AeroVironment, Inc. (“AeroVironment” or the “Company”) reported
today financial results for the fiscal third quarter ended January
27, 2024.
Third Quarter Highlights:
- Record third quarter revenue of $186.6 million, up 39%
year-over-year
- Third quarter net income of $13.9 million and adjusted EBITDA
of $28.8 million, increases of $14.6 million and $5.1 million,
year-over-year, respectively
- Funded backlog of $462.8 million as of January 27, 2024
“Once again, AeroVironment has delivered outstanding results,
including a record for third quarter revenue that’s nearly 40%
above the same period last fiscal year,” said Wahid Nawabi,
AeroVironment chairman, president and chief executive officer.
“Solid bottom-line results, fueled by record demand and strong
operating execution, have us on track for our best year ever. In
addition, the Company continues to show tremendous growth in the
Loitering Munition Systems segment, which delivered record revenue
in the quarter.
“With the increased global demand for our solutions, strong
backlog and growing pipeline, AeroVironment remains well positioned
for continued growth. As such, we are raising and narrowing our
fiscal year revenue guidance for 2024 to between $700 million and
$710 million, and we continue to anticipate double-digit revenue
growth in fiscal year 2025.”
FISCAL 2024 THIRD QUARTER RESULTS
Revenue for the third quarter of fiscal 2024 was $186.6 million,
an increase of 39% as compared to $134.4 million for the third
quarter of fiscal 2023, reflecting higher product sales of $64.7
million, partially offset by lower service revenue of $12.5
million. From a segment standpoint, the year-over-year increase was
due to revenue growth in Loitering Munitions Systems (“LMS”) of
140% and Unmanned Systems (“UMS”) of 23%, partially offset by a
decrease in MacCready Works (“MW”) of 13%.
Gross margin for the third quarter of fiscal 2024 was $67.3
million, an increase of 48% as compared to $45.5 million for the
third quarter of fiscal 2023, reflecting higher product margin of
$20.1 million and higher service gross margin of $1.7 million. As a
percentage of revenue, gross margin increased to 36% from 34%,
primarily due to an increase in the proportion of product revenue
to total revenue, partially offset by an unfavorable product mix.
Gross margin was favorably impacted by a decrease in depreciation
charges for in-service assets of $5.3 million related to the
closure of COCO site locations during fiscal year 2023. Gross
margin was negatively impacted by $4.0 million of intangible
amortization expense and other related non-cash purchase accounting
expenses in the third quarter of fiscal 2024 as compared to $3.3
million in the third quarter of fiscal 2023.
Income from operations for the third quarter of fiscal 2024 was
$14.3 million as compared to $4.6 million for the third quarter of
last fiscal year. The increase year-over-year was primarily due
higher gross margin of $21.8 million, partially offset by increases
in research and development (“R&D”) expense of $9.0 million and
selling, general and administrative (“SG&A”) expense of $3.1
million.
Other income, net, for the third quarter of fiscal 2024 was $0.9
million, as compared to other loss, net of $5.4 million for the
third quarter of last fiscal year. The increase in other income,
net was primarily due to increases in net unrealized gains on
investment holdings and interest income and a decrease in interest
expense.
Provision for income taxes for the third quarter of fiscal 2024
was $1.3 million, as compared to a benefit of $(0.5) million for
the third quarter of last fiscal year. The increase in provision
for income taxes was primarily attributable to an increase in
income before income taxes.
Net income attributable to AeroVironment for the third quarter
of fiscal 2024 was $13.9 million, or $0.50 per diluted share, as
compared to net loss attributable to AeroVironment of $(0.7)
million, or $(0.03) per diluted share, in the prior-year period,
respectively.
Non-GAAP adjusted EBITDA for the third quarter of fiscal 2024
was $28.8 million and non-GAAP earnings per diluted share were
$0.63, as compared to $23.7 million and $0.33, respectively, for
the third quarter of fiscal 2023.
BACKLOG
As of January 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 $462.8
million, as compared to $424.1 million as of April 30, 2023.
