AeroVironment Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ AeroVironment, Inc. Condensed Consolidated Balance Sheet s (In thousands except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 27, April 30, ​ ​ ​ 2024 ​ 2024 ​ ​ (Unaudited) ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 81,162 ​ $ 73,301 ​ Accounts receivable, net of allowance for doubtful accounts of $ 58 at July 27, 2024 and $ 159 at April 30, 2024 ​ 35,487 ​ 70,305 ​ Unbilled receivables and retentions ​ 219,766 ​ 199,474 ​ Inventories, net ​ 143,835 ​ 150,168 ​ Income taxes receivable ​ ​ 338 ​ ​ — ​ Prepaid expenses and other current assets ​ 19,758 ​ 22,333 ​ Total current assets ​ 500,346 ​ 515,581 ​ Long-term investments ​ ​ 21,887 ​ ​ 20,960 ​ Property and equipment, net ​ 48,071 ​ 46,602 ​ Operating lease right-of-use assets ​ ​ 28,283 ​ ​ 30,033 ​ Deferred income taxes ​ 41,303 ​ 41,303 ​ Intangibles, net ​ ​ 67,521 ​ ​ 72,224 ​ Goodwill ​ ​ 275,932 ​ ​ 275,652 ​ Other assets ​ 15,826 ​ 13,505 ​ Total assets ​ $ 999,169 ​ $ 1,015,860 ​ Liabilities and stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 43,596 ​ $ 48,298 ​ Wages and related accruals ​ 20,413 ​ 44,312 ​ Customer advances ​ 10,993 ​ 11,192 ​ Current portion of long-term debt ​ ​ 10,000 ​ ​ 10,000 ​ Current operating lease liabilities ​ ​ 9,428 ​ ​ 9,841 ​ Income taxes payable ​ ​ 5,597 ​ ​ 4,162 ​ Other current liabilities ​ 17,331 ​ 17,074 ​ Total current liabilities ​ 117,358 ​ 144,879 ​ Long-term debt, net of current portion ​ ​ 6,788 ​ ​ 17,092 ​ Non-current operating lease liabilities ​ ​ 21,086 ​ ​ 22,745 ​ Other non-current liabilities ​ ​ 2,123 ​ ​ 2,132 ​ Liability for uncertain tax positions ​ 5,603 ​ 5,603 ​ Deferred income taxes ​ ​ 673 ​ ​ 664 ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value: ​ ​ ​ ​ ​ ​ ​ Authorized shares— 10,000,000 ; 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— 28,206,480 shares at July 27, 2024 and 28,134,438 shares at April 30, 2024 ​ 4 ​ 4 ​ Additional paid-in capital ​ 598,735 ​ 597,646 ​ Accumulated other comprehensive loss ​ ( 5,054 ) ​ ( 5,592 ) ​ Retained earnings ​ 251,853 ​ 230,687 ​ Total stockholders’ equity ​ ​ 845,538 ​ ​ 822,745 ​ Total liabilities and stockholders’ equity ​ $ 999,169 ​ $ 1,015,860 ​ ​ See accompanying notes to condensed consolidated financial statements (unaudited). 3 Table of Contents AeroVironment, Inc. Condensed Consolidated Statements of Operation s (Unaudited) (In thousands except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ July 27, ​ July 29, ​ ​ 2024 2023 Revenue: ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 159,504 ​ $ 119,471 ​ Contract services ​ 29,979 ​ 32,876 ​ ​ ​ 189,483 ​ 152,347 ​ Cost of sales: ​ ​ ​ ​ ​ ​ ​ Product sales ​ 85,519 ​ 61,608 ​ Contract services ​ 22,497 ​ 25,079 ​ ​ ​ 108,016 ​ 86,687 ​ Gross margin: ​ ​ ​ ​ ​ ​ Product sales ​ ​ 73,985 ​ ​ 57,863 ​ Contract services ​ ​ 7,482 ​ ​ 7,797 ​ ​ ​ 81,467 ​ 65,660 ​ Selling, general and administrative ​ 33,795 ​ 23,827 ​ Research and development ​ 24,613 ​ 15,466 ​ Income from operations ​ 23,059 ​ 26,367 ​ Other loss: ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ ( 239 ) ​ ( 2,008 ) ​ Other expense, net ​ ( 234 ) ​ ( 1,129 ) ​ Income before income taxes ​ 22,586 ​ 23,230 ​ Provision for income taxes ​ 1,485 ​ 1,314 ​ Equity method investment income (loss), net of tax ​ 65 ​ ( 21 ) ​ Net income ​ ​ 21,166 ​ ​ 21,895 ​ Net income per share ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.76 ​ $ 0.84 ​ Diluted ​ $ 0.75 ​ $ 0.84 ​ Weighted-average shares outstanding: ​ ​ ​ ​ ​ ​ ​ Basic ​ 27,959,692 ​ 26,088,277 ​ Diluted ​ 28,281,827 ​ 26,179,042 ​ ​ See accompanying notes to condensed consolidated financial statements (unaudited). ​ ​ 4 Table of Contents AeroVironment, Inc. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ July 27, ​ July 29, ​ ​ 2024 2023 Net income ​ $ 21,166 ​ $ 21,895 ​ Other comprehensive income: ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustments ​ ​ 538 ​ ​ ( 63 ) ​ Total comprehensive income ​ $ 21,704 ​ ​ 21,832 ​ ​ See accompanying notes to condensed consolidated financial statements (unaudited). ​ 5 Table of Contents ​ ​ AeroVironment, Inc. Condensed Consolidated Statements of Stockholders’ Equity For the three months ended July 27, 2024 and July 29, 2023 (Unaudited) (In thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ ​ ​ ​ Shares Amount Capital Earnings Loss ​ Total Balance at April 30, 2024 28,134,438 ​ $ 4 ​ $ 597,646 ​ $ 230,687 ​ $ ( 5,592 ) ​ $ 822,745 Net income — ​ — ​ — ​ 21,166 ​ — ​ ​ 21,166 Foreign currency translation ​ — ​ — ​ — ​ ​ — ​ ​ 538 ​ ​ 538 Stock options exercised ​ 16,164 ​ — ​ 506 ​ ​ — ​ ​ — ​ ​ 506 Restricted stock awards ​ 69,522 ​ — ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock awards forfeited ( 2,194 ) ​ — ​ — ​ — ​ ​ — ​ ​ — Tax withholding payment related to net share settlement of equity awards ​ ( 11,450 ) ​ — ​ ( 3,953 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 3,953 ) Stock based compensation — ​ — ​ 4,536 ​ — ​ ​ — ​ ​ 4,536 Balance at July 27, 2024 28,206,480 ​ $ 4 ​ $ 598,735 ​ $ 251,853 ​ $ ( 5,054 ) ​ $ 845,538 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ ​ ​ ​ Shares Amount Capital Earnings Loss ​ Total Balance at April 30, 2023 26,216,897 ​ $ 4 ​ $ 384,397 ​ $ 171,021 ​ $ ( 4,452 ) ​ $ 550,970 Net income — ​ — ​ — ​ 21,895 ​ — ​ ​ 21,895 Foreign currency translation ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 63 ) ​ ​ ( 63 ) Restricted stock awards ​ 91,913 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock awards forfeited ( 3,438 ) ​ — ​ — ​ — ​ ​ — ​ ​ — Tax withholding payment related to net share settlement of equity awards ​ ( 13,242 ) ​ ​ — ​ ​ ( 1,298 ) ​ ​ — ​ ​ — ​ ​ ( 1,298 ) Issuance cost for shares issued ​ — ​ ​ — ​ ​ ( 163 ) ​ ​ — ​ ​ — ​ ​ ( 163 ) Stock based compensation ​ — ​ — ​ 3,204 ​ — ​ ​ — ​ ​ 3,204 Balance at July 29, 2023 26,292,130 ​ $ 4 ​ $ 386,140 ​ $ 192,916 ​ $ ( 4,515 ) ​ $ 574,545 ​ ​ ​ ​ 6 Table of Contents AeroVironment, Inc. Condensed Consolidated Statements of Cash Flow s (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ July 27, July 29, ​ ​ 2024 ​ 2023 ​ Operating activities ​ ​ ​ ​ ​ Net income ​ $ 21,166 ​ $ 21,895 ​ Adjustments to reconcile net income to cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 8,852 ​ 6,951 ​ (Gain) loss from equity method investments ​ ​ ( 65 ) ​ ​ 21 ​ Amortization of debt issuance costs ​ ​ 266 ​ ​ 214 ​ Provision for doubtful accounts ​ ( 101 ) ​ ( 15 ) ​ Reserve for inventory excess and obsolescence ​ ​ 2,667 ​ ​ 3,330 ​ Other non-cash expense, net ​ ​ 616 ​ ​ 173 ​ Non-cash lease expense ​ ​ 2,430 ​ ​ 2,184 ​ Loss on foreign currency transactions ​ 142 ​ 132 ​ Unrealized loss on available-for-sale equity securities, net ​ ​ 321 ​ ​ 1,013 ​ Deferred income taxes ​ ( 1 ) ​ ( 427 ) ​ Stock-based compensation ​ 4,536 ​ 3,204 ​ Loss on disposal of property and equipment ​ ​ 143 ​ ​ 116 ​ Changes in operating assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 34,993 ​ 8,207 ​ Unbilled receivables and retentions ​ ( 20,274 ) ​ ( 1,603 ) ​ Inventories ​ 3,867 ​ ( 40,004 ) ​ Income taxes receivable ​ ​ ( 336 ) ​ ​ — ​ Prepaid expenses and other assets ​ ( 814 ) ​ ( 4,401 ) ​ Accounts payable ​ ( 4,976 ) ​ ( 2,780 ) ​ Other liabilities ​ ​ ( 25,081 ) ​ ​ ( 15,272 ) ​ Net cash provided by (used in) operating activities ​ 28,351 ​ ( 17,062 ) ​ Investing activities ​ ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ( 5,430 ) ​ ( 3,632 ) ​ Contributions in equity method investments ​ ​ ( 1,183 ) ​ ​ — ​ Net cash used in investing activities ​ ( 6,613 ) ​ ( 3,632 ) ​ Financing activities ​ ​ ​ ​ ​ ​ ​ Principal payments of term loan ​ ​ ( 10,500 ) ​ ​ ( 5,000 ) ​ Payment of debt issuance costs ​ ​ — ​ ​ ( 9 ) ​ Tax withholding payment related to net settlement of equity awards ​ ​ ( 3,953 ) ​ ​ ( 1,298 ) ​ Exercise of stock options ​ ​ 506 ​ ​ — ​ Other ​ ​ ( 7 ) ​ ​ ( 8 ) ​ Net cash used in financing activities ​ ( 13,954 ) ​ ( 6,315 ) ​ Effects of currency translation on cash and cash equivalents ​ ​ 77 ​ ​ 21 ​ Net increase (decrease) in cash and cash equivalents ​ 7,861 ​ ( 26,988 ) ​ Cash and cash equivalents at beginning of period ​ 73,301 ​ 132,859 ​ Cash and cash equivalents at end of period ​ $ 81,162 ​ $ 105,871 ​ Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ ​ ​ Cash paid (refunded), net during the period for: ​ ​ ​ ​ ​ ​ ​ Income taxes ​ $ ( 101 ) ​ $ 35 ​ Interest ​ $ 370 ​ $ 1,782 ​ Non-cash activities ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustments ​ $ 538 ​ $ ( 63 ) ​ Acquisitions of property and equipment included in accounts payable ​ $ 1,208 ​ $ 969 ​ See accompanying notes to condensed consolidated financial statements (unaudited). ​ ​ 7 Table of Contents AeroVironment, Inc. Notes to Condensed Consolidated Financia l Statements (Unaudited) ​ 1. Organization and Significant Accounting Policies ​ Organization ​ AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, delivery and support of a technologically advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses. AeroVironment, Inc. 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 ​ The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. 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 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. 8 Table of Contents ​ The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. ​ The Company’s unaudited condensed consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. ​ 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 UxS segment. The assets, liabilities and operating results of Tomahawk have been included in the Company’s unaudited condensed consolidated financial statements. Refer to Note 16—Business Acquisitions for further details. ​ Recently Adopted Accounting Standards ​ The Company did not adopt any accounting standards during the three months ended July 27, 2024. ​ Revenue Recognition ​ The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of its customers. These contracts may be firm fixed price (“FFP”), cost plus fixed fee (“CPFF”), or time and materials (“T&M”). The Company considers all such contracts to be within the