WOOD DALE, Ill., Dec. 18, 2014 /PRNewswire/ -- AAR (NYSE:
AIR) today reported second quarter fiscal year 2015 consolidated
sales of $490.0 million and net
income of $15.2 million, or
$0.38 per diluted share. For
the second quarter of the prior fiscal year, the Company reported
sales of $540.7 million and net
income of $20.0 million, or
$0.50 per diluted share.
Within the Aviation Services segment, sales decreased 11.1% to
$377.7 million. Supply chain sales to
commercial and defense customers experienced double-digit growth
but this was offset by lower sales of the Company's airlift and MRO
services, although MRO facility utilization ramped up during the
quarter. Comparability of financial performance for this
quarter was also negatively impacted by the sale of two aircraft in
the prior year period.
Within the Technology Products segment, sales declined by
3.2%. Commercial and military cargo sales experienced
double-digit growth offset by lower sales of mobility products.
"Today we reported second quarter FY 2015 results in line with
our expectations. Sales to commercial customers increased 2.1%
primarily due to the double-digit growth from our Aviation Services
supply chain business," said David P.
Storch, Chairman and Chief Executive Officer of AAR CORP.
"As we enter the second half of Fiscal 2015, we expect reduced
revenues from our businesses that are tied to military operational
tempo, while we expect solid growth from our Aviation Services
supply chain and MRO businesses that, in total, should lead to
sales growth on a consolidated basis."
During the quarter, the Company experienced the following
business wins:
Commercial
- Renewed a five-year agreement with Allegiant for airframe
maintenance of their MD-80 and 757 fleet of aircraft.
- Supported approximately 100 aircraft from the Company's supply
chain hub in Brussels where an
additional power-by-the-hour contract for a new customer's fleet of
737s is expected.
Government and defense
- Awarded a $49 million contract by
the Department of the Navy, Naval Supply Systems Command, to
provide personnel recovery, casualty evacuation and search and
rescue airlift services in West
Africa.
- Received a one-year extension on the vertical replenishment
contract for airlift services for U.S. Naval vessels in the Western
Pacific and Indian Oceans.
- Selected by AMMROC (Advanced Military Maintenance Repair and
Overhaul Center), the Abu
Dhabi-based Joint Venture between Mubadala Development
Company, Sikorsky and Lockheed Martin, to support the design,
outfitting and integration of key areas of AMMROC's
state-of-the-art facility in Al
Ain, UAE.
Second quarter sales to commercial customers represented 64.7%
of consolidated sales, compared to 57.4% of consolidated sales in
the second quarter of last year, while sales to government and
defense customers represented the balance.
Consolidated gross profit margin was 16.0% for the second
quarter down from 16.8% last year due to unfavorable margin mix.
Aviation Services segment gross profit margin was 16.9%, up
slightly from 16.8% in the prior year period, and Technology
Products gross profit margin declined to 13.0% from 17.0% in the
prior year period.
Selling, general and administrative expenses declined
$4.0 million over the prior year as a
result of cost-saving measures implemented by the Company.
Net interest expense for the quarter decreased to $9.5 million from $10.2
million in the second quarter of last year.
During the quarter, the Company generated $16.0 million in cash flow from operations and
free cash flow of $8.0 million while
increasing its investment in its supply chain business to fund
future growth. The Company paid cash dividends of $3.0 million and re-purchased shares for
$1.7 million.
Average diluted share count for the quarter was 39.1 million
compared to 39.2 million in the second quarter last year.
Conference Call
Information
AAR will hold its quarterly conference call at 3:45 p.m. CST on December
18, 2014. 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 be available by
calling 888-266-2081 from inside the U.S. or 703-925-2533 from
outside the U.S. (access code 1623126). The replay will be
available from 8:15 p.m. CST on
December 18, 2014, until 11:59 p.m. CST on December
26, 2014.
About AAR
AAR CORP. is a global aviation and aerospace company that
employs more than 6,000 people in 17 countries. Based in
Wood Dale, Illinois, AAR supports
commercial, government and defense customers through two operating
segments: Aviation Services and Technology Products. AAR's services
include inventory management and parts distribution; aircraft
maintenance, repair and overhaul; and expeditionary airlift. AAR's
products include cargo systems and containers; mobility systems and
shelters; advanced aerostructures; and command and control systems.
More 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, 2014. 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
November
30,
|
|
Six Months
Ended
November
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
Sales
|
$ 490.0
|
|
$ 540.7
|
|
$ 959.2
|
|
$ 1,055.2
|
Cost and
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
411.5
|
|
449.7
|
|
805.4
|
|
879.5
|
Selling, general and
administrative
|
47.1
|
|
51.1
|
|
92.0
|
|
98.8
|
|
|
|
|
|
|
|
|
Earnings from
aircraft joint ventures
|
0.7
|
|
0.8
|
|
1.3
|
|
2.0
|
|
|
|
|
|
|
|
|
Operating
income
|
32.1
|
|
40.7
|
|
63.1
|
|
78.9
|
|
|
|
|
|
|
|
|
Interest
expense
|
9.6
|
|
10.5
|
|
19.2
|
|
21.5
|
Interest
income
|
0.1
|
|
0.3
|
|
0.2
|
|
0.6
|
|
|
|
|
|
|
|
|
Income before
income tax expense
|
22.6
|
|
30.5
|
|
44.1
|
|
58.0
|
Income tax
expense
|
7.4
|
|
10.5
|
|
14.4
|
|
20.0
|
Net income
attributable to AAR and noncontrolling interest
|
15.2
|
|
20.0
|
|
29.7
|
|
38.0
|
Income
attributable to noncontrolling interest
|
-
|
|
-
|
|
(0.1)
|
|
(0.1)
|
Net income
attributable to AAR
|
$ 15.2
|
|
$ 20.0
|
|
$ 29.6
|
|
$ 37.9
|
|
|
|
|
|
|
|
|
Earnings per share –
Basic
|
$ 0.38
|
|
$ 0.51
|
|
$ 0.75
|
|
$ 0.96
|
|
|
|
|
|
|
|
|
Earnings per share –
Diluted
|
$ 0.38
|
|
$ 0.50
|
|
$ 0.74
|
|
$ 0.95
|
|
|
|
|
|
|
|
|
Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding – Basic
|
38.7
|
|
38.6
|
|
38.7
|
|
38.6
|
Average shares
outstanding – Diluted
|
39.1
|
|
39.2
|
|
39.2
|
|
39.1
|
|
|
|
|
|
|
|
|
AAR CORP. and
Subsidiaries
|
|
|
|
Consolidated
Balance Sheet Highlights
(In millions
except per share data)
|
November
30, 2014
|
May
31, 2014
|
|
|
|
Cash and cash
equivalents
|
$ 92.6
|
$ 89.2
|
Current
assets
|
1,214.8
|
1,116.9
|
Current
liabilities (excluding debt accounts)
|
353.6
|
332.4
|
Net property,
plant and equipment
|
288.5
|
314.9
|
Total
assets
|
2,227.7
|
2,199.5
|
Total
debt
|
635.3
|
634.0
|
Stockholders'
equity
|
1,002.1
|
1,000.7
|
Book value per
share
|
$ 25.18
|
$ 25.27
|
Shares
outstanding
|
39.8
|
39.6
|
|
|
|
|
|
|
Sales By Business
Segment
(In millions -
unaudited)
|
Three Months
Ended November
30,
|
Six Months
Ended November
30,
|
|
2014
|
2013
|
2014
|
2013
|
Aviation
Services
|
$ 377.7
|
$ 424.7
|
$ 741.4
|
$ 818.4
|
Technology
Products
|
112.3
|
116.0
|
217.8
|
236.8
|
|
$
490.0
|
$
540.7
|
$
959.2
|
$
1,055.2
|
|
|
|
|
|
Gross Profit by
Business Segment
(In millions -
unaudited)
|
Three Months
Ended
November
30,
|
Six Months
Ended
November
30,
|
|
2014
|
2013
|
2014
|
2013
|
Aviation
Services
|
$ 63.9
|
$ 71.3
|
$ 123.0
|
$ 136.8
|
Technology
Products
|
14.6
|
19.7
|
30.8
|
38.9
|
|
$
78.5
|
$ 91.0
|
$
153.8
|
$
175.7
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Share Calculation
(In millions
except per share data - unaudited)
|
Three Months
Ended
November
30,
|
Six Months
Ended
November
30,
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Net income
attributable to AAR
|
$ 15.2
|
$ 20.0
|
$ 29.6
|
$ 37.9
|
Less: Income
attributable to participating shares
|
(0.3)
|
(0.4)
|
(0.6)
|
(0.8)
|
Net income for
diluted EPS calculation
|
$ 14.9
|
$ 19.6
|
$ 29.0
|
$ 37.1
|
|
|
|
|
|
Diluted shares
outstanding
|
39.1
|
39.2
|
39.2
|
39.1
|
|
|
|
|
|
Diluted earnings
per share
|
$ 0.38
|
$ 0.50
|
$ 0.74
|
$ 0.95
|
|
|
|
|
|
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
free cash flow for the three-month period ended November 30, 2014
to evaluate its financial results and trends, and believes it is
useful for the reader of this press release.
|
Free Cash
Flow
(In millions -
unaudited)
|
Three Months
Ended
November 30,
|
|
2014
|
Net cash provided
from operating activities
|
$16.0
|
Less: Property,
plant and equipment expenditures
|
(8.0)
|
Free Cash
Flow
|
$8.0
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/aar-reports-second-quarter-fiscal-year-2015-results-300012181.html
SOURCE AAR CORP.