AeroVironment, Inc. Announces Fiscal 2014 First Quarter Results

  AeroVironment,Inc. Announces Fiscal 2014 First Quarter Results

Business Wire

MONROVIA, Calif. -- August 27, 2013

AeroVironment,Inc. (NASDAQ: AVAV) today reported financial results for its
first quarter ended July 27, 2013.

"While our first quarter revenue was in-line with our previous expectations,
it was adversely impacted by several one-time effects, as well as continued
government contracting delays. Despite the current market environment, we have
seen a recent pick-up in the number of delayed orders that have been released,
contributing to a 29 percent increase in funded backlog compared to last
quarter," said Tim Conver, AeroVironment chairman and chief executive officer.
"The final increment of government fiscal 2012 Raven orders arrived early in
the second quarter, supporting the expectation that demand for our small UAS
remains an enduring priority. At the same time, progress on Switchblade
tactical missile systems, electric vehicle charging systems and international
UAS markets moved us closer to broader adoption and increasing demand in each
of those areas, and long-term growth for the company. Overall, our fiscal 2014
plan remains on track, and we continue to operate within our previously
announced guidance range."

FISCAL 2014 FIRST QUARTER RESULTS

Revenue for the first quarter of fiscal 2014 was $44.1million, compared with
first quarter fiscal 2013 revenue of $58.7million. The decline in revenue
resulted from decreased sales in the Unmanned Aircraft Systems (UAS)segment
of $13.6million and in the Efficient Energy Systems (EES) segment of $1.0
million.

Loss from operations for the first quarter of fiscal 2014 was $7.1million,
compared to loss from operations for the first quarter of fiscal 2013 of
$2.3million. The loss from operations was a result of lower revenue, driven
by delayed government contracts, and first quarter reduction in force related
costs. This contributed to a lower gross margin of $7.0 million, offset by
lower selling, general and administrative (SG&A) expense of $1.2 million and
research and development (R&D) expense of $0.9 million.

Other expense, net, for the first quarter of fiscal 2014 was $3.2 million,
compared to other income for the first quarter of fiscal 2013 of $0.2 million.
The increase in other expense, net, was primarily due to the decrease in fair
value of the conversion option in the amount of $3.4 million of the Company’s
CybAero convertible bond investment.

Net loss for the first quarter of fiscal 2014 was $7.2million, compared to
net loss for the first quarter of fiscal 2013 of $1.4million. Loss per share
for the first quarter of fiscal 2014 was $0.32, compared to loss per share for
the first quarter of fiscal 2013 of $0.06.

BACKLOG

As of July 27, 2013, funded backlog (unfilled firm orders for which funding is
currently appropriated to AeroVironment under a customer contract) was
$76.9million, compared to $59.4 million as of April30, 2013.

FISCAL 2014 — OUTLOOK FOR THE FULL YEAR

For fiscal 2014, the company expects togenerate revenue of $230 million to
$250 million, and earnings per share from operations of $0.35to $0.50 on a
fully diluted basis, excluding any change in value of the CybAero convertible
bond investment.

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, August 27, 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 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, August 27, 2013, at
approximately 4:30 p.m. Pacific Time through Tuesday, September 3, at 9:00
p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode 32239505.
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 and supports 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 the company’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; 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.

                         - Financial Tables Follow -

                                       
                                                                     
AeroVironment,Inc.

Consolidated Statements of Operations

(In thousands except share and per share data)
                                                                     
                                           Three Months Ended
                                           July 27,      July 28,
                                           2013           2012
                                                                     
Revenue:
Product sales                              $  27,174      $  28,690
Contract services                          16,943         29,987
                                           44,117         58,677
Cost of sales:
Product sales                              20,555         20,559
Contract services                          11,017         18,613
                                           31,572         39,172
Gross margin                               12,545         19,505
Selling, general and administrative        12,459         13,621
Research and development                   7,190          8,136
Loss from operations                       (7,104     )   (2,252     )
Other income (expense):
Interest income                            205            172
Other expense                              (3,394     )   —
Loss before income taxes                   (10,293    )   (2,080     )
Benefit for income taxes                   (3,083     )   (694       )
Net loss                                   $  (7,210  )   $  (1,386  )
Loss per share data:
Basic                                      $  (0.32   )   $  (0.06   )
Diluted                                    $  (0.32   )   $  (0.06   )
Weighted average shares outstanding:
Basic                                      22,238,363     21,929,455
Diluted                                    22,238,363     21,929,455
                                                                     
                                                                     

                                                             
                                                                             
AeroVironment,Inc.

Consolidated Balance Sheets

(In thousands except share data)
                                                                             
                                                 July 27,          April 30,
                                                 2013              2013
                                                 (Unaudited)
Assets
Current assets:
Cash and cash equivalents                        $  64,339         $ 75,332
Short-term investments                           64,474            73,241
Accounts receivable, net of allowance for
doubtful accounts of $731 at July 27, 2013       19,604            19,770
and $936 at April 30, 2013
Unbilled receivables and retentions              9,719             11,304
Inventories, net                                 68,663            62,561
Income tax receivable                            14,812            11,777
Deferred income taxes                            5,189             5,166
Prepaid expenses and other current assets        3,765             4,303
Total current assets                             250,565           263,454
Long-term investments                            67,595            68,916
Property and equipment, net                      26,725            24,429
Deferred income taxes                            5,638             5,606
Other assets                                     1,036             1,060
Total assets                                     $  351,559        $ 363,465
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                                 $  13,545         $ 16,144
Wages and related accruals                       9,109             12,116
Customer advances                                7,005             7,519
Other current liabilities                        7,194             6,408
Total current liabilities                        36,853            42,187
Deferred rent                                    696               771
Liability for uncertain tax positions            5,211             5,321
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 — 22,672,762
at July 27, 2013 and 22,614,315 at April         2                 2
30, 2013
Additional paid-in capital                       131,398           130,527
Accumulated other comprehensive loss             (753        )     (705      )
Retained earnings                                178,152           185,362
Total stockholders’ equity                       308,799           315,186
Total liabilities and stockholders’ equity       $  351,559        $ 363,465
                                                                             
                                                                             

                                                 
                                                                             
AeroVironment,Inc.

Consolidated Statements of Cash Flows

(In thousands)
                                                                             
                                                     Three Months Ended
                                                     July 27,     July 28,
                                                     2013           2012
Operating activities
Net loss                                             $ (7,210 )     $ (1,386 )
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation and amortization                        2,185          2,932
Provision for doubtful accounts                      122            240
Deferred income taxes                                (23      )     42
Stock-based compensation                             910            840
Change in fair value of conversion feature of        3,391          —
convertible bonds
Tax benefit from exercise of stock options           28             88
Changes in operating assets and liabilities:
Accounts receivable                                  44             6,297
Unbilled receivables and retentions                  1,585          3,776
Inventories                                          (6,102   )     (966     )
Income tax receivable                                (3,035   )     (1,755   )
Other assets                                         538            433
Accounts payable                                     (2,599   )     (7,128   )
Other liabilities                                    (3,010   )     (21,183  )
Net cash used in operating activities                (13,176  )     (17,770  )
Investing activities
Acquisitions of property and equipment               (4,457   )     (2,548   )
Net redemptions of held-to-maturity                  6,442          9,064
investments
Net sales of available-for-sale investments          175            175
Net cash provided by investing activities            2,160          6,691
Financing activities
Exercise of stock options                            23             69
Net cash provided by financing activities            23             69
Net decrease in cash and cash equivalents            (10,993  )     (11,010  )
Cash and cash equivalents at beginning of            75,332         64,220
period
Cash and cash equivalents at end of period           $ 64,339       $ 53,210
                                                                             
Supplemental disclosure:
Unrealized (loss) gain on long-term
investments recorded in other comprehensive          $ (48    )     $ 37
(loss) income, net of deferred taxes of $32
and $24, respectively
Reclassification from share-based liability          $ —            $ 401
compensation to equity
                                                                             
                                                                             

                                      
                                                                   
Reportable Segment Results are as Follows (Unaudited):

(In thousands)
                                                                   
                                          Three Months Ended
                                          July 27,      July 28,
                                          2013            2012
Revenue:
UAS                                       $ 35,211        $ 48,806
EES                                       8,906           9,871
Total                                     44,117          58,677
Cost of sales:
UAS                                       24,599          32,756
EES                                       6,973           6,416
Total                                     31,572          39,172
Gross margin:
UAS                                       10,612          16,050
EES                                       1,933           3,455
Total                                     12,545          19,505
Selling, general and administrative       12,459          13,621
Research and development                  7,190           8,136
Loss from operations                      (7,104    )     (2,252   )
Other income (expense):
Interest income                           205             172
Other expense                             (3,394    )     —
Loss before income taxes                  $ (10,293 )     $ (2,080 )
                                                                   
                                                                   

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Contact:

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