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AeroVironment Announces Fiscal 2023 First Quarter Results

AeroVironment, Inc. (NASDAQ: AVAV), a global leader in intelligent, multi-domain robotic systems, today reported financial results for the first quarter ended July 30, 2022.

First Quarter Highlights

  • First quarter revenue of $108.5 million, up 7% year-over-year
  • First quarter gross margin of $33.7 million, an increase of 17% year-over-year; gross margin percentage rose approximately 300 basis points, to 31%
  • First quarter net loss attributable to AeroVironment of $(8.4) million and non-GAAP adjusted EBITDA of $13 million
  • Strong August bookings resulted in record funded backlog of $307.6 million as of August 27, 2022

“The company achieved first quarter results in line with expectations, and we are reaffirming our fiscal 2023 guidance as shared last quarter,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “We’re excited about the traction we’re receiving in the market, underscored by recent Switchblade orders and award of the U.S. Army’s Future Tactical UAS Increment 1. Even though backlog was flat relative to last quarter, strong August bookings have led to a record funded backlog.

“Overall, we are successfully managing ongoing supply chain challenges and are well positioned for continued value creation due to strong demand across nearly all our product lines led by heightened global interest in our Switchblade Tactical Missile Systems, Small Unmanned Aircraft Systems, and Medium Unmanned Aircraft Systems product lines.”

FISCAL 2023 FIRST QUARTER RESULTS

Revenue for the first quarter of fiscal 2023 was $108.5 million, an increase of 7% from the first quarter of fiscal 2022 revenue of $101.0 million. The increase in revenue reflects an increase in product sales of $4.9 million and an increase in service revenue of $2.6 million. The increase in revenue was primarily due to increases in revenue in the Tactical Missile Systems (“TMS”) segment of $3.8 million, All Other segment of $3.6 million primarily due to an increase in customer-funded research and development revenue and the Small Unmanned Aircraft Systems (“Small UAS”) segment of $3.3 million. These increases were partially offset by a decrease in revenue from the Medium Unmanned Aircraft Systems (“MUAS”) segment of $3.1 million.

Gross margin for the first quarter of fiscal 2023 was $33.7 million, an increase of 17% from the first quarter of fiscal 2022 gross margin of $28.7 million. The increase in gross margin reflects higher product margin of $4.5 million and higher service margin of $0.4 million. As a percentage of revenue, gross margin increased to 31% from 28%. Gross margin was negatively impacted by $3.0 million of intangible amortization expense and other related non-cash purchase accounting expenses in the first quarter of fiscal 2023 as compared to $4.0 million in the first quarter of fiscal 2022.

Loss from operations for the first quarter of fiscal 2023 was $3.3 million, a decrease of $8.8 million from the first quarter of fiscal 2022 loss from operations of $12.1 million. The decrease in loss from operations was primarily the result of a decrease in selling, general and administrative (“SG&A”) expense of $5.2 million and an increase in gross margin of $5.0 million, partially offset by an increase in research and development (“R&D”) expense of $1.3 million. The decrease in SG&A expense reflects a decrease in acquisition-related expenses of $2.9 million and a decrease in intangible amortization expense and other related non-cash purchase accounting expenses of $1.2 million.

Other expense, net, for the first quarter of fiscal 2023 was $2.0 million, as compared to other expense, net of $1.6 million for the first quarter of fiscal 2022, primarily due to an increase in interest expense resulting from an increase in interest rates.

Provision for income taxes for the first quarter of fiscal 2023 was $2.6 million, as compared to a benefit from income taxes of $(1.0) million for the first quarter of fiscal 2022. The increase in provision for income taxes was primarily due to changes in the full fiscal year projected effective income tax rate.

Equity method investment loss, net of tax, for the first quarter of fiscal 2023 was $0.5 million, as compared to $1.1 million for the first quarter of fiscal 2022. Subsequent to the sale of the equity interest in HAPSMobile during the three months ended April 30, 2022, equity method investment loss, net of tax only relates to activity from investments in limited partnership funds.

