AeroVironment, Inc. Announces Fiscal 2020 Full Year and Fourth Quarter Results

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SIMI VALLEY, Calif.–(BUSINESS WIRE)–Jun. 23, 2020–
AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems (UAS), today reported financial results for its full year and fourth quarter ended April 30, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200623005863/en/

AeroVironment's Family of Systems provide multi-mission capabilities for defense and commercial customers, and precision strike at the battlefield's edge (Graphic: Business Wire)

AeroVironment’s Family of Systems provide multi-mission capabilities for defense and commercial customers, and precision strike at the battlefield’s edge (Graphic: Business Wire)

  • Record fourth quarter and full year revenue of $135.2 million and $367.3 million, an increase of 54 percent and 17 percent year-over-year, respectively
  • Fourth quarter diluted earnings per share from continuing operations and non-GAAP diluted earnings per share from continuing operations of $0.73 and $0.75, an increase of 47 cents and 49 cents year-over-year, respectively
  • Record funded backlog of $208.1 million, providing strong momentum toward a fourth consecutive year of profitable growth

“Our team delivered outstanding results in our fourth quarter and full fiscal year 2020. We established new records for highest quarterly revenue, highest fiscal year revenue, and highest funded backlog for the full fiscal year 2020. With continued focus on our business strategy, coupled with excellent execution by our committed and talented team, we delivered our third consecutive year of profitable, double-digit topline growth,” said Wahid Nawabi, AeroVironment president and chief executive officer. “Strong growth in small unmanned aircraft systems revenue reflects continued global demand for our market leading UAS solutions, while significant progress in tactical missile systems and HAPS advances our strategy for long-term value creation.”

“We achieved numerous significant milestones this fiscal year, including successfully completing initial flight tests of the HAWK30 solar-HAPS system, securing the largest U.S. Army LMAMS order to date for our Switchblade system, successfully demonstrating a larger variant of Switchblade, progressing in the development of next generation autonomy capabilities and growing our international customer base to 50 allied nations. Presented with the unprecedented circumstances driven by the COVID-19 pandemic, our team continued to deliver exceptional results while maintaining a strong focus on safety and serving our customers around the world. We continue to build on our momentum as we enter fiscal year 2021 and are confident in our ability to enhance shareholder value over the near- and long-term,” Mr. Nawabi added.

FISCAL 2020 FOURTH QUARTER RESULTS

Revenue for the fourth quarter of fiscal 2020 was $135.2 million, an increase of 54% from the fourth quarter of fiscal 2019 revenue of $87.9 million. The increase in revenue was due to an increase in product sales of $37.4 million and an increase in service revenue of $9.9 million.

Gross margin for the fourth quarter of fiscal 2020 was $53.2 million, an increase of 44% from the fourth quarter of fiscal 2019 gross margin of $37.0 million. The increase in gross margin was primarily due to an increase in product margin of $10.8 million and an increase in service margin of $5.3 million. As a percentage of revenue, gross margin decreased to 39% from 42%. The decrease in gross margin percentage was primarily due to an unfavorable product mix and an increase in intangible asset amortization expense of $0.7 million associated with our acquisition of Pulse Aerospace in June 2019.

Income from continuing operations for the fourth quarter of fiscal 2020 was $21.3 million, an increase of $16.2 million from the fourth quarter of fiscal 2019 income from continuing operations of $5.1 million. The increase in income from continuing operations was primarily a result of an increase in gross margin of $16.1 million and a decrease in selling, general and administrative (“SG&A”) expense of $3.9 million, partially offset by an increase in research and development (“R&D”) expense of $3.9 million. SG&A expense for the fourth quarter of fiscal 2019 included impairment charges of $4.4 million related to the long-lived assets of our commercial UAS Quantix solution.

Other income, net, for the fourth quarter of fiscal 2020 was $1.2 million compared to $2.8 million for the fourth quarter of fiscal 2019. The decrease in other income, net was primarily due to a decrease in income from transition services performed on behalf of the buyer of the discontinued EES business.

Provision for (benefit from) income taxes for the fourth quarter of fiscal 2020 was a provision of $2.6 million compared to a benefit of $0.1 million for the fourth quarter of fiscal 2019. The increase in provision for income taxes was primarily due to the increase in income before income taxes.

Equity method investment loss, net of tax, for the fourth quarter of fiscal 2020 was $2.1 million compared to $1.9 million for the fourth quarter of fiscal 2019 primarily associated with our investment in HAPSMobile, Inc. joint venture formed in December 2017.

Net income attributable to AeroVironment for the fourth quarter of fiscal 2020 was $17.5 million compared to $5.7 million for the fourth quarter of fiscal 2019.

