AeroVironment, Inc. (NASDAQ: AVAV), a global leader in
intelligent, multi-domain robotic systems, today reported financial
results for the first quarter ended July 30, 2022.
First Quarter Highlights
- First quarter revenue of $108.5 million, up 7%
year-over-year
- First quarter gross margin of $33.7 million, an increase of 17%
year-over-year; gross margin percentage rose approximately 300
basis points, to 31%
- First quarter net loss attributable to AeroVironment of $(8.4)
million and non-GAAP adjusted EBITDA of $13 million
- Strong August bookings resulted in record funded backlog of
$307.6 million as of August 27, 2022
“The company achieved first quarter results in line with
expectations, and we are reaffirming our fiscal 2023 guidance as
shared last quarter,” said Wahid Nawabi, AeroVironment chairman,
president and chief executive officer. “We’re excited about the
traction we’re receiving in the market, underscored by recent
Switchblade orders and award of the U.S. Army’s Future Tactical UAS
Increment 1. Even though backlog was flat relative to last quarter,
strong August bookings have led to a record funded backlog.
“Overall, we are successfully managing ongoing supply chain
challenges and are well positioned for continued value creation due
to strong demand across nearly all our product lines led by
heightened global interest in our Switchblade Tactical Missile
Systems, Small Unmanned Aircraft Systems, and Medium Unmanned
Aircraft Systems product lines.”
FISCAL 2023 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2023 was $108.5 million,
an increase of 7% from the first quarter of fiscal 2022 revenue of
$101.0 million. The increase in revenue reflects an increase in
product sales of $4.9 million and an increase in service revenue of
$2.6 million. The increase in revenue was primarily due to
increases in revenue in the Tactical Missile Systems (“TMS”)
segment of $3.8 million, All Other segment of $3.6 million
primarily due to an increase in customer-funded research and
development revenue and the Small Unmanned Aircraft Systems (“Small
UAS”) segment of $3.3 million. These increases were partially
offset by a decrease in revenue from the Medium Unmanned Aircraft
Systems (“MUAS”) segment of $3.1 million.
Gross margin for the first quarter of fiscal 2023 was $33.7
million, an increase of 17% from the first quarter of fiscal 2022
gross margin of $28.7 million. The increase in gross margin
reflects higher product margin of $4.5 million and higher service
margin of $0.4 million. As a percentage of revenue, gross margin
increased to 31% from 28%. Gross margin was negatively impacted by
$3.0 million of intangible amortization expense and other related
non-cash purchase accounting expenses in the first quarter of
fiscal 2023 as compared to $4.0 million in the first quarter of
fiscal 2022.
Loss from operations for the first quarter of fiscal 2023 was
$3.3 million, a decrease of $8.8 million from the first quarter of
fiscal 2022 loss from operations of $12.1 million. The decrease in
loss from operations was primarily the result of a decrease in
selling, general and administrative (“SG&A”) expense of $5.2
million and an increase in gross margin of $5.0 million, partially
offset by an increase in research and development (“R&D”)
expense of $1.3 million. The decrease in SG&A expense reflects
a decrease in acquisition-related expenses of $2.9 million and a
decrease in intangible amortization expense and other related
non-cash purchase accounting expenses of $1.2 million.
Other expense, net, for the first quarter of fiscal 2023 was
$2.0 million, as compared to other expense, net of $1.6 million for
the first quarter of fiscal 2022, primarily due to an increase in
interest expense resulting from an increase in interest rates.
Provision for income taxes for the first quarter of fiscal 2023
was $2.6 million, as compared to a benefit from income taxes of
$(1.0) million for the first quarter of fiscal 2022. The increase
in provision for income taxes was primarily due to changes in the
full fiscal year projected effective income tax rate.
Equity method investment loss, net of tax, for the first quarter
of fiscal 2023 was $0.5 million, as compared to $1.1 million for
the first quarter of fiscal 2022. Subsequent to the sale of the
equity interest in HAPSMobile during the three months ended April
30, 2022, equity method investment loss, net of tax only relates to
activity from investments in limited partnership funds.
Net loss attributable to AeroVironment for the first quarter of
fiscal 2023 was $8.4 million, or $(0.34) per diluted share, as
compared to $14.0 million, or $(0.57) per diluted share, for the
first quarter of fiscal 2022.
Non-GAAP loss per diluted share was $(0.10) for the first
quarter of fiscal 2023, as compared to $(0.17) for the first
quarter of fiscal 2022.
