AeroVironment, Inc.
(NASDAQ: AVAV) today reported financial results for its second quarter
ended October 31, 2015.
“Strong performance in our core UAS business delivered a 23 percent
increase in AeroVironment’s quarterly revenue year-over-year and a 76
percent increase in quarterly gross margin, including 19 percentage
points from a government contract reserve reduction. Solid bookings of
more than $66 million in UAS contracts and contract extensions further
illustrate our team’s effectiveness during the quarter,” said Tim
Conver, AeroVironment chairman and chief executive officer. "We also
produced meaningful progress from of our investments in commercial UAS
information services and Tactical Missile Systems that have positioned
AeroVironment favorably for emerging opportunities in both sectors. In
our EES segment, we have more narrowly focused our EV charging business
on consumer and business solutions to drive more profitable long-term
growth, and Hyundai became the seventh global automaker to select
AeroVironment for electric vehicle charging systems.”
FISCAL 2016 SECOND QUARTER RESULTS
Revenue for the second quarter of fiscal 2016 was $64.7 million, up 23%
from second quarter fiscal 2015 revenue of $52.7 million. The increase
in revenue resulted from an increase in sales in our Unmanned Aircraft
Systems (UAS) segment of $13.5 million, offset by a decrease in sales in
our Efficient Energy Systems (EES) segment of $1.5 million.
Gross margin for the second quarter of fiscal 2016 was $31.5 million, up
76% from second quarter fiscal 2015 gross margin of $17.9 million. The
increase in gross margin was due to an increase in product margin of
$9.6 million and an increase in service margin of $4.1 million, both of
which were impacted by a reserve reversal of $3.5 million for the
settlement of prior year government incurred cost audits. As a
percentage of revenue, gross margin increased to 49% from 34%.
Income from operations for the second quarter of fiscal 2016 was
$6.9 million compared to loss from operations for the second quarter of
fiscal 2015 of $4.1 million. The increase in income from operations was
a result of an increase in gross margin of $13.7 million, offset by an
increase in research and development (R&D) of $1.4 million and in
selling, general & administrative (SG&A) expense of $1.3 million.
Other income, net, for the second quarter of fiscal 2016 was $0.1
million compared to other expense, net, for the second quarter of fiscal
2015 of $0.4 million.
Net income for the second quarter of fiscal 2016 was $4.4 million
compared to net loss for the second quarter of fiscal 2015 of
$2.9 million.
Earnings per diluted share for the second quarter of fiscal 2016 were
$0.19 compared to loss per share for the second quarter of fiscal 2015
of $0.13. Loss per share for the second quarter of fiscal 2015 increased
by $0.01 due to the decrease in fair value of the conversion option of
our convertible bond investment and related sales of stock. There was no
impact to earnings per share for the second quarter of fiscal 2016 for
the convertible bond investment or sales of stock.
FISCAL 2016 YEAR-TO-DATE RESULTS
Revenue for the first six months of fiscal 2016 was $111.8 million, up
7% from first six months fiscal 2015 revenue of $104.5 million. The
increase in revenue resulted from an increase in sales in our UAS
segment of $12.5 million offset by a decrease in sales in our
EES segment of $5.3 million.
Gross margin for the first six months of fiscal 2016 was $47.6 million,
up 49% from first six months fiscal 2015 gross margin of $31.9 million.
The increase in gross margin was due to an increase in service margin of
$8.2 million and an increase in product margin of $7.5 million, both of
which were impacted by a reserve reversal of $3.5 million for the
settlement of prior year government incurred cost audits. As a
percentage of revenue, gross margin increased to 43% from 31%.
Loss from operations for the first six months of fiscal 2016 was
$2.2 million compared to loss from operations for the first six months
of fiscal 2015 of $10.6 million. The decrease in loss from operations
was a result of an increase in gross margin of $15.6 million, offset by
an increase in research and development (R&D) expense of $4.1 million
and in selling, general & administrative (SG&A) expense of $3.1 million.
Other expense, net, for the first six months of fiscal 2016 was $2.1
million compared to other income, net for the first six months of fiscal
2015 of $0.4 million. The increase in expense is primarily due to the
recording of an other-than-temporary impairment loss on our CybAero
equity securities.
Net loss for the first six months of fiscal 2016 was $2.6 million
compared to net loss for the first six months of fiscal 2015 of
$6.5 million.
Loss per share for the first six months of fiscal 2016 was $0.11
compared to loss per share for the first six months of fiscal 2015 of
$0.29. Loss per share for the first six months of fiscal 2016 was
increased by $0.06 due to both the impairment loss and loss on sale of
our CybAero equity securities. Loss per share for the first six months
of fiscal 2015 decreased by $0.01 due to the increase in fair value of
the conversion option of our convertible bond investment and related
sales of stock.
BACKLOG
As of October 31, 2015, funded backlog (unfilled firm orders for which
funding is currently appropriated to us under a customer contract) was
$97.2 million compared to $64.7 million as of April 30, 2015.
FISCAL 2016 — OUTLOOK FOR THE FULL YEAR
For fiscal 2016, the company continues to expect revenue of between $260
million and $280 million, and a gross profit margin of between 36
percent and 37.5 percent, net of reserve effect. Planned increases in
strategic R&D and SG&A investments for Commercial UAS in fiscal 2016 may
largely offset operating profit in the current fiscal year.
The foregoing estimates are forward looking and reflect management's
view of current and future market conditions, including certain
assumptions with respect to our ability to 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
In conjunction with this release, AeroVironment, Inc. will host a
conference call today, Tuesday, December 8, 2015, at 1:30 pm Pacific
Time that will be broadcast live over the Internet. Timothy E. Conver,
chairman and chief executive officer, Raymond D. Cook, chief financial
officer and Steven A. Gitlin, 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 at (877) 561-2749 (U.S.) or (678)
809-1029 (international) 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.
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,
December 8, 2015, at approximately 4:30 p.m. Pacific Time through
Tuesday, December 15, 2015, at 9:00 p.m. Pacific Time. Dial (855)
859-2056 and enter the passcode 89717937. International callers should
dial (404) 537-3406 and enter the same passcode number to access the
audio replay.
ABOUT AEROVIRONMENT, INC.
AeroVironment is a technology solutions provider that designs, develops,
produces, supports and operates an advanced portfolio of Unmanned
Aircraft Systems (UAS) and electric transportation solutions. The
company's electric-powered, hand-launched UASs generate and process data
to deliver powerful insight, on-demand, to people engaged in military,
public safety and commercial activities around the world.
AeroVironment's electric transportation solutions include a
comprehensive suite of electric
vehicle (EV) charging systems, installation and network services for
consumers, automakers, utilities and government agencies, power
cycling and test systems for EV developers and industrial
EV charging systems for commercial fleets. More information about
AeroVironment is available at 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, 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; potential need for changes in our long-term
strategy in response to future developments; unexpected technical and
marketing difficulties inherent in major research and product
development efforts; 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; 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; product liability, infringement and other claims; changes in
the regulatory environment; 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.
|
AeroVironment, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
October 31,
|
|
November 1,
|
|
October 31,
|
|
November 1,
|
|
|
|
|
2015
|
|
|
2014
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
49,492
|
|
|
$
|
42,874
|
|
$
|
76,131
|
|
|
$
|
85,685
|
|
|
Contract services
|
|
15,239
|
|
|
9,790
|
|
35,650
|
|
|
18,845
|
|
|
|
|
64,731
|
|
|
52,664
|
|
111,781
|
|
|
104,530
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
24,802
|
|
|
27,779
|
|
41,567
|
|
|
58,576
|
|
|
Contract services
|
|
8,396
|
|
|
7,014
|
|
22,658
|
|
|
14,029
|
|
|
|
|
33,198
|
|
|
34,793
|
|
64,225
|
|
|
72,605
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
24,690
|
|
|
15,095
|
|
34,564
|
|
|
27,109
|
|
|
Contract services
|
|
6,843
|
|
|
2,776
|
|
12,992
|
|
|
4,816
|
|
|
|
|
31,533
|
|
|
17,871
|
|
47,556
|
|
|
31,925
|
|
|
Selling, general and administrative
|
|
14,733
|
|
|
13,470
|
|
29,989
|
|
|
26,873
|
|
|
Research and development
|
|
9,897
|
|
|
8,531
|
|
19,728
|
|
|
15,655
|
|
|
Income (loss) from operations
|
|
6,903
|
|
|
(4,130
|
)
|
(2,161
|
)
|
|
(10,603
|
)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
268
|
|
|
193
|
|
492
|
|
|
405
|
|
|
Other (expense) income
|
|
(192
|
)
|
|
(583
|
)
|
(2,581
|
)
|
|
8
|
|
|
Income (loss) before income taxes
|
|
6,979
|
|
|
(4,520
|
)
|
(4,250
|
)
|
|
(10,190
|
)
|
|
Provision (benefit) for income taxes
|
|
2,560
|
|
|
(1,619
|
)
|
(1,688
|
)
|
|
(3,680
|
)
|
|
Net Income (loss)
|
|
$
|
4,419
|
|
|
$
|
(2,901
|
)
|
$
|
(2,562
|
)
|
|
$
|
(6,510
|
)
|
|
Earnings (loss) per share data:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.19
|
|
|
$
|
(0.13
|
)
|
$
|
(0.11
|
)
|
|
$
|
(0.29
|
)
|
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
(0.13
|
)
|
$
|
(0.11
|
)
|
|
$
|
(0.29
|
)
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,985,956
|
|
|
22,878,410
|
|
22,966,513
|
|
|
22,840,465
|
|
|
Diluted
|
|
23,148,456
|
|
|
22,878,410
|
|
22,966,513
|
|
|
22,840,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AeroVironment, Inc.
Reconciliation of Earnings (Loss) per Share (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
October 31,
|
|
November 1,
|
|
October 31,
|
|
November 1,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
Earnings (loss) per diluted share as adjusted
|
|
$
|
0.19
|
|
$
|
(0.12
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.30
|
)
|
|
Other-than-temporary impairment loss and loss on sale of stock
|
|
|
—
|
|
|
—
|
|
|
|
(0.06
|
)
|
|
|
—
|
|
|
(Decrease) increase in fair value of convertible bond and related
sale of stock
|
|
|
—
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
0.01
|
|
|
Earnings (loss) per diluted share as reported
|
|
$
|
0.19
|
|
$
|
(0.13
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2015
|
|
|
April 30,
2015
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
128,032
|
|
|
$
|
143,410
|
|
|
Short-term investments
|
|
77,967
|
|
|
85,381
|
|
|
Accounts receivable, net of allowance for doubtful accounts of $212
at October 31, 2015 and $606 at April 30, 2015
|
|
42,746
|
|
|
33,607
|
|
|
Unbilled receivables and retentions
|
|
11,798
|
|
|
17,356
|
|
|
Inventories, net
|
|
48,336
|
|
|
39,414
|
|
|
Income tax receivable
|
|
2,836
|
|
|
—
|
|
|
Deferred income taxes
|
|
5,050
|
|
|
5,265
|
|
|
Prepaid expenses and other current assets
|
|
4,555
|
|
|
4,599
|
|
|
Total current assets
|
|
321,320
|
|
|
329,032
|
|
|
Long-term investments
|
|
37,715
|
|
|
46,769
|
|
|
Property and equipment, net
|
|
13,579
|
|
|
13,499
|
|
|
Deferred income taxes
|
|
6,725
|
|
|
7,426
|
|
|
Other assets
|
|
690
|
|
|
741
|
|
|
Total assets
|
|
$
|
380,029
|
|
|
$
|
397,467
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
11,590
|
|
|
$
|
19,243
|
|
|
Wages and related accruals
|
|
10,503
|
|
|
13,395
|
|
|
Income taxes payable
|
|
—
|
|
|
692
|
|
|
Customer advances
|
|
3,835
|
|
|
4,235
|
|
|
Other current liabilities
|
|
5,669
|
|
|
9,170
|
|
|
Total current liabilities
|
|
31,597
|
|
|
46,735
|
|
|
Deferred rent
|
|
1,266
|
|
|
1,381
|
|
|
Liability for uncertain tax positions
|
|
439
|
|
|
439
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value:
|
|
|
|
|
|
|
|
Authorized shares — 10,000,000; none issued or outstanding
|
|
—
|
|
|
—
|
|
|
Common stock, $0.0001 par value:
|
|
|
|
|
|
|
|
Authorized shares — 100,000,000
|
|
|
|
|
|
|
|
Issued and outstanding shares — 23,318,688 at October 31, 2015 and
23,314,640 at April 30, 2015
|
|
2
|
|
|
2
|
|
|
Additional paid-in capital
|
|
151,269
|
|
|
148,293
|
|
|
Accumulated other comprehensive loss
|
|
(201
|
)
|
|
(1,358
|
)
|
|
Retained earnings
|
|
195,657
|
|
|
201,975
|
|
|
Total stockholders’ equity
|
|
346,727
|
|
|
348,912
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
380,029
|
|
|
$
|
397,467
|
|
|
|
|
|
|
|
|
|
|
|
|
AeroVironment, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
October 31,
2015
|
|
November 1,
2014
|
|
Operating activities
|
|
|
|
|
|
Net loss
|
|
$
|
(2,562
|
)
|
|
$
|
(6,510
|
)
|
|
Adjustments to reconcile net loss to cash (used in) provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
2,765
|
|
|
4,303
|
|
|
Impairment of available-for-sale securities
|
|
2,186
|
|
|
—
|
|
|
Loss from equity method investments
|
|
122
|
|
|
98
|
|
|
Provision for doubtful accounts
|
|
(231
|
)
|
|
(105
|
)
|
|
Deferred income taxes
|
|
215
|
|
|
42
|
|
|
Loss (gain) on sale of equity securities
|
|
219
|
|
|
(347
|
)
|
|
Stock-based compensation
|
|
2,082
|
|
|
1,745
|
|
|
Foreign currency losses
|
|
63
|
|
|
281
|
|
|
Increase in fair value of conversion feature of convertible bonds
|
|
—
|
|
|
(73
|
)
|
|
