WOOD DALE, Ill., March 22, 2016 /PRNewswire/ -- AAR CORP. (NYSE:
AIR) today reported third quarter fiscal year 2016 consolidated
sales of $402.8 million and income
from continuing operations of $10.7
million, or $0.31 per diluted
share. Third quarter results from continuing operations
include an approximate $1.6 million,
or $0.05 per diluted share, reduction
in income tax expense. For the third quarter of the prior
fiscal year, the Company reported sales of $380.1 million and income from continuing
operations of $1.9 million, or
$0.05 per diluted share.
"Our Aviation Services segment delivered strong results once
again as sales in the third quarter grew nearly 10% from last year
to $349.2 million, contributing to
improved margins. Demand for our commercial and military
supply chain solutions remains favorable, and utilization across
our airframe maintenance facility network was high in the period,"
said David P. Storch, Chairman,
President, and Chief Executive Officer of AAR CORP. "In
addition, I am very pleased that, subsequent to quarter end, the US
Naval Air Systems Command awarded AAR a $105
million firm-fixed-price contract for the procurement of
contractor logistics support, including commercial depot support
and site support for the C-40A aircraft. Work is expected to
commence in 60 days and be completed in March 2021."
Storch continued, "In Expeditionary Services, sales declined
13.1% year-over-year to $53.6 million
due to lower mobility product volumes partially offset by revenue
growth at airlift. While revenue on the Falkland Islands search and rescue program is
on track to start in the fourth quarter, our expectations for the
entire segment are tempered in the near-term due to weak demand and
pricing pressures."
In the Aviation Services segment, gross profit increased
$7.9 million and margins increased to
16.8%, primarily due to increased sales. In the Expeditionary
Services segment, margins were negative due to general
softness in the markets this segment serves.
Third quarter sales to commercial customers represented 60.6% of
consolidated sales, compared to 64.6% of consolidated sales in the
third quarter of last year, and sales to government and defense
customers represented 39.4% of consolidated sales compared to 35.4%
in the prior year's quarter.
Selling, general and administrative expenses as a percentage of
sales were 10.6% for the third quarter, compared to 11.0% last
year. Net interest expense from continuing operations for the
quarter was $1.6 million compared to
$6.4 million last year as net debt
declined to $145.3 million from
$576.3 million last year.
During the third quarter, the Company paid cash dividends of
$2.6 million, or $0.075 per share, and repurchased approximately
312,000 shares for $7.3 million, or
$23.44 per share. Average
diluted share count for the quarter was 34.4 million compared to
39.2 million in the third quarter last year.
Storch concluded, "We will continue to assess opportunities to
deploy capital, including investments in our current businesses,
M&A opportunities, and returning capital to shareholders."
Loss from discontinued operations in the third quarter was
$5.9 million, which includes
additional income tax expense of $5.5
million related to the gain on the sale of the Company's
Telair Cargo Group in fiscal year 2015. Inclusive of
discontinued operations, the Company reported total net income in
the third quarter of $4.8 million, or
$0.14 per diluted share, compared to
a total net loss of $34.5 million, or
$0.89 per diluted share, in the prior
year period.
Conference Call
Information
AAR will hold its quarterly conference call at 3:45 p.m. CDT on March 22,
2016. 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 1623126). The replay will be
available from 8:15 p.m. CDT on
March 22, 2016, until 11:59 p.m. CDT on March
29, 2016.
About AAR
AAR is a global aftermarket solutions company that employs more
than 4,500 people in over 20 countries. Based in Wood Dale, Illinois, AAR supports commercial
aviation and government customers through two operating segments:
Aviation Services and Expeditionary Services. AAR's Aviation
Services include inventory management; parts supply; OEM parts
distribution; aircraft maintenance, repair and overhaul; and
component repair. AAR's Expeditionary Services include airlift
operations; mobility systems; and command and control centers in
support of military and humanitarian missions. Additional
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,
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, 2015. 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 Income
(In millions
except per share data - unaudited)
|
Three Months
Ended
February
29/28,
|
|
Nine Months
Ended
February
29/28,
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
Sales
|
$402.8
|
|
$ 380.1
|
|
$1,204.4
|
|
$ 1,178.5
|
Cost and
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
344.5
|
|
330.0
|
|
1,031.7
|
|
998.8
|
Selling, general and
administrative
|
42.6
|
|
41.7
|
|
124.5
|
|
120.3
|
|
|
|
|
|
|
|
|
Earnings (Loss)
from aircraft joint ventures
|
-
|
|
0.6
|
|
(0.4)
|
|
1.8
|
|
|
|
|
|
|
|
|
Operating
income
|
15.7
|
|
9.0
|
|
47.8
|
|
61.2
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
-
|
|
-
|
|
(0.4)
|
|
-
|
Interest
expense
|
(1.7)
|
|
(6.4)
|
|
(5.2)
|
|
(19.4)
|
Interest
income
|
0.1
|
|
-
|
|
0.2
|
|
0.2
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income tax expense
|
14.1
|
|
2.6
|
|
42.4
|
|
42.0
|
Income tax
expense
|
3.4
|
|
0.7
|
|
13.1
|
|
14.4
|
Income from
continuing operations attributable to AAR
|
10.7
|
|
1.9
|
|
29.3
|
|
27.6
|
Income (Loss) from
discontinued operations attributable to AAR
|
(5.9)
|
|
(36.4)
|
|
6.4
|
|
(32.5)
|
Net income (loss)
attributable to AAR
|
$4.8
|
|
($34.5)
|
|
$35.7
|
|
($4.9)
|
|
|
|
|
|
|
|
|
Earnings (Loss)
per share – basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$0.31
|
|
$0.05
|
|
$0.84
|
|
$0.70
|
Discontinued operations
|
(0.17)
|
|
(0.94)
|
|
0.19
|
|
(0.84)
|
Earnings per share –
basic
|
$0.14
|
|
($0.89)
|
|
$1.03
|
|
($0.14)
|
|
|
|
|
|
|
|
|
Earnings (Loss)
per share – diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$0.31
|
|
$0.05
|
|
$0.84
|
|
$0.69
|
Discontinued
operations
|
(0.17)
|
|
(0.94)
|
|
0.19
|
|
(0.84)
|
Earnings per share –
diluted
|
$0.14
|
|
($0.89)
|
|
$1.03
|
|
($0.15)
|
|
|
|
|
|
|
|
|
Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding – Basic
|
34.2
|
|
38.7
|
|
34.5
|
|
38.7
|
Average shares
outstanding – Diluted
|
34.4
|
|
39.2
|
|
34.7
|
|
39.2
|
|
|
|
|
|
|
|
|
|
|
|
AAR CORP. and
Subsidiaries
|
|
Consolidated
Balance Sheet Highlights
(In millions
except per share data)
|
|
February 29,
2016
|
May
31,
2015
|
|
|
(Unaudited)
|
|
Cash and cash
equivalents
|
|
$ 50.4
|
$54.7
|
Current
assets
|
|
970.7
|
954.1
|
Current
liabilities (excluding debt accounts)
|
|
324.0
|
343.0
|
Net property,
plant and equipment
|
|
222.4
|
214.8
|
Total
assets
|
|
1,522.0
|
1,515.0
|
Total
debt
|
|
195.7
|
154.0
|
Stockholders'
equity
|
|
858.3
|
845.1
|
Book value per
share
|
|
$ 24.73
|
$23.87
|
Shares
outstanding
|
|
34.7
|
35.4
|
|
Sales By Business
Segment
(In millions -
unaudited)
|
Three Months
Ended
February
29/28,
|
Nine Months
Ended
February
29/28,
|
|
2016
|
2015
|
2016
|
2015
|
Aviation
Services
|
$ 349.2
|
$ 318.4
|
$ 1,024.6
|
$ 955.9
|
Expeditionary
Services
|
53.6
|
61.7
|
179.8
|
222.6
|
|
$ 402.8
|
$ 380.1
|
$ 1,204.4
|
$ 1,178.5
|
|
|
|
Gross Profit
(Loss) by Business Segment
(In millions -
unaudited)
|
Three Months
Ended
February
29/28,
|
Nine Months
Ended
February
29/28,
|
|
2016
|
2015
|
2016
|
2015
|
Aviation
Services
|
$ 58.6
|
$ 50.7
|
$ 166.7
|
$ 152.8
|
Expeditionary
Services
|
(0.3)
|
(0.6)
|
6.0
|
26.9
|
|
$ 58.3
|
$ 50.1
|
$ 172.7
|
$ 179.7
|
|
Note: Pursuant to SEC Regulation G, the Company has
included the following reconciliation of financial measure reported
on a non-GAAP basis to compare financial measures reported on the
basis of Generally Accepted Accounting Principles ("GAAP").
The Company uses net debt to evaluate its financial position and
results and trends and believes it is useful for the reader of this
press release.
Net Debt
(In millions-
unaudited)
|
February 29,
2016
|
|
February 28,
2015
|
Total
debt
|
$195.7
|
|
$643.3
|
Less: Cash and
cash equivalents
|
(50.4)
|
|
(67.0)
|
Net
debt
|
$145.3
|
|
$576.3
|
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SOURCE AAR CORP.