AOG Investors OPS Portal PAARTSSM Store
X Facebook Instagram Linkedin YouTube Threads

Press release

March 15, 2011

AAR Reports Third Quarter Fiscal Year 2011 Results

  • Third quarter sales of $451 million, up 50% year-over-year
  • Diluted earnings per share from continuing operations of $0.45, up 61% year-over-year
  • Commercial market sales growth of 44%
  • Third quarter cash flow from operations of $30.1 million

WOOD DALE, Ill., /PRNewswire via COMTEX/ --AAR (NYSE: AIR) today reported third quarter fiscal year 2011 consolidated sales of $451.0 million and income from continuing operations of $18.3 million, or $0.45 per diluted share. For the third quarter of the prior fiscal year, the Company reported sales of $300.8 million and income from continuing operations of $10.5 million, or $0.28 per diluted share. Prior year third quarter results included a $0.10 per diluted share unfavorable impact from a customer bankruptcy.

Sales to commercial customers increased 44% compared with the third quarter of fiscal year 2010, and included 53% sales growth in the Maintenance, Repair and Overhaul segment and 39% sales growth in the Aviation Supply Chain segment. The robust sales growth to the commercial market was due to improved conditions for the airlines and the Company's success in winning new business.

Sales to government and defense customers increased 56% year-over-year due to sales at the Company's Airlift business, which was acquired in the fourth quarter of the last fiscal year, and growth in program business at the Company's defense logistics business.

"We are pleased to report another quarter of solid sales and earnings growth. We had exceptional organic sales growth to commercial customers, far outpacing the overall growth rate in the airline market. We are executing on our strategy of becoming more integral to our customers' operations by providing more technical expertise and engineering content. This strategy has enabled us to deepen our current customer relationships and to capture new customers," said David P. Storch, Chairman and Chief Executive Officer of AAR CORP.

Commenting on performance in the government and defense markets, Storch continued, "Our defense logistics business experienced solid growth during the period and we again had a meaningful contribution from AAR Airlift. Our mobility products business continues to exhibit strength, albeit at levels below the prior year. Even as defense budgets are under pressure, we currently believe our businesses are well positioned in areas that will continue to receive strong funding support."

The consolidated gross profit margin in the third quarter was 17.2%, and selling, general and administrative expenses as a percentage of sales were 9.4%. SG&A expenses included $2.2 million of unusual expenses, principally related to the relocation of AAR Airlift. The Company expects to incur approximately $2.0 million of additional AAR Airlift relocation expenses in the fourth quarter as the move is finalized. The consolidated operating margin was 7.8% of sales, and was unfavorably impacted by 50 basis points as a result of the above expenses.

Net interest expense increased $1.2 million year-over-year, principally due to increased borrowings to support AAR Airlift, and to a lesser extent, to non-cash interest expense on the Company's outstanding convertible notes. The Company generated $30.1 million in cash flow from operations during the third quarter. Capital expenditures were $22.4 million, of which $17 million was to support recent contract awards at AAR Airlift.

As previously announced, during the third quarter, the Company concluded that it will exit its Amsterdam component repair facility, and is evaluating a number of strategic alternatives. Operating results for this unit are now being reported as a discontinued operation.

AAR is a leading provider of products and value-added services to the worldwide aerospace and government and defense industries. With facilities and sales locations around the world, AAR uses its close-to-the-customer business model to serve aviation and government and defense customers through four operating segments: Aviation Supply Chain; Government and Defense Services; Maintenance, Repair and Overhaul; and Structures and Systems. More information can be found at www.aarcorp.com.

AAR will hold its quarterly conference call at 7:30 a.m. CDT on March 16, 2011. The conference call can be accessed by calling 866-804-3547 from inside the U.S. or 703-639-1328 from outside the U.S. A replay of the 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 1517813) from 11:30 a.m. CDT on March 16, 2011 until 11:59 p.m. CDT on March 23, 2011.

Named One of the Most Trustworthy Companies by Forbes.

