Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended August 1, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-33261 AEROVIRONMENT, INC. (Exact name of registrant as specified in its charter) Delaware 95-2705790 (State or other ju ...

Financial Performance - AeroVironment achieved record fourth quarter revenue of $135 million[6] - The company's fiscal year revenue reached $367 million[6], a 17% year-over-year increase[8], driven by higher small UAS, "other," and HAPS revenue[8] - Gross profit for the fiscal year was $153.1 million[8], a 19% increase[8] - The funded backlog reached a record $208 million[6], a 27% increase[8] - Diluted EPS was $1.72, compared to $1.74 in the previous year, which included a $0.26 per share one-time gain from litigation settlement[8] - Non-GAAP diluted EPS was $1.84, an increase of $0.36, including $0.12 in acquisition-related expenses and amortization of intangible assets[8] Strategic Progress - AeroVironment strengthened its leadership position in multiple markets[6] - Small UAS revenue reached $226 million, driven by strong domestic demand[13] - The company expanded its international reach to a total of 50 allied customers[13] - The contract value of the HAPS program grew to $166 million[13] Fiscal Year 2021 Expectations - AeroVironment anticipates revenue between $390 million and $410 million for fiscal year 2021[17, 18] - The company expects an operating income margin of 12% to 12.5%[18] - Diluted earnings per share are projected to be between $1.65 and $1.85[18] - Non-GAAP diluted earnings per share are expected to be between $1.74 and $1.94[18]

Financial Data and Key Metrics Changes - AeroVironment reported record fourth quarter revenue of $135.2 million, an increase of 54% from $87.9 million in the prior year [9][23] - Full year revenue reached $367.3 million, up 17% from $314.3 million in fiscal 2019 [9][27] - Full year diluted earnings per share from continuing operations was $1.72, slightly down from $1.74 in fiscal 2019, but non-GAAP earnings per diluted share increased to $1.84 from $1.48 [10][28] Business Line Data and Key Metrics Changes - Small unmanned aircraft systems (UAS) accounted for 62% of total revenue, generating $225.9 million, while tactical missile systems (TMS) contributed $63.8 million, representing 17% of total revenue [11][27] - HAPS (High Altitude Pseudo-Satellite) generated $60.9 million, also 17% of total revenue, with expectations for flat growth in fiscal 2021 [17][28] Market Data and Key Metrics Changes - International revenue for the year was $166.2 million, with $50.6 million in the fourth quarter [73] - The UK emerged as the largest international customer, indicating strong demand for AeroVironment's solutions in foreign markets [14] Company Strategy and Development Direction - The company aims to enhance its leadership in robotic sensor, software analytics, and connectivity technologies, with a focus on diversity and inclusion within its workforce [7][8] - AeroVironment is positioned to disrupt the legacy missile market with its Switchblade family of loitering missile systems, which has secured significant contracts [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2021 revenue guidance of $390 million to $410 million, despite potential impacts from COVID-19 and supply chain delays [34][36] - The company anticipates a slightly lower top-line growth rate due to the ongoing pandemic and its effects on customer funding and procurement decisions [35][36] Other Important Information - The funded backlog as of April 30, 2020, was a record $208.1 million, providing strong momentum for future growth [10][30] - The company has transitioned to a hybrid work structure due to COVID-19, ensuring safety while maintaining productivity [20][21] Q&A Session Summary Question: Guidance on revenue growth and contract ramp-up - Management indicated that the first half of fiscal 2021 is expected to represent about 40% of total revenue, with a diverse portfolio allowing for flexibility in growth [40] Question: Drivers of growth in fiscal 2021 - The majority of growth is anticipated to come from small UAS and TMS, with HAPS expected to remain flat [43] Question: Impact of continuing resolution for DoD on guidance - Management has accounted for potential impacts from the continuing resolution and remains confident in achieving the provided guidance [46] Question: Relative impact of COVID-19 on guidance - Management noted that while there are delays, they are manageable, and the strong backlog supports their growth outlook [58] Question: International sales and opportunities - The company has 50 international allies as customers and is actively pursuing opportunities for TMS internationally, with a positive outlook for future sales [54]