Earnings per diluted share from continuing operations attributable to AeroVironment for the fourth quarter of fiscal 2020 was $0.73 compared to $0.26 for the fourth quarter of fiscal 2019.

Non-GAAP earnings per diluted share from continuing operations was $0.75 for the fourth quarter of fiscal 2020 compared to $0.26 for the fourth quarter of fiscal 2019.

FISCAL 2020 FULL YEAR RESULTS

Revenue for fiscal 2020 was $367.3 million, an increase of 17% from fiscal 2019 revenue of $314.3 million. The increase in revenue was primarily due to an increase in product sales of $44.7 million and an increase in service revenue of $8.3 million.

Gross margin for fiscal 2020 was $153.1 million, an increase of 19% from fiscal 2019 gross margin of $128.4 million. The increase in gross margin was primarily due to an increase in product margin of $19.0 million and an increase in service margin of $5.7 million. As a percentage of revenue, gross margin increased to 42% from 41%. The increase in gross margin percentage was primarily due to an increase in the proportion of product sales to total revenue, partially offset by an increase in intangible asset amortization expense of $2.5 million associated with our acquisition of Pulse Aerospace in June 2019.

Income from continuing operations for fiscal 2020 was $47.1 million, an increase of 39% from fiscal 2019 income from continuing operations of $33.8 million. The increase in income from continuing operations was primarily a result of an increase in gross margin of $24.7 million and a decrease in SG&A expense of $0.9 million, partially offset by an increase in R&D expense of $12.2 million. SG&A expense for fiscal 2019 included impairment charges of $4.4 million related to the long-lived assets of our commercial UAS Quantix solution.

Other income, net for fiscal 2020 was $5.5 million compared to $16.7 million for fiscal 2019. The decrease in other income, net was primarily due to a one-time gain from a litigation settlement of $0.26 per diluted share in fiscal 2019 and a decrease in income from transition services performed on behalf of the buyer of the discontinued EES business.

Provision for income taxes for fiscal 2020 was $5.8 million compared to $4.6 million for fiscal 2019. The increase in provision for income taxes was primarily due to an increase in income before income taxes.

Equity method investment loss, net of tax for fiscal 2020 was $5.5 million compared to $3.9 million for fiscal 2019. The equity method loss is primarily associated with our investment in the HAPSMobile Inc. joint venture formed in December 2017.

Net income attributable to AeroVironment for fiscal 2020 was $41.1 million compared to $47.4 million for fiscal 2019. Fiscal 2019 included a one-time gain from a litigation settlement of $0.26 per diluted share.

Earnings per diluted share from continuing operations attributable to AeroVironment for fiscal 2020 was $1.72 compared to $1.74 for fiscal 2019. Fiscal 2019 included a one-time gain from a litigation settlement of $0.26 per diluted share.

Non-GAAP earnings per diluted share from continuing operations for fiscal 2020 was $1.84 compared to $1.48 for fiscal 2019 which excludes a one-time gain from a litigation settlement of $0.26 per diluted share.

BACKLOG

As of April 30, 2020, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $208.1 million compared to $164.3 million as of April 30, 2019.

FISCAL 2021 — OUTLOOK FOR THE FULL YEAR

For fiscal 2021, the Company expects to generate revenue between $390 million and $410 million, operating margin of between 12% and 12.5%, and earnings per diluted share of $1.65 to $1.85. This financial guidance assumes approximately 7% ownership of the HAPSMobile joint venture. The Company expects non-GAAP earnings per diluted share, which excludes amortization of acquired intangible assets, to be between $1.74 and $1.94.

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.

UPDATED CONFERENCE CALL AND PRESENTATION

In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday June 23, 2020, 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, 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 updated telephone numbers, (877) 561-2749 (U.S.) or (678) 809-1029 (international) and providing the conference ID 3557035 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 fourth quarter and full fiscal 2020 can be accessed at https://investor.avinc.com/events-and-presentations.

Updated 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 June 23, 2020, at approximately 4:00 p.m. Pacific Time through June 30, 2020, at 11:59 p.m. Pacific Time. Dial (855) 859-2056 (U.S.) or (404) 537-3406 (international) and provide the conference ID 3557035.

ABOUT AEROVIRONMENT, INC.

AeroVironment (NASDAQ: AVAV) provides customers with more actionable intelligence so they can proceed with certainty. Based in California, 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, 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; the impact of our recent acquisition of Pulse Aerospace, LLC and our ability to successfully integrate it into our operations; 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 a non-GAAP financial measure. See in the financial tables below the calculation of this measure, the reasons why we believe this measure provides useful information to investors, and a reconciliation of this measure to the most directly comparable GAAP.