scope of ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). ​ Performance Obligations ​ A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its observable standalone selling price for products and services. When the standalone selling price is not directly observable, the Company uses its best estimate of the standalone selling price of each distinct good or service in the contract using the cost plus margin approach. This approach estimates the Company’s expected costs of satisfying the performance obligation and then adds an appropriate margin for that distinct good or service. ​ Contract modifications are routine in the performance of the Company’s contracts. In most instances, contract modifications are for additional goods and/or services that are distinct and, therefore, accounted for as new contracts. ​ The Company’s performance obligations are satisfied over time or at a point in time. Performance obligations are satisfied over time if the customer receives the benefits as the Company performs, if the customer controls the asset as it is being developed or produced, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for the Company’s costs incurred to date plus a reasonable margin. The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. Revenue for LMS product deliveries, certain Tomahawk product deliveries and Customer-Funded Research and Development contracts is recognized over time as costs are incurred. Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, and technical support services. Contract services revenue is recognized over time as services are rendered. 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 9 Table of Contents 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 MUAS in overseas locations to support U.S. military operations under ISR services contracts under a contractor-owned, contractor-operated (“COCO”) arrangement. ​ 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. Incurred costs represent work performed, which correspond with, and thereby best depict, transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts. ​ 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 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. ​ 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 . ​ The Company collects sales, value added, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer. ​ Contract Estimates ​ Accounting for contracts and programs primarily with a duration of less than six months involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts. ​ Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer. ​ The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively. The Company generally estimates such variable consideration as the most likely amount. 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. 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 10 Table of Contents 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. In the period undefinitized contract actions become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact. ​ 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 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 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 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 ​ The following tables present the Company’s revenue disaggregated by segment, contract type, customer category and geographic location (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ Revenue by segment 2024 2023 ​ UxS ​ $ 119,976 ​ $ 98,207 ​ LMS ​ ​ 51,973 ​ ​ 30,917 ​ MW ​ ​ 17,534 ​ ​ 23,223 ​ Total revenue ​ $ 189,483 ​ $ 152,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ Revenue by contract type ​ 2024 2023 ​ FFP ​ $ 171,869 ​ $ 129,942 ​ CPFF ​ ​ 16,231 ​ ​ 21,293 ​ T&M 1,383 ​ 1,112 ​ Total revenue ​ $ 189,483 ​ $ 152,347 ​ ​ 11 Table of Contents Each of these contract types presents advantages and disadvantages. Typically, the Company assumes more risk with FFP contracts. However, these types of contracts generally offer additional profits when the Company completes the work for less than originally estimated. CPFF contracts generally subject the Company to lower risk. Accordingly, the associated base fees are usually lower than fees on FFP contracts. Under T&M contracts, the Company’s profit may vary if actual labor hour rates vary significantly from the negotiated rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ Revenue by customer category ​ 2024 2023 ​ U.S. government ​ $ 148,600 ​ $ 101,348 ​ Non-U.S. government ​ ​ 40,883 ​ ​ 50,999 ​ Total revenue ​ $ 189,483 ​ $ 152,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ July 27, ​ July 29, ​ Revenue by geographic location ​ 2024 2023 ​ Domestic ​ $ 66,998 ​ $ 58,126 ​ International ​ ​ 122,485 ​ ​ 94,221 ​ Total revenue ​ $ 189,483 ​ $ 152,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ July 27, ​ July 29, ​ Revenue percentage by recognition method ​ 2024 2023 ​ Over time ​ ​ 41 % ​ ​ 39 % ​ Point in time ​ ​ 59 % ​ ​ 61 % ​ Total revenue ​ ​ 100 % ​ ​ 100 % ​ ​ Contract Balances ​ The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables, and customer advances and deposits on the condensed consolidated balance sheet. In the Company’s services contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, which is generally monthly, or upon the achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets recorded in unbilled receivables and retentions on the condensed consolidated balance sheet. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities recorded in customer advances on the condensed consolidated balance sheet. Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. These assets and liabilities are reported on the condensed consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. 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 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 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 12 Table of Contents 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. ​ Segments ​ 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 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. Refer to Note 18—Segments for further details. ​ Investments ​ The Company’s investments are accounted for as available-for-sale and are reported at fair value. Unrealized gains and losses for debt securities are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes for available-for-sale investments. Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income. Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other expense, net. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. ​ Fair Values of Financial Instruments ​ Fair values of cash and cash equivalents, accounts receivable, unbilled receivables and retentions, and accounts payable approximate cost due to the short period of time to maturity. ​ Government Contracts ​ Payments to the Company on government CPFF or T&M contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company for CPFF and T&M contracts. ​ For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. Historically, the Company has not experienced material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. 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 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. ​ 13 Table of Contents The reconciliation of basic to diluted shares is as follows (in thousands except share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ July 27, 2024 July 29, 2023 Net income ​ $ 21,166 ​ $ 21,895 ​ Denominator for basic earnings per share: ​ ​ ​ ​ ​ ​ ​ Weighted average common shares ​ 27,959,692 ​ 26,088,277 ​ Dilutive effect of employee stock options, restricted stock and restricted stock units ​ 322,135 ​ 90,765 ​ Denominator for diluted earnings per share ​ ​ 28,281,827 ​ ​ 26,179,042 ​ ​ 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 ​ In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses reported to the CODM. ASU 2023-07 also requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is adopted retrospectively. 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): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires updates to the rate reconciliation, income taxes paid and other disclosures. The new standard is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. ASU 2023-09 is adopted retrospectively. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. ​ 2. Investments ​ Investments consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 27, ​ April 30, ​ ​ 2024 2024 Long-term investments: ​ ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ ​ Equity securities and warrants ​ ​ 706 ​ ​ 1,027 ​ Total long-term available-for-sale securities investments ​ 706 ​ 1,027 ​ Equity method investments ​ ​ ​ ​ ​ ​ ​ Investments in limited partnership funds ​ 21,181 ​ 19,933 ​ Total equity method investments ​ 21,181 ​ 19,933 ​ Total long-term investments ​ $ 21,887 ​ $ 20,960 ​ ​ 14 Table of Contents Equity Securities ​ Equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other expense, net. Unrealized loss recorded (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ July 27, 2024 ​ July 29, 2023 Net losses recognized during the period on equity securities ​ $ ( 321 ) ​ $ ( 1,013 ) Less: Net loss recognized during the period on equity securities sold during the period ​ ​ — ​ ​ — Unrealized loss recognized during the period on equity securities still held at the reporting date ​ $ ( 321 ) ​ $ ( 1,013 ) ​ ​ 3. Fair Value Measurements ​ Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows: ​ ● Level 1—Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date. ​ ● Level 2—Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data. ​ ● 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 July 27, 2024, were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement Using ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ ​ ​ Quoted prices in ​ other ​ Significant ​ ​ ​ ​ ​ ​ active markets for ​ observable ​ unobservable ​ ​ ​ ​ ​ ​ identical assets ​ inputs ​ inputs ​ ​ ​ ​ Description ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ Total ​ Equity securities ​ $ 596 ​ $ — ​ $ — ​ $ 596 ​ Warrants ​ ​ — ​ ​ 110 ​ ​ — ​ ​ 110 ​ Total ​ $ 596 ​ $ 110 ​ $ — ​ $ 706 ​ ​ ​ ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement Using ​ ​ ​ Significant ​ ​ ​ ​ ​ ​ Quoted prices in ​ other ​ Significant ​ ​ ​ ​ ​ active markets for ​ observable ​ unobservable ​ ​ ​ ​ ​ identical assets ​ inputs ​ inputs ​ ​ ​ Description ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ Total Equity securities ​ $ 937 ​ $ — ​ $ — ​ $ 937 Warrants ​ ​ — ​ ​ 90 ​ ​ — ​ ​ 90 Total ​ $ 937 ​ $ 90 ​ $ — ​ $ 1,027 ​ 15 Table of Contents 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. The privately placed, redeemable warrants have an exercise price of $ 12.50 and redemption price of $ 20.00 . 