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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 30, 2021

OR

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.)

241 18th Street, Suite 415

Arlington, Virginia

22202

(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 1, 2021, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 24,813,218.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.

Financial Statements :

    

Consolidated Balance Sheets as of October 30, 2021 (Unaudited) and April 30, 2021

3

Consolidated Statements of Operations for the three and six months ended October 30, 2021 (Unaudited) and October 31, 2020 (Unaudited)

4

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended October 30, 2021 (Unaudited) and October 31, 2020 (Unaudited)

5

Consolidated Statements of Stockholders’ Equity for the three and six months ended October 30, 2021 (Unaudited) and October 31, 2020 (Unaudited)

7

Consolidated Statements of Cash Flows for the six months ended October 30, 2021 (Unaudited) and October 31, 2020 (Unaudited)

8

Notes to Consolidated Financial Statements (Unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

Item 4.

Controls and Procedures

47

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

49

Item 1A.

Risk Factors

49

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

Item 3.

Defaults Upon Senior Securities

53

Item 4.

Mine Safety Disclosures

53

Item 5.

Other Information

53

Item 6.

Exhibits

54

Signatures

55

2

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 30,

    

April 30,

2021

2021

    

(Unaudited)

 

Assets

Current assets:

Cash and cash equivalents

$

104,770

$

148,741

Short-term investments

6,311

31,971

Accounts receivable, net of allowance for doubtful accounts of $566 at October 30, 2021 and $595 at April 30, 2021

 

26,552

 

62,647

Unbilled receivables and retentions (inclusive of related party unbilled receivables of $9,215 at October 30, 2021 and $544 at April 30, 2021)

 

119,031

 

71,632

Inventories

 

81,944

 

71,646

Income taxes receivable

11,708

Prepaid expenses and other current assets

 

13,761

 

15,001

Total current assets

 

364,077

 

401,638

Long-term investments

11,271

12,156

Property and equipment, net

 

68,217

 

58,896

Operating lease right-of-use assets

26,058

22,902

Deferred income taxes

 

2,900

 

2,061

Intangibles, net

110,620

106,268

Goodwill

335,888

314,205

Other assets

 

6,276

 

10,440

Total assets

$

925,307

$

928,566

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

21,443

$

24,841

Wages and related accruals

 

21,697

 

28,068

Customer advances

 

10,322

 

7,183

Current portion of long-term debt

10,000

10,000

Current operating lease liabilities

6,440

6,154

Income taxes payable

214

861

Other current liabilities

 

31,313

 

19,078

Total current liabilities

 

101,429

 

96,185

Long-term debt, net of current portion

182,769

187,512

Non-current operating lease liabilities

21,665

19,103

Other non-current liabilities

10,302

10,141

Liability for uncertain tax positions

 

3,518

 

3,518

Deferred income taxes

5,390

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares—10,000,000; none issued or outstanding at October 30, 2021 and April 30, 2021

 

 

Common stock, $0.0001 par value:

Authorized shares—100,000,000

Issued and outstanding shares—24,805,829 shares at October 30, 2021 and 24,777,295 shares at April 30, 2021

 

2

 

2

Additional paid-in capital

 

261,612

 

260,327

Accumulated other comprehensive (loss) income

 

(1,677)

 

343

Retained earnings

 

339,965

 

351,421

Total AeroVironment, Inc. stockholders’ equity

 

599,902

 

612,093

Noncontrolling interest

332

14

Total equity

600,234

612,107

Total liabilities and stockholders’ equity

$

925,307

$

928,566

See accompanying notes to consolidated financial statements (unaudited).

3

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 30,

October 31,

October 30,

October 31,

    

2021

    

2020

    

2021

    

2020

 

Revenue:

Product sales

$

70,998

$

65,528

$

124,114

$

123,885

Contract services (inclusive of related party revenue of $10,342 and $11,452 for the three months ended October 30, 2021 and October 31, 2020, respectively; and $20,694 and $27,838 for the six months ended October 30, 2021 and October 31, 2020, respectively)

 

51,010

 

27,137

 

98,903

 

56,230

 

122,008

 

92,665

 

223,017

 

180,115

Cost of sales:

Product sales

 

38,937

 

34,209

 

71,527

 

66,293

Contract services

 

40,616

 

17,605

 

80,312

 

37,560

 

79,553

 

51,814

 

151,839

 

103,853

Gross margin:

 

 

Product sales

32,061

31,319

52,587

57,592

Contract services

10,394

9,532

18,591

18,670

42,455

40,851

 

71,178

 

76,262

Selling, general and administrative

 

24,819

 

14,977

 

51,947

 

26,988

Research and development

 

14,297

 

11,976

 

28,005

 

23,079

Income (loss) from operations

 

3,339

 

13,898

 

(8,774)

 

26,195

Other (loss) income:

Interest (expense) income, net

 

(1,379)

 

115

 

(2,654)

 

323

Other (expense) income, net

 

(10,048)

 

72

 

(10,394)

 

105

(Loss) income before income taxes

 

(8,088)

 

14,085

 

(21,822)

 

26,623

(Benefit from) provision for income taxes

(9,511)

2,491

 

(10,468)

 

3,698

Equity method investment income (loss), net of tax

 

1,133

 

(9,522)

 

(8)

 

(10,810)

Net income (loss)

2,556

2,072

(11,362)

12,115

Net (income) loss attributable to noncontrolling interest

(31)

22

(94)

59

Net income (loss) attributable to AeroVironment, Inc.

$

2,525

$

2,094

$

(11,456)

$

12,174

Net income (loss) per share attributable to AeroVironment, Inc.

Basic

$

0.10

$

0.09

$

(0.47)

$

0.51

Diluted

$

0.10

$

0.09

$

(0.47)

$

0.50

Weighted-average shares outstanding:

Basic

 

24,641,614

 

23,936,950

 

24,630,838

 

23,914,737

Diluted

 

24,885,870

 

24,196,912

 

24,630,838

 

24,190,316

See accompanying notes to consolidated financial statements (unaudited).

4

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

Three Months Ended

Six Months Ended

October 30,

October 31,

October 30,

October 31,

    

2021

    

2020

    

2021

    

2020

 

Net income (loss)

$

2,556

$

2,072

$

(11,362)

$

12,115

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale investments, net of deferred tax (expense) benefit of $0 and $(3) for the three months ended October 30, 2021 and October 31, 2020, respectively; and $0 and $1 for the six months ended October 30, 2021 and October 31, 2020, respectively

 

1

 

(9)

 

(3)

 

(61)

Change in foreign currency translation adjustments

(1,284)

(2,017)

75

Total comprehensive income (loss)

1,273

2,063

(13,382)

12,129

Net (income) loss attributable to noncontrolling interest

(31)

22

(94)

59

Comprehensive income (loss) attributable to AeroVironment, Inc.

$

1,242

$

2,085

$

(13,476)

$

12,188

See accompanying notes to consolidated financial statements (unaudited).

5

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the six months ended October 30, 2021 and October 31, 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 (Loss)

Equity

Interest

    

Total

 

Balance at April 30, 2021

 

24,777,295

$

2

$

260,327

$

351,421

$

343

$

612,093

$

14

$

612,107

Net (loss) income

 

 

 

 

(11,456)

 

(11,456)

94

 

(11,362)

Unrealized loss on investments

 

 

 

 

(3)

(3)

 

(3)

Foreign currency translation

 

 

 

 

(2,017)

(2,017)

 

(2,017)

Stock options exercised

 

4,000

 

 

119

 

119

 

119

Restricted stock awards

 

52,226

 

 

 

 

Restricted stock awards forfeited

 

(15,751)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(11,941)

 

 

(1,176)

 

(1,176)

 

(1,176)

Change in non-controlling interest

224

224

Stock based compensation

 

 

 

2,342

 

2,342

 

2,342

Balance at October 30, 2021

 

24,805,829

$

2

$

261,612

$

339,965

$

(1,677)

$

599,902

$

332

$

600,234

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (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

6

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the three months ended October 30, 2021 and October 31, 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) Income

Equity

Interest

    

Total

Balance at July 31, 2021

 

24,811,802

$

2

$

261,192

$

337,440

$

(394)

$

598,240

$

77

$

598,317

Net income

 

 

 

 

2,525

 

2,525

31

 

2,556

Unrealized gain on investments

 

 

 

 

 

1

1

 

1

Foreign currency translation

(1,284)

(1,284)

(1,284)

Restricted stock awards

3,638

Restricted stock awards forfeited

 

(9,611)

 

 

 

 

Change in non-controlling interest

224

224

Stock based compensation

 

 

 

420

 

420

 

420

Balance at October 30, 2021

 

24,805,829

$

2

$

261,612

$

339,965

$

(1,677)

$

599,902

$

332

$

600,234

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

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

See accompanying notes to consolidated financial statements (unaudited).

7

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Six Months Ended

    

October 30,

    

October 31,

 

2021

2020

Operating activities

Net (loss) income

$

(11,362)

$

12,115

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: