AeroVironment Inc (AVAV)

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AeroVironment Announces Fiscal 2024 Second Quarter Results

Source: Business Wire
AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal second quarter ended October 28, 2023.

Second Quarter Highlights:

Second quarter revenue of $180.8 million, up 62% year-over-year
Second quarter net income of $17.8 million and Adjusted EBITDA of $39.5 million, increases of 366% and 481%, year-over-year, respectively
Funded backlog of $487.0 million as of October 28, 2023
Increasing fiscal year 2024 revenue guidance to between $685 million and $705 million, including the recently completed acquisition of Tomahawk Robotics
“Our results exceeded expectations, underscored by the highest second quarter revenue in company history combined with strong bottom-line performance,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Sales rose significantly year-over-year, reflecting increasing demand, strong operational execution and effective supply chain management. At the same time, we successfully completed the acquisition of Tomahawk Robotics, and we are well on our way to fully integrating these two great organizations – leveraging our combined technology to accelerate the implementation of AI and autonomy applications across our portfolio of unmanned platforms through a common operating platform.

“Given our standout performance and solid backlog, along with the addition of Tomahawk, we are again raising our revenue guidance for fiscal year 2024. Our optimism not only reflects near-term demand dynamics but also reflects an ongoing shift in battlefield priorities to the more frequent use of distributed, intelligent, multi-domain unmanned systems.”

FISCAL 2024 SECOND QUARTER RESULTS

Revenue for the second quarter of fiscal 2024 was $180.8 million, an increase of 62% as compared to $111.6 million for the second quarter of fiscal 2023, reflecting higher product sales of $83.4 million, partially offset by lower service revenue of $14.2 million. From a segment standpoint, the year-over-year increase was due to revenue growth in Unmanned Systems (“UMS”) of 115%, partially offset by decreases in MacCready Works (“MW”) of 6% and Loitering Munitions Systems (“LMS”) of 3%.

Gross margin for the second quarter of fiscal 2024 was $75.4 million, an increase of 191% as compared to $25.9 million for the second quarter of fiscal 2023, reflecting higher product margin of $43.8 million and higher service gross margin of $5.6 million. As a percentage of revenue, gross margin increased to 42% from 23%, primarily due to an increase in the proportion of product revenue to total revenue and a favorable product mix. Gross margin was favorably impacted by a decrease in depreciation charges for in-service assets of $7.1 million related to the closure of COCO site locations during fiscal year 2023. Gross margin was negatively impacted by $3.2 million of intangible amortization expense and other related non-cash purchase accounting expenses in the second quarter of fiscal 2024 as compared to $4.0 million in the second quarter of fiscal 2023.

Income from operations for the second quarter of fiscal 2024 was $25.2 million as compared to loss from operations of $(14.3) million for the second quarter of last fiscal year. The increase year-over-year was primarily due higher gross margin of $49.5 million, partially offset by increases in research and development (“R&D”) expense of $5.4 million and selling, general and administrative (“SG&A”) expense of $4.5 million.

Other loss, net, for the second quarter of fiscal 2024 was $4.8 million, as compared to $1.5 million for the second quarter of last fiscal year. The increase in other expense was primarily due to an increase in unrealized losses on investment holdings.

Provision for income taxes for the second quarter of fiscal 2024 was $1.1 million, as compared to a benefit from income taxes of $(10.5) million for the second quarter of last fiscal year. The increase in provision for income taxes was primarily due to the increase in pre-tax income.

Net income attributable to AeroVironment for the second quarter of fiscal 2024 was $17.8 million, or $0.66 per diluted share, as compared to net loss attributable to AeroVironment of $(6.7) million, or $(0.27) per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the second quarter of fiscal 2024 was $39.5 million and non-GAAP earnings per diluted share were $0.97, as compared to $6.8 million and $0.01, respectively, for the second quarter of fiscal 2023.

BACKLOG

As of October 28, 2023, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $487.0 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 $685 million and $705 million, net income of between $45 million and $51 million, Non-GAAP adjusted EBITDA of between $119 million and $127 million, earnings per diluted share of between $1.66 and $1.90 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 $2.46 and $2.70.

The revised outlook includes the impacts of the recent 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, December 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/BI64ffae409eb84e6c946d9347cf5e6c50

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 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 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 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; 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.