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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 27, 2024

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.)

241 18th Street South, Suite 415

Arlington, Virginia

22202

(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 February 28, 2024, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 28,135,734.

Table of Contents

AeroVironment, Inc.

Table of Contents

Item 1.

Financial Statements :

    

Condensed Consolidated Balance Sheets as of January 27, 2024 (Unaudited) and April 30, 2023

3

Condensed Consolidated Statements of Operations for the three and nine months ended January 27, 2024 (Unaudited) and January 28, 2023 (Unaudited)

4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended January 27, 2024 (Unaudited) and January 28, 2023 (Unaudited)

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended January 27, 2024 (Unaudited) and January 28, 2023 (Unaudited)

6

Condensed Consolidated Statements of Cash Flows for the nine months ended January 27, 2024 (Unaudited) and January 28, 2023 (Unaudited)

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2.

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

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 3.

Defaults Upon Senior Securities

50

Item 4.

Mine Safety Disclosures

50

Item 5.

Other Information

50

Item 6.

Exhibits

51

Signatures

52

2

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AeroVironment, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)

January 27,

    

April 30,

2024

2023

    

(Unaudited)

 

Assets

Current assets:

Cash and cash equivalents

$

107,694

$

132,859

Accounts receivable, net of allowance for doubtful accounts of $88 at January 27, 2024 and $156 at April 30, 2023

 

53,236

 

87,633

Unbilled receivables and retentions

 

148,588

 

105,653

Inventories, net

 

161,384

 

138,814

Income taxes receivable

8,081

Prepaid expenses and other current assets

 

21,708

 

12,043

Total current assets

 

500,691

 

477,002

Long-term investments

21,282

23,613

Property and equipment, net

 

45,053

 

39,795

Operating lease right-of-use assets

28,904

27,363

Deferred income taxes

 

21,378

 

27,206

Intangibles, net

77,597

43,577

Goodwill

275,189

180,801

Other assets

 

10,205

 

5,220

Total assets

$

980,299

$

824,577

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

26,969

$

31,355

Wages and related accruals

 

28,443

 

35,637

Customer advances

 

17,536

 

16,645

Current portion of long-term debt

7,500

7,500

Current operating lease liabilities

8,934

8,229

Income taxes payable

797

2,342

Other current liabilities

 

17,352

 

19,626

Total current liabilities

 

107,531

 

121,334

Long-term debt, net of current portion

31,292

125,904

Non-current operating lease liabilities

21,978

21,189

Other non-current liabilities

2,105

746

Liability for uncertain tax positions

 

2,705

 

2,705

Deferred income taxes

1,703

1,729

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares—10,000,000; none issued or outstanding at January 27, 2024 and April 30, 2023

 

 

Common stock, $0.0001 par value:

Authorized shares—100,000,000

Issued and outstanding shares—28,136,735 shares at January 27, 2024 and 26,216,897 shares at April 30, 2023

 

4

 

4

Additional paid-in capital

 

593,228

 

384,397

Accumulated other comprehensive loss

 

(4,888)

 

(4,452)

Retained earnings

 

224,641

 

171,021

Total stockholders' equity

812,985

550,970

Total liabilities and stockholders’ equity

$

980,299

$

824,577

See accompanying notes to condensed consolidated financial statements (unaudited).

3

Table of Contents

AeroVironment, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

Three Months Ended

Nine Months Ended

January 27,

January 28,

January 27,

January 28,

    

2024

    

2023

    

2024

    

2023

 

Revenue:

Product sales

$

155,923

$

91,216

$

421,173

$

211,533

Contract services

 

30,655

 

43,179

 

98,568

 

142,962

 

186,578

 

134,395

 

519,741

 

354,495

Cost of sales:

Product sales

 

99,486

 

54,866

 

240,126

 

127,210

Contract services

 

19,805

 

34,019

 

71,318

 

122,171

 

119,291

 

88,885

 

311,444

 

249,381

Gross margin:

 

 

Product sales

56,437

36,350

181,047

84,323

Contract services

10,850

9,160

27,250

20,791

67,287

45,510

 

208,297

 

105,114

Selling, general and administrative

 

27,826

 

24,746

 

79,800

 

70,302

Research and development

 

25,127

 

16,157

 

62,618

 

47,793

Income (loss) from operations

 

14,334

 

4,607

 

65,879

 

(12,981)

Other income (loss):

Interest expense, net

 

(114)

 

(2,810)

 

(4,072)

 

(6,722)

Other income (expense), net

 

1,004

 

(2,587)

 

(2,983)

 

(2,183)

Income (loss) before income taxes

 

15,224

 

(790)

 

58,824

 

(21,886)

Provision for (benefit from) income taxes

1,259

(531)

 

3,710

 

(8,382)

Equity method investment loss, net of tax

 

(80)

 

(417)

 

(1,494)

 

(2,190)

Net income (loss)

13,885

(676)

53,620

(15,694)

Net income attributable to noncontrolling interest

(45)

Net income (loss) attributable to AeroVironment, Inc.

