Release Details

SIMI VALLEY, Calif.--(BUSINESS WIRE)--Sep. 4, 2019-- 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.

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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Source: AeroVironment, Inc.

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