FISCAL 2024 — OUTLOOK FOR THE FULL YEAR
For fiscal year 2024, the Company now expects revenue of between
$700 million and $710 million, net income of between $51 million
and $55 million, Non-GAAP adjusted EBITDA of between $122 million
and $127 million, earnings per diluted share of between $1.86 and
$2.00 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 $2.69 and $2.83.
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, Monday, March 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, senior director 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/BI2e69517f68da41c0ade849312a1992e2
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 third quarter
fiscal year 2024 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) is a global leader in intelligent
multi-domain robotic systems, uncrewed aircraft and ground systems,
sensors, software analytics and connectivity. Headquartered in
Arlington, Virginia, AeroVironment delivers actionable intelligence
so our customers can proceed with certainty. 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, including the
acquisition of Tomahawk Robotics; 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;
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 perform under 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;
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; 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.
AeroVironment, Inc.
Consolidated Statements of
Operations
(In thousands except share and
per share data)
Three Months Ended
Nine Months Ended
January 27,
January 28,
January 27,
January 28,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Revenue:
Product sales
$
155,923
$
91,216
$
421,173
$
211,533
Contract services
30,655
43,179
98,568
142,962
186,578
134,395
519,741
354,495
Cost of sales:
Product sales
99,486
54,866
240,126
127,210
Contract services
19,805
34,019
71,318
122,171
119,291
88,885
311,444
249,381
Gross margin:
Product sales
56,437
36,350
181,047
84,323
Contract services
10,850
9,160
27,250
20,791
67,287
45,510
208,297
105,114
Selling, general and administrative
27,826
24,746
79,800
70,302
Research and development
25,127
16,157
62,618
47,793
Income (loss) from operations
14,334
4,607
65,879
(12,981
)
Other income (loss):
Interest expense, net
(114
)
(2,810
)
(4,072
)
(6,722
)
Other income (expense), net
1,004
(2,587
)
(2,983
)
(2,183
)
Income (loss) before income taxes
15,224
(790
)
58,824
(21,886
)
Provision for (benefit from) income
taxes
1,259
(531
)
3,710
(8,382
)
Equity method investment loss, net of
tax
(80
)
(417
)
(1,494
)
(2,190
)
Net income (loss)
13,885
(676
)
53,620
(15,694
)
Net income attributable to noncontrolling
interest
—
—
—
(45
)
Net income (loss) attributable to
AeroVironment, Inc.
$
13,885
$
(676
)
$
53,620
$
(15,739
)
Net income (loss) per share attributable
to AeroVironment, Inc.
Basic
$
0.50
$
(0.03
)
$
1.99
$
(0.63
)
Diluted
$
0.50
$
(0.03
)
$
1.98
$
(0.63
)
Weighted-average shares outstanding:
Basic
27,907,568
25,012,412
26,957,061
24,906,977
Diluted
28,044,127
25,012,412
27,061,409
24,906,977
AeroVironment, Inc.
Consolidated Balance
Sheets
(In thousands except share
data)
January 27,
April 30,
2024
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
107,694
$
132,859
Accounts receivable, net of allowance for
doubtful accounts of $88 at January 27, 2024 and $156 at April 30,
2023
53,236
87,633
Unbilled receivables and retentions
148,588
105,653
Inventories, net
161,384
138,814
Income taxes receivable
8,081
—
Prepaid expenses and other current
assets
21,708
12,043
Total current assets
500,691
477,002
Long-term investments
21,282
23,613
Property and equipment, net
45,053
39,795
Operating lease right-of-use assets
28,904
27,363
Deferred income taxes
21,378
27,206
Intangibles, net
77,597
43,577
Goodwill
275,189
180,801
Other assets
10,205
5,220
Total assets
$
980,299
$
824,577
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
26,969
$
31,355
Wages and related accruals
28,443
35,637
Customer advances
17,536
16,645
Current portion of long-term debt
7,500
7,500
