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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended January 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to           

Commission File Number: 001-33261

AEROVIRONMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-2705790

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

900 Innovators Way

Simi Valley, California

93065

(Address of principal executive offices)

(Zip Code)

(805) 520-8350

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

AVAV

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of March 3, 2021, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 24,676,485.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.

Financial Statements :

    

Consolidated Balance Sheets as of January 30, 2021 (Unaudited) and April 30, 2020

3

Consolidated Statements of Operations for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)

4

Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)

5

Consolidated Statements of Stockholders’ Equity for the three and nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)

7

Consolidated Statements of Cash Flows for the nine months ended January 30, 2021 (Unaudited) and January 25, 2020 (Unaudited)

8

Notes to Consolidated Financial Statements (Unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

42

Item 3.

Defaults Upon Senior Securities

42

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

43

Item 6.

Exhibits

43

Signatures

45

2

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)

January 30,

    

April 30,

2021

2020

    

(Unaudited)

 

Assets

Current assets:

Cash and cash equivalents

$

324,543

$

255,142

Short-term investments

48,499

47,507

Accounts receivable, net of allowance for doubtful accounts of $565 at January 30, 2021 and $1,190 at April 30, 2020

 

26,621

 

73,660

Unbilled receivables and retentions (inclusive of related party unbilled receivables of $6,834 at January 30, 2021 and $15,779 at April 30, 2020)

 

61,084

 

75,837

Inventories

 

53,104

 

45,535

Prepaid expenses and other current assets

 

7,693

 

6,246

Total current assets

 

521,544

 

503,927

Long-term investments

11,222

15,030

Property and equipment, net

 

22,920

 

21,694

Operating lease right-of-use assets

11,281

8,793

Deferred income taxes

 

5,821

 

4,928

Intangibles, net

11,552

13,637

Goodwill

6,340

6,340

Other assets

 

312

 

10,605

Total assets

$

590,992

$

584,954

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

15,837

$

19,859

Wages and related accruals

 

20,081

 

23,972

Customer advances

 

4,279

 

7,899

Current operating lease liabilities

4,403

3,380

Income taxes payable

2,370

1,065

Other current liabilities

 

9,158

 

10,778

Total current liabilities

 

56,128

 

66,953

Non-current operating lease liabilities

8,426

6,833

Other non-current liabilities

243

250

Liability for uncertain tax positions

 

1,017

 

1,017

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares—10,000,000; none issued or outstanding at January 30, 2021 and April 30, 2020

 

 

Common stock, $0.0001 par value:

Authorized shares—100,000,000

Issued and outstanding shares—24,102,691 shares at January 30, 2021 and 24,063,639 shares at April 30, 2020

 

2

 

2

Additional paid-in capital

 

184,366

 

181,481

Accumulated other comprehensive income

 

347

 

328

Retained earnings

 

340,475

 

328,090

Total AeroVironment, Inc. stockholders’ equity

 

525,190

 

509,901

Noncontrolling interest

(12)

Total equity

525,178

509,901

Total liabilities and stockholders’ equity

$

590,992

$

584,954

See accompanying notes to consolidated financial statements (unaudited).

3

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

Three Months Ended

Nine Months Ended

January 30,

January 25,

January 30,

January 25,

    

2021

    

2020

    

2021

    

2020

 

Revenue:

Product sales

$

58,348

$

36,432

$

182,233

$

159,657

Contract services (inclusive of related party revenue of $7,480 and $11,762 for the three months ended January 30, 2021 and January 30, 2020, respectively; and $35,318 and $37,491 for the nine months ended January 30, 2021 and January 25, 2020, respectively)

 

20,434

 

25,459

 

76,664

 

72,416

 

78,782

 

61,891

 

258,897

 

232,073

Cost of sales:

Product sales

 

35,746

 

21,034

 

102,039

 

82,244

Contract services

 

14,395

 

17,361

 

51,955

 

49,895

 

50,141

 

38,395

 

153,994

 

