What changed in this filing

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Item 1. Financial Statements

2024-09-05 compared with 2024-03-05 · 181 added, 360 removed, 513 unchanged (51% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 88 at January 27, 2024 and $ 156 at April 30, 2023

Accounts receivable, net of allowance for doubtful accounts of $ 58 at July 27, 2024 and $ 159 at April 30, 2024

Unbilled receivables and retentions

27 unchanged sentences

Authorized shares— 10,000,000 ;

none issued or outstanding at January 27, 2024 and April 30, 2023

none issued or outstanding at July 27, 2024 and April 30, 2024

Common stock, $ 0.0001 par value:

Authorized shares— 100,000,000

Issued and outstanding shares— 28,136,735 shares at January 27, 2024 and 26,216,897 shares at April 30, 2023

Issued and outstanding shares— 28,206,480 shares at July 27, 2024 and 28,134,438 shares at April 30, 2024

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

Product sales

8 unchanged sentences

Research and development

Income (loss) from operations

Other income (loss):

Income from operations

Interest expense, net

Other income (expense), net

Income (loss) before income taxes

Provision for (benefit from) income taxes

Equity method investment loss, net of tax

Net income (loss)

Net income attributable to noncontrolling interest

Net income (loss) attributable to AeroVironment, Inc.

Net income (loss) per share attributable to AeroVironment, Inc.

Other expense, net

Income before income taxes

Provision for income taxes

Equity method investment income (loss), net of tax

Net income per share

Weighted-average shares outstanding:

1 unchanged sentence

AeroVironment, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

Net income (loss)

Other comprehensive income (loss):

Unrealized gain on available-for-sale investments, net of deferred tax expense of $ 0 for the three and nine months ended January 28, 2023, respectively

Other comprehensive income:

Change in foreign currency translation adjustments

Total comprehensive income (loss)

Net income attributable to noncontrolling interest

Comprehensive income (loss) attributable to AeroVironment, Inc.

Total comprehensive income

See accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended January 27, 2024 and January 28, 2023 (Unaudited)

(In thousands except share data)

Comprehensive

AeroVironment, Inc.

Balance at October 28, 2023

Foreign currency translation

Restricted stock awards

Restricted stock awards forfeited

Stock based compensation

Balance at January 27, 2024

Comprehensive

AeroVironment, Inc.

Balance at October 29, 2022

Foreign currency translation

Stock options exercised

Restricted stock awards

Restricted stock awards forfeited

Shares issued, net of issuance costs

Stock based compensation

Balance at January 28, 2023

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the nine months ended January 27, 2024 and January 28, 2023 (Unaudited)

For the three months ended July 27, 2024 and July 29, 2023 (Unaudited)

(In thousands except share data)

Comprehensive

AeroVironment, Inc.

Balance at April 30, 2024

Foreign currency translation

Stock options exercised

Restricted stock awards

1 unchanged sentence

Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Issuance of common stock for business acquisition

Stock based compensation

Balance at January 27, 2024

Balance at July 27, 2024

Comprehensive

AeroVironment, Inc.

Balance at April 30, 2023

Net (loss) income

Unrealized gain on investments

Foreign currency translation

Stock options exercised

Restricted stock awards

1 unchanged sentence

Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Deconsolidation of previously controlled subsidiary

Issuance cost for shares issued

Stock based compensation

Balance at January 28, 2023

Balance at July 29, 2023

AeroVironment, Inc.

1 unchanged sentence

(In thousands)

Nine Months Ended

Three Months Ended

Operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Adjustments to reconcile net income to cash provided by (used in) operating activities:

Depreciation and amortization

Loss from equity method investments

Loss on deconsolidation of previously controlled subsidiary

(Gain) loss from equity method investments

Amortization of debt issuance costs

8 unchanged sentences

Loss on disposal of property and equipment

Amortization of debt securities discount

Changes in operating assets and liabilities, net of acquisitions:

5 unchanged sentences

Other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Investing activities

Acquisition of property and equipment

Equity method investments

Equity security investments

Acquisition of intangibles

Business acquisitions, net of cash acquired

Proceeds from deconsolidation of previously controlled subsidiary, net of cash deconsolidated

Redemptions of available-for-sale investments

Purchases of available-for-sale investments

Net cash (used in) provided by investing activities

Contributions in equity method investments

Net cash used in investing activities

Financing activities

Principal payments of term loan

Holdback and retention payments for business acquisition

Payment of contingent consideration

Proceeds from shares issued, net of issuance costs

Payment of debt issuance costs

3 unchanged sentences

Effects of currency translation on cash and cash equivalents

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

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosures of cash flow information

Cash paid, net during the period for:

Cash paid (refunded), net during the period for:

Non-cash activities

Issuance of common stock for business acquisition

Unrealized gain on available-for-sale investments, net of deferred tax expense of $ 0 for the nine months ended January 27, 2024 and January 28, 2023, respectively

Change in foreign currency translation adjustments

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

Acquisitions of property and equipment included in accounts payable

5 unchanged sentences

AeroVironment, Inc.

supplies unmanned systems (“UMS”), loitering munitions systems (“LMS”) and related services primarily to organizations within the U.S.

Government and to international allied governments.

supplies uncrewed aircraft and ground robot systems, loitering munitions systems and related services primarily to organizations within or supplying the U.S.

Department of Defense (“D.o.D”), other federal agencies and to international allied governments.

Effective May 1, 2023, the Company reorganized its segments.

Due to the Company’s growth as an organization, the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their product lines.

The Company’s reportable segments are as follows:

Uncrewed Systems (“UxS”) —The UxS segment, which consists of the former small uncrewed aircraft systems (“SUAS”), medium uncrewed aircraft systems (“MUAS”) and uncrewed ground vehicles (“UGV”) segments and the acquired Tomahawk, focuses primarily on small UAS products designed to operate reliably at lower altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support including training, spare and accessory parts, product repair, product replacement, maintenance and upgrades;

medium UAS products designed to operate reliably at medium altitudes with longer range while carrying larger payloads including airborne platforms, payloads and payload integration, and ground support equipment and other items and services related generally to uncrewed aircraft systems historically including ISR services;

UGV products designed to help responders remove, contain or neutralize these hazards in situations where improvised explosive devices, caustic chemicals, nuclear, radiological or biological hazards or violent individuals represent significant danger to humans;

and AI-enabled common control and communication solutions that allow any uncrewed system to be controlled from a common user interface while aggregating data from multiple platforms to provide real time intelligence.

