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 October 29, 2022

☐

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 18^th Street South, 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 November 30, 2022, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 25,157,316.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.	Financial Statements :
	Condensed Consolidated Balance Sheets as of October 29, 2022 (Unaudited) and April 30, 2022	3
	Condensed Consolidated Statements of Operations for the three and six months ended October 29, 2022 (Unaudited) and October 30, 2021 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended October 29, 2022 (Unaudited) and October 30, 2021 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended October 29, 2022 (Unaudited) and October 30, 2021 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended October 29, 2022 (Unaudited) and October 30, 2021 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	45

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		49

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)


	October 29,		April 30,
	2022		2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	101,417	$	77,231
Short-term investments		—		24,716
Accounts receivable, net of allowance for doubtful accounts of $74 at October 29, 2022 and $592 at April 30, 2022		31,664		60,170
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $2,229 at April 30, 2022)		92,457		104,194
Inventories, net		109,810		90,629
Income taxes receivable		8,940		442
Prepaid expenses and other current assets		13,244		11,527
Total current assets		357,532		368,909
Long-term investments		22,462		15,433
Property and equipment, net		52,415		62,296
Operating lease right-of-use assets		25,580		26,769
Deferred income taxes		8,098		7,290
Intangibles, net		88,660		97,224
Goodwill		334,963		334,347
Other assets		1,972		1,932
Total assets	$	891,682	$	914,200
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	26,317	$	19,244
Wages and related accruals		25,049		25,398
Customer advances		7,074		8,968
Current portion of long-term debt		10,000		10,000
Current operating lease liabilities		7,564		6,819
Income taxes payable		26		759
Other current liabilities		27,824		30,203
Total current liabilities		103,854		101,391
Long-term debt, net of current portion		155,622		177,840
Non-current operating lease liabilities		20,043		21,915
Other non-current liabilities		748		768
Liability for uncertain tax positions		1,450		1,450
Deferred income taxes		2,482		2,626
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued or outstanding at October 29, 2022 and April 30, 2022		—		—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—25,157,618 shares at October 29, 2022 and 24,951,287 shares at April 30, 2022		4		2
Additional paid-in capital		283,789		267,248
Accumulated other comprehensive loss		(8,480)		(6,514)
Retained earnings		332,170		347,233
Total AeroVironment, Inc. stockholders’ equity		607,483		607,969
Noncontrolling interest		—		241
Total equity		607,483		608,210
Total liabilities and stockholders’ equity	$	891,682	$	914,200

See accompanying notes to condensed consolidated financial statements (unaudited).

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AeroVironment, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)


	Three Months Ended				Six Months Ended
	October 29,		October 30,		October 29,		October 30,
	2022		2021		2022		2021
Revenue:
Product sales	$	62,343	$	70,998	$	120,317	$	124,114
Contract services (inclusive of related party revenue of $10,342 and $20,694 for the three and six months ended October 30, 2021, respectively)		49,241		51,010		99,783		98,903
		111,584		122,008		220,100		223,017
Cost of sales:
Product sales		39,445		38,937		72,344		71,527
Contract services		46,249		40,616		88,152		80,312
		85,694		79,553		160,496		151,839
Gross margin:
Product sales		22,898		32,061		47,973		52,587
Contract services		2,992		10,394		11,631		18,591
		25,890		42,455		59,604		71,178
Selling, general and administrative		23,613		24,819		45,556		51,947
Research and development		16,591		14,297		31,636		28,005
(Loss) income from operations		(14,314)		3,339		(17,588)		(8,774)
Other (loss) income:
Interest expense, net		(2,309)		(1,379)		(3,912)		(2,654)
Other income (expense), net		810		(10,048)		404		(10,394)
Loss before income taxes		(15,813)		(8,088)		(21,096)		(21,822)
Benefit from income taxes		(10,457)		(9,511)		(7,851)		(10,468)
Equity method investment (loss) income, net of tax		(1,273)		1,133		(1,773)		(8)
Net (loss) income		(6,629)		2,556		(15,018)		(11,362)
Net income attributable to noncontrolling interest		(39)		(31)		(45)		(94)
Net (loss) income attributable to AeroVironment, Inc.	$	(6,668)	$	2,525	$	(15,063)	$	(11,456)
Net (loss) income per share attributable to AeroVironment, Inc.
Basic	$	(0.27)	$	0.10	$	(0.61)	$	(0.47)
Diluted		(0.27)		0.10	$	(0.61)	$	(0.47)
Weighted-average shares outstanding:
Basic		24,900,873		24,641,614		24,852,219		24,630,838
Diluted		24,900,873		24,885,870		24,852,219		24,630,838