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

Three Months Ended

Year Ended

April 30,

April 30,

April 30,

April 30,

2020

2019

2020

2019

(Unaudited)

Revenue:

Product sales

$

97,101

$

59,696

$

256,758

$

212,089

Contract services

38,122

28,234

110,538

102,185

135,223

87,930

367,296

314,274

Cost of sales:

Product sales

56,887

30,331

139,131

113,489

Contract services

25,168

20,576

75,063

72,382

82,055

50,907

214,194

185,871

Gross margin:

Product sales

40,214

29,365

117,627

98,600

Contract services

12,954

7,658

35,475

29,803

53,168

37,023

153,102

128,403

Selling, general and administrative

16,344

20,277

59,490

60,343

Research and development

15,529

11,603

46,477

34,234

Income from continuing operations

21,295

5,143

47,135

33,826

Other income:

Interest income, net

1,111

1,426

4,828

4,672

Other income, net

75

1,339

707

11,980

Income from continuing operations before income taxes

22,481

7,908

52,670

50,478

Provision for (benefit from) income taxes

2,645

(83

)

5,848

4,641

Equity method investment loss, net of tax

(2,077

)

(1,873

)

(5,487

)

(3,944

)

Net income from continuing operations

17,759

6,118

41,335

41,893

Discontinued operations:

(Loss) gain on sale of business, net of tax

(265

)

38

(265

)

8,490

Loss from discontinued operations, net of tax

(453

)

(2,964

)

Net (loss) income from discontinued operations

(265

)

(415

)

(265

)

5,526

Net income

17,494

5,703

41,070

47,419

Net (income) loss attributable to noncontrolling interest

(23

)

(21

)

4

19

Net income attributable to AeroVironment, Inc.

$

17,471

$

5,682

$

41,074

$

47,438

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

Continuing operations

$

0.74

$

0.26

$

1.74

$

1.77

Discontinued operations

(0.01

)

(0.02

)

(0.01

)

0.23

Net income per share attributable to AeroVironment, Inc.–Basic

$

0.73

$

0.24

$

1.73

$

2.00

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

Continuing operations

$

0.73

$

0.26

$

1.72

$

1.74

Discontinued operations

(0.01

)

(0.02

)

(0.01

)

0.23

Net income per share attributable to AeroVironment, Inc.–Diluted

$

0.72

$

0.24

$

1.71

$

1.97

Weighted-average shares outstanding:

Basic

23,849,575

23,718,030

23,806,208

23,663,410

Diluted

24,133,809

24,094,717

24,088,167

24,071,713

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share data)

April 30,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

255,142

$

172,708

Held-to-maturity short-term investments

150,487

Available-for-sale short-term investments

47,507

Accounts receivable, net of allowance for doubtful accounts of $1,190 at April 30, 2020 and $1,041 at April 30, 2019

73,660

31,051

Unbilled receivables and retentions

75,837

53,047

Inventories

45,535

54,056

Prepaid expenses and other current assets

6,246

7,418

Income taxes receivable

821

Total current assets

503,927

469,588

Held-to-maturity long-term investments

9,386

Available-for-sale long-term investments

15,030

Property and equipment, net

21,694

16,905

Operating lease right-of-use assets

8,793

Deferred income taxes

4,928

6,685

Intangibles, net

13,637

459

Goodwill

6,340

Other assets

10,605

5,821

Total assets

$

584,954

$

508,844

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

19,859

$

15,972

Wages and related accruals

23,972

18,507

Customer advances

7,899

2,962

Current operating lease liabilities

3,380

Income taxes payable

1,065

Other current liabilities

10,778

7,425

Total current liabilities

66,953

44,866

Deferred rent

1,173

Non-current operating lease liabilities

6,833

Other non-current liabilities

250

150

Deferred tax liability

29

Liability for uncertain tax positions

1,017

51

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares–10,000,000; none issued or outstanding at April 30, 2020 and April 30, 2019

Common stock, $0.0001 par value:

Authorized shares–100,000,000

Issued and outstanding shares–24,063,639 shares at April 30, 2020 and 23,946,293 shares at April 30, 2019

2

2

Additional paid-in capital

181,481

176,216

Accumulated other comprehensive income

328

2

Retained earnings

328,090

286,351

Total AeroVironment, Inc. stockholders’ equity

509,901

462,571

Noncontrolling interest

4

Total equity

509,901

462,575

Total liabilities and stockholders’ equity

$

584,954

$

508,844

AeroVironment, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year Ended April 30,

2020

2019

2018

Operating activities

Net income

$

41,070

$

47,419

$

17,647

Loss (gain) on sale of business, net of tax

265

(8,490

)

Loss from discontinued operations, net of tax

2,964

3,887

Net income from continuing operations

41,335

41,893

21,534

Adjustments to reconcile net income from continuing operations to cash provided by operating activities from continuing operations:

