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AeroVironment Q2 2015 revenue down 19%

Staff writer |
AeroVironment reported financial results for its second quarter ended November 1, 2014. Revenue for Q2 2015 was $52.7 million, down 19% from second quarter fiscal 2014 revenue of $64.9 million.

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The decrease in revenue resulted from decreased sales in our Unmanned Aircraft Systems (UAS) segment of $13.0 million offset by an increase in sales in our Efficient Energy Systems (EES) segment of $0.8 million.

Gross margin for the second quarter of fiscal 2015 was $17.9 million, down 25% from second quarter fiscal 2014 gross margin of $23.9 million. The decrease in gross margin was due to lower product margins of $4.3 million and lower service margins of $1.7 million. As a percentage of revenue, gross margin decreased to 34% from 37%.

Loss from operations for the second quarter of fiscal 2015 was $4.1 million compared to income from operations for the second quarter of fiscal 2014 of $3.9 million.

The loss from operations was a result of lower revenue, resulting in $6 million lower gross margin, and higher selling, general & administrative (SG&A) expense of $0.4 million and research and development (R&D) expense of $1.7 million.

Other expense, net, for the second quarter of fiscal 2015 was $0.4 million compared to other expense, net, for the second quarter of fiscal 2014 of $2.1 million.

The decrease in other expense, net, was primarily due to a decrease of $0.4 million in the fair value of the conversion option of our convertible bond investment and sales of related equity securities during the second quarter of fiscal 2015, compared to a decrease of $2.3 million in the fair value of the conversion option for the second quarter of fiscal 2014.

Net loss for the second quarter of fiscal 2015 was $2.9 million compared to net income for the second quarter of fiscal 2014 of $1.7 million.

Loss per share for the second quarter of fiscal 2015 was $0.13 compared to earnings per diluted share for the second quarter of fiscal 2014 of $0.07. Loss per share for the second quarter of fiscal 2015 increased by $0.01 due to the decrease in fair value of the conversion option of our convertible bond investment and related sales of stock.

Earnings per diluted share for the second quarter of fiscal 2014 decreased by $0.07 due to the decrease in fair value of the conversion option of our convertible bond investment.

Revenue for the first six months of fiscal 2015 was $104.5 million, down 4% from first six months fiscal 2014 revenue of $109.0 million. The decrease in revenue resulted from decreased sales in our UAS segment of $7.1 million offset by an increase in our EES segment of $2.6 million.

Gross margin for the first six months of fiscal 2015 was $31.9 million, down 12% from first six months fiscal 2014 gross margin of $36.4 million. The decrease in gross margin was due to lower service margins of $5.6 million offset by higher product margins of $1.1 million. As a percentage of revenue, gross margin decreased from 33% to 31%.

Loss from operations for the first six months of fiscal 2015 was $10.6 million compared to loss from operations for the first six months of fiscal 2014 of $3.2 million. The higher loss from operations was the result of lower revenue, resulting in a $4.5 million decrease in gross margin, higher SG&A expense of $1.3 million and higher R&D expense of $1.6 million.

Other income, net, for the first six months of fiscal 2015 was $0.4 million compared to other expense, net, for the first six months of fiscal 2014 of $5.3 million.

The increase in other income, net, was primarily due to an increase of $0.4 million in the fair value of the conversion option of our convertible bond investment and sales of related equity securities during the first six months of fiscal 2015, compared to a decrease of $5.7 million in the fair value of the conversion option during the first six months of fiscal 2014.

Net loss for the first six months of fiscal 2015 was $6.5 million compared to net loss for the first six months of fiscal 2014 of $5.6 million.

Loss per share for the first six months of fiscal 2015 was $0.29 compared to loss per share for the first six months of fiscal 2014 of $0.25. Loss per share for the first six months of fiscal 2015 decreased by $0.01 due to the increase in fair value of the conversion option of our convertible bond investment and related sales of stock.

Loss per share for the first six months of fiscal 2014 increased by $0.19 due to the decrease in fair value of the conversion option of our convertible bond investment.

As of November 1, 2014, funded backlog (unfilled firm orders for which funding is currently appropriated to us under a customer contract) was $125.2 million compared to $65.9 million as of April 30, 2014.

For fiscal 2015, the company continues to expect to generate revenue of between $250 million and $270 million and gross profit margin of between 34.5 percent and 37.5 percent at the respective revenue levels.

Planned increases in research and development and business development investments for Tactical Missile Systems, Commercial UAS and Global Observer business areas in fiscal 2015 may largely offset operating profit in the current fiscal year.


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