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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 January 29, 2022

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 February 25, 2022, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 24,914,333.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.

Financial Statements :

    

Consolidated Balance Sheets as of January 29, 2022 (Unaudited) and April 30, 2021

3

Consolidated Statements of Operations for the three and nine months ended January 29, 2022 (Unaudited) and January 30, 2021 (Unaudited)

4

Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended January 29, 2022 (Unaudited) and January 30, 2021 (Unaudited)

5

Consolidated Statements of Stockholders’ Equity for the three and nine months ended January 29, 2022 (Unaudited) and January 30, 2021 (Unaudited)

7

Consolidated Statements of Cash Flows for the nine months ended January 29, 2022 (Unaudited) and January 30, 2021 (Unaudited)

8

Notes to Consolidated Financial Statements (Unaudited)

9

Item 2.

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

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

Item 3.

Defaults Upon Senior Securities

54

Item 4.

Mine Safety Disclosures

54

Item 5.

Other Information

54

Item 6.

Exhibits

55

Signatures

56

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)

January 29,

    

April 30,

2022

2021

    

(Unaudited)

 

Assets

Current assets:

Cash and cash equivalents

$

82,528

$

148,741

Short-term investments

3,969

31,971

Accounts receivable, net of allowance for doubtful accounts of $577 at January 29, 2022 and $595 at April 30, 2021

 

41,739

 

62,647

Unbilled receivables and retentions (inclusive of related party unbilled receivables of $5,944 at January 29, 2022 and $544 at April 30, 2021)

 

97,993

 

71,632

Inventories

 

89,616

 

71,646

Income taxes receivable

26,578

Prepaid expenses and other current assets

 

12,099

 

15,001

Total current assets

 

354,522

 

401,638

Long-term investments

12,388

12,156

Property and equipment, net

 

65,377

 

58,896

Operating lease right-of-use assets

24,848

22,902

Deferred income taxes

 

3,258

 

2,061

Intangibles, net

103,825

106,268

Goodwill

335,164

314,205

Other assets

 

5,881

 

10,440

Total assets

$

905,263

$

928,566

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

15,118

$

24,841

Wages and related accruals

 

21,207

 

28,068

Customer advances

 

6,864

 

7,183

Current portion of long-term debt

10,000

10,000

Current operating lease liabilities

6,150

6,154

Income taxes payable

247

861

Other current liabilities

 

27,897

 

19,078

Total current liabilities

 

87,483

 

96,185

Long-term debt, net of current portion

180,398

187,512

Non-current operating lease liabilities

20,678

19,103

Other non-current liabilities

5,273

10,141

Liability for uncertain tax positions

 

3,518

 

3,518

Deferred income taxes

5,198

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares—10,000,000; none issued or outstanding at January 29, 2022 and April 30, 2021

 

 

Common stock, $0.0001 par value:

Authorized shares—100,000,000

Issued and outstanding shares—24,915,105 shares at January 29, 2022 and 24,777,295 shares at April 30, 2021

 

2

 

2

Additional paid-in capital

 

265,885

 

260,327

Accumulated other comprehensive (loss) income

 

(3,434)

 

343

Retained earnings

 

339,975

 

351,421

Total AeroVironment, Inc. stockholders’ equity

 

602,428

 

612,093

Noncontrolling interest

287

14

Total equity

602,715

612,107

Total liabilities and stockholders’ equity

$

905,263

$

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

Nine Months Ended

January 29,

January 30,

January 29,

January 30,

    

2022

    

2021

    

2022

    

2021

 

Revenue:

Product sales

$

42,599

$

58,348

$

166,713

$

182,233

Contract services (inclusive of related party revenue of $9,543 and $7,480 for the three months ended January 29, 2022 and January 30, 2021, respectively; and $30,237 and $35,318 for the nine months ended January 29, 2022 and January 30, 2021, respectively)

 

47,494

 

20,434

 

146,397

 

76,664

 

90,093

 

78,782

 

313,110

 

258,897

Cost of sales:

Product sales

 

29,294

 

35,746

 

100,821

 

102,039

Contract services

 

39,363

 

14,395

 

119,675

 

51,955

 

68,657

 

50,141

 

220,496

 

153,994

Gross margin:

 

 

Product sales

13,305

22,602

65,892

80,194

Contract services

8,131

6,039

26,722

24,709

21,436

28,641

 

92,614

 

104,903

Selling, general and administrative

 

22,549

 

15,652

 

74,496

 

42,640

Research and development

 

13,013

 

13,631

 

41,018

 

36,710

(Loss) income from operations

 

(14,126)

 

(642)

 

(22,900)

 

25,553

Other (loss) income:

Interest (expense) income, net

 

(1,510)

 

94

 

(4,164)

 

417

Other income (expense), net

 

34

 

(37)

 

(10,360)

 

68

(Loss) income before income taxes

 

(15,602)

 

(585)

 

(37,424)

 

26,038

(Benefit from) provision for income taxes

(15,396)

(924)

 

(25,864)

 

2,774

Equity method investment income (loss), net of tax

 

171

 

(81)

 

163

 

(10,891)

Net (loss) income

(35)

258

(11,397)

12,373

Net loss (income) attributable to noncontrolling interest

45

(47)

(49)

12

Net income (loss) attributable to AeroVironment, Inc.

$

10

$

211

$

(11,446)

$

12,385

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

Basic

$

$

0.01

$

(0.46)

$

0.52

Diluted

$

$

0.01

$

(0.46)

$

0.51

Weighted-average shares outstanding:

Basic

 

24,710,991

 

23,942,782

 

24,657,846

 

23,924,017

Diluted

 

24,879,643

 

24,260,874

 

24,657,846

 

24,216,371

See accompanying notes to consolidated financial statements (unaudited).

4

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

January 29,

January 30,

January 29,

January 30,

    

2022

    

2021

    

2022

    

2021

 

Net (loss) income

$

(35)

$

258

$

(11,397)

$

12,373

Other comprehensive (loss) income:

Unrealized (loss) gain on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the three months ended January 29, 2022 and January 30, 2021, respectively; and $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively

 

(3)

 

5

 

(6)

 

(56)

Change in foreign currency translation adjustments

(1,754)

(3,771)

75

Total comprehensive (loss) income

(1,792)

263

(15,174)

12,392

Net loss (income) attributable to noncontrolling interest

45

(47)

(49)

12

Comprehensive (loss) income attributable to AeroVironment, Inc.

$

(1,747)

$

216

$

(15,223)

$

12,404

See accompanying notes to consolidated financial statements (unaudited).

5

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the nine months ended January 29, 2022 and January 30, 2021 (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

 

 

 

 

(11,446)

 

(11,446)

49

 

(11,397)

Unrealized loss on investments

 

 

 

 

(6)

(6)

 

(6)

Foreign currency translation

 

 

 

 

(3,771)

(3,771)

 

(3,771)

Stock options exercised

 

114,362

 

 

2,777

 

2,777

 

2,777

Restricted stock awards

 

55,592

 

 

 

 

Restricted stock awards forfeited

 

(20,203)

 

 

 

 

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

 

 

 

3,957

 

3,957

 

3,957

Balance at January 29, 2022

 

24,915,105

$

2

$

265,885

$

339,975

$

(3,434)

$

602,428

$

287

$

602,715

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)

 

 

 

 

12,385

 

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

6

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the three months ended January 29, 2022 and January 30, 2021 (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 October 30, 2021

 

24,805,829

$

2

$

261,612

$

339,965

$

(1,677)

$

599,902

$

332

$

600,234

Net income (loss)

 

 

 

 

10

 

10

(45)

 

(35)

Unrealized loss on investments

 

 

 

 

 

(3)

(3)

 

(3)

Foreign currency translation

(1,754)

(1,754)

(1,754)

Stock options exercised

110,362

 

 

2,657

 

 

2,657

 

2,657

Restricted stock awards

3,366

Restricted stock awards forfeited

 

(4,452)

 

 

 

 

Stock based compensation

 

 

 

1,616

 

1,616

 

1,616

Balance at January 29, 2022

 

24,915,105

$

2

$

265,885

$

339,975

$

(3,434)

$

602,428

$

287

$

602,715

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 October 31, 2020

 

24,103,980

2

183,298

340,264

342

523,906

(59)

523,847

Net income

 

 

 

 

211

 

211

47

 

258

Unrealized gain 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

See accompanying notes to consolidated financial statements (unaudited).

7

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Nine Months Ended

    

January 29,

    

January 30,

 

2022

2021

Operating activities

Net (loss) income

$

(11,397)

$

12,373

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

Depreciation and amortization