BACKLOG
As of July 30, 2022, funded backlog (defined as remaining
performance obligations under firm orders for which funding is
currently appropriated to the Company under a customer contract)
was $203.9 million, as compared to $210.8 million as of April 30,
2022. As of August 27, 2022, funded backlog was $307.6 million.
FISCAL 2023 — OUTLOOK FOR THE FULL YEAR
For the fiscal year 2023, the Company continues to expect
revenue of between $490 million and $520 million, net income of
between $11 million and $18 million, Non-GAAP adjusted EBITDA of
between $82 million and $92 million, earnings per diluted share of
between $0.42 and $0.72 and non-GAAP earnings per diluted share,
which excludes amortization of intangible assets and other non-cash
purchase accounting expenses, of between $1.35 and $1.65.
The foregoing estimates are forward-looking and reflect
management’s view of current and future market conditions, subject
to certain risks and uncertainties, and including certain
assumptions with respect to our ability to efficiently and on a
timely basis integrate our acquisitions, obtain and retain
government contracts, changes in the timing and/or amount of
government spending, 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 7, 2022, 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, senior director corporate
development and investor relations, will host the call.
New this quarter, 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/BI9db32ad42d4b4fd5a1ec1f9a55e658f5
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 2023 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 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 recent acquisitions of Arcturus UAV, Telerob
and ISG and our ability to successfully integrate them into our
operations; the risk that disruptions will occur from the
transactions that will harm our business; any disruptions 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 and
related to our development of HAPS UAS; availability of U.S.
government funding for defense procurement and R&D programs;
changes in the timing and/or amount of government spending; our
ability to perform under existing contracts and obtain new
contracts; risks related to our international business, including
compliance with export control laws; potential need for changes in
our long-term strategy in response to future developments; the
extensive 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
our, our customers’ and/or our suppliers’ information and systems;
changes in the supply and/or demand and/or prices for our products
and services; increased competition; uncertainty in the customer
adoption rate of commercial use unmanned aircraft systems; failure
to remain a market innovator, to create new market opportunities or
to expand into new markets; unexpected changes in significant
operating expenses, including components and raw materials; failure
to develop new products or integrate new technology into current
products; unfavorable results in legal proceedings; our ability to
respond and adapt to unexpected legal, regulatory and government
budgetary changes, including those resulting from the ongoing
COVID-19 pandemic, such as supply chain disruptions, vaccine
mandates, the threat of future variants and potential
governmentally-mandated shutdowns, quarantine policies, travel
restrictions and social distancing, curtailment of trade, diversion
of government resources to non-defense priorities, and other
business restrictions affecting our ability to manufacture and sell
our products and provide our services; 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.
AeroVironment, Inc.
Consolidated Statements of
Operations (Unaudited)
(In thousands except share and
per share data)
Three Months Ended
July 30,
July 31,
2022
2021
(Unaudited)
Revenue:
Product sales
$
57,974
$
53,116
Contract services
50,542
47,893
108,516
101,009
Cost of sales:
Product sales
32,899
32,590
Contract services
41,903
39,696
74,802
72,286
Gross margin:
Product sales
25,075
20,526
Contract services
8,639
8,197
33,714
28,723
Selling, general and administrative
21,943
27,128
Research and development
15,045
13,708
Loss from operations
(3,274
)
(12,113
)
Other loss:
Interest expense, net
(1,603
)
(1,275
)
Other expense, net
(406
)
(346
)
Loss before income taxes
(5,283
)
(13,734
)
Provision for (benefit from) income
taxes
2,606
(957
)
Equity method investment loss, net of
tax
(500
)
(1,141
)
Net loss
(8,389
)
(13,918
)
Net income attributable to noncontrolling
interest
(6
)
(63
)
Net loss attributable to AeroVironment,
Inc.
$
(8,395
)
$
(13,981
)
Net loss per share attributable to
AeroVironment, Inc.
Basic
$
(0.34
)
$
(0.57
)
Diluted
$
(0.34
)
$
(0.57
)
Weighted-average shares outstanding:
Basic
24,804,232
24,620,180
Diluted
24,804,232
24,620,180
AeroVironment, Inc.
Consolidated Balance
Sheets
(In thousands except share
data)
July 30,
April 30,
2022
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
93,183
$
77,231
Short-term investments
12,655
24,716
Accounts receivable, net of allowance for
doubtful accounts of $615 at July 30, 2022 and $592 at April 30,
2022
52,062
60,170
Unbilled receivables and retentions
89,397
104,194
Inventories
98,603
90,629
Income taxes receivable
—
442
Prepaid expenses and other current
assets
11,368
11,527
Total current assets
357,268
368,909
Long-term investments
17,707
15,433
Property and equipment, net
61,862
62,296
Operating lease right-of-use assets
25,385
26,769
Deferred income taxes
7,671
7,290
Intangibles, net
91,009
97,224
Goodwill
333,791
334,347
Other assets
1,961
1,932
Total assets
$
896,654
$
914,200
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
21,945
$
19,244
Wages and related accruals
17,403
25,398
Customer advances
10,258
8,968
Current portion of long-term debt
10,000
10,000
Current operating lease liabilities
7,029
6,819
Income taxes payable
2,962
759
Other current liabilities
26,279
30,203
Total current liabilities
95,876
101,391
Long-term debt, net of current portion
175,481
177,840
Non-current operating lease
liabilities
20,371
21,915
Other non-current liabilities
759
768
Liability for uncertain tax positions
1,450
1,450
Deferred income taxes
2,547
2,626
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued
or outstanding at July 30, 2022 and April 30, 2022
—
—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—24,990,590
shares at July 30, 2022 and 24,951,287 shares at April 30, 2022
2
2
Additional paid-in capital
268,641
267,248
Accumulated other comprehensive loss
(7,558
)
(6,514
)
Retained earnings
338,838
347,233
Total AeroVironment, Inc. stockholders’
equity
599,923
607,969
Noncontrolling interest
247
241
Total equity
600,170
608,210
Total liabilities and stockholders’
equity
$
896,654
$
914,200
AeroVironment, Inc.
Consolidated Statements of
Cash Flows (Unaudited)
(In thousands)
Three Months Ended
July 30,
July 31,
2022
2021
Operating activities
Net loss
$
(8,389
)
$
(13,918
)
Adjustments to reconcile net loss from
operations to cash provided by (used in) operating activities:
Depreciation and amortization
14,000
13,654
Loss from equity method investments
500
1,141
Amortization of debt issuance costs
211
129
Provision for doubtful accounts
23
(20
)
Other non-cash expense, net
153
48
Non-cash lease expense
1,590
1,677
(Gain) loss on foreign currency
transactions
(44
)
19
Deferred income taxes
(381
)
(472
)
Stock-based compensation
2,217
1,922
Loss on disposal of property and
equipment
485
379
Amortization of debt securities
130
90
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
8,053
17,914
Unbilled receivables and retentions
14,754
(14,684
)
Inventories
(11,707
)
(6,058
)
Income taxes receivable
442
(326
)
Prepaid expenses and other assets
46
481
Accounts payable
3,323
(7,997
)
Other liabilities
(9,519
)
(9,283
)
Net cash provided by (used in) operating
activities
15,887
(15,304
)
Investing activities
Acquisition of property and equipment
(5,393
)
(5,428
)
Equity method investments
(2,774
)
(2,692
)
Business acquisitions, net of cash
acquired
—
(46,150
)
Redemptions of available-for-sale
investments
13,280
17,925
Purchases of available-for-sale
investments
(1,326
)
—
Net cash provided by (used in) investing
activities
3,787
(36,345
)
Financing activities
Principal payments of term loan
(2,500
)
(2,500
)
Tax withholding payment related to net
settlement of equity awards
(824
)
(1,176
)
Holdback and retention payments for
business acquisition
—
(5,991
)
Exercise of stock options
—
119
Other
(7
)
(8
)
Net cash used in financing activities
(3,331
)
(9,556
)
Effects of currency translation on cash
and cash equivalents
(391
)
(111
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
15,952
(61,316
)
Cash, cash equivalents and restricted cash
at beginning of period
77,231
157,063
Cash, cash equivalents and restricted cash
at end of period
$
93,183
$
95,747
Supplemental disclosures of cash flow
information
Cash paid, net during the period for:
Income taxes
$
—
$
—
Interest
$
2,169
$
—
Non-cash activities
Unrealized (gain) loss on
available-for-sale investments, net of deferred tax expense of $6
and $0 for the three months ended July 30, 2022 and July 31, 2021,
respectively
$
(20
)
$
4
Change in foreign currency translation
adjustments
$
(1,064
)
$
(733
)
Issuances of inventory to property and
equipment, ISR in-service assets
$
3,364
$
6,881
Acquisitions of property and equipment
included in accounts payable
$
543
$
821
AeroVironment, Inc.
