8-K
AeroVironment Inc (AVAV)
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 7, 2021
AEROVIRONMENT, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-33261 | 95-2705790 |
|---|---|---|
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification No.) |
| incorporation or organization) |
| 241 18th Street South, Suite 415 | |
|---|---|
| Arlington , Virginia | 22202 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (805) 520-8350
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 |
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition
On December 7, 2021, AeroVironment, Inc. (the “Company”) issued a press release announcing second quarter financial results for the period ended October 30, 2021, a copy of which is attached hereto as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure
The information under Item 2.02 above is incorporated herein by reference.
Attached as Exhibit 99.2 hereto is a presentation containing additional information regarding the Company’s second quarter fiscal 2022 financial results for the period ended October 30, 2021. A copy of the presentation is also available on the investor relations section of the Company’s website at https://investor.avinc.com/events-and-presentations. The information contained on the Company’s website is not incorporated by reference into, and does not form a part of, this Current Report on Form 8-K.
In addition to historic information, this report, including the exhibits, 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 exhibits, and in our periodic reports filed with the Securities and Exchange Commission.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Items 2.02 and 7.01 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.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit | ||
|---|---|---|
| Number | **** | Description |
| 99.1 | Press release issued by AeroVironment, Inc., dated December 7, 2021. | |
| 99.2 | | Presentation regarding AeroVironment, Inc.’s second quarter fiscal 2022 financial results dated December 7, 2021. |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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.
| AEROVIRONMENT, INC. | ||
|---|---|---|
| Date: December 7, 2021 | By: | /s/ Wahid Nawabi |
| Wahid Nawabi | ||
| President and Chief Executive Officer |
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Exhibit 99.1
AeroVironment, Inc. Announces Second Quarter Results and Resets Guidance for Fiscal 2022
ARLINGTON, VA, December 7, 2021 — AeroVironment, Inc. (NASDAQ: AVAV), a global leader in intelligent, multi-domain robotic systems, today reported financial results for its fiscal second quarter ended October 30, 2021.
“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,” said Wahid Nawabi, AeroVironment president and chief executive officer. “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.”
FISCAL 2022 SECOND QUARTER 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 our acquisitions of Arcturus UAV and Telerob GmbH in February and May 2021, respectively. These 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 higher service margin of $0.9 million and 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 1
to $0.7 million in the second quarter of fiscal 2021. With the acquisitions of Arcturus and the Intelligent Systems Group of Progeny Systems Corp. (“ISG”), we 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. 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. The increase in other expense, net was primarily due to an additional legal accrual of $10.0 million for the expected settlement of all claims from the buyers of our former EES business and higher interest expense of $1.4 million resulting from the term debt issued concurrent 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. 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 our 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 our 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 was $0.78 for the second quarter of fiscal 2022, as compared to $0.48 for the second quarter of fiscal 2021.
BACKLOG
As of October 30, 2021, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $252.0 million, as compared to $211.8 million as of April 30, 2021.
FISCAL 2022 — REVISED OUTLOOK FOR THE FULL YEAR
Based on negative impact from supply chain delays, extended procurement cycles, slower decision making in Washington and staffing shortages, the Company has reduced its full year fiscal 2022 expectations and now expects revenue of between $440 million and $460 million, net loss of between $12 million and $8 million, Non-GAAP adjusted EBITDA of between $59 million and $65 million, loss per diluted share of between $(0.47) and $(0.33) and non-GAAP earnings per diluted share, which excludes litigation settlement expenses, acquisition-related expenses and amortization of intangible assets, of between $1.23 and $1.37.
The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, subject to certain risks and uncertainties, and including certain assumptions with respect to our ability to efficiently and on a timely basis integrate our acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, changes in the demand for our products and 2
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 AND PRESENTATION
In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday, December 7, 2021, at 4:30 pm Eastern Time that will be webcast live. Wahid Nawabi, president and chief executive officer, Kevin P. McDonnell, chief financial officer and Jonah Teeter-Balin, senior director corporate development and investor relations, will host the call.
Investors may dial into the call by using the following telephone numbers, (877) 561-2749 (U.S.) or (678) 809-1029 (international) and providing the conference ID 3093207 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.
A supplementary investor presentation for the second quarter fiscal 2022 can be accessed at https://investor.avinc.com/events-and-presentations.
Audio Replay
An audio replay of the event will be archived on the Investor Relations section of the Company's website at http://investor.avinc.com.
