AeroVironment, Inc. (NASDAQ: AVAV) today reported financial
results for its third quarter ended January 30, 2016.
“Our continued focus on effectively serving our customers drove
AeroVironment’s third quarter results, including gross margin of 39
percent, revenue of $68 million and funded backlog of $80 million,”
said Tim Conver, AeroVironment chairman and chief executive
officer. “In our growth portfolio, the unique advantages of
Switchblade and its four emerging variants within our family of
Tactical Missile Systems continued to build traction with customers
during the quarter. The addition of a line item for Lethal
Miniature Aerial Missile Systems in the fiscal 2017 federal budget
request demonstrates the increasing value of our solutions to our
troops and our country.”
Conver added, “Our strategic investments in commercial unmanned
aircraft systems continued to strengthen our long-term growth
prospects across multiple promising avenues. In EES, our focus on
innovation enabled the company to expand its EV charging footprint
in North America and introduce PosiCharge ProCore charging systems
for industrial electric vehicles early in the fourth quarter.”
FISCAL 2016 THIRD QUARTER RESULTS
Revenue for the third quarter of fiscal 2016 was
$67.6 million, a decline from third quarter fiscal 2015
revenue of $68.4 million. The decrease in revenue resulted
from a decrease in sales in our Efficient Energy Systems (EES)
segment of $3.9 million, partially offset by an increase in sales
in our Unmanned Aircraft Systems (UAS) segment of
$3.1 million.
Gross margin for the third quarter of fiscal 2016 was
$26.6 million, a decline from third quarter fiscal 2015 gross
margin of $27.0 million. The decrease in gross margin was due
to a decrease in product margin of $2.0 million, partially
offset by an increase in service margin of $1.6 million. As a
percentage of revenue, gross margin decreased from 39.5% to
39.4%.
Income from operations for the third quarter of fiscal 2016 was
$5.1 million, consistent with third quarter fiscal 2015. Year
over year income from operations was a result of a decrease in
gross margin of $0.4 million, largely offset by a decrease in
research and development (R&D) expense of $0.3 million.
Other expense, net, for the third quarter of fiscal 2016 was
$34,000 compared to $0.1 million for the third quarter of fiscal
2015.
Net income for the third quarter of fiscal 2016 was
$6.2 million, including a $1.1 million tax benefit, compared
to net income for the third quarter of fiscal 2015 of
$2.3 million.
Earnings per diluted share for the third quarter of fiscal 2016
were $0.27 compared to earnings per diluted share for the third
quarter of fiscal 2015 of $0.10.
FISCAL 2016 YEAR-TO-DATE RESULTS
Revenue for the first nine months of fiscal 2016 was
$179.3 million, up 4% from the first nine months of fiscal
2015 revenue of $172.9 million. The increase in revenue
resulted from an increase in sales in our UAS segment of
$15.6 million, partially offset by a decrease in sales in our
EES segment of $9.2 million.
Gross margin for the first nine months of fiscal 2016 was
$74.2 million, up 26% from the first nine months of fiscal
2015 gross margin of $58.9 million. The increase in gross
margin was due to an increase in service margin of
$9.8 million and an increase in product margin of
$5.4 million, both of which were impacted by a reserve
reversal of $3.5 million for the settlement of prior year
government incurred cost audits recorded during the second fiscal
quarter of 2016. As a percentage of revenue, gross margin increased
to 41% from 34%.
Income from operations for the first nine months of fiscal 2016
was $2.9 million compared to a loss from operations for the
first nine months of fiscal 2015 of $5.5 million. The increase in
income from operations was a result of an increase in gross margin
of $15.3 million, partially offset by an increase in R&D
expense of $3.7 million and an increase in selling, general &
administrative (SG&A) expense of $3.2 million.
Other expense, net, for the first nine months of fiscal 2016 was
$2.1 million compared to other income, net, for the first nine
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 during the first
quarter of fiscal 2016.
Net income for the first nine months of fiscal 2016 was
$3.6 million, including a $2.8 million tax benefit, compared
to a net loss for the first nine months of fiscal 2015 of
$4.2 million.
