UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition
On September 4, 2024, AeroVironment, Inc. (the “Company”) issued a press release announcing first quarter financial results for the period ended July 27, 2024, a copy of which is attached hereto as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure
The information under Item 2.02 above is incorporated herein by reference.
Attached as Exhibit 99.2 hereto is a presentation containing additional information regarding the Company’s first quarter fiscal 2025 financial results for the period ended July 27, 2024. A copy of the presentation is also available on the investor relations section of the Company’s website at https://investor.avinc.com/events-and-presentations. The information contained on the Company’s website is not incorporated by reference into, and does not form a part of, this Current Report on Form 8-K.
In addition to historic information, this report, including the exhibits, contains forward-looking statements regarding events, performance and financial trends. Various factors could affect future results and could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of those factors are identified in the exhibits, and in our periodic reports filed with the Securities and Exchange Commission.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Items 2.02 and 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of AeroVironment, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit |
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Number |
| Description |
99.1 |
| Press release issued by AeroVironment, Inc., dated September 4, 2024. |
99.2 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AEROVIRONMENT, INC. | |
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Date: September 4, 2024 | By: | /s/ Wahid Nawabi |
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| Wahid Nawabi |
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| Chairman, President and Chief Executive Officer |
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Exhibit 99.1
AeroVironment Announces Fiscal 2025 First Quarter Results
ARLINGTON, VA, September 4, 2024 — AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal first quarter ended July 27, 2024.
First Quarter Highlights:
| ● | Record first quarter revenue of $189.5 million up 24% year-over-year |
| ● | First quarter net income of $21.2 million and adjusted EBITDA of $37.2 million |
| ● | In August 2024 awarded U.S. Army Lethal Unmanned Systems Indefinite Delivery, Indefinite Quantity (“IDIQ”) with a record contract ceiling value of $990 million and initial funding of $128 million |
“AeroVironment has once again delivered excellent results, including record first-quarter revenue that’s 24% higher than the same period last fiscal year,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Our Loitering Munition Systems segment continues to be the highest growth driver for the company posting first-quarter revenue, 68% higher than the same quarter last year.
“With a growing pipeline and solid operating performance, AeroVironment is working toward achieving another record fiscal year, and we are confident that our success will carry forward into future years.”
FISCAL 2025 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2025 was $189.5 million, an increase of 24% as compared to $152.3 million for the first quarter of fiscal 2024, reflecting higher product sales of $40.0 million, partially offset by a decrease in service revenue of $2.9 million. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 68% and UnCrewed Systems (“UxS”) of 22%, partially offset by a decrease in MacCready Works (“MW”) of 24%.
Gross margin for the first quarter of fiscal 2025 was $81.5 million, an increase of 24% as compared to $65.7 million for the first quarter of fiscal 2024, reflecting higher product gross margin of $16.1 million, partially offset by lower service margin of $0.3 million. As a percentage of revenue, gross margin remained consistent at 43%. Gross margin was negatively impacted by an increase of $1.3 million of intangible amortization expense and other related non-cash purchase accounting expenses.
Income from operations for the first quarter of fiscal 2025 was $23.1 million as compared to $26.4 million for the first quarter of last fiscal year. The decrease year-over-year was due to an increase in selling, general and administrative (“SG&A”) expense of $10.0 million and an increase in research and development (“R&D”) expense of $9.1 million, partially offset by higher gross margin of $15.8 million.
Other loss, net, for the first quarter of fiscal 2025 was $0.5 million, as compared to $3.1 million for the first quarter of last fiscal year. The decrease in other loss, net was primarily due to a decrease in net interest expense and a decrease in net unrealized losses on investment holdings.
Provision for income taxes for the first quarter of fiscal 2025 was $1.5 million, as compared to $1.3 million for the first quarter of last fiscal year.
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Net income for the first quarter of fiscal 2025 was $21.2 million, or $0.75 per diluted share, as compared to $21.9 million, or $0.84 per diluted share, in the prior-year period, respectively.
Non-GAAP adjusted EBITDA for the first quarter of fiscal 2025 was $37.2 million and non-GAAP earnings per diluted share were $0.89, as compared to $37.3 million and $1.00, respectively, for the first quarter of fiscal 2024.
BACKLOG
As of July 27, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $372.9 million, as compared to $400.2 million as of April 30, 2024. Funded backlog as of July 27, 2024 includes only initial funding for Switchblade 300 and 600s for the recently announced program wins such as the Low Altitude Stalking and Strike Ordnance or “LASSO” program, Organic Precision Fires-Light or “OPF-L” program, the Replicator Initiative, Ukraine Aid Initiative and our first Lithuanian order. Funded backlog does not include $128 million of initial funding under the recently announced IDIQ contract to deliver LMS systems for the U.S. Army’s Directed Requirement for Lethal Unmanned Systems with a contract ceiling value of $990 million. Additional funding for each of these programs is anticipated in our full year plan.
FISCAL 2025 — OUTLOOK FOR THE FULL YEAR
For fiscal year 2025, the Company continues to expect revenue of between $790 million and $820 million, net income of between $74 million and $83 million, Non-GAAP adjusted EBITDA of between $143 million and $153 million, earnings per diluted share of between $2.61 and $2.92 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $3.18 and $3.49.
The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates.
CONFERENCE CALL AND PRESENTATION
In conjunction with this release, AeroVironment, Inc. will host a conference call today, Wednesday, September 4, 2024, at 4:30 pm Eastern Time that will be webcast live. Wahid Nawabi, chairman, president and chief executive officer, Kevin P. McDonnell, chief financial officer and Jonah Teeter-Balin, vice president corporate development and investor relations, will host the call.
Investors may access the call by registering via the following participant registration link up to ten minutes prior to the start time.
Participant registration URL: https://register.vevent.com/register/BIabc39fbc6b534eb4aac7d5fda54c1d33
Investors may also listen to the live audio webcast via the Investor Relations page of the AeroVironment, Inc. website, http://investor.avinc.com. Please allow 15 minutes prior to the call to download and install any necessary audio software.
A supplementary investor presentation for the first quarter fiscal year 2025 can be accessed at https://investor.avinc.com/events-and-presentations.
Audio Replay
An audio replay of the event will be archived on the Investor Relations section of the Company's website at http://investor.avinc.com.
ABOUT AEROVIRONMENT, INC.
AeroVironment (NASDAQ: AVAV) provides technology solutions at the intersection of robotics, sensors, software analytics and connectivity that deliver more actionable intelligence so you can Proceed with Certainty. Headquartered in
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Virginia, AeroVironment is a global leader in intelligent, multi-domain robotic systems, and serves defense, government and commercial customers. For more information, visit www.avinc.com.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements.
Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the impact of our ability to successfully close and integrate acquisitions into our operations and avoid disruptions from acquisition transactions that will harm our business; the recording of goodwill and other intangible assets as part of acquisitions that are subject to potential impairments in the future and any realization of such impairments; any actual or threatened disruptions to our relationships with our distributors, suppliers, customers and employees, including shortages in components for our products; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government, including uncertainties in classification, pricing or potentially burdensome imposed terms for certain types of government contracts; availability of U.S. government funding for defense procurement and R&D programs; our ability to win U.S. and international government R&D and procurement programs; changes in the timing and/or amount of government spending, including due to continuing resolutions; adverse impacts of a U.S. government shutdown; our reliance on limited relationships to fund our development of HAPS UAS; our ability to execute contracts for anticipated sales, perform under such contracts and other existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; the extensive and increasing regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats or the risk of unauthorized access to and resulting misuse of our, our customers’ and/or our suppliers’ information and systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; our ability to increase production capacity to support anticipated growth; unexpected changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; any increase in litigation activity or unfavorable results in legal proceedings, including pending class actions; our ability to respond and adapt to legal, regulatory and government budgetary changes, including those resulting from the impact of pandemics and similar outbreaks; our ability to comply with the covenants in our loan documents; our ability to attract and retain skilled employees; the impact of inflation; and general economic and business conditions in the United States and elsewhere in the world; and the failure to establish and maintain effective internal control over financial reporting. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. See in the financial tables below the calculation of these measures, the reasons why we believe these measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures.
– Financial Tables Follow –
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AeroVironment, Inc.
Consolidated Statements of Operations
(In thousands except share and per share data)
| | Three Months Ended |
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| | July 27, | | July 29, | | ||
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| 2024 |
| 2023 |
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| | (Unaudited) | | ||||
Revenue: | | | | | | | |
Product sales | | $ | 159,504 | | $ | 119,471 | |
Contract services | |
| 29,979 | |
| 32,876 | |
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| 189,483 | |
| 152,347 | |
Cost of sales: | | | | | | | |
Product sales | |
| 85,519 | |
| 61,608 | |
Contract services | |
| 22,497 | |
| 25,079 | |
| |
| 108,016 | |
| 86,687 | |
Gross margin: | |
| | | | | |
Product sales | | | 73,985 | | | 57,863 | |
Contract services | | | 7,482 | | | 7,797 | |
| | | 81,467 | | | 65,660 | |
Selling, general and administrative | |
| 33,795 | |
| 23,827 | |
Research and development | |
| 24,613 | |
| 15,466 | |
Income from operations | |
| 23,059 | |
| 26,367 | |
Other loss: | | | | | | | |
Interest expense, net | |
| (239) | |
| (2,008) | |
Other (expense) income, net | |
| (234) | |
| (1,129) | |
Income before income taxes | |
| 22,586 | |
| 23,230 | |
Provision for income taxes | |
| 1,485 | |
| 1,314 | |
Equity method investment loss, net of tax | | | 65 | | | (21) | |
Net income | | | 21,166 | | | 21,895 | |
Net income per share | | | | | | | |
Basic | | $ | 0.76 | | $ | 0.84 | |
Diluted | | $ | 0.75 | | $ | 0.84 | |
Weighted-average shares outstanding: | | | | | | | |
Basic | |
| 27,959,692 | |
| 26,088,277 | |
Diluted | |
| 28,281,827 | |
| 26,179,042 | |
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AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
| | July 27, |
| April 30, | | ||
| | 2024 | | 2024 | | ||
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| (Unaudited) | | | |
| |
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 81,162 | | $ | 73,301 | |
Accounts receivable, net of allowance for doubtful accounts of $58 at July 27, 2024 and $159 at April 30, 2024 | |
| 35,487 | |
| 70,305 | |
Unbilled receivables and retentions | |
| 219,766 | |
| 199,474 | |
Inventories, net | |
| 143,835 | |
| 150,168 | |
Income taxes receivable | |
| 338 | |
| — | |
Prepaid expenses and other current assets | |
| 19,758 | |
| 22,333 | |
Total current assets | |
| 500,346 | |
| 515,581 | |
Long-term investments | | | 21,887 | | | 20,960 | |
Property and equipment, net | |
| 48,071 | |
| 46,602 | |
Operating lease right-of-use assets | | | 28,283 | | | 30,033 | |
Deferred income taxes | |
| 41,303 | |
| 41,303 | |
Intangibles, net | | | 67,521 | | | 72,224 | |
Goodwill | | | 275,932 | | | 275,652 | |
Other assets | |
| 15,826 | |
| 13,505 | |
Total assets | | $ | 999,169 | | $ | 1,015,860 | |
Liabilities and stockholders’ equity | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | 43,596 | | $ | 48,298 | |
Wages and related accruals | |
| 20,413 | |
| 44,312 | |
Customer advances | |
| 10,993 | |
| 11,192 | |
Current portion of long-term debt | | | 10,000 | | | 10,000 | |
Current operating lease liabilities | | | 9,428 | | | 9,841 | |
Income taxes payable | | | 5,597 | | | 4,162 | |
Other current liabilities | |
| 17,331 | |
| 17,074 | |
Total current liabilities | |
| 117,358 | |
| 144,879 | |
Long-term debt, net of current portion | | | 6,788 | | | 17,092 | |
Non-current operating lease liabilities | | | 21,086 | | | 22,745 | |
Other non-current liabilities | | | 2,123 | | | 2,132 | |
Liability for uncertain tax positions | |
| 5,603 | |
| 5,603 | |
Deferred income taxes | | | 673 | | | 664 | |
Commitments and contingencies | | | | | | | |
Stockholders’ equity: | | | | | | | |
Preferred stock, $0.0001 par value: | | | | | | | |
Authorized shares—10,000,000; none issued or outstanding at July 27, 2024 and April 30, 2024 | |
| — | |
| — | |
Common stock, $0.0001 par value: | | | | | | | |
Authorized shares—100,000,000 | | | | | | | |
Issued and outstanding shares—28,206,480 shares at July 27, 2024 and 28,134,438 shares at April 30, 2024 | |
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| 4 | |
Additional paid-in capital | |
| 598,735 | |
| 597,646 | |
Accumulated other comprehensive loss | |
| (5,054) | |
| (5,592) | |
Retained earnings | |
| 251,853 | |
| 230,687 | |
Total stockholders’ equity | | | 845,538 | | | 822,745 | |
Total liabilities and stockholders’ equity | | $ | 999,169 | | $ | 1,015,860 | |
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AeroVironment, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| | Three Months Ended | | ||||
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| July 27, |
| July 29, |
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Operating activities | | | | | | | |
Net income | | $ | 21,166 | | $ | 21,895 | |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | | | | | | | |
Depreciation and amortization | |
| 8,852 | |
| 6,951 | |
(Gain) loss from equity method investments | | | (65) | | | 21 | |
Amortization of debt issuance costs | | | 266 | | | 214 | |
Provision for doubtful accounts | | | (101) | | | (15) | |
Reserve for inventory excess and obsolescence | | | 2,667 | | | 3,330 | |
Other non-cash expense, net | |
| 616 | |
| 173 | |
Non-cash lease expense | | | 2,430 | | | 2,184 | |
Loss on foreign currency transactions | |
| 142 | |
| 132 | |
Unrealized loss on available-for-sale equity securities, net | |
| 321 | |
| 1,013 | |
Deferred income taxes | | | (1) | | | (427) | |
Stock-based compensation | | | 4,536 | | | 3,204 | |
Loss on disposal of property and equipment | | | 143 | | | 116 | |
Changes in operating assets and liabilities, net of acquisitions: | | | | | | | |
Accounts receivable | |
| 34,993 | |
| 8,207 | |
Unbilled receivables and retentions | |
| (20,274) | |
| (1,603) | |
Inventories | |
| 3,867 | |
| (40,004) | |
Income taxes receivable | |
| (336) | |
| — | |
Prepaid expenses and other assets | |
| (814) | |
| (4,401) | |
Accounts payable | |
| (4,976) | |
| (2,780) | |
Other liabilities | | | (25,081) | | | (15,272) | |
Net cash provided by (used in) operating activities | |
| 28,351 | |
| (17,062) | |
Investing activities | | | | | | | |
Acquisition of property and equipment | |
| (5,430) | |
| (3,632) | |
Contributions in equity method investments | | | (1,183) | | | — | |
Net cash used in investing activities | |
| (6,613) | |
| (3,632) | |
Financing activities | | | | | | | |
Principal payments of term loan | | | (10,500) | | | (5,000) | |
Payment of debt issuance costs | | | — | | | (9) | |
Tax withholding payment related to net settlement of equity awards | | | (3,953) | | | (1,298) | |
Exercise of stock options | | | 506 | | | — | |
Other | | | (7) | | | (8) | |
Net cash used in financing activities | |
| (13,954) | |
| (6,315) | |
Effects of currency translation on cash and cash equivalents | | | 77 | | | 21 | |
Net increase (decrease) in cash and cash equivalents | |
| 7,861 | |
| (26,988) | |
Cash and cash equivalents at beginning of period | |
| 73,301 | |
| 132,859 | |
Cash and cash equivalents at end of period | | $ | 81,162 | | $ | 105,871 | |
Supplemental disclosures of cash flow information | | | | | | | |
Cash paid (refunded), net during the period for: | | | | | | | |
Income taxes | | $ | (101) | | $ | 35 | |
Interest | | $ | 370 | | $ | 1,782 | |
Non-cash activities | | | | | | | |
Change in foreign currency translation adjustments | | $ | 538 | | $ | (63) | |
Acquisitions of property and equipment included in accounts payable | | $ | 1,208 | | $ | 969 | |
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AeroVironment, Inc.
Reportable Segment Results (Unaudited)
(In thousands)
| | Three Months Ended July 27, 2024 | ||||||||||
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| UxS |
| LMS |
| MW | | Total | ||||
Revenue: | | | | | | | | | | | | |
Product sales | | $ | 112,301 | | $ | 47,180 | | $ | 23 | | $ | 159,504 |
Contract services | | | 7,675 | | | 4,793 | | | 17,511 | | | 29,979 |
| | $ | 119,976 | | $ | 51,973 | | $ | 17,534 | | $ | 189,483 |
| | | | | | | | | | | | |
Segment adjusted gross margin | | $ | 67,252 | | $ | 13,272 | | $ | 4,657 | | | |
| | Three Months Ended July 29, 2023 | ||||||||||
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| UxS |
| LMS |
| MW | | Total | ||||
Revenue: | | | | | | | | | | | | |
Product sales | | $ | 93,231 | | $ | 25,325 | | $ | 915 | | $ | 119,471 |
Contract services | | | 4,976 | | | 5,592 | | | 22,308 | | | 32,876 |
| | $ | 98,207 | | $ | 30,917 | | $ | 23,223 | | $ | 152,347 |
| | | | | | | | | | | | |
Segment adjusted gross margin | | $ | 50,426 | | $ | 12,323 | | $ | 5,308 | | | |
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AeroVironment, Inc.
Reconciliation of non-GAAP Earnings per Diluted Share (Unaudited)
| | | | | | |
| | Three Months Ended | | Three Months Ended | ||
|
| July 27, 2024 | | July 29, 2023 | ||
| | | | | | |
Earnings per diluted share | | $ | 0.75 | | $ | 0.84 |
Acquisition-related expenses | | | — | | | 0.02 |
Amortization of acquired intangible assets and other purchase accounting adjustments | | | 0.13 | | | 0.10 |
Equity method and equity securities investments activity, net | | | 0.01 | | | 0.04 |
Earnings per diluted share as adjusted (Non-GAAP) | | $ | 0.89 | | $ | 1.00 |
Reconciliation of non-GAAP adjusted EBITDA (Unaudited)
| | | | | | |
| | Three Months Ended | | Three Months Ended | ||
(in millions) | | July 27, 2024 | | July 29, 2023 | ||
Net income | | $ | 21.2 | | $ | 21.9 |
Interest expense, net | | | 0.2 | | | 2.0 |
Provision for income taxes | | | 1.5 | | | 1.3 |
Depreciation and amortization | | | 8.9 | | | 7.0 |
EBITDA (Non-GAAP) | | | 31.8 | | | 32.2 |
Stock-based compensation | | | 4.5 | | | 3.2 |
Equity method and equity securities investments activity, net | | | 0.3 | | | 1.0 |
Amortization of cloud computing arrangement implementation | | | 0.6 | | | 0.2 |
Acquisition-related expenses | | | — | | | 0.7 |
Adjusted EBITDA (Non-GAAP) | | $ | 37.2 | | $ | 37.3 |
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Reconciliation of Forecast Earnings per Diluted Share (Unaudited)
| | | |
| | Fiscal year ending | |
|
| April 30, 2025 | |
Forecast earnings per diluted share | | $ | 2.61 - 2.92 |
Amortization of acquired intangible assets and other purchase accounting adjustments | | | 0.51 |
Equity method and equity securities investments activity, net | | | 0.06 |
Forecast earnings per diluted share as adjusted (Non-GAAP) | | $ | 3.18 - 3.49 |
Reconciliation of 2025 Forecast and Fiscal Year 2024 Actual Non-GAAP adjusted EBITDA (Unaudited)
| | | | | | |
| | Fiscal year ending | | Fiscal year ended | ||
(in millions) | | April 30, 2025 | | April 30, 2024 | ||
Net income | | $ | 74 - 83 | | $ | 60 |
Interest expense, net | | | — | | | 4 |
Provision for income taxes | | | 7 - 8 | | | 2 |
Depreciation and amortization | | | 39 | | | 36 |
EBITDA (Non-GAAP) | | | 120 - 130 | | | 102 |
Stock-based compensation | | | 20 | | | 17 |
Equity method and equity securities investments activity, net | | | 1 | | | 6 |
Amortization of cloud computing arrangement implementation | | | 2 | | | 2 |
Acquisition-related expenses | | | — | | | 2 |
Adjusted EBITDA (Non-GAAP) | | $ | 143 - 153 | | $ | 128 |
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Statement Regarding Non-GAAP Measures
The non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing our results that, when reconciled to the corresponding GAAP measures, help our investors to understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. In addition, management uses these non-GAAP measures to evaluate our operating and financial performance.
Non-GAAP Adjusted Gross Margin
Adjusted gross margin is defined as gross margin before intangible amortization and amortization of non-cash purchase accounting adjustments.
Non-GAAP Earnings per Diluted Share
We exclude the acquisition-related expenses, amortization of acquisition-related intangible assets, equity securities investments gains or losses, goodwill impairment and one-time non-operating items because we believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible asset amortization will recur in future periods until such intangible assets have been fully amortized.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA is defined as net income before interest income, interest expense, income tax expense (benefit) and depreciation and amortization including amortization of purchase accounting adjustments, adjusted for the impact of certain other non-cash items, including amortization of implementation of cloud computing arrangements, stock-based compensation, acquisition related expenses, equity method investment gains or losses, equity securities investments gains or losses, goodwill impairment and one-time non-operating gains or losses. We present Adjusted EBITDA, which is not a recognized financial measure under U.S. GAAP, because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation, intangible asset amortization will recur in future periods until such intangible assets have been fully amortized and that interest and income tax expenses will recur in future periods. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
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| Slide 1 | © 2024 AeroVironment, Inc. First Quarter Fiscal Year 2025 Earnings Presentation September 4, 2024 |
| Slide 2 052620 | © 2024 AeroVironment, Inc. Safe Harbor Statement Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the impact of our ability to successfully close and integrate acquisitions into our operations and avoid disruptions from acquisition transactions that will harm our business; the recording of goodwill and other intangible assets as part of acquisitions that are subject to potential impairments in the future and any realization of such impairments; any actual or threatened disruptions to our relationships with our distributors, suppliers, customers and employees, including shortages in components for our products; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government, including uncertainties in classification, pricing or potentially burdensome imposed terms for certain types of government contracts; availability of U.S. government funding for defense procurement and R&D programs; our ability to win U.S. and international government R&D and procurement programs; changes in the timing and/or amount of government spending, including due to continuing resolutions; adverse impacts of a U.S. government shutdown; our reliance on limited relationships to fund our development of HAPS UAS; our ability to execute contracts for anticipated sales, perform under such contracts and other existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; the extensive and increasing regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats or the risk of unauthorized access to and resulting misuse of our, our customers’ and/or our suppliers’ information and systems;; failure to remain a market innovator, to create new market opportunities or to expand into new markets; our ability to increase production capacity to support anticipated growth; unexpected changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; any increase in litigation activity or unfavorable results in legal proceedings, including pending class actions; our ability to respond and adapt to legal, regulatory and government budgetary changes, including those resulting from the impact of pandemics and similar outbreaks; our ability to comply with the covenants in our loan documents; our ability to attract and retain skilled employees; the impact of inflation; and general economic and business conditions in the United States and elsewhere in the world; and the failure to establish and maintain effective internal control over financial reporting. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise. |
| Slide 3 052620 | © 2024 AeroVironment, Inc. First Quarter Fiscal Year 2025 Key Messages First-quarter revenue of $189 million, a 24% increase over Q1 FY24 Robust pipeline converting to backlog evidenced by AV’s recent Army IDIQ award with a nearly $1B ceiling Loitering Munition Systems segment continues to lead company growth with a first-quarter revenue record of $52 million Given strong execution and growing pipeline we are reiterating our previously disclosed fiscal year 2025 guidance |
| Slide 4 052620 | © 2024 AeroVironment, Inc. First Quarter Results Fiscal Year 2025 1 Q1 GAAP EPS was $0.75 per diluted share. Refer to Reconciliation of Non-GAAP Earnings Per Diluted Share on Appendix A 2.Q1 GAAP Net income was $21.2M. Refer to Adjusted EBITDA reconciliation on Appendix D. 3 Backlog expected to increase in future quarters in FY25 Slide 4 | © 2024 AeroVironment, Inc. Metric Q1 FY25 Year-Over-Year Change Notes Revenue $189.5 m +24% Overall increase driven by higher product sales in UxS and LMS segments partially offset by a decrease in MW revenue. GAAP Gross Margin $81.5 m +24% Increase driven by favorable sales volume. Adjusted EBITDA2 $37.2 m --% In-line with same quarter last year as higher gross margins were offset by higher SG&A expenses and increased investments in R&D. Non-GAAP EPS (diluted)1 $0.89 -11% Lower than last year as higher gross margins were more than offset by higher SG&A expenses, and increased investments in R&D. Funded Backlog $372.9 m -31% Q1 backlog lower due to contract award timing3 .. |
| Slide 5 052620 | © 2024 AeroVironment, Inc. backlog of Slide 5 QUARTERLY REVENUE BY SEGMENT QUARTERLY REVENUE BY TYPE Revenue Mix by Segment and Type 78% 81% 84% 84% 84% 22% 19% 16% 16% 16% 43% 42% 36% 38% 43% 0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Gross Margin Percentage Quarterly Revenue Product Revenue Service Revenue GAAP Gross Margin Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 MW $23.2 $17.8 $15.6 $19.5 $17.5 LMS $30.9 $30.2 $57.7 $73.8 $52.0 UxS $98.2 $132.8 $113.3 $103.7 $120.0 $- $50.0 $100.0 $150.0 $200.0 $250.0 Revenue in millions MW LMS UxS $186.6 $152.3 $189.5 $180.8 UxS: Uncrewed Systems | LMS: Loitering Munitions Systems | MW: MacCready Works $197.0 |
