AeroVironment, Inc. (NASDAQ: AVAV) today reported financial
results for its second quarter ended November 1, 2014.
"Strong second quarter order flow in our small UAS business
increased funded backlog by 50 percent sequentially to $125
million, contributing to 97% visibility and confidence in
achieving the midpoint of our expected revenue guidance range for
the year," said Tim Conver, AeroVironment chairman and chief
executive officer. "We secured important new awards during the
quarter, including a $22 million Marine Corps contract for their
next generation family of small UAS and a $19 million contract for
the DARPA Tern program to continue developing a large new unmanned
aircraft system for the Navy. As planned, we also increased
investments in three opportunity areas with long-term growth
potential, namely, Tactical Missile Systems, Global Observer and
Commercial UAS solutions. We remain well positioned for the year
and for the long-term."
FISCAL 2015 SECOND QUARTER RESULTS
Revenue for the second quarter of fiscal 2015 was
$52.7 million, down 19% from second quarter fiscal 2014
revenue of $64.9 million. The decrease in revenue resulted
from decreased sales in our Unmanned Aircraft Systems
(UAS) segment of $13.0 million offset by an increase in
sales in our Efficient Energy Systems (EES) segment of $0.8
million.
Gross margin for the second quarter of fiscal 2015 was
$17.9 million, down 25% from second quarter fiscal 2014 gross
margin of $23.9 million. The decrease in gross margin was due
to lower product margins of $4.3 million and lower service
margins of $1.7 million. As a percentage of revenue, gross
margin decreased to 34% from 37%.
Loss from operations for the second quarter of fiscal 2015 was
$4.1 million compared to income from operations for the second
quarter of fiscal 2014 of $3.9 million. The loss from operations
was a result of lower revenue, resulting in $6.0 million lower
gross margin, and higher selling, general & administrative
(SG&A) expense of $0.4 million and research and development
(R&D) expense of $1.7 million.
Other expense, net, for the second quarter of fiscal 2015 was
$0.4 million compared to other expense, net, for the second quarter
of fiscal 2014 of $2.1 million. The decrease in other expense, net,
was primarily due to a decrease of $0.4 million in the fair value
of the conversion option of our convertible bond investment and
sales of related equity securities during the second quarter of
fiscal 2015, compared to a decrease of $2.3 million in the fair
value of the conversion option for the second quarter of fiscal
2014.
Net loss for the second quarter of fiscal 2015 was
$2.9 million compared to net income for the second quarter of
fiscal 2014 of $1.7 million.
Loss per share for the second quarter of fiscal 2015 was $0.13
compared to earnings per diluted share for the second quarter of
fiscal 2014 of $0.07. 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. Earnings per diluted share for the second
quarter of fiscal 2014 decreased by $0.07 due to the decrease in
fair value of the conversion option of our convertible bond
investment.
FISCAL 2015 YEAR-TO-DATE RESULTS
Revenue for the first six months of fiscal 2015 was
$104.5 million, down 4% from first six months fiscal 2014
revenue of $109.0 million. The decrease in revenue resulted
from decreased sales in our UAS segment of $7.1 million
offset by an increase in our EES segment of $2.6 million.
Gross margin for the first six months of fiscal 2015 was
$31.9 million, down 12% from first six months fiscal 2014
gross margin of $36.4 million. The decrease in gross margin
was due to lower service margins of $5.6 million offset by
higher product margins of $1.1 million. As a percentage of
revenue, gross margin decreased from 33% to 31%.
Loss from operations for the first six months of fiscal 2015 was
$10.6 million compared to loss from operations for the first
six months of fiscal 2014 of $3.2 million. The higher loss from
operations was the result of lower revenue, resulting in a $4.5
million decrease in gross margin, higher SG&A expense of $1.3
million and higher R&D expense of $1.6 million.
Other income, net, for the first six months of fiscal 2015 was
$0.4 million compared to other expense, net, for the first six
months of fiscal 2014 of $5.3 million. The increase in other
income, net, was primarily due to an increase of $0.4 million in
the fair value of the conversion option of our convertible bond
investment and sales of related equity securities during the first
six months of fiscal 2015, compared to a decrease of $5.7 million
in the fair value of the conversion option during the first six
months of fiscal 2014.
Net loss for the first six months of fiscal 2015 was
$6.5 million compared to net loss for the first six months of
fiscal 2014 of $5.6 million.
Loss per share for the first six months of fiscal 2015 was $0.29
compared to loss per share for the first six months of fiscal 2014
of $0.25. 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. Loss per share for the first six months of fiscal
2014 increased by $0.19 due to the decrease in fair value of the
conversion option of our convertible bond investment.
BACKLOG
As of November 1, 2014, funded backlog (unfilled firm orders for
which funding is currently appropriated to us under a customer
contract) was $125.2 million compared to $65.9 million as of
April 30, 2014.
FISCAL 2015 — OUTLOOK FOR THE FULL YEAR
For fiscal 2015, the company continues to expect to generate
revenue of between $250 million and $270 million and gross profit
margin of between 34.5 percent and 37.5 percent at the respective
revenue levels. Planned increases in research and development and
business development investments for Tactical Missile Systems,
Commercial UAS and Global Observer business areas in fiscal 2015
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, November 25, 2014, at 1:30 pm
Pacific Time that will be broadcast live over the Internet. Timothy
E. Conver, chairman and chief executive officer, Jikun Kim, 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, November 25, 2014, at approximately
4:30 p.m. Pacific Time through Tuesday, December 2, 2014, at 9:00
p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode
33894573. 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 unmanned
aircraft systems 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 electric vehicle 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;
changes in the timing and/or amount of government spending; changes
in the supply and/or demand and/or prices for our products and
services; the activities of competitors; failure of the markets in
which we operate to grow; failure to expand into new markets;
changes in significant operating expenses, including components and
raw materials; failure to develop new products; 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
November 1, October 26, November 1, October
26, 2014 2013 2014 2013
Revenue: Product sales $ 42,874 $ 51,537 $ 85,685 $ 78,711 Contract
services 9,790 13,330 18,845 30,273 52,664 64,867 104,530 108,984
Cost of sales: Product sales 27,779 32,143 58,576 52,698 Contract
services 7,014 8,846 14,029 19,863 34,793 40,989 72,605 72,561
Gross margin: Product sales 15,095 19,394 27,109 26,013 Contract
services 2,776 4,484 4,816 10,410 17,871 23,878 31,925 36,423
Selling, general and administrative 13,470 13,084 26,873 25,543
Research and development 8,531 6,861 15,655 14,051 (Loss) income
from operations (4,130 ) 3,933 (10,603 ) (3,171 ) Other income
(expense): Interest income 193 195 405 400 Other (expense) income
(583 ) (2,307 ) 8 (5,701 ) (Loss) income before income taxes (4,520
) 1,821 (10,190 ) (8,472 ) (Benefit) provision for income taxes
(1,619 ) 166 (3,680 ) (2,917 ) Net (loss) income $ (2,901 ) $ 1,655
$ (6,510 ) $ (5,555 ) (Loss) earnings per share data: Basic $ (0.13
) $ 0.07 $ (0.29 ) $ (0.25 ) Diluted $ (0.13 ) $ 0.07 $ (0.29 ) $
(0.25 ) Weighted average shares outstanding: Basic 22,878,410
22,273,629 22,840,465 22,256,292 Diluted 22,878,410 22,697,590
22,840,465 22,256,292
AeroVironment, Inc.
Reconciliation of (Loss) Earnings per
Share (Unaudited)
Three Months Ended Six Months Ended
November 1, October 26, November 1,
October 26, 2014 2013
2014 2013 (Loss) earnings per diluted
share as adjusted $ (0.12 ) $ 0.14 $ (0.30 ) $ (0.06 ) (Decrease)
increase in fair value of CybAero investment (0.01 )
(0.07 ) 0.01 (0.19 ) (Loss) earnings per
diluted share as reported $ (0.13 ) $ 0.07 $ (0.29 ) $ (0.25
)
AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share
data)
November 1,2014 April 30,2014
(Unaudited) Assets Current assets: Cash and cash
equivalents $ 126,339 $ 126,969 Short-term investments 81,120
70,639 Accounts receivable, net of allowance for doubtful accounts
of $635 at November 1, 2014 and $791 at April 30, 2014 31,096
31,739 Unbilled receivables and retentions 7,103 10,929
Inventories, net 51,804 50,699 Income tax receivable 4,876 6,584
Deferred income taxes 4,996 5,038 Prepaid expenses and other
current assets 4,233 4,260 Total current assets 311,567 306,857
Long-term investments 49,718 50,505 Property and equipment, net
16,889 19,997 Deferred income taxes 7,118 6,721 Other assets 837
874 Total assets $ 386,129 $ 384,954
Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable $
18,988 $ 13,906 Wages and related accruals 9,889 14,083 Customer
advances 4,655 2,984 Other current liabilities 9,709 6,762 Total
current liabilities 43,241 37,735 Deferred rent 1,231 1,239
Liability for uncertain tax positions 3,513 3,513 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 — 23,324,276 at November 1, 2014 and
23,176,576 at April 30, 2014 2 2 Additional paid-in capital 146,431
143,648 Accumulated other comprehensive loss (859 ) (263 ) Retained
earnings 192,570 199,080 Total stockholders’ equity 338,144 342,467
Total liabilities and stockholders’ equity $ 386,129 $ 384,954
AeroVironment, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
November 1, 2014
October 26, 2013
Operating activities Net loss $ (6,510 ) $ (5,555 )
Adjustments to reconcile net loss to cash provided by (used in)
operating activities: Depreciation and amortization 4,303 4,504
Provision for doubtful accounts (105 ) 309 Deferred income taxes 42
(233 ) Realized gain on sale of equity securities (347 ) —
Stock-based compensation 1,745 1,840 Foreign currency losses 281 —
(Increase) decrease in fair value of conversion feature of
convertible bonds (73 ) 5,711 Tax benefit from exercise of stock
options 11 151 Excess tax benefit from stock-based compensation
(348 ) — Changes in operating assets and liabilities: Accounts
receivable 748 (16,777 ) Unbilled receivables and retentions 3,826
4,048 Inventories (1,105 ) 1,932 Income tax receivable 1,708 3,657
Other assets (61 ) 9 Accounts payable 5,082 (4,370 ) Other
liabilities 764 (4,899 ) Net cash provided by (used in) operating
activities 9,961 (9,673 )
Investing activities Acquisitions
of property and equipment (1,070 ) (6,047 ) Acquisitions of
distribution and licensing rights — (750 ) Net (purchases)
redemptions of held-to-maturity investments (19,586 ) 6,934 Net
sales of available-for-sale investments 9,038 175 Net cash (used
in) provided by investing activities (11,618 ) 312
Financing
activities Excess tax benefit from exercise of stock options
348 — Exercise of stock options 679 155 Net cash provided by
financing activities 1,027 155 Net decrease in cash and cash
equivalents (630 ) (9,206 ) Cash and cash equivalents at beginning
of period 126,969 75,332 Cash and cash equivalents at end of period
$ 126,339 $ 66,126 Supplemental disclosure: Unrealized loss
(gain) on available-for-sale investments recorded in other
comprehensive (loss) income, net of deferred taxes of $397 and
$(18), respectively $ 596 $ (29 )
Reportable Segment Results are as
Follows (Unaudited):
(In thousands)
Three Months Ended Six Months Ended
November 1, October 26, November 1, October
26, 2014 2013 2014 2013 Revenue:
UAS $ 43,045 $ 56,079 $ 84,231 $ 91,290 EES 9,619 8,788 20,299
17,694 Total 52,664 64,867 104,530 108,984 Cost of sales: UAS
27,575 35,280 58,590 59,879 EES 7,218 5,709 14,015 12,682 Total
34,793 40,989 72,605 72,561 Gross margin: UAS 15,470 20,799 25,641
31,411 EES 2,401 3,079 6,284 5,012 Total 17,871 23,878 31,925
36,423 Selling, general and administrative 13,470 13,084 26,873
25,543 Research and development 8,531 6,861 15,655 14,051 (Loss)
income from operations (4,130 ) 3,933 (10,603 ) (3,171 ) Other
income (expense): Interest income 193 195 405 400 Other (expense)
income (583 ) (2,307 ) 8 (5,701 ) (Loss) income before income taxes
$ (4,520 ) $ 1,821 $ (10,190 ) $ (8,472 )
Additional AV News: http://avinc.com/resources/news/AV Media
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AeroVironment, Inc.Steven Gitlin, +1 (626)
357-9983ir@avinc.com
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