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. ​ 4. Inventories, net ​ Inventories consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 27, ​ April 30, ​ ​ 2024 2024 ​ ​ ​ ​ Raw materials ​ $ 59,829 ​ $ 57,218 ​ Work in process ​ 51,333 ​ 53,232 ​ Finished goods ​ 61,169 ​ 65,618 ​ Inventories, gross ​ 172,331 ​ 176,068 ​ Reserve for inventory excess and obsolescence ​ ( 28,496 ) ​ ( 25,900 ) ​ Inventories, net ​ $ 143,835 ​ $ 150,168 ​ ​ ​ 5. Equity Method Investments ​ Investments in Limited Partnership Funds ​ In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets. Under the terms of the limited partnership agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022. 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 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 ​ On September 15, 2021, the Company entered into a Share Sale and Purchase Agreement with Toygun whereby the Company sold 35 % of the common shares of 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 sales, the Company decreased its interest in Altoy from 85 % to 15 %. The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s unaudited condensed consolidated financial statements. 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 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 16 Table of Contents 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. ​ ​ 6. Warranty Reserves ​ The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. The warranty reserve is included in other current liabilities on the unaudited condensed consolidated balance sheet. The related expense is included in cost of sales. 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 ​ ​ ​ July 27, ​ July 29, ​ ​ 2024 2023 ​ Beginning balance ​ $ 5,538 ​ $ 3,642 ​ Warranty expense ​ ( 647 ) ​ 1,750 ​ Warranty costs settled ​ ( 651 ) ​ ( 765 ) ​ Ending balance ​ $ 4,240 ​ $ 4,627 ​ ​ ​ 7. Intangibles, net ​ The components of intangibles are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 27, ​ April 30, ​ ​ 2024 2024 ​ Technology ​ $ 101,163 ​ $ 101,012 ​ Licenses ​ ​ 1,008 ​ ​ 1,008 ​ Customer relationships ​ ​ 77,379 ​ ​ 77,313 ​ Backlog ​ ​ 2,863 ​ ​ 2,831 ​ In-process research and development ​ ​ 550 ​ ​ 550 ​ Non-compete agreements ​ ​ 320 ​ ​ 320 ​ Trademarks and tradenames ​ ​ 1,668 ​ ​ 1,668 ​ Other ​ ​ 146 ​ ​ 146 ​ Intangibles, gross ​ ​ 185,097 ​ ​ 184,848 ​ Less accumulated amortization ​ ( 117,576 ) ​ ( 112,624 ) ​ Intangibles, net ​ $ 67,521 ​ $ 72,224 ​ ​ 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): ​ ​ ​ ​ ​ ​ ​ Year ending ​ ​ April 30, 2025 ​ $ 14,369 ​ 2026 ​ 15,022 ​ 2027 ​ 12,655 ​ 2028 ​ 11,941 ​ 2029 ​ 7,764 ​ ​ ​ $ 61,751 ​ ​ ​ 17 Table of Contents 8. Goodwill ​ The following table presents the changes in the Company’s goodwill balance by segment (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ UxS ​ LMS ​ MW ​ Total Balance at April 30, 2024 ​ $ 256,398 ​ $ — ​ $ 19,254 ​ $ 275,652 Change to goodwill ​ ​ 280 ​ ​ — ​ ​ — ​ ​ 280 Balance at July 27, 2024 ​ $ 256,678 ​ $ — ​ $ 19,254 ​ $ 275,932 ​ The UxS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc. (“Arcturus”), Telerob, Planck and Tomahawk acquisitions. 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 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. Estimating the fair value of individual reporting units requires the Company to make assumptions and estimates regarding future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors. Estimated future annual net cash flows based in part upon the Company’s ability to obtain contracts from the U.S. 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 the MUAS reporting unit goodwill 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 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 $ 12,771,000 as of July 27, 2024 will also be evaluated for potential impairment during the fourth quarter. ​ 9. Debt ​ 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. Bank National Association, as joint lead arrangers and joint bookrunners (the “Credit Agreement”). ​ 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 18 Table of Contents 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. The Term Loan Facility requires payment of 5 % of the outstanding obligations in each of the first four loan years, with the remaining 80 % payable in loan year five, consisting of three quarterly payments of 1.25 % each, with the remaining outstanding principal amount of the Term Loan Facility due and payable on the final maturity date. 