SEC Filing | AeroVironment, Inc.

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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 January 30, 2021

☐

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 March 3, 2021, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 24,676,485.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.	Financial Statements :
	Consolidated Balance Sheets as of January 30, 2021 (Unaudited) and April 30, 2020	3
	Consolidated Statements of Operations for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)	7
	Consolidated Statements of Cash Flows for the nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		45

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)


	January 30,		April 30,
	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	324,543	$	255,142
Short-term investments		48,499		47,507
Accounts receivable, net of allowance for doubtful accounts of $565 at January 30, 2021 and $1,190 at April 30, 2020		26,621		73,660
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $6,834 at January 30, 2021 and $15,779 at April 30, 2020)		61,084		75,837
Inventories		53,104		45,535
Prepaid expenses and other current assets		7,693		6,246
Total current assets		521,544		503,927
Long-term investments		11,222		15,030
Property and equipment, net		22,920		21,694
Operating lease right-of-use assets		11,281		8,793
Deferred income taxes		5,821		4,928
Intangibles, net		11,552		13,637
Goodwill		6,340		6,340
Other assets		312		10,605
Total assets	$	590,992	$	584,954
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	15,837	$	19,859
Wages and related accruals		20,081		23,972
Customer advances		4,279		7,899
Current operating lease liabilities		4,403		3,380
Income taxes payable		2,370		1,065
Other current liabilities		9,158		10,778
Total current liabilities		56,128		66,953
Non-current operating lease liabilities		8,426		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 January 30, 2021 and April 30, 2020		—		—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—24,102,691 shares at January 30, 2021 and 24,063,639 shares at April 30, 2020		2		2
Additional paid-in capital		184,366		181,481
Accumulated other comprehensive income		347		328
Retained earnings		340,475		328,090
Total AeroVironment, Inc. stockholders’ equity		525,190		509,901
Noncontrolling interest		(12)		—
Total equity		525,178		509,901
Total liabilities and stockholders’ equity	$	590,992	$	584,954

See accompanying notes to consolidated financial statements (unaudited).

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AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)


	Three Months Ended				Nine Months Ended
	January 30,		January 25,		January 30,		January 25,
	2021		2020		2021		2020
Revenue:
Product sales	$	58,348	$	36,432	$	182,233	$	159,657
Contract services (inclusive of related party revenue of $7,480 and $11,762 for the three months ended January 30, 2021 and January 30, 2020, respectively; and $35,318 and $37,491 for the nine months ended January 30, 2021 and January 25, 2020, respectively)		20,434		25,459		76,664		72,416
		78,782		61,891		258,897		232,073
Cost of sales:
Product sales		35,746		21,034		102,039		82,244
Contract services		14,395		17,361		51,955		49,895
		50,141		38,395		153,994		132,139
Gross margin:
Product sales		22,602		15,398		80,194		77,413
Contract services		6,039		8,098		24,709		22,521
		28,641		23,496		104,903		99,934
Selling, general and administrative		15,652		13,223		42,640		43,146
Research and development		13,631		11,381		36,710		30,948
(Loss) income from operations		(642)		(1,108)		25,553		25,840
Other income:
Interest income, net		94		1,122		417		3,717
Other (expense) income, net		(37)		120		68		632
(Loss) income before income taxes		(585)		134		26,038		30,189
(Benefit from) provision for income taxes		(924)		(38)		2,774		3,203
Equity method investment loss, net of tax		(81)		(1,200)		(10,891)		(3,410)
Net income (loss)		258		(1,028)		12,373		23,576
Net (income) loss attributable to noncontrolling interest		(47)		20		12		27
Net income (loss) attributable to AeroVironment, Inc.	$	211	$	(1,008)	$	12,385	$	23,603
Net income (loss) per share attributable to AeroVironment, Inc.
Basic	$	0.01	$	(0.04)	$	0.52	$	0.99
Diluted	$	0.01	$	(0.04)	$	0.51	$	0.98
Weighted-average shares outstanding:
Basic		23,942,782		23,821,145		23,924,017		23,790,788
Diluted		24,260,874		23,821,145		24,216,371		24,076,195

See accompanying notes to consolidated financial statements (unaudited).

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AeroVironment, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)


	Three Months Ended				Nine Months Ended
	January 30,		January 25,		January 30,		January 25,
	2021		2020		2021		2020
Net income (loss)	$	258	$	(1,028)	$	12,373	$	23,576
Other comprehensive income (loss):
Change in foreign currency translation adjustments		—		(112)		75		67
Unrealized gain (loss) on available-for-sale investments, net of deferred tax benefit of $2 for the three and nine months ended January 30, 2021		5		—		(56)		—
Total comprehensive income (loss)		263		(1,140)		12,392		23,643
Net loss (income) attributable to noncontrolling interest		(47)		20		12		27
Comprehensive income (loss) attributable to AeroVironment, Inc.	$	216	$	(1,120)	$	12,404	$	23,670

See accompanying notes to consolidated financial statements (unaudited).

