Red Cat Holdings, Inc. (RCAT) on Q1 2022 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal First Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. . After today's presentation, there will be an opportunity to ask questions. . Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through December 20, 2021. I would now like to turn the call over to Scott Gordon, President of Core IR, the company's Investor Relations firm. Please go ahead, sir. Scott Gordon: Thank you, Ellie. Good afternoon, everyone and thank you for joining us for the Red Cat Holdings fiscal first quarter 2022 financial results and corporate update conference call. Joining us today from Red Cat Holdings are Jeff Thompson, Chief Executive Officer of Red Cat Holdings; and Jeff Hernon, Chief Financial Officer. During this call, management will be making forward-looking statements including statements that address Red Cat's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Red Cat's most recently filed periodic reports on Form 10-K and Form 10-Q and the Form 8-K filed with the SEC today and Red Cat's press release that accompany this call, particularly the cautionary statements in it. The context of this call contains time-sensitive information that is accurate only as of today, September 20, 2021. Except as required by law, Red Cat disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Jeff Thompson, Red Cat’s CEO. Jeff, Please go ahead. Jeffrey Thompson: Thank you, Scott. Good afternoon, and thank you all for joining our fiscal first quarter 2022 call and webcast. Also joining me today is Joseph Hernon, our CFO. The series of recent acquisitions we have completed, both in fiscal 2021 and 2022 thus far, are pivotal to the direction and outlook for Red Cat. The acquisitions of Teal Drones at the beginning of September 2021 and Skypersonic in early May 2021 position the company to compete effectively in the military and infrastructure inspection marketplaces respectfully. And both will add considerable contribution to our Enterprise segment. With the Teal Drones acquisition, we gained immediate access to the military reconnaissance and public safety applications markets for small UAVs. Teal’s Golden Eagle drone is one of just five drones approved by the Department of Defense. We are both invigorated and optimistic about the military contract that we can now bid on. Additionally, the Golden Eagle is currently the only drone approved to fly on United States Air Force property. This is an important exclusivity and we intend to continue to leverage this competitive advantage moving forward. Teal drones are made in the USA and with the ban on drones and even drone components made in China coming into effect, this is another competitive advantage for Red Cat. Additionally, we continue to move forward with the DoD in the Short-Range Reconnaissance, SRR program. And we are participating in the second tranche of that program. In fact Dr. Allan Evans, our COO; and George Matus, CEO and Founder of Teal Drones are attending the program for advanced autonomous short-range VTOL CSO as we speak. After attending product one, we received notice approximately five weeks later. This could be a $2 million win for Teal and Red Cat. While we are working on securing government contracts, we're also aggressively scaling Golden Eagle production to meet the current levels of government agency demands. We are fortunate to be fully funded, and we plan on using some of our cash reserve as an internal investment to grow production capabilities. Turning to Skypersonic, we have an incredible opportunity to use drones to evaluate the structural integrity of enterprise and/or government structures or other assets particularly in locations where there's high risk for human operators involved. Skypersonic allows for the execution of remote drone flights with operators anywhere in the world using patented technology that allows for tight space inspections, even in areas where GPS is not allowed or available. We've already received small purchase orders for pilot programs for our artificial intelligence platform that Skypersonic is building as part of Dronebox. We anticipate success in these programs as well as more substantial revenues for these services in the next 12 months. Also, we currently have outstanding bids on jobs in Europe with General Motors and other domestic government agencies. We're currently co-bidding on a project with partners in Italy that is approximately $8 million. And if we were selected, we would get the material portion of the award. Let's move on to the Consumer segment. I'm pleased with the performance especially given the adversity seen in the quarter. The global supply chain crisis resulted in being out of stock of our most popular items at Fat Shark and Rotor Riot divisions for over a month. Luckily, we anticipated the issue and minimized the impact, we are very excited for the fiscal second quarter because we have gotten ahead on inventory