AAR Announces Third Quarter Results
WOOD DALE, Ill., /PRNewswire-FirstCall via COMTEX/ -- AAR (NYSE: AIR) today reported a modest sequential improvement in its third quarter results. Increased sales to military customers and reduced operating and interest expenses were offset by lower demand for the Company's products and services in support of its airline customers due largely to a reduction in air traffic. The Company announced a net loss of $2.3 million or $0.08 per share in the third quarter of fiscal 2002, which ended February 28, 2002.
Net sales for the quarter were $143.5 million compared to $200.1 million in the third quarter of last year as the commercial airline industry continued to be effected by the aftermath of September 11 and a relatively weak economy. As the third quarter progressed the Company saw buying activity increase from its airline customers as they began to replenish their inventories. The Company expects its results to continue to improve as the airlines add capacity and as the U.S. economy rebounds.
While consolidated sales were relatively flat compared with second quarter sales of $144.9 million, the Company's Inventory and Logistic Services segment experienced a sales increase of 6%, largely due to an increase in logistics and spares support for the U.S. Military and its contractors. In the Maintenance, Repair and Overhaul segment, sales were 9% below the second quarter principally due to a decline in maintenance demand resulting from reduced air traffic. Sales in the Manufacturing segment were 6% higher than the second quarter due to increased sales of products supporting U.S. Military tactical deployment requirements. Aircraft and Engine Sales and Leasing sales declined 16% due to the industry-wide lack of capital asset investment activity.
"The Company continues to take aggressive steps to reduce costs and maintain its solid financial position. We have reduced annual operating expenses by nearly $25 million and generated more than $10 million of cash from operations since September 1. In addition, we have lowered annual interest expense by more than $3.5 million," said AAR President and CEO David P. Storch. "In the month of February, the Company strengthened its capital structure with a common stock offering which raised $34.5 million. We believe the cash raised will provide us the financial flexibility we need to execute our business strategy."
"As the airline industry begins to recover from its current levels, we expect to see increased outsourcing opportunities for our products and services which have demonstrated value-added benefits to our airline customers," Storch continued. "Additionally, we are expecting to capitalize on trading opportunities generated by the market imbalances. We are expanding our presence as the logistics provider of choice for the U.S. Armed Forces and its major contractors and we expect to see growth in our business supporting the U.S. Military's mobilization needs."
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.
AAR will hold its quarterly conference call at 10:30 AM (CST) on Wednesday, March 20, 2002. The conference call can be accessed via dial-in (1-719-457-2665; conference code 557107). A replay of the call will be available (1-719-457-0820; conference code 557107) until 12 AM on Tuesday, March 26, 2002.
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: the impact of the events of September 11, 2001 on the economy, the aviation/aerospace industry and the Company; general economic conditions; ability to acquire inventory at favorable prices; 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. 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 publicly release the result of any revisions that may be made to 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 Comparative Statement of Earnings Three Months Ended Nine Months Ended (In thousands except February 28, February 28, per share data) 2002 2001 2002 2001 (Unaudited) (Unaudited) Sales $143,457 $200,055 $491,339 $632,580 Pass through sales -- 16 -- 20,596 Total sales 143,457 200,071 491,339 653,176 Cost of sales* 123,946 164,325 422,180 547,678 Gross profit* 19,511 35,746 69,159 105,498 SG&A* 19,468 23,287 63,842 71,710 Impairment and other special charges -- -- 86,000 -- Operating income (loss) 43 12,459 (80,683) 33,788 Interest expense 4,505 5,433 15,475 17,139 Interest income 652 450 2,341 1,201 Pretax income (loss) (3,810) 7,476 (93,817) 17,850 Provision (benefit) for income taxes (1,520) 2,088 (37,529) 5,025 Net income (loss) (2,290) 5,388 (56,288) 12,825 Earnings (loss) per share-Basic ($ .08) $0.20 ($ 2.08) $0.48 Earnings (loss) per share-Diluted ($ .08) $0.20 ($ 2.08) $0.48 Average shares outstanding - Basic 27,409 26,941 27,075 26,904 Average shares outstanding - Diluted 27,409 27,064 27,075 26,999 *Before consideration of impairment and other special charges Balance Sheet Highlights February 28, May 31, (In thousands except per share data) 2002 2001 (Unaudited) (Derived from audited financial statements) Cash and cash equivalents $ 34,454 $ 13,809 Current assets 450,494 485,856 Net property, plant and equipment 103,760 108,907 Current liabilities 129,670 125,392 Working capital 320,824 360,464 Total assets 690,681 701,854 Short-term debt 20,890 13,652 Long-term debt 189,665 179,987 Stockholders' equity 314,832 340,212 Book value per share $ 9.88 $ 12.63 Shares outstanding 31,859 26,937 Sales By Business Segment Three Months Ended Nine Months Ended (In thousands) February 28, February 28, 2002 2001 2002 2001 (Unaudited) (Unaudited) Inventory & Logistic Services $59,104 $84,208 $196,172 $282,177 Maintenance, Repair & Overhaul 50,395 63,569 162,233 187,632 Manufacturing 26,944 27,301 74,381 73,762 Aircraft & Engine Sales & Leasing 7,014 24,977 58,553 89,009 $143,457 $200,055 $491,339 $632,580 Pass Through Sales -- 16 -- 20,596 $143,457 $200,071 $491,339 $653,176
SOURCE AAR CORP.
Timothy J. Romenesko,
Vice President, Chief Financial Officer of AAR,
Copyright (C) 2002 PR Newswire. All rights reserved.
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