AeroVironment, Inc. (“AeroVironment” or the “Company”) reported
today financial results for the fiscal second quarter ended October
26, 2024.
Second Quarter Highlights:
- Record second quarter revenue of $188.5 million up 4%
year-over-year
- Second quarter net income of $7.5 million and non-GAAP adjusted
EBITDA of $25.9 million
- Funded backlog of $467.1 million as of October 26, 2024
- Announced its entry into an agreement for the acquisition of
BlueHalo in an all-stock transaction with an enterprise value of
approximately $4.1 billion
“AeroVironment continues to deliver strong results, including
record second-quarter revenue along with a healthy funded backlog
that is 25% higher than the prior quarter,” said Wahid Nawabi,
AeroVironment chairman, president and chief executive officer. “Key
wins from our Loitering Munition Systems segment continue to drive
growth for the company.
“We expect our proposed acquisition of BlueHalo to further
advance our growth opportunities with a highly complementary
portfolio of products, customers and capabilities in key defense
space and intelligence sectors and establish AeroVironment as the
next generation defense technology company for our customers. We
look forward to continued momentum beyond fiscal year 2025.”
FISCAL 2025 SECOND QUARTER RESULTS
Revenue for the second quarter of fiscal 2025 was $188.5
million, an increase of 4% as compared to $180.8 million for the
second quarter of fiscal 2024, reflecting higher product sales and
service revenue of $5.5 million and $2.2 million, respectively.
From a segment standpoint, the year-over-year increase was due to
revenue growth in Loitering Munitions Systems (“LMS”) of 157% and
MacCready Works (“MW”) of 42%, partially offset by a decrease in
UnCrewed Systems (“UxS”) of 35%.
Gross margin for the second quarter of fiscal 2025 was $73.6
million, a decrease of 2% as compared to $75.4 million for the
second quarter of fiscal 2024, reflecting lower product gross
margin of $2.6 million, partially offset by higher service margin
of $0.9 million. As a percentage of revenue, gross margin decreased
to 39% from 42%, primarily due to an increase in the proportion of
LMS product revenue and an increase of $0.5 million of intangible
amortization expense, partially offset by favorable LMS contract
definitizations.
Income from operations for the second quarter of fiscal 2025 was
$7.0 million as compared to $25.2 million for the second quarter of
last fiscal year. The decrease year-over-year was due to an
increase in selling, general and administrative (“SG&A”)
expense of $9.8 million, which includes an increase of $2.5 million
of acquisition related expenses, an increase in research and
development (“R&D”) expense of $6.7 million and a decrease in
gross margin of $1.7 million.
Other loss, net, for the second quarter of fiscal 2025 was $0.7
million, as compared to $4.8 million for the second quarter of last
fiscal year. The decrease in other loss, net was primarily due to a
decrease in net interest expense and a decrease in net unrealized
losses on investment holdings.
Benefit from income taxes for the second quarter of fiscal 2025
was $(0.2) million, as compared to provision for income taxes of
$1.1 million for the second quarter of last fiscal year.
Net income for the second quarter of fiscal 2025 was $7.5
million, or $0.27 per diluted share, as compared to $17.8 million,
or $0.66 per diluted share, in the prior-year period,
respectively.
Non-GAAP adjusted EBITDA for the second quarter of fiscal 2025
was $25.9 million and non-GAAP earnings per diluted share were
$0.47, as compared to $39.5 million and $0.97, respectively, for
the second quarter of fiscal 2024.
BACKLOG
As of October 26, 2024, funded backlog (defined as remaining
performance obligations under firm orders for which funding is
currently appropriated to us under a customer contract) was $467.1
million, as compared to $400.2 million as of April 30, 2024.
FISCAL 2025 — OUTLOOK FOR THE FULL YEAR
For fiscal year 2025, the Company continues to expect revenue of
between $790 million and $820 million, non-GAAP adjusted EBITDA of
between $143 million and $153 million and non-GAAP earnings per
diluted share of between $3.18 and $3.49.
