AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned
aircraft systems (UAS), today reported financial results for its
first quarter ended August 1, 2020.
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the full release here:
https://www.businesswire.com/news/home/20200909006018/en/
AeroVironment’s family of systems provide
multi-mission capabilities for defense and commercial customers,
and precision strike at the battlefield’s edge. (Graphic: Business
Wire)
“We are on track to achieve our fiscal year 2021 plans and
deliver another year of profitable top line growth, despite the
COVID-19 pandemic and its unprecedented impact on the global
economy. We delivered $87.5 million in revenue and $0.42 diluted
earnings per share in our first quarter, consistent with our plan,”
said Wahid Nawabi, AeroVironment president and chief executive
officer. “Our outstanding team continues to deliver results and
extend our global market leadership position. During the quarter,
our team successfully completed the fourth flight test of the
Sunglider HAPS system and performed successful demonstrations of
our larger Switchblade variant, which is designed to address a much
larger segment of the legacy missile market.”
“We remain well positioned to continue creating shareholder
value in the near- and long-term. With the unwavering support of
our employees and a laser focus on achieving our financial and
operational objectives, we are confident we will emerge from this
pandemic as an even stronger company,” Mr. Nawabi added.
FISCAL 2021 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2021 was $87.5 million,
an increase of 1% from the first quarter of fiscal 2020 revenue of
$86.9 million. The increase in revenue was due to an increase in
service revenue of $8.0 million, partially offset by a decrease in
product sales of $7.5 million.
Gross margin for the first quarter of fiscal 2021 was $35.4
million, a decrease of 14% from the first quarter of fiscal 2020
gross margin of $41.3 million. The decrease in gross margin was
primarily due to a decrease in product margin of $9.2 million,
partially offset by an increase in service margin of $3.3 million.
As a percentage of revenue, gross margin decreased to 40% from 47%.
The decrease in gross margin percentage was primarily due to a
decrease in the proportion of product sales to total revenue and an
unfavorable product mix.
Income from operations for the first quarter of fiscal 2021 was
$12.3 million, a decrease of $6.6 million from the first quarter of
fiscal 2020 income from operations of $18.9 million. The decrease
in income from operations was primarily a result of a decrease in
gross margin of $5.9 million and an increase in research and
development (“R&D”) expense of $2.4 million, partially offset
by a decrease in selling, general and administrative (“SG&A”)
expense of $1.7 million.
Other income, net, for the first quarter of fiscal 2021 was $0.2
million, as compared to $1.7 million for the first quarter of
fiscal 2020. The decrease in other income, net was primarily due to
a decrease in interest income resulting from a decrease in the
average interest rates earned on our investment portfolio.
Provision for income taxes for the first quarter of fiscal 2021
was $1.2 million, as compared to $2.1 million for the first quarter
of fiscal 2020. The decrease in provision for income taxes was
primarily due to the decrease in income before income taxes.
Equity method investment loss, net of tax, for the first quarter
of fiscal 2021 was $1.3 million, as compared to $1.3 million for
the first quarter of fiscal 2020, and was primarily 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 2021 was $10.1 million, as compared to $17.1 million for
the first quarter of fiscal 2020.
Earnings per diluted share attributable to AeroVironment for the
first quarter of fiscal 2021 was $0.42, as compared to $0.71 for
the first quarter of fiscal 2020.
Non-GAAP earnings per diluted share was $0.44 for the first
quarter of fiscal 2021, as compared to $0.74 for the first quarter
of fiscal 2020.
BACKLOG
As of August 1, 2020, funded backlog (remaining performance
obligations under firm orders for which funding is currently
appropriated to us under a customer contract) was $154.4 million,
as compared to $208.1 million as of April 30, 2020.
