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AeroVironment, Inc. Announces Fiscal 2016 Fourth Quarter and Full Year ResultsAeroVironment, Inc. (NASDAQ: AVAV) today reported financial results for its fourth quarter ended April 30, 2016. "Fiscal 2016 fully diluted earnings per share increased 200 percent from the prior year to $0.39, we delivered revenue within our guidance range and exceeded gross profit margin guidance, including a favorable one-time government contract reserve reduction," said Wahid Nawabi, AeroVironment president and chief executive officer. "International small UAS revenue grew significantly in fiscal 2016 and we expect it to remain a major contributor to fiscal 2017 revenue. We also made significant progress in developing the right solution for what we believe is a very large emerging market opportunity for commercial UAS applications, where early adopter customers are evaluating new hardware prototypes and pre-release software." "Our team maintained leading market positions in small UAS and Tactical Missile Systems for defense applications, and in electric vehicle charging and test solutions for commercial and consumer applications throughout 2016. We believe we are well positioned for long-term growth potential in our core and growth markets by staying focused on helping our customers proceed with certainty," Mr. Nawabi added. FISCAL 2016 FOURTH QUARTER RESULTS Revenue for the fourth quarter of fiscal 2016 was $84.8 million, a decrease of 2% from fourth quarter fiscal 2015 revenue of $86.5 million. The decrease in revenue resulted from a decrease in sales in our Unmanned Aircraft Systems (UAS) segment of $2.8 million, partially offset by an increase in sales in our Efficient Energy Systems (EES) segment of $1.1 million. Gross margin for the fourth quarter of fiscal 2016 was $37.9 million, a decrease of 16% from fourth quarter fiscal 2015 gross margin of $45.4 million. The decrease in gross margin was due to a decrease in product margin of $8.1 million, partially offset by an increase in service margin of $0.7 million. As a percentage of revenue, gross margin decreased to 45% from 52%. Income from operations for the fourth quarter of fiscal 2016 was $6.8 million compared to income from operations for the fourth quarter of fiscal 2015 of $7.5 million. The decrease in income from operations was a result of a decrease in gross margin of $7.4 million and an increase in selling, general & administrative (SG&A) expense of $1.2 million, partially offset by a decrease in research and development (R&D) of $7.9 million. Other income, net, for the fourth quarter of fiscal 2016 was $0.5 million compared to other expense, net, for the fourth quarter of fiscal 2015 of $0.5 million. The increase in other income, net was primarily due to losses on our CybAero equity securities recorded during the fourth quarter of fiscal 2015. The CybAero equity securities were sold during the second quarter of fiscal 2016. Net income for the fourth quarter of fiscal 2016 was $5.4 million compared to net income for the fourth quarter of fiscal 2015 of $7.1 million. Earnings per diluted share for the fourth quarter of fiscal 2016 were $0.23 compared to earnings per diluted share for the fourth quarter of fiscal 2015 of $0.31. Earnings per diluted share for the fourth quarter of fiscal 2015 included a loss of $0.01 per share due to losses on our equity investment. FISCAL 2016 FULL-YEAR RESULTS Revenue for fiscal 2016 was $264.1 million, up 2% from fiscal 2015 revenue of $259.4 million. The increase in revenue resulted from an increase in sales in our UAS segment of $12.8 million, partially offset by a decrease in sales in our EES segment of $8.1 million. Gross margin for fiscal 2016 was $112.1 million, up 8% from fiscal 2015 gross margin of $104.3 million. The increase in gross margin was due to an increase in service margin of $10.5 million, partially offset by a decrease in product margin of $2.7 million, both of which were impacted by a reserve reversal of $3.6 million for the settlement and resolution of prior year government incurred cost audits during 2016. As a percentage of revenue, gross margin increased to 42% from 40%. Income from operations for fiscal 2016 was $9.7 million compared to income from operations for fiscal 2015 of $2.0 million. The increase in income from operations was a result of an increase in gross margin of $7.8 million and a decrease in R&D of $4.2 million, partially offset by an increase in SG&A of $4.3 million. Other expense, net, for fiscal 2016 was $1.7 million compared to other expense, net, for fiscal 2015 of $0.1 million. The increase in other expense, net was primarily due to the recording of an other-than-temporary impairment loss on our CybAero equity securities during the first quarter of fiscal 2016. Net income for fiscal 2016 was $9.0 million compared to net income for fiscal 2015 of $2.9 million. Earnings per diluted share for fiscal 2016 were $0.39 compared to earnings per diluted share for fiscal 2015 of $0.13. Net income per diluted share for fiscal 2016 increased by $0.10 due to the reserve reversal for the settlement and resolution of prior year government incurred cost audits, increased by $0.05 due to R&D tax credits related to prior fiscal years, primarily as a result of the reenactment of the federal R&D tax credit, and decreased by $0.06 due to both the impairment loss and loss on sale of our CybAero equity securities during the first quarter. BACKLOG As of April 30, 2016, funded backlog (unfilled firm orders for which funding is currently appropriated to us under a customer contract) was $65.8 million compared to $64.7 million as of April 30, 2015. FISCAL 2017 - OUTLOOK FOR THE FULL YEAR For fiscal 2017, the company expects to generate revenue of between $260 million and $280 million, and earnings per fully diluted share of between $0.20 and $0.35. The foregoing estimates are forward looking and reflect management's view of current and future market conditions, including certain assumptions with respect to our ability to obtain and retain government contracts, changes in the timing and/or amount of government spending, changes in the demand for our products and 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 In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday, June 28, 2016, at 1:30 pm Pacific Time that will be broadcast live over the Internet. Wahid Nawabi, president and chief executive officer, Raymond D. Cook, chief financial officer and Steven A. Gitlin, vice president of investor relations, will host the call.
4:30 PM ET Investors may dial into the call at (877) 561-2749 (U.S.) or (678) 809-1029 (international) 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. Audio Replay Options An audio replay of the event will be archived on the Investor Relations page of the company's website, at http://investor.avinc.com. The audio replay will also be available via telephone from Tuesday, June 28, 2016, at approximately 4:30 p.m. Pacific Time through Tuesday, July 5, 2016, at 9:00 p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode 22090043. International callers should dial (404) 537-3406 and enter the same passcode number to access the audio replay. ABOUT AEROVIRONMENT, INC. AeroVironment (NASDAQ: AVAV) provides customers with more actionable intelligence so they can proceed with certainty. Based in California, AeroVironment is a global leader in unmanned aircraft systems, tactical missile systems and electric vehicle charging and test systems, and serves militaries, government agencies, businesses and consumers. 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, reliance on sales to the U.S. government; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of government spending; potential need for changes in our long-term strategy in response to future developments; unexpected technical and marketing difficulties inherent in major research and product development efforts; 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; failure to remain a market innovator and create new market opportunities; changes in significant operating expenses, including components and raw materials; failure to develop new products; the extensive regulatory requirements governing our contracts with the U.S. government; product liability, infringement and other claims; changes in the regulatory environment; 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.
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