AeroVironment(US:AVAV)2023-03-05 16:00Revenue and Profitability - Revenue for the three months ended January 28, 2023, was $134.4 million, compared to $90.1 million for the same period in 2022, representing a 49% increase[192]. - Revenue for the three months ended January 28, 2023, was $134.4 million, an increase of $44.3 million, or 49%, compared to $90.1 million for the same period in 2022[196]. - Gross margin for the three months ended January 28, 2023, was $45.5 million, up from $21.4 million in the prior year, indicating a significant improvement in profitability[192]. - Gross margin for the three months ended January 28, 2023, was $45.5 million, representing an increase of $24.1 million, or 112%, compared to $21.4 million for the same period in 2022[198]. - Gross margin for the nine months ended January 28, 2023, was $105.1 million, a 13% increase from $92.6 million in the previous year, maintaining a gross margin percentage of 30%[217]. Expenses - Research and development expenses for the three months ended January 28, 2023, were $16.2 million, compared to $13.0 million for the same period in 2022, reflecting a 24% increase[192]. - Selling, general, and administrative expenses for the three months ended January 28, 2023, were $24.7 million, slightly higher than $22.5 million in the prior year[192]. - Selling, General and Administrative (SG&A) expenses for the three months ended January 28, 2023, were $24.7 million, or 18% of revenue, compared to $22.5 million, or 25% of revenue, for the same period in 2022[201]. - Research and Development (R&D) expenses for the three months ended January 28, 2023, were $16.2 million, or 12% of revenue, compared to $13.0 million, or 14% of revenue, for the same period in 2022[202]. - SG&A expenses decreased to $70.3 million, or 20% of revenue, compared to $74.5 million, or 24% of revenue, for the same period in 2022[218]. - R&D expenses increased to $47.8 million, or 13% of revenue, from $41.0 million, also 13% of revenue, due to enhanced product capabilities and new product line development[218]. Net Loss and Adjusted Income - The company reported a net loss of $0.7 million for the three months ended January 28, 2023, compared to a net loss of $35,000 for the same period in 2022[192]. - Adjusted income from operations for the three months ended January 28, 2023, was $12.0 million, compared to an adjusted loss of $4.4 million for the same period in 2022[196]. Cash Flow and Backlog - Net cash provided by operating activities increased by $32.0 million to $8.8 million for the nine months ended January 28, 2023, compared to a net cash used of $23.2 million in the prior year[236]. - Funded backlog as of January 28, 2023, was approximately $413.9 million, up from $210.8 million as of April 30, 2022[224]. - Unfunded backlog was $387.0 million as of January 28, 2023, including a $235.2 million contract pending export license approval[225]. Interest Expense and Tax Rate - Interest expense, net for the three months ended January 28, 2023, was $2.8 million, compared to $1.5 million for the same period in 2022, primarily due to higher interest rates[202]. - Interest expense, net for the nine months ended January 28, 2023, was $6.7 million, an increase from $4.2 million in the same period in 2022, primarily due to higher interest rates[219]. - The effective income tax rate for the three months ended January 28, 2023, was 67.2%, down from 98.7% for the same period in 2022[204]. - Effective income tax rate decreased to 38.3% for the nine months ended January 28, 2023, from 69.1% in the prior year, influenced by expected federal R&D tax credits[220]. Risks and Future Outlook - The MUAS reporting unit is at an increased risk of failing future quantitative goodwill impairment tests, with its estimated fair value exceeding its carrying value by approximately 10%[188]. - The company expects lower levels of MUAS service revenues to continue into fiscal 2024 due to the completion of certain MUAS site locations[196]. - The company anticipates inflationary and supply chain constraints to continue impacting gross margin throughout fiscal year 2023[201]. Foreign Exchange and Financing Activities - The company has not experienced significant foreign exchange gains or losses, as a significant part of sales and expenses are in U.S. dollars[243]. - The acquisition of Telerob for $46.2 million impacted cash flows, with a portion of cash now denominated in Euros[237][243]. - The current outstanding balance of the Credit Facilities is $167.5 million, bearing a variable interest rate, which may increase if market interest rates continue to rise[241]. - The market interest rate has increased significantly, which could lead to higher interest payments on the Credit Facilities[241].