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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 28, 2023

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 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 29, 2023, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 28,135,100.

AeroVironment, Inc.

Table of Contents

Item 1.

Financial Statements :

    

Condensed Consolidated Balance Sheets as of October 28, 2023 (Unaudited) and April 30, 2023

3

Condensed Consolidated Statements of Operations for the three and six months ended October 28, 2023 (Unaudited) and October 29, 2022 (Unaudited)

4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended October 28, 2023 (Unaudited) and October 29, 2022 (Unaudited)

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended October 28, 2023 (Unaudited) and October 29, 2022 (Unaudited)

6

Condensed Consolidated Statements of Cash Flows for the six months ended October 28, 2023 (Unaudited) and October 29, 2022 (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

44

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

47

Signatures

48

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)

October 28,

    

April 30,

2023

2023

    

(Unaudited)

 

Assets

Current assets:

Cash and cash equivalents

$

100,908

$

132,859

Accounts receivable, net of allowance for doubtful accounts of $158 at October 28, 2023 and $156 at April 30, 2023

 

73,865

 

87,633

Unbilled receivables and retentions

 

141,812

 

105,653

Inventories, net

 

181,767

 

138,814

Income taxes receivable

5,735

Prepaid expenses and other current assets

 

19,958

 

12,043

Total current assets

 

524,045

 

477,002

Long-term investments

20,611

23,613

Property and equipment, net

 

43,772

 

39,795

Operating lease right-of-use assets

30,632

27,363

Deferred income taxes

 

20,780

 

27,206

Intangibles, net

82,848

43,577

Goodwill

274,781

180,801

Other assets

 

9,231

 

5,220

Total assets

$

1,006,700

$

824,577

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

28,834

$

31,355

Wages and related accruals

 

26,671

 

35,637

Customer advances

 

20,440

 

16,645

Current portion of long-term debt

5,000

7,500

Current operating lease liabilities

8,818

8,229

Income taxes payable

595

2,342

Other current liabilities

 

18,946

 

19,626

Total current liabilities

 

109,304

 

121,334

Long-term debt, net of current portion

73,678

125,904

Non-current operating lease liabilities

23,727

21,189

Other non-current liabilities

1,898

746

Liability for uncertain tax positions

 

2,705

 

2,705

Deferred income taxes

1,658

1,729

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares—10,000,000; none issued or outstanding at October 28, 2023 and April 30, 2023

 

 

Common stock, $0.0001 par value:

Authorized shares—100,000,000

Issued and outstanding shares—28,135,539 shares at October 28, 2023 and 26,216,897 shares at April 30, 2023

 

4

 

4

Additional paid-in capital

 

589,047

 

384,397

Accumulated other comprehensive loss

 

(6,077)

 

(4,452)

Retained earnings

 

210,756

 

171,021

Total stockholders' equity

793,730

550,970

Total liabilities and stockholders’ equity

$

1,006,700

$

824,577

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

3

AeroVironment, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

Three Months Ended

Six Months Ended

October 28,

October 29,

October 28,

October 29,

    

2023

    

2022

    

2023

    

2022

 

Revenue:

Product sales

$

145,779

$

62,343

$

265,250

$

120,317

Contract services

 

35,037

 

49,241

 

67,913

 

99,783

 

180,816

 

111,584

 

333,163

 

220,100

Cost of sales:

Product sales

 

79,032

 

39,445

 

140,640

 

72,344

Contract services

 

26,434

 

46,249

 

51,513

 

88,152

 

105,466

 

85,694

 

192,153

 

160,496

Gross margin:

 

 

Product sales

66,747

22,898

124,610

47,973

Contract services

8,603

2,992

16,400

11,631

75,350

25,890

 

141,010

 

59,604

Selling, general and administrative

 

28,147

 

23,613

 

51,974

 

45,556

Research and development

 

22,025

 

16,591

 

37,491

 

31,636

Income (loss) from operations

 

25,178

 

(14,314)

 

51,545

 

(17,588)

Other (loss) income:

Interest expense, net

 

(1,950)

 

(2,309)

 

(3,958)

 

(3,912)

Other (expense) income, net

 

(2,858)

 

810

 

(3,987)

 

404

Income (loss) before income taxes

 

20,370

 

(15,813)

 

43,600

 

(21,096)

Provision for (benefit from) income taxes

1,137

(10,457)

 

2,451

 

(7,851)

Equity method investment loss, net of tax

 

(1,393)

 

(1,273)

 

(1,414)

 

(1,773)

Net income (loss)

17,840

(6,629)

39,735

(15,018)

Net income attributable to noncontrolling interest

(39)

(45)

Net income (loss) attributable to AeroVironment, Inc.

$

17,840

$

(6,668)

$

39,735

$

(15,063)

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

Basic

$

0.66

$

(0.27)

$

1.50

$

(0.61)

Diluted

0.66

(0.27)

$

1.50

$

(0.61)

Weighted-average shares outstanding:

Basic

 

26,865,763

 

24,900,873

 

26,479,168

 

24,852,219

Diluted

 

26,956,806

 

24,900,873

 

26,569,267

 

24,852,219

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

4

AeroVironment, Inc.

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

(In thousands)

Three Months Ended

Six Months Ended

October 28,

October 29,

October 28,

October 29,

    

2023

    

2022

    

2023

    

2022

 

Net income (loss)

$

17,840

$

(6,629)

$

39,735

$

(15,018)

Other comprehensive income (loss):

Unrealized gain on available-for-sale investments, net of deferred tax expense of $0 for the three and six months ended October 29, 2022, respectively

 

 

6

 

 

26

Change in foreign currency translation adjustments

(1,562)

(928)

(1,625)

(1,992)

Total comprehensive income (loss)

16,278

(7,551)

38,110

(16,984)

Net income attributable to noncontrolling interest

(39)

(45)

Comprehensive income (loss) attributable to AeroVironment, Inc.

$

16,278

$

(7,590)

$

38,110

$

(17,029)

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

5

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended October 28, 2023 and October 29, 2022 (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 July 29, 2023

 

26,292,130

$

4

$

386,140

$

192,916

$

(4,515)

$

574,545

$

$

574,545

Net income

 

 

 

 

17,840

 

17,840

 

17,840

Foreign currency translation

(1,562)

(1,562)

(1,562)

Restricted stock awards

53,455

Restricted stock awards forfeited

 

(2,738)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

(677)

(72)

(72)

(72)

Shares issued, net of issuance costs

807,370

88,119

88,119

88,119

Issuance of common stock for business acquisition

985,999

109,820

109,820

109,820

Stock based compensation

 

 

 

5,040

 

5,040

 

5,040

Balance at October 28, 2023

 

28,135,539

$

4

$

589,047

$

210,756

$

(6,077)

$

793,730

$

$

793,730

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

Equity

Interest

    

Total

Balance at July 30, 2022

 

24,990,590

$

2

$

268,641

$

338,838

$

(7,558)

$

599,923

$

247

$

600,170

Net (loss) income

 

 

 

 

(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

6

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the six months ended October 28, 2023 and October 29, 2022 (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, 2023

 

26,216,897

$

4

$

384,397

$

171,021

$

(4,452)

$

550,970

$

$

550,970

Net income

 

 

 

 

39,735

 

39,735

 

39,735

Foreign currency translation

 

 

 

 

(1,625)

(1,625)

 

(1,625)

Restricted stock awards

 

145,368

 

 

 

 

Restricted stock awards forfeited

 

(6,176)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(13,919)

 

 

(1,370)

 

(1,370)

 

(1,370)

Shares issued, net of issuance costs

807,370

87,956

87,956

87,956

Issuance of common stock for business acquisition

985,999

109,820

109,820

109,820

Stock based compensation

 

 

 

8,244

 

8,244

 

8,244

Balance at October 28, 2023

 

28,135,539

$

4

$

589,047

$

210,756

$

(6,077)

$

793,730

$

$

793,730

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, 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

7

AeroVironment, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Six Months Ended

    

October 28,

    

October 29,

 

2023

2022

Operating activities