AeroVironment, Inc. (NASDAQ: AVAV) today reported financial
results for its first quarter ended July 27, 2019.
- Revenue of $86.9 million, up 11 percent year-over-year
- Earnings per diluted share of $0.71 down $0.14 year-over-year;
non-GAAP earnings per diluted share of $0.74, up $0.15
year-over-year
- Funded backlog of $165.2 million, an increase of five percent
year-over-year
“Our team delivered outstanding first quarter results of $87
million in revenue, $0.71 and $0.74 in GAAP and non-GAAP earnings
per diluted share, respectively, and funded backlog of $165
million,” said Wahid Nawabi, AeroVironment president and chief
executive officer. “Strong performance globally in our small
unmanned aircraft systems product line reflects our continued
leadership in this category, which will benefit further from our
newly acquired VAPOR unmanned helicopter solutions. We now have
visibility into the timing of U.S. Army orders for our Switchblade
tactical missile systems, and we are making great progress in our
HAPS program, with ground testing underway and flight testing about
to begin. Across our business, we are executing our plans and
delivering results that support our current year guidance and
long-term value creation objectives.”
FISCAL 2020 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2020 was $86.9 million,
an increase of 11% from first quarter fiscal 2019 revenue of $78.0
million. The increase in revenue was due to an increase in product
sales of $10.5 million, partially offset by a decrease in service
revenue of $1.7 million.
Gross margin for the first quarter of fiscal 2020 was $41.3
million, an increase of 27% from first quarter fiscal 2019 gross
margin of $32.6 million. The increase in gross margin was primarily
due to an increase in product margin of $9.9 million, partially
offset by a decrease in service margin of $1.2 million. As a
percentage of revenue, gross margin increased to 47% from 42%. The
increase in gross margin percentage was primarily due to the
increase in sales volume and an increase in the proportion of
product revenue to total revenue.
Income from continuing operations for the first quarter of
fiscal 2020 was $18.9 million, an increase of 33% from first
quarter fiscal 2019 income from continuing operations of $14.2
million. The increase in income from continuing operations was
primarily a result of an increase in gross margin of $8.7 million,
partially offset by an increase in research and development expense
of $2.3 million and an increase in selling, general and
administrative expense of $1.7 million.
Other income, net for the first quarter of fiscal 2020 was $1.7
million compared to other income, net of $9.3 million for the first
quarter of fiscal 2019. The decrease in other income, net was
primarily due to a one-time gain from a litigation settlement
during the first quarter of fiscal 2019.
Provision for income taxes for the first quarter of fiscal 2020
was a $2.1 million compared to $2.6 million for the first quarter
of fiscal 2019. The decrease in provision for income taxes was
primarily due to a decrease in income before income taxes.
Equity method investment loss, net of tax for the first quarter
of fiscal 2020 was $1.3 million compared to $0.6 million for the
first quarter of fiscal 2019. The equity method loss is associated
with our investment in the HAPSMobile Inc. joint venture formed in
December 2017.
Net income attributable to AeroVironment for the first quarter
of fiscal 2020 was $17.1 million, a decrease from first quarter
fiscal 2019 net income attributable to AeroVironment of $27.3
million. The first quarter of fiscal 2019 included a one-time gain
from a litigation settlement.
Earnings per diluted share from continuing operations
attributable to AeroVironment for the first quarter of fiscal 2020
was $0.71 compared to earnings per diluted share from continuing
operations attributable to AeroVironment for the first quarter
fiscal 2019 of $0.85. The first quarter of fiscal 2019 included a
one-time gain from a litigation settlement of $0.26.
Non-GAAP earnings per diluted share from continuing operations
was $0.74 for the first quarter of fiscal 2020 compared to Non-GAAP
earnings per diluted share from continuing operations for the first
quarter of fiscal 2019 of $0.59.
BACKLOG
As of July 27, 2019, funded backlog (remaining performance
obligations under firm orders for which funding is currently
appropriated to us under a customer contract) was $165.2 million
compared to $157.0 million as of July 28, 2018.
FISCAL 2020 — OUTLOOK FOR THE FULL YEAR
For fiscal 2020, the Company continues to expect to generate
between $350 million and $370 million in revenue and between $1.35
and $1.55 in earnings per diluted share. This financial guidance
assumes approximately 5% ownership of the HAPSMobile joint venture
and includes the expected losses of Pulse Aerospace, which the
Company acquired on June 10, 2019. The Company continues to expect
non-GAAP earnings per diluted share, which excludes acquisition
related expenses and amortization of acquired intangible assets to
be between $1.47 and $1.67.
