UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 2019
AEROVIRONMENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-33261 |
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95-2705790 |
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(State or other jurisdiction of |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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incorporation or organization) |
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900 Innovators Way |
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Simi Valley, California |
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93065 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (805) 520-8350
Securities registered pursuant to Section 12(b) of the Act:
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Title of Class |
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Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, par value $0.0001 per share |
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AVAV |
The NASDAQ Stock Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On September 4, 2019, AeroVironment, Inc. (the “Company”) issued a press release announcing first quarter financial results for the period ended July 27, 2019, a copy of which is attached hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
The information under Item 2.02 above is incorporated herein by reference.
Attached as Exhibit 99.2 hereto is a presentation containing additional information regarding the Company’s first quarter financial results for the period ended July 27, 2019. A copy of the presentation is also available on the investor relations section of the Company’s website at https://investor.avinc.com/events-and-presentations. The information contained on the Company’s website is not incorporated by reference into, and does not form a part of, this Current Report on Form 8-K.
In addition to historic information, this report, including the exhibits, contains forward-looking statements regarding events, performance and financial trends. Various factors could affect future results and could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of those factors are identified in the exhibits, and in our periodic reports filed with the Securities and Exchange Commission.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Items 2.02 and 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of AeroVironment, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
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Exhibit |
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Number |
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Description |
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99.1 |
Press release issued by AeroVironment, Inc., dated September 4, 2019. |
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99.2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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AEROVIRONMENT, INC. |
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Date: September 4, 2019 |
By: |
/s/ Wahid Nawabi |
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Wahid Nawabi |
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President and Chief Executive Officer |
3
Exhibit 99.1
AeroVironment, Inc. Announces Fiscal 2020 First Quarter Results
SIMI VALLEY, Calif., September 4, 2019 — AeroVironment, Inc. (NASDAQ: AVAV) today reported financial results for its first quarter ended July 27, 2019.
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· |
Revenue of $86.9 million, up 11 percent year-over-year |
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· |
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 |
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· |
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.
1
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.
2
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.
3
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.
- Financial Tables Follow –
4
AeroVironment, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except share and per share data)
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Three Months Ended |
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July 27, |
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July 28, |
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2019 |
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2018 |
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Revenue: |
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Product sales |
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$ |
65,839 |
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$ |
55,313 |
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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) |
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21,072 |
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22,730 |
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86,911 |
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78,043 |
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Cost of sales: |
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Product sales |
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30,408 |
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29,811 |
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Contract services |
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15,231 |
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15,643 |
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45,639 |
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45,454 |
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Gross margin: |
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Product sales |
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35,431 |
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25,502 |
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Contract services |
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5,841 |
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7,087 |
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41,272 |
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32,589 |
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Selling, general and administrative |
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13,668 |
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11,956 |
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Research and development |
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8,709 |
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6,435 |
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Income from continuing operations |
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18,895 |
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14,198 |
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Other income: |
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Interest income, net |
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1,329 |
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|
906 |
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Other income, net |
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355 |
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8,388 |
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Income from continuing operations before income taxes |
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20,579 |
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23,492 |
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Provision for income taxes |
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2,133 |
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2,567 |
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Equity method investment loss, net of tax |
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(1,347) |
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(602) |
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Net income from continuing operations |
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17,099 |
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20,323 |
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Discontinued operations: |
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Gain on sale of business, net of tax expense of $2,577 |
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— |
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8,843 |
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Loss from discontinued operations, net of tax |
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— |
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(1,850) |
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Net income from discontinued operations |
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— |
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6,993 |
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Net income |
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17,099 |
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27,316 |
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Net loss attributable to noncontrolling interest |
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11 |
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14 |
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Net income attributable to AeroVironment |
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$ |
17,110 |
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$ |
27,330 |
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Net income per share attributable to AeroVironment—Basic |
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Continuing operations |
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$ |
0.72 |
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$ |
0.86 |
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Discontinued operations |
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— |