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 May 31, 2010 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 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 Operations

(In thousands except per share data - unaudited)

Three Months Ended

February 28,

 

Nine Months Ended

February 28,

 
 

2011

2010

 

2011

2010

 
         

Sales

$451,031

 

$300,845

 

$1,295,946

 

$951,607

 

Cost and expenses:

               

Cost of sales

373,258

 

242,629

 

1,074,494

 

778,002

 

Selling, general and administrative

42,527

 

34,091

 

124,643

 

105,121

 
                 

Earnings from aircraft joint ventures

56

 

56

 

2,613

 

150

 
                 

Operating income

35,302

 

24,181

 

99,422

 

68,634

 
                 

Gain on extinguishment of debt

---

 

---

 

97

 

913

 
                 

Interest expense

7,595

 

6,523

 

22,607

 

19,541

 

Interest income

62

 

146

 

298

 

752

 

Loss on investment

---

 

1,876

 

---

 

1,876

 
                 

Income from continuing operations before income taxes

27,769

 

15,928

 

77,210

 

48,882

 

Income tax expense

9,465

 

5,381

 

26,769

 

15,360

 
                 

Income from continuing operations

18,304

 

10,547

 

50,441

 

33,522

 

Discontinued operations, net of tax

(386)

 

(762)

 

(2,035)

 

(1,386)

 
                 

Net income attributable to AAR and noncontrolling interest

17,918

 

9,785

 

48,406

 

32,136

 

Loss attributable to noncontrolling interest

---

 

127

 

---

 

1,292

 

Net income attributable to AAR

$17,918

 

$9,912

 

$48,406

 

$33,428

 
             

 
                 

Earnings per share - Basic

               

Earnings from continuing operations

$ 0.48

 

$ 0.28

 

$ 1.32

 

$ 0.91

 

Loss from discontinued operations

(0.01)

 

(0.02)

 

(0.06)

 

(0.03)

 

Earnings per share - Basic

$ 0.47

 

$ 0.26

 

$ 1.26

 

$ 0.88

 

Earnings per share - Diluted

               

Earnings from continuing operations

$ 0.45

 

$ 0.28

 

$ 1.26

 

$ 0.90

 

Loss from discontinued operations

(0.01)

 

(0.02)

 

(0.05)

 

(0.03)

 

Earnings per share - Diluted

$ 0.44

 

$ 0.26

 

$ 1.21

 

$ 0.87

 
                 
                 

Average shares outstanding - Basic

38,361

 

38,217

 

38,341

 

38,154

 

Average shares outstanding - Diluted

43,713

 

43,108

 

43,458

 

42,921

 
                   
         

Consolidated Balance Sheet Highlights

(In thousands except per share data)

February 28,

2011

 

May 31,

2010

 
 

(Unaudited)

     

Cash and cash equivalents

$ 54,716

 

$ 79,370

 

Current assets

927,839

 

863,429

 

Current liabilities (excluding debt accounts)

303,190

 

224,717

 

Net property, plant and equipment

318,857

 

224,866

 

Total assets

1,655,991

 

1,501,042

 

Total recourse debt

429,485

 

419,732

 

Total non-recourse obligations

16,713

 

17,292

 

Stockholders' equity

804,596

 

746,350

 

Book value per share

$ 20.25

 

$ 18.90

 

Shares outstanding

39,739

 

39,484

 
         
       
       

Sales By Business Segment

(In thousands - unaudited)

Three Months Ended

February 28,

Nine Months Ended

February 28,

 
 

2011

2010

2011

2010

 

Aviation Supply Chain

$ 112,962

$ 81,129

$ 324,552

$ 274,480

 

Government and Defense Services

147,329

38,362

411,065

114,434

 

Maintenance, Repair & Overhaul

108,037

70,657

283,897

221,679

 

Structures and Systems

82,703

110,697

276,432

341,014

 
 

$ 451,031

$ 300,845

$ 1,295,946

$ 951,607

 
           
         
       