The foregoing estimates are forward looking and reflect
management's view of current and future market conditions,
including certain assumptions with respect to our ability to obtain
and retain government contracts, changes in the timing and/or
amount of government spending, changes in the demand for our
products and services, activities of competitors, changes in the
regulatory environment, and general economic and business
conditions in the United States and elsewhere in the world.
Investors are reminded that actual results may differ materially
from these estimates.
CONFERENCE CALL AND PRESENTATION
In conjunction with this release, AeroVironment, Inc. will host
a conference call today, Wednesday September 4, 2019, at 1:30 pm
Pacific Time that will be broadcast live over the Internet. Wahid
Nawabi, president and chief executive officer, Teresa P. Covington,
chief financial officer and Steven A. Gitlin, vice president of
investor relations, will host the call.
4:30 PM ET 3:30 PM CT 2:30 PM MT 1:30 PM PT
Investors may dial into the call at (800) 708-4540 (U.S.) and
enter the passcode 48934545 or (847) 619-6397 (international) five
to ten minutes prior to the start time to allow for
registration.
Investors with Internet access may listen to the live audio
webcast via the Investor Relations page of the AeroVironment, Inc.
website, http://investor.avinc.com. Please allow 15 minutes prior
to the call to download and install any necessary audio
software.
Audio Replay Options
An audio replay of the event will be archived on the Investor
Relations page of the company's website, at
http://investor.avinc.com. The audio replay will also be available
via telephone from Wednesday September 4, 2019, at approximately
4:00 p.m. Pacific Time through September 11, 2019, at 11:59 p.m.
Pacific Time. Dial (888) 843-7419 and enter the passcode 48934545#.
International callers should dial (630) 652-3042 and enter the same
passcode number to access the audio replay.
A supplementary investor presentation for the first fiscal
quarter 2020, can be accessed at
https://investor.avinc.com/events-and-presentations.
ABOUT AEROVIRONMENT, INC.
AeroVironment (NASDAQ: AVAV) provides customers with more
actionable intelligence so they can proceed with certainty. Based
in California, AeroVironment is a global leader in unmanned
aircraft systems and tactical missile systems, and serves defense,
government and commercial customers. For more information visit
www.avinc.com.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” as that
term is defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future
results, performance or achievements, and may contain words such as
“believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,”
“plan,” or words or phrases with similar meaning. Forward-looking
statements are based on current expectations, forecasts and
assumptions that involve risks and uncertainties, including, but
not limited to, economic, competitive, governmental and
technological factors outside of our control, that may cause our
business, strategy or actual results to differ materially from the
forward-looking statements.
Factors that could cause actual results to differ materially
from the forward-looking statements include, but are not limited
to, reliance on sales to the U.S. government; availability of U.S.
government funding for defense procurement and R&D programs;
changes in the timing and/or amount of government spending; our
ability to perform under existing contracts and obtain new
contracts; risks related to our international business, including
compliance with export control laws; potential need for changes in
our long-term strategy in response to future developments; the
extensive regulatory requirements governing our contracts with the
U.S. government and international customers; the consequences to
our financial position, business and reputation that could result
from failing to comply with such regulatory requirements;
unexpected technical and marketing difficulties inherent in major
research and product development efforts; the impact of potential
security and cyber threats; changes in the supply and/or demand
and/or prices for our products and services; the activities of
competitors and increased competition; failure of the markets in
which we operate to grow; uncertainty in the customer adoption rate
of commercial use unmanned aircraft systems; failure to remain a
market innovator and create new market opportunities; changes in
significant operating expenses, including components and raw
materials; failure to develop new products; the extensive
regulatory requirements governing our contracts with the U.S.
government; risk of litigation, including but not limited to
pending litigation arising from the sale of our EES business; the
impact of our recent acquisition of Pulse Aerospace, LLC and our
ability to successfully integrate it into our operations; product
liability, infringement and other claims; changes in the regulatory
environment; and general economic and business conditions in the
United States and elsewhere in the world. For a further list and
description of such risks and uncertainties, see the reports we
file with the Securities and Exchange Commission. We do not intend,
and undertake no obligation, to update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), this earnings
release also contains a non-GAAP financial measure. See in the
financial tables below the calculation of this measure, the reasons
why we believe this measure provides useful information to
investors, and a reconciliation of this measure to the most
directly comparable GAAP.
AeroVironment, Inc.