and expect robust Christmas for Rotor Riot along with growing digital goggle sales from Fat Shark. Rotor Riot had a backlog of almost 100 ready to fly drones. We have quickly started building and are expected to be caught up now that we have the supply chain issues resolved. Fat Shark is also poised in Q2 to rebound with new products and proper inventory. We continue to perform strongly in the market carving out our leadership position in the industry through acquisitions and performance. As we continue to execute on the expansion of the company, with it comes an expansion of our revenue and overall market performance. As Joseph, our CFO will talk a little later, we recognized 155% year-over-year increase in our revenues in our fiscal first quarter ending July 31. And we are extremely in a strong position to build large contracts, and execute on our roadmap, thanks to the $66 million in cash and equivalents on our balance sheet as of July 31, 2021. And with that, I'm going to hand the call over to Joseph. Joseph Hernon: Thank you, Jeff, and to everyone for joining today. Our first quarter of fiscal 2022 was exciting, and eventful in a number of respects. Our strategy to acquire synergistic drone technologies and platforms continued to move forward, as we completed our first full quarter of operations for Fat Shark, closed on the acquisition of Skypersonic in May, signed a Letter of Intent to acquire Teal in July and then close on that acquisition at the end of August. Revenues, despite the challenges that Jeff described, still grew strongly in Q1 '22 compared to Q1 '21, primarily driven by Fat Shark. Like many companies, our gross margin and our availability of inventory to meet demand during the quarter was adversely impacted by higher shipping and fulfillment costs, in part related to the COVID-19 pandemic. All of our functional expense categories were higher in fiscal '22 compared to the same quarter in fiscal '21, reflecting the growth of the company as we integrated the Fat Shark and Skypersonic acquisition. The largest increase in expenses incurred in the category of general and administrative which were heavily impacted by our uplifting to the NASDAQ market, including the associated NASDAQ listing fees, securing D&O coverage to attract qualified additional Board members, as well as formally engaging a PR IR firm. While our net loss was higher in Q1 '22 compared to Q1 '21, we continue to efficiently grow the enterprise while controlling cash burn. Our adjusted net loss in the first quarter of ‘22 -- 2022, excuse me, which excludes non-cash expenses related to derivative liabilities and stock-based comp, both to employees and service providers, totaled only $1.1 million in Q1 '22. We think this is an impressive accomplishment, considering that we were busy integrating Fat Shark and Skypersonic during the quarter. As most of us know, integrating acquisitions is often expensive. In summary, we were pleased with our operating performance during the quarter. We were equally pleased with our ability to strengthen our financial position during the quarter. In May, we closed an offering of 4 million shares of common stock, which generated gross proceeds of $16 million. In July, we closed, the second offering of slightly more than 13 million shares of common stock, which generated gross proceeds of $60 million. It is important to note that, we completed these offerings without having to include warrants, which is very typical for a company of our size. This enables us to avoid an overhang of future dilution. We ended the quarter with approximately $66 million in cash and equivalent. If you compare that amount to our adjusted net loss of $1.1 million for the first quarter of fiscal 2022, you can quickly understand why we feel so strongly and confident about our financial position at this time. With that, I would like to turn the call over for questions. Operator? Operator: . Our first question today comes from Ashok Kumar with ThinkEquity. Ashok Kumar: Good afternoon, Jeff. And Jeff could you please review the short-term and the long run revenue opportunities? Thank you very much. Jeffrey Thompson: Yes. Thanks for jumping on the call, Ashok. Yes, there's a lot as I kind of mentioned in my prepared remarks. But what's pretty exciting right now is, Teal Drones, we have already ordered about (ph) drone chipsets to be able to construct over 600 drones that we could actually have delivered in the next six months. Depending on if we use distributors, that would generate about $6.5 million in revenue. And if we sell direct, it would generate about $8.4 million in revenue from those drones, that we have -- being constructed right now. And then, if we add in the possibility of winning the second tranche, which our team is attending right now this week, if they get that awarded in the next five or six weeks, that would be an additional $2 million. So there is -- the short-term has, I would say, the next six to eight months