FISCAL 2021 — OUTLOOK FOR THE FULL YEAR
For fiscal 2021, the Company continues to expect to generate
revenue between $390 million and $410 million, operating margin of
between 12% and 12.5%, and earnings per diluted share of $1.65 to
$1.85. This financial guidance assumes approximately 7% ownership
of the HAPSMobile joint venture. The Company expects non-GAAP
earnings per diluted share, which excludes amortization of acquired
intangible assets, to be between $1.74 and $1.94.
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 9, 2020, at 1:30 pm
Pacific Time that will be webcast live. Wahid Nawabi, president and
chief executive officer, Kevin P. McDonnell, chief financial
officer and Steven A. Gitlin, chief marketing officer and 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 by using the following
telephone numbers, (877) 561-2749 (U.S.) or (678) 809-1029
(international) and providing the conference ID 7154976 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.
A supplementary investor presentation for the first fiscal
quarter 2021 can be accessed at
https://investor.avinc.com/events-and-presentations.
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 9, 2020, at approximately
4:30 p.m. Pacific Time through September 16, 2020, at 4:30 p.m.
Pacific Time. Dial (855) 859-2056 (U.S.) or (404) 537-3406
(international) and provide the conference ID 7154976.
ABOUT AEROVIRONMENT, INC.
AeroVironment (NASDAQ: AVAV) provides technology solutions at
the intersection of robotics, sensors, software analytics and
connectivity that deliver more actionable intelligence so you can
proceed with certainty. Celebrating 50 years of innovation,
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; the impact of the outbreak related to the strain of
coronavirus known as COVID-19 on our business operations; 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 measures.
AeroVironment, Inc.
Consolidated Statements of
Operations (Unaudited)
(In thousands except share and
per share data)
Three Months Ended
August 1,
July 27,
2020
2019
Revenue:
Product sales
$
58,357
$
65,839
Contract services
29,093
21,072
87,450
86,911
Cost of sales:
Product sales
32,084
30,408
Contract services
19,955
15,231
52,039
45,639
Gross margin:
Product sales
26,273
35,431
Contract services
9,138
5,841
35,411
41,272
Selling, general and administrative
12,011
13,668
Research and development
11,103
8,709
Income from operations
12,297
18,895
Other income:
Interest income, net
208
1,329
Other income, net
33
355
Income before income taxes
12,538
20,579
Provision for income taxes
1,207
2,133
Equity method investment loss, net of
tax
(1,288
)
(1,347
)
Net income
10,043
17,099
Net loss attributable to noncontrolling
interest
37
11
Net income attributable to AeroVironment,
Inc.
$
10,080
$
17,110
Net income per share attributable to
AeroVironment, Inc.
Basic
$
0.42
$
0.72
Diluted
$
0.42
$
0.71
Weighted-average shares outstanding:
Basic
23,893,001
23,745,199
Diluted
24,186,228
24,069,933
AeroVironment, Inc.
Consolidated Balance
Sheets
(In thousands except share
data)
August 1,
April 30,
2020
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
246,839
$
255,142
Short-term investments
71,334
47,507
Accounts receivable, net of allowance for
doubtful accounts of $1,054 at August 1, 2020 and $1,190 at April
30, 2020
43,357
73,660
Unbilled receivables and retentions
73,791
75,837
Inventories
45,530
45,535
Prepaid expenses and other current
assets
5,941
6,246
Total current assets
486,792
503,927
Long-term investments
20,338
15,030
Property and equipment, net
22,907
21,694
Operating lease right-of-use assets
13,612
8,793
Deferred income taxes
5,262
4,928
Intangibles, net
12,928
13,637
Goodwill
6,340
6,340
Other assets
9,640
10,605
Total assets
$
577,819
$
584,954
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
11,740
$
19,859
Wages and related accruals
13,025
23,972
Customer advances
5,725
7,899
Current operating lease liabilities
4,478
3,380
Income taxes payable
2,620
1,065
Other current liabilities
8,735
10,778
Total current liabilities
46,323
66,953
Non-current operating lease
liabilities
10,344
6,833
Other non-current liabilities
243
250
Liability for uncertain tax positions
1,017
1,017
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued
or outstanding at August 1, 2020 and April 30, 2020
—
—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—24,104,564
shares at August 1, 2020 and 24,063,639 shares at April 30,
2020
2
2
Additional paid-in capital
181,406
181,481
Accumulated other comprehensive income
351
328
Retained earnings
338,170
328,090
Total AeroVironment, Inc. stockholders’
equity
519,929
509,901
Noncontrolling interest
(37
)
—
Total equity
519,892
509,901
Total liabilities and stockholders’
equity
$
577,819
$
584,954
AeroVironment, Inc.
Consolidated Statements of
Cash Flows (Unaudited)
(In thousands)
Three Months Ended
August 1,
July 27,
2020
2019
Operating activities
Net income
$
10,043
$
17,099
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
2,779
2,079
Losses from equity method investments
1,288
1,347
Realized gain from sale of
available-for-sale investments
(11
)
—
Provision for doubtful accounts
(136
)
11
Other non-cash expense
—
32
Non-cash lease expense (income)
1,190
(251
)
Loss on foreign currency transactions
1
1
Deferred income taxes
(339
)
(349
)
Stock-based compensation
1,595
1,566
Loss (gain) on sale of property and
equipment
2
(75
)
Amortization of debt securities
(43
)
(527
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
30,439
(11,557
)
Unbilled receivables and retentions
2,046
5,112
Inventories
5
(1,946
)
Income tax receivable
—
821
Prepaid expenses and other assets
324
(616
)
Accounts payable
(7,338
)
(5,110
)
Other liabilities
(15,004
)
(4,524
)
Net cash provided by operating
activities
26,841
3,113
Investing activities
Acquisition of property and equipment
(4,067
)
(1,902
)
Equity method investments
(1,173
)
(4,569
)
Business acquisition, net of cash
acquired
—
(18,641
)
Proceeds from sale of property and
equipment
—
81
Redemptions of held-to-maturity
investments
—
65,035
Purchases of held-to-maturity
investments
—
(70,463
)
Redemptions of available-for-sale
investments
41,727
—
Purchases of available-for-sale
investments
(69,961
)
(2,693
)
Net cash used in investing activities
(33,474
)
(33,152
)
Financing activities
Tax withholding payment related to net
settlement of equity awards
(1,756
)
(668
)
Exercise of stock options
86
93
Net cash used in financing activities
(1,670
)
(575
)
Net decrease in cash, cash equivalents,
and restricted cash
(8,303
)
(30,614
)
Cash, cash equivalents and restricted cash
at beginning of period
255,142
172,708
Cash, cash equivalents and restricted cash
at end of period
$
246,839
$
142,094
Supplemental disclosures of cash flow
information
Cash refunded (paid), net during the
period for:
Income taxes
$
10
$
(294
)
Non-cash activities
Unrealized loss on investments, net of
deferred tax expense of $4 for the three months ended August 1,
2020
$
52
$
—
Change in foreign currency translation
adjustments
$
75
$
169
Acquisitions of property and equipment
included in accounts payable
$
643
$
1,253
AeroVironment, Inc.
Reconciliation of non-GAAP
Earnings per Diluted Share (Unaudited)
Three Months Ended
Three Months Ended
August 1, 2020
July 27, 2019
Earnings per diluted share
$
0.42
$
0.71
Acquisition related expenses
—
0.01
Amortization of acquired intangible
assets
0.02
0.02
Earnings per diluted share as adjusted
(Non-GAAP)
$
0.44
$
0.74
Reconciliation of Forecasted
Earnings per Diluted Share (Unaudited)
Fiscal year ending
April 30, 2021
Forecasted earnings per diluted share
$
1.65 - 1.85
Amortization of acquired intangible
assets
0.09
Forecasted earnings per diluted share as
adjusted (Non-GAAP)
$
1.74 - 1.94
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 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/20200909006018/en/
AeroVironment, Inc. Steven Gitlin +1 (805) 520-8350
ir@avinc.com
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