May 31--AeroVironment Inc., a drone manufacturer with operations in Simi Valley, said it has reorganized and laid off employees to adjust to reduced revenues caused by federal sequestration.
The maker of small unmanned aircraft systems, which is headquartered in Monrovia, announced the efforts in a Securities and Exchange Commission filing released Thursday. That occurred a day after some employees were laid off, according to Steven Gitlin, vice president of marketing strategy and communications.
AeroVironment would not say how many employees were affected, but Gitlin did say the layoffs occurred in Simi Valley, where it employs about 500 people, and Monrovia. He 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 automatic spending cuts known as 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."
The reorganization and layoffs will cost AeroVironment an estimated $1 million, mostly in severance payments, the manufacturer said in the federal filing.
"Any reduction is painful because these are friends and colleagues and contributors to this company's success," Gitlin said. The reorganization will not affect AeroVironment's upper-level management, he added.
The company also attributed the workforce cuts to delayed growth in sales of its electric vehicle recharging stations.
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 of the reorganization and layoffs, AeroVironment said it will be able to focus on new products and strategies that support long-term growth.
The company plans to shift away from selling drones to some customers and instead provide them with drone operators and information that drones collect, 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. AeroVironment already has sold drones to 24 foreign customers, Gitlin said.
The company, which already has sold more than 11,000 electric vehicle charging stations, also believes demand for plug-in systems will continue to grow. Ford Motor Co. recently named AeroVironment as its sole preferred installer and authorized supplier of charging stations for a line of plug-in vehicles.
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