AeroVironment, a leader in defense technology and unmanned systems, today reported its financial results for the second quarter of fiscal year 2025, ending October 26, 2024. The company posted impressive growth with a record second-quarter revenue and notable progress in expanding its business portfolio.
Second Quarter Financial Highlights
- Revenue: AeroVironment achieved a record revenue of $188.5 million, a 4% increase from $180.8 million in the same period last year. This growth was driven by a $5.5 million increase in product sales and a $2.2 million increase in service revenue. Key revenue contributions came from the Loitering Munition Systems (LMS) and MacCready Works (MW) segments, which grew by 157% and 42%, respectively. However, the Uncrewed Systems (UxS) segment saw a 35% decrease in revenue, partially offsetting overall growth.
- Net Income and Adjusted EBITDA: The company reported net income of $7.5 million, or $0.27 per diluted share, down from $17.8 million, or $0.66 per diluted share, in the prior year. Adjusted EBITDA for the quarter was $25.9 million, compared to $39.5 million in the same quarter of fiscal 2024. Non-GAAP earnings per diluted share were $0.47, a decrease from $0.97 in the previous year. The decline was primarily driven by increased operating expenses, including research and development (R&D) investments and acquisition-related costs.
- Gross Margin: AeroVironment’s gross margin for the quarter was $73.6 million, slightly down from $75.4 million in the prior year, reflecting a lower product gross margin offset by a higher service margin. As a percentage of revenue, gross margin decreased to 39% from 42%, mainly due to the higher proportion of LMS product sales, which generally have a lower margin, and an increase in intangible amortization costs.
- Operating Expenses: Operating income for the quarter was $7.0 million, compared to $25.2 million in the same period last year. This decrease was attributed to a $9.8 million rise in selling, general, and administrative (SG&A) expenses, including $2.5 million in acquisition-related costs and a $6.7 million increase in R&D spending.
- Other Loss and Tax Benefit: AeroVironment reported other net losses of $0.7 million for the quarter, significantly improved from $4.8 million in the same quarter last year. This reduction was largely due to lower net interest expenses and unrealized losses on investment holdings. The company also recorded a benefit from income taxes of $(0.2) million, compared to a tax provision of $1.1 million in the second quarter of fiscal 2024.
Backlog and Future Prospects
- Funded Backlog: As of October 26, 2024, AeroVironment’s funded backlog stood at $467.1 million, a 17% increase from $400.2 million at the end of April 2024. The strong backlog reflects the company’s robust order book and highlights the continued demand for its unmanned systems and advanced defense technologies.
- Acquisition of BlueHalo: AeroVironment announced its entry into an agreement to acquire BlueHalo, a provider of advanced technologies in the defense and aerospace sectors, in an all-stock transaction valued at approximately $4.1 billion. The acquisition is expected to significantly enhance AeroVironment’s capabilities in the defense space and intelligence sectors, creating new growth opportunities and further establishing the company as a leader in next-generation defense technologies.
Fiscal 2025 Full-Year Outlook
AeroVironment has provided its full-year guidance for fiscal 2025. The company expects revenue to range between $790 million and $820 million, with non-GAAP adjusted EBITDA between $143 million and $153 million, and non-GAAP earnings per diluted share between $3.18 and $3.49. This forecast does not include the anticipated financial impact of the BlueHalo acquisition, which remains subject to regulatory approvals and other conditions. AeroVironment has also noted that acquisition-related expenses are expected to be significant, but the timing and amount remain uncertain.
CEO’s Commentary
We continue to deliver strong financial results, including a record second-quarter revenue and a healthy funded backlog that is 25% higher than last quarter, said Wahid Nawabi, AeroVironment’s Chairman, President, and CEO. “Our Loitering Munition Systems segment is a key driver of growth, and we are excited about the opportunities our proposed acquisition of BlueHalo will create. This strategic move will expand our product portfolio, enhance our capabilities, and position AeroVironment as a leader in the next-generation defense technology space.”
Nawabi added, “We look forward to leveraging the momentum from our strong second-quarter performance and continued innovation to drive growth and deliver value to our stakeholders beyond fiscal year 2025.”
Conference Call and Webcast
AeroVironment will host a conference call on Wednesday, December 4, 2024, at 4:30 p.m. Eastern Time to discuss the results. Investors can access the live webcast via the Investor Relations section of the AeroVironment website. A replay of the call will be available on the company’s website following the event.
For additional details on the company’s second-quarter financial performance and fiscal outlook, investors can refer to AeroVironment’s supplementary investor presentation, available online.
AeroVironment’s continued growth, backed by its robust backlog and strategic acquisitions, underscores its position as a leading provider of cutting-edge defense technologies, poised for continued success in fiscal 2025 and beyond.