| Slide 6 052620 | © 2024 AeroVironment, Inc. Adjusted Profitability by Type and Non-GAAP EPS 49% 47% 38% 41% 48% 28% 28% 40% 38% 29% 45% 43% 38% 40% 45% 0% 10% 20% 30% 40% 50% 60% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Adj Product Margin Adj Service Margin Total Adj Gross Margin 1 Q1 GAAP Product Margin of 46% and Service Margin of 25%. Refer to GAAP to NON-GAAP reconciliation on Appendix C. | 2 Refer to Reconciliation of Non-GAAP Diluted Earnings Per Share on Appendix A. $1.00 $0.89 $- $0.20 $0.40 $0.60 $0.80 $1.00 Q1 FY24 Q1 FY25 Slide 6 | © 2024 AeroVironment, Inc. NON-GAAP DILUTED EPS2 PERCENTAGE ADJUSTED GROSS MARGIN1 |
| Slide 7 052620 | © 2024 AeroVironment, Inc. Maintaining Guidance: Fiscal 2025 Outlook AS OF 09/4/2024 FY24 RESULTS FY25 GUIDANCE EXPECTED % CHANGE (TO MIDPOINT) Revenue $717 million $790 million - $820 million 12% Net Income $60 million $74 million – $83 million4 31% Adjusted EBITDA $128 million2 $143 million–$153 million4 16% Earnings Per Share (diluted) $2.18 $2.61 – $2.92 27% Non-GAAP Earnings Per Share (diluted) $2.993 $3.18 – $3.49 1 11% 1 Refer to Reconciliation of Fiscal Year 2025 Non-GAAP Diluted Earnings Per Share Expectations on Appendix B. 2 Refer to Adjusted EBITDA Reconciliation on Appendix D. 3 Refer to Reconciliation of Fiscal Year 2024 Non-GAAP Diluted Earnings Per Share on Appendix F. 4 Refer to Reconciliation of Non-GAAP Fiscal Year 2025 Adjusted EBITDA Expectations on Appendix E. Expect R&D Expenses between 12%-13% of Revenues in FY25. |
| Slide 8 052620 | © 2024 AeroVironment, Inc. Visibility for FY25 $189.5 $361.2 $317.3 $29.9 $99.0 $52.4 $41.1 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 Q4 FY24 Q1 FY25 (as of 9/3/24) Q2 FY25 Q3 FY25 Revenue Anticipated This FY from Unfunded Backlog Revenue Anticipated This FY from Qtr-To-Date Bookings Revenue Anticipated This FY from Funded Backlog Revenue Year-To-Date 1 Based on midpoint of guidance range of $790-$820 million Revenue Guidance Range: $790 to $820 million Company visibility (as of September 3, 2024) supports revenue guidance range REVENUE (MILLIONS) 55% visibility 1 80% visibility 1 |
| Slide 9 © 2024 AeroVironment, Inc. Financial Tables |
| Slide 10 | © 2024 AeroVironment, Inc. APPENDIX A – RECONCILIATION OF NON-GAAP EARNINGS PER DILUTED SHARE (UNAUDITED) |
| Slide 11 052620 | © 2024 AeroVironment, Inc. APPENDIX B – RECONCILIATION OF FISCAL YEAR 2025 NON-GAAP DILUTED EARNINGS PER SHARE EXPECTATIONS (UNAUDITED) |
| Slide 12 052620 | © 2024 AeroVironment, Inc. APPENDIX C – GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED GROSS MARGIN |
| Slide 13 052620 | © 2024 AeroVironment, Inc. APPENDIX D – HISTORICAL ADJUSTED EBITDA RECONCILIATION |
| Slide 14 052620 | © 2024 AeroVironment, Inc. APPENDIX E – RECONCILIATION OF NON-GAAP FISCAL YEAR 2025 ADJUSTED EBITDA EXPECTATIONS |
| Slide 15 052620 | © 2024 AeroVironment, Inc. APPENDIX F – RECONCILIATION OF FISCAL YEAR 2024 NON-GAAP EARNINGS PER DILUTED SHARE (UNAUDITED) Fiscal Year Ended April 30, 2024 Earnings (loss) per diluted share $ 2.18 Acquisition-related expenses 0.06 Amortization of acquired intangible assets and other purchase accounting adjustments 0.54 Equity method and equity securities investments activity, net 0.21 Goodwill impairment — Accelerated intangible amortization — Earnings per diluted share as adjusted (Non-GAAP) $ 2.99 |
