AAR CORP. (NYSE: AIR), a leading provider of aviation services to
commercial and government operators, MROs, and OEMs, today reported
first quarter fiscal year 2024 consolidated sales of $549.7 million
and loss from continuing operations of $0.6 million, or $0.02 per
diluted share. For the first quarter of the prior year, the Company
reported sales of $446.3 million and income from continuing
operations of $22.3 million, or $0.62 per diluted share.
Our adjusted diluted earnings per share from
continuing operations in the first quarter of fiscal year 2024 were
$0.78, compared to $0.61 in the first quarter of the prior year.
Current quarter results included net pretax adjustments of $42.5
million, or $0.80 per share, primarily due to the previously
disclosed pension settlement and Russian legal charges. We strongly
disagree with the Russian court judgment based on the facts of the
case and believe the judgment is a result of a hostile business and
legal environment in Russia. For those reasons, we believe it is
highly unlikely the full judgment will ultimately be paid.
Consolidated first quarter sales increased 23.2%
over the prior year quarter. Our consolidated sales to commercial
customers increased 34% over the prior year quarter, primarily due
to strong demand for our new and used parts offerings, while our
consolidated sales to government customers increased 3%. Sales to
commercial customers were 71% of consolidated sales, compared to
66% in the prior year quarter.
“During the quarter, we drove meaningful growth
across all our commercial activities. In particular, Parts Supply
revenue grew 40% due to investments we made in prior quarters in
anticipation of strong demand. Additionally, in Repair &
Engineering our hangars were largely full throughout the summer and
flight hours continue to recover globally which drove growth in
Integrated Solutions,” said John M. Holmes, Chairman, President and
Chief Executive Officer of AAR CORP.
Gross profit margin of 18.4% was consistent
across the current and prior year quarters. Adjusted gross profit
margin increased from 18.1% to 18.4%, primarily due to the
favorable impact of our operating efficiency on increased sales
volumes.
Selling, general, and administrative expenses
were $74.7 million in the quarter, which included increased
investments in the business, $2.8 million related to Trax
acquisition and amortization expenses as well as $11.2 million for
the Russian legal charge. As a percentage of sales, selling,
general, and administrative expenses were 13.6% for the quarter,
compared to 11.2% last year. Excluding the Trax acquisition and
amortization expenses and the Russian legal charge, selling,
general, and administrative expenses as a percent of sales
decreased from 11.2% of sales to 11.0% of sales.
Operating margins were 4.6% in the current
quarter, compared to 7.0% in the prior year quarter. Adjusted
operating margin increased from 6.9% to 7.3%, primarily as a result
of the growth in commercial sales. Sequentially, our adjusted
operating margin decreased from 7.8% to 7.3%, driven by a shift in
the mix of products and services sold.
During and subsequent to the quarter, we
announced multiple new contract awards, including:
- Two multi-year commercial
agreements with Moog Inc. with one agreement covering our
distribution of their products applicable to mature aircraft
platforms and the other agreement establishing reciprocal component
repair services
- Exclusive multi-year foreign
military distribution agreement with Pall Corporation for their
highly engineered filtration products and solutions
Net interest expense for the quarter was $5.4
million, compared to $1.0 million last year. Average diluted share
count decreased from 35.4 million in the prior year quarter to 35.1
million in the current year quarter. We did not repurchase any
shares during the quarter and have $57.6 million remaining on the
program. We will continue to evaluate share repurchases along with
other opportunities to deploy our capital.
Cash flow used in operating activities from
continuing operations was $18.5 million during the current quarter
reflecting attractive inventory investments to support both USM
demand and the continuing ramp-up of recently signed distribution
agreements. Excluding our accounts receivable financing program,
our cash flow used in operating activities from continuing
operations was $19.4 million in the current quarter. As of August
31, 2023, our net debt was $236.7 million and our net leverage was
1.18x.
Holmes concluded, “We are proud to have
delivered another quarter of year over year sales growth and record
first quarter adjusted earnings. Our commercial businesses are
capitalizing on the favorable aftermarket trends and we expect that
to continue in the quarters to come. We are also pleased with the
progress we have made on the integration of Trax and its
performance to date. We believe our pipeline of commercial and
government opportunities, our strong balance sheet, and our ability
to execute quickly will drive further growth across our parts
and services offerings.”
