April 2, 2024
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AeroVironment shares hit all-time high behind record Q3 earnings

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A soldier launches a test flight of an AeroVironment Puma drone. (courtesy photo)

Shares of AeroVironment, a drone maker for the defense industry, are up more than 40% since the company announced its earnings for the third quarter, showing that demand for its products is soaring.

AeroVironment, headquartered in Virginia but still maintains large operations in Simi Valley and Moorpark, beat analyst expectations by a large amount on March 4.

According to its latest earnings report for the quarter that ended Jan. 27, AeroVironment generated record third-quarter revenue of $186.6 million, up 39% year-over-year.

The company also generated net income worth $13.9 million for the third quarter, up from a loss of about $1 million in the same quarter a year ago.

Moreover, when adjusted for one-time losses, AeroVironment generated a net income of $28.8 million, or 63 cents per share, doubling up on Wall Street expectations of 33 cents per share, according to the Motley Fool.

That, combined with AeroVironment raising its full-year fiscal guidance for the second-straight quarter, was the reason for the company’s shares jumping so drastically.

AeroVironment now expects total year sales of between $700 million and $710 million, up from a forecast of between $645 million and $675 million in sales made back in September. 

Shares of the company are up 41% since its earnings announcement, including jumping 8% during the trading day on March 8. Shares closed at $180.61 on March 8.

Shares reached as high as $183.55, an all-time high for the company since going public in 2007.

“Once again, AeroVironment has delivered outstanding results, including a record for third-quarter revenue that’s nearly 40% above the same period last fiscal year,” Wahid Nawabi, AeroVironment chairman, president and CEO, said in a press release. 

“Solid bottom-line results, fueled by record demand and strong operating execution, have us on track for our best year ever. In addition, the Company continues to show tremendous growth in the Loitering Munition Systems segment, which delivered record revenue in the quarter. With the increased global demand for our solutions, strong backlog and growing pipeline, AeroVironment remains well positioned for continued growth.”

AeroVironment ended the quarter with a funded backlog of $462.8 million in future business. 

During the company’s earnings call, Nawabi noted that “higher demand across the globe and emerging programs of record are driving historic top-line growth.”

He said that sales in the company’s loitering munitions segment more than doubled year-over-year to $58 million. 

“This was our best quarter ever for LMS, with a significant rise sequentially and year over year. Yet, we believe we’re only getting started,” Nawabi said.

Its loitering munitions segment includes AeroVironment’s Switchblade drone. The Switchblade is a drone used by several branches of the military and is small enough to fit in a backpack.

Nawabi said the company is engaged with more than 20 countries who have “demonstrated a strong interest in Switchblade.”

“We expect Switchblade production to increase further in the fourth quarter, setting LMS up for another record fiscal year and even greater success in the future. Since we foresee additional large orders for Switchblade on the horizon, we’re investing to further increase our manufacturing capacity,” Nawabi said.

“While we have sufficient capacity for the next couple of years of increased demand, our team is also evaluating future expansion of facilities, geographies, and supply chain partners.”

Sales for the company’s unmanned system segment rose 23% year over year to approximately $113 million. 

Top-line growth is broadly spread across its Puma and JUMP 20 systems, reflecting a good mix of domestic and international customers, Nawabi said.

In fact, sales for Puma, now in its third generation, accounted for about half the UMS revenue.

AeroVironment ended the quarter with cash and cash equivalents worth $107.2 million.

email: jmercado@pacbiztimes.com