ABOUT AEROVIRONMENT, INC.
AeroVironment (NASDAQ: AVAV) provides technology solutions at the intersection of robotics, sensors, software analytics and connectivity that deliver more actionable intelligence so you can Proceed with Certainty. Headquartered in Virginia, AeroVironment is a global leader in intelligent, multi-domain robotic systems, and serves defense, government and commercial customers. 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, the impact of our recent acquisitions of Arcturus UAV, Telerob and ISG and our ability to successfully integrate them into our operations; the risk that disruptions will occur from the transactions that will harm our business; any disruptions or threatened disruptions to our relationships with our distributors, suppliers, customers and employees, including shortages in components for our products; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government and related to our development of HAPS UAS; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of government spending; our ability to perform under existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; potential need for changes in our 3
long-term strategy in response to future developments; the extensive regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats; 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; uncertainty in the customer adoption rate of commercial use unmanned aircraft systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; risk of litigation, including but not limited to pending litigation arising from the sale of our EES business; product liability, infringement and other claims; changes in the regulatory environment; the impact of the outbreak related to the strain of coronavirus known as COVID-19 on our business; our ability to comply with the covenants in our loan documents; our ability to attract and retain skilled employees; 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.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. See in the financial tables below the calculation of these measures, the reasons why we believe these measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures.
– Financial Tables Follow – 4
AeroVironment, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except share and per share data)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | Six Months Ended | **** | ||||||||
| | | October 30, | | October 31, | | October 30, | | October 31, | | ||||
| | **** | 2021 | | 2020 | **** | 2021 | **** | 2020 | **** | ||||
| Revenue: | | | | | | | | | | | | | |
| Product sales | | $ | 70,998 | | $ | 65,528 | | $ | 124,114 | | $ | 123,885 | |
| Contract services | | 51,010 | | | 27,137 | | 98,903 | | 56,230 | | |||
| | | 122,008 | | | 92,665 | | 223,017 | | 180,115 | | |||
| Cost of sales: | | | | | | | | | | | | | |
| Product sales | | 38,937 | | | 34,209 | | 71,527 | | 66,293 | | |||
| Contract services | | 40,616 | | | 17,605 | | 80,312 | | 37,560 | | |||
| | | 79,553 | | | 51,814 | | 151,839 | | 103,853 | | |||
| Gross margin: | | | | | | | | | | | | ||
| Product sales | | | 32,061 | | | 31,319 | | | 52,587 | | | 57,592 | |
| Contract services | | | 10,394 | | | 9,532 | | | 18,591 | | | 18,670 | |
| | | | 42,455 | | | 40,851 | | | 71,178 | | | 76,262 | |
| Selling, general and administrative | | 24,819 | | | 14,977 | | 51,947 | | 26,988 | | |||
| Research and development | | 14,297 | | | 11,976 | | 28,005 | | 23,079 | | |||
| Income (loss) from operations | | 3,339 | | | 13,898 | | (8,774) | | 26,195 | | |||
| Other (loss) income: | | | | | | | | | | | | | |
| Interest (expense) income, net | | (1,379) | | | 115 | | (2,654) | | 323 | | |||
| Other (expense) income, net | | (10,048) | | | 72 | | (10,394) | | 105 | | |||
| (Loss) income before income taxes | | (8,088) | | | 14,085 | | (21,822) | | 26,623 | | |||
