AAR Reports First Quarter Results
WOOD DALE, Ill., /PRNewswire/ -- AAR (NYSE: AIR) today reported diluted earnings per share of $0.12 and net income of $3.2 million for the first quarter of Fiscal 2001 ended August 31, 2000. Sales for the quarter, excluding pass through sales, were $224.9 million. Total sales including pass through sales were $241.8 million. Although the Company continued to experience strength in its Airframe and Accessories businesses, first quarter sales declined over the prior year primarily as a result of lower revenue in the Company's aircraft sales business.
Net income and earnings per share were down from the prior year as a result of a reduction in gross profit margins, principally at the Company's engine parts, landing gear repair and general aviation parts distribution businesses. This decline was primarily attributable to pricing pressure on older technology engine parts, reduced demand from certain inventory management programs, deferred landing gear removals due to unusually heavy utilization during the peak summer months and lower demand for general aviation parts driven by higher fuel prices.
"We are working to resolve issues with a main program customer," said David P. Storch, AAR President and CEO. "As we reduce our investment in older technology engine parts consistent with reduced demand, we will be increasing our investment in aircraft, engines and newer generation engine parts. During the quarter we acquired three aircraft to expand our leasing activity. We are also investing in higher margin repair capabilities and are actively pursuing acquisitions of complementary businesses," Storch continued. "We expect these actions to result in sequential earnings improvement."
During the quarter, the Company entered into the following significant new contracts having an aggregate annual sales value in excess of $15 million:
A supply chain management services agreement by Northrop Grumman in support of their US Air Force contract for maintenance, training and upgrades for the E-8 Joint Surveillance Target Attack Radar System aircraft (JSTARS).
A multi-year contract to provide landing gear support to United Airlines in support of its fleet of 70 Boeing 777 commercial aircraft.
Multi-year landing gear support contracts with SkyWest and Comair in support of their combined fleet of over 200 Canadian Regional Jets.
A five-year support agreement with KLMuk Engineering for rotable component repair and inventory management in support of its fleet of BAe146 regional aircraft.
An agreement with Boeing Corp. to provide warranty management, rotable maintenance, inventory management and logistics handling in support of the new B717-200 aircraft.
AAR Corp. (NYSE: AIR) is the preeminent provider of products and value-added services to the worldwide aerospace/aviation industry. Products and services include proprietary inventory management and logistic support services, encompassing supply, repair and manufacture of spare parts and systems. Headquartered in Wood Dale, Illinois, AAR serves commercial and government aircraft fleet operators and independent service customers throughout the world. Further 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, depending on a variety of factors, including: implementation of information technology systems, integration of acquisitions, marketplace competition, economic and aviation/aerospace market stability and Company profitability. 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.
AAR CORP. and Subsidiaries
Comparative Statement of Earnings Three Months Ended (In thousands except per share data) August 31, 2000 1999 (Unaudited) Sales $ 224,888 $ 245,909 Pass through sales 16,882 20,774 Total sales 241,770 266,683 Gross profit 34,415 44,190 SG&A 24,544 23,683 Operating income 9,871 20,507 Interest expense 5,988 5,809 Interest income 506 688 Pretax income 4,389 15,386 Net income 3,159 10,831 Earnings Per Share-Basic $ 0.12 $0.40 Earnings Per Share-Diluted $ 0.12 $0.39 Average shares outstanding-Basic 26,859 27,394 Average shares outstanding-Diluted 26,962 27,827 Balance Sheet Highlights August 31, May 31, (In thousands except per share data) 2000 2000 (Unaudited) (Derived from audited financial statements) Current assets $ 510,278 $ 511,267 Current liabilities 168,282 163,816 Working capital 341,996 347,451 Total assets 747,543 740,998 Long-term debt 180,367 180,447 Stockholders' equity 339,253 339,515 Book value per share $ 12.63 $ 12.64 Shares outstanding 26,856 26,865 Sales By Business Activity Three Months Ended (In thousands) August 31, 2000 1999 Airframe and Accessories $104,209 $ 96,166 Aircraft and Engines 97,673 119,854 Manufacturing 23,006 29,889 $224,888 $245,909 Pass Through Sales 16,882 20,774 $241,770 $266,683
SOURCE AAR CORP.
CONTACT: Timothy J. Romenesko, Vice President, Chief Financial Officer of AAR Corporation, 630-227-2090, or e-mail, email@example.com
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