Consolidated Statements of
Operations (Unaudited)
(In thousands except share and
per share data)
Three Months Ended
July 27,
July 28,
2019
2018
Revenue:
Product sales
$
65,839
$
55,313
Contract services (inclusive of related
party revenue of $12,335 and $11,563 for the three months ended
July 27, 2019 and July 28, 2018, respectively)
21,072
22,730
86,911
78,043
Cost of sales:
Product sales
30,408
29,811
Contract services
15,231
15,643
45,639
45,454
Gross margin:
Product sales
35,431
25,502
Contract services
5,841
7,087
41,272
32,589
Selling, general and administrative
13,668
11,956
Research and development
8,709
6,435
Income from continuing operations
18,895
14,198
Other income:
Interest income, net
1,329
906
Other income, net
355
8,388
Income from continuing operations before
income taxes
20,579
23,492
Provision for income taxes
2,133
2,567
Equity method investment loss, net of
tax
(1,347
)
(602
)
Net income from continuing operations
17,099
20,323
Discontinued operations:
Gain on sale of business, net of tax
expense of $2,577
—
8,843
Loss from discontinued operations, net of
tax
—
(1,850
)
Net income from discontinued
operations
—
6,993
Net income
17,099
27,316
Net loss attributable to noncontrolling
interest
11
14
Net income attributable to
AeroVironment
$
17,110
$
27,330
Net income per share attributable to
AeroVironment—Basic
Continuing operations
$
0.72
$
0.86
Discontinued operations
—
0.30
Net income per share attributable to
AeroVironment—Basic
$
0.72
$
1.16
Net income per share attributable to
AeroVironment—Diluted
Continuing operations
$
0.71
$
0.85
Discontinued operations
—
0.29
Net income per share attributable to
AeroVironment—Diluted
$
0.71
$
1.14
Weighted-average shares outstanding:
Basic
23,745,199
23,574,595
Diluted
24,069,933
24,010,303
AeroVironment, Inc.
Consolidated Balance
Sheets
(In thousands except share
data)
July 27,
April 30,
2019
2019
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
137,094
$
172,708
Short-term investments
163,634
150,487
Accounts receivable, net of allowance for
doubtful accounts of $1,053 at July 27, 2019 and $1,041 at April
30, 2019
42,724
31,051
Unbilled receivables and retentions
(inclusive of related party unbilled receivables of $12,649 at July
27, 2019 and $9,028 at April 30, 2019)
47,935
53,047
Inventories
56,336
54,056
Prepaid expenses and other current
assets
7,606
7,418
Income taxes receivable
—
821
Total current assets
455,329
469,588
Long-term investments
4,887
9,386
Property and equipment, net
17,747
16,905
Operating lease right-of-use assets
9,917
—
Deferred income taxes
7,699
6,685
Intangibles, net
16,727
459
Goodwill
8,080
—
Other assets
14,196
5,821
Total assets
$
534,582
$
508,844
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
11,450
$
15,972
Wages and related accruals
12,085
18,507
Customer advances
3,268
2,962
Current operating lease liabilities
2,771
—
Income taxes payable
1,367
—
Other current liabilities
12,167
7,425
Total current liabilities
43,108
44,866
Deferred rent
—
1,173
Non-current operating lease
liabilities
7,597
—
Other non-current liabilities
2,298
150
Deferred tax liability
29
29
Liability for uncertain tax positions
51
51
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued
or outstanding at July 27, 2019 and April 30, 2019
—
—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—23,990,459
shares at July 27, 2019 and 23,946,293 shares at April 30, 2019
2
2
Additional paid-in capital
177,207
176,216
Accumulated other comprehensive loss
171
2
Retained earnings
304,126
286,351
Total AeroVironment stockholders’
equity
481,506
462,571
Noncontrolling interest
(7
)
4
Total equity
481,499
462,575
Total liabilities and stockholders’
equity
$
534,582
$
508,844
AeroVironment, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
Three Months Ended
July 27,
July 28,
2019
2018
Operating activities
Net income
$
17,099
$
27,316
Gain on sale of business, net of tax
—
(8,843
)
Loss from discontinued operations, net of
tax
—
1,850
Net income from continuing operations
17,099
20,323
Adjustments to reconcile net income from
continuing operations to cash provided by operating activities from
continuing operations:
Depreciation and amortization
2,079
1,746
Loss from equity method investment
1,347
602
Provision for doubtful accounts
11
(48
)
Other non-cash expense
32
—
Non-cash lease expense
(251
)
—
Losses (gains) on foreign currency
transactions
1
(2
)
Deferred income taxes
(349
)
(306
)
Stock-based compensation
1,566
1,287
Gain on sale of property and equipment
(75