Net loss attributable to AeroVironment for the first quarter of fiscal 2023 was $8.4 million, or $(0.34) per diluted share, as compared to $14.0 million, or $(0.57) per diluted share, for the first quarter of fiscal 2022.

Non-GAAP loss per diluted share was $(0.10) for the first quarter of fiscal 2023, as compared to $(0.17) for the first quarter of fiscal 2022.

BACKLOG

As of July 30, 2022, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to the Company under a customer contract) was $203.9 million, as compared to $210.8 million as of April 30, 2022. As of August 27, 2022, funded backlog was $307.6 million.

FISCAL 2023 — OUTLOOK FOR THE FULL YEAR

For the fiscal year 2023, the Company continues to expect revenue of between $490 million and $520 million, net income of between $11 million and $18 million, Non-GAAP adjusted EBITDA of between $82 million and $92 million, earnings per diluted share of between $0.42 and $0.72 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets and other non-cash purchase accounting expenses, of between $1.35 and $1.65.

The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, and including certain assumptions with respect to our ability to efficiently and on a timely basis integrate our acquisitions, 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 AND PRESENTATION

In conjunction with this release, AeroVironment, Inc. will host a conference call today, Wednesday, September 7, 2022, at 4:30 pm Eastern Time that will be webcast live. Wahid Nawabi, chairman, president and chief executive officer, Kevin P. McDonnell, chief financial officer and Jonah Teeter-Balin, senior director corporate development and investor relations, will host the call.

New this quarter, investors may access the call by registering via the following participant registration link up to ten minutes prior to the start time.

Participant registration URL: https://register.vevent.com/register/BI9db32ad42d4b4fd5a1ec1f9a55e658f5

Investors may also 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.

A supplementary investor presentation for the first quarter fiscal year 2023 can be accessed at https://investor.avinc.com/events-and-presentations.

Audio Replay

An audio replay of the event will be archived on the Investor Relations section of the Company's website at http://investor.avinc.com.

ABOUT AEROVIRONMENT, INC.

AeroVironment (NASDAQ: AVAV) provides technology solutions at the intersection of robotics, sensors, software analytics and connectivity that deliver more actionable intelligence so you can Proceed with Certainty. Headquartered in Virginia, AeroVironment is a global leader in intelligent, multi-domain robotic systems, and serves defense, government and commercial customers. 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, the impact of our recent acquisitions of Arcturus UAV, Telerob and ISG and our ability to successfully integrate them into our operations; the risk that disruptions will occur from the transactions that will harm our business; any disruptions or threatened disruptions to our relationships with our distributors, suppliers, customers and employees, including shortages in components for our products; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government and related to our development of HAPS UAS; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of government spending; our ability to perform under existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; potential need for changes in our long-term strategy in response to future developments; the extensive regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats or the risk of unauthorized access to our, our customers’ and/or our suppliers’ information and systems; changes in the supply and/or demand and/or prices for our products and services; increased competition; uncertainty in the customer adoption rate of commercial use unmanned aircraft systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; unexpected changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; unfavorable results in legal proceedings; our ability to respond and adapt to unexpected legal, regulatory and government budgetary changes, including those resulting from the ongoing COVID-19 pandemic, such as supply chain disruptions, vaccine mandates, the threat of future variants and potential governmentally-mandated shutdowns, quarantine policies, travel restrictions and social distancing, curtailment of trade, diversion of government resources to non-defense priorities, and other business restrictions affecting our ability to manufacture and sell our products and provide our services; our ability to comply with the covenants in our loan documents; our ability to attract and retain skilled employees; the impact of inflation; and general economic and business conditions in the United States and elsewhere in the world; and the failure to establish and maintain effective internal control over financial reporting. 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.

NON-GAAP MEASURES

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. See in the financial tables below the calculation of these measures, the reasons why we believe these measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures.

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

July 30,

 

July 31,

 

 

 

2022

 

 

2021

 

 

 

 

(Unaudited)

 

Revenue:

 

 

 

 

 

 

 

Product sales

 

$

57,974

 

 

$

53,116

 

 

Contract services

 

 

50,542

 

 

 

47,893

 

 

 

 

 

108,516

 

 

 

101,009

 

 

Cost of sales:

 

 

 

 

 

 

 

Product sales

 

 

32,899

 

 

 

32,590

 

 

Contract services

 

 

41,903

 

 

 

39,696

 

 

 

 

 

74,802

 

 

 

72,286

 

 

Gross margin:

 

 

 

 

 

 

 

Product sales

 

 

25,075

 

 

 

20,526

 

 

Contract services

 

 

8,639

 

 

 

8,197

 

 

 

 

 

33,714

 

 

 

28,723

 

 

Selling, general and administrative

 

 

21,943

 

 

 

27,128

 

 

Research and development

 

 

15,045

 

 

 

13,708

 

 

Loss from operations

 

 

(3,274

)

 

 

(12,113

)

 

Other loss:

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,603

)

 

 

(1,275

)

 

Other expense, net

 

 

(406

)

 

 

(346

)

 

Loss before income taxes

 

 

(5,283

)

 

 

(13,734

)

 

Provision for (benefit from) income taxes

 

 

2,606

 

 

 

(957

)

 

Equity method investment loss, net of tax

 

 

(500

)

 

 

(1,141

)

 

Net loss

 

 

(8,389

)

 

 

(13,918

)

 

Net income attributable to noncontrolling interest

 

 

(6

)

 

 

(63

)

 

Net loss attributable to AeroVironment, Inc.

 

$

(8,395

)

 

$

(13,981

)

 

Net loss per share attributable to AeroVironment, Inc.

 

 

 

 

 

 

 

Basic

 

$

(0.34

)

 

$

(0.57

)

 

Diluted

 

$

(0.34

)

 

$

(0.57

)

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

24,804,232

 

 

 

24,620,180

 

 

Diluted

 

 

24,804,232

 

 

 

24,620,180

 

 

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share data)

 

 

 

 

 

 

 

 

 

 

July 30,

 

April 30,

 

 

 

2022

 

 

2022

 

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,183

 

 

$

77,231

 

 

Short-term investments

 

 

12,655

 

 

 

24,716

 

 

Accounts receivable, net of allowance for doubtful accounts of $615 at July 30, 2022 and $592 at April 30, 2022

 

 

52,062

 

 

 

60,170

 

 

Unbilled receivables and retentions

 

 

89,397

 

 

 

104,194

 

 

Inventories

 

 

98,603

 

 

 

90,629

 

 

Income taxes receivable

 

 

 

 

 

442

 

 

Prepaid expenses and other current assets

 

 

11,368

 

 

 

11,527

 

 

Total current assets

 

 

357,268

 

 

 

368,909

 

 

Long-term investments

 

 

17,707

 

 

 

15,433

 

 

Property and equipment, net

 

 

61,862

 

 

 

62,296

 

 

Operating lease right-of-use assets

 

 

25,385

 

 

 

26,769

 

 

Deferred income taxes

 

 

7,671

 

 

 

7,290

 

 

Intangibles, net

 

 

91,009

 

 

 

97,224

 

 

Goodwill

 

 

333,791

 

 

 

334,347

 

 

Other assets

 

 

1,961

 

 

 

1,932

 

 

Total assets

 

$

896,654

 

 

$

914,200

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

21,945

 

 

$

19,244

 

 

Wages and related accruals

 

 

17,403

 

 

 

25,398

 

 

Customer advances

 

 

10,258

 

 

 

8,968

 

 

Current portion of long-term debt

 

 

10,000

 

 

 

10,000

 

 

Current operating lease liabilities

 

 

7,029

 

 

 

6,819

 

 

Income taxes payable

 

 

2,962

 

 

 

759

 

 

Other current liabilities

 

 

26,279

 

 

 

30,203

 

 

Total current liabilities

 

 

95,876

 

 

 

101,391

 

 

Long-term debt, net of current portion

 

 

175,481

 

 

 

177,840

 

 

Non-current operating lease liabilities

 

 

20,371

 

 

 

21,915

 

 

Other non-current liabilities

 

 

759

 

 

 

768

 

 

Liability for uncertain tax positions

 

 

1,450

 

 

 

1,450

 

 

Deferred income taxes

 

 

2,547

 

 

 

2,626

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value:

 

 

 

 

 

 

 

Authorized shares—10,000,000; none issued or outstanding at July 30, 2022 and April 30, 2022

 

 

 

 

 

 

 

Common stock, $0.0001 par value:

 

 

 

 

 

 

 

Authorized shares—100,000,000

 

 

 

 

 

 

 

Issued and outstanding shares—24,990,590 shares at July 30, 2022 and 24,951,287 shares at April 30, 2022

 

 

2

 

 

 

2

 

 

Additional paid-in capital

 

 

268,641

 

 

 

267,248

 

 

Accumulated other comprehensive loss

 

 

(7,558

)

 

 

(6,514

)

 

Retained earnings

 

 

338,838

 

 

 

347,233

 

 

Total AeroVironment, Inc. stockholders’ equity

 

 

599,923

 

 

 

607,969

 

 

Noncontrolling interest

 

 

247

 

 

 

241

 

 

Total equity

 

 

600,170

 

 

 

608,210

 

 

Total liabilities and stockholders’ equity

 

$

896,654

 

 

$

914,200

 

 

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

July 30,

 

July 31,

 

 

 

2022

 

 

2021

 

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(8,389

)

 

$

(13,918

)

 

Adjustments to reconcile net loss from operations to cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

14,000

 

 

 

13,654

 

 

Loss from equity method investments

 

 

500

 

 

 

1,141

 

 

Amortization of debt issuance costs

 

 

211

 

 

 

129

 

 

Provision for doubtful accounts

 

 

23

 

 

 

(20

)

 

Other non-cash expense, net

 

 

153

 

 

 

48

 

 

Non-cash lease expense

 

 

1,590

 

 

 

1,677

 

 

(Gain) loss on foreign currency transactions

 

 

(44

)

 

 

19

 

 

Deferred income taxes

 

 

(381

)

 

 

(472

)

 

Stock-based compensation

 

 

2,217

 

 

 

1,922

 

 

Loss on disposal of property and equipment

 

 

485

 

 

 

379

 

 

Amortization of debt securities

 

 

130

 

 

 

90

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

Accounts receivable

 

 

8,053

 

 

 

17,914

 

 

Unbilled receivables and retentions

 

 

14,754

 

 

 

(14,684

)

 

Inventories

 

 

(11,707

)

 

 

(6,058

)

 

Income taxes receivable

 

 

442

 

 

 

(326

)

 

Prepaid expenses and other assets

 

 

46

 

 

 

481

 

 

Accounts payable

 

 

3,323

 

 

 

(7,997

)

 

Other liabilities

 

 

(9,519

)

 

 

(9,283

)

 

Net cash provided by (used in) operating activities

 

 

15,887

 

 

 

(15,304

)

 

Investing activities

 

 

 

 

 

 

 

Acquisition of property and equipment

 

 

(5,393

)

 

 

(5,428

)

 

Equity method investments

 

 

(2,774

)

 

 

(2,692

)

 

Business acquisitions, net of cash acquired

 

 

 

 

 

(46,150

)

 

Redemptions of available-for-sale investments

 

 

13,280

 

 

 

17,925

 

 

Purchases of available-for-sale investments

 

 

(1,326

)

 

 

 

 

Net cash provided by (used in) investing activities

 

 

3,787

 

 

 

(36,345

)

 

Financing activities

 

 

 

 

 

 

 

Principal payments of term loan

 

 

(2,500

)

 

 

(2,500

)

