

First, we are growth minded. With a strong foundation as a known drone solutions company, and more than a decade of proven experience, AgEagle is uniquely positioned to offer best-in-class solutions to legacy and emerging industries through product innovation, R&D, acquisitions, and strategic partnerships. Our reputation as an American drone technology company sets us apart and positions us to become a dominant force in the market.

Second, we believe our deep bench of drone expertise on the team puts us in the pole position to benefit from regulatory changes that will allow our customers to fly drones autonomously in more places than ever. These autonomous drones will collect high-quality data and applications as varied as pipeline inspection, [as-designed] construction surveys, leaf-level crop health, and tactical mapping for the warfighter.

Lastly, this is one company with one vision. We believe our employees are passionate, experienced professionals who are building the solutions that will pave the way to an autonomous future of robots. We trust that, together, we can build diverse, collaborative, resilient, and innovation -- and innovative culture intent on winning.

With that, I'd like to thank all of you for joining our webcast today. And I'd like to thank all of our shareholders for their continued support. We look forward to continuing to share our progress.

Operator, back to you.

Thank you, Brandon. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect at your line -- your lines at this time. Thank you for your participation, and have a great day.