AAR CORP. (NYSE: AIR) today reported third quarter Fiscal Year 2022
consolidated sales of $452.2 million and income from continuing
operations of $22.6 million, or $0.63 per diluted share. For the
third quarter of the prior year, the Company reported sales of
$410.3 million and income from continuing operations of $31.1
million, or $0.87 per diluted share. Our adjusted diluted earnings
per share from continuing operations in the third quarter of Fiscal
Year 2022 were $0.63 compared to $0.37 in the third quarter of the
prior year. The prior year quarter included net pretax adjustments
of $23.4 million, or $0.50 per share, primarily related to the
exclusion of CARES Act payroll support.
Consolidated third quarter sales increased 10%
over the prior year quarter. Our consolidated sales to commercial
customers increased 28% over the prior year quarter due to the
recovery in the commercial market from the impact of COVID-19. Our
consolidated sales to government customers decreased 8% primarily
related to the level of program activity and delays in pallet
orders in our Mobility business.
Sales to commercial customers were 59% of
consolidated sales compared to 51% in the prior year’s quarter
primarily reflecting the recovery in the commercial market from the
impact of COVID-19.
“During the quarter, we drove continued
sequential improvement in our government and commercial businesses.
In our government business, we were able to mitigate the impact of
the Afghanistan drawdown and in commercial, we saw demand in our
parts activities accelerate throughout the quarter as the impact
from the Omicron variant subsided. Furthermore, our largest
commercial customers remain optimistic about the recovering demand
for business and leisure travel and we expect this momentum to
continue,” said John M. Holmes, President and Chief Executive
Officer of AAR CORP.
Gross profit margins were 17.8% in the current
quarter compared to 21.0% in the prior year quarter which included
the favorable impact of CARES Act payroll support. Adjusted
gross profit margin increased from 16.1% to 17.3%, primarily due to
the favorable impact from our actions to reduce costs and improve
our operating efficiency.
Selling, general and administrative expenses
increased from $44.9 million to $48.9 million mainly due to digital
and other investments to support the volume growth. Selling,
general and administrative expenses decreased as a percent of sales
from 10.9% to 10.8% primarily related to the growth in sales.
Operating margins were 6.7% in the current
quarter compared to 9.7% in the prior year quarter which included
the favorable impact of CARES Act payroll support. Adjusted
operating margin increased from 5.0% to 6.7%, as a result of the
actions we took to improve our operating efficiency as well as the
recovery in commercial sales. Sequentially, our adjusted
operating margin increased from 6.1% in the second quarter to 6.7%
in the current quarter primarily due to improved performance across
our commercial activities.
During the quarter, we announced a ten-year
extension of our component maintenance, repair, and overhaul
contract with International Aerospace Management Company (IAMCO),
which is responsible for depot-level maintenance for the NATO E-3A
AWACS aircraft fleet.
Subsequent to the end of the quarter, we
announced an exclusive distribution agreement with Collins
Aerospace’s Goodrich De-Icing & Specialty Heating Systems
business. Under the agreement, we will provide airlines, business
jet and other aircraft operators as well as MROs globally with
de-icers and supporting products.
Net interest expense for the quarter was $0.6
million compared to $1.0 million last year. Average diluted share
count increased from 35.5 million to 35.7 million in the current
year quarter. We also repurchased 0.5 million shares for $20.2
million in conjunction with the $150 million share repurchase
program we announced earlier in the quarter.
Cash flow provided by operating activities from
continuing operations was $16.2 million during the current quarter.
Excluding our accounts receivable financing program, our cash flow
provided by operating activities from continuing operations was
$18.4 million in the current quarter. At February 28, 2022, our net
debt was $63.9 million and our net leverage was 0.43x.
Holmes concluded, “Early in the pandemic, we
took a series of actions to better position the Company for margin
improvement as the industry recovered. We have now delivered
our sixth straight quarter of adjusted operating margin expansion
and our margins are exceeding pre-pandemic levels. We
are extremely proud of this progress particularly since we
have not yet seen a complete recovery in commercial sales. We
expect our improved operating performance combined with the
strength of our balance sheet to allow us to continue generating
shareholder value by investing in our parts, MRO and government
activities, pursuing strategic M&A, and returning capital to
shareholders.”
Conference Call Information
AAR will hold its quarterly conference call at
3:45 p.m. CT on March 22, 2022. The conference call can be accessed
by calling 866-802-4322 from inside the U.S. or +1-703-639-1319
from outside the U.S. A replay of the conference call will also be
available by calling 855-859-2056 from inside the U.S. or
+1-404-537-3406 from outside the U.S. (access code 2031289). The
replay will be available from 7:15 p.m. CT on March 22, 2022 until
10:59 p.m. CT on March 29, 2022.
About AAR
AAR is a global aerospace and defense
aftermarket solutions company with operations in over 20 countries.
Headquartered in the Chicago area, AAR supports commercial and
government customers through two operating segments: Aviation
Services and Expeditionary Services. AAR’s Aviation Services
include parts supply; OEM solutions; integrated solutions;
maintenance, repair, overhaul; and engineering. AAR’s Expeditionary
Services include mobility systems operations. Additional
information can be found at www.aarcorp.com.
Contact: Dylan Wolin – Vice President,
Strategic & Corporate Development and Treasurer | (630)
227-2017 | dylan.wolin@aarcorp.com
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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,
which reflect management’s expectations about future conditions,
including but not limited to (i) the optimism about the recovering
demand for business and leisure travel, (ii) our expectation that
this momentum will continue, (iii) our continued actions to better
position the company for margin improvement as the industry
recovers, (iv) our expectation of seeing a continued recovery in
commercial sales, and (v) our expectation that our improved
operating performance combined with the strength of our balance
sheet will allow us to continue to generate shareholder value by
investing in our parts, MRO and government activities, pursuing
strategic M&A, and returning capital to shareholders. |
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Forward-looking statements often address our expected future
operating and financial performance and financial condition, or
sustainability targets, goals, commitments, and other business
plans, and often may also be identified because they contain words
such as “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,”
“predict,” “project,” “seek,” “should,” “target,” “will,” “would,”
or similar expressions and the negatives of those terms. |
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These forward-looking statements are based on the beliefs of
Company management, as well as assumptions and estimates based on
information available to the Company as of the dates such
assumptions and estimates are made, 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: (i) factors that adversely
affect the commercial aviation industry; (ii) the continued impact
of the COVID-19 pandemic on air travel, worldwide commercial
activity and our and our customers’ ability to source parts and
components; (iii) a reduction in the level of sales to the
branches, agencies and departments of the U.S. government and their
contractors (which were 44.7% of total sales in fiscal 2021); (iv)
non-compliance with laws and regulations relating to the formation,
administration and performance of our U.S. government contracts;
(v) cost overruns and losses on fixed-price contracts; (vi)
nonperformance by subcontractors or suppliers; (vii) changes in or
non-compliance with laws and regulations that may affect certain of
our aviation and government and defense related activities that are
subject to licensing, certification and other regulatory
requirements imposed by the FAA, the U.S. State Department and
other regulatory agencies, both domestic and foreign; (viii) a
reduction in outsourcing of maintenance activity by airlines; (ix)
a shortage of the skilled personnel on whom we depend to operate
our business, or work stoppages; (x) competition from other
companies, including original equipment manufacturers, some of
which have greater financial resources than we do; (xi) financial
and operational risks arising as a result of operating
internationally; (xii) inability to integrate acquisitions
effectively and execute our operational and financial plan related
to the acquisitions; (xiii) inability to recover our costs due to
fluctuations in market values for aviation products and equipment
caused by various factors, including reductions in air travel,
airline bankruptcies, consolidations and fleet reductions; (xiv)
asset impairment charges we may be required to recognize to reflect
the non-recoverability of our assets or lowered expectations
regarding businesses we have acquired; (xv) limitations on our
ability to access the debt and equity capital markets or to draw
down funds under loan agreements; (xvi) non-compliance with
restrictive and financial covenants contained in certain of our
loan agreements, and government funding received under the CARES
Act; (xvii) restrictions on paying, or failure to maintain or pay
dividends; (xviii) exposure to product liability and property
claims that may be in excess of our liability insurance coverage;
(xix) threats to our systems technology from equipment failures’
cyber and other security y breaches or other disruptions; (xx) the
costs of compliance, and liability for non-compliance, with
environmental regulations, including future requirements regarding
climate change; and (xxi) a need to make significant capital
expenditures to keep pace with technological developments in our
industry. Should one or more of those risks or uncertainties
materialize adversely, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from
those described. Those events and uncertainties are difficult
or impossible to predict accurately and many are beyond our
control. |
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For a discussion of these and other risks and uncertainties, refer
to our Annual Report on Form 10-K, Part I, “Item 1A, Risk Factors”
and our Quarterly Reports on Form 10-Q. These events and
uncertainties are difficult or impossible to predict accurately and
many are beyond the Company’s control. The risks described in
these reports are not the only risks we face, as additional risks
and uncertainties are not currently known or foreseeable or
impossible to predict accurately or risks that are beyond the
Company’s control or deemed immaterial may materially adversely
affect our business, financial condition or results of operations
in future periods. We assume 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. |
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AAR CORP. and Subsidiaries
|
|
|
|
Condensed Consolidated
Statements of Income |
Three Months Ended |
|
Nine Months Ended |
(In millions except per share
data - unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
452.2 |
|
|
$ |
410.3 |
|
|
$ |
1,343.9 |
|
|
$ |
1,214.7 |
|
Cost and
expenses: |
|
|
|
|
|
|
|
Cost of sales |
|
371.8 |
|
|
|
324.3 |
|
|
|
1,120.5 |
|
|
|
1,010.6 |
|
Provision for doubtful accounts |
|
0.1 |
|
|
|
1.4 |
|
|
|
0.9 |
|
|
|
5.8 |
|
Selling, general and administrative |
|
48.9 |
|
|
|
44.9 |
|
|
|
145.3 |
|
|
|
133.6 |
|
Loss from joint ventures |
|
(1.1 |
) |
|
|
–– |
|
|
|
(1.7 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
Operating
income |
|
30.3 |
|
|
|
39.7 |
|
|
|
75.5 |
|
|
|
64.5 |
|
Loss on sale of
business |
|
–– |
|
|
|
–– |
|
|
|
(1.3 |
) |
|
|
(19.5 |
) |
Interest expense,
net |
|
(0.6 |
) |
|
|
(1.0 |
) |
|
|
(1.7 |
) |
|
|
(3.9 |
) |
Other income,
net |
|
1.1 |
|
|
|
4.4 |
|
|
|
2.1 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income tax expense |
|
30.8 |
|
|
|
43.1 |
|
|
|
74.6 |
|
|
|
45.0 |
|
Income tax
expense |
|
8.2 |
|
|
|
12.0 |
|
|
|
20.0 |
|
|
|
13.4 |
|
Income from continuing
operations |
|
22.6 |
|
|
|
31.1 |
|
|
|
54.6 |
|
|
|
31.6 |
|
Income (Loss) from
discontinued operations |
|
(0.1 |
) |
|
|
(3.0 |
) |
|
|
0.2 |
|
|
|
(9.8 |
) |
Net
income |
$ |
22.5 |
|
|
$ |
28.1 |
|
|
$ |
54.8 |
|
|
$ |
21.8 |
|
|
|
|
|
|
|
|
|
Earnings per share –
Basic: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.64 |
|
|
$ |
0.88 |
|
|
$ |
1.54 |
|
|
$ |
0.90 |
|
Income (Loss) from discontinued operations |
|
–– |
|
|
|
(0.09 |
) |
|
|
0.01 |
|
|
|
(0.28 |
) |
Earnings per share – Basic |
$ |
0.64 |
|
|
$ |
0.79 |
|
|
$ |
1.55 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
Earnings per share –
Diluted: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.63 |
|
|
$ |
0.87 |
|
|
$ |
1.52 |
|
|
$ |
0.89 |
|
Income (Loss) from discontinued operations |
|
–– |
|
|
|
(0.08 |
) |
|
|
0.01 |
|
|
|
(0.28 |
) |
Earnings per share – Diluted |
$ |
0.63 |
|
|
$ |
0.79 |
|
|
$ |
1.53 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Share
Data: |
|
|
|
|
|
|
|
Weighted average
shares outstanding – Basic |
|
35.1 |
|
|
|
35.0 |
|
|
|
35.3 |
|
|
|
35.0 |
|
Weighted average
shares outstanding – Diluted |
|
35.7 |
|
|
|
35.5 |
|
|
|
35.8 |
|
|
|
35.2 |
|
AAR CORP. and Subsidiaries
|
|
|
|
Condensed Consolidated
Balance Sheets |
February 28, |
|
May 31, |
(In millions) |
2022 |
|
2021 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
40.6 |
|
|
$ |
51.8 |
|
Restricted
cash |
|
2.4 |
|
|
|
8.4 |
|
Accounts receivable,
net |
|
209.3 |
|
|
|
166.7 |
|
Contract
assets |
|
68.8 |
|
|
|
71.9 |
|
Inventories,
net |
|
535.2 |
|
|
|
540.6 |
|
Rotable assets and
equipment on or available for lease |
|
53.6 |
|
|
|
50.4 |
|
Assets of discontinued
operations |
|
17.0 |
|
|
|
19.5 |
|
Other current
assets |
|
50.3 |
|
|
|
27.7 |
|
Total current assets |
|
977.2 |
|
|
|
937.0 |
|
Property, plant, and
equipment, net |
|
106.9 |
|
|
|
120.0 |
|
Operating lease
right-of-use assets, net |
|
73.2 |
|
|
|
75.8 |
|
Goodwill and
intangible assets, net |
|
121.0 |
|
|
|
123.8 |
|
Rotable assets
supporting long-term programs |
|
171.1 |
|
|
|
184.3 |
|
Other non-current
assets |
|
102.6 |
|
|
|
98.8 |
|
Total assets |
$ |
1,552.0 |
|
|
$ |
1,539.7 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Accounts payable and
accrued liabilities |
$ |
325.0 |
|
|
$ |
301.4 |
|
Liabilities of
discontinued operations |
|
18.1 |
|
|
|
35.4 |
|
Total current liabilities |
|
343.1 |
|
|
|
336.8 |
|
Long-term
debt |
|
103.3 |
|
|
|
133.7 |
|
Operating lease
liabilities |
|
57.9 |
|
|
|
59.9 |
|
Other liabilities and
deferred income |
|
30.0 |
|
|
|
34.9 |
|
Total liabilities |
|
534.3 |
|
|
|
565.3 |
|
Equity |
|
1,017.7 |
|
|
|
974.4 |
|
Total liabilities and equity |
|
1,552.0 |
|
|
$ |
1,539.7 |
|
AAR CORP. and Subsidiaries
|
|
|
|
Condensed Consolidated
Statements of Cash Flows |
Three Months Ended |
|
Nine Months Ended |
(In millions – unaudited) |
February 28, |
|
February 28, |
|
|
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash flows provided
from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
22.5 |
|
|
$ |
28.1 |
|
|
$ |
54.8 |
|
|
$ |
21.8 |
|
Loss (Income) from discontinued operations |
|
0.1 |
|
|
|
3.0 |
|
|
|
(0.2 |
) |
|
|
9.8 |
|
Income from continuing operations |
|
22.6 |
|
|
|
31.1 |
|
|
|
54.6 |
|
|
|
31.6 |
|
Adjustments to reconcile income from continuing operations
to net cash provided from operating
activities |
|
|
|
|
|
|
|
Depreciation and intangible
amortization |
|
7.7 |
|
|
|
8.9 |
|
|
|
25.5 |
|
|
|
27.1 |
|
Amortization of stock-based
compensation |
|
1.1 |
|
|
|
2.3 |
|
|
|
5.8 |
|
|
|
6.8 |
|
Provision for doubtful
accounts |
|
0.1 |
|
|
|
1.4 |
|
|
|
0.9 |
|
|
|
5.8 |
|
Loss on sale of
business |
|
–– |
|
|
|
–– |
|
|
|
1.3 |
|
|
|
19.5 |
|
Contract termination and restructuring costs |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
2.2 |
|
Impairment charges |
|
–– |
|
|
|
–– |
|
|
|
2.9 |
|
|
|
7.0 |
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(17.9 |
) |
|
|
(17.7 |
) |
|
|
(44.1 |
) |
|
|
(22.5 |
) |
Contract
assets |
|
(0.3 |
) |
|
|
(9.3 |
) |
|
|
2.9 |
|
|
|
(16.8 |
) |
Inventories |
|
(3.4 |
) |
|
|
21.0 |
|
|
|
4.6 |
|
|
|
51.2 |
|
Prepaid expenses and other current
assets |
|
(14.0 |
) |
|
|
10.0 |
|
|
|
(22.7 |
) |
|
|
46.7 |
|
Accounts payable and accrued liabilities |
|
18.6 |
|
|
|
(3.7 |
) |
|
|
17.2 |
|
|
|
5.3 |
|
Payroll Support Program deferred credit |
|
–– |
|
|
|
(23.6 |
) |
|
|
–– |
|
|
|
–– |
|
Deferred revenue on long-term programs |
|
1.8 |
|
|
|
(12.2 |
) |
|
|
2.5 |
|
|
|
(72.6 |
) |
Other |
|
(0.1 |
) |
|
|
9.4 |
|
|
|
(1.8 |
) |
|
|
(6.3 |
) |
Net cash provided from operating activities – continuing
operations |
|
16.2 |
|
|
|
17.6 |
|
|
|
49.6 |
|
|
|
85.0 |
|
Net cash used in operating activities – discontinued
operations |
|
(0.3 |
) |
|
|
(0.5 |
) |
|
|
(14.5 |
) |
|
|
(2.4 |
) |
Net cash provided from operating activities |
|
15.9 |
|
|
|
17.1 |
|
|
|
35.1 |
|
|
|
82.6 |
|
|
|
|
|
|
|
|
|
Cash flows provided
from (used in) investing activities: |
|
|
|
|
|
|
|
Property, plant and equipment
expenditures |
|
(4.2 |
) |
|
|
(2.6 |
) |
|
|
(10.2 |
) |
|
|
(8.6 |
) |
Proceeds from termination of life insurance
policies |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
10.0 |
|
Other |
|
–– |
|
|
|
(0.7 |
) |
|
|
3.3 |
|
|
|
0.9 |
|
Net cash provided from (used in) investing
activities |
|
(4.2 |
) |
|
|
(3.3 |
) |
|
|
(6.9 |
) |
|
|
2.3 |
|
|
|
|
|
|
|
|
|
Cash flows used in
financing activities: |
|
|
|
|
|
|
|
Repayments on borrowings,
net |
|
–– |
|
|
|
(15.0 |
) |
|
|
(29.7 |
) |
|
|
(396.3 |
) |
Purchase of treasury
stock |
|
(20.2 |
) |
|
|
–– |
|
|
|
(20.2 |
) |
|
|
–– |
|
Other |
|
5.0 |
|
|
|
0.7 |
|
|
|
4.6 |
|
|
|
(0.9 |
) |
Net cash used in
financing activities |
|
(15.2 |
) |
|
|
(14.3 |
) |
|
|
(45.3 |
) |
|
|
(397.2 |
) |
Effect of exchange
rate changes on
cash |
|
0.1 |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.2 |
|
Increase (Decrease) in
cash and cash
equivalents |
|
(3.4 |
) |
|
|
(0.4 |
) |
|
|
(17.2 |
) |
|
|
(312.1 |
) |
Cash, cash
equivalents, and restricted cash at beginning of
period |
|
46.4 |
|
|
|
113.0 |
|
|
|
60.2 |
|
|
|
424.7 |
|
Cash, cash
equivalents, and restricted cash at end of
period |
$ |
43.0 |
|
|
$ |
112.6 |
|
|
$ |
43.0 |
|
|
$ |
112.6 |
|
AAR CORP. and Subsidiaries
|
|
|
|
Sales By Business Segment |
Three Months Ended |
|
Nine Months Ended |
(In millions - unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Aviation Services |
$ |
438.0 |
|
|
$ |
389.7 |
|
|
$ |
1,292.9 |
|
|
$ |
1,138.3 |
|
Expeditionary Services |
|
14.2 |
|
|
|
20.6 |
|
|
|
51.0 |
|
|
|
76.4 |
|
|
$ |
452.2 |
|
|
$ |
410.3 |
|
|
$ |
1,343.9 |
|
|
$ |
1,214.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit by Business Segment |
Three Months Ended |
|
Nine Months Ended |
(In millions- unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Aviation Services |
$ |
77.9 |
|
|
$ |
82.5 |
|
|
$ |
212.8 |
|
|
$ |
193.9 |
|
Expeditionary Services |
|
2.5 |
|
|
|
3.5 |
|
|
|
10.6 |
|
|
|
10.2 |
|
|
$ |
80.4 |
|
|
$ |
86.0 |
|
|
$ |
223.4 |
|
|
$ |
204.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from continuing operations,
adjusted diluted earnings per share from continuing operations,
adjusted sales, adjusted cost of sales, adjusted gross profit
margin, adjusted operating margin, adjusted cash provided by
operating activities from continuing operations, adjusted EBITDA,
and net debt are “non-GAAP financial measures” as defined in
Regulation G of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). We believe these non-GAAP financial
measures are relevant and useful for investors as they illustrate
our actual operating performance unaffected by the impact of
certain items. When reviewed in conjunction with our GAAP
results and the accompanying reconciliations, we believe these
non-GAAP financial measures provide additional information that is
useful to gain an understanding of the factors and trends affecting
our business and provide a means by which to compare our operating
performance against that of other companies in the industries we
compete. These non-GAAP measures should be considered as a
supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP.
Adjusted EBITDA is income from continuing operations before
interest income (expense), other income (expense), income taxes,
depreciation and amortization, stock-based compensation and items
of an unusual nature including but not limited to business
divestitures, workforce actions, subsidies and costs, impairment
and exit charges, facility consolidation and repositioning costs,
investigation and remediation compliance costs, purchase accounting
settlements, and significant customer events such as early
terminations, contract restructurings, forward loss provisions and
bankruptcies.
Pursuant to the requirements of Regulation G of
the Exchange Act, we are providing the following tables that
reconcile the above mentioned non-GAAP financial measures to the
most directly comparable GAAP financial measures:
Adjusted Income from Continuing Operations
(a) |
Three Months Ended |
|
Nine Months Ended |
(In millions - unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Income from continuing operations |
$ |
22.6 |
|
|
$ |
31.1 |
|
|
$ |
54.6 |
|
|
$ |
31.6 |
|
Investigation and remediation compliance
costs |
|
1.2 |
|
|
|
0.2 |
|
|
|
1.9 |
|
|
|
3.3 |
|
Loss on sale of business |
|
–– |
|
|
|
–– |
|
|
|
1.0 |
|
|
|
14.8 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
(0.8 |
) |
|
|
2.9 |
|
|
|
0.9 |
|
|
|
8.0 |
|
Customer bankruptcy and credit charges |
|
–– |
|
|
|
0.8 |
|
|
|
0.7 |
|
|
|
1.9 |
|
Asset impairment and exit charges |
|
0.4 |
|
|
|
–– |
|
|
|
2.6 |
|
|
|
5.4 |
|
Government COVID-related subsidies |
|
(0.8 |
) |
|
|
(18.8 |
) |
|
|
(2.9 |
) |
|
|
(41.4 |
) |
Facility consolidation and repositioning
costs |
|
–– |
|
|
|
–– |
|
|
|
0.2 |
|
|
|
1.8 |
|
Severance, furlough and pension settlement
charges |
|
0.7 |
|
|
|
0.1 |
|
|
|
1.9 |
|
|
|
7.0 |
|
Gain on settlement of purchase accounting
liabilities |
|
(0.8 |
) |
|
|
–– |
|
|
|
(0.8 |
) |
|
|
–– |
|
Recognition of foreign currency translation
adjustments |
|
–– |
|
|
|
–– |
|
|
|
0.2 |
|
|
|
–– |
|
Gain on legal settlement |
|
–– |
|
|
|
(3.3 |
) |
|
|
–– |
|
|
|
(3.3 |
) |
Strategic financing evaluation costs |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
0.8 |
|
Adjusted income from continuing operations |
$ |
22.5 |
|
|
$ |
13.0 |
|
|
$ |
60.3 |
|
|
$ |
29.9 |
|
(a) All adjustments are presented net of applicable
income taxes.
Adjusted Diluted Earnings per Share from Continuing
Operations (a) |
Three Months Ended |
|
Nine Months Ended |
(In millions - unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Diluted earnings per share from continuing
operations |
$ |
0.63 |
|
|
$ |
0.87 |
|
|
$ |
1.52 |
|
|
$ |
0.89 |
|
Investigation and remediation compliance
costs |
|
0.03 |
|
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.10 |
|
Loss on sale of business |
|
–– |
|
|
|
–– |
|
|
|
0.03 |
|
|
|
0.42 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
(0.02 |
) |
|
|
0.08 |
|
|
|
0.03 |
|
|
|
0.23 |
|
Customer bankruptcy and credit charges |
|
–– |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.05 |
|
Asset impairment and exit charges |
|
0.01 |
|
|
|
–– |
|
|
|
0.07 |
|
|
|
0.15 |
|
Government COVID-related subsidies |
|
(0.02 |
) |
|
|
(0.53 |
) |
|
|
(0.08 |
) |
|
|
(1.18 |
) |
Facility consolidation and repositioning
costs |
|
–– |
|
|
|
–– |
|
|
|
0.01 |
|
|
|
0.05 |
|
Severance, furlough and pension settlement
charges |
|
0.02 |
|
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.20 |
|
Gain on settlement of purchase accounting
liabilities |
|
(0.02 |
) |
|
|
–– |
|
|
|
(0.02 |
) |
|
|
–– |
|
Gain on legal settlement |
|
–– |
|
|
|
(0.09 |
) |
|
|
–– |
|
|
|
(0.09 |
) |
Strategic financing evaluation costs |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
0.02 |
|
Adjusted diluted earnings per share from continuing
operations |
$ |
0.63 |
|
|
$ |
0.37 |
|
|
$ |
1.68 |
|
|
$ |
0.84 |
|
(a) All adjustments are presented net of applicable
income taxes.
Adjusted Gross Profit Margin |
|
(In millions - unaudited) |
Three Months Ended |
|
February28, 2022 |
|
November30, 2021 |
|
February28, 2021 |
|
February29, 2020 |
Sales |
$ |
452.2 |
|
|
$ |
436.6 |
|
|
$ |
410.3 |
|
|
$ |
553.1 |
|
Contract termination/restructuring costs, net |
|
(0.2 |
) |
|
|
(2.5 |
) |
|
|
1.5 |
|
|
|
9.8 |
|
Adjusted sales |
$ |
452.0 |
|
|
$ |
434.1 |
|
|
$ |
411.8 |
|
|
$ |
562.9 |
|
|
|
|
|
|
Cost of sales |
$ |
371.8 |
|
|
$ |
358.2 |
|
|
$ |
324.3 |
|
|
$ |
487.8 |
|
Contract termination/restructuring costs
and loss provisions, net |
|
0.9 |
|
|
|
1.9 |
|
|
|
(2.5 |
) |
|
|
(14.9 |
) |
Government COVID-related subsidies, net |
|
0.9 |
|
|
|
2.5 |
|
|
|
24.0 |
|
|
|
–– |
|
Facility consolidation and repositioning
costs |
|
–– |
|
|
|
(0.1 |
) |
|
|
–– |
|
|
|
–– |
|
Asset impairment charges |
|
–– |
|
|
|
(0.6 |
) |
|
|
–– |
|
|
|
–– |
|
Severance and furlough costs |
|
–– |
|
|
|
(0.5 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Adjusted cost of sales |
$ |
373.6 |
|
|
$ |
361.4 |
|
|
$ |
345.7 |
|
|
$ |
472.8 |
|
|
|
|
|
|
Adjusted gross profit margin |
|
17.3 |
% |
|
|
16.7 |
% |
|
|
16.1 |
% |
|
|
16.0 |
% |
Adjusted Operating Margin |
|
(In millions - unaudited) |
Three Months Ended |
|
February28, 2022 |
|
November30, 2021 |
|
February28, 2021 |
|
February29, 2020 |
Adjusted sales |
$ |
452.0 |
|
|
$ |
434.1 |
|
|
$ |
411.8 |
|
|
$ |
562.9 |
|
|
|
|
|
|
Operating income |
$ |
30.3 |
|
|
$ |
30.1 |
|
|
$ |
39.7 |
|
|
$ |
5.3 |
|
Investigation and remediation costs |
|
1.6 |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
2.7 |
|
Contract termination/restructuring costs
and loss provisions, net |
|
(1.1 |
) |
|
|
(4.4 |
) |
|
|
4.0 |
|
|
|
24.7 |
|
Customer bankruptcy and credit charges |
|
–– |
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
–– |
|
Government COVID-related subsidies |
|
(1.0 |
) |
|
|
(2.5 |
) |
|
|
(24.6 |
) |
|
|
–– |
|
Facility consolidation and repositioning
costs |
|
–– |
|
|
|
0.1 |
|
|
|
–– |
|
|
|
–– |
|
Asset impairment and exit charges |
|
0.5 |
|
|
|
0.6 |
|
|
|
–– |
|
|
|
–– |
|
Severance and furlough costs |
|
0.2 |
|
|
|
0.8 |
|
|
|
0.1 |
|
|
|
0.5 |
|
Adjusted operating income |
$ |
30.5 |
|
|
$ |
26.5 |
|
|
$ |
20.5 |
|
|
$ |
33.2 |
|
|
|
|
|
|
Adjusted operating margin |
|
6.7 |
% |
|
|
6.1 |
% |
|
|
5.0 |
% |
|
|
5.9 |
% |
Adjusted Cash Provided by Operating Activities
from Continuing Operations |
Three Months Ended |
|
Nine Months Ended |
(In millions - unaudited) |
February 28, |
|
February 28, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash provided by operating activities from continuing
operations |
$ |
16.2 |
|
|
$ |
17.6 |
|
|
$ |
49.6 |
|
|
$ |
85.0 |
|
Amounts outstanding on accounts receivable financing
program: |
|
|
|
|
|
Beginning of period |
|
20.2 |
|
|
|
48.9 |
|
|
|
38.6 |
|
|
|
74.3 |
|
End of period |
|
(18.0 |
) |
|
|
(48.4 |
) |
|
|
(18.0 |
) |
|
|
(48.4 |
) |
Adjusted cash provided by operating activities
from continuing operations |
$ |
18.4 |
|
|
$ |
18.1 |
|
|
$ |
70.2 |
|
|
$ |
110.9 |
|
Adjusted EBITDA |
Three Months Ended |
|
Nine Months Ended |
|
Year Ended |
(In millions - unaudited) |
February 28, |
|
February 28, |
|
May 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2021 |
Net income |
$ |
22.5 |
|
|
$ |
28.1 |
|
|
$ |
54.8 |
|
|
$ |
21.8 |
|
|
$ |
35.8 |
|
Loss (Income) from discontinued operations |
|
0.1 |
|
|
|
3.0 |
|
|
|
(0.2 |
) |
|
|
9.8 |
|
|
|
10.5 |
|
Income tax expense |
|
8.2 |
|
|
|
12.0 |
|
|
|
20.0 |
|
|
|
13.4 |
|
|
|
18.2 |
|
Other income, net |
|
(1.1 |
) |
|
|
(4.4 |
) |
|
|
(2.1 |
) |
|
|
(3.9 |
) |
|
|
(4.3 |
) |
Interest expense, net |
|
0.6 |
|
|
|
1.0 |
|
|
|
1.7 |
|
|
|
3.9 |
|
|
|
4.8 |
|
Depreciation and intangible amortization |
|
7.7 |
|
|
|
8.9 |
|
|
|
25.5 |
|
|
|
27.1 |
|
|
|
36.3 |
|
Investigation and remediation compliance
costs |
|
1.6 |
|
|
|
0.3 |
|
|
|
2.6 |
|
|
|
4.4 |
|
|
|
4.4 |
|
Loss on sale of business |
|
–– |
|
|
|
–– |
|
|
|
1.3 |
|
|
|
19.5 |
|
|
|
20.2 |
|
Asset impairment and exit charges |
|
0.5 |
|
|
|
–– |
|
|
|
3.4 |
|
|
|
7.0 |
|
|
|
7.0 |
|
Contract termination/restructuring costs and
loss provisions, net |
|
(1.1 |
) |
|
|
4.0 |
|
|
|
1.2 |
|
|
|
10.7 |
|
|
|
9.3 |
|
Customer bankruptcy and credit charges |
|
–– |
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
2.5 |
|
|
|
4.9 |
|
Government COVID-related subsidies, net |
|
(1.0 |
) |
|
|
(24.6 |
) |
|
|
(3.8 |
) |
|
|
(54.4 |
) |
|
|
(56.2 |
) |
Facility consolidation and repositioning
costs |
|
–– |
|
|
|
–– |
|
|
|
0.2 |
|
|
|
2.4 |
|
|
|
4.5 |
|
Severance and furlough costs |
|
0.2 |
|
|
|
0.1 |
|
|
|
1.9 |
|
|
|
8.3 |
|
|
|
9.0 |
|
Strategic financing evaluation costs |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
1.0 |
|
|
|
1.0 |
|
Stock-based compensation |
|
1.1 |
|
|
|
2.3 |
|
|
|
5.8 |
|
|
|
6.8 |
|
|
|
9.2 |
|
Adjusted EBITDA |
$ |
39.3 |
|
|
$ |
31.7 |
|
|
$ |
113.3 |
|
|
$ |
80.3 |
|
|
$ |
114.6 |
|
Net Debt(In millions- unaudited) |
February 28,2022 |
|
February 28,2021 |
Total debt |
$ |
104.5 |
|
|
$ |
207.6 |
|
Less: Cash and cash
equivalents |
|
(40.6 |
) |
|
|
(99.2 |
) |
Net debt |
$ |
63.9 |
|
|
$ |
108.4 |
|
Net Debt to Adjusted EBITDA(In millions -
unaudited) |
|
Adjusted EBITDA for the year ended May 31,
2021 |
$ |
114.6 |
|
Less: Adjusted EBITDA for the nine months ended February
28, 2021 |
|
(80.3 |
) |
Plus: Adjusted EBITDA for the nine months ended February
28, 2022 |
|
113.3 |
|
Adjusted EBITDA for the twelve months ended February 28,
2022 |
$ |
147.6 |
|
Net debt at February 28, 2022 |
$ |
63.9 |
|
Net debt to Adjusted EBITDA |
|
0.43 |
|
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