Dec 8, 2021

The stock price of AeroVironment, Inc. (NASDAQ: AVAV) fell by 27.48% in the most recent trading session. This is why it happened. The stock price of AeroVironment, Inc. (NASDAQ: AVAV) – a global leader in intelligent, multi-domain robotic systems – fell by 27.48% in the most recent trading session. Investors responded negatively to what was said by AeroVironment president and chief executive officer Wahid Nawabi in a statement about the full-year outlook for the company. Q2 2022 Results — Revenue for the second quarter of fiscal 2022 was $122.0 million, an increase of 32% from the second quarter of fiscal 2021 revenue of $92.7 million. The increase in revenue reflects an increase in service revenue of $23.9 million and product sales of $5.5 million. The increase in revenue was primarily due to revenue from the Medium Unmanned Aircraft Systems (MUAS) segment of $26.5 million and the Unmanned Ground Vehicles product line of $6.5 million, as a result of the acquisitions of Arcturus UAV and Telerob GmbH in February and May 2021, respectively. The increases were partially offset by a decrease in revenue in the Small Unmanned Aircraft Systems (Small UAS) segment of $3.4 million and in the other businesses of $1.1 million. — Gross margin for the second quarter of fiscal 2022 was $42.5 million, an increase of 4% from the second quarter of fiscal 2021 gross margin of $40.9 million. The increase in gross margin reflects a higher service margin of $0.9 million and a product margin of $0.7 million. As a percentage of revenue, gross margin decreased to 35% from 44%. Gross margin was impacted by $5.5 million of intangible amortization expense and other related non-cash purchase accounting expenses in the second quarter of fiscal 2022 as compared to $0.7 million in the second quarter of fiscal 2021. And with the acquisitions of Arcturus and the Intelligent Systems Group of Progeny Systems Corp. (ISG), the company experienced a higher proportion of service revenue, which generally has lower gross margins than do product sales. — Income from operations for the second quarter of fiscal 2022 was $3.3 million, a decrease of $10.6 million from the second quarter of fiscal 2021 income from operations of $13.9 million. The decrease in income from operations was primarily the result of an increase in selling, general, and administrative (“SG&A”) expense of $9.8 million and an increase in research and development (R&D) expense of $2.3 million, partially offset by an increase in gross margin of $1.6 million. SG&A expense included acquisition-related expenses and intangible amortization expense of $5.7 million in the second quarter of fiscal 2022 as compared to $0.4 million in the second quarter of fiscal 2021. The SG&A expense in the current quarter also included additional headcount and support costs associated with the acquisitions of Arcturus UAV, ISG, and Telerob. — Other expense, net, for the second quarter of fiscal 2022 was $11.4 million, as compared to other income, net of $0.2 million for the second quarter of fiscal 2021. And the increase in other expense, net was primarily due to an additional legal accrual of $10 million for the expected settlement of all claims from the buyers of the former EES business and higher interest expense of $1.4 million resulting from the term debt issued concurrently with the acquisition of Arcturus UAV. — Benefit from income taxes for the second quarter of fiscal 2022 was $9.5 million, as compared to a provision for income taxes of $2.5 million for the second quarter of fiscal 2021. And the increase in benefit from income taxes was primarily due to the decrease in income before income taxes and an increase in certain federal income tax credits. — Equity method investment income, net of tax, for the second quarter of fiscal 2022 was $1.1 million, as compared to equity method investment loss, net of tax, of $9.5 million for the second quarter of fiscal 2021. The increase in equity method investment income was due to an increase in the limited partnership investment. Equity method investment loss, net of tax, for the second quarter of fiscal 2021 included a loss of $8.4 million for the proportionate share of the HAPSMobile Inc. joint venture’s impairment of its investment in Loon LLC. — Net income attributable to AeroVironment for the second quarter of fiscal 2022 was $2.5 million, or $0.10 per diluted share, as compared to $2.1 million, or $0.09 per diluted share, for the second quarter of fiscal 2021. — Non-GAAP earnings per diluted share were $0.78 for the second quarter of fiscal 2022, as compared to $0.48 for the second quarter of fiscal 2021. KEY QUOTES: “While we achieved second quarter and first-half results in line with our expectations, headwinds to our business have intensified in recent months, requiring us to reduce our full-year outlook. The negative impact from supply chain delays, extended procurement cycles due to the global COVID-19 pandemic, slower decision making in Washington tied to Continuing Resolution related budget uncertainties, and staffing shortages have prevented us from realizing the growth and bottom-line results expected at the start of this fiscal year. We are diligently working to manage expenses and other challenges in light of our revised outlook but are realistic regarding the lack of visibility within this ongoing environment.” “Nevertheless, we made progress during the quarter and are executing on a strategy to deliver long-term improvement in our operating performance. We have begun to demonstrate synergies within our three recently acquired businesses, exemplified by the recent integration of Switchblade 300 with the Jump 20 Medium Unmanned Air System. At the same time, our impressive team continues to deliver on new product development, including the launch of the i45 N Mantis gimbal, providing superior intelligence, surveillance, and reconnaissance (“ISR”) for night-time operations. Furthermore, we saw traction across other growth initiatives within our Tactical Missile Systems segment by securing new orders for our Switchblade 600 and demonstrating sensor-to-shooter operations with NATO.” “Despite current market headwinds, we remain well-positioned to deliver long-term shareholder value through our focus on winning new business leveraging our innovative capabilities and industry-leading technology. While resetting our expectations for 2022, we are taking all steps available to mitigate these challenges going forward, ensuring the company remains on track for a fifth consecutive year of top-line growth and a path to higher investor returns.” — Wahid Nawabi, AeroVironment president and chief executive officer Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.