Loitering Munitions Systems (“LMS”) —The LMS segment, which consists of the former Tactical Missile Systems segment, focuses primarily on tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement.

The LMS segment also includes customer-funded research and development programs.

MacCready Works (“MW”) —The MW segment, which consists of the former MacCready Works and High Altitude Pseudo-Satellite systems (“HAPS”) segments, focuses on customer-funded research and development in the areas of HAPS, robotics, sensors, software analytics, data intelligence and connectivity.

This segment contains the Company’s center of excellence for the development of machine learning, object identification and autonomy solutions and also seeks to identify new products, services and businesses for the Company.

Basis of Presentation

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In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included.

The results of operations for the three and nine months ended January 27, 2024 are not necessarily indicative of the results for the full year ending April 30, 2024.

The results of operations for the three months ended July 27, 2024 are not necessarily indicative of the results for the full year ending April 30, 2025.

For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2024, included in the Company’s Annual Report on Form 10-K.

4 unchanged sentences

All intercompany accounts and transactions have been eliminated.

On September 15, 2021, the Company entered into a Share Sale and Purchase Agreement with Toygun Savunma Sanayi ve Havacilik Anonim Sirketi (“Toygun”) whereby the Company sold 35 % of the common shares of the Company’s Turkish joint venture, Altoy Savunma Sanayi ve Havacilik Anonim Sirketi (“Altoy”), to Toygun.

On October 14, 2022, the Company sold an additional 35 % of the common shares of Altoy to Toygun.

As a result of the share sales, the Company decreased its interest in Altoy from 85 % to 15 % and has determined that it no longer controls Altoy.

Therefore, the Company no longer consolidates Altoy in the Company’s unaudited condensed consolidated financial statements.

As the Company has the ability to exercise significant influence over the operating and financial policies of Altoy, the Company accounts for the investment as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investments, net of tax.

Refer to Note 5—Equity Method Investments for further details.

On August 17, 2022, the Company closed its acquisition of Planck Aerosystems, Inc.

(“Planck”) pursuant to the purchase agreement, and post-acquisition, Planck has been incorporated into the UMS segment.

The assets, liabilities and operating results of Planck have been included in the Company’s unaudited condensed consolidated financial statements.

Refer to Note 16—Business Acquisitions for further details.

On September 15, 2023, the Company closed its acquisition of Tomahawk Robotics, Inc.

(“Tomahawk”) pursuant to a merger agreement, and post-acquisition, Tomahawk has been incorporated into the UMS segment.

(“Tomahawk”) pursuant to a merger agreement, and post-acquisition, Tomahawk has been incorporated into the UxS segment.

The assets, liabilities and operating results of Tomahawk have been included in the Company’s unaudited condensed consolidated financial statements.

1 unchanged sentence

Recently Adopted Accounting Standards

The Company did not adopt any accounting standards during the nine months ended January 27, 2024.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Specifically, the Company’s reserves for inventory excess and obsolescence have been reclassified from changes in inventories to non-cash adjustments within operating activities on the consolidated statements of cash flows for all periods presented.

Reportable segment presentation for the three and nine months ended January 28, 2023 has been reclassified to conform to the current year reportable segments:

UMS, LMS and MacCready Works (“MW”) resulting from the Company’s reorganization, which was effective May 1, 2023.

Refer to Note 18—Segments for further details.

The Company did not adopt any accounting standards during the three months ended July 27, 2024.

Revenue Recognition

18 unchanged sentences

Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress.

Contract services revenue, which historically included revenue from intelligence, surveillance, and reconnaissance (“ISR”) services, is recognized over time as services are rendered.

In accordance with ASC 606, the Company elected the right to invoice practical expedient in which if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, such as flight hours for ISR services, the entity may recognize revenue in the

amount to which the entity has a right to invoice.

In the past, the Company operated its medium unmanned aircraft systems (“MUAS”) in overseas locations to support U.S.

Contract services revenue, which historically included revenue from intelligence, surveillance, and reconnaissance (“ISR”) services, is recognized over time as services are

In the past, the Company operated its MUAS in overseas locations to support U.S.

military operations under ISR services contracts under a contractor-owned, contractor-operated (“COCO”) arrangement.

During the year ended April 30, 2023, all COCO sites were closed.

Training services are recognized over time using an output method based on days of training completed.

For performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress.

2 unchanged sentences

For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is recognized at the point in time in which each performance obligation is fully satisfied.

The Company’s Small UAS (“SUAS”), MUAS, unmanned ground vehicles (“UGV”) product sales revenue is composed of revenue recognized on contracts for the delivery of SUAS, MUAS and UGV systems and spare parts, respectively.

The Company’s SUAS, MUAS, UGV product sales revenue is composed of revenue recognized on contracts for the delivery of SUAS, MUAS and UGV systems and spare parts, respectively.

Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.

Three Months Ended

Nine Months Ended

Revenue percentage by recognition method

Point in time

Total revenue

On January 27, 2024, the Company had approximately $ 462,787,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

On July 27, 2024, the Company had approximately $ 372,904,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

The Company currently expects to recognize approximately 85 % of the remaining performance obligations as revenue in fiscal 2025 and the remaining 15 % in fiscal 2026 .

11 unchanged sentences

In addition, the Company includes the estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved.

These estimates are based on historical award experience, anticipated

performance and the Company’s best judgment at the time.

These estimates are based on historical award experience, anticipated performance and the Company’s best judgment at the time.

Based on experience in estimating these amounts, they are included in the transaction price of the Company’s contracts and the associated remaining performance obligations.

As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company regularly reviews and updates its contract-related estimates.

Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations recognized over time.

Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the

period identified for contracts with performance obligations recognized over time.

Changes in cumulative revenue estimates due to changes in the estimated transaction price are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations at a point in time, including undefinitized contract actions.

1 unchanged sentence

If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

The balance of forward loss reserves as of January 27, 2024 and April 30, 2023 was $ 1,052,000 and $ 1,878,000 , respectively.

The balance of forward loss reserves as of July 27, 2024 and April 30, 2024 was $ 496,000 and $ 374,000 , respectively.