just from Teal could be anywhere from $6.5 million with all the things I just discussed up to $10.5 million. So we think that Teal is going to start to hit its stride and the goal is to get to a certain amount of drones per month that gets us to breakeven. So we're pretty excited we feel and then now Skypersonic is also starting to get its artificial intelligence platform in great order. We were really just going out for a few customers to make sure that it was working the way we wanted it to. We now think that the product is ready to start scaling. And as we mentioned in the remarks that we do -- we have received some smaller purchase orders on Skypersonic world, we’re basically getting units out to companies. And then we expect, if they like what they see that they'll grow into very large contracts. So I think we're in a really good spot over the next six months to ramp revenue pretty quickly. Operator: Our next question comes from Kevin Dede with H.C. Wainwright. Spencer Kirschman: This is Spencer Kirschman in for Kevin. Congrats on a great quarter. I was just curious how you guys are thinking about branding and potential brand consolidation given the various subsidiaries? Jeffrey Thompson: Yes. That's actually -- it gets pretty interesting where the -- some of the brands have bigger appeal than others. Rotor Riot brand is so well-known that we'll keep that as a standalone brand, and same with Fat Shark. Fat Shark is one of the leaders in the goggle space for 8 years. So those are brands who would not want to touch. In the military, fortunate with Teal and the government contracting capabilities. They also have a relatively great brand. So if the brand is well-known, is starting to get traction, we'll probably leave it as it is. And the people in the military barely know who Red Cat is, but they know -- they knew who the heck Teal Drones is. And the same thing with Rotor Riot, Fat Shark. So we will be selective on how we brand or rebrand companies as we acquire them. Spencer Kirschman: And I believe you're going to continue with that M&A strategy of just trying to acquire other drone manufacturers or software, whatever it may be. Can you provide any more color on that in terms of what you see in the space, in terms of that potential consolidation? Jeffrey Thompson: Yes. So we -- as we're looking at, specifically for the DoD contracts that we're looking at, there's five companies that are able to participate in these programs, that’s since gone down to four, which Altavian is no longer pursuing after they got bought by Teledyne. So we’re one of four, which really puts us in a good spot. We want to make sure that we have the best features to hopefully win these large contracts in tranche 3. So if there's any pieces of puzzle that we don't think that we have, we would probably go after those in there, mostly in the software world. We will probably not go at such a vicious rate with our acquisitions, as we have in the last six months. We'd like to continue to work on the LuGus deal now that we've got Teal squared away and which gives a great simulation platform that is needed in all of our divisions basically, actually already working with LuGus. So you will -- we will still be doing acquisitions which just probably won't be at the same pace that we've done in the last six months. Spencer Kirschman: And last question, are you able to provide any additional color on different DoD activities, like different kinds of projects that you may be looking at? Jeffrey Thompson: Yes, some of the things that we're hearing right now specifically for this DoD, the pitch that we're going to this week, we’ve actually found out that it used to be just specifically for the army. And recently, I've heard that they're adding the Marines and the Navy to this program, which could enlarge the contract awards next year. So -- but we are basically already in almost every government entity and have Teal Drones there. Operator: This concludes our question-and-answer session. I'd like to turn the call back over to Jeff Thompson for any closing remarks. Jeffrey Thompson: Yes. Thanks, everybody. Hopefully, you survived this crazy day. But we're pretty excited and I just want to wish the team (ph) and I want to thank all the Red Cat employees from all the different divisions and it's going to be an exciting quarter. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Red Cat Holdings, Inc. (NASDAQ:RCAT) Appoints New President and Reports Earnings
- Red Cat Holdings, Inc. (NASDAQ:RCAT) appoints Shawn Webb as President of FlightWave Aerospace Systems Corporation, aiming to bolster its drone technology sector leadership.
- RCAT reported an EPS of -$0.09, surpassing the estimated EPS of -$0.10, and a revenue of $7.49 million, significantly exceeding expectations.
- Despite positive sales, RCAT's financial ratios indicate ongoing losses and challenges in cash flow generation, with a negative P/E ratio of -12.80 and a price-to-sales ratio of 33.47.
