AeroVironment, Inc. Announces Fiscal 2021 Third Quarter Results

– Financial Tables Follow –

AeroVironment, Inc. Consolidated Statements of Operations (Unaudited) (In thousands except share and per share data)

	Three Months Ended						Nine Months Ended
	January 30,			January 25,			January 30,			January 25,
	2021			2020			2021			2020
Revenue:
Product sales	$	58,348		$	36,432		$	182,233		$	159,657
Contract services		20,434			25,459			76,664			72,416
		78,782			61,891			258,897			232,073
Cost of sales:
Product sales		35,746			21,034			102,039			82,244
Contract services		14,395			17,361			51,955			49,895
		50,141			38,395			153,994			132,139
Gross margin:
Product sales		22,602			15,398			80,194			77,413
Contract services		6,039			8,098			24,709			22,521
		28,641			23,496			104,903			99,934
Selling, general and administrative		15,652			13,223			42,640			43,146
Research and development		13,631			11,381			36,710			30,948
(Loss) income from operations		(642	)		(1,108	)		25,553			25,840
Other income:
Interest income, net		94			1,122			417			3,717
Other (expense) income, net		(37	)		120			68			632
(Loss) income before income taxes		(585	)		134			26,038			30,189
(Benefit from) provision for income taxes		(924	)		(38	)		2,774			3,203
Equity method investment loss, net of tax		(81	)		(1,200	)		(10,891	)		(3,410	)
Net income (loss)		258			(1,028	)		12,373			23,576
Net (income) loss attributable to noncontrolling interest		(47	)		20			12			27
Net income (loss) attributable to AeroVironment, Inc.	$	211		$	(1,008	)	$	12,385		$	23,603
Net income (loss) per share attributable to AeroVironment, Inc.
Basic	$	0.01		$	(0.04	)	$	0.52		$	0.99
Diluted	$	0.01		$	(0.04	)	$	0.51		$	0.98
Weighted-average shares outstanding:
Basic		23,942,782			23,821,145			23,924,017			23,790,788
Diluted		24,260,874			23,821,145			24,216,371			24,076,195

AeroVironment, Inc. Consolidated Balance Sheets (In thousands except share data)

	January 30,			April 30,
	2021			2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	324,543		$	255,142
Short-term investments		48,499			47,507
Accounts receivable, net of allowance for doubtful accounts of $565 at January 30, 2021 and $1,190 at April 30, 2020		26,621			73,660
Unbilled receivables and retentions		61,084			75,837
Inventories		53,104			45,535
Prepaid expenses and other current assets		7,693			6,246
Total current assets		521,544			503,927
Long-term investments		11,222			15,030
Property and equipment, net		22,920			21,694
Operating lease right-of-use assets		11,281			8,793
Deferred income taxes		5,821			4,928
Intangibles, net		11,552			13,637
Goodwill		6,340			6,340
Other assets		312			10,605
Total assets	$	590,992		$	584,954
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	15,837		$	19,859
Wages and related accruals		20,081			23,972
Customer advances		4,279			7,899
Current operating lease liabilities		4,403			3,380
Income taxes payable		2,370			1,065
Other current liabilities		9,158			10,778
Total current liabilities		56,128			66,953
Non-current operating lease liabilities		8,426			6,833
Other non-current liabilities		243			250
Liability for uncertain tax positions		1,017			1,017
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued or outstanding at January 30, 2021 and April 30, 2020		—			—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—24,102,691 shares at January 30, 2021 and 24,063,639 shares at April 30, 2020		2			2
Additional paid-in capital		184,366			181,481
Accumulated other comprehensive income		347			328
Retained earnings		340,475			328,090
Total AeroVironment, Inc. stockholders’ equity		525,190			509,901
Noncontrolling interest		(12	)		—
Total equity		525,178			509,901
Total liabilities and stockholders’ equity	$	590,992		$	584,954

AeroVironment, Inc. Consolidated Statements of Cash Flows (Unaudited) (In thousands)

	Nine Months Ended
	January 30,			January 25,
	2021			2020
Operating activities
Net income	$	12,373		$	23,576
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		8,650			7,107
Losses from equity method investments		10,891			3,410
Realized gain from sale of available-for-sale investments		(11	)		—
Provision for doubtful accounts		(145	)		(2	)
Other non-cash income		(473	)		(719	)
Non-cash lease expense		3,592			3,453
Loss on foreign currency transactions		1			—
Deferred income taxes		(897	)		(946	)
Stock-based compensation		4,754			4,751
Loss (gain) on sale of property and equipment		2			(71	)
Amortization of debt securities		143			(1,291	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		47,184			3,245
Unbilled receivables and retentions		14,753			(24,364	)
Inventories		(7,569	)		(10,766	)
Income tax receivable		—			821
Prepaid expenses and other assets		(1,622	)		216
Accounts payable		(3,346	)		(1,301	)
Other liabilities		(9,318	)		7,947
Net cash provided by operating activities		78,962			15,066
Investing activities
Acquisition of property and equipment		(8,472	)		(8,504	)
Equity method investments		(2,150	)		(9,551	)
Business acquisition, net of cash acquired		—			(18,641	)
Proceeds from sale of property and equipment		—			81
Redemptions of held-to-maturity investments		—			166,917
Purchases of held-to-maturity investments		—			(162,517	)
Redemptions of available-for-sale investments		130,066			41,150
Purchases of available-for-sale investments		(125,644	)		(59,297	)
Net cash used in investing activities		(6,200	)		(50,362	)
Financing activities
Tax withholding payment related to net settlement of equity awards		(1,955	)		(1,009	)
Holdback and retention payments for business acquisition		(1,492	)		—
Exercise of stock options		86			93
Net cash used in financing activities		(3,361	)		(916	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		69,401			(36,212	)
Cash, cash equivalents and restricted cash at beginning of period		255,142			172,708
Cash, cash equivalents and restricted cash at end of period	$	324,543		$	136,496
Supplemental disclosures of cash flow information
Cash paid, net during the period for:
Income taxes	$	2,364		$	518
Non-cash activities
Unrealized loss on available-for-sale investments, net of deferred tax benefit of $2	$	56		$	—
Change in foreign currency translation adjustments	$	75		$	67
Acquisitions of property and equipment included in accounts payable	$	746		$	263

AeroVironment, Inc. Reconciliation of non-GAAP Earnings per Diluted Share (Unaudited)

	Three Months Ended		Three Months Ended			Nine Months Ended		Nine Months Ended
	January 30, 2021		January 25, 2020			January 30, 2021		January 25, 2020

Earnings (loss) per diluted share	$	0.01	$	(0.04	)	$	0.51	$	0.98
Acquisition-related expenses		0.11		0.01			0.14		0.03
Amortization of acquired intangible assets		0.02		0.02			0.06		0.06
HAPSMobile Inc. JV impairment of investment in Loon LLC		—		—			0.35		—
Earnings (loss) per diluted share as adjusted (Non-GAAP)	$	0.14		(0.01	)	$	1.06	$	1.07

Reconciliation of Forecast Earnings per Diluted Share (Unaudited)

	Fiscal year ending
	April 30, 2021
Forecast earnings per diluted share	$	0.76 - 0.96
Acquisition-related expenses		0.40
Amortization of acquired intangible assets		0.23
HAPSMobile Inc. JV impairment of investment in Loon LLC		0.35
Forecast earnings per diluted share as adjusted (Non-GAAP)	$	1.74 - 1.94

Reconciliation of Fiscal Year 2020 Actual, and 2021 and 2022 Forecast Non-GAAP adjusted EBITDA (Unaudited)

	Fiscal year ending			Fiscal year ending		Fiscal year ending
(in millions)	April 30, 2020			April 30, 2021		April 30, 2022
Net income from continuing operations	$	41		$	18 - 23	$	35 - 40
Interest (income) expense, net		(5	)		1		5
Provision for income taxes		6			2		4
Depreciation and amortization		10			21		64
EBITDA (Non-GAAP)		52			42 - 47		108 - 113
Equity Method Investment		6			11		-
Deal and integration costs		1			11		2
Adjusted EBITDA (Non-GAAP)	$	59		$	64 - 69	$	110 - 115

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