Form 8-K AeroVironment Inc For: Dec 06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 6, 2016

 

AEROVIRONMENT, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code: (626) 357-9983

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 2.02.  Results of Operations and Financial Condition

 

On December 6, 2016, AeroVironment, Inc. issued a press release announcing second quarter financial results for the period ended October 29, 2016, a copy of which is attached hereto as Exhibit 99.1.

 

The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of AeroVironment, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.

 

In addition to historic information, this report, including the exhibit, contains forward-looking statements regarding events, performance and financial trends. Various factors could affect future results and could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of those factors are identified in the exhibit, and in our periodic reports filed with the Securities and Exchange Commission.

 

Item 9.01.  Financial Statements and Exhibits

 

(d)  Exhibits.

 

 

2

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

3

 

Exhibit 99.1

 

 

 

AeroVironment, Inc. Announces Fiscal 2017 Second Quarter Results

 

MONROVIA, Calif., December 6, 2016 — AeroVironment, Inc. (NASDAQ: AVAV) today reported financial results for its second quarter ended October 29, 2016.

 

“Strong order flow in the second quarter increased funded backlog by 60 percent, sequentially, to $119.6 million, supporting our full year objectives,” said Wahid Nawabi, AeroVironment chief executive officer.  “Second quarter results are in-line with our previously stated forecast and we have made significant progress executing against our strategic objectives.”

 

"Our business remains strong and we expect robust demand for small unmanned aircraft systems and support services from international customers across the globe.  Our family of Tactical Missile Systems continues to provide uniquely valuable force protection capabilities to United States troops in a growing number of ways.  Leveraging our demonstrated and successful UAS expertise into commercial markets, which represents a large opportunity for our business, remains an important priority for us. In November we unveiled our comprehensive commercial information solution, consisting of the breakthrough Quantix drone, our Decision Support System software platform and turnkey flight services.  As we move into the second half of fiscal 2017, we anticipate an increase in work across our portfolio and remain committed to achieving our financial and strategic objectives and delivering value to our shareholders,” Mr. Nawabi added."

 

FISCAL 2017 SECOND QUARTER RESULTS

 

Revenue for the second quarter of fiscal 2017 was $50.1 million, a decrease from second quarter fiscal 2016 revenue of $64.7 million. The decrease in revenue resulted from a decrease in sales in our Unmanned Aircraft Systems (UAS) segment of $15.8 million, partially offset by an increase in sales in our Efficient Energy Systems (EES) segment of $1.1 million.

 

Gross margin for the second quarter of fiscal 2017 was $17.4 million, a decrease from second quarter fiscal 2016 gross margin of $31.5 million. The decrease in gross margin was primarily due to a decrease in product margin of $14.5 million, partially offset by an increase in service margin of $0.4 million. As a percentage of revenue, gross margin decreased from 49% to 35%. The decrease in gross margin percentage was primarily due to the reserve reversal of $3.5 million for the settlement of prior year government incurred cost audits recorded in the second quarter of fiscal 2016, a decrease in product sales volume, which resulted in an increase in the per unit fixed manufacturing and engineering overhead support cost and an increase sustaining engineering activities in support of our existing products of $1.3 million.

 

Loss from operations for the second quarter of fiscal 2017 was $4.5 million compared to second quarter fiscal 2016 income from operations of $6.9 million. The decrease in the year over year income from operations was a result of a decrease in gross margin of $14.1 million, partially offset by a decrease in research and development (R&D) expense of $1.4 million and a decrease in selling, general and administrative (SGA) expense of $1.3 million.

 

Other income, net, for the second quarter of fiscal 2017 was $0.3 million compared to other income, net of $0.1 million for the second quarter of fiscal 2016. 

 

Benefit for income taxes for the second quarter of fiscal 2017 was $48,000 compared to provision for income taxes of $2.6 million for the second quarter of fiscal 2016. The decrease in provision for income taxes was

primarily due to a decrease in income before income taxes, an increase in tax credits as a result of federal legislation reinstating the federal research and development tax credit during the three months ended January 30, 2016 and the reversal of a reserve for uncertain tax positions due to the settlement of prior fiscal year audits recorded in the first quarter of fiscal 2017.

 

Net loss for the second quarter of fiscal 2017 was $4.2 million compared to net income for the second quarter of fiscal 2016 of $4.4 million.

 

Loss per share for the second quarter of fiscal 2017 was $0.18 compared to earnings per share for the second quarter of fiscal 2016 of $0.19.

 

FISCAL 2017 YEAR-TO-DATE RESULTS

 

Revenue for the first six months of fiscal 2017 was $86.3 million, a decrease from the first six months’ fiscal 2016 revenue of $111.8 million. The decrease in revenue resulted from a decrease in sales in our UAS segment of $25.4 million. Sales in our EES segment were unchanged at $15.0 million during the first six months of fiscal 2017 and 2016.