Conference call
information
On Tuesday, September 26, 2023, at 3:45 p.m.
Central time, AAR will hold a conference call to discuss the
results. The conference call can be accessed by registering at
https://register.vevent.com/register/BI1cfbb6b1cadd40e8b5668ba9b353d440.
Once registered, participants will receive a dial-in number and a
unique PIN that will allow them to access the call.
A replay of the conference call will be
available for on-demand listening shortly after the completion of
the call at https://edge.media-server.com/mmc/p/h98mp8ej and will
remain available for approximately one year.
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 four operating segments: Parts Supply,
Repair & Engineering, Integrated Solutions, and Expeditionary
Services. Additional information can be found at aarcorp.com.
Contact: Dylan Wolin – Vice
President, Strategic & Corporate Development and Treasurer |
+1-630-227-2017 | dylan.wolin@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, which reflect
management’s expectations about future conditions, including but
not limited to the strength of the commercial and government
aviation markets, opportunities for and the execution and success
of growth investments and related business initiatives, successful
integration of Trax, continuing demand for our parts and services,
expected activities and benefits under commercial and distribution
agreements, and challenges and uncertainties related to the outcome
of the Russian litigation.
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.
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 impact of pandemics and other disease outbreaks, such as
COVID-19, and similar public health threats 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; (iv) cost overruns and losses on
fixed-price contracts; (v) nonperformance by subcontractors or
suppliers; (vi) 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; (vii) a reduction in outsourcing of
maintenance activity by airlines; (viii) a shortage of the skilled
personnel on whom we depend to operate our business, or work
stoppages; (ix) competition from other companies, including
original equipment manufacturers, some of which have greater
financial resources than we do; (x) financial and operational risks
arising as a result of operating internationally; (xi) inability to
integrate acquisitions effectively and execute our operational and
financial plan related to the acquisitions; (xii) failure to
realize the anticipated benefits of the acquisition of Trax USA
Corp. (“Trax”) and difficulties integrating Trax’s operations;
(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) threats to our systems technology from equipment
failures, cyber or other security threats or other disruptions;
(xvi) a need to make significant capital expenditures to keep pace
with technological developments in our industry; (xvii) a need to
reduce the carrying value of our assets; (xviii) inability to fully
execute our stock repurchase program and return capital to our
stockholders; (xix) restrictions on paying, or failure to maintain
or pay dividends; (xx) limitations on our ability to access the
debt and equity capital markets or to draw down funds under loan
agreements; (xxi) non-compliance with restrictive and financial
covenants contained in certain of our loan agreements; (xxii)
non-compliance with laws and regulations relating to the formation,
administration and performance of our U.S. government contracts;
(xxiii) exposure to product liability and property claims that may
be in excess of our liability insurance coverage; (xxiv) impacts
from stakeholder and market focus on environmental, social and
governance matters; and (xxv) the costs of compliance, and
liability for non-compliance, with environmental regulations,
including future requirements regarding climate change and
environmental, social and governance matters. 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.
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 other filings
from time to time with the U.S Securities and Exchange Commission.
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.