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. ​ Any borrowing under the Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage costs, and any amounts repaid under the Revolving Facility may be reborrowed. Mandatory prepayments are required under the revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders. Mandatory prepayments are also required in connection with the disposition of assets to the extent not reinvested and unpermitted debt transactions. ​ In support of its obligations pursuant to the Credit Facilities, the Company has granted security interests in substantially all of the personal property of the Company and its domestic subsidiaries, including a pledge of the equity interests in its subsidiaries (limited to 65 % of outstanding equity interests in the case of foreign subsidiaries), and the proceeds thereof, with customary exclusions and exceptions. The Company’s existing and future domestic subsidiaries, including Arcturus, are guarantors for the Credit Facilities. ​ The Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Company and its subsidiaries (as defined in the Credit Agreement) to incur any additional indebtedness or guarantee indebtedness of others, to create liens on properties or assets, or to enter into certain asset and stock-based transactions. In addition, the Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter. ​ On February 4, 2022, the Company entered into a First Amendment to Credit Agreement and Waiver relating to its existing Credit Agreement (the “First Amendment to Credit Agreement”). The First Amendment to Credit Agreement waives any event of default that may have occurred as a result of the potential failure by the Company to comply with the consolidated leverage ratio covenant set forth in the Credit Agreement for the fiscal quarter ended January 29, 2022. 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; and 3.00 to 1.00 for any fiscal quarter ending thereafter. On June 6, 2023, the Company entered into a Second Amendment to Credit Agreement relating to its existing credit Agreement which increased the sublimit from $ 10,000,000 to $ 25,000,000 . ​ The Credit Agreement, as amended by the First Amendment to Credit Agreement and Second Amendment to the Credit Agreement, contains certain customary events of default, which include failure to make payments when due thereunder, the material inaccuracy of representations or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain judgments, certain ERISA-related events, invalidity of loan documents, or a Change of Control (as defined in the Credit Agreement). Upon the occurrence and continuation of an event of default, the Lenders may cease making future loans under the Credit Agreement and may declare all amounts owing under the Credit Agreement to be immediately due and payable. ​ The First Amendment to Credit Agreement also implemented certain secured overnight financing rate (“SOFR”) interest rate mechanics and interest rate reference benchmark replacement provisions in order to effectuate the transition from LIBOR as a reference interest rate. Following the First Amendment to Credit Agreement, the Company has a choice of interest rates between (a) Term SOFR (with a 0 % floor) plus the Applicable Margin; 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 19 Table of Contents 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. The Company also remains responsible for certain commitment fees from 0.20 - 0.35 % depending on the Consolidated Leverage Ratio, and administrative agent expenses incurred in relation to the Credit Facilities. 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 July 27, 2024, the Company is in compliance with all amended covenants. ​ Long-term debt and the current period interest rates were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 27, ​ April 30, ​ ​ 2024 2024 ​ ​ (In thousands) ​ (In thousands) Term loan ​ $ 17,500 ​ $ 28,000 Revolving credit facility ​ ​ — ​ ​ — Total debt ​ ​ 17,500 ​ ​ 28,000 Less current portion ​ ​ 10,000 ​ ​ 10,000 Total long-term debt, less current portion ​ ​ 7,500 ​ ​ 18,000 Less unamortized debt issuance costs–term loans ​ ​ 712 ​ ​ 908 Total long-term debt, net of unamortized debt issuance costs–term loans ​ $ 6,788 ​ $ 17,092 Unamortized debt issuance costs–revolving credit facility ​ $ 441 ​ $ 511 Current period interest rate ​ ​ 6.9 % ​ ​ 6.9 % ​ Future contractual long-term debt principal payments at July 27, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ (In thousands) 2025 ​ $ 10,000 2026 ​ ​ 7,500 ​ ​ $ 17,500 ​ ​ 10. Leases ​ The Company leases certain buildings, land and equipment. At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities on the unaudited condensed consolidated balance sheet. ​ The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The Company defines the initial lease term to include renewal options determined to be reasonably certain. The Company’s leases have remaining lease terms of less than one year to seven years , some of which may include options to extend the lease for up to nine years , and some of which may include options to terminate the lease after three years . If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities. For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. ​ Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records incentive as a reduction to fixed lease payments thereby reducing rent expense. 