Red Cat Holdings, Inc. (NASDAQ:RCAT) is a company that focuses on drone technology for military, government, and commercial uses. Recently, the company appointed Shawn Webb as President of its subsidiary, FlightWave Aerospace Systems Corporation. This move is part of Red Cat's strategy to strengthen its leadership team and enhance its operations in the drone technology sector.
On April 7, 2025, RCAT reported an earnings per share (EPS) of -$0.09, which was better than the estimated EPS of -$0.10. This indicates that the company is performing slightly better than analysts expected, despite still operating at a loss. The company's revenue of approximately $7.49 million significantly surpassed the estimated revenue of $2.4 million, showcasing strong sales performance.
Despite the positive revenue figures, RCAT has a negative price-to-earnings (P/E) ratio of -12.80, indicating ongoing financial losses. The price-to-sales ratio is 33.47, meaning investors are paying $33.47 for every dollar of sales. This high ratio suggests that investors have high expectations for the company's future growth.
RCAT's enterprise value to sales ratio is 34.03, reflecting its valuation in relation to sales. The enterprise value to operating cash flow ratio is -29.07, highlighting challenges in generating positive cash flow from operations. These metrics suggest that while the company is valued highly, it faces difficulties in converting sales into cash flow.
The company's debt-to-equity ratio is 0.51, indicating a moderate level of debt compared to equity. This suggests that RCAT is not overly reliant on debt for financing. Additionally, the current ratio of 1.43 indicates that the company has a reasonable level of liquidity to cover its short-term liabilities, providing some financial stability.
Red Cat Holdings, Inc. (NASDAQ:RCAT) Appoints New President and Reports Earnings
- Red Cat Holdings, Inc. (NASDAQ:RCAT) appoints Shawn Webb as President of FlightWave Aerospace Systems Corporation, aiming to bolster its drone technology sector leadership.
- RCAT reported an EPS of -$0.09, surpassing the estimated EPS of -$0.10, and a revenue of $7.49 million, significantly exceeding expectations.
- Despite positive sales, RCAT's financial ratios indicate ongoing losses and challenges in cash flow generation, with a negative P/E ratio of -12.80 and a price-to-sales ratio of 33.47.
Red Cat Holdings, Inc. (NASDAQ:RCAT) is a company that focuses on drone technology for military, government, and commercial uses. Recently, the company appointed Shawn Webb as President of its subsidiary, FlightWave Aerospace Systems Corporation. This move is part of Red Cat's strategy to strengthen its leadership team and enhance its operations in the drone technology sector.
On April 7, 2025, RCAT reported an earnings per share (EPS) of -$0.09, which was better than the estimated EPS of -$0.10. This indicates that the company is performing slightly better than analysts expected, despite still operating at a loss. The company's revenue of approximately $7.49 million significantly surpassed the estimated revenue of $2.4 million, showcasing strong sales performance.
Despite the positive revenue figures, RCAT has a negative price-to-earnings (P/E) ratio of -12.80, indicating ongoing financial losses. The price-to-sales ratio is 33.47, meaning investors are paying $33.47 for every dollar of sales. This high ratio suggests that investors have high expectations for the company's future growth.
RCAT's enterprise value to sales ratio is 34.03, reflecting its valuation in relation to sales. The enterprise value to operating cash flow ratio is -29.07, highlighting challenges in generating positive cash flow from operations. These metrics suggest that while the company is valued highly, it faces difficulties in converting sales into cash flow.
The company's debt-to-equity ratio is 0.51, indicating a moderate level of debt compared to equity. This suggests that RCAT is not overly reliant on debt for financing. Additionally, the current ratio of 1.43 indicates that the company has a reasonable level of liquidity to cover its short-term liabilities, providing some financial stability.
Red Cat Holdings, Inc. (NASDAQ:RCAT) Earnings Preview and Growth Prospects
- Red Cat Holdings, Inc. (NASDAQ:RCAT) is expected to report quarterly earnings with an EPS of -$0.10 and projected revenue of $2.4 million.
- The company's revenue growth in 2025 is anticipated to be driven by new military contracts, with projections ranging from $80 million to $120 million.
- Despite a 50% decline in stock price, Red Cat's collaboration with Palantir could enhance drone capabilities, potentially increasing software gross margins to 80-90%.