Financial Performance - Revenue for the year ended April 30, 2020, was $367.3 million, an increase from $314.3 million in 2019, representing a growth of 16.4%[254] - Net income attributable to AeroVironment, Inc. was $41.3 million, compared to $41.9 million in the previous year, reflecting a slight decrease of 1.4%[254] - Basic earnings per share from continuing operations was $1.74, down from $1.77 in 2019, a decrease of 1.7%[254] - Total revenue for the year ended April 30, 2020, was $367,296,000, an increase of 16.9% from $314,274,000 in 2019[369] - Net income from continuing operations was $41,335,000, slightly down from $41,893,000 in 2019, resulting in a net income per share of $1.73[369] - Total comprehensive income for the year was $41,396,000, compared to $47,442,000 in 2019, reflecting a decrease of 12.5%[370] - Net income attributable to AeroVironment, Inc. for the year ended April 30, 2020, was $41,074,000, down from $47,438,000 in 2019, a decline of about 13.5%[448] Assets and Liabilities - Total assets increased to $585.0 million from $508.8 million in 2019, marking a growth of 15.0%[254] - Cash and cash equivalents rose to $255.14 million in 2020, up from $172.71 million in 2019, indicating a significant increase of 47.8%[366] - Total current liabilities increased to $66.95 million in 2020 from $44.87 million in 2019, reflecting a rise of 49.2%[366] - Stockholders' equity grew to $509.90 million in 2020, compared to $462.57 million in 2019, marking an increase of 10.2%[366] - Current assets rose to $67,387,000 in 2020 from $31,746,000 in 2019, while current liabilities increased to $72,505,000 from $11,757,000[489] Revenue Recognition and Contracts - 42% of the total revenue was recognized from contracts satisfied over time, amounting to approximately $154.7 million[353] - The company adopted ASU No. 2014-09 for revenue recognition in fiscal year 2019, changing its accounting method for contracts with customers[361] - The Company recognizes revenue for performance obligations satisfied over time, which accounted for 42% of revenue during the fiscal year ended April 30, 2020[416] - As of April 30, 2020, the Company had approximately $208,063,000 in remaining performance obligations, expecting to recognize about 96% as revenue in fiscal 2021[419] Investments and Acquisitions - The company acquired 100% of Pulse for $21.88 million, with asset allocation including technology valued at $14.95 million, in-process R&D at $0.55 million, and goodwill at $6.34 million[359] - The company made significant investments, including $18,641 for business acquisitions and $14,498 in equity method investments[375] - The company recorded a total of $5,377,000 in inventory reserve charges over the fiscal years 2018 to 2020[481] Expenses and Costs - Research and development expenses increased to $46,477,000, up from $34,234,000 in 2019, indicating a focus on innovation[369] - Stock-based compensation for the fiscal year ending April 30, 2020, was reported at $6.227 million, compared to $7.100 million in the previous year, reflecting a decrease of approximately 12%[373] - The company incurred depreciation and amortization expenses of $9,888, an increase from $7,669 in the previous year[375] - Total lease costs recorded were $5,774,000 in 2020, including operating lease costs of $4,574,000[501] Shareholder Information - The company reported a weighted average of 23,806 basic shares outstanding, an increase from 23,663 in the previous year, reflecting a growth of 0.6%[254] - The weighted average common shares for basic earnings per share increased to 23,806,208 in 2020 from 23,663,410 in 2019, representing an increase of 0.6%[448] - The maximum number of shares that may be issued under the Restated 2006 Plan is 4,884,157, with a limit of 2,000,000 shares per participant per year[507] Taxation - The effective income tax rate for fiscal year 2020 was 11.1%, an increase from 9.2% in fiscal year 2019[525] - The Company recorded a total income tax expense of $5,848,000 for fiscal year 2020, compared to $4,641,000 for fiscal year 2019[527] - The Company had unrecognized tax benefits of approximately $14,347,000 as of April 30, 2020, which would impact the effective tax rate if recognized[531] Operational Insights - The company operates as a single reportable segment, focusing on unmanned aircraft systems for various industries[387] - The company has made significant estimates regarding inventory valuation and deferred tax assets, which could impact future financial results[388] - The Company performs ongoing credit evaluations of its commercial customers and maintains an allowance for potential losses[396] Miscellaneous - The company has not engaged in interest rate derivative financial instruments, indicating no significant interest rate exposure[342] - There have been no significant foreign exchange gains or losses, as a substantial portion of sales and expenses are in U.S. dollars[343] - The company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842), effective May 1, 2019, impacting financial reporting[349]

