Aerospace Co. Receives FAA Approval for Agricultural Drones

Volatus Aerospace Corp. (VOL:TSX; VLTTF:OTCQB) announced in a press release on February 13, 2024, that the Federal Aviation Administration (FAA) had granted authorization for the company to operate commercial agricultural drones, even drones larger than 55 pounds.

While Volatus has, up until now, offered agricultural equipment and data management services, the authorization from the FAA to operate large drones capable of precision spraying is a new step for the company.

Volatus expects this to be a win for farmers as well.

John Johnstone, the agricultural product lead for Volatus, commented, "Climate change alone is causing major challenges for agriculture. Agricultural drones are helping farmers adapt to today's reality by scanning every corner of a field to monitor crop health, soil conditions, and plant health and plan appropriate and timely treatment with the precision application of Ag products, enabling agronomists to increase crop yields and improve margins, while simultaneously reducing the negative impacts on the environment."

Rob Goff with Echelon reviewed Volatus on December 1, 2023, and rated the company as a "Speculative Buy" with a target share price of CA$0.68. 

Glen Lynch, the CEO of Volatus, commented on the company's path forward, "By continuing to align our drone operations with our commercial aircraft and helicopter operations, we are building confidence with global regulators. This has allowed Volatus to obtain numerous special approvals for operations requiring Beyond Visual Line of Sight flights, higher altitude flights, and heavier aircraft operations not currently covered by today's regulations in both Canada and the United States. Each authority allows us to increase our service offering and generate greater revenues using advanced drone technology."

Expected annual growth of 31.5%

Markets and Markets estimated that the market size for agricultural drones will reach US$17.9 billion by 2028, with a compound annual growth rate of 31.5%. The report identified a number of drivers of the market, including changes in policy from the Federal Aviation Administration that have opened up opportunities for drone use and the development of improved software.

Grand View Research released a report that stated the market size for agricultural drones was worth US$347.9 million in 2022.

According to Grand View Research, the ability to monitor crops and manage large swathes of land has made drones an invaluable part of modern agriculture.

60% Revenue Growth

Rob Goff with Echelon reviewed Volatus on December 1, 2023, and rated the company as a "Speculative Buy" with a target share price of CA$0.68. Goff highlighted the company's CA$60 million contract with an American utility company, along with revenue growth of 60% in Q3 of 2023. Looking forward, Goff predicts that the company will have CA$80 million in revenue through contracts in 2024.

The company's investor presentation indicated that, in terms of catalysts, the company would continue to seek out regulatory authorizations and hopes to continue expanding.

Ownership and Share Structure

Refinitiv provided a breakdown of the company's ownership and share structure, where management and insiders own approximately 63.04% of the company. According to Refinitiv, Chairman Ian Alexander McDougall owns 31.75% of the company with 39.02 million shares, and CEO Glen Lynch owns 31.29% of the company with 38.46 million shares.

Institutions, in the form of Palos Management Inc., owns 0.11% of the company with 0.13 million shares.

According to Refinitiv, there are 122.91 million shares outstanding and 45.43 million free float traded shares, while the company has a market cap of CA$9.97 million and trades in the 52-week period between CA$0.10 and CA$0.44.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Volatus Aerospace Corp.
2. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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