AeroVironment, Inc. Announces Fiscal 2014 Fourth Quarter and Full Year Results

  AeroVironment,Inc. Announces Fiscal 2014 Fourth Quarter and Full Year
  Results

Business Wire

MONROVIA, Calif. -- July 8, 2014

AeroVironment,Inc. (NASDAQ: AVAV) today reported financial results for its
fourth quarter ended April 30, 2014.

“An 87 percent increase in diluted earnings per share on an adjusted basis,
the achievement of our financial and operating objectives and the delivery of
solid results that exceeded our guidance for fiscal 2014 demonstrate the
AeroVironment team’s strong performance and disciplined execution of our
strategy,” said Tim Conver, AeroVironment chairman and chief executive
officer. “Our core business is stronger and more profitable than last year,
and we are confident about the Company’s prospects for growth and shareholder
value creation.”

Conver continued, “Looking ahead to fiscal 2015, we are encouraged by market
and customer trends we are seeing and now believe we have greater visibility
into the timing of meaningful adoption for Tactical Missile Systems,
Commercial UAS and Global Observer. Accordingly, and to ensure we are well
positioned to lead market adoption and capitalize on each opportunity, we plan
to increase investments this year in these areas. We believe these additional
investments in fiscal 2015 reflect the best use of our capital and will
position the Company to deliver long-term growth and outstanding stockholder
returns in the years to come.”

FISCAL 2014 FOURTH QUARTER RESULTS

Revenue for the fourth quarter of fiscal 2014 was $73.5million, up 36% from
fourth quarter fiscal 2013 revenue of $54.1million. The increase in revenue
resulted from increased sales in our Unmanned Aircraft Systems (UAS)segment
of $17.7million and in our Efficient Energy Systems (EES) segment of $1.7
million.

Income from operations for the fourth quarter of fiscal 2014 was $6.9million
compared to loss from operations for the fourth quarter of fiscal 2013 of $6.0
million. The higher income from operations was a result of higher revenue,
resulting in $12.4 million higher gross margin, and lower research and
development (R&D) expense of $3.2 million, offset by higher selling, general &
administrative (SG&A) expense of $2.7 million.

Other income for the fourth quarter of fiscal 2014 was $2.9 million compared
to other income for the fourth quarter of fiscal 2013 of $6.4 million. Other
income for the fourth quarter of fiscal 2014 and fiscal 2013 included $2.8
million and $6.2 million, respectively, related to the increase in fair value
of the conversion option of our CybAero convertible bond investment.

Net income for the fourth quarter of fiscal 2014 was $8.1million compared to
net loss for the fourth quarter of fiscal 2013 of $0.8million.

Earnings per diluted share for the fourth quarter of fiscal 2014 was $0.35
compared to loss per share for the fourth quarter of fiscal 2013 of $0.04.
Earnings per diluted share for the fourth quarter of fiscal 2014 included an
increase of $0.08 per share due to the increase in fair value of the
conversion option of our CybAero convertible bond investment. Loss per share
for the fourth quarter of fiscal 2013 included an increase of $0.17 per share
due to the increase in fair value of the conversion option of our CybAero
convertible bond investment.

FISCAL 2014 FULL YEAR RESULTS

Revenue for fiscal 2014 was $251.7million, up 5% from fiscal 2013 revenue of
$240.2million. The increase in revenue resulted from higher sales in our
UASsegment of $14.5million offset by lower sales in our EES segment of $3.0
million.

Income from operations for fiscal 2014 was $12.4million compared to income
fromoperations for fiscal 2013 of $3.8million. The higher income from
operations resulted from higher revenue, resulting in $1.1 million higher
gross margin and lower R&D expense of $11.7 million, offset by higher SG&A
expense of $4.2 million.

Other income for fiscal 2014 was $2.5 million compared to other income for
fiscal 2013 of $7.0 million. Other income for fiscal 2014 and fiscal 2013
included $1.8 million and $6.2 million, respectively, related to the increase
in fair value of the conversion option of our CybAero convertible bond
investment.

Net income for fiscal 2014 was $13.7million compared to net income for fiscal
2013 of $10.4million.

Earnings per diluted share for fiscal 2014 was $0.60 compared to earnings per
diluted share for fiscal 2013 of $0.47. Earnings per diluted share for fiscal
2014 and fiscal 2013 included an increase of $0.04 and $0.17 per share,
respectively, due to the increase in fair value of the conversion option of
our CybAero convertible bond investment.

BACKLOG

As of April 30, 2014, funded backlog (unfilled firm orders for which funding
is currently appropriated to us under a customer contract) was $65.9million
compared to $59.4 million as of April30, 2013.

FISCAL 2015 — OUTLOOK FOR THE FULL YEAR

For fiscal 2015, the company expects to generate revenue of between $250
million and $270 million, and gross profit margins of between 34.5 percent and
37.5 percent, respectively. Planned increases in research and development and
business development investments for Tactical Missile Systems, Commercial UAS
and Global Observer business areas in fiscal 2015 may largely offset operating
profit in the current fiscal year.

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, July 8, 2014, 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 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, July 8, 2014, at approximately
4:30 p.m. Pacific Time through Tuesday, July 15, at 9:00 p.m. Pacific Time.
Dial (855) 859-2056 and enter the passcode 59925045. 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. The company’s
electric-powered, hand-launched unmanned aircraft systems provide powerful
actionable information to military, public safety and commercial personnel
around the world through real-time, airborne imaging, sensing 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.


AeroVironment, Inc.
Consolidated Statements of Operations
(In thousands except share and per share data)
                                                    
                           Three Months Ended          Twelve Months Ended
                           April 30,   April 30,      April 30,   April 30,
                           2014         2013          2014         2013
                           (Unaudited)
Revenue:
Product sales              $   59,244   $  35,212      $  194,996   $  139,813
Contract services          14,254       18,898        56,707       100,339
                           73,498       54,110         251,703      240,152
Cost of sales:
Product sales              33,246       22,588         119,137      85,643
Contract services          10,114       13,800        38,953       61,973
                           43,360       36,388        158,090      147,616
Gross margin               30,138       17,722         93,613       92,536
Selling, general and       16,968       14,290         55,679       51,520
administrative
Research and development   6,223        9,386         25,515       37,214
Income (loss) from         6,947        (5,954     )   12,419       3,802
operations
Other income:
Interest income            258          228            855          726
Other income               2,648        6,196         1622         6,245
Income before income       9,853        470            14,896       10,773
taxes
Provision for income       1,796        1,265         1,178        347
taxes
Net income (loss)         $   8,057    $  (795    )   $  13,718    $  10,426
Earnings (loss) per
share data:
Basic                      $   0.36     $  (0.04   )   $  0.61      $  0.47
Diluted                    $   0.35     $  (0.04   )   $  0.60      $  0.47
Weighted average shares
outstanding:
Basic                      22,571,067   22,170,268     22,354,444   22,069,842
Diluted                    22,986,167   22,170,268     22,719,218   22,390,420


AeroVironment, Inc.
Reconciliation of Earnings per Share (Unaudited)
                                                      
                                 Three Months Ended      Twelve Months Ended
                                 April 30,  April 30,   April 30,  April 30,
                                 2014        2013       2014        2013
Earnings (loss) per diluted      $   0.27    $ (0.21 )   $   0.56    $   0.30
share as adjusted
Increase in fair value of
conversion option of CybAero        0.08     0.17        0.04       0.17
convertible bond investment
Earnings (loss) per diluted      $   0.35    $ (0.04 )   $   0.60    $   0.47
share as reported


AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
                                                   
                                                     April 30,
                                                     2014         2013
Assets
Current assets:
Cash and cash equivalents                            $ 126,969     $ 75,332
Short-term investments                                 70,639        73,241
Accounts receivable, net of allowance for doubtful
accounts of $791 at April 30, 2014 and $936 at         31,739        19,770
April 30, 2013
Unbilled receivables and retentions                    10,929        11,304
Inventories, net                                       50,699        62,561
Income tax receivable                                  6,584         11,777
Deferred income taxes                                  5,038         5,166
Prepaid expenses and other current assets             4,260       4,303   
Total current assets                                   306,857       263,454
Long-term investments                                  50,505        68,916
Property and equipment, net                            19,997        24,429
Deferred income taxes                                  6,721         3,745
Other assets                                          874         1,060   
Total assets                                         $ 384,954    $ 361,604 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                     $ 13,906      $ 16,144
Wages and related accruals                             14,083        12,116
Customer advances                                      2,984         7,519
Other current liabilities                             6,762       6,408   
Total current liabilities                              37,735        42,187
Deferred rent                                          1,239         771
Liability for uncertain tax positions                  3,513         3,460
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—23,176,576 shares at     2             2
April 30, 2014 and 22,614,315 at April 30, 2013
Additional paid-in capital                             143,648       130,527
Accumulated other comprehensive loss                   (263    )     (705    )
Retained earnings                                     199,080     185,362 
Total stockholders’ equity                            342,467     315,186 
Total liabilities and stockholders’ equity           $ 384,954    $ 361,604 