 

Gross margin for the first six months of fiscal 2017 was $24.1 million, a decrease of 49% from the first six months’ fiscal 2016 gross margin of $47.6 million. The decrease in gross margin was due to a decrease in product margin of $23.9 million, partially offset by an increase in service margin of $0.4 million. As a percentage of revenue, gross margin decreased to 28% from 43%. The decrease in gross margin percentage was primarily due to the reserve reversal of $3.5 million for the settlement of prior year government incurred cost audits recorded in the first six months of fiscal 2016, an increase in sustaining engineering activities in support of our existing products of $2.7 million and an increase in warranty related costs of $1.7 million related to certain small UAS delivered in prior periods.

 

Loss from operations for the first six months of fiscal 2017 was $20.1 million compared to loss from operations for the first six months of fiscal 2016 of $2.2 million. The increase in loss from operations was a result of a decrease in gross margin of $23.5 million, partially offset by a decrease in SG&A expense of $2.9 million and a decrease in R&D expense of $2.6 million.

 

Other income, net, for the first six months of fiscal 2017 was $0.3 million compared to other expense, net, for the first six months of fiscal 2016 of $2.1 million. The decrease in expense was primarily due to the recording of an other-than-temporary impairment loss of $2.2 million on our CybAero equity securities during the first six months of fiscal 2016. The CybAero equity securities were sold during the second quarter of fiscal 2016.

 

Benefit for income taxes for the first six months of fiscal 2017 was $3.9 million compared to $1.7 million for the first six months of fiscal 2016. The increase in benefit for income taxes was primarily due to an increase in loss before income taxes, partially offset by an increase in tax credits as a result of federal legislation reinstating the federal research and development tax credit during the three months ended January 30, 2016 and the reversal of a reserve for uncertain tax positions due to the settlement of prior fiscal year audits recorded in the first six months of fiscal 2017.

 

Net loss for the first six months of fiscal 2017 was $15.8 million compared to net loss for the first six months of fiscal 2016 of $2.6 million.

 

Loss per share for the first six months of fiscal 2017 was $0.69 compared to loss per share for the first six months of fiscal 2016 of $0.11. Loss per share for the first six months of fiscal 2016 increased by $0.06 due to both the impairment loss and loss on sale of our CybAero equity securities.

 

 

BACKLOG

 

As of October 29, 2016, funded backlog (unfilled firm orders for which funding is currently appropriated to us under a customer contract) was $119.6 million compared to $65.8 million as of April 30, 2016.

FISCAL 2017 — OUTLOOK FOR THE THIRD QUARTER AND THE FULL YEAR

For the third quarter of fiscal 2017, the company expects to generate revenue of between $50 million and $52 million, and loss per fully diluted share of between $0.34 and $0.38.

For fiscal 2017, the company expects to generate revenue of between $260 million and $280 million, and earnings per fully diluted share of between $0.20 and $0.35. 

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, December 6, 2016, at 1:30 pm Pacific Time that will be broadcast live over the Internet. Wahid Nawabi, president and chief executive officer, Raymond D. Cook, 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, December 6, 2016, at approximately 4:30 p.m. Pacific Time through Tuesday, December 13, 2016, at 9:00 p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode 13677282. International callers should dial (404) 537-3406 and enter the same passcode number to access the audio replay. 

 

ABOUT AEROVIRONMENT, INC.

 

AeroVironment (NASDAQ: AVAV) provides customers with more actionable intelligence so they can proceed with certainty. Based in California, AeroVironment is a global leader in unmanned aircraft systems, tactical missile systems and electric vehicle charging and test systems, and serves militaries, government agencies, businesses and consumers. For more information visit 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; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of government spending; risks related to our international business, including compliance with export control laws; potential need for changes in our long-term strategy in response to future developments; unexpected technical and marketing difficulties inherent in major research and product development efforts; changes in the supply and/or demand and/or prices for our products and services; the activities of competitors and increased competition; failure of the markets in which we operate to grow; failure to remain a market innovator and create new market opportunities; changes in significant operating expenses, including components and raw materials; failure to develop new products; the extensive regulatory requirements governing our contracts with the U.S. government; product liability, infringement and other claims; 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 (Unaudited)

(In thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AeroVironment, Inc.

Reconciliation of (Loss) Earnings per Share (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AeroVironment, Inc.

Consolidated Balance Sheets

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AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

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AeroVironment, Inc.

Reportable Segment Results are as Follows (Unaudited)

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Contact:

AeroVironment, Inc.

Steven Gitlin

+1 (626) 357-9983

[email protected]