Current operating lease liabilities
8,934
8,229
Income taxes payable
797
2,342
Other current liabilities
17,352
19,626
Total current liabilities
107,531
121,334
Long-term debt, net of current portion
31,292
125,904
Non-current operating lease
liabilities
21,978
21,189
Other non-current liabilities
2,105
746
Liability for uncertain tax positions
2,705
2,705
Deferred income taxes
1,703
1,729
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued
or outstanding at January 27, 2024 and April 30, 2023
—
—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—28,136,735
shares at January 27, 2024 and 26,216,897 shares at April 30,
2023
4
4
Additional paid-in capital
593,228
384,397
Accumulated other comprehensive loss
(4,888
)
(4,452
)
Retained earnings
224,641
171,021
Total stockholders' equity
812,985
550,970
Total liabilities and stockholders’
equity
$
980,299
$
824,577
AeroVironment, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
Nine Months Ended
January 27,
January 28,
2024
2023
(Unaudited)
Operating activities
Net income (loss)
$
53,620
$
(15,694
)
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation and amortization
24,969
48,109
Loss from equity method investments
1,494
2,190
Amortization of debt issuance costs
638
634
Provision for doubtful accounts
(67
)
5
Reserve for inventory excess and
obsolescence
11,668
3,787
Other non-cash expense, net
783
935
Non-cash lease expense
6,923
5,866
Loss on foreign currency transactions
54
38
Unrealized loss on available-for-sale
equity securities, net
2,712
1,798
Deferred income taxes
(1,604
)
(1,250
)
Stock-based compensation
12,425
7,108
Loss on disposal of property and
equipment
115
1,193
Amortization of debt securities
discount
—
125
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
36,387
6,847
Unbilled receivables and retentions
(41,950
)
(5,098
)
Inventories
(31,901
)
(43,111
)
Income taxes receivable
(8,081
)
(9,388
)
Prepaid expenses and other assets
(15,896
)
(3,114
)
Accounts payable
(10,003
)
7,789
Other liabilities
(15,321
)
(157
)
Net cash provided by operating
activities
26,965
8,612
Investing activities
Acquisition of property and equipment
(13,901
)
(10,116
)
Equity method investments
(1,875
)
(2,774
)
Equity security investments
—
(5,100
)
Acquisition of intangibles
(1,500
)
—
Business acquisitions, net of cash
acquired
(24,156
)
(5,105
)
Proceeds from deconsolidation of
previously controlled subsidiary, net of cash deconsolidated
—
(635
)
Redemptions of available-for-sale
investments
—
25,945
Purchases of available-for-sale
investments
—
(1,326
)
Net cash (used in) provided by investing
activities
(41,432
)
889
Financing activities
Principal payments of term loan
(95,000
)
(22,500
)
Holdback and retention payments for
business acquisition
(500
)
—
Payment of contingent consideration
(2,132
)
—
Proceeds from shares issued, net of
issuance costs
88,437
20,104
Payment of debt issuance costs
(37
)
—
Tax withholding payment related to net
settlement of equity awards
(1,370
)
(853
)
Exercise of stock options
—
868
Other
(19
)
(21
)
Net cash used in financing activities
(10,621
)
(2,402
)
Effects of currency translation on cash
and cash equivalents
(77
)
695
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(25,165
)
7,794
Cash, cash equivalents and restricted cash
at beginning of period
132,859
77,231
Cash, cash equivalents and restricted cash
at end of period
$
107,694
$
85,025
Supplemental disclosures of cash flow
information
Cash paid, net during the period for:
Income taxes
$
15,195
$
1,192
Interest
$
5,850
$
5,697
Non-cash activities
Issuance of common stock for business
acquisition
$
109,820
$
—
Unrealized gain on available-for-sale
investments, net of deferred tax expense of $0 for the nine months
ended January 27, 2024 and January 28, 2023, respectively
$
—
$
(26
)
Change in foreign currency translation
adjustments
$
(436
)
$
1,433
Issuances of inventory to property and
equipment, ISR in-service assets
$
—
$
4,677
Acquisitions of property and equipment
included in accounts payable
$
2,519
$
731
AeroVironment, Inc.
