AeroVironment, Inc. Announces Fiscal 2021 Third Quarter Results

SIMI VALLEY, Calif.–(BUSINESS WIRE)–AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems (UAS), today reported financial results for its third quarter ended January 30, 2021.


  • Revenue of $78.8 million, a year-over-year increase of 27 percent
  • Gross margin of $28.6 million, a year-over-year increase of 22 percent
  • Diluted earnings per share of $0.01, a year-over-year increase of $0.05
  • Diluted non-GAAP earnings per share of $0.14, a year-over-year increase of $0.15

“Our team delivered year-over-year increases in revenue, gross margin, diluted earnings per share and Non-GAAP diluted earnings per share in the third quarter, despite the ongoing challenges presented by the COVID-19 pandemic,” said Wahid Nawabi, AeroVironment president and chief executive officer. “We continue to shape our portfolio with three transformative acquisitions that we are confident will accelerate our success and value creation. Our acquisition of Arcturus UAV extends our reach and expands our solutions portfolio with medium UAS, which addresses a more than $1 billion segment of the UAS market. Our pending acquisition of Telerob will add a suite of unmanned ground vehicles to our portfolio, expanding our offering to the ground domain for defense and non-defense customers, such as law enforcement and first responders. Through our acquisition of Progeny Systems Corporation’s Intelligent Systems Group, we will accelerate AeroVironment’s development and deployment of critical technologies, such as artificial intelligence and perceptive autonomy, which will help our customers operate more effectively in contested airspace against peer and near-peer adversaries and increase our customer-funded research and development revenue.

“We continue to build on our momentum and recently received United States government approval for our first export of Switchblade 300 to an allied nation. We are delivering on our commitments while working toward achieving our fiscal year 2021 objectives to produce a fourth consecutive year of profitable, double-digit topline growth.”

FISCAL 2021 THIRD QUARTER RESULTS

Revenue for the third quarter of fiscal 2021 was $78.8 million, an increase of 27% from the third quarter of fiscal 2020 revenue of $61.9 million. The increase in revenue was due to an increase in product sales of $21.9 million, partially offset by a decrease in service revenue of $5.0 million.

Gross margin for the third quarter of fiscal 2021 was $28.6 million, an increase of 22% from the third quarter of fiscal 2020 gross margin of $23.5 million. The increase in gross margin was primarily due to an increase in product margin of $7.2 million, partially offset by a decrease in service margin of $2.1 million. As a percentage of revenue, gross margin decreased to 36% from 38%. The decrease in gross margin percentage was primarily due to an unfavorable product mix.

Loss from operations for the third quarter of fiscal 2021 was $0.6 million, a decrease of $0.5 million from the third quarter of fiscal 2020 loss from operations of $1.1 million. The decrease in loss from operations was primarily a result of an increase in gross margin of $5.2 million, partially offset by an increase in selling, general and administrative (“SG&A”) expense of $2.4 million, and an increase in research and development (“R&D”) expense of $2.3 million. The increase in SG&A expense for the third quarter of fiscal 2021 includes an increase in acquisition-related expenses of $3.1 million related to the acquisitions of Arcturus UAV and Progeny Systems Corporation’s Intelligent Systems Group (“ISG”) and the pending acquisition of Telerob GmbH.

Other income, net, for the third quarter of fiscal 2021 was $0.1 million, as compared to $1.2 million for the third quarter of fiscal 2020. The decrease in other income, net was primarily due to a decrease in interest income resulting from a decrease in the average interest rate earned on our investment portfolio.

Benefit from income taxes for the third quarter of fiscal 2021 was $0.9 million, as compared to $38 thousand for the third quarter of fiscal 2020. The increase in benefit from income taxes was primarily due to a decrease in the projected fiscal year 2021 effective tax rate.

Equity method investment loss, net of tax, for the third quarter of fiscal 2021 was $0.1 million, as compared to $1.2 million for the third quarter of fiscal 2020.

