AAR Reports First Quarter Fiscal Year 2015 Results
"Although performance in the first quarter was in line with our expectations, sales in both segments were down for the quarter," said
Storch continued, "Over the balance of the year, we expect lower results for our businesses that support the military's operational tempo – airlift and mobility. While we expect continued strength in our commercial and defense supply chain businesses, as well as improvement in our MRO performance, this will not fully offset the anticipated reductions related to military operations."
During the quarter, the Company announced the following new business wins:
- A ten-year exclusive distribution agreement with EATON for aircraft fluid-distribution products, oil debris-monitoring technology, engine seals and other products for commercial airlines. Revenues under this program will start in October and will fully ramp within a year.
- Agreement with the
U.S. Army to upgrade and overhaul Auxiliary Power Units for its UH-60 Black Hawk helicopters, which started in the second quarter.
Subsequent to quarter end, the Company had the following new business awards:
- Two airlift contracts valued at approximately
$83 million over five years, to provide dedicated rotary- and fixed-wing airlift services to U.S. Africa Command with operations commencing in the second quarter. - A five-year agreement with Air Nostrum to overhaul landing gear on its CRJ900 aircraft fleet. The contract began in the second quarter and builds upon AAR's existing relationship and experience servicing landing gear on the airline's entire fleet of CRJ200s over the past seven years.
- Contracts for maintenance and engineering work on narrow- and wide-body aircraft at the Lake Charles MRO facility with two major U.S. carriers, a leasing company, and a VIP aircraft operator, which started in the second quarter.
First quarter sales to commercial customers represented 65% of consolidated sales, compared to 58% of consolidated sales in the first quarter of last year. The balance of the sales was to government and defense customers.
Selling, general and administrative expenses declined
Company Guidance
The Company's previous earnings guidance included assumptions on the number and mix of contracted Airlift positions, including certain awards that now seem unlikely to materialize. Therefore, the Company is adjusting its earnings per share guidance from a range of
Conference Call Information
AAR will hold its quarterly conference call at
About AAR
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
AAR CORP. and Subsidiaries |
||||
Consolidated Statements of Income (In millions except per share data - unaudited) |
Three Months Ended August 31, |
|||
2014 |
2013 |
|||
Sales |
$469.2 |
$514.5 |
||
Cost and expenses: |
||||
Cost of sales |
393.9 |
429.8 |
||
Selling, general and administrative |
44.9 |
47.7 |
||
Earnings from aircraft joint ventures |
0.6 |
1.2 |
||
Operating income |
31.0 |
38.2 |
||
Interest expense |
(9.6) |
(11.0) |
||
Interest income |
0.1 |
0.3 |
||
Income before income taxes |
21.5 |
27.5 |
||
Income tax expense |
7.0 |
9.5 |
||
Net income attributable to AAR and noncontrolling interest |
14.5 |
18.0 |
||
Income attributable to noncontrolling interest |
(0.1) |
(0.1) |
||
Net income attributable to AAR |
$14.4 |
$17.9 |
||
Earnings per share – Basic |
$0.36 |
$0.45 |
||
Earnings per share – Diluted |
$0.36 |
$0.45 |
||
Share Data: |
||||
Average shares outstanding – Basic |
38.8 |
38.6 |
||
Average shares outstanding – Diluted |
39.2 |
39.0 |
||
AAR CORP. and Subsidiaries |
||
Consolidated Balance Sheet Highlights (In millions except per share data) |
August 31, 2014 |
May 31, 2014 |
Cash and cash equivalents |
$ 81.8 |
$ 89.2 |
Current assets |
1,155.9 |
1,116.9 |
Current liabilities (excluding debt accounts) |
337.8 |
332.4 |
Net property, plant and equipment |
287.9 |
314.9 |
Total assets |
2,205.4 |
2,199.5 |
Total debt |
627.1 |
634.0 |
Stockholders' equity |
1,004.5 |
1,000.7 |
Book value per share |
$ 25.18 |
$ 25.27 |
Shares outstanding |
39.9 |
39.6 |
Sales By Business Segment (In millions - unaudited) |
Three Months Ended August 31, |
|
2014 |
2013 |
|
Aviation Services |
$ 363.7 |
$ 393.7 |
Technology Products |
105.5 |
120.8 |
$ 469.2 |
$ 514.5 |
|
Gross Profit by Business Segment (In millions- unaudited) |
Three Months Ended August 31, |
|
2014 |
2013 |
|
Aviation Services |
$59.1 |
$65.5 |
Technology Products |
16.2 |
19.2 |
$75.3 |
$84.7 |
|
Diluted Earnings Per Share Calculation (In millions except per share data- unaudited) |
Three Months Ended August 31, |
|
2014 |
2013 |
|
Net income attributable to AAR |
$14.4 |
$17.9 |
Add: After-tax interest on convertible debt |
- |
- |
Less: Income attributable to participating shares |
(0.3) |
(0.4) |
Net income for diluted EPS calculation |
$14.1 |
$17.5 |
Diluted shares outstanding |
39.2 |
39.0 |
Diluted earnings per share |
$ 0.36 |
$ 0.45 |
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 August 31, 2014 to evaluate its financial results and trends, and believes it is useful for the reader of this press release. |
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Free Cash Flow (In millions - unaudited) |
Three Months Ended August 31, |
|||||
2014 |
||||||
Net cash provided from operating activities |
$ 15.0 |
|||||
Less: Property, plant and equipment expenditures |
(9.0) |
|||||
Free Cash Flow |
$ 6.0 |
|||||
Net Debt (In millions - unaudited) |
August 31, |
August 31, |
||||
2014 |
2013 |
|||||
Total debt |
$627.1 |
$702.2 |
||||
Less: Cash and cash equivalents |
81.8 |
90.9 |
||||
Net debt |
$545.3 |
$611.3 |
SOURCE
John Fortson, Vice President, Chief Financial Officer, | (630) 227-2075 | john.fortson@aarcorp.com