AAR CORP. and subsidiaries
|
|
|
| Condensed consolidated
statements of operations(In millions except per share data
- unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
|
|
2022 |
|
| |
|
|
Sales |
$ |
549.7 |
|
|
$ |
446.3 |
|
| Cost and
expenses: |
|
|
|
|
Cost of sales |
|
448.4 |
|
|
|
364.4 |
|
| Gross
profit |
|
101.3 |
|
|
|
81.9 |
|
|
Provision for credit losses |
|
0.4 |
|
|
|
–– |
|
|
Selling, general and administrative |
|
74.7 |
|
|
|
50.1 |
|
|
Loss from joint ventures |
|
(0.9 |
) |
|
|
(0.6 |
) |
| Operating
income |
|
25.3 |
|
|
|
31.2 |
|
| Pension settlement
charge |
|
(26.7 |
) |
|
|
–– |
|
| Losses related to sale
and exit of business |
|
(0.7 |
) |
|
|
–– |
|
| Interest expense,
net |
|
(5.4 |
) |
|
|
(1.0 |
) |
| Other income,
net |
|
–– |
|
|
|
0.2 |
|
| Income (Loss) from
continuing operations before income taxes |
|
(7.5 |
) |
|
|
30.4 |
|
| Income tax expense
(benefit) |
|
(6.9 |
) |
|
|
8.1 |
|
| Income (Loss) from
continuing operations |
|
(0.6 |
) |
|
|
22.3 |
|
| Income from discontinued
operations |
|
–– |
|
|
|
0.4 |
|
| Net income
(loss) |
$ |
(0.6 |
) |
|
$ |
22.7 |
|
| |
|
|
|
| Earnings (Loss) per share
– Basic: |
|
|
|
|
Earnings (Loss) from continuing operations |
$ |
(0.02 |
) |
|
$ |
0.63 |
|
|
Earnings from discontinued operations |
|
–– |
|
|
|
0.01 |
|
|
Earnings (Loss) per share – Basic |
$ |
(0.02 |
) |
|
$ |
0.64 |
|
| |
|
|
|
| Earnings (Loss) per share
– Diluted: |
|
|
|
|
Earnings (Loss) from continuing operations |
$ |
(0.02 |
) |
|
$ |
0.62 |
|
|
Earnings from discontinued operations |
|
–– |
|
|
|
0.01 |
|
|
Earnings (Loss) per share – Diluted |
$ |
(0.02 |
) |
|
$ |
0.63 |
|
| |
|
|
|
| Share data: |
|
|
|
| Weighted average shares
outstanding – Basic |
|
34.7 |
|
|
|
34.9 |
|
| Weighted average shares
outstanding – Diluted |
|
35.1 |
|
|
|
35.4 |
|
|
|
|
|
|
|
|
|
|
AAR CORP. and subsidiaries
|
Condensed consolidated balance sheets(In
millions) |
August 31,2023 |
|
May 31,2023 |
| |
(unaudited) |
|
|
| ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
70.3 |
|
$ |
68.4 |
| Restricted
cash |
|
19.9 |
|
|
13.4 |
| Accounts receivable,
net |
|
280.6 |
|
|
241.3 |
| Contract
assets |
|
99.3 |
|
|
86.9 |
| Inventories,
net |
|
614.2 |
|
|
574.1 |
| Rotable assets and
equipment on or available for lease |
|
51.7 |
|
|
50.6 |
| Assets of discontinued
operations |
|
12.6 |
|
|
13.5 |
| Other current
assets |
|
58.6 |
|
|
49.7 |
|
Total current assets |
|
1,207.2 |
|
|
1,097.9 |
| Property, plant, and
equipment, net |
|
131.0 |
|
|
126.1 |
| Operating lease
right-of-use assets, net |
|
67.3 |
|
|
63.7 |
| Goodwill and intangible
assets, net |
|
240.0 |
|
|
239.5 |
| Rotable assets supporting
long-term programs |
|
176.8 |
|
|
178.1 |
| Other non-current
assets |
|
132.1 |
|
|
127.8 |
|
Total assets |
$ |
1,954.4 |
|
$ |
1,833.1 |
| |
|
|
|
| LIABILITIES AND
EQUITY |
|
|
|
| Accounts payable and
accrued liabilities |
$ |
381.1 |
|
$ |
338.1 |
| Liabilities of
discontinued operations |
|
12.4 |
|
|
13.4 |
|
Total current liabilities |
|
393.5 |
|
|
351.5 |
| Long-term
debt |
|
304.8 |
|
|
269.7 |
| Operating lease
liabilities |
|
51.5 |
|
|
48.2 |
| Other
liabilities |
|
82.7 |
|
|
64.6 |
|
Total liabilities |
|
832.5 |
|
|
734.0 |
| Equity |
|
1,121.9 |
|
|
1,099.1 |
|
Total liabilities and equity |
$ |
1,954.4 |
|
$ |
1,833.1 |
|
|
AAR CORP. and subsidiaries
|
Condensed consolidated statements of cash flows(In
millions – unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
|
2022 |
|
| Cash flows provided by
(used in) operating activities: |
|
|
|