Net income attributable to AeroVironment for the third quarter of fiscal 2021 was $0.2 million, as compared to a net loss attributable to AeroVironment of $1.0 million for the third quarter of fiscal 2020.

Earnings per diluted share attributable to AeroVironment for the third quarter of fiscal 2021 was $0.01, as compared to a loss per diluted share attributable to AeroVironment of $0.04 for the third quarter of fiscal 2020.

Non-GAAP earnings per diluted share was $0.14 for the third quarter of fiscal 2021, as compared to a loss of $0.01 for the third quarter of fiscal 2020.

FISCAL 2021 YEAR-TO-DATE RESULTS

Revenue for the first nine months of fiscal 2021 was $258.9 million, an increase of 12% from the first nine months of fiscal 2020 revenue of $232.1 million. The increase in revenue was due to an increase in product sales of $22.6 million and an increase in service revenue of $4.2 million.

Gross margin for the first nine months of fiscal 2021 was $104.9 million, an increase of 5% from the first nine months of fiscal 2020 gross margin of $99.9 million. The increase in gross margin was primarily due to an increase in product margin of $2.8 million and an increase in service margin of $2.2 million. As a percentage of revenue, gross margin decreased to 41% from 43%. The decrease in gross margin percentage was primarily due to an unfavorable product mix.

Income from operations for the first nine months of fiscal 2021 was $25.6 million, a decrease of $0.2 million from the first nine months of fiscal 2020 of $25.8 million. The decrease in income from operations was primarily a result of an increase in R&D expense of $5.8 million, partially offset by an increase in gross margin of $5.0 million and a decrease in SG&A expense of $0.5 million. SG&A expense for the first nine months of fiscal 2021 includes an increase in acquisition-related expenses of $3.1 million related to the acquisitions of Arcturus UAV and ISG and the pending acquisition of Telerob.

Other income, net, for the first nine months of fiscal 2021 was $0.5 million, as compared to $4.3 million for the first nine months of fiscal 2020. The decrease in other income, net was primarily due to a decrease in interest income resulting from a decrease in the average interest rate earned on our investment portfolio.

Provision for income taxes for the first nine months of fiscal 2021 was $2.8 million, as compared to $3.2 million for the first nine months of fiscal 2020. The decrease in provision for income taxes was primarily due to a decrease in income before income taxes.

Equity method investment loss, net of tax, for the first nine months of fiscal 2021 was $10.9 million, as compared to $3.4 million for the first nine months of fiscal 2020. Equity method investment loss, net of tax, for the first nine months of fiscal 2021 included a loss of $8.4 million for our proportionate share of the HAPSMobile Inc. joint venture’s impairment of its investment in Loon LLC.

Net income attributable to AeroVironment for the first nine months of fiscal 2021 was $12.4 million, a decrease from the first nine months of fiscal 2020 net income attributable to AeroVironment of $23.6 million. The first nine months of fiscal 2021 included the impairment loss of $8.4 million related to HAPSMobile Inc.’s investment in Loon LLC.

Earnings per diluted share attributable to AeroVironment for the first nine months of fiscal 2021 was $0.51, as compared to the first nine months of fiscal 2020 of $0.98. The first nine months of fiscal 2021 included the impairment loss of $8.4 million related to HAPSMobile Inc.’s investment in Loon LLC.

Non-GAAP earnings per diluted share was $1.06 for the first nine months of fiscal 2021, as compared to $1.07 for the first nine months of fiscal 2020.

BACKLOG

As of January 30, 2021, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $103.9 million, as compared to $208.1 million as of April 30, 2020.

FISCAL 2021 — OUTLOOK FOR THE FULL YEAR

For fiscal 2021, the Company narrows its revenue expectations to between $400 million and $410 million, representing the upper half of its prior range. The Company now expects net income of $18 million to $23 million, adjusted EBITDA of $64 million to $69 million and revised earnings per diluted share of $0.76 to $0.96. The revised earnings per diluted share outlook reflects reductions of $0.35 per diluted share for the HAPSMobile Inc. JV impairment of its investment in Loon LLC and $0.53 per diluted share for additional acquisition-related expenses and amortization of intangible assets. The Company continues to expect non-GAAP earnings per diluted share, which excludes the HAPSMobile Inc. impairment of its investment in Loon LLC, amortization of acquired intangible assets and acquisition-related expenses, of between $1.74 and $1.94. This outlook includes the impact of the two recently closed acquisitions in the fourth quarter of fiscal year 2021 and the anticipated closing of the third acquisition in the fourth quarter of fiscal year 2021.