Red Cat Holdings, Inc. (NASDAQ:RCAT) specializes in drone technology, focusing on military applications. The company is set to release its quarterly earnings on April 7, 2025. Wall Street analysts expect the earnings per share to be -$0.10, with projected revenue of approximately $2.4 million. Despite these figures, Red Cat is anticipated to experience substantial revenue growth in 2025.
The company's growth is primarily driven by new military contracts, which are expected to boost revenues significantly. Projections for 2025 range from $80 million to $120 million, a substantial increase from the current quarter's expectations. This growth is supported by high gross margins, which are crucial for profitability. The collaboration with Palantir is set to enhance Red Cat's drone capabilities, potentially increasing software gross margins to an impressive 80-90%.
Despite a significant 50% decline in its stock price, Red Cat's future appears promising. The company has a negative price-to-earnings (P/E) ratio of approximately -14.76, indicating it is not currently profitable. However, the price-to-sales ratio of 38.58 suggests that investors are willing to pay a premium for each dollar of sales, reflecting confidence in future growth. The enterprise value to sales ratio is 39.13, slightly higher than the price-to-sales ratio, indicating the company's total valuation in relation to its sales.
Red Cat faces challenges in generating positive cash flow from operations, as indicated by an enterprise value to operating cash flow ratio of -33.43. The earnings yield is -6.78%, further highlighting the company's current lack of profitability. However, the debt-to-equity ratio of 0.51 suggests a moderate level of debt relative to equity, which is manageable. Additionally, the current ratio of 1.43 indicates that the company has a reasonable level of short-term liquidity to cover its current liabilities.
Red Cat Holdings, Inc. (NASDAQ:RCAT) Earnings Preview and Growth Prospects
- Red Cat Holdings, Inc. (NASDAQ:RCAT) is expected to report quarterly earnings with an EPS of -$0.10 and projected revenue of $2.4 million.
- The company's revenue growth in 2025 is anticipated to be driven by new military contracts, with projections ranging from $80 million to $120 million.
- Despite a 50% decline in stock price, Red Cat's collaboration with Palantir could enhance drone capabilities, potentially increasing software gross margins to 80-90%.
Red Cat Holdings, Inc. (NASDAQ:RCAT) specializes in drone technology, focusing on military applications. The company is set to release its quarterly earnings on April 7, 2025. Wall Street analysts expect the earnings per share to be -$0.10, with projected revenue of approximately $2.4 million. Despite these figures, Red Cat is anticipated to experience substantial revenue growth in 2025.
The company's growth is primarily driven by new military contracts, which are expected to boost revenues significantly. Projections for 2025 range from $80 million to $120 million, a substantial increase from the current quarter's expectations. This growth is supported by high gross margins, which are crucial for profitability. The collaboration with Palantir is set to enhance Red Cat's drone capabilities, potentially increasing software gross margins to an impressive 80-90%.
Despite a significant 50% decline in its stock price, Red Cat's future appears promising. The company has a negative price-to-earnings (P/E) ratio of approximately -14.76, indicating it is not currently profitable. However, the price-to-sales ratio of 38.58 suggests that investors are willing to pay a premium for each dollar of sales, reflecting confidence in future growth. The enterprise value to sales ratio is 39.13, slightly higher than the price-to-sales ratio, indicating the company's total valuation in relation to its sales.
Red Cat faces challenges in generating positive cash flow from operations, as indicated by an enterprise value to operating cash flow ratio of -33.43. The earnings yield is -6.78%, further highlighting the company's current lack of profitability. However, the debt-to-equity ratio of 0.51 suggests a moderate level of debt relative to equity, which is manageable. Additionally, the current ratio of 1.43 indicates that the company has a reasonable level of short-term liquidity to cover its current liabilities.
Red Cat Holdings, Inc. (NASDAQ: RCAT) Faces Financial Challenges Despite Innovative Drone Technology
- Red Cat Holdings, Inc. (NASDAQ: RCAT) reported an earnings per share (EPS) of -$0.18, missing the estimated EPS of -$0.08, indicating the company's current lack of profitability.