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0.30 |
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Net income per share attributable to AeroVironment—Basic |
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$ |
0.72 |
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$ |
1.16 |
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Net income per share attributable to AeroVironment—Diluted |
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Continuing operations |
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$ |
0.71 |
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$ |
0.85 |
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Discontinued operations |
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— |
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0.29 |
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Net income per share attributable to AeroVironment—Diluted |
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$ |
0.71 |
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$ |
1.14 |
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Weighted-average shares outstanding: |
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Basic |
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23,745,199 |
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23,574,595 |
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Diluted |
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24,069,933 |
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24,010,303 |
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5
AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
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July 27, |
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April 30, |
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2019 |
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2019 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
137,094 |
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$ |
172,708 |
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Short-term investments |
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163,634 |
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150,487 |
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Accounts receivable, net of allowance for doubtful accounts of $1,053 at July 27, 2019 and $1,041 at April 30, 2019 |
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42,724 |
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31,051 |
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Unbilled receivables and retentions (inclusive of related party unbilled receivables of $12,649 at July 27, 2019 and $9,028 at April 30, 2019) |
|
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47,935 |
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53,047 |
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Inventories |
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56,336 |
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54,056 |
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Prepaid expenses and other current assets |
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7,606 |
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7,418 |
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Income taxes receivable |
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— |
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821 |
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Total current assets |
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455,329 |
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469,588 |
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Long-term investments |
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4,887 |
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9,386 |
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Property and equipment, net |
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17,747 |
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16,905 |
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Operating lease right-of-use assets |
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9,917 |
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— |
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Deferred income taxes |
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7,699 |
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6,685 |
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Intangibles, net |
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16,727 |
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|
459 |
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Goodwill |
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8,080 |
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— |
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Other assets |
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14,196 |
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5,821 |
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Total assets |
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$ |
534,582 |
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$ |
508,844 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
11,450 |
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$ |
15,972 |
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Wages and related accruals |
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12,085 |
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18,507 |
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Customer advances |
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3,268 |
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2,962 |
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Current operating lease liabilities |
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2,771 |
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— |
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Income taxes payable |
|
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1,367 |
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— |
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Other current liabilities |
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12,167 |
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7,425 |
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Total current liabilities |
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43,108 |
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44,866 |
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Deferred rent |
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— |
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1,173 |
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Non-current operating lease liabilities |
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7,597 |
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— |
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Other non-current liabilities |
|
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2,298 |
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|
150 |
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Deferred tax liability |
|
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29 |
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29 |
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Liability for uncertain tax positions |
|
|
51 |
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51 |
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Commitments and contingencies |
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Stockholders’ equity: |
|
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|
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Preferred stock, $0.0001 par value: |
|
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|
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Authorized shares—10,000,000; none issued or outstanding at July 27, 2019 and April 30, 2019 |
|
|
— |
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— |
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Common stock, $0.0001 par value: |
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|
|
|
|
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Authorized shares—100,000,000 |
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Issued and outstanding shares—23,990,459 shares at July 27, 2019 and 23,946,293 shares at April 30, 2019 |
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2 |
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2 |
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Additional paid-in capital |
|
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177,207 |
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|
176,216 |
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Accumulated other comprehensive loss |
|
|
171 |
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|
2 |
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Retained earnings |
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304,126 |
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|
286,351 |
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Total AeroVironment stockholders’ equity |
|
|
481,506 |
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|
462,571 |
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Noncontrolling interest |
|
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(7) |
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4 |
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Total equity |
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481,499 |
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|
462,575 |
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Total liabilities and stockholders’ equity |
|
$ |
534,582 |
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$ |
508,844 |
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6
AeroVironment, Inc.