See accompanying notes to condensed consolidated financial statements (unaudited).

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AeroVironment, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

(In thousands)


	Three Months Ended				Six Months Ended
	October 29,		October 30,		October 29,		October 30,
	2022		2021		2022		2021
Net (loss) income	$	(6,629)	$	2,556	$	(15,018)	$	(11,362)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $0 for the three and six months ended October 29, 2022 and October 30, 2021, respectively		6		1		26		(3)
Change in foreign currency translation adjustments		(928)		(1,284)		(1,992)		(2,017)
Total comprehensive (loss) income		(7,551)		1,273		(16,984)		(13,382)
Net income attributable to noncontrolling interest		(39)		(31)		(45)		(94)
Comprehensive (loss) income attributable to AeroVironment, Inc.	$	(7,590)	$	1,242	$	(17,029)	$	(13,476)

See accompanying notes to condensed consolidated financial statements (unaudited).

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AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the six months ended October 29, 2022 and October 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, 2022	24,951,287	$	2	$	267,248	$	347,233	$	(6,514)	$	607,969	$	241	$	608,210
Net (loss) income	—		—		—		(15,063)		—		(15,063)		45		(15,018)
Unrealized gain on investments	—		—		—		—		26		26		—		26
Foreign currency translation	—		—		—		—		(1,992)		(1,992)		—		(1,992)
Stock options exercised	25,000		—		682		—		—		682		—		682
Restricted stock awards	75,357		—		—		—		—		—		—		—
Restricted stock awards forfeited	(8,744)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(10,723)		—		(853)		—		—		(853)		—		(853)
Shares issued, net of issuance costs	125,441		2		12,310		—		—		12,312		—		12,312
Deconsolidation of previously controlled subsidiary	—		—		—		—		—		—		(286)		(286)
Stock based compensation	—		—		4,402		—		—		4,402		—		4,402
Balance at October 29, 2022	25,157,618	$	4	$	283,789	$	332,170	$	(8,480)	$	607,483	$	—	$	607,483

								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

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AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended October 29, 2022 and October 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 July 30, 2022	24,990,590	$	2	$	268,641	$	338,838	$	(7,558)	$	599,923	$	247	$	600,170
Net income (loss)	—		—		—		(6,668)		—		(6,668)		39		(6,629)
Unrealized gain on investments	—		—		—		—		6		6		—		6
Foreign currency translation	—		—		—		—		(928)		(928)		—		(928)
Stock options exercised	25,000		—		682		—		—		682		—		682
Restricted stock awards	19,540		—		—		—		—		—		—		—
Restricted stock awards forfeited	(2,606)		—		—		—		—		—		—		—
Tax withholding payment related to net share settlement of equity awards	(347)		—		(29)		—		—		(29)		—		(29)
Shares issued, net of issuance costs	125,441		2		12,310		—		—		12,312		—		12,312
Deconsolidation of previously controlled subsidiary	—		—		—		—		—		—		(286)		(286)
Stock based compensation	—		—		2,185		—		—		2,185		—		2,185
Balance at October 29, 2022	25,157,618	$	4	$	283,789	$	332,170	$	(8,480)	$	607,483	$	—	$	607,483

								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 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	—