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AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the nine months ended January 30, 2021 and January 25, 2020 (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)	—		—		—		12,385		—		12,385		(12)		12,373
Unrealized loss on investments	—		—		—		—		(56)		(56)		—		(56)
Foreign currency translation	—		—		—		—		75		75		—		75
Stock options exercised	3,500		—		86		—		—		86		—		86
Restricted stock awards	62,675		—		—		—		—		—		—		—
Restricted stock awards forfeited	(1,833)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(25,290)		—		(1,955)		—		—		(1,955)		—		(1,955)
Stock based compensation	—		—		4,754		—		—		4,754		—		4,754
Balance at January 30, 2021	24,102,691	$	2	$	184,366	$	340,475	$	347	$	525,190	$	(12)	$	525,178

								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)	—		—		—		23,603		—		23,603		(27)		23,576
Foreign currency translation	—		—		—		—		67		67		—		67
Stock options exercised	3,000		—		93		—		—		93		—		93
Restricted stock awards	74,892		—		—		—		—		—		—		—
Restricted stock awards forfeited	(11,769)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(17,307)		—		(1,009)		—		—		(1,009)		—		(1,009)
Stock based compensation	—		—		4,751		—		—		4,751		—		4,751
Balance at January 25, 2020	23,995,109	$	2	$	180,051	$	310,619	$	69	$	490,741	$	(23)	$	490,718

See accompanying notes to consolidated financial statements (unaudited).

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AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the three months ended January 30, 2021 and January 25, 2020 (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 October 31, 2020	24,103,980	$	2	$	183,298	$	340,264	$	342	$	523,906	$	(59)	$	523,847
Net income	—		—		—		211		—		211		47		258
Unrealized loss on investments	—		—		—		—		5		5		—		5
Restricted stock awards	2,083		—		—		—		—		—		—		—
Restricted stock awards forfeited	(1,318)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(2,054)		—		(177)		—		—		(177)		—		(177)
Stock based compensation	—		—		1,245		—		—		1,245		—		1,245
Balance at January 30, 2021	24,102,691	$	2	$	184,366	$	340,475	$	347	$	525,190	$	(12)	$	525,178

								Accumulated
				Additional				Other		Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		AeroVironment, Inc.		Controlling
	Shares	Amount		Capital		Earnings		Income		Equity		Interest		Total
Balance at October 26, 2019	23,990,616		2		178,550		311,627		181		490,360		(3)		490,357
Net loss	—		—		—		(1,008)		—		(1,008)		(20)		(1,028)
Foreign currency translation	—		—		—		—		(112)		(112)		—		(112)
Restricted stock awards	9,200		—		—		—		—		—		—		—
Restricted stock awards forfeited	(764)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(3,943)		—		(266)		—		—		(266)		—		(266)
Stock-based compensation	—		—		1,767		—		—		1,767		—		1,767
Balance at January 25, 2020	23,995,109	$	2	$	180,051	$	310,619	$	69	$	490,741	$	(23)	$	490,718

See accompanying notes to consolidated financial statements (unaudited).

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AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Nine Months Ended
	January 30,		January 25,
	2021		2020
Operating activities
Net income	$	12,373	$	23,576
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		8,650		7,107
Losses from equity method investments		10,891		3,410
Realized gain from sale of available-for-sale investments		(11)		—
Provision for doubtful accounts		(145)		(2)
Other non-cash income		(473)		(719)
Non-cash lease expense		3,592		3,453
Loss on foreign currency transactions		1		—
Deferred income taxes		(897)		(946)
Stock-based compensation		4,754		4,751
Loss (gain) on sale of property and equipment		2		(71)
Amortization of debt securities		143		(1,291)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		47,184		3,245
Unbilled receivables and retentions		14,753		(24,364)
Inventories		(7,569)		(10,766)
Income tax receivable		—		821
Prepaid expenses and other assets		(1,622)		216
Accounts payable		(3,346)		(1,301)
Other liabilities		(9,318)		7,947
Net cash provided by operating activities		78,962		15,066
Investing activities
Acquisition of property and equipment		(8,472)		(8,504)
Equity method investments		(2,150)		(9,551)
Business acquisition, net of cash acquired		—		(18,641)
Proceeds from sale of property and equipment		—		81
Redemptions of held-to-maturity investments		—		166,917
Purchases of held-to-maturity investments		—		(162,517)
Redemptions of available-for-sale investments		130,066		41,150
Purchases of available-for-sale investments		(125,644)		(59,297)
Net cash used in investing activities		(6,200)		(50,362)
Financing activities
Tax withholding payment related to net settlement of equity awards		(1,955)		(1,009)
Holdback and retention payments for business acquisition		(1,492)