Sign in Subscribe

AeroVironment - $AVAV - Earnings Analysis: Record funded backlog of $763.5 million provides a strong foundation for future revenue.

By sagebytes in Technology —

Business Model

AeroVironment generates revenue through product sales (Uncrewed Systems, Loitering Munition Systems and MacCready Works) and contract services. The company serves defense, government and commercial customers.

Revenue Sources

  • Product Sales: Uncrewed Systems (UxS), Loitering Munitions Systems (LMS), MacCready Works (MW)
  • Contract Services: Services related to the above product segments.

Income Statement Analysis

  • Revenue decreased by 10% year-over-year, primarily due to a 44% decrease in UnCrewed Systems (UxS) revenue, partially offset by increases in Loitering Munitions Systems (LMS) and MacCready Works (MW).
  • Gross margin decreased by 6%, from 36% to 38%, primarily due to increases in LMS product margins driven by favorable contract definitizations in Q2 and increased LMS sales volume, partially offset by lower service margins driven by lower volumes.
  • Loss from operations was $(3.1) million compared to income from operations of $14.3 million in the prior year, primarily due to a $16.0 million increase in selling, general and administrative (SG&A) expenses and a decrease in gross margin of $4.1 million, partially offset by a decrease in research and development (R&D) expense of $2.6 million.
  • Net loss was $(1.8) million, or $(0.06) per diluted share, compared to net income of $13.9 million, or $0.50 per diluted share, in the prior-year period.

Balance Sheet Analysis

  • Total Assets increased to $1,048.143 million as of January 25, 2025, from $1,015.860 million as of April 30, 2024.
  • Total Stockholders' Equity increased to $861.055 million as of January 25, 2025, from $822.745 million as of April 30, 2024.
  • Total Liabilities decreased to $187.088 million as of January 25, 2025, from $193.115 million as of April 30, 2024.

Cash Flow Analysis

  • Net cash used in operating activities was $(1.054) million for the nine months ended January 25, 2025, compared to net cash provided by operating activities of $26.965 million for the nine months ended January 27, 2024.
  • Net cash used in investing activities was $(16.601) million for the nine months ended January 25, 2025, compared to $(41.432) million for the nine months ended January 27, 2024.
  • Net cash used in financing activities was $(8.388) million for the nine months ended January 25, 2025, compared to $(10.621) million for the nine months ended January 27, 2024.
  • Cash and cash equivalents at the end of the period decreased to $47.000 million as of January 25, 2025, from $107.694 million as of January 27, 2024.

Capital Allocation

AeroVironment is focused on expanding production capacity and strategic organic and inorganic investments by developing new innovative products, expanding into adjacent markets and increasing its production capacity. This is further strengthened through the planned acquisition of BlueHalo.

Management Commentary

We made significant progress towards executing our long-term growth strategy and building resiliency for the future.

We booked record Switchblade and Jump-20 orders, which helped expand our backlog to a record $764 million.

While this has been a transition year pivoting away from Ukraine demand, we still expect a strong fiscal year 2025 including record fourth quarter revenue.

We faced a number of short-term challenges in the third quarter, including the unprecedented high winds and fires in Southern California, which impacted our ability to meet our goals.

Overall Sentiment: Positive, but cautious due to short-term challenges and the transition away from Ukraine demand. Confident in long-term growth strategy.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.