A leading provider of integrated drone solutions across North America
Canadian based Volatus Aerospace Inc. is a leading provider of integrated drone solutions across North America with expanding operations in Latin America and globally. The company serves civil, public safety and defense markets. And in May, the company announced a transformative merger with Drone Delivery Canada. Lyndsay Malchuk recently caught up with Glen Lynch, CEO of Volatus Aerospace to discuss the company's background, their technology, and how Volatus stands apart from all the rest.
The following is a transcription of the above video, and The Market Online has edited it for clarity .
Lyndsay: Let's start with just a bit of a background if we could, can you walk us through Volatus' journey and really how it's grown into a key player in the drone tech and services space?
Glen: Certainly. So, the company was founded about six years ago with the belief that drones would replace piloted aircraft for specifically logistics and aerial survey intelligence type works. And then eventually it would actually start to replace human beings in jobs that were dull, dirty, or dangerous, which is really the theme of autonomous or automated systems. So now the company has become an innovator in aerial intelligence and logistics.
We grew fairly quickly, 50% from organic growth and 50% through acquisition. So we are an acquisitive company. And last August with the completion of Drone Delivery Canada, that was our 18th acquisition. So now we have a service that basically delivers intelligence and cargo services globally.
We've got a strong presence in public safety, infrastructure, oil and gas and energy. We've pioneered off-grid nested drone solutions. So basically autonomous drone in a box that are dropped off at mining and industrial sites and operated remotely and really become known for our regulatory strengths that have allowed us to operate beyond the confines of typical regulations through waivers and special applied operating certificates.
Lyndsay: What are some of those standout technologies or platforms Volatus has built? Let's expand on that a little bit. I mean, how do these set you apart from others in the drone industry?
Glen: Well, funny enough, R&D is part of our DNA, and we have a portfolio of technologies. What really sets us apart from many is that we're truly a technology agnostic company. We've developed more of an integrated ecosystem of aerial solutions that include much of our own technologies, but also other people's technologies.
The concept is to leverage our remote operations capabilities from our OCC in the Toronto area for the remote operation of air vehicles beyond visual line of sight of the pilot. So a lot of the IP was for remote operations came from Drone Delivery Canada including our ground-based infrastructure and many of the cargo delivery drones. And today we conduct nearly daily flights where the air vehicle is more than 3000 kilometers away from the pilot operator in Toronto.
On the inspection side, we've got AI driven inspections. We do thermal leak detection, remote sensing activities and I should also mention our Volatus Academy, which I'm quite proud of.
That's our training and education platform where we focus on platform agnostic training and STEM programs, specifically our SEAR program, which is our scientific experiential aerial research program that works with high school students to have them understand drone technology, sensors and use data that they collect to populate algorithms that ultimately can contribute to things like the early detection of Dutch Elm disease, projects like that.
And then of course, the last thing is focusing on our regulatory approvals that allow us to use all of this ecosystem or engage it in operations that are beyond what most companies can.
Lyndsay: Let's just walk over to the financials if we could. Can you break down some of those highlights for us? You know, revenue growth, profitability, any big investments or partnerships that have helped drive that performance for you?
Glen: So, the company has experienced some decent growth. We're still a small business by definition, but our revenues in 2021 were basically $660,000 and 2024, a few years later, were $27 million, and we're targeting $50 million in 2025.
We've pivoted a lot towards recurring revenue models where we're dealing with long-term contracts with oil and gas and power utilities versus the early days of individual one-off type contracts. Not to say that we don't still have a fair number of individual buildings or projects that we will inspect, but a lot of our focus now is on larger scale, bigger customers, bigger contracts basically.
On the equipment sales side, we have about $12 million in unfulfilled demand in Canada alone for solution sales. So big opportunities there. Our defense strategy focuses on ISR or intelligence, reconnaissance and surveillance type services with a focus in Canada, Europe, and Southeast Asia.
A lot of focus around NATO allies. Our revenue mix is about 60% on the service side, which is basically our turnkey services, our training and our consulting services, and 40% on solution sales. That's expected to shift more and more towards the service side of the business as we continue to grow.
Margins have also grown. So, from about 24% to about 35%, we're targeting 40% to 45% in the near future. That's a year over year growth that will continue to improve as our business mix changes and as our business evolves.
And one key thing, I'm quite proud of our post-merger strategies, our synergies that we were able to realize with Drone Delivery Canada. We forecast $3 million in savings in the first 100 days. We actually achieved $3.8 million and near break even in Q4 last year.
So, our adjusted EBITDA was just a little better than a $200,000 loss, which is putting us kind of on track for our target to a positive EBITDA on a go forward basis by the end of the year.
Lyndsay: Let's unpack that merger just a little bit more with Drone Delivery Canada. Now that that's complete how does that boost Volatus' capabilities and position in the market?