$

13,885

$

(676)

$

53,620

$

(15,739)

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

Basic

$

0.50

$

(0.03)

$

1.99

$

(0.63)

Diluted

$

0.50

$

(0.03)

$

1.98

$

(0.63)

Weighted-average shares outstanding:

Basic

 

27,907,568

 

25,012,412

 

26,957,061

 

24,906,977

Diluted

 

28,044,127

 

25,012,412

 

27,061,409

 

24,906,977

See accompanying notes to condensed consolidated financial statements (unaudited).

4

Table of Contents

AeroVironment, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

January 27,

January 28,

January 27,

January 28,

    

2024

    

2023

    

2024

    

2023

 

Net income (loss)

$

13,885

$

(676)

$

53,620

$

(15,694)

Other comprehensive income (loss):

Unrealized gain on available-for-sale investments, net of deferred tax expense of $0 for the three and nine months ended January 28, 2023, respectively

 

 

 

 

26

Change in foreign currency translation adjustments

1,189

3,425

(436)

1,433

Total comprehensive income (loss)

15,074

2,749

53,184

(14,235)

Net income attributable to noncontrolling interest

(45)

Comprehensive income (loss) attributable to AeroVironment, Inc.

$

15,074

$

2,749

$

53,184

$

(14,280)

See accompanying notes to condensed consolidated financial statements (unaudited).

5

Table of Contents

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended January 27, 2024 and January 28, 2023 (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 October 28, 2023

 

28,135,539

$

4

$

589,047

$

210,756

$

(6,077)

$

793,730

$

$

793,730

Net income

 

 

 

 

13,885

 

13,885

 

13,885

Foreign currency translation

1,189

1,189

1,189

Restricted stock awards

4,622

Restricted stock awards forfeited

 

(3,426)

 

 

 

 

Stock based compensation

 

 

 

4,181

 

4,181

 

4,181

Balance at January 27, 2024

 

28,136,735

$

4

$

593,228

$

224,641

$

(4,888)

$

812,985

$

$

812,985

Accumulated

Additional

Other

Total

Non-

Common Stock

Paid-In

Retained

Comprehensive

AeroVironment, Inc.

Controlling

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

Equity

Interest

    

Total

Balance at October 29, 2022

 

25,157,618

$

4

$

283,789

$

332,170

$

(8,480)

$

607,483

$

$

607,483

Net loss

 

 

 

 

(676)

 

(676)

 

(676)

Foreign currency translation

3,425

3,425

3,425

Stock options exercised

10,000

186

186

186

Restricted stock awards

1,812

Restricted stock awards forfeited

 

(1,935)

 

 

 

 

Shares issued, net of issuance costs

96,530

8,389

8,389

8,389

Stock based compensation

 

 

2,706

 

2,706

 

2,706

Balance at January 28, 2023

 

25,264,025

$

4

$

295,070

$

331,494

$

(5,055)

$

621,513

$

$

621,513

6

Table of Contents

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the nine months ended January 27, 2024 and January 28, 2023 (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, 2023

 

26,216,897

$

4

$

384,397

$

171,021

$

(4,452)

$

550,970

$

$

550,970

Net income

 

 

 

 

53,620

 

53,620

 

53,620

Foreign currency translation

 

 

 

 

(436)

(436)

 

(436)

Restricted stock awards

 

149,990

 

 

 

 

Restricted stock awards forfeited

 

(9,602)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(13,919)

 

 

(1,370)

 

(1,370)

 

(1,370)

Shares issued, net of issuance costs

807,370

87,956

87,956

87,956

Issuance of common stock for business acquisition

985,999

109,820

109,820

109,820

Stock based compensation

 

 

 

12,425

 

12,425

 

12,425

Balance at January 27, 2024

 

28,136,735

$

4

$

593,228

$

224,641

$

(4,888)

$

812,985

$

$

812,985

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, 2022

 

24,951,287

$

2

$

267,248

$

347,233

$

(6,514)

$

607,969

$

241

$

608,210

Net (loss) income

 

 

 

 

(15,739)

 

(15,739)

45

 

(15,694)

Unrealized gain on investments

 

 

 

 

26

26

 

26

Foreign currency translation

 

 

 

 

1,433

1,433

 

1,433

Stock options exercised

 

35,000

868

868

 

868

Restricted stock awards

 

77,169

 

 

 

 

Restricted stock awards forfeited

 

(10,679)

 

 

 

 

Tax withholding payment related to net share settlement of equity awards

 

(10,723)

 

 

(853)

 

(853)

 

(853)

Shares issued, net of issuance costs

221,971

2

20,699

20,701

20,701

Deconsolidation of previously controlled subsidiary

(286)

(286)

Stock based compensation

 

 

7,108

 

7,108

 

7,108

Balance at January 28, 2023

 

25,264,025

$

4

$

295,070

$

331,494

$

(5,055)

$

621,513

$

$

621,513

7

Table of Contents

AeroVironment, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Nine Months Ended

    

January 27,

    

January 28,

 

2024

2023

Operating activities

Net income (loss)

$

53,620

$

(15,694)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization

 

24,969

 

48,109

Loss from equity method investments

1,494

2,190

Loss on deconsolidation of previously controlled subsidiary

189

Amortization of debt issuance costs

638

634

Provision for doubtful accounts

 

(67)

 

5

Reserve for inventory excess and obsolescence

11,668

3,787

Other non-cash expense, net

783

935

Non-cash lease expense