AeroVironment, with annual revenue of $297 million, is the leading supplier to the military for small unmanned aircraft systems. But third quarter earnings “fell well short” of the company’s plans as revenue dropped $25 million to $47 million. Sales of unmanned aircraft systems sank $19.6 million and electric vehicle charging systems sales fell $5.3 million.
As a result, The maker of small unmanned aircraft systems, which is headquartered in Monrovia, CA, was forced to reorganize and layoff an undisclosed number of employees of its operations in Monrovia and Simi Valley, where it employs an additional 500 people.
Steven Gitlin, vice president of marketing strategy and communications, said the company was not required to file a Worker Adjustment and Retraining Notification with the state. Such a notice is typically required when 50 or more people are laid off.
Gitlin attributed the layoffs to significantly lower revenue than expected for its most recent fiscal year because its government drone contracts have been postponed in the wake of the sequestration. He said anticipated sales of between $348 million and $370 million for the year have been reduced to about $230 million to $250 million.
“The workforce reduction was designed to align our organization to the current market reality,” Gitlin said. “The basic fact is by reducing revenue guidance by a third and not reducing the organization would not yield a positive outcome in terms of profits.”
Although the reorganization did not effect upper management, Gitlin said, “Any reduction is painful because these are friends and colleagues and contributors to this company’s success.”
In a federal filing, Aerovironment estimated that the layoffs would cost the company around $1 million, primarily in severance payments.
The company plans to shift away from selling drones to some customers and instead provide them with drone operators and information collected by the drones, Gitlin said.
Other options are to develop the company’s first armed loitering munitions system, the Switchblade, and expand the company’s international drone market. Gitlin said AeroVironment has already sold drones to 24 foreign customers.