AAR to Sell Telair Cargo Group to TransDigm for $725 Million
February 23, 2015
AAR to Sell Telair Cargo Group to TransDigm for $725 Million
AAR to Discontinue Precision Systems Manufacturing
AAR to build on its leadership position in aviation services
WOOD DALE, Illinois, February 23, 2015 – AAR (NYSE: AIR) today announced it has agreed to sell its Telair Cargo Group to TransDigm for a purchase price of $725 million in cash, subject to adjustments. The Telair Cargo Group is comprised of Telair International, Telair U.S., and Nordisk Aviation Products. AAR will report its Telair Cargo Group as discontinued operations beginning in the third quarter of FY 2015 and the sale is expected to close in the fourth quarter ending May 31, 2015, subject to regulatory approval. When the sale closes, AAR expects to report a pre-tax gain of approximately $200 million after expenses and fees.
AAR further announced its intention to sell its unprofitable Precision Systems Manufacturing business and will report it as a discontinued operation and record an impairment charge of approximately $40 million in the third quarter of FY 2015.
"These transactions are an important strategic step positioning AAR as a pure-play, industry-leading global aviation services company and will allow us to focus our attention where we see the best opportunities for the Company," said David P. Storch, Chairman and Chief Executive Officer of AAR. "We also expect the sale will create value for our shareholders by crystalizing our valuation, improving AAR’s overall return profile, and reshaping our balance sheet while returning capital to shareholders."
As a result of these transactions, the Company will report its results in two new segments:
- Aviation Services, comprised of Aviation Supply Chain and Maintenance, Repair and Overhaul (MRO)
- Expeditionary Services, comprised of Airlift & Mobility
Storch continued, "We are very pleased with the double-digit organic growth rate we are experiencing in our new Aviation Services segment and excited by our prospects going forward. And while revenues and earnings in our new Expeditionary Services segment have decreased significantly from the prior year, we have confidence in our industry-leading positions and see substantial opportunities ahead."
The Company also announced today that its third-quarter results will be less than expected due to fewer flying positions in its Airlift operation, costs associated with this transaction, and bid costs for large government contracts.
Citi served as exclusive financial advisor and Winston & Strawn LLP as legal advisor to AAR CORP. on the sale of the Telair Cargo Group. They will also serve as advisors on the sale of Precision Systems Manufacturing.
AAR will hold a conference call at 9:30 a.m. CST on February 23, 2015. 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 1652972). The replay will be available from 14:00 p.m. CST on February 23, 2015, until 11:59 p.m. CST on March 3, 2015.
Contact: John Fortson, Vice President, Chief Financial Officer | (630) 227-2075 | firstname.lastname@example.org
AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR’s Aviation Services include Parts Supply; OEM Solutions; Integrated Solutions; and Maintenance, Repair and Overhaul (MRO) Services. AAR’s Expeditionary Services include Mobility Systems operations. Additional information can be found at www.aarcorp.com.
Media contact: Daniela Pietsch, Vice President Corporate Marketing & Communications, at email@example.com or +1 630-227-5100.
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, including, but not limited to,statements regarding the agreement to establish The Module Factory,AAR’s estimate that it will manage the teardown, repair, marketing and sales of spare parts of FTAI’s CFM56 engine pool totaling over 200 engines and growing, AAR’s ability to leverage its extensive USM capabilities to offer CFM56 serviceable engine material to the global commercial aviation aftermarket, that the partnership positions AAR well to service the growing demand for USM on a leading engine platform as customers increasingly prioritize more cost-efficient solutions, and the belief that serviceable engine products, combined with FTAI’s proprietary products and partnerships, completes its unique suite of CFM56 aftermarket offerings aimed at delivering the lowest cost per cycle solution to airline customers. Forward-looking statements may also be identified because they contain words such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘continue,’’ ‘‘could,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘likely,’’ ‘‘may,’’ ‘‘might,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘predict,’’ ‘‘project,’’ ‘‘seek,’’ ‘‘should,’’ ‘‘target,’’ ‘‘will,’’ ‘‘would,’’ or similar expressions and the negatives of those terms. 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.