WOOD DALE, Ill., Sept. 19, 2017 /PRNewswire/ -- AAR CORP. (NYSE:
AIR) today reported first quarter Fiscal Year 2018 consolidated
sales of $439.2 million and net
income of $10.6 million, or
$0.31 per diluted share. For
the first quarter of the prior fiscal year, the Company reported
sales of $404.8 million and net
income of $9.5 million, or
$0.28 per diluted share. Last
year's first quarter results included a gain of $2.6 million from the sale of a product
line. During the first quarter of Fiscal Year 2018, we
recognized a tax benefit of $1.2
million related to incremental tax benefits from stock
compensation.
"Our Aviation Services segment delivered strong results once
again as sales in the first quarter grew 11.0% from last year to
$371.3 million, contributing to
improved profitability. I am very pleased with our performance as
we continue to execute on our strategy to expand our aviation
services globally across the commercial and government markets,"
said David P. Storch, Chairman and
Chief Executive Officer of AAR CORP. Sales growth in our
industry-leading integrated supply chain solutions, MRO services,
and aircraft and parts supply activities more than offset the
impact from the wind-down of the KC-10 CLS Program, which
contributed $26.9 million less than
prior year's sales.
During the quarter, we announced new contract awards that expand
our comprehensive suite of services to newer generation
aircraft. We signed our first Airbus NEO customer to a new
long-term component support agreement with Hawaiian Airlines which
is expected to start in November
2017. We also signed our first Boeing 737 MAX program
with flydubai to provide comprehensive flight-hour component
support for 100 aircraft which is expected to start in October 2017.
Subsequent to the end of quarter, we agreed to acquire
two MRO businesses in Quebec and Ontario,
Canada from Premier Aviation and announced a new long-term
contract with Air Canada for airframe maintenance on their
narrow-body and regional fleet including A319, A320, A321, and
E-190 aircraft. These airframe maintenance services will be
performed in the newly acquired Canadian facilities. Storch
continued, "We are very pleased to have entered into this new
long-term partnership with Air Canada as we continue to expand our
airframe maintenance capabilities in North America."
During the quarter, Aviation Services received a Notice to
Proceed on the 15-year, $900 million
Landing Gear Performance-Based Logistics One program with the US
Air Force previously announced. For this program, we are
providing total supply chain management, including inventory
logistics and repair services to support Air Force requisitions
received for all C-130, KC-135 and E-3 landing gear parts.
Our Expeditionary Services segment experienced a sales decline
of $2.3 million.
First quarter sales to commercial customers represented 70.4% of
consolidated sales compared to 61.5% of consolidated sales in the
first quarter of last year. Sales to government and defense
customers represented 29.6% of consolidated sales compared to 38.5%
in the prior year's quarter.
Selling, general and administrative expenses as a percentage of
sales were 10.9% for the quarter, compared to 11.1% last year.
Net interest expense for the quarter was $1.7 million compared to $1.3 million last year due to higher borrowings.
During the quarter, we consumed $20.6
million of cash in operations, paid cash dividends of
$2.6 million, or $0.075 per share, and repurchased 142,600 shares
for $5.2 million.
Conference Call
Information
AAR will hold its quarterly conference call at 3:45 p.m. CDT on September
19, 2017. The conference call can be accessed by calling
866-802-4322 from inside the U.S. or 703-639-1319 from outside the
U.S. A replay of the conference call will also be available
by calling 855-859-2056 from inside the U.S. or 404-537-3406 from
outside the U.S. (access code 46019250). The replay will be
available from 7:15 p.m. CST on
September 19, 2017 until 10:59 p.m. CST on September 26, 2017.
About AAR
AAR is a global aftermarket solutions company that employs more
than 4,500 people in over 20 countries. Based in Wood Dale, Illinois, AAR supports commercial
aviation and government customers through two operating segments:
Aviation Services and Expeditionary Services. AAR's Aviation
Services include inventory management; parts supply; OEM parts
distribution; aircraft maintenance, repair and overhaul; and
component repair. AAR's Expeditionary Services include airlift
operations; mobility systems; and command and control centers in
support of military and humanitarian missions. Additional
information can be found at www.aarcorp.com.
This press release contains certain statements relating to
future results, which are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on beliefs
of Company management, as well as assumptions and estimates based
on information currently available to the Company, and are subject
to certain risks and uncertainties that could cause actual results
to differ materially from historical results or those anticipated,
including those factors discussed under Item 1A, entitled "Risk
Factors", included in the Company's Form 10-K for the fiscal year
ended May 31, 2017. Should one or
more of these risks or uncertainties materialize adversely, or
should underlying assumptions or estimates prove incorrect, actual
results may vary materially from those described. These
events and uncertainties are difficult or impossible to predict
accurately and many are beyond the Company's control. The
Company assumes no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events. For additional information, see the comments
included in AAR's filings with the Securities and Exchange
Commission.
AAR CORP. and
Subsidiaries
|
|
|
Consolidated
Statements of Income
(In millions
except per share data - unaudited)
|
Three Months
Ended
August
31,
|
|
2017
|
|
2016
|
|
|
|
|
Sales
|
$439.2
|
|
$404.8
|
Cost and
expenses:
|
|
|
|
Cost of
sales
|
374.7
|
|
343.3
|
Selling, general and
administrative
|
48.0
|
|
44.8
|
Operating
income
|
16.5
|
|
16.7
|
Interest expense,
net
|
(1.7)
|
|
(1.3)
|
Income from
continuing operations before income taxes
|
14.8
|
|
15.4
|
Income tax
expense
|
4.2
|
|
5.5
|
Income from
continuing operations
|
10.6
|
|
9.9
|
Loss from
discontinued operations
|
-
|
|
(0.4)
|
Net
income
|
$10.6
|
|
$9.5
|
|
|
|
|
Earnings per share
– Basic
|
|
|
|
Earnings from continuing
operations
|
$0.31
|
|
$0.29
|
Loss from discontinued
operations
|
-
|
|
(0.01)
|
Earnings per share –
Basic
|
$0.31
|
|
$0.28
|
|
|
|
|
Earnings per share
– Diluted
|
|
|
|
Earnings from continuing
operations
|
$0.31
|
|
$0.29
|
Loss from discontinued
operations
|
-
|
|
(0.01)
|
Earnings per share –
Diluted
|
$0.31
|
|
$0.28
|
|
|
|
|
Share
Data:
|
|
|
|
Weighted average
shares outstanding – Basic
|
34.0
|
|
33.9
|
Weighted average
shares outstanding – Diluted
|
34.5
|
|
34.1
|
|
|
|
|
|
|
AAR CORP. and
Subsidiaries
|
|
|
|
|
|
Consolidated
Balance Sheet Highlights
(In millions
except per share data)
|
August 31,
2017
|
|
May 31,
2017
|
|
(Unaudited)
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$15.1
|
|
$10.3
|
Current
assets
|
904.7
|
|
888.5
|
Current
liabilities (excluding debt accounts)
|
310.1
|
|
333.1
|
Net property,
plant and equipment
|
198.1
|
|
201.9
|
Total
assets
|
1,531.7
|
|
1,504.1
|
Total
debt
|
192.9
|
|
159.3
|
Stockholders'
equity
|
924.7
|
|
914.2
|
Book value per
share
|
$26.73
|
|
$26.58
|
Shares
outstanding
|
34.6
|
|
34.4
|
|
|
|
|
|
|
Sales By Business
Segment
(In millions -
unaudited)
|
Three Months
Ended
August
31,
|
|
2017
|
|
2016
|
Aviation
Services
|
$371.3
|
|
$334.6
|
Expeditionary
Services
|
67.9
|
|
70.2
|
|
$439.2
|
|
$404.8
|
|
|
Gross Profit by
Business Segment
(In millions-
unaudited)
|
Three Months
Ended
August
31,
|
|
2017
|
|
2016
|
Aviation
Services
|
$57.8
|
|
$53.4
|
Expeditionary
Services
|
6.7
|
|
8.1
|
|
$64.5
|
|
$61.5
|
|
Note: Pursuant to SEC Regulation G, the Company has
included the following reconciliation of financial measure reported
on a non-GAAP basis to compare financial measures reported on the
basis of Generally Accepted Accounting Principles ("GAAP").
The Company uses net debt to evaluate its financial position and
results and trends and believes it is useful for the reader of this
press release.
Net
Debt
(In millions-
unaudited)
|
August 31,
2017
|
|
August 31,
2016
|
Total
debt
|
$192.9
|
|
$151.6
|
Less: Cash and
cash equivalents
|
(15.1)
|
|
(7.9)
|
Net
debt
|
$177.8
|
|
$143.7
|
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SOURCE AAR CORP.