SEC Filing | AeroVironment, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended October 31, 2020

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33261

AEROVIRONMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware		95-2705790
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

900 Innovators Way
Simi Valley, California		93065
(Address of principal executive offices)		(Zip Code)

(805) 520-8350

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	AVAV	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 2, 2020, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 24,103,980.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.	Financial Statements :
	Consolidated Balance Sheets as of October 31, 2020 (Unaudited) and April 30, 2020	3
	Consolidated Statements of Operations for the three and six months ended October 31, 2020 (Unaudited) and October 26, 2019 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the three and six months ended October 31, 2020 (Unaudited) and October 26, 2019 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the three and six months ended October 31, 2020 (Unaudited) and October 26, 2019 (Unaudited)	7
	Consolidated Statements of Cash Flows for the six months ended October 31, 2020 (Unaudited) and October 26, 2019 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		39

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)


	October 31,		April 30,
	2020		2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	280,099	$	255,142
Short-term investments		67,137		47,507
Accounts receivable, net of allowance for doubtful accounts of $561 at October 31, 2020 and $1,190 at April 30, 2020		30,701		73,660
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $14,974 at October 31, 2020 and $15,779 at April 30, 2020)		70,573		75,837
Inventories		51,779		45,535
Prepaid expenses and other current assets		7,310		6,246
Total current assets		507,599		503,927
Long-term investments		20,976		15,030
Property and equipment, net		22,868		21,694
Operating lease right-of-use assets		12,363		8,793
Deferred income taxes		5,546		4,928
Intangibles, net		12,213		13,637
Goodwill		6,340		6,340
Other assets		102		10,605
Total assets	$	588,007	$	584,954
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,225	$	19,859
Wages and related accruals		18,737		23,972
Customer advances		2,957		7,899
Current operating lease liabilities		4,030		3,380
Income taxes payable		3,018		1,065
Other current liabilities		10,511		10,778
Total current liabilities		53,478		66,953
Non-current operating lease liabilities		9,422		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 October 31, 2020 and April 30, 2020		—		—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—24,103,980 shares at October 31, 2020 and 24,063,639 shares at April 30, 2020		2		2
Additional paid-in capital		183,298		181,481
Accumulated other comprehensive income		342		328
Retained earnings		340,264		328,090
Total AeroVironment, Inc. stockholders’ equity		523,906		509,901
Noncontrolling interest		(59)		—
Total equity		523,847		509,901
Total liabilities and stockholders’ equity	$	588,007	$	584,954

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)


	Three Months Ended				Six Months Ended
	October 31,		October 26,		October 31,		October 26,
	2020		2019		2020		2019
Revenue:
Product sales	$	65,528	$	57,386	$	123,885	$	123,225
Contract services (inclusive of related party revenue of $11,452 and $13,393 for the three months ended October 31, 2020 and October 26, 2019, respectively; and $27,838 and $25,728 for the six months ended October 31, 2020 and October 26, 2019, respectively)		27,137		25,885		56,230		46,957
		92,665		83,271		180,115		170,182
Cost of sales:
Product sales		34,209		30,802		66,293		61,210
Contract services		17,605		17,303		37,560		32,534
		51,814		48,105		103,853		93,744
Gross margin:
Product sales		31,319		26,584		57,592		62,015
Contract services		9,532		8,582		18,670		14,423
		40,851		35,166		76,262		76,438
Selling, general and administrative		14,977		16,255		26,988		29,923
Research and development		11,976		10,858		23,079		19,567
Income from operations		13,898		8,053		26,195		26,948
Other income:
Interest income, net		115		1,266		323		2,595
Other income, net		72		157		105		512
Income before income taxes		14,085		9,476		26,623		30,055
Provision for income taxes		2,491		1,108		3,698		3,241
Equity method investment loss, net of tax		(9,522)		(863)		(10,810)		(2,210)
Net income		2,072		7,505		12,115		24,604
Net loss (income) attributable to noncontrolling interest		22		(4)		59		7
Net income attributable to AeroVironment, Inc.	$	2,094	$	7,501	$	12,174	$	24,611
Net income per share attributable to AeroVironment, Inc.
Basic	$	0.09	$	0.32	$	0.51	$	1.04
Diluted	$	0.09	$	0.31	$	0.50	$	1.02
Weighted-average shares outstanding:
Basic		23,936,950		23,804,364		23,914,737		23,775,355
Diluted		24,196,912		24,061,810		24,190,316		24,063,775

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	Three Months Ended				Six Months Ended
	October 31,		October 26,		October 31,		October 26,
	2020		2019		2020		2019
Net income	$	2,072	$	7,505	$	12,115	$	24,604
Other comprehensive income:
Change in foreign currency translation adjustments		—		10		75		179
Unrealized loss on available-for-sale investments, net of deferred tax (expense) benefit of ($3) and $1 for the three and six months ended October 31, 2020, respectively		(9)		—		(61)		—
Total comprehensive income		2,063	$	7,515		12,129		24,783
Net loss (income) attributable to noncontrolling interest		22		(4)		59		7
Comprehensive income attributable to AeroVironment, Inc.	$	2,085	$	7,511	$	12,188	$	24,790

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the six months ended October 31, 2020 and October 26, 2019 (Unaudited)

(In thousands except share data)


								Accumulated
				Additional				Other		Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		AeroVironment, Inc.		Controlling
	Shares	Amount		Capital		Earnings		Loss		Equity		Interest		Total
Balance at April 30, 2020	24,063,639	$	2	$	181,481	$	328,090	$	328	$	509,901	$	—	$	509,901
Net income (loss)	—		—		—		12,174		—		12,174		(59)		12,115
Unrealized loss on investments	—		—		—		—		(61)		(61)		—		(61)
Foreign currency translation	—		—		—		—		75		75		—		75
Stock options exercised	3,500		—		86		—		—		86		—		86
Restricted stock awards	60,592		—		—		—		—		—		—		—
Restricted stock awards forfeited	(515)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(23,236)		—		(1,778)		—		—		(1,778)		—		(1,778)
Stock based compensation	—		—		3,509		—		—		3,509		—		3,509
Balance at October 31, 2020	24,103,980	$	2	$	183,298	$	340,264	$	342	$	523,906	$	(59)	$	523,847

								Accumulated
				Additional				Other		Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		AeroVironment, Inc.		Controlling
	Shares	Amount		Capital		Earnings		Loss		Equity		Interest		Total
Balance at April 30, 2019	23,946,293	$	2	$	176,216	$	286,351	$	2	$	462,571	$	4	$	462,575
Adoption of ASU 2018-09	—		—		—		665		—		665		—		665
Net income (loss)	—		—		—		24,611		—		24,611		(7)		24,604
Unrealized gain on investments	—		—		—		—		—		—		—		—
Foreign currency translation	—		—		—		—		179		179		—		179
Stock options exercised	3,000		—		93		—		—		93		—		93
Restricted stock awards	65,692		—		—		—		—		—		—		—
Restricted stock awards forfeited	(11,005)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(13,364)		—		(743)		—		—		(743)		—		(743)
Stock based compensation	—		—		2,984		—		—		2,984		—		2,984
Balance at October 26, 2019	23,990,616	$	2	$	178,550	$	311,627	$	181	$	490,360	$	(3)	$	490,357

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the three months ended October 31, 2020 and October 26, 2019 (Unaudited)

(In thousands except share data)


								Accumulated
				Additional				Other		Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		AeroVironment, Inc.		Controlling
	Shares	Amount		Capital		Earnings		Income		Equity		Interest		Total
Balance at August 1, 2020	24,104,564	$	2	$	181,406	$	338,170	$	351	$	519,929	$	(37)	$	519,892
Net income (loss)	—		—		—		2,094		—		2,094		(22)		2,072
Unrealized loss on investments	—		—		—		—		(9)		(9)		—		(9)
Restricted stock awards forfeited	(245)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(339)		—		(22)		—		—		(22)		—		(22)
Stock based compensation	—		—		1,914		—		—		1,914		—		1,914
Balance at October 31, 2020	24,103,980	$	2	$	183,298	$	340,264	$	342	$	523,906	$	(59)	$	523,847

								Accumulated
				Additional				Other		Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		AeroVironment, Inc.		Controlling
	Shares	Amount		Capital		Earnings		Income		Equity		Interest		Total
Balance at July 27, 2019	23,990,459		2		177,207		304,126		171		481,506		(7)		481,499
Net income	—		—		—		7,501		—		7,501		4		7,505
Foreign currency translation	—		—		—		—		10		10		—		10
Restricted stock awards	7,831		—		—		—		—		—		—		—
Restricted stock awards forfeited	(6,285)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(1,389)		—		(75)		—		—		(75)		—		(75)
Stock-based compensation	—		—		1,418		—		—		1,418		—		1,418
Balance at October 26, 2019	23,990,616	$	2	$	178,550	$	311,627	$	181	$	490,360	$	(3)	$	490,357

See accompanying notes to consolidated financial statements (unaudited).

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Six Months Ended
	October 31,		October 26,
	2020		2019
Operating activities
Net income	$	12,115	$	24,604
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		5,693		4,486
Losses from equity method investments		10,810		2,210
Realized gain from sale of available-for-sale investments		(11)		—
Provision for doubtful accounts		(156)		14
Other non-cash (income) expense		(473)		81
Non-cash lease expense		2,393		2,255
Loss on foreign currency transactions		2		1
Deferred income taxes		(621)		(669)
Stock-based compensation		3,509		2,984
Loss (gain) on sale of property and equipment		2		(75)
Amortization of debt securities		(12)		(984)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		43,115		(9,400)
Unbilled receivables and retentions		5,264		(9,350)
Inventories		(6,244)		1,621
Income tax receivable		—		821
Prepaid expenses and other assets		(1,029)		(1,051)
Accounts payable		(5,028)		(5,046)
Other liabilities		(10,736)		(4,583)
Net cash provided by operating activities		58,593		7,919
Investing activities
Acquisition of property and equipment		(6,052)		(6,850)
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		—		159,839
Purchases of held-to-maturity investments		—		(169,148)
Redemptions of available-for-sale investments		92,226		—
Purchases of available-for-sale investments		(116,945)		(4,947)
Net cash used in investing activities		(31,944)		(44,235)
Financing activities
Tax withholding payment related to net settlement of equity awards		(1,778)		(743)
Exercise of stock options		86		93
Net cash used in financing activities		(1,692)		(650)
Net increase (decrease) in cash, cash equivalents, and restricted cash		24,957		(36,966)
Cash, cash equivalents and restricted cash at beginning of period		255,142		172,708
Cash, cash equivalents and restricted cash at end of period	$	280,099	$	135,742
Supplemental disclosures of cash flow information
Cash paid, net during the period for: