AeroVironment, Inc. Announces Fiscal 2013 Third Quarter Results

  AeroVironment,Inc. Announces Fiscal 2013 Third Quarter Results

Business Wire

MONROVIA, Calif. -- March 5, 2013

AeroVironment,Inc. (NASDAQ: AVAV) today reported financial results for its
third quarter ending January 26, 2013.

“Third quarter revenue of $47.1 million and earnings per share of $0.17 fell
well short of our plans primarily due to delays in government procurements
expected during the quarter,” said Tim Conver, AeroVironment chairman and
chief executive officer. “We believe these are delays in order timing, and not
lost orders. We have recalibrated our expectations for order and shipment
timing in our UAS business based on the procurement timelines we are currently
experiencing, resulting in a significant reduction in expected revenue and
earnings per share for fiscal 2013.”

“We continue to see multiple opportunities for growth in fiscal 2014 and
beyond based on leading market positions and significant new development
activities for both defense and non-defense solutions,” Conver added.

FISCAL 2013 THIRD QUARTER RESULTS

Revenue for the third quarter of fiscal 2013 was $47.1million, down $24.9
million from third quarter fiscal 2012 revenue of $72.0million. The decrease
in revenue resulted from decreased sales in our Unmanned Aircraft Systems
(UAS)segment of $19.6million and in our Efficient Energy Systems (EES)
segment of $5.3 million.

Loss from operations for the third quarter of fiscal 2013 was $1.1million, a
decrease of 115% from income from operations for the third quarter of fiscal
2012 of $7.3million. The decrease in income from operations resulted from
lower gross margin of $7.8 million and higher research and development (R&D)
expense of $3.1 million, offset by lower selling, general and administrative
(SG&A) expense of $2.4 million.

Net income for the third quarter of fiscal 2013 was $3.9million, a decrease
of $1.8 million from net income for the third quarter of fiscal 2012 of
$5.7million.

Earnings per diluted share for the third quarter of fiscal 2013 were $0.17, a
decrease of $0.09 from third quarter fiscal 2012 earnings per diluted share of
$0.26.

FISCAL 2013 YEAR-TO-DATE RESULTS

Revenue for the first nine months of fiscal 2013 was $186.0million, down 13%
from the first nine months of fiscal 2012 revenue of $214.3million. The
decrease in revenue resulted from lower sales in our UASsegment of
$24.5million and EES segment of $3.8 million.

Income from operations for the first nine months of fiscal 2013 was
$9.8million, a decrease of 44% from the first nine months of fiscal 2012
income fromoperations of $17.3million. The decrease in income from
operations resulted from lower gross margin of $5.0 million and higher R&D
expense of $4.2 million, offset by lower SG&A expense of $1.6 million.

Net income for the first nine months of fiscal 2013 was $11.2million, a
decrease of $1.4 million from net income for the first nine months of fiscal
2012 of $12.7million.

Earnings per diluted share for the first nine months of fiscal 2013 were
$0.50, a decrease of $0.07 from the first nine months of fiscal 2012 income
per diluted share of $0.57.

BACKLOG

As of January 26, 2013, funded backlog (unfilled firm orders for which funding
is currently appropriated to us under a customer contract) was $70.5 million
compared to $93.2million as of April30, 2012.

FISCAL 2013 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2013, the Company is reducing its guidance to reflect
anticipated full year revenue of $230 million to $250 million, and earnings
per share of $0.30 to $0.50 on a fully diluted basis.

"Significant delays in government procurement activities have reduced our
expected revenue sharply from our original guidance of $348 million to $370
million. Multiple orders for our unmanned aircraft systems solutions have been
delayed, including a funded requirement of the U.S. government awaiting final
contract actions, and the time it takes to complete them has increased
considerably, pushing them into fiscal 2014," said Tim Conver. "Looking
forward, we see significant opportunities to achieve long-term compound growth
with Switchblade Loitering Munitions systems, mission services and
international small UAS sales."

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, delays or
changes in government funding, changes in the demand for our products and
services, activities of competitors and 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 5, 2013, 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, Tom Herring, chief
operating officer and Steven A. Gitlin, vice president of investor relations,
will host the call.

4:30 PM ET
3:30 PM CT
2:30 PM MT
1:30 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 section 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
section of the Company's website, at http://investor.avinc.com. The audio
replay will also be available via telephone from Tuesday, March 5, 2013, at
approximately 4:30 p.m. Pacific Time through Tuesday, March 12, 2013 at 9:00
p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode 99341363.
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. Agencies of the U.S.
Department of Defense and allied military services use AeroVironment’s
electric-powered, hand-launched unmanned aircraft systems extensively to
provide situational awareness to tactical operating units through real-time,
airborne reconnaissance, surveillance and communication. 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; delays or changes in government funding; 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 Income (Unaudited)

(In thousands except share and per share data)
                                              
                    Three Months Ended             Nine Months Ended
                    January 26,    January        January 26,    January
                                    28,                             28,
                    2013            2012           2013            2012
                                                                    
Revenue:
Product sales       $   23,496      $  36,645      $  104,601       $  113,802
Contract            23,591          35,319         81,441          100,531
services
                    47,087          71,964         186,042          214,333
Cost of sales:
Product sales       14,281          23,587         63,055           69,958
Contract            13,133          20,944         48,173          64,597
services
                    27,414          44,531         111,228         134,555
Gross margin        19,673          27,433         74,814           79,778
Selling,
general and         10,433          12,866         37,230           38,806
administrative
Research and        10,306          7,238          27,828          23,640
development
(Loss) income       (1,066      )   7,329          9,756            17,332
from operations
Other income:
Interest income     164             129            498              313
Other income        49              —              49              —
(Loss) income
before income       (853        )   7,458          10,303           17,645
taxes
(Benefit)
provision for       (4,722      )   1,714          (918       )     4,988
income taxes
Net income          $   3,869       $  5,744       $  11,221       $  12,657
Earnings per
share data:
Basic               $   0.17        $  0.26        $  0.51          $  0.58
Diluted             $   0.17        $  0.26        $  0.50          $  0.57
Weighted
average shares
outstanding:
Basic               22,142,917      21,797,802     22,035,007       21,761,927
Diluted             22,408,377      22,317,015     22,375,126       22,269,675
                                                                    

AeroVironment,Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)
                                                              
                                                 January 26,       April 30,
                                                 2013              2012
                                                 (Unaudited)
Assets
Current assets:
Cash and cash equivalents                        $  63,975         $ 64,220
Short-term investments                           69,811            77,152
Accounts receivable, net of allowance for
doubtful accounts of $815 at January 26,         31,600            56,417
2013 and $921 at April 30, 2012
Unbilled receivables and retentions              15,409            27,034
Inventories, net                                 63,597            43,539
Income tax receivable                            8,349             —
Deferred income taxes                            9,785             9,377
Prepaid expenses and other current assets        4,283             4,030
Total current assets                             266,809           281,769
Long-term investments                            60,928            58,457
Property and equipment, net                      21,714            23,515
Deferred income taxes                            5,180             5,209
Other assets                                     4,159             201
Total assets                                     $  358,790        $ 369,151
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                                 $  15,777         $ 20,213
Wages and related accruals                       9,652             19,076
Income taxes payable                             —                 8,788
Customer advances                                5,915             5,124
Other current liabilities                        6,877             9,898
Liability for uncertain tax positions            606               606
Total current liabilities                        38,827            63,705
Wages and other accruals                         —                 1,203
Deferred rent                                    842               1,019
Liability for uncertain tax positions            4,026             4,026
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 — 22,417,427
at January 26, 2013 and 22,243,903 at April      2                 2
30, 2012
Additional paid-in capital                       129,588           124,954
Accumulated other comprehensive loss             (652        )    (694      )
Retained earnings                                186,157           174,936
Total stockholders’ equity                       315,095           299,198
Total liabilities and stockholders’ equity       $  358,790        $ 369,151
                                                                             

AeroVironment,Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)
                                                
                                                   Nine Months Ended
                                                   January 26,   January 28,
                                                   2013            2012
Operating activities
Net income                                         $  11,221       $  12,657
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization                      8,340           6,418
Provision for doubtful accounts                    338             354
Deferred income taxes                              (407      )     (510      )
Unrealized foreign currency gain                   (53       )     —
Stock-based compensation                           2,629           2,319
Tax benefit from exercise of stock options         1,536           664
Excess tax benefit from stock-based                —               (115      )
compensation
Gain on sale of property and equipment             —               (13       )
Changes in operating assets and liabilities:
Accounts receivable                                24,479          19,809
Unbilled receivables and retentions                11,625          (2,541    )
Inventories                                        (20,058   )     (10,310   )
Income tax receivable                              (8,349    )     —
Other assets                                       (282      )     (441      )
Accounts payable                                   (4,436    )     (17,759   )
Other liabilities                                  (21,518   )     (5,678    )
Net cash provided by operating activities          5,065           4,854
Investing activities
Acquisitions of property and equipment             (6,528    )     (9,856    )
Proceeds from the sale of property and             —               13
equipment
Acquisition of intangible assets                   (850      )     —
Investment in CybAero AB convertible notes         (3,037    )     —
Net redemptions of held-to-maturity                4,690           7,965
investments
Net sales of available-for-sale investments        250             225
Net cash used in investing activities              (5,475    )     (1,653    )
Financing activities
Excess tax benefit from stock-based                —               115
compensation
Exercise of stock options                          165             508
Net cash provided by financing activities          165             623
Net (decrease) increase in cash and cash           (245      )     3,824
equivalents
Cash and cash equivalents at beginning of          64,220          62,041
period
Cash and cash equivalents at end of period         $  63,975       $  65,865
                                                                             
Supplemental disclosure:
Unrealized gains on long-term investments
recorded in other comprehensive income, net of     $  42           $  87
deferred taxes of $28 and $59, respectively
Reclassification from share-based liability        $  401          $  —
compensation to equity
                                                                             

Reportable Segment Results are as Follows (Unaudited):

(In thousands)
                                              
                     Three Months Ended            Nine Months Ended
                     January       January        January 26,   January 28,
                     26,            28,
                     2013           2012           2013            2012
Revenue:
UAS                  $  37,665      $  57,247      $  151,904      $  176,383
EES                  9,422          14,717         34,138          37,950
Total                47,087         71,964         186,042         214,333
Cost of sales:
UAS                  20,585         34,096         88,620          105,803
EES                  6,829          10,435         22,608          28,752
Total                27,414         44,531         111,228         134,555
Gross margin:
UAS                  17,080         23,151         63,284          70,580
EES                  2,593          4,282          11,530          9,198
Total                19,673         27,433         74,814          79,778
Selling, general
and                  10,433         12,866         37,230          38,806
administrative
Research and         10,306         7,238          27,828          23,640
development
(Loss) income        (1,066     )   7,329          9,756           17,332
from operations
Interest income      164            129            498             313
Other income         49             —              49              —
(Loss) income
before income        $  (853    )   $  7,458       $  10,303       $  17,645
taxes
                                                                      

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Contact:

AeroVironment,Inc.
Steven Gitlin
+1 (626) 357-9983
ir@avinc.com
 
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