AeroVironment posts narrower loss in fiscal first quarter
Despite an increase in sales of drones for the military, Monrovia-based AeroVironment Inc. posted a loss in its fiscal first quarter as it spent more on research and development of new robotic aircraft.
The company posted a loss of $3.4 million, or 16 cents a share, compared with a loss of $3.6 million, or 17 cents, in the year-earlier period. The quarterly loss was better than what analysts expected. On average, analysts were anticipating a loss of 23 cents a share.
In regular trading, AeroVironment shares rose slightly to $23.35 a share, up 25 cents.
“This is a key transition year for AV,” said AeroVironment Chairman and Chief Executive Timothy E. Conver. “We’ve been investing for years in key developments, and I believe they will accelerate our business growth on a long-term basis.”
AeroVironment increased research spending by 40% to about $8 million in the quarter, the company said. Much of it was poured into developing a long-endurance spy plane, dubbed the Global Observer, which is currently in test flight at Edwards Air Force Base near Mojave. The plane, with its 175-foot wingspan, is designed to hover at 65,000 feet for a week at a time.
The aircraft has had no buyers, but “one customer has said in the past … ‘If you build it we will come,’” Conver said. The company doesn’t know when the plane will be ready for operation. Analysts expect it to sell for about $30 million.
In the quarter, which ended in July, the company reported higher sales of small, hand-launched, remotely controlled robotic planes such as its Raven, Wasp and Puma aircraft. AeroVironment is the Pentagon’s top supplier of such products.
Revenue was $38.2 million in the quarter, up from $37.9 million a year earlier.
Looking forward, AeroVironment said it anticipated revenue growth in the range of 10% to 15% over last fiscal year, as the company expects the bulk of its sales to take place in the second half of the fiscal year.
Still, its stock has plummeted more than 21% to $23.35 so far this year. Investors are bearish on military contractors now because of the end of combat operations in Iraq and prospects of a slowdown in Pentagon spending, said analyst Peter Arment at Broadpoint AmTech.
“You can’t run from the austerity in the defense market right now,” he said. “Nobody thinks that procurement is going to stay where it has been the last 10 years.”
In addition to unmanned aircraft for the military, AeroVironment makes charging systems for electric cars.
The company will build 60 to 100 fueling stations for electric vehicles in seven South Carolina cities as part of a contract with the nonprofit Plug-In Carolina, which is sponsored by the state’s major utilities. The project is being funded largely through two state grants from the South Carolina Energy Office worth $480,000.
The firm is also preparing to roll out home charging docks that it will install nationwide as Nissan brings its Leaf to the market. The Leaf is a five-passenger, all-electric car, slated to be the first commercially available 100%-electric vehicle when it enters the market in December.
william.hennigan@latimes.com