- The company's revenue for the fiscal second quarter was approximately $1.53 million, significantly lower than the estimated $4.13 million, reflecting in a high price-to-sales ratio of about 52.81.
- Despite financial strains, RCAT maintains a debt-to-equity ratio of 0.51 and a current ratio of 1.43, suggesting moderate debt levels and reasonable liquidity.
Red Cat Holdings, Inc. (NASDAQ: RCAT) is a company that focuses on drone technology for military, government, and commercial uses. Based in San Juan, Puerto Rico, RCAT integrates robotic hardware and software to enhance its offerings. Despite its innovative approach, the company faces financial challenges, as seen in its recent earnings report.
On December 16, 2024, RCAT reported an earnings per share (EPS) of -$0.18, which was below the estimated EPS of -$0.08. This indicates that the company is not currently profitable, as highlighted by its negative price-to-earnings (P/E) ratio of approximately -28.52. A negative P/E ratio suggests that the company is not generating enough earnings to cover its share price.
RCAT's actual revenue for the fiscal second quarter was approximately $1.53 million, significantly lower than the estimated $4.13 million. This shortfall is reflected in the company's price-to-sales ratio of about 52.81, meaning investors are paying $52.81 for every dollar of sales. The enterprise value to sales ratio is slightly higher at 53.42, indicating a similar valuation challenge.
The company's financial performance is further strained by a negative enterprise value to operating cash flow ratio of around -41.39. This suggests difficulties in generating positive cash flow from operations. Additionally, the earnings yield is negative at approximately -3.51%, reinforcing the lack of profitability.
Despite these challenges, RCAT maintains a debt-to-equity ratio of 0.51, indicating a moderate level of debt compared to its equity. The current ratio of 1.43 suggests that the company has a reasonable level of liquidity to cover its short-term liabilities, providing some financial stability amidst its earnings struggles.
Red Cat Holdings, Inc. (NASDAQ: RCAT) Faces Financial Challenges Despite Innovative Drone Technology
- Red Cat Holdings, Inc. (NASDAQ: RCAT) reported an earnings per share (EPS) of -$0.18, missing the estimated EPS of -$0.08, indicating the company's current lack of profitability.
- The company's revenue for the fiscal second quarter was approximately $1.53 million, significantly lower than the estimated $4.13 million, reflecting in a high price-to-sales ratio of about 52.81.
- Despite financial strains, RCAT maintains a debt-to-equity ratio of 0.51 and a current ratio of 1.43, suggesting moderate debt levels and reasonable liquidity.
Red Cat Holdings, Inc. (NASDAQ: RCAT) is a company that focuses on drone technology for military, government, and commercial uses. Based in San Juan, Puerto Rico, RCAT integrates robotic hardware and software to enhance its offerings. Despite its innovative approach, the company faces financial challenges, as seen in its recent earnings report.
On December 16, 2024, RCAT reported an earnings per share (EPS) of -$0.18, which was below the estimated EPS of -$0.08. This indicates that the company is not currently profitable, as highlighted by its negative price-to-earnings (P/E) ratio of approximately -28.52. A negative P/E ratio suggests that the company is not generating enough earnings to cover its share price.
RCAT's actual revenue for the fiscal second quarter was approximately $1.53 million, significantly lower than the estimated $4.13 million. This shortfall is reflected in the company's price-to-sales ratio of about 52.81, meaning investors are paying $52.81 for every dollar of sales. The enterprise value to sales ratio is slightly higher at 53.42, indicating a similar valuation challenge.
The company's financial performance is further strained by a negative enterprise value to operating cash flow ratio of around -41.39. This suggests difficulties in generating positive cash flow from operations. Additionally, the earnings yield is negative at approximately -3.51%, reinforcing the lack of profitability.
Despite these challenges, RCAT maintains a debt-to-equity ratio of 0.51, indicating a moderate level of debt compared to its equity. The current ratio of 1.43 suggests that the company has a reasonable level of liquidity to cover its short-term liabilities, providing some financial stability amidst its earnings struggles.