This guidance does not include the forecasted financial results
associated with the anticipated acquisition of BlueHalo or certain
acquisition related expenses which are contingent upon the
consummation of the acquisition. The Company cannot provide
guidance for or reconciliation to GAAP net income or earnings per
diluted share without unreasonable efforts due to the inherent
difficulty of forecasting the timing and/or amount of the
acquisition related expenses that have not yet occurred (and have
been excluded from the adjusted measures). Acquisition related
expenses for the fiscal year ending April 30, 2025, which are
expected to be significant, will be materially impacted by the
timing of the close of the acquisition and, amongst other factors,
shareholder approval, required regulatory approval processes
including Hart Scott Rodino and certain other international
regulatory approvals, which are, in part, outside the control of
the Company. As the Company cannot predict the amount or timing of
acquisition related expenses with a reasonable degree of accuracy,
the Company believes such reconciliation could imply a degree of
precision that might be confusing or misleading to investors.
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 and investors should review all
risks related to achievement of the guidance reflected under
“forward-looking statements” below and in the Company’s filings
with the Securities and Exchange Commission.
CONFERENCE CALL AND PRESENTATION
In conjunction with this release, AeroVironment, Inc. will host
a conference call today, Wednesday, December 4, 2024, at 4:30 pm
Eastern Time that will be webcast live. Wahid Nawabi, chairman,
president and chief executive officer, Kevin P. McDonnell, senior
vice president and chief financial officer and Jonah Teeter-Balin,
vice president 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/BI6646c8fb19cd4a6dbb219f3d7ab00889
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 second quarter
fiscal year 2025 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) provides technology solutions at
the intersection of robotics, sensors, software analytics and
connectivity that deliver more actionable intelligence so you can
Proceed with Certainty. Headquartered in Virginia,
AeroVironment is a global leader in intelligent, multi-domain
robotic 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
“will,” “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; 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; our ability to win U.S. and international
government R&D and procurement 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
ability to consummate the acquisition of BlueHalo and realize the
anticipated benefits of the transaction; our reliance on limited
relationships to fund our development of HAPS UAS; our ability to
execute contracts for anticipated sales, perform under such
contracts and other 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; failure to remain a market innovator, to create new market
opportunities or to expand into new markets; our ability to
increase production capacity to support anticipated growth;
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; or litigation that may arise from
our pending acquisition of BlueHalo; 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; and our merger agreement with BlueHalo; 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.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This press release references the proposed transaction between
the Company and BlueHalo. In connection with the proposed
transaction, the Company will file with the SEC a registration
statement on Form S-4, which will include a proxy statement and a
prospectus, to register the shares of the Company stock that will
be issued to BlueHalo’s shareholders (the “Proxy and Registration
Statement”), as well as other relevant documents regarding the
proposed transaction. INVESTORS ARE URGED TO READ IN THEIR ENTIRETY
THE PROXY AND REGISTRATION STATEMENT REGARDING THE TRANSACTION WHEN
IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy and Registration Statement, as well as
other filings containing information about the Company, may be
obtained at the SEC’s website (http://www.sec.gov). You will also
be able to obtain these documents, free of charge, from the Company
at https://investor.avinc.com/ or by emailing ir@avinc.com.
PARTICIPANTS IN THE SOLICITATION
The Company and its respective directors and executive officers
may be deemed to be participants in the solicitation of proxies
from its respective stockholders in respect of the proposed
transactions contemplated by the Proxy and Registration Statement.
Information regarding the persons who are, under the rules of the
SEC, participants in the solicitation of the stockholders of the
Company in connection with the proposed transactions, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the Proxy and
Registration Statement when it is filed with the SEC. Information
regarding the Company’s directors and executive officers is
contained in its Annual Report on Form 10-K for the year ended
April 30, 2024 and its Proxy Statement on Schedule 14A, dated
August 12, 2024, which are filed with the SEC.