| (Benefit from) provision for income taxes | | (9,511) | | | 2,491 | | (10,468) | | 3,698 | | |||
| Equity method investment income (loss), net of tax | | | 1,133 | | | (9,522) | | | (8) | | | (10,810) | |
| Net income (loss) | | | 2,556 | | | 2,072 | | | (11,362) | | | 12,115 | |
| Net (income) loss attributable to noncontrolling interest | | | (31) | | | 22 | | | (94) | | | 59 | |
| Net income (loss) attributable to AeroVironment, Inc. | | $ | 2,525 | | $ | 2,094 | | $ | (11,456) | | $ | 12,174 | |
| Net income (loss) per share attributable to AeroVironment, Inc. | | | | | | | | | | | | | |
| Basic | | $ | 0.10 | | $ | 0.09 | | $ | (0.47) | | $ | 0.51 | |
| Diluted | | $ | 0.10 | | $ | 0.09 | | $ | (0.47) | | $ | 0.50 | |
| Weighted-average shares outstanding: | | | | | | | | | | | | | |
| Basic | | 24,641,614 | | | 23,936,950 | | 24,630,838 | | 23,914,737 | | |||
| Diluted | | 24,885,870 | | | 24,196,912 | | 24,630,838 | | 24,190,316 | |
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AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | October 30, | **** | April 30, | | ||
| | | 2021 | | 2021 | | ||
| | **** | (Unaudited) | | | | **** | |
| Assets | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 104,770 | | $ | 148,741 | |
| Short-term investments | | | 6,311 | | | 31,971 | |
| Accounts receivable, net of allowance for doubtful accounts of $566 at October 30, 2021 and $595 at April 30, 2021 | | 26,552 | | 62,647 | | ||
| Unbilled receivables and retentions | | 119,031 | | 71,632 | | ||
| Inventories | | 81,944 | | 71,646 | | ||
| Income taxes receivable | | | 11,708 | | | — | |
| Prepaid expenses and other current assets | | 13,761 | | 15,001 | | ||
| Total current assets | | 364,077 | | 401,638 | | ||
| Long-term investments | | | 11,271 | | | 12,156 | |
| Property and equipment, net | | 68,217 | | 58,896 | | ||
| Operating lease right-of-use assets | | | 26,058 | | | 22,902 | |
| Deferred income taxes | | 2,900 | | 2,061 | | ||
| Intangibles, net | | | 110,620 | | | 106,268 | |
| Goodwill | | | 335,888 | | | 314,205 | |
| Other assets | | 6,276 | | 10,440 | | ||
| Total assets | | $ | 925,307 | | $ | 928,566 | |
| Liabilities and stockholders’ equity | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 21,443 | | $ | 24,841 | |
| Wages and related accruals | | 21,697 | | 28,068 | | ||
| Customer advances | | 10,322 | | 7,183 | | ||
| Current portion of long-term debt | | | 10,000 | | | 10,000 | |
| Current operating lease liabilities | | | 6,440 | | | 6,154 | |
| Income taxes payable | | | 214 | | | 861 | |
| Other current liabilities | | 31,313 | | 19,078 | | ||
| Total current liabilities | | 101,429 | | 96,185 | | ||
| Long-term debt, net of current portion | | | 182,769 | | | 187,512 | |
| Non-current operating lease liabilities | | | 21,665 | | | 19,103 | |
| Other non-current liabilities | | | 10,302 | | | 10,141 | |
| Liability for uncertain tax positions | | 3,518 | | 3,518 | | ||
| Deferred income taxes | | | 5,390 | | | — | |
| Commitments and contingencies | | | | | | | |
| Stockholders’ equity: | | | | | | | |
| Preferred stock, $0.0001 par value: | | | | | | | |
| Authorized shares—10,000,000; none issued or outstanding at October 30, 2021 and April 30, 2021 | | — | | — | | ||
| Common stock, $0.0001 par value: | | | | | | | |
| Authorized shares—100,000,000 | | | | | | | |
| Issued and outstanding shares—24,805,829 shares at October 30, 2021 and 24,777,295 shares at April 30, 2021 | | 2 | | 2 | | ||
| Additional paid-in capital | | 261,612 | | 260,327 | | ||
| Accumulated other comprehensive (loss) income | | (1,677) | | 343 | | ||
| Retained earnings | | 339,965 | | 351,421 | | ||
| Total AeroVironment, Inc. stockholders’ equity | | 599,902 | | 612,093 | | ||
| Noncontrolling interest | | | 332 | | | 14 | |