132,139

Gross margin:

 

 

Product sales

22,602

15,398

80,194

77,413

Contract services

6,039

8,098

24,709

22,521

28,641

23,496

 

104,903

 

99,934

Selling, general and administrative

 

15,652

 

13,223

 

42,640

 

43,146

Research and development

 

13,631

 

11,381

 

36,710

 

30,948

(Loss) income from operations

 

(642)

 

(1,108)

 

25,553

 

25,840

Other income:

Interest income, net

 

94

 

1,122

 

417

 

3,717

Other (expense) income, net

 

(37)

 

120

 

68

 

632

(Loss) income before income taxes

 

(585)

 

134

 

26,038

 

30,189

(Benefit from) provision for income taxes

(924)

(38)

 

2,774

 

3,203

Equity method investment loss, net of tax

 

(81)

 

(1,200)

 

(10,891)

 

(3,410)

Net income (loss)

258

(1,028)

12,373

23,576

Net (income) loss attributable to noncontrolling interest

(47)

20

12

27

Net income (loss) attributable to AeroVironment, Inc.

$

211

$

(1,008)

$

12,385

$

23,603

Net income (loss) per share attributable to AeroVironment, Inc.

Basic

$

0.01

$

(0.04)

$

0.52

$

0.99

Diluted

$

0.01

$

(0.04)

$

0.51

$

0.98

Weighted-average shares outstanding:

Basic

 

23,942,782

 

23,821,145

 

23,924,017

 

23,790,788

Diluted

 

24,260,874

 

23,821,145

 

24,216,371

 

24,076,195

See accompanying notes to consolidated financial statements (unaudited).

4

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

January 30,

January 25,

January 30,

January 25,

    

2021

    

2020

    

2021

    

2020

 

Net income (loss)

$

258

$

(1,028)

$

12,373

$

23,576

Other comprehensive income (loss):

Change in foreign currency translation adjustments

(112)

75

67

Unrealized gain (loss) on available-for-sale investments, net of deferred tax benefit of $2 for the three and nine months ended January 30, 2021

 

5

 

 

(56)

 

Total comprehensive income (loss)

263

(1,140)

12,392

23,643

Net loss (income) attributable to noncontrolling interest

(47)

20

12

27

Comprehensive income (loss) attributable to AeroVironment, Inc.

$

216

$

(1,120)

$

12,404

$

23,670

See accompanying notes to consolidated financial statements (unaudited).

5

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the nine months ended January 30, 2021 and January 25, 2020 (Unaudited)

(In thousands except share data)

Accumulated

 

Additional

Other

Total

Non-

 

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

 

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

Equity

Interest

    

Total

 

Balance at April 30, 2020

 

24,063,639

$

2

$

181,481

$

328,090

$

328

$

509,901

$

$

509,901

Net income (loss)

 

 

 

 

12,385

 

12,385

(12)

 

12,373

Unrealized loss on investments

 

 

 

 

(56)

(56)

 

(56)

Foreign currency translation

 

 

 

 

75

75

 

75

Stock options exercised

 

3,500

 

 

86

 

86

 

86

Restricted stock awards

 

62,675

 

 

 

 

Restricted stock awards forfeited

 

(1,833)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(25,290)

 

 

(1,955)

 

(1,955)

 

(1,955)

Stock based compensation

 

 

 

4,754

 

4,754

 

4,754

Balance at January 30, 2021

 

24,102,691

$

2

$

184,366

$

340,475

$

347

$

525,190

$

(12)

$

525,178

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

Equity

Interest

    

Total

Balance at April 30, 2019

 

23,946,293

$

2

$

176,216

$

286,351

$

2

$

462,571

$

4

$

462,575

Adoption of ASU 2018-09

665

665

665

Net income (loss)

 

 

 

 

23,603

 

23,603

(27)

 

23,576

Foreign currency translation

 

 

 

 

67

67

 

67

Stock options exercised

 

3,000

 

 

93

 

93

 

93

Restricted stock awards

 

74,892

 

 

 

 

Restricted stock awards forfeited

 

(11,769)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(17,307)

 

 

(1,009)

 

(1,009)

 

(1,009)

Stock based compensation

 

 

4,751

 

4,751

 

4,751

Balance at January 25, 2020

 

23,995,109

$

2

$

180,051

$

310,619

$

69

$

490,741

$

(23)

$

490,718

See accompanying notes to consolidated financial statements (unaudited).

6

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Stockholders’ Equity

For the three months ended January 30, 2021 and January 25, 2020 (Unaudited)

(In thousands except share data)

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income

Equity

Interest

    

Total

Balance at October 31, 2020

 

24,103,980

$

2

$

183,298

$

340,264

$

342

$

523,906

$

(59)

$

523,847

Net income

 

 

 

 

211

 

211

47

 

258

Unrealized loss on investments

 

 

 

 

 

5

5

 

5

Restricted stock awards

2,083

Restricted stock awards forfeited

 

(1,318)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(2,054)

 

 

(177)

 

(177)

 

(177)

Stock based compensation

 

 

 

1,245

 

1,245

 

1,245

Balance at January 30, 2021

 

24,102,691

$

2

$

184,366

$

340,475

$

347

$

525,190

$

(12)

$

525,178

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income

Equity

Interest

    

Total

Balance at October 26, 2019

 

23,990,616

2

178,550

311,627

181

490,360

(3)

490,357

Net loss

 

 

 

 

(1,008)

 

(1,008)

(20)

 

(1,028)

Foreign currency translation

 

 

 

 

(112)

(112)

 

(112)

Restricted stock awards

 

9,200

 

 

 

 

Restricted stock awards forfeited

 

(764)

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(3,943)

 

 

(266)

 

(266)

 

(266)

Stock-based compensation

 

 

1,767

 

1,767

 

1,767

Balance at January 25, 2020

 

23,995,109

$

2

$

180,051

$

310,619

$

69

$

490,741

$

(23)

$

490,718

See accompanying notes to consolidated financial statements (unaudited).

7

Table of Contents

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Nine Months Ended

    

January 30,

    

January 25,

 

2021

2020

Operating activities

Net income

$

12,373

$

23,576

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

 

8,650

 

7,107

Losses from equity method investments

10,891

3,410

Realized gain from sale of available-for-sale investments

(11)

Provision for doubtful accounts

 

(145)

 

(2)

Other non-cash income

(473)

(719)

Non-cash lease expense

3,592

3,453

Loss on foreign currency transactions

 

1

 

Deferred income taxes

 

(897)

 

(946)

Stock-based compensation

 

4,754

 

4,751

Loss (gain) on sale of property and equipment

2

(71)

Amortization of debt securities

143

(1,291)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

 

47,184

 

3,245

Unbilled receivables and retentions

 

14,753

 

(24,364)

Inventories

 

(7,569)

 

(10,766)

Income tax receivable

821

Prepaid expenses and other assets

 

(1,622)

 

216

Accounts payable

 

(3,346)

 

(1,301)

Other liabilities

(9,318)

7,947

Net cash provided by operating activities

 

78,962

 

15,066

Investing activities

Acquisition of property and equipment

 

(8,472)

 

(8,504)

Equity method investments

(2,150)

(9,551)

Business acquisition, net of cash acquired

(18,641)

Proceeds from sale of property and equipment

81

Redemptions of held-to-maturity investments

 

 

166,917

Purchases of held-to-maturity investments

(162,517)

Redemptions of available-for-sale investments

 

130,066

 

41,150

Purchases of available-for-sale investments

(125,644)

(59,297)

Net cash used in investing activities

 

(6,200)

 

(50,362)

Financing activities

Tax withholding payment related to net settlement of equity awards

(1,955)

(1,009)

Holdback and retention payments for business acquisition

(1,492)

Exercise of stock options

 

86

 

93

Net cash used in financing activities