AeroVironment Inc

AeroVironment, Inc. designs and produces unmanned aircraft systems and alternative energy systems. The company primarily serves the U.S. government but also sells to corporate customers. AeroVironment was founded in 1971 and has a marker cap of $638 million.

Second-Quarter Results

AeroEnvironment's share price has continued to advance over the last 12 weeks, no doubt helped by the company's solid second-quarter results, reported on Sep 9.

Revenue was up 9% from last year to $53.6 million. Net income came in at $4.8 million, up 25% from last year's $3.8 million. This produced earnings of 22 cents per share, 4 cents ahead of analyst estimates.

The company noted that its revenue growth was fueled by its unmanned aircraft systems division, with sales increasing by $4.2 million from last year.

Consistent Results

It was the fourth time in four quarters that the company has surprised and beat analyst estimates, having done so by an average of 3 cents, or 12.5%.

Guidance and Estimates

AeroVironment also reaffirmed its revenue guidance for fiscal 2009, saying it expects growth to fall between 20% and 25%, with operating margins falling between 12% and 14%.

The analyst community is bullish on the company's long-term prospects, with the next-year estimate pegged at $1.39 per share, a 19% earnings growth projection.

The Chart

Shares of AVAV have been rallying for most of 2008, advancing from just above $18 in March to a recent high at $38.50. A long-term trend line has been in play during this stock's upward ascent and has continues to provide support. Take a look below.

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First quarter highlights:

-- Revenue of $53.6 million

-- Operating margin of 13%

-- Earnings per diluted share of $0.22

FISCAL 2009 FIRST QUARTER RESULTS

Revenue for the first quarter of fiscal 2009 was $53.6million, up 9% over first quarter fiscal 2008 revenue of $49.2million. The increase in revenue resulted from increased sales in our Unmanned Aircraft Systems (UAS)segment of $4.2million and Efficient Energy Systems (EES) of $0.2 million.

Income from operations for the first quarter of fiscal 2009 was $7.2million, up 50% from first quarter fiscal 2008 income fromoperations of $4.8million. The growth in income from operations was caused by increased gross margin of $3.7million, partially offset by higher research and development expense of $1.0 million and selling, general and administrative (SG&A) expense of $0.3 million.

Net income for the first quarter of fiscal 2009 was $4.8million, up 25% from first quarter fiscal 2008 net income of $3.8million.

Earnings per diluted share for the first quarter of fiscal 2009 was $0.22, up 22% over first quarter fiscal 2008 earnings per diluted share of $0.18.

BACKLOG

As of August2, 2008, funded backlog (unfilled firm orders for which funding is currently appropriated to us under a customer contract) was $108.9million compared to $82.0million as of April30, 2008.

FISCAL 2009 -- OUTLOOK FOR THE FULL YEAR

For fiscal year 2009 the company maintains its guidance of revenue growth of between 20% and 25% over fiscal year 2008, with an operating income margin of between 12% and 14%. 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 demand for our products and services, activities of competitors and changes in the regulatory environment. 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, September9, 2008, at 1:30 p.m. Pacific Time that will be broadcast live over the Internet. Timothy E. Conver, chief executive officer, and president, Stephen C. Wright, chief financial officer, and Steven A. Gitlin, director of investor relations, will host the call.

4:30 PM ET

3:30 PM CT

2:30 PM MT

1:30 PM PT

Investors may dial into the call at 877-548-7901 (U.S.) or 719-325-4876 (international) five to ten minutes prior to the start time to allow for registration.

Investors with access to the Internet may access the conference call live over the Internet at the Investor Relations section of the AeroVironment,Inc. website, http://investor.avinc.com. Please allow fifteen minutes prior to the call to download and install any necessary audio software. An audio replay of the event will be archived on the Investor Relations pageof the Company's web site, at http://investor.avinc.com.