| Total equity | | | 600,234 | | | 612,107 | |
| Total liabilities and stockholders’ equity | | $ | 925,307 | | $ | 928,566 | |
6
AeroVironment, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | Six Months Ended | | ||||
| | **** | October 30, | **** | October 31, | **** | ||
| | | 2021 | | 2020 | | ||
| Operating activities | | | | | | | |
| Net (loss) income | | $ | (11,362) | | $ | 12,115 | |
| Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: | | | | | | | |
| Depreciation and amortization | | 30,019 | | 5,693 | | ||
| (Income) losses from equity method investments, net | | | (520) | | | 10,810 | |
| Amortization of debt issuance costs | | | 258 | | | — | |
| Realized gain from sale of available-for-sale investments | | | — | | | (11) | |
| Provision for doubtful accounts | | (35) | | (156) | | ||
| Other non-cash expense (income) | | | 157 | | | (473) | |
| Non-cash lease expense | | | 3,358 | | | 2,393 | |
| Loss on foreign currency transactions | | 30 | | 2 | | ||
| Deferred income taxes | | (840) | | (621) | | ||
| Stock-based compensation | | 2,342 | | 3,509 | | ||
| Loss on disposal of property and equipment | | | 3,036 | | | 2 | |
| Amortization of debt securities | | | 113 | | | (12) | |
| Changes in operating assets and liabilities, net of acquisitions: | | | | | | | |
| Accounts receivable | | 37,134 | | 43,115 | | ||
| Unbilled receivables and retentions | | (46,619) | | 5,264 | | ||
| Inventories | | (10,075) | | (6,244) | | ||
| Income taxes receivable | | | (10,667) | | | — | |
| Prepaid expenses and other assets | | 272 | | (1,029) | | ||
| Accounts payable | | (3,587) | | (5,028) | | ||
| Other liabilities | | | 3,642 | | | (10,736) | |
| Net cash (used in) provided by operating activities | | (3,344) | | 58,593 | | ||
| Investing activities | | | | | | | |
| Acquisition of property and equipment | | (13,147) | | (6,052) | | ||
| Equity method investments | | | (6,245) | | | (1,173) | |
| Business acquisitions, net of cash acquired | | | (46,150) | | | — | |
| Redemptions of available-for-sale investments | | 30,531 | | 92,226 | | ||
| Purchases of available-for-sale investments | | | — | | | (116,945) | |
| Other | | | 224 | | | — | |
| Net cash used in investing activities | | (34,787) | | (31,944) | | ||
| Financing activities | | | | | | | |
| Principal payment of loan | | | (5,000) | | | — | |
| Holdback and retention payments for business acquisition | | | (5,991) | | | — | |
| Tax withholding payment related to net settlement of equity awards | | | (1,176) | | | (1,778) | |
| Exercise of stock options | | 119 | | 86 | | ||
| Other | | | (16) | | | — | |
| Net cash used in financing activities | | (12,064) | | (1,692) | | ||
| Effects of currency translation on cash and cash equivalents | | | (275) | | | — | |
| Net (decrease) increase in cash, cash equivalents, and restricted cash | | (50,470) | | 24,957 | | ||
| Cash, cash equivalents and restricted cash at beginning of period | | 157,063 | | 255,142 | | ||
| Cash, cash equivalents and restricted cash at end of period | | $ | 106,593 | | $ | 280,099 | |
| Supplemental disclosures of cash flow information | | | | | | | |
| Cash paid, net during the period for: | | | | | | | |
| Income taxes | | $ | 1,923 | | $ | 2,364 | |
| Interest | | $ | 2,283 | | $ | — | |
| Non-cash activities | | | | | | | |
| Unrealized loss on available-for-sale investments, net of deferred tax benefit of $0 and $1 for the six months ended October 30, 2021 and October 31, 2020, respectively | | $ | 3 | | $ | 61 | |
| Change in foreign currency translation adjustments | | $ | (2,017) | | $ | 75 | |
| Issuances of inventory to property and equipment, ISR in-service assets | | $ | 12,472 | | $ | — | |
| Acquisitions of property and equipment included in accounts payable | | $ | 415 | | $ | 818 | |
7
AeroVironment, Inc.