The Company recorded the forward loss reserves as the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts.

No adjustment on the forward loss reserve for any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three and nine months ended January 27, 2024, respectively.

During the three months ended January 28, 2023, the Company recognized a decrease in the forward loss reserves on two MUAS ISR contracts of $ 2,424,000 due to decreases in the estimated costs to complete the contracts and an increase in the forward loss reserve of an MUAS products contract of $ 1,593,000 due to increases in the estimated costs to complete the contract.

No adjustment on the forward loss reserve for any one contract was material to the Company’s unaudited condensed consolidated financial statements for the nine months ended January 28, 2023.

No adjustment on the forward loss reserve for any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three months ended July 27, 2024 or July 29, 2023, respectively.

The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses, or revenue.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was $ 4,398,000 and $ 5,087,000 for the three and nine month periods ended January 27, 2024, respectively.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was not significant for the three and nine month periods ended January 28, 2023.

During the three months ended January 27, 2024, the Company revised its estimates to reflect a favorable definitization of an LMS contract.

The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of approximately $ 3,574,000 .

During the nine months ended January 27, 2024, the Company revised its estimates of the total expected costs to complete a different LMS contract.

No adjustment on any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three month period ended January 28, 2023.

During the nine months ended January 28, 2023, the Company revised its estimates of the total expected costs to complete two LMS variant contracts.

The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease to revenue of approximately $ 2,448,000 .

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was not material for the three month period ended July 27, 2024 or July 29, 2023, respectively.

No adjustment on any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three month periods ended July 27, 2024 or July 29, 2023.

Revenue by Category

1 unchanged sentence

Three Months Ended

Nine Months Ended

Revenue by segment

1 unchanged sentence

Three Months Ended

Nine Months Ended

Revenue by contract type

7 unchanged sentences

Three Months Ended

Nine Months Ended

Revenue by customer category

1 unchanged sentence

Three Months Ended

Nine Months Ended

Revenue by geographic location

1 unchanged sentence

Total revenue

Three Months Ended

Revenue percentage by recognition method

Point in time

Total revenue

Contract Balances

6 unchanged sentences

For the Company’s product revenue, the Company generally receives cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable.

Changes in the contract asset and liability balances during the three and nine month periods ended January 27, 2024 were not materially impacted by any other factors.

Changes in the contract asset and liability balances during the three month period ended July 27, 2024 were not materially impacted by any other factors.

For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

Revenue recognized for the three and nine month periods ended January 27, 2024 that was included in customer advances balances as of April 30, 2023 was $ 610,000 and $ 3,026,000 , and revenue recognized for the three and nine month periods ended January 28, 2023 that was included in customer advances balances as of April 30, 2022 was $ 369,000 and $ 3,374,000 , respectively.

Revenue recognized for the three month period ended July 27, 2024 that was included in customer advances balances as of April 30, 2024 was $ 5,486,000 and revenue recognized for the three month period ended July 29, 2023 that was included in customer advances balances as of April 30, 2023 was $ 2,538,000 .

Cost to Fulfill a Contract with a Customer

The Company recognizes assets for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered in accordance with ASC 340-40 Other Assets and Deferred Costs:

Contracts with Customers.

The assets related to costs to

fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied.

As of July 27, 2024 the Company’s costs to fulfill were $ 4,396,000 , and as of April 30, 2024, the Company’s costs to fulfill were not material.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance.

As of January 27, 2024, the Company’s CODM, the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for research and development (“R&D”).

As of July 27, 2024, the Company’s CODM, the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for research and development (“R&D”).

Accordingly, the Company identifies three reportable segments.

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The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured.

At January 27, 2024 and April 30, 2023, the Company had no reserve for incurred cost claim audits.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock.

At July 27, 2024 and April 30, 2024, the Company had no reserve for incurred cost claim audits.

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock.

The reconciliation of basic to diluted shares is as follows (in thousands except share data):

Three Months Ended

Nine Months Ended

January 27, 2024

January 28, 2023

January 27, 2024

January 28, 2023

Net income (loss) attributable to AeroVironment, Inc.

Denominator for basic earnings (loss) per share:

July 27, 2024

July 29, 2023

Denominator for basic earnings per share:

Weighted average common shares

Dilutive effect of employee stock options, restricted stock and restricted stock units

Denominator for diluted earnings (loss) per share

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 72 and 606 for the three and nine months ended January 27, 2024.

Due to the net loss for the three and nine months ended January 28, 2023, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 145,793 and 152,047 for the three and nine months ended January 28, 2023, respectively.

Denominator for diluted earnings per share

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 72 for the three months ended July 27, 2024.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 738 for the three months ended July 29, 2023.

Recently Issued Accounting Standards

5 unchanged sentences

ASU 2023-07 is adopted retrospectively.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

The Company will include the required enhanced disclosures in its Annual Report on Form 10-K for the fiscal year ending April 30, 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

18 unchanged sentences

Three Months Ended

Nine Months Ended

January 27, 2024

January 28, 2023

January 27, 2024

January 28, 2023

Net gains (losses) recognized during the period on equity securities

July 27, 2024

July 29, 2023

Net losses recognized during the period on equity securities

Net loss recognized during the period on equity securities sold during the period

Unrealized gain (loss) recognized during the period on equity securities still held at the reporting date

Unrealized loss recognized during the period on equity securities still held at the reporting date

Fair Value Measurements

4 unchanged sentences

● Level 3—Inputs to the valuation that are unobservable inputs for the asset or liability.

The Company’s financial assets measured at fair value on a recurring basis at January 27, 2024, were as follows (in thousands):

The Company’s financial assets measured at fair value on a recurring basis at July 27, 2024, were as follows (in thousands):

Fair Value Measurement Using

3 unchanged sentences

Equity securities

The Company had no financial liabilities measured at fair value on a recurring basis at January 27, 2024.

The Company had no financial liabilities measured at fair value on a recurring basis at July 27, 2024.