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 20 Table of Contents 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. ​ In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease. Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease. ​ The components of lease costs recorded in cost of sales and selling, general and administrative (“SG&A”) expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ 2024 ​ 2023 Operating lease cost ​ $ 2,430 ​ $ 2,184 Short term lease cost ​ ​ 155 ​ ​ 385 Variable lease cost ​ ​ 423 ​ ​ 513 Sublease income ​ ​ — ​ ​ — Total lease costs, net ​ $ 3,008 ​ $ 3,082 ​ Supplemental lease information was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ 2024 ​ 2023 ​ ​ (In thousands) ​ (In thousands) Cash paid for amounts included in the measurement of operating lease liabilities ​ $ 2,550 ​ $ 2,241 Right-of-use assets obtained in exchange for new lease liabilities ​ $ 239 ​ $ 247 ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ ​ 49 months ​ ​ 51 months Weighted average discount rate ​ ​ 5.4 % ​ ​ 4.3 % ​ Maturities of operating lease liabilities as of July 27, 2024 were as follows (in thousands): ​ ​ ​ ​ ​ 2025 ​ $ 8,213 2026 ​ 8,335 2027 ​ 7,649 2028 ​ 5,621 2029 ​ 4,503 Thereafter ​ ​ 1,628 Total lease payments ​ ​ 35,949 Less: imputed interest ​ ​ ( 5,435 ) Total present value of operating lease liabilities ​ $ 30,514 ​ ​ 21 Table of Contents 11. Accumulated Other Comprehensive Loss and Reclassifications Adjustments ​ The components of accumulated other comprehensive loss and adjustments are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ July 27, ​ July 29, ​ 2024 2023 Balance as of April 30, 2024 and April 30, 2023, respectively $ ( 5,592 ) ​ $ ( 4,452 ) Change in foreign currency translation adjustments ​ ​ 538 ​ ​ ( 63 ) Balance as of July 27, 2024 and July 29, 2023, respectively $ ( 5,054 ) ​ $ ( 4,515 ) ​ ​ 12. Customer-Funded Research & Development ​ Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform R&D activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales as costs are incurred. 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 $ 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. ​ 13. Long-Term Incentive Awards ​ During the three months ended July 27, 2024, the Company granted awards under its 2021 Equity Incentive Plan (the “2021 Plan”) to key employees (“Fiscal 2025 LTIP”). 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 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. 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. Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock. 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 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 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 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- 22 Table of Contents 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. 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. Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock. 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 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. The estimation of whether the performance targets will be achieved requires judgment, and, to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited. ​ 14. Income Taxes ​ 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. ​ 15. Share Repurchase Plan and Issuances ​ 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. ​ 16. Business Acquisitions ​ Tomahawk Acquisition ​ On September 15, 2023, the Company closed its acquisition of Tomahawk Robotics, Inc., a leader in AI-enabled robotic control systems. 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 23 Table of Contents 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 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. ​ The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Tomahawk. The purchase price allocation is expected to be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date (in thousands): ​ ​ ​ ​ ​ ​ September 15, ​ ​ 2023 Fair value of assets acquired: ​ ​ ​ Accounts receivable $ 2,314 Unbilled receivable ​ ​ 993 Inventories, net ​ ​ 2,882 Prepaid and other current assets ​ ​ 148 Property and equipment, net ​ ​ 1,789 Operating lease assets ​ ​ 1,337 Other assets ​ ​ 71 Technology ​ ​ 39,000 Customer relationship ​ ​ 4,800 Trademarks ​ ​ 1,600 Deferred tax asset ​ ​ 2,865 Goodwill ​ ​ 95,414 Total identifiable net assets ​ $ 153,213 ​ ​ ​ ​ Fair value of liabilities assumed: ​ ​ ​ Accounts payable ​ ​ 3,788 Wages and related accruals ​ ​ 620 Customer advances ​ ​ 1,648 Current operating lease liabilities ​ ​ 482 Other current liabilities ​ ​ 411 Non-current operating lease liabilities ​ ​ 855 Other non-current liabilities ​ ​ 7 Deferred income taxes ​ ​ 11,035 Total liabilities assumed ​ ​ 18,846 Total identifiable net assets ​ $ 134,367 ​ ​ ​ ​ Fair value of consideration transferred: ​ ​ ​ Equity consideration ​ $ 109,820 Cash consideration, net of cash acquired ​ ​ 24,157 Holdback ​ ​ 390 Total consideration ​ $ 134,367 ​ 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. 