Net income per diluted share for the first nine months of fiscal
2016 was $0.16 compared to a loss per share for the first nine
months of fiscal 2015 of $0.18. Net income per diluted share for
the first nine months of fiscal 2016 was decreased by $0.06 due to
both the impairment loss and loss on sale of our CybAero equity
securities. Loss per share for the first nine 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 January 30, 2016, funded backlog (unfilled firm orders for
which funding is currently appropriated to us under a customer
contract) was $79.7 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 is raising its gross
profit margin guidance range to between 38 percent and 39.5
percent. 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, March 8, 2016, at 1:30 p.m.
Pacific Time that will be broadcast live over the Internet. Timothy
E. Conver, chairman and chief executive officer, Wahid Nawabi,
president and chief operating 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, March 8, 2016, at approximately 4:30
p.m. Pacific Time through Tuesday, March 15, 2016, at 9:00 p.m.
Pacific Time. Dial (855) 859-2056 and enter the passcode 52024061.
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 UAS
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 Nine Months Ended January
30, January 31, January 30,
January 31, 2016 2015
2016 2015 Revenue: Product sales $ 53,305 $
56,308 $ 129,436 $ 141,993 Contract services 14,255
12,089 49,905 30,934
67,560 68,397 179,341 172,927 Cost of sales: Product sales 31,910
32,901 73,477 91,477 Contract services 9,025
8,503 31,683 22,532 40,935
41,404 105,160 114,009 Gross margin: Product sales 21,395 23,407
55,959 50,516 Contract services 5,230 3,586
18,222 8,402 26,625 26,993
74,181 58,918 Selling, general and administrative 13,313 13,268
43,302 40,141 Research and development 8,247
8,577 27,975 24,232 Income
(loss) from operations 5,065 5,148 2,904 (5,455 ) Other (expense)
income: Interest income, net 181 224 673 629 Other (expense), net
(215 ) (284 ) (2,796 ) (276 ) Income
(loss) before income taxes 5,031 5,088 781 (5,102 ) (Benefit)
provision for income taxes (1,133 ) 2,763
(2,821 ) (917 ) Net Income (loss) $ 6,164 $
2,325 $ 3,602 $ (4,185 ) Earnings (loss) per share
data: Basic $ 0.27 $ 0.10 $ 0.16 $ (0.18 ) Diluted $ 0.27 $ 0.10 $
0.16 $ (0.18 ) Weighted average shares outstanding: Basic
22,890,484 22,890,502 22,941,354 22,856,962 Diluted 23,083,816
23,109,354 23,139,981 22,856,962
AeroVironment,
Inc. Reconciliation of Earnings (Loss) per Share
(Unaudited) Three Months
Ended Nine Months Ended January
30, January 31, January 30,
January 31, 2016 2015
2016 2015 Earnings (loss) per diluted share as
adjusted $ 0.27 $ 0.10 $ 0.22 $ (0.19 ) Other-than-temporary
impairment loss and loss on sale of stock — —
(0.06
)
— Increase in fair value of convertible bond and related sale of
stock — — — 0.01 Earnings
(loss) per diluted share as reported $ 0.27 $ 0.10 $ 0.16 $
(0.18 )
AeroVironment, Inc. Consolidated
Balance Sheets (In thousands except share data)
January 30,
April 30, 2016 2015 (Unaudited)
Assets Current assets: Cash and cash equivalents $ 122,706 $
143,410 Short-term investments 97,692 85,381 Accounts receivable,
net of allowance for doubtful accounts of $191 at January 30, 2016
and $606 at April 30, 2015 38,991 33,607 Unbilled receivables and
retentions 10,440 17,356 Inventories, net 46,434 39,414 Income tax
receivable 3,901 — Deferred income taxes 5,247 5,265 Prepaid
expenses and other current assets 4,219 4,599
Total current assets 329,630 329,032 Long-term investments
38,175 46,769 Property and equipment, net 14,313 13,499 Deferred
income taxes 6,720 7,426 Other assets 653 741
Total assets $ 389,491 $ 397,467
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable $ 9,786 $ 19,243 Wages and related accruals 13,463
13,395 Income taxes payable — 692 Customer advances 3,213 4,235
Other current liabilities 6,408 9,170
Total current liabilities 32,870 46,735 Deferred rent 1,223 1,381
Capital lease obligations – net of current portion 388 — 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 — 23,358,981 at January 30, 2016 and
23,314,640 at April 30, 2015 2 2 Additional paid-in capital 152,942
148,293 Accumulated other comprehensive loss (194 ) (1,358 )
Retained earnings 201,821 201,975 Total
stockholders’ equity 354,571 348,912
Total liabilities and stockholders’ equity $ 389,491 $
397,467
AeroVironment, Inc.
Consolidated Statements of Cash Flows (Unaudited) (In
thousands) Nine Months Ended
January 30, January 31,
2016 2015 Operating activities Net income
(loss) $ 3,602 $ (4,185 ) Adjustments to reconcile net income
(loss) to cash (used in) provided by operating activities:
Depreciation and amortization 4,547 6,368 Impairment of
available-for-sale securities 2,186 — Loss from equity method
investments 248 152 Provision for doubtful accounts (252 ) (101 )
Deferred income taxes 18 (202 ) Loss (gain) on sale of equity
securities 219 (182 ) Stock-based compensation 3,170 2,714 Foreign
currency losses 63 361 Increase in fair value of conversion feature
of convertible bonds — (73 ) Tax benefit from exercise of stock
options 302 13 Excess tax benefit from stock-based compensation —
(343 ) Gain on sale of property and equipment (32 ) — Amortization
of held-to-maturity investments 3,086 3,388 Changes in operating
assets and liabilities: Accounts receivable (5,052 ) (5,994 )
Unbilled receivables and retentions 6,916 2,584 Inventories (7,020
) 1,900 Income tax receivable (3,952 ) 4,644 Other assets 455 57
Accounts payable (9,457 ) 2,309 Other liabilities (4,746 )
3,806 Net cash (used in) provided by operating
activities (5,699 ) 17,216
Investing activities Acquisitions
of property and equipment (4,259 ) (2,326 ) Equity method
investments (295 ) (285 ) Purchases of held-to-maturity investments
(75,740 ) (88,074 ) Redemptions of held-to-maturity investments
67,402 62,107 Acquisitions of intangible assets — (150 ) Sales of
available-for-sale investments 987 9,498
Net cash used in investing activities (11,905 ) (19,230 )
Financing activities Purchase and retirement of common stock
(3,756 ) — Principal payments on capital lease obligations (341 ) —
Tax withholding payment related to net settlement of equity awards
(29 ) (36 ) Excess tax benefit from exercise of stock options — 343
Exercise of stock options 1,026 715 Net
cash (used in) provided by financing activities (3,100 )
1,022 Net decrease in cash and cash equivalents
(20,704 ) (992 ) Cash and cash equivalents at beginning of period
143,410 126,969 Cash and cash
equivalents at end of period $ 122,706 $ 125,977
Supplemental disclosure: Unrealized change in fair value of
investments recorded in other comprehensive income (loss), net of
deferred taxes of $23 and $785, respectively $ 34 $ 1,178 Accrued
acquisition of intangible assets $ — $ 250 Forfeiture of vested
stock-based compensation $ — $ 23 Acquisitions of property and
equipment financed with capital lease obligations $ 694 $ —
Reclassification from share-based liability compensation to equity
$ 228 $ —
AeroVironment, Inc. Reportable
Segment Results are as Follows (Unaudited): (In
thousands) Three Months
Ended Nine Months Ended January
30, January 31, January 30,
January 31, 2016 2015
2016 2015 Revenue: UAS $ 61,086 $ 58,026 $ 157,842 $
142,257 EES 6,474 10,371 21,499
30,670 Total 67,560
68,397 179,341 172,927 Cost of
sales: UAS 36,488 33,259 91,268 91,849 EES 4,447
8,145 13,892 22,160 Total
40,935 41,404 105,160
114,009 Gross margin: UAS 24,598 24,767 66,574 50,408
EES 2,027 2,226 7,607
8,510 Total 26,625 26,993
74,181 58,918 Selling, general and
administrative 13,313 13,268 43,302 40,141 Research and development
8,247 8,577 27,975
24,232 Income (loss) from operations 5,065 5,148 2,904
(5,455 ) Other (expense) income: Interest income, net 181 224 673
629 Other (expense), net (215 ) (284 ) (2,796
) (276 ) Income (loss) before income taxes $ 5,031 $
5,088 $ 781 $ (5,102 )
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AeroVironment, Inc.Steven Gitlin+1 (626)
357-9983ir@avinc.com
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