Reportable Segment Results (Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended October 30, 2021 | |||||||||||||
| | **** | Small UAS | **** | TMS | **** | MUAS | **** | All other | **** | Total | |||||
| Revenue | | $ | 54,714 | | $ | 18,418 | | $ | 26,525 | | $ | 22,351 | | $ | 122,008 |
| Gross margin | | | 27,754 | | | 6,222 | | | 2,223 | | | 6,256 | | | 42,455 |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 13,377 | | | 47 | | | (7,000) | | | (3,085) | | | 3,339 |
| Acquisition-related expenses | | | 297 | | | 163 | | | 108 | | | 280 | | | 848 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 707 | | | - | | | 6,358 | | | 3,257 | | | 10,322 |
| Adjusted income (loss) from operations | | $ | 14,381 | | $ | 210 | | $ | (534) | | $ | 452 | | $ | 14,509 |
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended October 31, 2020 | |||||||||||||
| | | Small UAS | **** | TMS | **** | MUAS | **** | All other | **** | Total | |||||
| Revenue | | $ | 58,265 | | $ | 18,961 | | $ | - | | $ | 15,439 | | $ | 92,665 |
| Gross margin | | | 29,695 | | | 5,943 | | | - | | | 5,213 | | | 40,851 |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 15,386 | | | (995) | | | - | | | (493) | | | 13,898 |
| Acquisition-related expenses | | | 171 | | | 94 | | | 58 | | | 91 | | | 414 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 715 | | | - | | | - | | | - | | | 715 |
| Adjusted income (loss) from operations | | $ | 16,272 | | $ | (901) | | $ | 58 | | $ | (402) | | $ | 15,027 |
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Six Months Ended October 30, 2021 | |||||||||||||
| | **** | Small UAS | **** | TMS | **** | MUAS | **** | All other | **** | Total | |||||
| Revenue | | $ | 94,638 | | $ | 37,594 | | $ | 48,904 | | $ | 41,881 | | $ | 223,017 |
| Gross margin | | | 44,674 | | | 12,211 | | | 5,404 | | | 8,889 | | | 71,178 |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 15,335 | | | (416) | | | (13,381) | | | (10,312) | | | (8,774) |
| Acquisition-related expenses | | | 721 | | | 414 | | | 1,492 | | | 1,475 | | | 4,102 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 1,414 | | | - | | | 11,549 | | | 6,483 | | | 19,446 |
| Adjusted income (loss) from operations | | $ | 17,470 | | $ | (2) | | $ | (340) | | $ | (2,354) | | $ | 14,774 |
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Six Months Ended October 31, 2020 | |||||||||||||
| | | Small UAS | **** | TMS | **** | MUAS | **** | All other | **** | Total | |||||
| Revenue | | $ | 114,467 | | $ | 28,495 | | $ | - | | $ | 37,153 | | $ | 180,115 |
| Gross margin | | | 57,178 | | | 7,863 | | | - | | | 11,221 | | | 76,262 |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 30,583 | | | (5,140) | | | - | | | 752 | | | 26,195 |
| Acquisition-related expenses | | | 171 | | | 94 | | | 58 | | | 91 | | | 414 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 1,376 | | | - | | | - | | | - | | | 1,376 |
| Adjusted income (loss) from operations | | $ | 32,130 | | $ | (5,046) | | $ | 58 | | $ | 843 | | $ | 27,985 |
8
AeroVironment, Inc.
Reconciliation of non-GAAP Earnings per Diluted Share (Unaudited)
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | ||
| | | Three Months Ended | | Three Months Ended | | Six Months Ended | | Six Months Ended | ||||
| | **** | October 30, 2021 | | October 31, 2020 | | October 30, 2021 | | October 31, 2020 | ||||
| | | | | | | | | | | | | |
| Earnings (loss) per diluted share | | $ | 0.10 | | $ | 0.09 | | $ | (0.47) | | $ | 0.50 |
| Acquisition-related expenses | | | 0.03 | | | 0.02 | | | 0.15 | | | 0.02 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 0.33 | | | 0.02 | | | 0.62 | | | 0.04 |
| HAPSMobile Inc. JV impairment of investment in Loon LLC | | | — | | | 0.35 | | | — | | | 0.35 |
| Legal accrual related to our former EES business | | | 0.32 | | | — | | | 0.32 | | | — |
| Earnings per diluted share as adjusted (Non-GAAP) | | $ | 0.78 | | | 0.48 | | $ | 0.62 | | $ | 0.91 |
Reconciliation of Forecast Earnings per Diluted Share (Unaudited)
| | | | |
|---|---|---|---|
| | | | |
| | | Fiscal year ending | |
| | **** | April 30, 2022 | |
| Forecast loss per diluted share | | $ | (0.47) - (0.33) |
| Acquisition-related expenses | | | 0.16 |
| Amortization of acquired intangible assets and other purchase accounting adjustments | | | 1.22 |
| Legal accrual related to our former EES business | | | 0.32 |
| Forecast earnings per diluted share as adjusted (Non-GAAP) | | $ | 1.23 - 1.37 |
Reconciliation of Fiscal Year 2021 Actual and 2022 Forecast Non-GAAP adjusted EBITDA (Unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | | | |
| | | Fiscal year ending | | Fiscal year ending | ||
| (in millions) | | April 30, 2022 | | April 30, 2021 | ||
| Net (loss) income | | $ | (12) - (8) | | $ | 23 |
| Interest expense, net | | | 5 | | | 1 |
| Benefit from income taxes | | | (12) - (9) | | | 1 |
| Depreciation and amortization | | | 65 | | | 19 |
| EBITDA (Non-GAAP) | | | 46 - 53 | | | 44 |
| HAPSMobile Inc. JV impairment of investment in Loon LLC | | | — | | | 10 |
| Equity method investment gain | | | (2) | | | — |
| Legal accrual related to our former EES business | | | 10 | | | 9 |
| Acquisition-related expenses | | | 5 - 4 | | | 9 |
| Adjusted EBITDA (Non-GAAP) | | $ | 59 - 65 | | $ | 72 |
9
Statement Regarding Non-GAAP Measures
The non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing our results that, when reconciled to the corresponding GAAP measures, help our investors to understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. In addition, management uses these non-GAAP measures to evaluate our operating and financial performance.