24 Table of Contents ​ 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 UxS 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) ​ 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 ​ ​ ​ ​ July 29, ​ ​ ​ ​ 2023 ​ Revenue ​ $ 155,174 ​ Net income ​ $ 18,752 ​ ​ 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 30, 2022, reflecting the additional amortization that would have been charged and including the results of Tomahawk 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, 2022, nor are they indicative of results of operations that may occur in the future. ​ 17. Pension ​ As part of the Telerob acquisition, the Company acquired a small foreign-based defined benefit pension plan. The Rheinmetall-Zusatzversorgung service plan covers three former employees based on individual contracts issued to the employees. No other employees are eligible to participate. The Company has reinsurance policies that were taken out for participating former employees, which were pledged to the employees. The measurement date for the Company’s pension plan was April 30, 2024. ​ The table below includes the projected benefit obligation and fair value of plan assets as of April 30, 2024. The net fair value of plan assets (in thousands) is recorded in other assets on the unaudited condensed consolidated balance sheet. ​ ​ ​ ​ ​ ​ ​ April 30, ​ ​ 2024 ​ ​ (In thousands) Projected benefit obligation ​ $ ( 3,246 ) Fair value of plan assets ​ 3,636 Funded status of the plan ​ $ 390 ​ 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. The plan assets consist of reinsurance policies for each of the three pension commitments. The reinsurance policies are fixed-income investments considered a level 2 fair value hierarchy based on observable inputs of the policy. 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 July 27, 2024 and April 30, 2024. ​ 25 Table of Contents Expected benefit payments as of April 30, 2024 (in thousands): ​ ​ ​ ​ ​ 2025 ​ $ 188 2026 ​ ​ 192 2027 ​ 195 2028 ​ 197 2029 ​ ​ 199 2030-2034 ​ 1,014 Total expected benefit payments ​ $ 1,985 ​ Net periodic benefit cost (in thousands) is recorded in interest expense, net. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ July 27, ​ July 29, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ (In thousands) ​ (In thousands) ​ Expected return on plan assets ​ $ — ​ $ — ​ Interest cost ​ 28 ​ 30 ​ Actuarial gain ​ ​ — ​ ​ — ​ Net periodic benefit cost ​ $ 28 ​ $ 30 ​ ​ ​ ​ ​ 18. Segments ​ 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. 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 ​ UxS LMS MW ​ Total Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 112,301 ​ $ 47,180 ​ $ 23 ​ $ 159,504 Contract services ​ ​ 7,675 ​ ​ 4,793 ​ ​ 17,511 ​ ​ 29,979 ​ ​ $ 119,976 ​ $ 51,973 ​ $ 17,534 ​ $ 189,483 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment adjusted gross margin ​ $ 67,252 ​ $ 13,272 ​ $ 4,657 ​ $ 85,181 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ $ 6,901 ​ $ 800 ​ $ 1,151 ​ $ 8,852 ​ 26 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 29, 2023 ​ UxS LMS MW ​ Total Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 93,231 ​ $ 25,325 ​ $ 915 ​ $ 119,471 Contract services ​ ​ 4,976 ​ ​ 5,592 ​ ​ 22,308 ​ ​ 32,876 ​ ​ $ 98,207 ​ $ 30,917 ​ $ 23,223 ​ $ 152,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment adjusted gross margin ​ $ 50,426 ​ $ 12,323 ​ $ 5,308 ​ $ 68,057 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ $ 5,153 ​ $ 559 ​ $ 1,239 ​ $ 6,951 ​ The following table (in thousands) provides a reconciliation from segment adjusted gross margin to income before income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ July 27, July 29, ​ ​ 2024 ​ 2023 Segment adjusted gross margin ​ $ 85,181 ​ $ 68,057 Amortization in cost of sales ​ ​ ( 3,714 ) ​ ​ ( 2,397 ) Selling, general and administrative ​ ​ ( 33,795 ) ​ ​ ( 23,827 ) Research and development ​ ​ ( 24,613 ) ​ ​ ( 15,466 ) Interest expense, net ​ ​ ( 239 ) ​ ​ ( 2,008 ) Other expense, net ​ ​ ( 234 ) ​ ​ ( 1,129 ) Income before income taxes ​ $ 22,586 ​ $ 23,230 ​ 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ UxS LMS MW Corporate ​ Total As of July 27, 2024 ​ $ 535,001 ​ $ 197,738 ​ $ 49,874 ​ $ 216,556 ​ $ 999,169 As of April 30, 2024 ​ $ 590,619 ​ $ 165,413 ​ $ 50,767 ​ $ 209,061 ​ $ 1,015,860 ​ Capital expenditures are summarized in the table below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ UxS LMS MW Corporate ​ Total Three Months Ended July 27, 2024 ​ $ 2,151 ​ $ 1,069 ​ $ 1,353 ​ $ 857 ​ $ 5,430 Three Months Ended July 29, 2023 ​ $ 2,054 ​ $ 642 ​ $ 638 ​ $ 298 ​ $ 3,632 ​ ​ ​ ​ ​ ​ ​ ​ 27 Table of Contents