As a result of the significant portfolio-shaping the Company has undertaken to position it for continued growth and success, consisting of the noted acquisitions, the Company is providing a preliminary outlook for the next fiscal year. For fiscal year 2022 the Company expects revenue of between $560 million and $580 million, net income of between $35 million and $40 million, adjusted EBITDA of between $110 million and $115 million, earnings per diluted share of between $1.38 and $1.58 and non-GAAP earnings per diluted share, which excludes acquisition-related expenses and amortization of intangible assets, of between $2.50 and $2.70. This preliminary outlook assumes the closing of the third acquisition in the fourth quarter of fiscal year 2021 and includes estimates of intangible asset amortization, which are subject to final purchase accounting. More refined expectations for fiscal year 2022 may be provided in the Company’s fourth quarter and full fiscal year 2021 earnings release.

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, Tuesday, March 9, 2021, at 1:30 pm Pacific Time that will be webcast live. Wahid Nawabi, president and chief executive officer, Kevin P. McDonnell, chief financial officer and Steven A. Gitlin, chief marketing officer and vice president of investor relations, will host the call.

4:30 PM ET

3:30 PM CT

2:30 PM MT

1:30 PM PT

Investors may dial into the call by using the following telephone numbers, (877) 561-2749 (U.S.) or (678) 809-1029 (international) and providing the conference ID 9179576 five to ten minutes prior to the start time to allow for registration.

Investors with Internet access may 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 third fiscal quarter 2021 can be accessed at https://investor.avinc.com/events-and-presentations.

Audio Replay Options

An audio replay of the event will be archived on the Investor Relations page of the company’s website, at http://investor.avinc.com. The audio replay will also be available via telephone from Tuesday, March 9, 2021, at approximately 4:30 p.m. Pacific Time through March 16, 2021, at 4:30 p.m. Pacific Time. Dial (855) 859-2056 (U.S.) or (404) 537-3406 (international) and provide the conference ID 9179576.

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. Celebrating 50 years of innovation, AeroVironment is a global leader in unmanned aircraft systems and tactical missile 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, our ability to successfully consummate the transactions contemplated by the agreement to purchase Telerob on a timely basis, if at all, including the satisfaction of the closing conditions of such transaction; the impact of our recent acquisitions of Arcturus UAV 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; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government; 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; changes in the supply and/or demand and/or prices for our products and services; the activities of competitors and increased competition; failure of the markets in which we operate to grow; uncertainty in the customer adoption rate of commercial use unmanned aircraft systems; failure to remain a market innovator and create new market opportunities; changes in significant operating expenses, including components and raw materials; failure to develop new products; the extensive regulatory requirements governing our contracts with the U.S. government; risk of litigation, including but not limited to pending litigation arising from the sale of our EES business; product liability, infringement and other claims; changes in the regulatory environment; the impact of the outbreak related to the strain of coronavirus known as COVID-19 on our business operations; and general economic and business conditions in the United States and elsewhere in the world. 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 –

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 30,

 

January 25,

 

January 30,

 

January 25,

 

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

 

 

Product sales

 

$

58,348

 

$

36,432

 

$

182,233

 

$

159,657

 

Contract services

 

 

20,434

 

 

25,459

 

 

76,664

 

 

72,416

 

 

 

 

78,782

 

 

61,891

 

 

258,897

 

 

232,073

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Product sales

 

 

35,746

 

 

21,034

 

 

102,039

 

 

82,244

 

Contract services

 

 

14,395

 

 

17,361

 

 

51,955

 

 

49,895

 

 