Non-GAAP Adjusted Operating Income
Adjusted operating income is defined as operating income before intangible amortization, amortization of non-cash purchase accounting adjustments, and acquisition related expenses.
Non-GAAP Earnings per Diluted Share
We exclude the acquisition-related expenses, amortization of acquisition-related intangible assets and one-time non-operating items because we believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible asset amortization will recur in future periods until such intangible assets have been fully amortized.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA is defined as net income before interest income, interest expense, income tax expense (benefit) and depreciation and amortization including amortization of purchase accounting adjustments, adjusted for the impact of certain other items, including acquisition related expenses, equity method investment gains or losses, and one-time non-operating gains or losses. We present Adjusted EBITDA, which is not a recognized financial measure under U.S. GAAP, because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation, intangible asset amortization will recur in future periods until such intangible assets have been fully amortized and that interest and income tax expenses will recur in future periods. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries. 10
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CONTACT
Jonah Teeter-Balin
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https://investor.avinc.com/contact-us 11
Exhibit 99.2
| © 2021 AeroVironment, Inc. Slide 1<br>052620<br>SECOND QUARTER FISCAL YEAR 2022<br>EARNINGS PRESENTATION<br>Dec 7, 2021 |
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| © 2021 AeroVironment, Inc. Slide 2<br>052620<br>o Certain statements in this presentation may constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of<br>1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or<br>achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning.<br>Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to,<br>economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially<br>from the forward-looking statements.<br>o Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to the impact of our recent<br>acquisitions of Arcturus UAV, Inc., Telerob GmbH and the Intelligent Systems Group of Progeny Systems Corp. and our ability to successfully integrate them<br>into our operations; the risk that disruptions will occur from the transactions that will harm our business; any disruptions or threatened disruptions to our<br>relationships with our distributors, suppliers, customers and employees, including shortages in components for our products; the ability to timely and sufficiently<br>integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government and related to our<br>development of HAPS UAS; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of<br>government spending; our ability to perform under existing contracts and obtain new contracts; risks related to our international business, including compliance<br>with export control laws; potential need for changes in our long-term strategy in response to future developments; the extensive regulatory requirements<br>governing our contracts with the U.S. Government and international customers; the consequences to our financial position, business and reputation that could<br>result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product<br>development efforts; the impact of potential security and cyber threats; changes in the supply and/or demand and/or prices for our products and services; the<br>activities of competitors and increased competition; failure of the markets in which we operate to grow; uncertainty in the customer adoption rate of commercial<br>use unmanned aircraft systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; changes in significant<br>operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; risk of<br>litigation, including but not limited to pending litigation arising from the sale of our EES business; product liability, infringement and other claims; changes in the<br>regulatory environment; the impact of the outbreak related to the strain of coronavirus known as COVID-19 on our business; our ability to comply with the<br>covenants in our loan documents; our ability to attract and retain skilled employees; and general economic and business conditions in the United States and<br>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.