 

Tax withholding payment related to net settlement of equity awards

 

 

(824

)

 

 

(1,176

)

 

Holdback and retention payments for business acquisition

 

 

 

 

 

(5,991

)

 

Exercise of stock options

 

 

 

 

 

119

 

 

Other

 

 

(7

)

 

 

(8

)

 

Net cash used in financing activities

 

 

(3,331

)

 

 

(9,556

)

 

Effects of currency translation on cash and cash equivalents

 

 

(391

)

 

 

(111

)

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

15,952

 

 

 

(61,316

)

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

77,231

 

 

 

157,063

 

 

Cash, cash equivalents and restricted cash at end of period

 

$

93,183

 

 

$

95,747

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

Cash paid, net during the period for:

 

 

 

 

 

 

 

Income taxes

 

$

 

 

$

 

 

Interest

 

$

2,169

 

 

$

 

 

Non-cash activities

 

 

 

 

 

 

 

Unrealized (gain) loss on available-for-sale investments, net of deferred tax expense of $6 and $0 for the three months ended July 30, 2022 and July 31, 2021, respectively

 

$

(20

)

 

$

4

 

 

Change in foreign currency translation adjustments

 

$

(1,064

)

 

$

(733

)

 

Issuances of inventory to property and equipment, ISR in-service assets

 

$

3,364

 

 

$

6,881

 

 

Acquisitions of property and equipment included in accounts payable

 

$

543

 

 

$

821

 

 

AeroVironment, Inc.

Reportable Segment Results (Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 30, 2022

 

 

Small UAS

 

TMS

 

MUAS

 

HAPS

 

All other

 

Total

Revenue

 

$

43,256

 

$

23,011

 

 

$

19,262

 

 

$

10,215

 

$

12,772

 

 

$

108,516

 

Gross margin

 

 

21,296

 

 

7,746

 

 

 

(1,073

)

 

 

3,324

 

 

2,421

 

 

 

33,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

8,025

 

 

(1,031

)

 

 

(9,584

)

 

 

2,539

 

 

(3,223

)

 

 

(3,274

)

Acquisition-related expenses

 

 

-

 

 

-

 

 

 

221

 

 

 

-

 

 

114

 

 

 

335

 

Amortization of acquired intangible assets and other purchase accounting adjustments

 

 

682

 

 

-

 

 

 

4,831

 

 

 

-

 

 

1,334

 

 

 

6,847

 

Adjusted income (loss) from operations

 

$

8,707

 

$

(1,031

)

 

$

(4,532

)

 

$

2,539

 

$

(1,775

)

 

$

3,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 31, 2021

 

 

Small UAS

 

TMS

 

MUAS

 

HAPS

 

All other

 

Total

Revenue

 

$

39,924

 

$

19,176

 

 

$

22,379

 

 

$

10,352

 

$

9,178

 

 

$

101,009

 

Gross margin

 

 

16,920

 

 

5,989

 

 

 

3,181

 

 

 

3,174

 

 

(541

)

 

 

28,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

1,958

 

 

(463

)

 

 

(6,381

)

 

 

1,103

 

 

(8,330

)

 

 

(12,113

)

Acquisition-related expenses

 

 

424

 

 

251

 

 

 

1,384

 

 

 

104

 

 

1,091

 

 

 

3,254

 

Amortization of acquired intangible assets and other purchase accounting adjustments

 

 

707

 

 

-

 

 

 

5,191

 

 

 

-

 

 

3,226

 

 

 

9,124

 

Adjusted income (loss) from operations

 

$

3,089

 

$

(212

)

 

$

194

 

 

$

1,207

 

$

(4,013

)

 

$

265

 

 AeroVironment, Inc.