NO OFFER OR SOLICITATION
This press release is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
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
Six Months Ended
October 26,
October 28,
October 26,
October 28,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Revenue:
Product sales
$
151,231
$
145,779
$
310,735
$
265,250
Contract services
37,227
35,037
67,206
67,913
188,458
180,816
377,941
333,163
Cost of sales:
Product sales
87,052
79,032
172,571
140,640
Contract services
27,768
26,434
50,265
51,513
114,820
105,466
222,836
192,153
Gross margin:
Product sales
64,179
66,747
138,164
124,610
Contract services
9,459
8,603
16,941
16,400
73,638
75,350
155,105
141,010
Selling, general and administrative
37,916
28,147
71,711
51,974
Research and development
28,716
22,025
53,329
37,491
Income from operations
7,006
25,178
30,065
51,545
Other loss:
Interest expense, net
(690
)
(1,950
)
(929
)
(3,958
)
Other income (expense), net
16
(2,858
)
(218
)
(3,987
)
Income before income taxes
6,332
20,370
28,918
43,600
(Benefit from) provision for income
taxes
(221
)
1,137
1,264
2,451
Equity method investment income (loss),
net of tax
990
(1,393
)
1,055
(1,414
)
Net income
7,543
17,840
28,709
39,735
Net income per share
Basic
$
0.27
$
0.66
$
1.03
$
1.50
Diluted
$
0.27
$
0.66
$
1.02
$
1.50
Weighted-average shares outstanding:
Basic
28,009,963
26,865,763
27,985,425
26,479,168
Diluted
28,145,590
26,956,806
28,139,942
26,569,267
AeroVironment, Inc.
Consolidated Balance
Sheets
(In thousands except share
data)
October 26,
April 30,
2024
2024
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
68,960
$
73,301
Accounts receivable, net of allowance for
doubtful accounts of $92 at October 26, 2024 and $159 at April 30,
2024
73,935
70,305
Unbilled receivables and retentions
204,180
199,474
Inventories, net
139,698
150,168
Income taxes receivable
9,628
—
Prepaid expenses and other current
assets
18,444
22,333
Total current assets
514,845
515,581
Long-term investments
22,942
20,960
Property and equipment, net
49,681
46,602
Operating lease right-of-use assets
32,502
30,033
Deferred income taxes
41,303
41,303
Intangibles, net
62,703
72,224
Goodwill
275,827
275,652
Other assets
19,282
13,505
Total assets
$
1,019,085
$
1,015,860
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
40,646
$
48,298
Wages and related accruals
31,594
44,312
Customer advances
10,640
11,192
Current portion of long-term debt
—
10,000
Current operating lease liabilities
9,591
9,841
Income taxes payable
28
4,162
Other current liabilities
19,112
17,074
Total current liabilities
111,611
144,879
Long-term debt, net of current portion
15,000
17,092
Non-current operating lease
liabilities
25,690
22,745
Other non-current liabilities
2,114
2,132
Liability for uncertain tax positions
5,603
5,603
Deferred income taxes
670
664
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued
or outstanding at October 26, 2024 and April 30, 2024
—
—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—28,205,237
shares at October 26, 2024 and 28,134,438 shares at April 30,
2024
4
4
Additional paid-in capital
604,225
597,646
Accumulated other comprehensive loss
(5,228
)
(5,592
)
Retained earnings
259,396
230,687
Total stockholders’ equity
858,397
822,745
Total liabilities and stockholders’
equity
$
1,019,085
$
1,015,860
AeroVironment, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
Six Months Ended
October 26,
October 28,
2024
2023
(Unaudited)
Operating activities
Net income
$
28,709
$
39,735
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization
17,854
15,387
(Gain) loss from equity method
investments
(1,055
)
1,414
Amortization of debt issuance costs
1,047
424
Provision for doubtful accounts
(67
)
4
Reserve for inventory excess and
obsolescence
2,032
8,338
Other non-cash expense, net
1,194
331
Non-cash lease expense
4,980
4,486
Gain (loss) on foreign currency
transactions
32
(184
)
Unrealized loss on available-for-sale
equity securities, net
267
3,463
Deferred income taxes
—
(1,006
)
Stock-based compensation
10,137
8,244
Loss on disposal of property and