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2024, were as follows (in thousands):

4 unchanged sentences

Equity securities

The Company’s financial liabilities measured at fair value on a recurring basis at April 30, 2023, were as follows (in thousands):

Fair Value Measurement Using

Quoted prices in

active markets for

identical assets

Contingent consideration

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

Measurements Using

Unobservable Inputs

Balance at May 1, 2023

Business acquisition

Transfers to Level 3

Total fair value measurement adjustments (realized or unrealized)

Included in selling, general and administrative

Balance at January 27, 2024

The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at January 27, 2024

On May 3, 2021, the Company closed its acquisition of Telerob Gesellschaft für Fernhantierungstechnik mbH (“Telerob GmbH”), including Telerob GmbH’s wholly-owned subsidiary, Telerob USA, Inc.

(“Telerob USA,” and collectively with Telerob GmbH, “Telerob”) pursuant to its Share Purchase Agreement (the “Telerob Purchase Agreement”) with Unmanned Systems Investments GmbH (the “Telerob Seller”).

Pursuant to the Telerob Purchase Agreement, the Telerob Sellers may receive up to a maximum of € 6,000,000 (approximately $ 6,511,000 ) in additional cash consideration if specific revenue and contract award targets for Telerob were achieved during the 36 month period after closing.

The contingent consideration was valued using a Black-Scholes option-pricing model.

The analysis considered, among other items, contractual terms of the Telerob Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and contract award targets required for payment of the contingent

consideration will be achieved.

The fair value of the contingent consideration was recorded in other current liabilities on the condensed consolidated balance sheet.

The first year earnout of € 2,000,000 (approximately $ 2,170,000 ) was not achieved.

During the fiscal year ended April 30, 2023, the second year earnout of € 2,000,000 (approximately $ 2,132,000 ) was achieved and was paid in November 2023.

The third earnout of € 2,000,000 (approximately $ 2,170,000 ) is not expected to be achieved.

The Company had no financial liabilities measured at fair value on a recurring basis at April 30, 2024.

On September 12, 2022, the Company invested $ 5,000,000 and acquired 500,000 shares and 500,000 privately placed, redeemable warrants of Amprius Technologies, Inc.

1 unchanged sentence

The Company measures the fair value of the privately placed, redeemable warrants using the quoted market price of the public warrants which have an exercise price of $ 11.50 and a redemption price of $ 18.00 and classifies the warrants as a level 2 fair value measurement.

On September 9, 2022, the Company acquired 10,000 shares of Nauticus Robotics, Inc.

for $ 100,000 .

Inventories, net

11 unchanged sentences

In March 2022, the Company entered into a limited partnership agreement with a second limited partnership fund also focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

Under the terms of the second limited partnership agreement, the Company is committed to contributions totaling $ 20,000,000 over an expected five year period.

During the fiscal year ended April 30, 2023, the Company made total contributions of $ 5,778,000 .

The Company made a capital contribution of $ 1,875,000 during the three months ended October 28, 2023.

Under the terms of the second limited partnership agreement, the Company has committed to make additional capital contributions of $ 12,347,000 to the fund.

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest.

For the three and nine months ended January 27, 2024, the Company recorded its ownership percentage of the net losses of the limited partnerships, or $( 80,000 ) and $( 1,494,000 ), respectively, in equity method investment loss, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

For the three and nine months ended January 28, 2023, the Company recorded its ownership percentage of the net loss of the limited partnership, or $( 417,000 ) and $( 2,190,000 ), respectively, in equity method investment loss, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At January 27, 2024 and April 30, 2023, the carrying value of the investments in the limited partnership funds of $ 19,022,000 and $ 18,644,000 , respectively, which is recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Under the terms of the limited partnership agreement, the Company is committed to contributions totaling $ 20,000,000 over an expected five year period.

During the fiscal year ended April 30, 2024 and 2023, the Company made total contributions of $ 3,074,000 and $ 5,778,000 , respectively.

During the three months ended July 27, 2024, the Company made a contribution of $ 1,183,000 .

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 9,965,000 to the fund expected to be paid over the next three fiscal years.

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have significant influence when it holds more than a minor interest.

For the three months ended July 27, 2024 and July 29, 2023, the Company recorded its ownership percentage of the net gains (losses) of the limited partnerships, or $ 65,000 and $( 21,000 ), respectively, in equity method investment income (loss), net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At July 27, 2024 and April 30, 2024, the carrying value of the investments in the limited partnership funds of $ 21,181,000 and $ 19,933,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Investment in Altoy

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The Company maintains significant influence, accounts for its investment in Altoy as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investment loss, net of tax.

For the three and nine months ended January 27, 2024 and January 28, 2023, the Company recorded $ 0 for its ownership percentage of the net loss of Altoy in equity method investment loss, net of tax in the unaudited condensed consolidated statements of operations.

At January 27, 2024 and April 30, 2023, the carrying value of the investment in Altoy of $ 71,000 and $ 114,000 , respectively, was recorded in other assets on the unaudited condensed consolidated balance sheet.

For the three months ended July 27, 2024 and July 29, 2023, the Company recorded $ 0 for its ownership percentage of the net activity of Altoy in equity method investment income (loss), net of tax in the

unaudited condensed consolidated statements of operations.

At July 27, 2024 and April 30, 2024, the carrying value of the investment in Altoy of $ 152,000 was recorded in other assets on the unaudited condensed consolidated balance sheet.

Warranty Reserves

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The related expense is included in cost of sales.

Warranty reserve activity is summarized as follows for the three and nine months ended January 27, 2024 and January 28, 2023, respectively (in thousands):

Warranty reserve activity is summarized as follows for the three months ended July 27, 2024 and July 29, 2023, respectively (in thousands):

Three Months Ended

Nine Months Ended

Beginning balance

Balance acquired from acquisition

Warranty expense

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Intangibles, net

Additions to technology, customer relationships, and trademark and tradenames primarily relate to the Tomahawk acquisition.

Refer to Note 16—Business Acquisitions for further details.

In addition, during the three months ended October 28, 2023, AeroVironment acquired technology intellectual property of $ 1,500,000 through an asset purchase agreement with Windward Performance, Ltd.

Under the asset purchase agreement, AeroVironment acquired intellectual property related to unmanned aircraft for $ 3,000,000 consisting of $ 1,500,000 paid at closing plus two payments of $ 750,000 on the first and second anniversaries of the purchase agreement.

The additional payments will be expensed to R&D on a straight-line basis over the two year term.

The weighted average amortization period at each of January 27, 2024 and April 30, 2023 was four years .

