AeroVironment, Inc. engages in the design, development, production, support, and operation of unmanned aircraft systems and electric transportation solutions. The company was founded in July 1971 by Paul B. MacCready, Jr. and is headquartered in Monrovia, CA.
Military transformation and changes in overseas operational levels may affect future procurement priorities and existing programs, which could limit demand for our UAS.
We operate in evolving markets, which makes it difficult to evaluate our business and future prospects.
We face competition from other firms, many of which have substantially greater resources.
If the UAS, tactical missile systems, and commercial UAS markets do not experience significant growth, if we cannot expand our customer base or if our products do not achieve broad acceptance, then we may not be able to achieve our anticipated level of growth.
Our international business poses potentially greater risks than our domestic business.
We could be prohibited from shipping our products to certain countries if we are unable to obtain U.S. government authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business. In addition, failure to comply with export laws could result in fines, export restrictions and other sanctions and penalties.
If we are unable to manage the increasing complexity of our business or achieve or manage our expected growth, our business could be adversely affected.
Any efforts to expand our offerings beyond our current markets may not succeed, which could negatively impact our operating results.
The markets in which we compete are characterized by rapid technological change, which requires us to develop new products and product enhancements, and could render our existing products obsolete.
We expect to incur substantial research and development costs and devote significant resources to identifying and commercializing new products and services, which could significantly reduce our profitability and may never result in revenue to us.
Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our small UAS to non‑military customers in the United States.
Our products and services are complex and could have unknown defects or errors, which may give rise to claims against us, diminish our brand or divert our resources from other purposes.
If critical components or raw materials used to manufacture our products become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products, which could damage our business.
Our earnings and profit margins may decrease based on the mix of our contracts and programs and other factors related to our contracts.
We use estimates in accounting for many of our programs and changes in our estimates could adversely affect our future financial results.
Cost overruns on our contracts could subject us to losses, decrease our operating margins and adversely affect our future business.
Our senior management and key employees are important to our customer relationships and overall business.
We must recruit and retain highly‑skilled employees to succeed in our competitive business.
Our business may be dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances for the facilities in which we perform sensitive government work.
Our future profitability may be dependent upon achieving cost reductions and projected economies of scale from increasing manufacturing quantities of our products. Failing to achieve such reductions in manufacturing costs and projected economies of scale could materially adversely affect our business.
We face significant risks in the management of our inventory, and failure to effectively manage our inventory levels may result in product recalls or supply imbalances that could harm our business.
Due to the volatile and flammable nature of certain components of our products and equipment, fires or explosions may disrupt our business or cause significant injuries, which could adversely affect our financial results.
The operation of UAS in urban environments may be subject to risks, such as accidental collisions and transmission interference, which may limit demand for our UAS in such environments and harm our business and operating results.
As a manufacturer of commercial UAS, we are subject to various government regulations and may be subject to additional regulations in the future, violation of which could subject us to sanctions or otherwise harm our business.
We could be the subject of future product liability suits or product recalls, which could harm our business.
We are subject to pending legal proceedings that may disrupt our business, cause us to incur substantial costs, expose us to significant legal liabilities and could have a material adverse impact on our financial performance.
Our quarterly operating results may vary widely.
Shortfalls in available external research and development funding could adversely affect us.
Our work for the U.S. government and international governments may expose us to security risks.
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders.
Our cash may be subject to a risk of loss and we may be exposed to fluctuations in the market values of our portfolio investments and in interest rates.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.
Acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial results.
Environmental laws and regulations and unforeseen costs could impact our future earnings.
Our business is subject to federal, state and international laws regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk and adversely affect our business and operating results.
Compliance with the SEC’s conflict minerals regulations may increase our costs and adversely impact the supply‑chain for our UAS products.
Our business and operations are subject to the risks of earthquakes and other natural catastrophic events.
We are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.
Our business could be adversely affected by a negative audit or investigation by the U.S. government.
Some of our contracts with the U.S. government allow it to use inventions developed under the contracts and to disclose technical data to third parties, which could harm our ability to compete.
U.S. government contracts are generally not fully funded at inception and contain certain provisions that may be unfavorable to us, which could prevent us from realizing our contract backlog and materially harm our business and results of operations.
U.S. government contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue.
We are subject to procurement rules and regulations, which increase our performance and compliance costs under our U.S. government contracts.
If we fail to protect, or incur significant costs in defending or enforcing our intellectual property and other proprietary rights, our business, financial condition and results of operations could be materially harmed.
We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time‑consuming and limit our ability to use certain technologies in the future.
The price of our common stock may fluctuate significantly.
Our management, whose interests may not be aligned with yours, is able to exert significant influence over all matters requiring stockholder approval.