<br>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.<br>o For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission, including our most<br>recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at www.sec.gov or on our website at<br>www.investor.avinc.com/financial-information. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of<br>new information, future events or otherwise.<br>SAFE HARBOR STATEMENT |
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| © 2021 AeroVironment, Inc. Slide 3<br>052620<br>o Achieved Q2 performance and first half results in line with expectations<br>o Reducing full year outlook due to supply chain delays, extended<br>procurement cycles due to the global COVID-19 pandemic, slower decision<br>making in Washington, and staffing shortages<br>o Strong backlog driven by both organic and acquired businesses<br>o Despite market headwinds, Company remains on track to deliver 5th<br>consecutive year of solid top line growth<br>2ND QUARTER FISCAL YEAR 2022 KEY MESSAGES |
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| © 2021 AeroVironment, Inc. Slide 4<br>052620<br>SECOND QUARTER RESULTS FISCAL YEAR 2022<br>Metric Q2 FY22 Year-Over-<br>Year Change Notes<br>Revenue $122 million +32% Consistent with expectations<br>GAAP Gross<br>profit $42.5 million +4%<br>Driven by increased sales volumes partially offset by<br>increasing mix of services, intangible amortization expenses<br>and other non-cash purchase accounting impacts<br>EPS (diluted) $0.10 +$0.01<br>Affected by increased sales volumes and tax benefits<br>partially offset by lower gross margin mix, increase in SG&A<br>resulting from acquisitions, legal accrual, and transaction<br>related intangible amortization and other expenses<br>Non-GAAP EPS<br>(diluted)1 $0.78 +$0.30<br>Driven by increased sales volumes and tax benefits partially<br>offset by sales mix and increased expenses resulting from<br>acquisitions<br>Funded Backlog $252 million +93% Strong customer backlog driven by both organic and<br>acquisition increases<br>1 Refer to Reconciliation of Non-GAAP Diluted Earnings Per Share on Appendix A. |
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| © 2021 AeroVironment, Inc. Slide 5<br>052620<br>REVENUE MIX BY SEGMENT AND TYPE<br>Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY222<br>Other $15,439 $8,648 $10,152 $19,530 $22,351<br>TMS $18,961 $19,598 $39,175 $19,176 $18,418<br>MUAS $- $- $15,837 $22,379 $26,525<br>SUAS $58,265 $50,536 $70,851 $39,924 $54,714<br> $-<br> $20,000<br> $40,000<br> $60,000<br> $80,000<br> $100,000<br> $120,000<br> $140,000<br> $160,000<br>Revenue in thousands<br>Quarterly Revenue By Segment<br>$122,008<br>$92,665<br>$101,009<br>$136,015<br>$78,782<br>71% 74% 71%<br>53% 58%<br>29% 26% 29% 47% 42%<br>44%<br>36%<br>44%<br>28%<br>35%<br>0%<br>5%<br>10%<br>15%<br>20%<br>25%<br>30%<br>35%<br>40%<br>45%<br>50%<br>0%<br>10%<br>20%<br>30%<br>40%<br>50%<br>60%<br>70%<br>80%<br>90%<br>100%<br>Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22<br>Gross Margin<br>Percentage Quarterly Revenue<br>Quarterly Revenue by Type<br>Product Revenue Service Revenue GAAP Gross Margin |
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| © 2021 AeroVironment, Inc. Slide 6<br>052620<br>ADJUSTED PROFITABILITY BY TYPE AND NON-GAAP EPS<br>49%<br>40%<br>51%<br>42%<br>48%<br>35%<br>30%<br>32%<br>22%<br>27%<br>45%<br>37%<br>46%<br>32%<br>39%<br>0%<br>10%<br>20%<br>30%<br>40%<br>50%<br>60%<br>Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22<br>Percentage Adjusted Gross Margin<br>1<br>Adj Product Margin Adj Service Margin Total Adj Gross Margin<br>0.48<br>0.78<br> $-<br> $0.10<br> $0.20<br> $0.30<br> $0.40<br> $0.50<br> $0.60<br> $0.70<br> $0.80<br> $0.90<br>Q2 FY21 Q2 FY22<br>Non<br>-<br>GAAP Diluted EPS<br>2<br>1 Refer to GAAP to NON-GAAP reconciliation on Appendix C.<br>2 Refer to Reconciliation of Non-GAAP Diluted Earnings Per Share on Appendix A.<br>1 |