Reconciliation of non-GAAP Loss per Diluted Share (Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

July 30, 2022

 

July 31, 2021

 

 

 

 

 

 

 

Loss per diluted share

 

$

(0.34

)

 

$

(0.57

)

Acquisition-related expenses

 

 

0.02

 

 

 

0.11

 

Amortization of acquired intangible assets and other purchase accounting adjustments

 

 

0.22

 

 

 

0.29

 

Loss per diluted share as adjusted (Non-GAAP)

 

$

(0.10

)

 

$

(0.17

)

Reconciliation of non-GAAP adjusted EBITDA (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

(in millions)

 

July 30, 2022

 

July 31, 2021

Net loss

 

$

(8

)

 

$

(14

)

Interest expense, net

 

 

2

 

 

 

1

 

Provision for (benefit from) income taxes

 

 

2

 

 

 

(1

)

Depreciation and amortization

 

 

14

 

 

 

14

 

EBITDA (Non-GAAP)

 

 

10

 

 

 

 

Amortization of purchase accounting adjustment included in loss on disposal of property and equipment

 

 

 

 

 

1

 

Stock-based compensation

 

 

2

 

 

 

2

 

Equity method investment loss

 

 

1

 

 

 

1

 

Acquisition-related expenses

 

 

 

 

 

3

 

Adjusted EBITDA (Non-GAAP)

 

$

13

 

 

$

7

 

Reconciliation of Forecast Earnings per Diluted Share (Unaudited)

 

 

 

 

 

 

Fiscal year ending

 

 

April 30, 2023

Forecast earnings per diluted share

 

$

0.42 - 0.72

Acquisition-related expenses

 

 

0.02

Amortization of acquired intangible assets and other purchase accounting adjustments

 

 

0.91

Forecast earnings per diluted share as adjusted (Non-GAAP)

 

$

1.35 - 1.65

Reconciliation of 2023 Forecast and Fiscal Year 2022 Actual Non-GAAP adjusted EBITDA (Unaudited)

 

 

 

 

 

 

 

 

 

Fiscal year ending

 

Fiscal year ended

(in millions)

 

April 30, 2023

 

April 30, 2022

Net income (loss)

 

$

11 - 18

 

 

$

(4

)

Interest expense, net

 

 

5

 

 

 

5

 

Benefit from income taxes

 

 

(4) - (1

)

 

 

(10

)

Depreciation and amortization

 

 

60

 

 

 

61

 

EBITDA (Non-GAAP)

 

 

72 - 82

 

 

 

52

 

Amortization of purchase accounting adjustment included in loss on disposal of property and equipment

 

 

 

 

 

1

 

Stock-based compensation

 

 

8

 

 

 

5

 

Sale of ownership in HAPSMobile Inc. joint venture

 

 

 

 

 

(6

)

Equity method investment loss (gain)

 

 

1

 

 

 

(5

)

Legal accrual related to our former EES business

 

 

 

 

 

10

 

Acquisition-related expenses

 

 

1

 

 

 

5

 

Adjusted EBITDA (Non-GAAP)

$

82 - 92

 

 

$

62

Statement Regarding Non-GAAP Measures

The non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing our results that, when reconciled to the corresponding GAAP measures, help our investors to understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. In addition, management uses these non-GAAP measures to evaluate our operating and financial performance.

Non-GAAP Adjusted Operating Income

Adjusted operating income is defined as operating income before intangible amortization, amortization of non-cash purchase accounting adjustments, and acquisition related expenses.

Non-GAAP Earnings per Diluted Share

We exclude the acquisition-related expenses, amortization of acquisition-related intangible assets and one-time non-operating items because we believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible asset amortization will recur in future periods until such intangible assets have been fully amortized.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA is defined as net income before interest income, interest expense, income tax expense (benefit) and depreciation and amortization including amortization of purchase accounting adjustments, adjusted for the impact of certain other items, including stock-based compensation, acquisition related expenses, equity method investment gains or losses, and one-time non-operating gains or losses. We present Adjusted EBITDA, which is not a recognized financial measure under U.S. GAAP, because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation, intangible asset amortization will recur in future periods until such intangible assets have been fully amortized and that interest and income tax expenses will recur in future periods. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

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