AeroVironment, Inc.
Consolidated Statements of Cash Flows
(In thousands)
                                     
                                       Year ended April 30,
                                       2014         2013         2012
Operating activities
Net income                             $ 13,718      $ 10,426      $ 30,451
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization            9,155         10,937        8,973
Impairment of long-lived assets          3,317         —             —
Provision for doubtful accounts          (6      )     462           291
Unrealized foreign currency gain         21            —             —
Gain on sale of equity securities        (4      )     —             —
Deferred income taxes                    (3,110  )     3,851         (2,579  )
Change in fair value of conversion       (1,773  )     (6,173  )     —
feature of convertible bonds
Stock-based compensation                 3,622         3,470         3,196
Tax benefit from exercise of stock       2,305         1,606         1,239
options
Excess tax benefit from stock-based      (648    )     —             (189    )
compensation
Loss (gain) on disposition of            —             18            (11     )
property and equipment
Changes in operating assets and
liabilities:
Accounts receivable                      (11,963 )     36,185        (12,332 )
Unbilled receivables and retentions      375           15,730        (5,068  )
Inventories                              11,862        (19,022 )     (5,402  )
Income tax receivable                    5,193         (11,777 )     —
Prepaid expenses and other assets        82            (317    )     (1,678  )
Accounts payable                         (2,238  )     (4,069  )     (10,921 )
Other liabilities                       (1,045  )    (17,320 )    12,784  
Net cash provided by operating           28,863        24,007        18,754
activities
Investing activities
Acquisition of property and              (7,143  )     (11,834 )     (14,992 )
equipment
Net redemptions (purchases) of           23,113        2,014         (2,575  )
held-to-maturity investments
Acquisition of intangible assets         (750    )     (850    )     —
Purchases of available-for-sale          —             (3,037  )     —
investments
Sales of available-for-sale              360           600           225
investments
Proceeds from sale of property and      —           —           13      
equipment
Net cash provided by (used in)           15,580        (13,107 )     (17,329 )
investing activities
Financing activities
Excess tax benefit from stock-based      648           —             189
compensation
Tax withholding payment related to       (163    )     (77     )     —
net settlement of equity awards
Exercise of stock options               6,709       289         565     
Net cash provided by financing          7,194       212         754     
activities
Net increase in cash and cash            51,637        11,112        2,179
equivalents
Cash and cash equivalents at            75,332      64,220      62,041  
beginning of year
Cash and cash equivalents at end of    $ 126,969    $ 75,332     $ 64,220  
year
Supplemental disclosures of cash
flow information
Cash paid during the year for:
Income taxes                           $ 2,556       $ 15,262      $ 13,104
Non-cash activities
Unrealized gain (loss) on long-term
investments recorded in accumulated
other comprehensive loss, net of       $ 442         $ (11     )   $ 90
deferred taxes of $261, $37 and $56,
respectively
Reclassification from share-based      $ —           $ 401         $ —
liability compensation to equity


Reportable Segment Results are as Follows:
(In thousands)
                                                      
                                Three Months Ended       Twelve Months Ended
                                April 30,  April 30,    April 30,  April 30,
                                2014        2013        2014        2013
Revenue:
UAS                             $  60,029   $ 42,372     $ 208,810   $ 194,276
EES                             13,469      11,738      42,893      45,876
Total                           73,498      54,110      251,703     240,152
Cost of sales:
UAS                             34,548      26,574       127,992     115,194
EES                             8,812       9,814       30,098      32,422
Total                           43,360      36,388      158,090     147,616
Gross margin:
UAS                             25,481      15,798       80,818      79,082
EES                             4,657       1,924       12,795      13,454
Total                           30,138      17,722      93,613      92,536
Selling, general and            16,968      14,290       55,679      51,520
administrative
Research and development        6,223       9,386       25,515      37,214
Income (loss) from operations   6,947       (5,954   )   12,419      3,802
Other income:
Interest income                 258         228          855         726
Other income                    2,648       6,196       1,622       6,245
Income before income taxes      $  9,853    $ 470       $ 14,896    $ 10,773
                                                                       

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Contact:

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