)
—
Amortization of held-to-maturity
investments
(527
)
(115
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(11,557
)
43,189
Unbilled receivables and retentions
5,112
(42,998
)
Inventories
(1,946
)
(4,819
)
Income tax receivable
821
—
Prepaid expenses and other assets
(616
)
(133
)
Accounts payable
(5,110
)
(9,893
)
Other liabilities
(4,524
)
(3,797
)
Net cash provided by operating activities
of continuing operations
3,113
5,036
Investing activities
Acquisition of property and equipment
(1,902
)
(1,423
)
Equity method investments
(4,569
)
—
Business acquisition, net of cash
acquired
(18,641
)
—
Proceeds from sale of business
—
31,994
Proceeds from sale of property and
equipment
81
—
Redemptions of held-to-maturity
investments
65,035
78,909
Purchases of held-to-maturity
investments
(70,463
)
(81,646
)
Redemptions of available-for-sale
investments
—
2,250
Purchases of available-for-sale
investments
(2,693
)
—
Net cash (used in) provided by investing
activities from continuing operations
(33,152
)
30,084
Financing activities
Principal payments of capital lease
obligations
—
(57
)
Tax withholding payment related to net
settlement of equity awards
(668
)
(819
)
Exercise of stock options
93
67
Net cash used in financing activities from
continuing operations
(575
)
(809
)
Discontinued operations
Operating activities of discontinued
operations
—
(6,609
)
Investing activities of discontinued
operations
—
(431
)
Financing activities of discontinued
operations
—
—
Net cash used in discontinued
operations
—
(7,040
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(30,614
)
27,271
Cash, cash equivalents, and restricted
cash at beginning of period
172,708
143,517
Cash, cash equivalents, and restricted
cash at end of period
$
142,094
$
170,788
Supplemental disclosures of cash flow
information
Cash paid, net during the period for:
Income taxes
$
294
$
(7
)
Non-cash activities
Unrealized gain on investments, net of
deferred tax expense of $51 for the three months ended July 28,
2018
$
—
$
57
Change in foreign currency translation
adjustments
$
169
$
(20
)
Acquisitions of property and equipment
included in accounts payable
$
1,253
$
595
AeroVironment, Inc.
Reconciliation of non-GAAP
Earnings per Diluted Share (Unaudited)
Three Months Ended
Three Months Ended
July 27, 2019
July 28, 2018
Earnings per diluted share from continuing
operations
$
0.71
$
0.85
Acquisition related expenses
0.01
-
Amortization of acquired intangible
assets
0.02
-
One-time gain from a litigation
settlement
-
(0.26
)
Earnings per diluted share from continuing
operations as adjusted (Non-GAAP)
$
0.74
$
0.59
Reconciliation of Forecasted
Earnings per Diluted Share (Unaudited)
Fiscal year ending
April 30, 2020
Forecasted earnings per diluted share
$
1.35 - 1.55
Acquisition related expenses
0.03
Amortization of acquired intangible
assets
0.08 - 0.10
Forecasted earnings per diluted share as
adjusted (Non-GAAP)
$
1.47 - 1.67
Statement Regarding Non-GAAP Measures
The non-GAAP measure set forth above should be considered in
addition to, and not as a replacement for or superior to, the
comparable GAAP measure, and may not be comparable to similarly
titled measures reported by other companies. Management believes
that this measure provides useful information to investors by
offering additional ways of viewing our results that, when
reconciled to the corresponding GAAP measure, help our investors to
understand the long-term profitability trends of our business and
compare our profitability to prior and future periods and to our
peers. In addition, management uses this non-GAAP measure to
measure our operating and financial performance.
We exclude the acquisition-related expenses and amortization of
acquisition-related intangible assets in fiscal 2020 and the
one-time gain from a litigation settlement in fiscal 2019 because
we believe this facilitates more consistent comparisons of
operating results over time between our newly acquired and existing
businesses, and with our peer companies. We believe, however, that
it is important for investors to understand that such intangible
assets contribute to revenue generation and that intangible asset
amortization will recur in future periods until such intangible
assets have been fully amortized.
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version on businesswire.com: https://www.businesswire.com/news/home/20190904005941/en/
AeroVironment, Inc. Steven Gitlin +1 (805) 520-8350
ir@avinc.com
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