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Press Release

September 9, 2020 at 4:10 PM EDT

AeroVironment, Inc. Announces Fiscal 2021 First Quarter Results

SIMI VALLEY, Calif.--(BUSINESS WIRE)--Sep. 9, 2020-- AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems (UAS), today reported financial results for its first quarter ended August 1, 2020.

This press release features multimedia. View 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)

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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AeroVironment, Inc.
Steven Gitlin
+1 (805) 520-8350
ir@avinc.com

Source: AeroVironment, Inc.