Glen: So, it brought a lot to us. It was very much a technology company that had focused on remote operations and logistics services. So, it definitely strengthened our cargo logistics technologies and IP, but it's also given us a lot of enhanced capabilities through the operational control center and the staff that came with that, giving us national and international operating capabilities that I would say are second to none right now.
It added long-term regulatory approvals and positioned us as a dual leader in both logistics and remote operations for intelligence type products.
Lyndsay: So, it wasn't just that, which was the big news. the company also announced a major national expansion of its drone services on May 27th of this year. What does that rollout actually look like on the ground, and how does it fit into your bigger picture goals?
Glen: So that's really about nationwide beyond visual line of sight. In other words, where the air vehicle is at a long distance away from the operator. It makes us very scalable. It enables coast to coast remote operations of drones but with an internal self-approval mechanism.
So as long as we fall within the confines of our approval, the conditions of the approval, it allows us to self-approve a large percentage of the operations that we would be working towards. So, it advances our national drones as a service model, our nested drone solutions, basically drone in a box, industrial drone in a box that are just deployed. And it gives us immediate scalable benefits and increased gross margins in intelligence, the remote sensing area and in the logistics business. And it's a significant support of many of the federal government's goals that were announced yesterday during their news conference.
Lyndsay: You have so much going on, and even more so the big news that just dropped. So, with Canada's fast tracking military spending and prioritizing domestic vendors, is Volatus quietly positioning itself for an elephant sized defense contract? And if so, why aren't these prospective wins that you're speaking of not reflected in your baseline forecast?
Glen: So, largely because they're elephants. The simple truth of the matter is many of these are very large scale opportunities, and if you forecast them in your model, they're big misses. If you don't forecast them, they're big wins. Right? And frankly, these are new opportunities if you think about it.
Back in November, we knew that things were changing from a geopolitical standpoint, and in fact, Volatus engaged a full-time lobby firm, David Pratt & Associates in Ottawa to support us. But right after that, in January our previous Prime Minister stepped down from government, which basically put everything on hold until May 27th when the government effectively started to operate again. And of course, June 9th was a big day for the announcement of some of the policies that we've been expecting. So that's part of why, with an election and a new government, you really never know how much momentum is going to go in which direction.
But we followed that pretty closely. And the big deal now is the federal mandate, or the government stated goals aligns with the defense and economic and security objectives that Volatus is well positioned to fulfill.
We provide cost effective ISR and logistics for the border, for the Arctic. We can work on everything from security to public safety to sovereignty issues. It's a major opportunity for growth in defense contracts and domestic innovation, especially as the government attempts to repatriate that $0.75 of every dollar that we spend in the defense industry south of the border. Their goal is to become an energy superpower and that creates inspection and monitoring opportunities for Volatus. And of course, in the resource sectors, things like mining, like the Ring of Fire in Ontario and rare earths in British Columbia and Quebec.
Those are all opportunities in every phase of the development, from the exploration to the development and management of the mine to the transportation infrastructure, roads and railways that are going to carry are all opportunities for Volatus. And that ties in also with the major acceleration in infrastructure programs and investment which align with our capabilities and mapping and inspection services. So, I think there's a significant opportunity, let's say it's more like a herd of elephants right now. I think we've got some good opportunities, not just for Volatus, but for the entire Canadian aerospace and RPAS industry.
Lyndsay: Well, let's look ahead here then, Glen. What's next in terms of growth and innovation for Volatus and how do you plan to stay ahead in a space that's really moving as fast as drone tech?
Glen: So, we'll continue to scale our drones as a service, particularly with the remote drone in a box or drone infrastructure type capabilities. We want to expand our US and international regulatory envelope so that we can achieve the same level of operations as we can in Canada. We'll be pursuing waivers to support larger drone operations as the regulations evolve. We've got a change in regulations in November. Volatus has already positioned itself to adapt and capitalize on those opportunities. But we've already started looking at saying, 'okay, now with the baseline or with the bar having been raised, now we will look to go one step beyond that into larger and more capable drones.'
We have a real eye on industrial and logistics use cases with some of our partner technologies that are being enabled by these new regulations that are coming. And ultimately if you look at the objectives of the government in terms of targeting economic leadership on a global scale and achieving more security independence, those are all areas that Volatus will be very tightly focused on in the days, months and years ahead.
Lyndsay: Well, Glen, I really appreciate you taking the time and giving us really a peek behind the curtain at what Volatus is really building.
You can find Volatus Aerospace trading on the venture under the ticker symbol FLT, and on the OTCQB under the ticker symbol TAKOF. Check them out at volatusaerospace.com. for more information.
Join the discussion: Find out what everybody's saying about this stock on the Volatus Aerospace investor discussion forum, and check out the rest of Stockhouse's stock forums and message boards.
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