Consolidated Statements of Cash Flows
(In thousands)
|
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Three Months Ended |
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July 27, |
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July 28, |
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2019 |
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2018 |
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Operating activities |
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Net income |
|
$ |
17,099 |
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$ |
27,316 |
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Gain on sale of business, net of tax |
|
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— |
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(8,843) |
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Loss from discontinued operations, net of tax |
|
|
— |
|
|
1,850 |
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Net income from continuing operations |
|
|
17,099 |
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|
20,323 |
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Adjustments to reconcile net income from continuing operations to cash provided by operating activities from continuing operations: |
|
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|
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Depreciation and amortization |
|
|
2,079 |
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|
1,746 |
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Loss from equity method investment |
|
|
1,347 |
|
|
602 |
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Provision for doubtful accounts |
|
|
11 |
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|
(48) |
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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 |
|
7
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.
8
##
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Contact:
AeroVironment, Inc.
Steven Gitlin
+1 (805) 520-8350
ir@avinc.com
9
Exhibit 99.2
|
|
First Quarter Fiscal Year 2020 Earnings Release Presentation September 4, 2019 September 4, 2019 © 2019 AeroVironment, Inc. |
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Safe Harbor Statement Certain statements in this presentation may constitute "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. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at www.sec.gov or on our website at www.investor.avinc.com/financial-information. 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. 2 September 4, 2019 © 2019 AeroVironment, Inc. |
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First Quarter Fiscal Year 2020 Key Messages Our team delivered outstanding first quarter results We are successfully executing our plan and remain on-track to achieve our fiscal year 2020 objectives We continue to make great progress on our strategic growth initiatives On-track to achieve Fiscal Year 2020 objectives & deliver Third consecutive year of profitable, double-digit topline growth 3 September 4, 2019 © 2019 AeroVironment, Inc. |
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Outstanding First Quarter Fiscal Year 2020 Results Metric 1st Qtr. Fiscal Year 2020 Year-Over-Year Change Highlights Revenue $86.9 million + 11% Strong small UAS sales Gross profit $41.3 million + 27% Favorable revenue mix EPS (diluted) $0.71 - $0.14 Q1 fiscal year 2019 included $0.26 one-time gain Non-GAAP EPS* (diluted) $0.74 + $0.15 25% increase Funded Backlog $165 million + 5% Maintaining historically high level of funded backlog * 1st qtr. Fiscal Year 2020 excludes $0.02 in amortization of intangible assets and $0.01 in acquisition-related expenses; 1st qtr. Fiscal Year 2019 excludes $0.26 one-time gain from litigation settlement 4 September 4, 2019 © 2019 AeroVironment, Inc. |
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|
First Quarter Fiscal Year 2020 Business Highlights Received $45 million U.S. Army Contract Award for Raven systems Initiated HAPS demonstration/test phase of program; began assembly of second HAWK30 solar HAPS system Acquired VAPOR unmanned helicopter product line 5 September 4, 2019 © 2019 AeroVironment, Inc. |
|
|