Amortization expense for the three and nine months ended January 27, 2024 was $ 5,445,000 and $ 12,721,000 , respectively.

Amortization expense for the three and nine months ended January 28, 2023 was $ 6,073,000 and $ 17,925,000 , respectively.

The weighted average amortization period at each of July 27, 2024 and April 30, 2024 was three years .

Amortization expense for the three months ended July 27, 2024 and July 29, 2023 was $ 4,774,000 and $ 3,030,000 respectively.

Estimated amortization expense for the next five years is as follows (in thousands):

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Balance at April 30, 2024

Additions to goodwill

Change to goodwill

Balance at January 27, 2024

Effective May 1, 2023, the reporting segments for goodwill are UMS, LMS and MW.

The UMS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc.

Balance at July 27, 2024

The UxS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc.

(“Arcturus”), Telerob, Planck and Tomahawk acquisitions.

The Tomahawk acquisition is included in the additions to goodwill.

Refer to Note 16—Business Acquisitions for further details.

The goodwill change to UMS is attributable to the Telerob acquisition recorded in Euros and translated to dollars at each reporting date.

The goodwill change to UxS is attributable to the Telerob acquisition recorded in Euros and translated to U.S.

dollars at each reporting date.

The MW segment includes goodwill from the purchase of certain assets of Intelligent Systems Group business segment (“ISG”) of Progeny Systems Corporation.

The MUAS reporting unit, the renamed Arcturus acquisition included in the UMS reportable segment, has a goodwill balance of $ 134,140,000 as of January 27, 2024.

The estimated fair value of the MUAS reporting unit does not substantially exceed its carrying value due to the impairment recorded during the most recent annual goodwill impairment test performed during the fourth quarter ended April 30, 2023, resulting in carrying value being equal to estimated fair value.

The estimated fair value of the MUAS reporting unit, the renamed Arcturus acquisition included in the UxS reportable segment, does not substantially exceed its carrying value due to the impairment recorded during the fourth quarter ended April 30, 2023.

The fair value of the MUAS reporting unit exceeded its carrying value by 10 % as of January 28, 2024, the date of the most recent annual goodwill impairment test.

Fair value determinations utilized in the quantitative goodwill impairment test require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.

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Department of Defense and foreign allied nations and negotiate the estimated pricing are considered the most significant, sensitive assumptions.

If current expectations of future growth rates and margins are not met, if market factors outside of the Company’s control, such as discount rates, income tax rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to long-term operating plans, then MUAS may become impaired in the future.

Accordingly, the MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests.

The MUAS reporting unit has a goodwill balance of $ 135,774,000 as of July 27, 2024.

During the most recent annual impairment test during the fourth quarter of fiscal year 2024, the estimated fair value of all reporting units, other than MUAS, substantially exceeded their carrying value.

As of January 27, 2024, the company has not identified any events or circumstances that could trigger an impairment review prior to the Company’s annual impairment test.

As of July 27, 2024, the company has not identified any events or circumstances that could trigger an impairment review prior to the Company’s annual impairment test.

The annual impairment test for the fiscal year ending April 30, 2025 will be performed during the fourth quarter.

The intangibles included in the MUAS reporting unit of $ 14,636,000 as of January 27, 2024 will also be evaluated for potential impairment during the fourth quarter.

The intangibles included in the MUAS reporting unit of $ 12,771,000 as of July 27, 2024 will also be evaluated for potential impairment during the fourth quarter.

In connection with the consummation of the acquisition of Arcturus, a California corporation, pursuant to a Stock Purchase Agreement with Arcturus and each of the shareholders and other equity interest holders of Arcturus, to purchase 100 % of the issued and outstanding equity of Arcturus (the “Arcturus Acquisition”) on February 19, 2021, the Company, as borrower, and Arcturus, as guarantor, entered into a Credit Agreement with certain lenders, letter of credit issuers, Bank of America, N.A., as the administrative agent and the swingline lender, and BofA Securities, Inc., JPMorgan Chase Bank, N.A., and U.S.

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The Credit Agreement and its associated Security and Pledge Agreement set forth the terms and conditions for (i) a five-year $ 100,000,000 revolving credit facility, which includes a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit (the “Revolving Facility”), and (ii) a five-year amortized $ 200,000,000 term A loan (the “Term Loan Facility”, and together with the Revolving Facility, the “Credit Facilities”).

Certain existing letters of credit issued by JPMorgan Chase Bank were reserved for under the Revolving Facility at closing and remain outstanding under the terms thereof.

Certain existing letters of credit issued by JPMorgan Chase Bank were reserved for under the Revolving Facility at closing and remain outstanding under

the terms thereof.

Upon execution of the Credit Agreement, the Company drew the full principal of the Term Loan Facility for use in the acquisition of Arcturus.

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Proceeds from the Term Loan Facility were used in part to finance a portion of the cash consideration for the Arcturus Acquisition.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit of $ 7,508,000 as of July 27, 2024.

As of July 27, 2024, approximately $ 92,492,000 was available under the Revolving Facility.

Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes.

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In addition, the parties amended the maximum permitted Consolidated Leverage Ratio, such that such ratio may not exceed 4.00 to 1.00 for the Company’s fiscal quarters ended January 29, 2022 and April 30, 2022;

3.50 to 1.00 for any of

the Company’s fiscal quarters ending during the period from May 1, 2022 to October 31, 2022;

3.50 to 1.00 for any of the Company’s fiscal quarters ending during the period from May 1, 2022 to October 31, 2022;

and 3.00 to 1.00 for any fiscal quarter ending thereafter.

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or (b) Base Rate (defined as the highest of (a) the Federal Funds Rate plus one-half percent ( 0.50 %), (b) the Bank of America prime rate, and (c) the one (1) month SOFR plus one percent ( 1.00 %)) plus the Applicable Margin.

The Applicable Margin is based upon the Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects SOFR (ranging from 1.50 - 2.50 %) or Base Rate (ranging from 0.50 - 1.50 %).

The Applicable Margin is based upon the

Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects SOFR (ranging from 1.50 - 2.50 %) or Base Rate (ranging from 0.50 - 1.50 %).

The Company may choose interest periods of one, three or six months with respect to Term SOFR and all such rates will include a 0.10 % SOFR adjustment.

