AeroVironment, Inc. (NASDAQ: AVAV) stock fell over 4.3% on 3rd December, 2018 (Source: Google finance) after the company posted mixed results for the second quarter of FY 19. (Loss) gain on sale of a business, net of tax for the second quarter of fiscal 2019 was a loss of $0.4 million and resulted from a working capital adjustment to the proceeds from the sale of our EES business. Loss from discontinued operations, net of tax for the second quarter of fiscal 2019 was $0.6 million compared to loss from discontinued operations, net of tax for the second quarter of fiscal 2018 of $33 thousand. Net income attributable to AeroVironment for the second quarter of fiscal 2019 was $6.1 million, a decrease from second quarter fiscal 2018 net income attributable to AeroVironment of $7.7 million. As of October 27, 2018, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $163.9 million compared to $113.5 million as of October 28, 2017.
AVAV in the second quarter of FY 19 has reported the adjusted earnings per share of 29 cents, beating the analysts’ estimates for the adjusted earnings per share of 16 cents. The company had reported the adjusted revenue growth of 11 percent to $47.1 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $74.8 million. The increase in revenue was due to an increase in service revenue of $8.5 million, partially offset by a decrease in product sales of $1.3 million.
Gross margin for the second quarter of fiscal 2019 was $28.4 million, a decrease of 6% from second quarter fiscal 2018 gross margin of $30.1 million. The decrease in gross margin was primarily due to a decrease in product margin of $2.7 million, partially offset by an increase in service margin of $1.0 million. As a percentage of revenue, gross margin decreased to 39% from 46%. The decrease in gross margin percentage was primarily due to an increase in the proportion of service revenue to total revenue.
For FY19, the company has revised its expectations and now expects to generate revenue from continuing operations of between $300 million and $310 million, and earnings per diluted share from continuing operations of between $1.30 and $1.50 at 5% ownership of the HAPSMobile, Inc. joint venture. The company previously expected revenue from continuing operations of between $290 million and $310 million, and earnings per diluted share of between $1.10 and $1.40 at 5% ownership of the HAPSMobile, Inc. joint venture. The earnings per diluted share range includes a one-time gain of $0.26 from a litigation settlement.