Reportable Segment Results
(Unaudited)
(In thousands)
Three Months Ended January 27,
2024
UMS
LMS
MW
Total
Revenue:
Product sales
$
104,522
$
51,338
$
63
$
155,923
Contract services
8,768
6,320
15,567
30,655
$
113,290
$
57,658
$
15,630
$
186,578
Segment adjusted income (loss) from
operations
$
20,417
$
7,562
$
(8,103
)
Three Months Ended January 28,
2023
UMS
LMS
MW
Total
Revenue:
Product sales
$
74,966
$
16,203
$
47
$
91,216
Contract services
17,363
7,812
18,004
43,179
$
92,329
$
24,015
$
18,051
$
134,395
Segment adjusted income (loss) from
operations
$
11,792
$
(129
)
$
376
AeroVironment, Inc.
Reconciliation of non-GAAP
Earnings per Diluted Share (Unaudited)
Three Months
Ended
Three Months
Ended
Nine Months
Ended
Nine Months
Ended
January 27, 2024
January 28, 2023
January 27, 2024
January 28, 2023
Earnings (loss) per diluted share
$
0.50
$
(0.03
)
$
1.98
$
(0.63
)
Acquisition-related expenses
—
0.01
0.05
0.04
Amortization of acquired intangible assets
and other purchase accounting adjustments
0.16
0.22
0.38
0.69
Equity method and equity securities
investments activity, net
(0.03
)
0.13
0.16
0.16
Earnings per diluted share as adjusted
(Non-GAAP)
$
0.63
$
0.33
$
2.57
$
0.26
Reconciliation of non-GAAP
adjusted EBITDA (Unaudited)
Three Months
Ended
Three Months
Ended
Nine Months
Ended
Nine Months
Ended
(in millions)
January 27, 2024
January 28, 2023
January 27, 2024
January 28, 2023
Net income (loss)
$
13.9
$
(0.7
)
$
53.6
$
(15.7
)
Interest expense, net
0.1
2.8
4.1
6.7
Provision for (benefit from) income
taxes
1.3
(0.5
)
3.7
(8.4
)
Depreciation and amortization
9.6
15.8
25.0
48.1
EBITDA (Non-GAAP)
24.9
17.4
86.4
30.7
Stock-based compensation
4.2
2.7
12.4
7.1
Equity method and equity securities
investments activity, net
(0.7
)
3.2
4.2
4.0
Amortization of cloud computing
arrangement implementation
0.5
0.1
0.9
0.4
Acquisition-related expenses
(0.1
)
0.3
1.7
1.2
Adjusted EBITDA (Non-GAAP)
$
28.8
$
23.7
$
105.6
$
43.4
Reconciliation of Forecast
Earnings per Diluted Share (Unaudited)
Fiscal year ending
April 30, 2024
Forecast earnings per diluted share
$
1.86 - 2.00
Acquisition-related expenses
0.05
Amortization of acquired intangible assets
and other purchase accounting adjustments
0.54
Equity method and equity securities
investments activity, net
0.24
Forecast earnings per diluted share as
adjusted (Non-GAAP)
$
2.69 - 2.83
Reconciliation of 2024
Forecast and Fiscal Year 2023 Actual Non-GAAP adjusted EBITDA
(Unaudited)
Fiscal year ending
Fiscal year ended
(in millions)
April 30, 2024
April 30, 2023
Net income (loss)
$
51 - 55
$
(176
)
Interest expense, net
5
9
Provision for (benefit from) income
taxes
3 - 4
(15
)
Depreciation and amortization
36
100
EBITDA (Non-GAAP)
95 - 100
(82
)
Amortization of cloud computing
arrangement implementation
1
1
Stock-based compensation
17
11
Equity method and equity securities
investments activity, net
7
3
Acquisition-related expenses
2
1
Goodwill impairment
—
156
Adjusted EBITDA (Non-GAAP)
$
122 - 127
$
90
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, goodwill impairment and acquisition-related
expenses.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240304516443/en/
INVESTOR CONTACT Jonah Teeter-Balin Sr. Director,
Corporate Development and Investor Relations AeroVironment, Inc.
https://investor.avinc.com/contact-and-faq/contact-us
MEDIA CONTACT Ashley Riser Public Relations Manager
AeroVironment, Inc. pr@avinc.com
AeroVironment (NASDAQ:AVAV)
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