|
Net income (loss) |
$ |
(0.6 |
) |
|
$ |
22.7 |
|
|
Income from discontinued operations |
|
–– |
|
|
|
(0.4 |
) |
|
Income (loss) from continuing operations |
|
(0.6 |
) |
|
|
22.3 |
|
|
Adjustments to reconcile income (loss) from continuing
operations to net cash providedby (used in)
operating activities |
|
|
|
|
Depreciation and amortization |
|
8.4 |
|
|
|
6.8 |
|
|
Stock-based compensation expense |
|
4.3 |
|
|
|
4.1 |
|
|
Pension settlement charge |
|
26.7 |
|
|
|
–– |
|
|
Changes in certain assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(40.5 |
) |
|
|
(7.7 |
) |
|
Contract assets |
|
(12.3 |
) |
|
|
(14.2 |
) |
|
Inventories |
|
(39.8 |
) |
|
|
(26.0 |
) |
|
Prepaid expenses and other current assets |
|
(8.8 |
) |
|
|
6.6 |
|
|
Rotable assets supporting long-term programs |
|
(1.0 |
) |
|
|
(3.1 |
) |
|
Accounts payable and accrued liabilities |
|
54.2 |
|
|
|
11.2 |
|
|
Deferred revenue on long-term programs |
|
(4.3 |
) |
|
|
6.5 |
|
|
Other |
|
(4.8 |
) |
|
|
0.5 |
|
| Net cash provided by
(used in) operating activities – continuing
operations |
|
(18.5 |
) |
|
|
7.0 |
|
| Net cash used in
operating activities – discontinued operations |
|
(0.2 |
) |
|
|
(0.2 |
) |
| Net cash provided by
(used in) operating activities |
|
(18.7 |
) |
|
|
6.8 |
|
| |
|
|
|
| Cash flows used in
investing activities: |
|
|
|
|
Property, plant, and equipment expenditures |
|
(9.1 |
) |
|
|
(6.7 |
) |
|
Other |
|
(2.5 |
) |
|
|
(4.0 |
) |
| Net cash used in
investing activities |
|
(11.6 |
) |
|
|
(10.7 |
) |
| |
|
|
|
| Cash flows provided by
(used in) financing activities: |
|
|
|
|
Short-term borrowings (repayments) on Revolving Credit
Facility, net |
|
35.0 |
|
|
|
15.0 |
|
|
Purchase of treasury stock |
|
–– |
|
|
|
(21.9 |
) |
|
Other |
|
3.7 |
|
|
|
0.4 |
|
| Net cash provided by
(used in) financing activities |
|
38.7 |
|
|
|
(6.5 |
) |
| Effect of exchange rate
changes on cash |
|
–– |
|
|
|
(0.1 |
) |
| Increase (Decrease) in
cash, cash equivalents, and restricted cash |
|
8.4 |
|
|
|
(10.5 |
) |
| Cash, cash equivalents,
and restricted cash at beginning of period |
|
81.8 |
|
|
|
58.9 |
|
| Cash, cash equivalents,
and restricted cash at end of period |
$ |
90.2 |
|
|
$ |
48.4 |
|
|
|
AAR CORP. and subsidiaries
|
Third-party sales by operating segment(In millions
- unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
2022 |
| Parts
supply |
$ |
236.8 |
|
$ |
168.6 |
| Repair &
engineering |
|
137.5 |
|
|
127.6 |
| Integrated
solutions |
|
156.3 |
|
|
127.8 |
| Expeditionary
services |
|
19.1 |
|
|
22.3 |
|
|
$ |
549.7 |
|
$ |
446.3 |
|
Operating income by operating segment(In millions
- unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
|
2022 |
|
| Parts
supply |
$ |
15.1 |
|
|
$ |
18.3 |
|
| Repair &
engineering |
|
9.1 |
|
|
|
7.4 |
|
| Integrated
solutions |
|
7.7 |
|
|
|
8.3 |
|
| Expeditionary
services |
|
1.3 |
|
|
|
2.3 |
|
| |
|
33.2 |
|
|
|
36.3 |
|
| Corporate and
other |
|
(7.9 |
) |
|
|
(5.1 |
) |
|
|
$ |
25.3 |
|
|
$ |
31.2 |
|
|
|
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 (used
in) operating activities from continuing operations, adjusted
EBITDA, net debt, and net debt to adjusted EBITDA (net leverage)
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 core operating
performance, cash flows and leverage unaffected by the impact of
certain items that management does not believe are indicative of
our ongoing and core operating activities. 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 and
leverage 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.
