AeroVironment, Inc. Announces Fiscal 2013 Third Quarter Results

Tue Mar 5, 2013 4:10pm EST

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MONROVIA, Calif.--(Business Wire)--
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 $47.1 million, down $24.9
million from third quarter fiscal 2012 revenue of $72.0 million. The decrease in
revenue resulted from decreased sales in our Unmanned Aircraft Systems (UAS)
segment of $19.6 million and in our Efficient Energy Systems (EES) segment of
$5.3 million. 

Loss from operations for the third quarter of fiscal 2013 was $1.1 million, a
decrease of 115% from income from operations for the third quarter of fiscal
2012 of $7.3 million. 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 $3.9 million, a decrease of
$1.8 million from net income for the third quarter of fiscal 2012 of $5.7
million. 

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

Income from operations for the first nine months of fiscal 2013 was $9.8
million, a decrease of 44% from the first nine months of fiscal 2012 income from
operations of $17.3 million. 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 $11.2 million, a
decrease of $1.4 million from net income for the first nine months of fiscal
2012 of $12.7 million. 

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 $93.2 million as of April 30, 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 28,         January 26,                      January 28,      
                                           2013                        2012                2013                             2012             
                                                                                                                                             
 Revenue:                                                                                                                                    
 Product sales                             $       23,496              $       36,645      $       104,601                  $       113,802  
 Contract services                         23,591                      35,319              81,441                           100,531          
                                           47,087                      71,964              186,042                          214,333          
 Cost of sales:                                                                                                                              
 Product sales                             14,281                      23,587              63,055                           69,958           
 Contract services                         13,133                      20,944              48,173                           64,597           
                                           27,414                      44,531              111,228                          134,555          
 Gross margin                              19,673                      27,433              74,814                           79,778           
 Selling, general and administrative       10,433                      12,866              37,230                           38,806           
 Research and development                  10,306                      7,238               27,828                           23,640           
 (Loss) income from operations             (1,066          )           7,329               9,756                            17,332           
 Other income:                                                                                                                               
 Interest income                           164                         129                 498                              313              
 Other income                              49                          -                   49                               -                
 (Loss) income before income taxes         (853            )           7,458               10,303                           17,645           
 (Benefit) provision for income taxes      (4,722          )           1,714               (918             )               4,988            
 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, 2013 and $921 at April 30, 2012      31,600                  56,417               
 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 30, 2012                         2                       2                    
 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 compensation                                                                                          -                             (115          )     
 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 equipment                                                                                          -                             13                  
 Acquisition of intangible assets                                                                                                          (850          )               -                   
 Investment in CybAero AB convertible notes                                                                                                (3,037        )               -                   
 Net redemptions of held-to-maturity investments                                                                                           4,690                         7,965               
 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 compensation                                                                                          -                             115                 
 Exercise of stock options                                                                                                                 165                           508                 
 Net cash provided by financing activities                                                                                                 165                           623                 
 Net (decrease) increase in cash and cash equivalents                                                                                      (245          )               3,824               
 Cash and cash equivalents at beginning of period                                                                                          64,220                        62,041              
 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 deferred taxes of $28 and $59, respectively      $     42                      $     87            
 Reclassification from share-based liability compensation to equity                                                                        $     401                     $     -             
                                                                                                                                                                                             


 Reportable Segment Results are as Follows (Unaudited):                                                                               
 
(In thousands)                                                                                                                      
                                                                                                                                      
                                          Three Months Ended                              Nine Months Ended                           
                                          January 26,                 January 28,         January 26,                January 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 administrative      10,433                      12,866              37,230                     38,806           
 Research and development                 10,306                      7,238               27,828                     23,640           
 (Loss) income from operations            (1,066          )           7,329               9,756                      17,332           
 Interest income                          164                         129                 498                        313              
 Other income                             49                          -                   49                         -                
 (Loss) income before income taxes        $       (853    )           $       7,458       $       10,303             $       17,645   
                                                                                                                                      


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

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