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| © 2021 AeroVironment, Inc. Slide 7<br>052620<br>VISIBILITY SUPPORTS REVISED FULL YEAR EXPECTATIONS<br>$101.0<br>$223.0 $198.1<br>$215.5<br>$171.3<br>$108.7<br>$18.4<br>$5.2<br>$43.1<br>$39.9<br>$6.0<br> $-<br> $100<br> $200<br> $300<br> $400<br> $500<br> $600<br>Q4 FY21 (6/28/21) Q1 FY22 Q2 FY22 Q3 FY22<br>Revenue (millions)<br>Revenue Anticipated This FY from Unfunded Backlog<br>Revenue Anticipated This FY from Qtr-To-Date Bookings,<br>including backlog from acquired businesses<br>Revenue Anticipated This FY from Funded Backlog<br>Revenue Year-To-Date<br>Revenue Guidance Range as of 12/7/21:<br>$440 million to $460 million<br>61% visibility 1<br>Q3 FY 22<br>1 Based on midpoint of prior guidance range of $560 million to $580 million<br>2 Based on midpoint of revised guidance range of $440 million to $460 million<br>66% visibility 1<br>90% visibility 2<br>Revenue Guidance Range as of 6/28/21:<br>$560 million to $580 million |
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| © 2021 AeroVironment, Inc. Slide 8<br>052620<br>UPDATED GUIDANCE: FISCAL 2022 OUTLOOK<br>As of 12/7/21 Fiscal Year 2021<br>Results<br>Fiscal Year 2022 Revised<br>Expectations 2<br>Expected Change<br>(to midpoint)<br>Revenue $395 million $440 million - $460 million +14%<br>Net Income/(Loss) from continuing<br>operations $23 million ($12) million –($8) million (143%)<br>Adjusted EBITDA 1 $72 million $59 million – $65 million (13%)<br>Earnings/(Loss) Per Share (diluted) $0.96 ($0.47) –($0.33) (143%)<br>Non-GAAP Earnings Per Share (diluted) $2.10 3 $1.23 – $1.37 4 (38%)<br>Research & Development Investment 14% 11% – 12% -<br>Tax Rate (Benefit on Pre-Tax Loss) 1.6% (40% – 50%) -<br>Capital Expenditures 3% 5% – 7% -<br>DESPITE HEADWINDS, COMPANY IS WELL POSITIONED IN KEY MARKETS AND ON TRACK TO DELIVER<br>5TH CONSECUTIVE YEAR OF TOP LINE GROWTH<br>1 Refer to Adjusted EBITDA reconciliation on Appendix D.<br>2 Updates reflect final purchase accounting effects of intangible asset amortization.<br>3 Refer to Reconciliation of Non-GAAP Diluted Earnings Per Share on Appendix A.<br>4 Refer to Reconciliation of Fiscal Year 2022 Non-GAAP Diluted Earnings Per Share Expectations on Appendix B. |
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| © 2021 AeroVironment, Inc. Slide 9<br>052620<br>Investor Relations<br>ir@avinc,com<br>+1 (805) 520-8350 |
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| © 2021 AeroVironment, Inc. Slide 10<br>052620<br>APPENDIX A– RECONCILIATION OF NON-GAAP (LOSS) EARNINGS<br>PER DILUTED SHARE (UNAUDITED) |
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| © 2021 AeroVironment, Inc. Slide 11<br>052620<br>APPENDIX B– RECONCILIATION OF FISCAL YEAR 2022 NON-GAAP<br>DILUTED EARNINGS PER SHARE EXPECTATIONS (UNAUDITED) |
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| © 2021 AeroVironment, Inc. Slide 12<br>052620<br>APPENDIX C – GAAP TO NON-GAAP RECONCILIATION OF<br>ADJUSTED GROSS MARGIN<br>Fiscal 2nd Quarter Fiscal 3rd Quarter Fiscal 4th Quarter Fiscal 1st Quarter Fiscal 2nd Quarter<br>(in thousands) FY 2021 FY 2021 FY 2021 FY 2022 FY 2022<br>Adjusted Gross Margin<br>Products<br>Gross Margin $ 31,319 $ 22,602 $ 48,980 $ 20,526 $ $32,061<br>Intangible Amortization 623 623 623 1,667 1,986<br>Adjusted Gross Margin $ 31,942 $ 23,225 $ 49,603 $ 22,193 $ 34,047<br>Adjusted Gross Margin % of Revenue 49% 40% 51% 42% 48%<br>Services<br>Gross Margin $ 9,532 $ 6,039 $ 10,675 $ 8,197 $ 10,394<br>Intangible Amortization -- 1,960 2,362 3,188<br>Adjusted Gross Margin $ 9,532 $ 6,039 $ 12,635 $ 10,559 $ 13,582<br>Adjusted Gross Margin % of Revenue 35% 30% 32% 22% 27% |
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| © 2021 AeroVironment, Inc. Slide 13<br>052620<br>APPENDIX D – GAAP TO NON-GAAP RECONCILIATION OF<br>ADJUSTED EBITDA |
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