Favorable First Quarter Fiscal Year 2020 Revenue Mix and Higher Volume Contributed to $0.15 Increase in Non-GAAP Diluted EPS* * Excludes Q1 Fiscal Year 2019 one-time gain of $0.26 from litigation settlement and Q1 Fiscal Year 2020 amortization of intangible assets & acquisition-related expenses of $0.03 $0.59 $0.74 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 Q1 FY19 Q1 FY20 NON - GAAP DILUTED EPS 71% 64% 66% 68% 76% 29% 36% 34% 32% 24% 0% 25% 50% 75% 100% Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 PERCENTAGE OF QUARTERLY REVENUE Product Revenue Service Revenue 6 September 4, 2019 © 2019 AeroVironment, Inc. |
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|
Government Fiscal Year 2019 Procurement Appropriations Conversion to AeroVironment Contract Awards *Anticipate Switchblade contract award for Army/Marines LMAMS by AeroVironment’s fiscal Fourth qtr.; funds can extend into subsequent fiscal years * 7 September 4, 2019 © 2019 AeroVironment, Inc. |
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|
HAPS Builds on Decades of AeroVironment Solar-HAPS Experience – Program Continues to Advance SoftBank Corp. owns approximately 95% of HAPSMobile Inc, AeroVironment owns approximately 5% Developing solar HAPS unmanned aircraft system (HAWK30) to deliver next generation connectivity (i.e., 5G mobile, IoT) Total value of HAPSMobile contracts to AeroVironment of $134 million AeroVironment has the potential to manufacture and supply HAWK30 systems to HAPSMobile on exclusive basis AeroVironment retains exclusive rights to market HAWK30 to defense customers worldwide, except in Japan W o r l d ’ s f i r s t 3 G a n d H D T V c o n n e c t i v i t y f r o m s t r a t o s p h e r e W o r l d ’ s h i g h e s t f l y i n g a i r c r a f t i n l e v e l f l i g h t W o r l d ’ s f i r s t s o l a r - p o w e r e d h i g h a l t i t u d e U A S P a t h f i n d e r 7 1 , 5 0 4 f e e t / ( 1 9 9 7 ) P a t h f i n d e r P l u s 8 0 , 2 0 1 f e e t / ( 1 9 9 8 ) H e l i o s 9 6 , 8 6 3 f e e t / ( 2 0 0 1 ) D e s i g n D e v e l o p T e s t / D e m o n s t r a t e C e r t i f y L a u n c h & G r o w B u s i n e s s 2 0 1 8 Q 1 F Y 2 0 E a r n i n g s 9 / 4 / 1 9 H A P S P r o g r a m P l a n |
|
|
First Quarter Fiscal Year 2020 Visibility to Midpoint of Revenue Guidance Range of 75% 55% visibility 75% visibility Continued strong funded backlog supports high visibility Revenue Guidance Range as of 9/4/19: $350 million to $370 million $87 $152 $150 $29 $18 $16 $15 $- $50 $100 $150 $200 $250 $300 $350 $400 Q4 FY19 (6/25/19) Q1 FY20 (9/3/19) REVENUE (MILLIONS) Revenue Anticipated This FY from Unfunded Backlog Revenue Anticipated This FY from Qtr-To- Date Bookings Revenue Anticipated This FY from Funded Backlog Revenue Year-To-Date |
|
|
Fiscal Year 2020 Expectations Fiscal Year 2019 Actuals Current Expectations (9/4/19) Revenue $314 million $350 to $370 million Earnings Per Share (diluted) $1.74 $1.35 to $1.55 Non-GAAP Earnings Per Share (diluted) $1.48* $1.47 to $1.67 First half revenue as a percentage of full year revenue 48% ~45% Internal Research & Development 11% of revenue 11% of revenue Tax Rate ~9% ~11% On-track to achieve Fiscal Year 2020 objectives & deliver Third consecutive year of profitable, double-digit topline growth * Excludes Q1 Fiscal Year 2019 one-time gain of $0.26 from litigation settlement 10 September 4, 2019 © 2019 AeroVironment, Inc. |
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|
For more information: Steven Gitlin Vice President Investor Relations ir@avinc.com +1 (805) 520-8350 11 September 4, 2019 © 2019 AeroVironment, Inc. |
|
|
Appendix – Reconciliation of Non-GAAP Diluted Earnings Per Share (Unaudited) Three Months Ended Three Months Ended July 27, 2019 July 28, 2018 Earnings per diluted share from continuing operations (GAAP) $ 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 12 September 4, 2019 © 2019 AeroVironment, Inc. |
|
|
Appendix – Reconciliation of Fiscal Year 2020 Non-GAAP Diluted Earnings Per Share Expectations (Unaudited) d s Fiscal year ending April 30, 2020 Expected earnings per diluted share (GAAP) $ 1.35 – 1.55 Acquisition related expenses 0.03 Amortization of acquired intangible assets 0.08 – 0.10 Expected earnings per diluted share as adjusted (Non-GAAP) $ 1.47 – 1.67 13 September 4, 2019 © 2019 AeroVironment, Inc. |