Tax benefit from exercise of stock options
|
|
196
|
|
|
11
|
|
|
Excess tax benefit from stock-based compensation
|
|
—
|
|
|
(348
|
)
|
|
Amortization of held-to-maturity investments
|
|
2,146
|
|
|
2,211
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(8,908
|
)
|
|
748
|
|
|
Unbilled receivables and retentions
|
|
5,558
|
|
|
3,826
|
|
|
Inventories
|
|
(8,922
|
)
|
|
(1,105
|
)
|
|
Income tax receivable
|
|
(2,887
|
)
|
|
1,708
|
|
|
Other assets
|
|
119
|
|
|
27
|
|
|
Accounts payable
|
|
(7,653
|
)
|
|
5,082
|
|
|
Other liabilities
|
|
(7,417
|
)
|
|
764
|
|
|
Net cash (used in) provided by operating activities
|
|
(22,909
|
)
|
|
12,358
|
|
|
Investing activities
|
|
|
|
|
|
Acquisitions of property and equipment
|
|
(2,804
|
)
|
|
(1,070
|
)
|
|
Equity method investments
|
|
(186
|
)
|
|
(186
|
)
|
|
Purchases of held-to-maturity investments
|
|
(43,072
|
)
|
|
(68,524
|
)
|
|
Redemptions of held-to-maturity investments
|
|
55,847
|
|
|
46,727
|
|
|
Sales of available-for-sale investments
|
|
987
|
|
|
9,038
|
|
|
Net cash provided by (used in) investing activities
|
|
10,772
|
|
|
(14,015
|
)
|
|
Financing activities
|
|
|
|
|
|
Purchase and retirement of common stock
|
|
(3,756
|
)
|
|
—
|
|
|
Tax withholding payment related to net settlement of equity awards
|
|
(29
|
)
|
|
—
|
|
|
Excess tax benefit from exercise of stock options
|
|
—
|
|
|
348
|
|
|
Exercise of stock options
|
|
544
|
|
|
679
|
|
|
Net cash (used in) provided by financing activities
|
|
(3,241
|
)
|
|
1,027
|
|
|
Net decrease in cash and cash equivalents
|
|
(15,378
|
)
|
|
(630
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
143,410
|
|
|
126,969
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
128,032
|
|
|
$
|
126,339
|
|
|
|
|
|
|
|
|
Supplemental disclosure:
|
|
|
|
|
|
Unrealized change in fair value of investments recorded in other
comprehensive income (loss), net of deferred taxes of $18 and
$(397), respectively
|
|
$
|
27
|
|
|
$
|
596
|
|
|
Reclassification from share-based liability compensation to equity
|
|
$
|
228
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
AeroVironment, Inc.
Reportable Segment Results are as Follows (Unaudited):
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
October 31,
|
|
November 1,
|
|
October 31,
|
|
November 1,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
UAS
|
|
$
|
56,589
|
|
|
$
|
43,045
|
|
|
$
|
96,756
|
|
|
$
|
84,231
|
|
|
EES
|
|
8,142
|
|
|
9,619
|
|
|
15,025
|
|
|
20,299
|
|
|
Total
|
|
64,731
|
|
|
52,664
|
|
|
111,781
|
|
|
104,530
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
UAS
|
|
28,314
|
|
|
27,575
|
|
|
54,780
|
|
|
58,590
|
|
|
EES
|
|
4,884
|
|
|
7,218
|
|
|
9,445
|
|
|
14,015
|
|
|
Total
|
|
33,198
|
|
|
34,793
|
|
|
64,225
|
|
|
72,605
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
UAS
|
|
28,275
|
|
|
15,470
|
|
|
41,976
|
|
|
25,641
|
|
|
EES
|
|
3,258
|
|
|
2,401
|
|
|
5,580
|
|
|
6,284
|
|
|
Total
|
|
31,533
|
|
|
17,871
|
|
|
47,556
|
|
|
31,925
|
|
|
Selling, general and administrative
|
|
14,733
|
|
|
13,470
|
|
|
29,989
|
|
|
26,873
|
|
|
Research and development
|
|
9,897
|
|
|
8,531
|
|
|
19,728
|
|
|
15,655
|
|
|
Income (loss) from operations
|
|
6,903
|
|
|
(4,130
|
)
|
|
(2,161
|
)
|
|
(10,603
|
)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
268
|
|
|
193
|
|
|
492
|
|
|
405
|
|
|
Other (expense) income
|
|
(192
|
)
|
|
(583
|
)
|
|
(2,581
|
)
|
|
8
|
|
|
Income (loss) before income taxes
|
|
$
|
6,979
|
|
|
$
|
(4,520
|
)
|
|
$
|
(4,250
|
)
|
|
$
|
(10,190
|
)
|
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