 

 

50,141

 

 

38,395

 

 

153,994

 

 

132,139

 

Gross margin:

 

 

 

 

 

 

 

 

 

Product sales

 

 

22,602

 

 

15,398

 

 

80,194

 

 

77,413

 

Contract services

 

 

6,039

 

 

8,098

 

 

24,709

 

 

22,521

 

 

 

 

28,641

 

 

23,496

 

 

104,903

 

 

99,934

 

Selling, general and administrative

 

 

15,652

 

 

13,223

 

 

42,640

 

 

43,146

 

Research and development

 

 

13,631

 

 

11,381

 

 

36,710

 

 

30,948

 

(Loss) income from operations

 

 

(642

)

 

(1,108

)

 

25,553

 

 

25,840

 

Other income:

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

94

 

 

1,122

 

 

417

 

 

3,717

 

Other (expense) income, net

 

 

(37

)

 

120

 

 

68

 

 

632

 

(Loss) income before income taxes

 

 

(585

)

 

134

 

 

26,038

 

 

30,189

 

(Benefit from) provision for income taxes

 

 

(924

)

 

(38

)

 

2,774

 

 

3,203

 

Equity method investment loss, net of tax

 

 

(81

)

 

(1,200

)

 

(10,891

)

 

(3,410

)

Net income (loss)

 

 

258

 

 

(1,028

)

 

12,373

 

 

23,576

 

Net (income) loss attributable to noncontrolling interest

 

 

(47

)

 

20

 

 

12

 

 

27

 

Net income (loss) attributable to AeroVironment, Inc.

 

$

211

 

$

(1,008

)

$

12,385

 

$

23,603

 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

$

(0.04

)

$

0.52

 

$

0.99

 

Diluted

 

$

0.01

 

$

(0.04

)

$

0.51

 

$

0.98

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

23,942,782

 

 

23,821,145

 

 

23,924,017

 

 

23,790,788

 

Diluted

 

 

24,260,874

 

 

23,821,145

 

 

24,216,371

 

 

24,076,195

 

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share data)

 

 

 

 

 

 

 

 

 

January 30,

 

April 30,

 

 

2021

 

2020

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

324,543

 

 

$

255,142

Short-term investments

 

 

48,499

 

 

 

47,507

Accounts receivable, net of allowance for doubtful accounts of $565 at January 30, 2021 and $1,190 at April 30, 2020

 

 

26,621

 

 

 

73,660

Unbilled receivables and retentions

 

 

61,084

 

 

 

75,837

Inventories

 

 

53,104

 

 

 

45,535

Prepaid expenses and other current assets

 

 

7,693

 

 

 

6,246

Total current assets

 

 

521,544

 

 

 

503,927

Long-term investments

 

 

11,222

 

 

 

15,030

Property and equipment, net

 

 

22,920

 

 

 

21,694

Operating lease right-of-use assets

 

 

11,281

 

 

 

8,793

Deferred income taxes

 

 

5,821

 

 

 

4,928

Intangibles, net

 

 

11,552

 

 

 

13,637

Goodwill

 

 

6,340

 

 

 

6,340

Other assets

 

 

312

 

 

 

10,605

Total assets

 

$

590,992

 

 

$

584,954

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

15,837

 

 

$

19,859

Wages and related accruals

 

 

20,081

 

 

 

23,972

Customer advances

 

 

4,279

 

 

 

7,899

Current operating lease liabilities

 

 

4,403

 

 

 

3,380

Income taxes payable

 

 

2,370

 

 

 

1,065

Other current liabilities

 

 

9,158

 

 

 

10,778

Total current liabilities

 

 

56,128

 

 

 

66,953

Non-current operating lease liabilities

 

 

8,426

 

 

 

6,833

Other non-current liabilities

 

 

243

 

 

 

250

Liability for uncertain tax positions

 

 

1,017

 

 

 

1,017

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value:

 

 

 

 

 

 

Authorized shares—10,000,000; none issued or outstanding at January 30, 2021 and April 30, 2020

 

