AeroVironment, Inc. (NASDAQ: AVAV) today reported financial
results for its first quarter ended July 30, 2016.
“During the quarter we focused on executing our strategy and
generated results in line with guidance and historical seasonality
for our business,” said Wahid Nawabi, AeroVironment chief executive
officer. “International demand for our small UAS remains strong,
and we are confident in our ability to build on significant
opportunities with existing and new customers, particularly in
Europe and the Middle East. Domestically, we remain poised to
capitalize on revenue opportunities for small UAS with the U.S.
Department of Defense, and are on track with the development of our
integrated commercial information solution.”
Mr. Nawabi added, “Our funded backlog increased 14%, even though
certain bookings were delayed. Looking ahead, we expect a higher
proportion of full year revenue in the second half of our year
while working to achieve our fiscal 2017 goals. We are focused on
executing our strategy to deliver high long-term growth with
near-term progress in key initiatives.”
FISCAL 2017 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2017 was
$36.2 million, a decrease from first quarter fiscal 2016
revenue of $47.1 million. The decrease in revenue resulted
from a decrease in sales in our Unmanned Aircraft Systems (UAS)
segment of $9.7 million and a decrease in sales in our
Efficient Energy Systems (EES) segment of $1.2 million.
Gross margin for the first quarter of fiscal 2017 was
$6.7 million, a decrease from first quarter fiscal 2016 gross
margin of $16.0 million. The decrease in gross margin was
primarily due to a decrease in product margin of $9.4 million.
Service margins were consistent quarter over quarter. As a
percentage of revenue, gross margin decreased from 34% to 18%. The
decrease in gross margin percentage was primarily due to an
increase in warranty related costs of $1.7 million related to
certain small UAS delivered in prior periods, an increase in
engineering and technical analyses costs related to existing
products of $1.5 million, a decrease in product sales volume, which
resulted in an increase in the per unit fixed manufacturing and
engineering overhead support cost, and an unfavorable product
mix.
Loss from operations for the first quarter of fiscal 2017 was
$15.6 million, an increase from first quarter fiscal 2016 loss
from operations of $9.1 million. Year over year loss from
operations was a result of a decrease in gross margin of $9.3
million, partially offset by a decrease in selling, general and
administrative (SGA) expense of $1.6 million and a decrease in
research and development (R&D) expense of $1.2 million.
Other income, net, for the first quarter of fiscal 2017 was $0.1
million compared to other expense, net of $2.2 million for the
first quarter of fiscal 2016. The decrease was primarily due to the
recording of an other-than-temporary impairment loss on our CybAero
equity securities during the three months ended August 1, 2015. The
CybAero equity securities were sold during the second quarter of
fiscal 2016.
Net loss for the first quarter of fiscal 2017 was
$11.6 million compared to net loss for the first quarter of
fiscal 2016 of $7.0 million. The tax benefit for the three
months ended July 30, 2016 was primarily due to federal legislation
reinstating the federal research and development tax credit during
the three months ended January 30, 2016 and the reversal of a
reserve for uncertain tax positions due to the settlement of prior
fiscal year audits.
Loss per share for the first quarter of fiscal 2017 was $0.51
compared to loss per share for the first quarter of fiscal 2016 of
$0.30. Loss per share for the first fiscal quarter of 2016 was
impacted by both the impairment loss and losses on sales of our
CybAero equity securities.
BACKLOG
As of July 30, 2016, funded backlog (unfilled firm orders for
which funding is currently appropriated to us under a customer
contract) was $74.7 million compared to $65.8 million as of
April 30, 2016.
FISCAL 2017 — OUTLOOK FOR THE FULL YEAR
For fiscal 2017, the company remains committed to generating
revenue of between $260 million and $280 million, and earnings per
fully diluted share of between $0.20 and $0.35. Seasonally low
first quarter revenue, lower than planned bookings and significant
international opportunities requiring export license approval
contribute to greater execution challenges.
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, August 30, 2016, at 1:30 pm
Pacific Time that will be broadcast live over the Internet. Wahid
Nawabi, president 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 ET3:30 PM CT2:30 PM MT1:30 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, August 30, 2016, at approximately 4:30
p.m. Pacific Time through Tuesday, September 6, 2016, at 9:00 p.m.
Pacific Time. Dial (855) 859-2056 and enter the passcode 66874440.
International callers should dial (404) 537-3406 and enter the same
passcode number to access the audio replay.
ABOUT AEROVIRONMENT, INC.
AeroVironment (NASDAQ: AVAV) provides customers with more
actionable intelligence so they can proceed with certainty. Based
in California, AeroVironment is a recognized leader in unmanned
aircraft systems, tactical missile systems and electric vehicle
charging and test systems, and serves militaries, government
agencies, businesses and consumers. 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; 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;
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 July 30,
August 1, 2016 2015 Revenue:
Product sales $ 15,737 $ 26,639 Contract services 20,481 20,411
36,218 47,050 Cost of sales: Product sales 15,222 16,765 Contract
services 14,313 14,262 29,535 31,027 Gross margin: Product sales
515 9,874 Contract services 6,168 6,149 6,683 16,023 Selling,
general and administrative 13,663 15,256 Research and development
8,600 9,831 Loss from operations (15,580 ) (9,064 ) Other (expense)
income: Interest income, net 375 224 Other expense, net (300 )
(2,389 ) Loss before income taxes (15,505 ) (11,229 ) Benefit for
income taxes (3,863 ) (4,248 ) Net loss $ (11,642 ) $ (6,981 ) Loss
per share data: Basic $ (0.51 ) $ (0.30 ) Diluted $ (0.51 ) $ (0.30
) Weighted average shares outstanding: Basic 22,956,607 22,947,487
Diluted 22,956,607 22,947,487
AeroVironment,
Inc. Reconciliation of Loss per Share (Unaudited)
Three Months Ended July 30, August 1,
2016 2015 Loss per share as adjusted $ (0.51 ) $
(0.24 ) Other-than-temporary impairment loss and loss on sale of
stock — (0.06 ) Loss per diluted share as reported $
(0.51 ) $ (0.30 )
AeroVironment, Inc.
