AAR Provides Update on Strategic Positioning and Reports Fourth Quarter and Fiscal Year 2015 Results
Update on Strategic Positioning
Upon completing the Company's annual strategic review process and assessing its markets, AAR entered fiscal 2015 with a mission to narrow its focus and excel as an independent services provider to the global commercial aviation, government and defense markets. AAR is executing this strategy by selling manufacturing businesses and taking actions to strengthen the long-term growth potential of its industry-leading services businesses. When complete, this transformation will simplify the Company's operations, significantly strengthen its balance sheet, and improve its return to shareholders.
The financial highlights associated with the strategic positioning to date are as follows:
- Received gross proceeds of
$710.9 million and recorded a pre-tax gain of$198.6 million related to the sale of theTelair Cargo Group , with potential for$35.0 million of additional proceeds byDecember 31, 2015 subject to certain conditions. - Reclassified our Precision Systems Manufacturing operations as discontinued operations and recorded pre-tax goodwill and other impairment charges of
$57.5 million . - Recorded approximately
$74.5 million of pre-tax charges including costs associated with streamlining our operations and converting underperforming or excess assets to cash. Approximately$62.0 million are attributable to the Aviation Services segment,$8.0 million to Expeditionary services and$4.5 million to corporate restructuring. - Repurchased 4.7 million shares returning approximately
$150.0 million of value to AAR shareholders. - Redeemed
$325.0 million of 7.25% notes reducing annual interest expense by$24.0 million and incurred a pre-tax make whole premium of$45.6 million . Additionally, terminated early a swap and cap arrangement and recorded a$2.0 million charge, saving approximately$1.1 million in interest per year.
"It was a very pivotal year for AAR," said
Fourth Quarter FY15 Results
The results in the fourth quarter Fiscal Year 2015 were impacted by costs incurred to streamline operations and convert underperforming assets to cash as reported above. The Company's fourth quarter consolidated sales were
The Company reported a loss from continuing operations of
Sales in the Aviation Services segment increased 17.1% to
During the fourth quarter and in June and July of calendar 2015, the Company announced the following new contracts:
- Support contract with
Bell Helicopter Textron Inc. to provide warehouse and logistics services in support of upgrading T64 engines. - Component repair and inventory management contract with the
UK Ministry of Defence to become the exclusive manager and single source of all repairs, spare parts and unit exchanges for its fleet of BAe146 aircraft. - A five-year contract with the Afghan Air Force to sustain a fleet of C-130H aircraft.
- An MOU for establishing a joint venture with South African Airways Technical to assist the airline with improving efficiencies and driving sales growth for their third party maintenance activity.
Fourth quarter sales to commercial customers represented 65% of consolidated sales as compared to 57% of consolidated sales in the same period last year, with government and defense customers representing the balance. In Aviation Services, sales to commercial customers represented 74% of segment sales.
Net interest expense in the fourth quarter was
Fiscal Year 2015 Results
Full year Fiscal 2015 loss from continuing operations was
Full Fiscal Year 2015 consolidated sales were
Sales to commercial customers represented 63% of consolidated sales as compared to 55% of consolidated sales in the same period last year, with government and defense customers representing the balance. In Aviation Services, sales to commercial customers represented 75% of segment sales.
Financial Position
AAR's financial position improved over the course of Fiscal Year 2015. The Company started with a total debt to total capital ratio of 38.8% on
Looking Forward
AAR recently announced the closure of its MRO facility in
Storch concluded, "We have taken numerous actions during Fiscal Year 2015 to position the Company for future growth. We are focused on growing our industry-leading Aviation and Expeditionary Service businesses as we are confident in our prospects to provide customers with a 'best-in-class' value proposition. Our balance sheet is very strong and the Company is more nimble, which will allow us to invest, expand our leadership positions, and take advantage of opportunities to grow the business."
