AAR Reports First Quarter Fiscal Year 2004 Results
WOOD DALE, Ill., /PRNewswire-FirstCall via COMTEX/ -- AAR (NYSE: AIR) today reported net sales of $152.1 million and a net loss of $2.0 million or $.06 per share for the first quarter ended August 31, 2003. During the first quarter, the Company generated $9.0 million of cash flow from operations primarily due to a reduction in inventory. For the first quarter of last fiscal year, the Company reported net sales of $151.2 million and a net loss of $4.9 million or $0.15 per share.
"The operating environment in our industry improved as the first quarter progressed and sales in August were the highest monthly sales since August 2001. Additionally, each of our segments reported a year over year increase in profitability as we benefited from improved gross margins and lower costs," said AAR President and CEO David P. Storch. "We experienced strength in our parts trading, airframe maintenance and Mobility Systems businesses and we saw significant improvement in profitability at our industrial turbine business and our distribution business where we achieved higher sales to our airline customers. We continued to experience softness in our component repair operations where we took additional actions to lower our operating costs. These actions contributed to severance expense in the quarter of $0.6 million pre-tax, which will result in lower ongoing operating expenses beginning in our second quarter. Although we experienced lower sales in our cargo systems business, our backlog has increased and we expect improved results for the remainder of the fiscal year at this business."
Storch added, "We are starting the second quarter with a lower cost structure, enhanced liquidity and an improved balance sheet. We have increased our backlog by 20% since the beginning of the fiscal year and in addition have won several significant new orders which we expect to announce shortly. We anticipate that our operating performance will continue to improve as the worldwide economy and the airline industry recover and we continue to focus on our customers' needs for low-cost, value-added solutions."
AAR (NYSE: AIR) is the leading provider of aftermarket support to the worldwide aviation/aerospace industry. Products and services include customized inventory management and logistics programs, 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 (CDT) on September 17, 2003. The conference call can be accessed via dial-in (1-312-461-1932; conference code 721319). A replay of the call will be available (1-719-457-0820; conference code 721319) until 12 AM on September 23, 2003.
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 7, entitled "Factors Which May Affect Future Results", included in the Company's May 31, 2003 Form 10-K. 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 Operations Three Months Ended (In thousands except per share data) August 31, 2003 2002 (Unaudited) Sales $152,114 $151,165 Cost of sales 130,998 133,400 Gross profit 21,116 17,765 SG&A 19,648 20,781 Operating income (loss) 1,468 (3,016) Interest expense 4,913 4,867 Interest income 375 376 Pretax loss (3,070) (7,507) Benefit for income taxes (1,074) (2,628) Net loss (1,996) (4,879) Loss per share-Basic ($0.06) ($0.15) Loss per share-Diluted ($0.06) ($0.15) Average shares outstanding-Basic 31,850 31,866 Average shares outstanding-Diluted 31,850 31,866 Balance Sheet Highlights August 31, May 31, (In thousands except per share data) 2003 2003 (Unaudited) (Derived from audited financial statements) Cash and cash equivalents $ 31,929 $ 29,154 Current assets 387,141 396,412 Current maturities of recourse LTD 24,454 24,000 Current maturities of non-recourse LTD* 32,322 32,527 Current liabilities (excl current maturities) 131,085 147,048 Working capital 199,280 192,837 Net property, plant and equipment 91,322 94,029 Total assets 676,345 686,621 Bank lines & notes payable 21,614 35,729 Recourse long-term debt 174,735 164,658 Stockholders' equity 290,455 294,988 Book value per share $ 9.12 $ 9.26 Shares outstanding 31,850 31,850 * On June 20, 2002 the Company purchased the equity interest in an aircraft joint venture from its partner for nominal consideration as disclosed in the Company's May 31, 2003 Form 10-K. As a result, the book value of the aircraft and the associated non-recourse debt were recorded on the Company's consolidated balance sheet. The debt is currently being serviced by the underlying aircraft lease. Sales By Business Segment Three Months Ended (In thousands) August 31, 2003 2002 (Unaudited) Inventory & Logistics Services $61,737 $61,299 Maintenance, Repair & Overhaul 53,425 46,926 Manufacturing 25,170 27,987 Aircraft & Engine Sales & Leasing 11,782 14,953 $152,114 $151,165
SOURCE AAR CORP.
Contact: Timothy J. Romenesko, Vice President, Chief Financial Officer of AAR, +1-630-227-2090, firstname.lastname@example.org
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