equipment
201
136
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(3,500
)
15,553
Unbilled receivables and retentions
(4,684
)
(35,175
)
Inventories
7,485
(49,329
)
Income taxes receivable
(9,636
)
(5,735
)
Prepaid expenses and other assets
(2,247
)
(12,720
)
Accounts payable
(7,624
)
(6,105
)
Other liabilities
(20,416
)
(12,851
)
Net cash provided by (used in) operating
activities
24,709
(25,590
)
Investing activities
Acquisition of property and equipment
(10,447
)
(10,104
)
Contributions in equity method
investments
(1,183
)
(1,875
)
Acquisition of intangibles
—
(1,500
)
Business acquisitions, net of cash
acquired
—
(24,156
)
Net cash used in investing activities
(11,630
)
(37,635
)
Financing activities
Principal payments of term loan
(28,000
)
(55,000
)
Holdback and retention payments for
business acquisition
—
(500
)
Proceeds from shares issued, net of
issuance costs
—
88,437
Proceeds from long-term debt
15,000
—
Payment of debt issuance costs
(900
)
(8
)
Tax withholding payment related to net
settlement of equity awards
(4,064
)
(1,370
)
Exercise of stock options
506
—
Other
(13
)
(15
)
Net cash (used in) provided by financing
activities
(17,471
)
31,544
Effects of currency translation on cash
and cash equivalents
51
(270
)
Net decrease in cash and cash
equivalents
(4,341
)
(31,951
)
Cash and cash equivalents at beginning of
period
73,301
132,859
Cash and cash equivalents at end of
period
$
68,960
$
100,908
Supplemental disclosures of cash flow
information
Cash paid, net during the period for:
Income taxes
$
14,444
$
11,054
Interest
$
777
$
4,818
Non-cash activities
Issuance of common stock for business
acquisition
$
—
$
109,820
Change in foreign currency translation
adjustments
$
364
$
(1,625
)
Acquisitions of property and equipment
included in accounts payable
$
964
$
915
AeroVironment, Inc.
Reportable Segment Results
(Unaudited)
(In thousands)
Three Months Ended October 26,
2024
UxS
LMS
MW
Total
Revenue:
Product sales
$
79,147
$
71,930
$
154
$
151,231
Contract services
6,269
5,785
25,173
37,227
$
85,416
$
77,715
$
25,327
$
188,458
Segment adjusted gross margin
$
41,363
$
30,157
$
5,838
Three Months Ended October 28,
2023
UxS
LMS
MW
Total
Revenue:
Product sales
$
120,955
$
23,982
$
842
$
145,779
Contract services
11,818
6,267
16,952
35,037
$
132,773
$
30,249
$
17,794
$
180,816
Segment adjusted gross margin
$
65,613
$
9,345
$
3,604
AeroVironment, Inc.
Reconciliation of non-GAAP
Earnings per Diluted Share (Unaudited)
Three Months Ended
Three Months Ended
Six Months Ended
Six Months Ended
October 26, 2024
October 28, 2023
October 26, 2024
October 28, 2023
Earnings per diluted share
$
0.27
$
0.66
$
1.02
$
1.50
Acquisition-related expenses
0.10
0.03
0.10
0.05
Amortization of acquired intangible
assets
0.14
0.13
0.27
0.23
Equity method and equity securities
investments activity, net
(0.04
)
0.15
(0.03
)
0.18
Earnings per diluted share as adjusted
(non-GAAP)
$
0.47
$
0.97
$
1.36
$
1.96
Reconciliation of non-GAAP
adjusted EBITDA (Unaudited)
Three Months Ended
Three Months Ended
Six Months Ended
Six Months Ended
(in millions)
October 26, 2024
October 28, 2023
October 26, 2024
October 28, 2023
Net income
$
7.5
$
17.8
$
28.7
$
39.7
Interest expense, net
0.7
2.0
0.9
4.0
Provision for income taxes
(0.2
)
1.1
1.3
2.5
Depreciation and amortization
9.0
8.4
17.9
15.4
EBITDA (non-GAAP)
17.0
29.3
48.8
61.6
Stock-based compensation
5.6
5.0
10.1
8.2
Equity method and equity securities
investments activity, net
(1.0
)
3.9
(0.8
)
4.9
Amortization of cloud computing
arrangement implementation
0.6
0.2
1.3
0.3
Acquisition-related expenses
3.7
1.1
3.7
1.8
Adjusted EBITDA (non-GAAP)
$
25.9
$
39.5
$
63.1
$
76.8
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 Earnings per Diluted Share
We exclude 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, 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/20241204729355/en/
Jonah Teeter-Balin +1 (805) 520-8350 x4278
https://investor.avinc.com/contact-and-faq/contact-us
AeroVironment (NASDAQ:AVAV)
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