Conference Call Information
AAR will hold its quarterly conference call at
About AAR
AAR is a global aerospace and defense company that employs more than 5,000 people in over 20 countries. Based in
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 May 31, |
Twelve Months Ended May 31, |
|||||||
2015 |
2014 |
2015 |
2014 |
||||||
Sales |
$415.8 |
$ 420.6 |
$1,594.3 |
$ 1,709.1 |
|||||
Cost and expenses: |
|||||||||
Cost of sales |
436.2 |
347.1 |
1,435.0 |
1,420.2 |
|||||
Selling, general and administrative |
51.2 |
46.1 |
171.4 |
166.3 |
|||||
Earnings (Loss) from aircraft joint ventures |
(1.6) |
0.6 |
0.2 |
3.0 |
|||||
Operating income (Loss) |
(73.2) |
28.0 |
(11.9) |
125.6 |
|||||
Loss on extinguishment of debt |
(44.9) |
- |
(44.9) |
- |
|||||
Interest expense |
(7.2) |
(6.4) |
(26.5) |
(28.3) |
|||||
Interest income |
0.1 |
0.6 |
0.3 |
1.5 |
|||||
Income (Loss) from continuing operations before income tax expense |
(125.2) |
22.2 |
(83.0) |
98.8 |
|||||
Income tax expense |
(43.1) |
(7.3) |
(28.5) |
31.6 |
|||||
Income (Loss) from continuing operations attributable to AAR |
(82.1) |
14.9 |
(54.5) |
67.2 |
|||||
Income from discontinued operations attributable to AAR |
97.2 |
2.2 |
64.7 |
5.7 |
|||||
Net income attributable to AAR |
$15.1 |
$ 17.1 |
$10.2 |
$ 72.9 |
|||||
Earnings (Loss) per share – basic: |
|||||||||
Continuing operations |
($2.12) |
($0.38) |
($1.40) |
$1.70 |
|||||
Discontinued operations |
2.50 |
0.06 |
1.66 |
0.15 |
|||||
Earnings per share – Basic |
$0.38 |
$0.44 |
$0.26 |
$1.85 |
|||||
Earnings (Loss) per share – diluted: |
|||||||||
Continuing operations |
($2.12) |
$0.37 |
($1.40) |
$1.68 |
|||||
Discontinued operations |
2.48 |
0.06 |
1.64 |
0.15 |
|||||
Earnings per share – Diluted |
$0.36 |
$0.43 |
$0.24 |
$1.83 |
|||||
Share Data: |
|||||||||
Average shares outstanding – Basic |
38.8 |
38.6 |
39.1 |
38.6 |
|||||
Average shares outstanding – Diluted |
39.2 |
39.1 |
39.4 |
39.1 |
|||||
AAR CORP. and Subsidiaries |
||||||||
Consolidated Balance Sheet Highlights (In millions except per share data) |
May 31, 2015 |
May 31, 2014 |
||||||
Cash and cash equivalents |
$54.7 |
$ 89.2 |
||||||
Current assets |
954.1 |
1,111.4 |
||||||
Current liabilities (excluding debt accounts) |
343.0 |
332.4 |
||||||
Net property, plant and equipment |
214.8 |
314.9 |
||||||
Total assets |
1,515.0 |
2,194.0 |
||||||
Total debt |
154.0 |
634.0 |
||||||
Stockholders' equity |
845.1 |
1,000.7 |
||||||
Book value per share |
$23.87 |
$25.27 |
||||||
Shares outstanding |
35.4 |
39.6 |
||||||
Sales By Business Segment (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||||||
2015 |
2014 |
2015 |
2014 |
|||||
Aviation Services |
$ 360.2 |
$ 307.7 |
$ 1,316.1 |
$ 1,231.2 |
||||
Expeditionary Services |
55.6 |
112.9 |
278.2 |
477.9 |
||||
$ 415.8 |
$ 420.6 |
$ 1,594.3 |
$ 1,709.1 |
|||||
Gross Profit by Business Segment (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||||||
2015 |
2014 |
2015 |
2014 |
|||||
Aviation Services |
($ 9.0) |
$ 47.0 |
$ 143.8 |
$ 172.5 |
||||
Expeditionary Services |
(11.4) |
26.5 |
15.5 |
116.4 |
||||
($ 20.4) |
$ 73.5 |
$ 159.3 |
$ 288.9 |
|||||
Diluted Earnings Per Share Calculation (In millions except per share data - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||||||
2015 |
2014 |
2015 |
2014 |
|||||
Net income (Loss) attributable to continuing operations |
($82.1) |
$14.9 |
($ 54.5) |
$ 67.2 |
||||
Less: Income attributable to participating shares |
(0.1) |
(0.3) |
(0.3) |
(1.5) |
||||
Income (Loss) from continuing operations attributable to common shareholders |
($82.2) |
$14.6 |
($ 54.8) |
$65.7 |
||||
Income from discontinuing operations attributable to common shareholders |
97.2 |
2.2 |
64.7 |
5.7 |
||||
Net income for diluted EPS calculation |
$15.0 |
$16.8 |
$ 9.9 |
$ 71.4 |
||||
Diluted shares outstanding |
39.2 |
39.1 |
39.4 |
39.1 |
||||
Diluted earnings per share |
$0.36 |
$0.43 |
$0.24 |
$1.83 |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/aar-provides-update-on-strategic-positioning-and-reports-fourth-quarter-and-fiscal-year-2015-results-300112642.html
SOURCE
John Fortson, Vice President, Chief Financial Officer | (630) 227-2075. john.fortson@aarcorp.com