Consolidated Balance Sheets (In thousands except share
data) July 30,2016 April
30,2016 (Unaudited) Assets Current assets:
Cash and cash equivalents $ 122,313 $ 124,287 Short-term
investments 101,802 103,404 Accounts receivable, net of allowance
for doubtful accounts of $433 at July 30, 2016 and $262 at April
30, 2016 32,635 56,045 Unbilled receivables and retentions 14,493
18,899 Inventories, net 44,105 37,486 Income tax receivable 4,250 —
Prepaid expenses and other current assets 4,167 4,150 Total current
assets 323,765 344,271 Long-term investments 33,097 33,859 Property
and equipment, net 16,910 16,762 Deferred income taxes 15,104
15,016 Other assets 658 750 Total assets $ 389,534 $ 410,658
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable $ 10,529 $ 17,712 Wages and related accruals 9,934
13,973 Income taxes payable — 943 Customer advances 2,416 2,544
Other current liabilities 12,708 11,173 Total current liabilities
35,587 46,345 Deferred rent 1,864 1,714 Capital lease obligations –
net of current portion 357 449 Other non-current liabilities 184
184 Liability for uncertain tax positions 62 441 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 — 23,395,030 at July 30, 2016 and
23,359,925 at April 30, 2016 2 2 Additional paid-in capital 155,853
154,274 Accumulated other comprehensive loss (183 ) (201 ) Retained
earnings 195,808 207,450 Total stockholders’ equity 351,480 361,525
Total liabilities and stockholders’ equity $ 389,534 $ 410,658
AeroVironment, Inc. Consolidated Statements
of Cash Flows (Unaudited) (In thousands) Three
Months Ended July 30,2016 August
1,2015 Operating activities Net loss $ (11,642 )
$ (6,981 ) Adjustments to reconcile net loss to cash used in
operating activities: Depreciation and amortization 1,653 1,402
Loss from equity method investments 72 65 Impairment of
available-for-sale securities — 2,186 Provision for doubtful
accounts 171 (147 ) Losses on foreign currency transactions 226 58
Loss on sale of equity securities — 145 Deferred income taxes — 203
Stock-based compensation 992 1,039 Tax benefit from exercise of
stock options 22 196 Excess tax benefit from stock-based
compensation — (95 ) Gain on disposition of property and equipment
(7 ) — Amortization of held-to-maturity investments 661 1,149
Changes in operating assets and liabilities: Accounts receivable
23,019 5,549 Unbilled receivables and retentions 4,406 3,358
Inventories (6,619 ) (4,507 ) Income tax receivable (4,250 ) (5,569
) Prepaid expenses and other assets (17 ) 710 Accounts payable
(6,336 ) (6,299 ) Other liabilities (3,594 ) (3,766 ) Net cash used
in operating activities (1,243 ) (11,304 )
Investing
activities Acquisition of property and equipment (2,634 ) (906
) Equity method investment — (85 ) Redemptions of held-to-maturity
investments 28,820 37,507 Purchases of held-to-maturity investments
(27,487 ) (22,970 ) Proceeds from the sale of property and
equipment 7 — Sales and redemptions of available-for-sale
investments 400 217 Net cash (used in) provided by investing
activities (894 ) 13,763
Financing activities Excess tax
benefit from stock-based compensation — 95 Principal payments of
capital lease obligations (95 ) — Tax withholding payment related
to net settlement of equity awards — (29 ) Exercise of stock
options 258 515 Net cash provided by financing activities 163 581
Net (decrease) increase in cash and cash equivalents (1,974 ) 3,040
Cash and cash equivalents at beginning of period 124,287 143,410
Cash and cash equivalents at end of period $ 122,313 $ 146,450
Supplemental disclosures of cash flow information:
Cash paid during the period for: Income taxes $ 1,786 $ 1,519
Non-cash activities Unrealized change in fair value of
investments recorded in other comprehensive income (loss), net of
deferred taxes of $12 and $1, respectively $ 18 $ 2
Reclassification from share-based liability compensation to equity
$ 307 $ 228 Acquisitions of property and equipment included in
accounts payable $ 321 $ —
AeroVironment, Inc.
Reportable Segment Results are as Follows (Unaudited):
(In thousands) Three Months Ended July
30, August 1, 2016 2015 Revenue:
UAS $ 30,497 $ 40,167 EES 5,721 6,883 Total 36,218 47,050 Cost of
sales: UAS 25,083 26,466 EES 4,452 4,561 Total 29,535 31,027 Gross
margin: UAS 5,414 13,701 EES 1,269 2,322 Total 6,683 16,023
Selling, general and administrative 13,663 15,256 Research and
development 8,600 9,831 Loss from operations (15,580 ) (9,064 )
Other (expense) income: Interest income, net 375 224 Other expense,
net (300 ) (2,389 ) Loss before income taxes $ (15,505 ) $ (11,229
)
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AeroVironment, Inc.Steven Gitlin+1 (626)
357-9983ir@avinc.com
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