Aerovironment CEO Wahid Nawabi sits down with Jim Cramer

All right, look at this decline in air environment, the defense contractor best known for its high tech drones, ground robots, all this stuff that represents the future of the way war fighters are going to do their job. Last night, our environment reported a solid set of results, gave what people thought was muted guidance for the full year and it crushed the stock, I mean, sent it down more than 50% of its lows. Although elderly, it rebounded as people as cooler heads prevailed. How about that? Does it make sense to abandon this this one after maybe a weaker forecast? I am a huge believer in this business and this company. Everybody who's watched this show for any long time knows that I like this thing way. I don't know maybe it's it's probably going up more than four times when we first started talking about it. So let's take a closer look right now with with Wahid Nawabi and he is the chairman, president and CEO of Aero environment. Well, he's welcome back to mad money. It's great to have you great to be with you, Jim. OK, so we have. I'm proud to have been with you for a long time because we felt that you offered the alternative to these big heavy systems, which to me seem very outmoded because you have to have ground war fighters be able to shoot and live and have people have it up in the sky. All that I've seen so far that I'm most proud of you about is this. Well, there's been many things, but you were the first one in this replicator program, which to me is the Pentagon saying, listen, we're not tolerating these kinds of stuff anymore. We want precision and we want it done without a huge amount to the taxpayers. Tell us about the win, Jim. You called it right four or five years ago when our stock was in the 20s and 30s and where we are with today. It's fantastic. And of course, we are just starting the fundamental shift in warfare is that distributed intelligent robotic systems, loitering munitions, small drones, that's what we specialize in, is going to be a much bigger piece of the warfare in the future conflicts in Ukraine, conflicts and in the Pacific. It's always with that Replicator is the first initiative that the Department of Defense has taken up to the Under Secretary of the Deputy Secretary of Defense, Kathleen Hicks. Doctor Hicks has actually made it a mission to bring in these types of capabilities to be able to deter China and also defeat our adversaries in that theater. And we were honored to be selected as the first awardee for the Replicator program, the Switchblade 600. And the Army said that they going to buy a thousand of those immediately on the 1st tranche of the Replicator initiative. And already right now people have to understand that you early on, I know because we met and we talked about agricultural drones because the government, frankly, the military was not as ahead as what you saw would happen. You predicted all this. Unfortunately, we have real wars going on. But you predicted that Taiwan went after, you protected, you predicted that Russia could be a problem. Now Ukraine, Ukraine and Taiwan are gigantic markets for you. That's right, absolutely. So Ukraine today, to date, we've delivered thousands of units of our robotic systems, nine of our different products, nine of them are in use in Ukraine. We are the workhorse of Ukraine as an Air Force. The Pumas and Puma alleys are flying all over. Almost every artillery that the US DoD is given to Ukraine has a Puma flying in front of it to try to find targets, assess the battle space, find targets and sweeten the targets for them. So they're more effective. You know, having a Highmar even fire without the knowledge and intelligence and surveillance of a Puma, it's less effective, but the Puma makes it a lot more effective. So we want to increase the efficacy of these systems that we're providing to Ukraine and you and, and Taiwan is going to be very similar. And we're the only company that I know of that can actually produce these things in thousands of units of the DoD quality and rigor today. And we should talk about that. There was, I remember when Ukraine were first talking about funding Ukraine and there were a lot of things, a lot of pictures about the Javelin. And the Javelin is not yours. And when you looked into the Javelin, it was very expensive. And it also seemed like you had to see the target, which therefore almost always means the target can see you, which means that the losses, the number of men and women who were killed is way too high. What's the difference between your uncrewed and the Javelin? So our Switchblade 600 has essentially the same warhead as a Javelin. It's an anti main battle tank warhead that can go through any type of armored vehicle and including the Russian tanks. Javelin is a line of sight. You have to physically be able to see the target, as you said, within two to four kilometers. That is a very close fight. It's way too risky for the warfighter to be that close. We do not want our men and women in uniform to be that close to the actual enemy. Our solution? Switchblade 600 can be shot from almost 90 kilometers away, typically 40 plus kilometers. And once you get to the target, you could also loiter for about 40 more minutes To find loiter is because I know that's a very important term. It's a term of art in your business, but people might think just kind of hanging out. What does loiter mean? So lawyer means that you have a very sophisticated gimbal or sensor in the front of the UAV or drone that actually looks in the landscape and finds the target. You're going to look around to see if I can find a Russian asset that's worth taking out, a tank, a radar system, a compound, a forward operating base, a munition depot, etcetera, etcetera. Once you find it, then you designate the target to the switchblade, and then the switchblade then goes and actually hits the target as an explosive munition. And so that's when it actually achieves the lethality piece at the end game of the actual hitting. So once you get to the site, which is 40 kilometers plus away, then you have another 40 minutes to keep looking to find the right target you want to engage and then you take it out. OK. A lot of people say, well, Iran's got these $500 things and they're every bit as good as what you're doing. Could you please explain to us what the bad guys have versus what we have? The best way to describe it is that American innovation, including ours, is by far the best in the world. There is nothing that our adversaries produce that is at the caliber that we make in the United States. This is a tremendous strategic advantage for the United States and we need to keep that up. We're that's is the reason why I invest 11 to 12% of our revenue in R&D. And this year we said we don't know. People don't like that you're spending so much in Rd. I do I do because we know men and women in in our armed forces deserve it. Now let me ask you, there is a presidential election tonight. I understand from what the replicated program is is the current administration is trying to say you are the hope because you're not going to break the bank. Do you think it's going do you think either presidential candidate has a different view on drones on what you're doing? Not to my knowledge. Right now, both houses of Congress, both political parties are both the Pentagon leaders. Everyone actually believes in this future because it is the future of what's going to be a much, much more wars of drones, the Ukraine conflict, who proved it to us? We will not. You predicted it. You came on the show and I was saying when are they going to start ordering? I actually talked about ordering myself and trying to send them over there. You told me you're not allowed to do that because you had them all you the whole time you said it. And I couldn't believe that we were spending millions and millions and millions and getting almost no bang for the buck. But you've changed that. We have definitely changed that and we've actually proven it in real life when our systems arrived. And now they're very, very effective in the battlefield. And Ukrainians love them. And it's actually doing a lot of good. And I hope you save Taiwan because we cannot put soldiers there for some reason, but we can at least put drones there. We are ready to defend and provide these systems and 10s of thousands. Perfect. That's what I want to hear. That's why, you know, I be chairman, president, CEO of Aero Environment. I wish I've been able to come on midday when the stock was down gigantically. That was ridiculous, man. Bunnies back after the break. Thank you. Thank you. Coming up, pop open those umbrellas and tee up your toughest questions. Kramer takes on all comers in the Lightning round. Next, don't miss a second of Mad Money. Follow at Jim Cramer on X Have a question? Tweet Kramer hashtag MAD mentions. Send Jim an e-mail to [email protected] or give us a call at One 807 four three CNBC. Miss something? Head to madmoney.cnbc.com.