Gross Profit By Business Segment

(In thousands - unaudited)

Three Months Ended

February 28,

Nine Months Ended

February 28,

 
 

2011

2010

2011

2010

 

Aviation Supply Chain

$ 19,778

$ 14,866

$ 58,358

$ 50,187

 

Government and Defense Services

25,665

9,205

72,816

25,360

 

Maintenance, Repair & Overhaul

17,137

8,483

39,534

27,599

 

Structures and Systems

15,193

25,662

50,744

70,459

 
 

$ 77,773

$ 58,216

$ 221,452

$ 173,605

 
           
         
         

Diluted Earnings Per Share Calculation

(In thousands except per share data - unaudited)

Three Months Ended

February 28,

 

Nine Months Ended

February 28,

 
 

2011

2010

 

2011

2010

 
         

Income from continuing operations attributable to AAR

$18,304

 

$10,674

 

$ 50,441

 

$ 34,814

 

Add: After-tax interest on convertible debt

1,415

 

1,328

 

4,178

 

3,924

 

Net income for diluted EPS calculation

$ 19,719

 

$ 12,002

 

$ 54,619

 

$ 38,738

 
                 

Diluted shares outstanding

43,713

 

43,108

 

43,458

 

42,921

 

Diluted earnings per share from continuing operations

$ 0.45

 

$ 0.28

 

$ 1.26

 

$ 0.90

 
   
                   

Related news

See all SeeAll

Press release

February 21, 2024

Airinmar signs extension of aircraft warranty and value engineering services with Philippine Airlines

BERKSHIRE, England — AAR (NYSE: AIR) subsidiary Airinmar, a leading independent provider of component repair cycle management and aircraft warranty solutions, has signed a multi-year support services extension with Philippine Airlines (PAL).

Trax logo

Press release

February 20, 2024

Trax announces agreement to provide its eMRO and eMobility software and other cloud services to Archer Aviation

Miami – Trax, a leading global provider of paperless aviation maintenance and engineering software products, announced that it has entered into an agreement with leading electric aviation  company, Archer Aviation. Archer will leverage Trax’s web-based enterprise eMRO system and eMobility apps and Trax’s cloud hosting services to manage its planned electric air taxi operations.

AAR Doing It Right logo

Press release

February 14, 2024

AAR Prices Upsized Offering of Senior Notes to Finance Triumph Product Support Acquisition

Wood Dale, Illinois – AAR CORP. (“AAR” or the “Company”) (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs and OEMs, announced today that AAR Escrow Issuer, LLC, a wholly owned, unrestricted subsidiary of the Company (the “Escrow Issuer”), has successfully priced its offering of $550 million aggregate principal amount of 6.750% senior notes due 2029 (the “Notes”).  The offering was upsized to $550 million from the original offering size of $500 million in aggregate principal amount of Notes. The Notes will bear interest at a fixed annual rate of 6.750% and will mature on March 15, 2029. The offering is expected to close on March 1, 2024, subject to customary closing conditions.

AOG Investors OPS Portal PAARTSSM Store
logo

Our products

Airframe parts Engine solutions Distribution Mobility Systems AOG Contact nowContact
logo

Our services

Repair & Engineering

Airframe MRO Landing Gear Overhaul Component Repair Wheels and Brakes Engineering Services

Integrated Solutions

Flight-hour support Consumables and Expendables Airinmar® Trax(SM)

Additional services

Sourcing, purchasing, and remarketing ASTRO Government contract vehicles
logo

About

Our CompanyOur Company

Locations Certifications Digital innovation

Doing It Right®Doing It Right®

Environmental, social, and governance Ethics and compliance

LeadershipLeadership

logo

Careers

US job openings Amsterdam job openings Trois Rivières - Canada job openings United Kingdom job openings Windsor - Canada job openings
Employee experience Diversity, equity, and inclusion Military veterans EAGLE Pathway Program
logo

Newsroom

News Media resources
2023 Annual Report 2023 ESG Summary Report