Depreciation and amortization

9,888

7,669

5,982

Losses from equity method investments

5,487

3,944

1,283

Realized gain from sale of available-for-sale investments

(180

)

Impairment of long-lived assets

4,398

255

Provision for doubtful accounts

388

(39

)

977

Impairment of intangible assets and goodwill

1,021

Other non-cash gain, net

(703

)

Non-cash lease expense

4,574

Loss (gain) on foreign currency transactions

1

38

(87

)

Deferred income taxes

3,419

4,792

2,853

Stock-based compensation

6,227

6,985

4,956

(Gain) loss on sale of property and equipment

(71

)

76

20

Amortization of debt securities

(1,423

)

(1,506

)

1,424

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(42,869

)

25,821

11,070

Unbilled receivables and retentions

(22,790

)

(36,175

)

2,253

Inventories

8,855

(16,631

)

1,192

Income tax receivable

821

(821

)

Prepaid expenses and other assets

831

(2,401

)

139

Accounts payable

3,127

(7,054

)

5,736

Other liabilities

8,180

(4,043

)

9,224

Net cash provided by operating activities of continuing operations

25,097

26,946

69,832

Investing activities

Acquisition of property and equipment

(11,220

)

(8,896

)

(9,563

)

Equity method investments

(14,498

)

(7,598

)

(3,267

)

Business acquisition, net of cash acquired

(18,641

)

Proceeds from sale of business

31,994

Proceeds from sale of property and equipment

81

Redemptions of held-to-maturity investments

185,917

260,918

227,663

Purchases of held-to-maturity investments

(176,757

)

(267,122

)

(221,680

)

Redemptions of available-for-sale investments

200,892

2,250

450

Purchases of available-for-sale investments

(106,607

)

Net cash provided by (used in) investing activities from continuing operations

59,167

11,546

(6,397

)

Financing activities

Principal payments of capital lease obligations

(161

)

(288

)

Payment of contingent consideration

(868

)

Tax withholding payment related to net settlement of equity awards

(1,062

)

(1,094

)

(397

)

Exercise of stock options

100

71

2,705

Net cash (used in) provided by financing activities from continuing operations

(1,830

)

(1,184

)

2,020

Discontinued operations

Operating activities of discontinued operations

(7,686

)

(623

)

Investing activities of discontinued operations

(431

)

(1,219

)

Net cash used in discontinued operations

(8,117

)

(1,842

)

Net increase in cash, cash equivalents, and restricted cash

82,434

29,191

63,613

Cash, cash equivalents, and restricted cash at beginning of period

172,708

143,517

79,904

Cash, cash equivalents, and restricted cash at end of period

$

255,142

$

172,708

$

143,517

Supplemental disclosures of cash flow information

Cash paid, net during the period for:

Income taxes

$

532

$

6,780

$

1,813

Non-cash activities

Unrealized gain on investments, net of deferred tax expense of $14, $51 and $25 for the fiscal years ended 2020, 2019 and 2018, respectively

$

50

$

57

$

70

Reclassification from share-based liability compensation to equity

$

$

$

384

Change in foreign currency translation adjustments

$

276

$

(34

)

$

36

Acquisitions of property and equipment included in accounts payable

$

1,425

$

810

$

379

AeroVironment, Inc.

Reconciliation of non-GAAP Earnings per Diluted Share (Unaudited)

Three Months Ended

Three Months Ended

Year Ended

Year Ended

April 30, 2020

April 30, 2019

April 30, 2020

April 30, 2019

Earnings per diluted share from continuing operations

$

0.73

$

0.26

$

1.72

$

1.74

Acquisition related expenses

0.04

Amortization of acquired intangible assets

0.02

0.08

One-time gain from a litigation settlement

(0.26

)

Earnings per diluted share from continuing operations as adjusted (Non-GAAP)

$

0.75

$

0.26

$

1.84

$

1.48

Reconciliation of Forecasted Earnings per Diluted Share (Unaudited)

Fiscal year ending

April 30, 2021

Forecasted earnings per diluted share from continuing operations

$

1.65 – 1.85

Amortization of acquired intangible assets

0.09

Forecasted earnings per diluted share from continuing operations as adjusted (Non-GAAP)

$

1.74 – 1.94

Statement Regarding Non-GAAP Measures

The non-GAAP measure set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that this measure provides useful information to investors by offering additional ways of viewing our results that, when reconciled to the corresponding GAAP measure, 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 this non-GAAP measure to measure our operating and financial performance.

We exclude the acquisition-related expenses and amortization of acquisition-related intangible assets in fiscal 2020 and the one-time gain from a litigation settlement in fiscal 2019 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.

For additional media and information, please follow us at:

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AeroVironment, Inc.Steven Gitlin
+1 (805) 520-8350

ir@avinc.com

Source: AeroVironment, Inc.

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