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In the event of a default, an additional 2 % default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

As of January 27, 2024, the Company is in compliance with all amended covenants.

As of July 27, 2024, the Company is in compliance with all amended covenants.

Long-term debt and the current period interest rates were as follows:

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Current period interest rate

Future contractual long-term debt principal payments at January 27, 2024 were as follows:

Future contractual long-term debt principal payments at July 27, 2024 were as follows:

(In thousands)

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For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease.

For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

For these lease incentives, the Company uses the date of initial possession

as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

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The components of lease costs recorded in cost of sales and selling, general and administrative (“SG&A”) expense were as follows (in thousands):

Nine Months Ended

Three Months Ended

Operating lease cost

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Supplemental lease information was as follows:

Nine Months Ended

Three Months Ended

(In thousands)

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Weighted average discount rate

Maturities of operating lease liabilities as of January 27, 2024 were as follows (in thousands):

Maturities of operating lease liabilities as of July 27, 2024 were as follows (in thousands):

Total lease payments

3 unchanged sentences

The components of accumulated other comprehensive loss and adjustments are as follows (in thousands):

Nine Months Ended

Balance, net of $ 0 and $ 8 deferred taxes, as of April 30, 2023 and April 30, 2022, respectively

Unrealized gain on available-for-sale investments, net of deferred tax expense of $ 0 for the nine months ended January 27, 2024 and January 28, 2023, respectively

Three Months Ended

Balance as of April 30, 2024 and April 30, 2023, respectively

Change in foreign currency translation adjustments

Balance, net of $ 0 deferred taxes, as of January 27, 2024 and January 28, 2023, respectively

Balance as of July 27, 2024 and July 29, 2023, respectively

Customer-Funded Research & Development

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Revenue from customer-funded R&D contracts is recognized in accordance with ASC 606 over time as costs are incurred.

Revenue from customer-funded R&D was approximately $ 17,617,000 and $ 61,078,000 for the three and nine months ended January 27, 2024.

Revenue from customer-funded R&D was approximately $ 23,193,000 and $ 71,129,000 for the three and nine months ended January 28, 2023, respectively.

Revenue from customer-funded R&D was approximately $ 18,559,000 for the three months ended July 27, 2024.

Revenue from customer-funded R&D was approximately $ 24,383,000 for the three months ended July 29, 2023.

Long-Term Incentive Awards

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Awards under the Fiscal 2025 LTIP consist of:

(i) time-based

restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2024, July 2025 and July 2026, and (ii) performance-based restricted stock units (“PRSUs”), which vest based on the Company’s achievement of revenue and non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) targets for the three-year period ending April 30, 2026.

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2025, July 2026 and July 2027, and (ii) performance-based restricted stock units (“PRSUs”), which vest based on the Company’s achievement of revenue and non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) targets for the three-year period ending April 30, 2027.

At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 27, 2024, the Company recorded $ 965,000 and $ 2,798,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

The Company recorded no compensation expense related to the Fiscal 2024 LTIP for the three and nine months ended January 28, 2023.

At January 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 15,836,000 .

For the three months ended July 27, 2024, the Company recorded $ 306,000 of compensation expense related to the Fiscal 2025 LTIP.

The Company recorded no compensation expense related to the Fiscal 2025 LTIP for the three months ended July 29, 2023.

At July 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 18,207,000 .

During the three months ended July 29, 2023, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2024 LTIP”).

Awards under the Fiscal 2024 LTIP consist of:

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2023, July 2024 and July 2025, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP adjusted EBITDA targets for the three-year period ending April 30, 2025.

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2024, July 2025 and July 2026, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP operating income targets for the three-year period ending April 30, 2026.

At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established.

The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP adjusted EBITDA targets for the performance period.

The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP operating income targets for the performance period.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 27, 2024, the Company recorded $ 702,000 and $ 2,554,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

For the three and nine months ended January 28, 2023, the Company recorded $ 642,000 and $ 1,703,000 of compensation expense related to the Fiscal 2023 LTIP.

At January 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP is $ 11,611,000 .

During the three months ended July 31, 2021, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2022 LTIP”).

For the three months ended July 27, 2024 and July 29, 2023, the Company recorded $ 1,112,000 and $ 634,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

At July 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 15,836,000 .

During the three months ended July 30, 2022, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2023 LTIP”).

Awards under the Fiscal 2023 LTIP consist of:

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2022, July 2023 and July 2024, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP operating income targets for the three-year period ending April 30, 2024.

(i) time-based restricted stock awards and time-

based restricted stock units, which vest in equal tranches in July 2023, July 2024 and July 2025, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP adjusted EBITDA targets for the three-year period ending April 30, 2025.

At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 27, 2024, the Company recorded $ 125,000 and $ 613,000 of compensation expense related to the Fiscal 2022 LTIP, respectively.

For the three months ended January 28, 2023, the Company recorded $ 84,000 of compensation expense.

For the nine months ended January 28, 2023, the Company recorded a reversal of $( 31,000 ) of compensation expense related to the Fiscal 2022 LTIP.

At January 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2022 LTIP is $ 9,214,000 .

During the three months ended August 1, 2020, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2021 LTIP”).

For the three months ended July 27, 2024 and July 29, 2023, the Company recorded $ 865,000 , and $ 661,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

At July 27, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP is $ 11,611,000 .

During the three months ended July 31, 2021, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2022 LTIP”).

Awards under the Fiscal 2021 LTIP consist of:

(i) time-based restricted stock awards, which vest in equal tranches in July 2022, July 2023 and July 2024, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2024.

During the three months ended July 29, 2023, the Company issued a total of 5,772 fully-vested shares of the Company’s common stock to

settle the PRSUs in the Fiscal 2021 LTIP.

For the three and nine months ended January 28, 2023, the Company recorded $ 36,000 and $ 228,000 of compensation expense related to the Fiscal 2021 LTIP, respectively.

During the three months ended July 27, 2024, the Company issued a total of 15,427 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2022 LTIP.

For the three months ended July 27, 2024 and July 29, 2023, the Company recorded no compensation expense and $ 132,000 of compensation expense related to the Fiscal 2021 LTIP, respectively.

At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs.

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No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

For the three and nine months ended January 27, 2024, the Company recorded a provision for income taxes of $ 1,259,000 and $ 3,710,000 , yielding an effective tax rate of 8.3 % and 6.3 %, respectively.