Reportable Segment Results
(Unaudited)
(In thousands)
Three Months Ended July 30,
2022
Small UAS
TMS
MUAS
HAPS
All other
Total
Revenue
$
43,256
$
23,011
$
19,262
$
10,215
$
12,772
$
108,516
Gross margin
21,296
7,746
(1,073
)
3,324
2,421
33,714
Income (loss) from operations
8,025
(1,031
)
(9,584
)
2,539
(3,223
)
(3,274
)
Acquisition-related expenses
-
-
221
-
114
335
Amortization of acquired intangible assets
and other purchase accounting adjustments
682
-
4,831
-
1,334
6,847
Adjusted income (loss) from operations
$
8,707
$
(1,031
)
$
(4,532
)
$
2,539
$
(1,775
)
$
3,908
Three Months Ended July 31,
2021
Small UAS
TMS
MUAS
HAPS
All other
Total
Revenue
$
39,924
$
19,176
$
22,379
$
10,352
$
9,178
$
101,009
Gross margin
16,920
5,989
3,181
3,174
(541
)
28,723
Income (loss) from operations
1,958
(463
)
(6,381
)
1,103
(8,330
)
(12,113
)
Acquisition-related expenses
424
251
1,384
104
1,091
3,254
Amortization of acquired intangible assets
and other purchase accounting adjustments
707
-
5,191
-
3,226
9,124
Adjusted income (loss) from operations
$
3,089
$
(212
)
$
194
$
1,207
$
(4,013
)
$
265
AeroVironment,
Inc.
Reconciliation of non-GAAP
Loss per Diluted Share (Unaudited)
Three Months Ended
Three Months Ended
July 30, 2022
July 31, 2021
Loss per diluted share
$
(0.34
)
$
(0.57
)
Acquisition-related expenses
0.02
0.11
Amortization of acquired intangible assets
and other purchase accounting adjustments
0.22
0.29
Loss per diluted share as adjusted
(Non-GAAP)
$
(0.10
)
$
(0.17
)
Reconciliation of non-GAAP
adjusted EBITDA (Unaudited)
Three Months Ended
Three Months Ended
(in millions)
July 30, 2022
July 31, 2021
Net loss
$
(8
)
$
(14
)
Interest expense, net
2
1
Provision for (benefit from) income
taxes
2
(1
)
Depreciation and amortization
14
14
EBITDA (Non-GAAP)
10
—
Amortization of purchase accounting
adjustment included in loss on disposal of property and
equipment
—
1
Stock-based compensation
2
2
Equity method investment loss
1
1
Acquisition-related expenses
—
3
Adjusted EBITDA (Non-GAAP)
$
13
$
7
Reconciliation of Forecast
Earnings per Diluted Share (Unaudited)
Fiscal year ending
April 30, 2023
Forecast earnings per diluted share
$
0.42 - 0.72
Acquisition-related expenses
0.02
Amortization of acquired intangible assets
and other purchase accounting adjustments
0.91
Forecast earnings per diluted share as
adjusted (Non-GAAP)
$
1.35 - 1.65
Reconciliation of 2023
Forecast and Fiscal Year 2022 Actual Non-GAAP adjusted EBITDA
(Unaudited)
Fiscal year ending
Fiscal year ended
(in millions)
April 30, 2023
April 30, 2022
Net income (loss)
$
11 - 18
$
(4
)
Interest expense, net
5
5
Benefit from income taxes
(4) - (1
)
(10
)
Depreciation and amortization
60
61
EBITDA (Non-GAAP)
72 - 82
52
Amortization of purchase accounting
adjustment included in loss on disposal of property and
equipment
—
1
Stock-based compensation
8
5
Sale of ownership in HAPSMobile Inc. joint
venture
—
(6
)
Equity method investment loss (gain)
1
(5
)
Legal accrual related to our former EES
business
—
10
Acquisition-related expenses
1
5
Adjusted EBITDA (Non-GAAP)
$
82 - 92
$
62
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 Operating Income
Adjusted operating income is defined as operating income before
intangible amortization, amortization of non-cash purchase
accounting adjustments, and acquisition related expenses.
Non-GAAP Earnings per Diluted Share
We exclude the acquisition-related expenses, amortization of
acquisition-related intangible assets 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 items,
including stock-based compensation, acquisition related expenses,
equity method investment gains or losses, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220907006040/en/
Jonah Teeter-Balin +1 (805) 520-8350 x4278
https://investor.avinc.com/contact-us
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