AeroVironment, Inc. (NASDAQ:AVAV) Q3 2020 Earnings Conference Call March 3, 2020 4:30 PM ET Company Participants Steven Gitlin - Chief Marketing Officer and Vice President of Investor Relations Wahid Nawabi - President and Chief Executive Officer Kevin McDonnell - Senior Vice President and Chief Financial Officer Conference Call Participants Pete Skibitski - Alembic Global Advisors Ken Herbert - Canaccord Genuity Inc. Troy Jensen - Piper Jaffray & Company Louie DiPalma - William Blair & Company Steven Gitli ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended January 25, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-33261 AEROVIRONMENT, INC. (Exact name of registrant as specified in its charter) Delaware 95-2705790 (State or other ...

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2020 was $83.3 million, a 14% increase from $73 million in Q2 fiscal 2019 [7][18] - Gross profit was $35.2 million, up 24% from $28.4 million in the same quarter last year, with a gross margin of 42%, an increase of 3 percentage points [7][19] - GAAP earnings per diluted share increased to $0.31 from $0.29 year-over-year, while non-GAAP earnings per diluted share rose to $0.35 from $0.30 [8][22] - Funded backlog decreased by 10% to $146.7 million compared to the previous year, but remained high relative to historical averages [8][27] Business Line Data and Key Metrics Changes - Small UAS revenue was $59.2 million, accounting for 71% of total revenue, while HAPS contributed $13.4 million (16%), TMS $7.9 million (10%), and other $2.8 million (3%) [18] - The HAPS program has generated $103.2 million in revenue to date, with a total contract value of $148.9 million [18][19] Market Data and Key Metrics Changes - The company reported strong international demand for small UAS, with multiple awards totaling over $20 million from customers in Southeast Asia and the Middle East [12] - A $5 million contract was awarded for Puma systems to the U.S. Border Patrol, indicating ongoing procurement opportunities [12] Company Strategy and Development Direction - The company is focused on executing its growth strategy and achieving fiscal year 2020 objectives, with a commitment to innovation in small UAS and tactical missile systems [6][32] - The transition of VAPOR product line manufacturing to Simi Valley is on track, expected to be completed by the end of Q3 fiscal 2020 [12][60] - The company is also advancing its HAPS business, with a total contract value increase to $149 million, indicating strong growth potential in this area [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2020 revenue guidance of $350 million to $370 million, despite potential impacts from government funding resolutions [32][33] - The company anticipates a decline in gross margin in the latter half of the fiscal year due to a shift in revenue mix [32] - Management highlighted the importance of ongoing government support for international sales and the potential for expanding the customer base [72] Other Important Information - The company plans to invest 5% to 6% of revenue in capital expenditures to support growth strategies [33] - Cash and cash equivalents at the end of Q2 fiscal 2020 totaled $310.9 million, a decrease attributed to the acquisition of Pulse Aerospace and investments in HAPSMobile [27][28] Q&A Session Summary Question: How does the current 89% visibility compare to previous years? - Management noted that while the current visibility is lower than last year's 97%, it remains high compared to historical averages [36][38] Question: When can we expect a larger variant of the Switchblade? - Management is making progress on a larger variant but could not disclose specific timing for its market release [39][41] Question: What are the next steps for the LMAMS contract? - Management is engaged in sole-source negotiations with the U.S. government, with a potential contract value of $160 million [44][46] Question: What is the status of the HAPS program? - The company is transitioning from design and development to testing and certification, with multiple flights planned in the future [68][69] Question: How is the UAV adoption rate trending? - Management reported strong growth in small UAS internationally, supported by U.S. government export licenses [71][73]