 

 

 

 

Common stock, $0.0001 par value:

 

 

 

 

 

 

Authorized shares—100,000,000

 

 

 

 

 

 

Issued and outstanding shares—24,102,691 shares at January 30, 2021 and 24,063,639 shares at April 30, 2020

 

 

2

 

 

 

2

Additional paid-in capital

 

 

184,366

 

 

 

181,481

Accumulated other comprehensive income

 

 

347

 

 

 

328

Retained earnings

 

 

340,475

 

 

 

328,090

Total AeroVironment, Inc. stockholders’ equity

 

 

525,190

 

 

 

509,901

Noncontrolling interest

 

 

(12

)

 

 

Total equity

 

 

525,178

 

 

 

509,901

Total liabilities and stockholders’ equity

 

$

590,992

 

 

$

584,954

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

January 30,

 

January 25,

 

 

2021

 

2020

Operating activities

 

 

 

 

Net income

 

$

12,373

 

$

23,576

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

 

8,650

 

 

7,107

 

Losses from equity method investments

 

 

10,891

 

 

3,410

 

Realized gain from sale of available-for-sale investments

 

 

(11

)

 

 

Provision for doubtful accounts

 

 

(145

)

 

(2

)

Other non-cash income

 

 

(473

)

 

(719

)

Non-cash lease expense

 

 

3,592

 

 

3,453

 

Loss on foreign currency transactions

 

 

1

 

 

 

Deferred income taxes

 

 

(897

)

 

(946

)

Stock-based compensation

 

 

4,754

 

 

4,751

 

Loss (gain) on sale of property and equipment

 

 

2

 

 

(71

)

Amortization of debt securities

 

 

143

 

 

(1,291

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

 

47,184

 

 

3,245

 

Unbilled receivables and retentions

 

 

14,753

 

 

(24,364

)

Inventories

 

 

(7,569

)

 

(10,766

)

Income tax receivable

 

 

 

 

821

 

Prepaid expenses and other assets

 

 

(1,622

)

 

216

 

Accounts payable

 

 

(3,346

)

 

(1,301

)

Other liabilities

 

 

(9,318

)

 

7,947

 

Net cash provided by operating activities

 

 

78,962

 

 

15,066

 

Investing activities

 

 

 

 

 

Acquisition of property and equipment

 

 

(8,472

)

 

(8,504

)

Equity method investments

 

 

(2,150

)

 

(9,551

)

Business acquisition, net of cash acquired

 

 

 

 

(18,641

)

Proceeds from sale of property and equipment

 

 

 

 

81

 

Redemptions of held-to-maturity investments

 

 

 

 

166,917

 

Purchases of held-to-maturity investments

 

 

 

 

(162,517

)

Redemptions of available-for-sale investments

 

 

130,066

 

 

41,150

 

Purchases of available-for-sale investments

 

 

(125,644

)

 

(59,297

)

Net cash used in investing activities

 

 

(6,200

)

 

(50,362

)

Financing activities

 

 

 

 

 

Tax withholding payment related to net settlement of equity awards

 

 

(1,955

)

 

(1,009

)

Holdback and retention payments for business acquisition

 

 

(1,492

)

 

 

Exercise of stock options

 

 

86

 

 

93

 

Net cash used in financing activities

 

 

(3,361

)

 

(916

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

69,401

 

 

(36,212

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

255,142

 

 

172,708

 

Cash, cash equivalents and restricted cash at end of period

 

$

324,543

 

$

136,496

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Cash paid, net during the period for:

 

 

 

 

 

Income taxes

 

$

2,364

 

$

518

 

Non-cash activities

 

 

 

 

 

Unrealized loss on available-for-sale investments, net of deferred tax benefit of $2

 

$

56

 

$

 

Change in foreign currency translation adjustments

 

$

75

 

$

67

 

Acquisitions of property and equipment included in accounts payable

 

$

746

 

$

263

 

Contacts

AeroVironment, Inc.

Steven Gitlin

+1 (805) 520-8350

ir@avinc.com

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