For the three and nine months ended January 28, 2023, the Company recorded a benefit from income taxes of $( 531,000 ) and $( 8,382,000 ) yielding an effective tax rate of 67.2 % and 38.3 %, respectively.

The variance from statutory rates for the three and nine months ended January 27, 2024 was primarily due to foreign-derived intangible income (“FDII”) deductions and to federal R&D credits.

Historically, the Company calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate (“AETR”) for the full fiscal year to the pretax income or loss for the interim reporting period.

For the three and nine months ended January 28, 2023, the Company calculated the provision for income taxes using a discrete effective tax rate (“ETR”) method.

The Company determined that due to the fact that small changes in the Company’s estimated pretax income or loss would result in significant changes in the estimated AETR, the historical method would not provide a reliable estimate for the three and nine months ended January 28, 2023.

The variance from statutory rates for the three and nine months ended January 28, 2023 was primarily due to a combination of federal R&D credits, the FDII deduction and discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options.

For the three months ended July 27, 2024, the Company recorded a provision for income taxes of $ 1,485,000 , yielding an effective tax rate of 6.6 %.

For the three months ended July 29, 2023, the Company recorded a provision for income taxes of $ 1,314,000 yielding an effective tax rate of 5.7 %.

The variance from statutory rates for the three months ended July 27, 2024 was primarily due to foreign-derived intangible income (“FDII”) deductions, federal R&D credits and excess tax benefits from the exercise of stock options and vesting of equity awards.

The variance from statutory rates for the three months ended July 29, 2023 was primarily due to FDII deductions and federal R&D credits.

Share Repurchase Plan and Issuances

The Company’s share repurchase program announced September 2015 was terminated by the Company’s Board of Directors in September 2022.

There were no repurchases of the Company’s common stock during the nine months ended January 28, 2023.

On September 8, 2022, the Company filed an S-3 shelf registration statement to offer and sell shares of the Company’s common stock, including a prospectus supplement in relation to an Open Market Sale Agreement SM , also dated September 8, 2022, with Jefferies LLC relating to the proposed offer and sale of shares of our common stock having an aggregate offering price of up to $ 200,000,000 from time to time through Jefferies LLC as the sales agent.

During the six months ended October 28, 2023, the Company completed the Open Market Sale Agreement SM .

During the six months ended October 28, 2023 the Company sold 807,370 shares, for total gross proceeds of $ 91,313,000 , total proceeds received of $ 88,574,000 , net of commission expense, and $ 88,437,000 net of equity issuance costs.

During the three and nine months ended January 28, 2023, the Company sold 96,530 and 221,971 of its shares, respectively, for total gross proceeds of $ 8,710,000 and $ 21,439,000 , respectively, total proceeds received of $ 8,449,000 and $ 20,796,000 , net of commission expense, respectively, and $ 8,325,000 and $ 20,104,000 net of equity issuance costs, respectively.

As of January 27, 2024, the Company has completed the Open Market Sale Agreement SM and sold 1,917,100 of its shares for total gross proceeds of $ 200,000,000 , total proceeds received of $ 193,999,000 , net of commission expense and $ 193,086,000 net of equity issuance costs.

On September 8, 2022 the Company filed an S-3 shelf registration statement to offer and sell shares of the Company’s common stock, including a prospectus supplement in relation to an Open Market Sale Agreement SM , also dated September 8, 2022, with Jefferies LLC relating to the proposed offer and sale of shares of the Company’s common stock having an aggregate offering price of up to $ 200,000,000 from time to time through Jefferies LLC as the sales agent.

There were no shares sold during the three months ended July 29, 2023.

During the fiscal year ended April 30, 2024, the Company completed the Open Market Sale Agreement SM , and the Company sold 807,370 shares, for total gross proceeds of $ 91,313,000 , total proceeds received of $ 88,574,000 , net of commission expense, and $ 88,437,000 , net of equity issuance costs.

Business Acquisitions

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Pursuant to the merger agreement, the Company acquired 100 % of Tomahawk equity for an aggregate purchase price of $ 134,467,000 consisting of 985,999 shares of restricted common stock of the Company valued at $ 109,820,000 and $ 27,205,000 cash-on-hand, net of $ 3,048,000 cash acquired, plus a $ 490,000 holdback.

During the three months ended January 27, 2024, the holdback was decreased $ 100,000 as part of the working capital adjustment,

and the total purchase price and goodwill, therefore, decreased by $ 100,000 as well.

fiscal year ended April 30, 2024, the holdback was decreased $ 100,000 as part of the working capital adjustment, and the total purchase price and goodwill, therefore, decreased by $ 100,000 as well.

The fair value of the shares issued was the closing price on September 15, 2023, the close of the Tomahawk purchase agreement.

Tomahawk is incorporated into AeroVironment’s UMS segment.

The acquisition will enable deeper integration of both companies’ technology, leading to enhanced interoperability and interconnectivity of unmanned systems through a singular platform with similar control features.

Tomahawk is incorporated into AeroVironment’s UxS segment.

The acquisition will enable deeper integration of both companies’ technology, leading to enhanced interoperability and interconnectivity of uncrewed systems through a singular platform with similar control features.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

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Use of different estimates and judgments could yield materially different results.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Tomahawk and expected future customers in the UMS market.

For income tax purposes the acquisition is treated as a stock acquisition, and none of the goodwill is expected to be deductible.

Tomahawk Supplemental Pro Forma Information (unaudited)

Tomahawk revenue and loss from operations since acquisition on September 15, 2023 was $ 13,319,000 and $( 1,169,000 ) as of January 27, 2024, respectively.

The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business acquisition had occurred on May 1, 2022 (in thousands):

Three Months Ended

Nine Months Ended

Net income (loss) attributable to AeroVironment, Inc.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

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The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable and are not necessarily indicative of the results that have been realized had the acquisition been consolidated in the tables above as of May 1, 2022, nor are they indicative of results of operations that may occur in the future.

Planck Acquisition

On August 17, 2022, the Company closed its acquisition of Planck, a leading provider of advanced unmanned aircraft navigation solutions based in San Diego, California.

Pursuant to the purchase agreement, the Company paid a total purchase price of $ 5,105,000 from cash-on-hand plus a $ 500,000 holdback for certain assets of Planck, which was paid during the three months ended October 28, 2023.

Planck is a small technology company incorporated into AeroVironment’s UMS segment for the MUAS product line to focus on integrating its flight autonomy solutions, such as ACE™, or Autonomous Control Engine, into the Company’s offerings to enable safe, autonomous takeoff and landing from moving platforms on land or at sea in GPS-denied environments.

Other solutions include AVEM™, a fully integrated mobile tethered sensor platform designed for persistent autonomous operation from moving vehicles and vessels in any environment, and a suite of machine-learning object detection and tracking systems that are customized for specific end-user needs.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The following table summarizes the final allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Planck.

During the three months ended July 29, 2023, the Company finalized its determination of the fair value of the assets and liabilities assumed in the acquisition of Planck and no significant changes were recorded from the original estimation (in thousands):

Fair value of assets acquired:

Property and equipment, net

Total identifiable net assets

Fair value of liabilities assumed:

Customer advances

Total liabilities assumed

Total identifiable net assets

Fair value of consideration transferred:

Total consideration

Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates.

The fair value of the intangible assets was determined using a discounted cash flow analysis, which were based on the Company’s preliminary estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.

Use of different estimates and judgments could yield materially different results.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Planck and expected future customers in the MUAS market.

For tax purposes the acquisition was treated as an asset acquisition and the goodwill is deductible.

Planck Supplemental Pro Forma Information (unaudited)

The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business acquisition had occurred on May 1, 2021 (in thousands):

Three Months Ended

Nine Months Ended

Net loss attributable to AeroVironment, Inc.

Planck revenue since acquisition on August 17, 2022 was $ 76,000 .

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 31, 2021, reflecting the additional amortization that would have been charged and including the results of Planck prior to acquisition.

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable and are not necessarily indicative of the results that have been realized had the acquisition been consolidated in the tables above as of May 1, 2021, nor are they indicative of results of operations that may occur in the future.

As part of the Telerob acquisition, the Company acquired a small foreign-based defined benefit pension plan.

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Funded status of the plan

The projected benefit obligation includes assumptions of a discount rate of 2.4 % and pension increase for in-payment benefits of 1.5 % for January 27, 2024 and April 30, 2023.

The projected benefit obligation includes assumptions of a discount rate of 3.9 % and pension increase for in-payment benefits of 2.5 % for July 27, 2024 and April 30, 2024.

The accumulated benefit obligation is approximately equal to the Company’s projected benefit obligation.

2 unchanged sentences

The Company does not expect to make any contributions to the plan in the fiscal year ending April 30, 2025.

The Company assumed expected return on plan assets of 2.9 % for January 27, 2024 and April 30, 2023.

The Company assumed expected return on plan assets of 2.9 % for July 27, 2024 and April 30, 2024.

Expected benefit payments as of April 30, 2024 (in thousands):

2 unchanged sentences

Three Months Ended

Nine Months Ended

(In thousands)

Expected return on plan assets

2 unchanged sentences

Net periodic benefit cost

Effective May 1, 2023, the Company reorganized its segments.

The Company’s reportable segments are as follows:

Unmanned Systems —The UMS segment, which consists of the former SUAS, MUAS and UGV segments and the recently acquired Tomahawk, focuses primarily on small UAS products designed to operate reliably at lower altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support including training, spare and accessory parts, product repair, product replacement, maintenance and upgrades;

medium UAS products designed to operate reliably at medium altitudes with longer range while carrying larger payloads including airborne platforms, payloads and payload integration, and ground support equipment and other items and services related generally to unmanned aircraft systems historically including ISR services;

and AI-enabled common control and communication solutions that allow any unmanned system to be controlled from a common user interface while aggregating data from multiple platforms to provide real time intelligence.

Loitering Munitions Systems —The LMS segment, which consists of the former Tactical Missile Systems segment, focuses primarily on tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement.

The LMS segment also includes customer-funded research and development programs.

MacCready Works —The MW segment, which consists of the former MacCready Works and High Altitude Pseudo-Satellite systems (“HAPS”) segments, focuses on customer-funded research and development in the areas of HAPS, robotics, sensors, software analytics, data intelligence and connectivity.

The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other.

Segment adjusted income (loss) from operations is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

Three Months Ended January 27, 2024

Product sales

Contract services

Segment adjusted income (loss) from operations

Depreciation and amortization

Three Months Ended January 28, 2023

Product sales

Contract services

Segment adjusted income (loss) from operations

Depreciation and amortization

Nine Months Ended January 27, 2024

Effective May 1, 2024, segment adjusted gross margin is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

Segment adjusted gross margin is defined as gross margin before intangible amortization expense including amortization of purchase accounting adjustments.

Prior period segment information has been revised to align with the new segment measure of profitability.

Three Months Ended July 27, 2024

Product sales

Contract services

Segment adjusted income (loss) from operations

Segment adjusted gross margin

Depreciation and amortization

Nine Months Ended January 28, 2023

Three Months Ended July 29, 2023

Product sales

Contract services

Segment adjusted income from operations

Segment adjusted gross margin

Depreciation and amortization

The following table (in thousands) provides a reconciliation from segment adjusted income from operations to income (loss) before taxes:

The following table (in thousands) provides a reconciliation from segment adjusted gross margin to income before income taxes:

Three Months Ended

Nine Months Ended

Segment adjusted income from operations

Amortization of acquired intangible assets and other purchase accounting adjustments

Acquisition-related expenses

Other income (expense), net

Three Months Ended

Segment adjusted gross margin

Amortization in cost of sales

Selling, general and administrative

Research and development

Interest expense, net

Income (loss) before income taxes

Segment assets are summarized in the table below.

Other expense, net

Income before income taxes

Identifiable segment assets are summarized in the table below.

Corporate assets primarily consist of cash and cash equivalents, prepaid expenses and other current assets, long-term investments, property and equipment, net, operating lease right-of-use assets, deferred income taxes and other assets managed centrally on behalf of the business segments.

January 27, 2024

Identifiable assets

April 30, 2023

Identifiable assets

As of July 27, 2024

As of April 30, 2024

Capital expenditures are summarized in the table below (in thousands):

Three Months Ended July 27, 2024

Three Months Ended July 29, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements