AeroVironment Inc (AVAV)

[abrooklyn]

AeroVironment Announces Fiscal 2024 First Quarter Results

Source: Business Wire
AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal first quarter ended July 29, 2023.

First Quarter Highlights:

First quarter revenue of $152.3 million, up 40% year-over-year
First quarter net income of $21.9 million and Adjusted EBITDA of $37 million, an increase of 361% and 185%, respectively
Record funded backlog of $539.7 million as of July 29, 2023, an increase of 27% from prior quarter
Raising revenue and Non-GAAP adjusted EBITDA guidance ranges
“We delivered record first quarter results,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Revenue climbed 40% year-over-year due to higher shipments across all our business segments, indicative of robust demand for our innovative, intelligent, multi-domain unmanned systems. Gross margins, as a percent of sales, also increased significantly, while our funded backlog increased to a new record of $540 million – from $424 million at the start of the fiscal year – reflecting nearly $270 million in new bookings during the quarter. Since fiscal year 2024 is off to such a great start, we are also raising full year guidance to reflect our improved outlook for the Company.

“Additionally, we took steps to further strengthen and expand our product portfolio through our previously announced acquisition of Tomahawk Robotics. This transaction – which is expected to close in the second quarter – will add common control solutions with advanced open standard communications technologies – namely the Kinesis Ecosystem – to our current AI enabled software suite. We expect that this acquisition enhances AeroVironment’s existing control and communications solutions, opens up adjacent market opportunities, enables multi-domain integration across all unmanned platforms, and brings additional top notch software engineering talent to our growing team,” continued Nawabi. “We look forward to continued strong execution by our team and are optimistic about growing AeroVironment to new heights this fiscal year.”

FISCAL 2024 FIRST QUARTER RESULTS

Revenue for the first quarter of fiscal 2024 was $152.3 million, an increase of 40% as compared to $108.5 million for the first quarter of fiscal 2023, reflecting higher product sales of $61.5 million, partially offset by lower service revenue of $17.7 million. From a segment standpoint, the change year-over-year was due to revenue growth in Unmanned Systems (“UMS”) of 45%, Loitering Munitions Systems (“LMS”) of 34% and MacCready Works (“MW”) of 31%.

Gross margin for the first quarter of fiscal 2024 was $65.7 million, an increase of 95% as compared to $33.7 million for the first quarter of fiscal 2023, reflecting higher product margin of $32.8 million, partially offset by lower service gross margin of $0.8 million. As a percentage of revenue, gross margin percentage increased to 43% from 31%, primarily due to an increase in the proportion of product revenue to total revenue. Gross margin was negatively impacted by $2.4 million of intangible amortization expense and other related non-cash purchase accounting expenses in the first quarter of fiscal 2024 as compared to $3.0 million in the first quarter of fiscal 2023.

Income from operations for the first quarter of fiscal 2024 was $26.4 million as compared to loss from operations of $(3.3) million for the first quarter of last fiscal year. The increase year-over-year was primarily due higher gross margin of $31.9 million, partially offset by an increase in selling, general and administrative (“SG&A”) expense of $1.9 million.

Other loss, net, for the first quarter of fiscal 2024 was $3.1 million, as compared to $2.0 million for the first quarter of last fiscal year. The increase in interest expense was primarily due to an increase in interest rates on the Company’s debt facility. Other loss, net for the first quarter of fiscal 2024 includes unrealized losses associated with changes in the fair market value of equity security investments.

Provision for income taxes for the first quarter of fiscal 2024 was $1.3 million, as compared to $2.6 million for the first quarter of last fiscal year. The decrease in provision for income taxes was primarily due to a decrease in the full year effective tax rate.

Net income attributable to AeroVironment for the first quarter of fiscal 2024 was $21.9 million, or $0.84 per diluted share, as compared to net loss attributable to AeroVironment of $(8.4) million, or $(0.34) per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the first quarter of fiscal 2024 was approximately $37 million and non-GAAP earnings per diluted share were $1.00, as compared to approximately $13 million and non-GAAP loss per diluted per share of $(0.08), respectively, for the first quarter of fiscal 2023.

BACKLOG

As of July 29, 2023, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $539.7 million, as compared to $424.1 million as of April 30, 2023.

FISCAL 2024 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2024, the Company now expects revenue of between $645 million and $675 million, net income of between $51 million and $59 million, Non-GAAP adjusted EBITDA of between $117 million and $127 million, earnings per diluted share of between $1.91 and $2.21 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $2.30 and $2.60.

The outlook does not reflect the impacts of the recently announced acquisition of Tomahawk Robotics, Inc. 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.

CONFERENCE CALL AND PRESENTATION

In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday, September 5, 2023, at 4:30 pm Eastern Time that will be webcast live. Wahid Nawabi, chairman, president and chief executive officer, Kevin P. McDonnell, chief financial officer, and Jonah Teeter-Balin, senior director 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/BI15f3f4201ad342ac9ad87ea3031189a2

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 first quarter fiscal year 2024 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 “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, including the pending acquisition of Tomahawk Robotics; 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 disruptions 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; changes in the timing and/or amount of government spending, including due to continuing resolutions; adverse impacts of a U.S. government shutdown; our reliance on limited relationships to fund our development of HAPS UAS; 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 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; changes in the supply and/or demand and/or prices for our products and services; increased competition; uncertainty in the customer adoption rate of commercial use unmanned aircraft systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; 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; our ability to respond and adapt to unexpected legal, regulatory and government budgetary changes, including those resulting from the COVID-19 pandemic or future pandemics, such as supply chain disruptions and delays, potential governmentally-mandated shutdowns, travel restrictions and site access, diversion of government resources to non-defense priorities, and other business restrictions affecting our ability to manufacture and sell our products and provide our services; our ability to comply with the covenants in our loan documents; 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.