A digital replay of the call will be available on Tuesday, September9, at approximately 4:30p.m. Pacific Time through Monday, September15, at 9:00p.m. Pacific Time. Dial 888-203-1112 and enter the passcode 2408231. International callers should dial 719-457-0820 and enter the same passcode number to access the digital replay.

About AeroVironment,Inc. (AV)

Building on a history of technological innovation, AV designs, develops, produces, and supports an advanced portfolio of Unmanned Aircraft Systems (UAS) and efficient electric energy systems. The company's small UAS are used extensively by agencies of the U.S. Department of Defense and increasingly by allied military services to provide situational awareness to tactical operating units through reliable, real-time, airborne reconnaissance, surveillance, and target acquisition. AV's efficient energy systems include PosiCharge(TM) fast charge systems for increasing the productivity of industrial electric vehicles, and Architectural Wind(TM) systems for clean energy generation on buildings. More information about AV is available at 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; changes in the supply and/or demand and/or prices for our products; the activities of competitors; failure of the markets in which we operate to grow; failure to expand into new markets; changes in significant operating expenses, including components and raw materials; failure to develop new products; 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.

AeroVironment,Inc.
Consolidated Statements of Income (Unaudited)
(In thousands except share and per share data)
                                              Three Months Ended
                                              August 2,               July 28,
                                              2008                    2007
Revenue:
Product sales                                 $       25,327          $       29,684
Contract services                             28,286                  19,520
                                              53,613                  49,204
Cost of sales:
Product sales                                 14,358                  18,291
Contract services                             18,672                  14,076
                                              33,030                  32,367
Gross margin                                  20,583                  16,837
Selling, general and administrative           8,095                   7,726
Research and development                      5,260                   4,300
Income from operations                        7,228                   4,811
Other income:
Interest income                               541                     979
Income before income taxes                    7,769                   5,790
Provision for income taxes                    2,960                   1,946
Net income                                    $       4,809           $       3,844
Earnings per share data:
Basic                                         $       0.23            $       0.20
Diluted                                       $       0.22            $       0.18
Weighted average shares outstanding:
Basic                                         20,711,656              18,897,711
Diluted                                       21,651,032              21,077,055

AeroVironment,Inc.
Selected Consolidated Balance Sheet Information
(In thousands except share data)
                                             August 2,                April 30,
                                             2008                     2008
                                             (Unaudited)
Cash and cash equivalents                    $       104,831          $       105,064
Short-term investments                       8,525                    13,375
Accounts receivable, net                     29,355                   29,788
Unbilled receivables and retentions          21,530                   20,590
Inventories, net                             20,687                   15,923
Total assets                                 204,230                  202,779
Stockholders' equity                         181,522                  169,740
Shares issued and outstanding                20,924,256               20,614,044

Reportable Segment Results are as Follows (Unaudited):
(In thousands)
                                              Three Months Ended
                                              August 2,                  July 28,
                                              2008                       2007
                                                                         (Restated (a))
Revenue:
UAS                                           $        46,076            $        41,873
EES                                           7,537                      7,331
Total                                         53,613                     49,204
Gross margin:
UAS                                           16,643                     14,091
EES                                           3,940                      2,746
Total                                         20,583                     16,837
Selling, general and administrative           8,095                      7,726
Research and development                      5,260                      4,300
Income from operations                        7,228                      4,811
Interest income                               541                        979
Income before income taxes                    $        7,769             $        5,790

(a) Effective May1, 2008, the Company consolidated the operations of two of its business segments to reflect the change in the management and organizational structure that occurred on May1, 2008. PosiCharge Systems and EnergyTechnologyCenter were consolidated into one segment named Efficient Energy Systems. As required by Statement of Financial Accounting StandardsNo.131, Disclosures about Segments of an Enterprise and Related Information, the Company has restated its historical segment information for the three months ended July28, 2007, to be consistent with the current reportable segment structure.

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SOURCE: AeroVironment, Inc.

AeroVironment,Inc. 
Steven Gitlin, +1-626-357-9983 
ir@avinc.com