Our non-GAAP financial measures reflect
adjustments for certain items including, but not limited to, the
following:
- Investigation and remediation
compliance costs comprised of legal and professional fees related
to addressing potential violations of the U.S. Foreign Corrupt
Practices Act, which we self-reported to the U.S. Department of
Justice and other agencies.
- Contract termination/restructuring
costs comprised of gains and losses that are recognized at the time
of modifying, terminating, or restructuring certain customer and
vendor contracts, including adjustments for forward loss provisions
on long-term contracts.
- Customer bankruptcy and credit
charges (recoveries) reflecting the impact of bankruptcies and
other credit charges primarily resulting from the significant
impact of the COVID-19 pandemic on the commercial aviation
industry.
- Costs related to strategic projects
consisting of professional fees for significant projects related to
strategic financings and acquisitions, including due diligence
costs.
- Losses related to the sale and exit
from our Composites manufacturing business including legal fees for
the performance guarantee associated with the Composites’ A220
aircraft contract.
- Expenses associated with our Trax
acquisition including professional fees for legal, due diligence,
and other acquisition activities, intangible asset amortization,
and compensation expense related to contingent consideration and
retention agreements.
- Pension settlement charges
associated with the planned termination of our frozen defined
benefit pension plan.
- Legal judgments related to or
impacted by the Russian/Ukraine conflict.
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 and acquisitions, workforce
actions, subsidies and costs, impairment and exit charges, facility
consolidation and repositioning costs, investigation and
remediation compliance costs, purchase accounting and legal
settlements, strategic project costs, equity investment gains and
losses, pension settlement charges, legal judgements, Trax
acquisition and amortization expenses, 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(In
millions - unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
2022 |
|
|
Income (Loss) from continuing operations |
$ |
(0.6 |
) |
$ |
22.3 |
|
|
Investigation and remediation compliance
costs |
|
1.1 |
|
|
0.8 |
|
|
Pension settlement charge |
|
26.7 |
|
|
–– |
|
|
Russian bankruptcy court judgment |
|
11.2 |
|
|
–– |
|
|
Losses related to sale and exit of business |
|
0.7 |
|
|
–– |
|
|
Trax acquisition and amortization expenses |
|
2.8 |
|
|
–– |
|
|
Government COVID-related subsidies |
|
–– |
|
|
(0.7 |
) |
|
Contract termination/restructuring costs, net |
|
–– |
|
|
(0.3 |
) |
|
Costs related to strategic projects |
|
–– |
|
|
(0.2 |
) |
|
Severance charges |
|
–– |
|
|
0.1 |
|
|
Tax effect on
adjustments(a) |
|
(14.6 |
) |
|
0.1 |
|
|
Adjusted income from continuing operations |
$ |
27.3 |
|
$ |
22.1 |
|
(a) Calculation uses estimated statutory tax
rates on non-GAAP adjustments except for the tax effect of the
pension settlement charge which includes income taxes previously
recognized in accumulated other comprehensive loss.
|
Adjusted diluted earnings per share from continuing
operations(unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
2022 |
|
|
Diluted earnings (loss) per share from continuing
operations |
$ |
(0.02 |
) |
$ |
0.62 |
|
|
Investigation and remediation compliance
costs |
|
0.03 |
|
|
0.02 |
|
|
Pension settlement charge |
|
0.76 |
|
|
–– |
|
|
Russian bankruptcy court judgment |
|
0.32 |
|
|
–– |
|
|
Losses related to sale and exit of business |
|
0.02 |
|
|
–– |
|
|
Trax acquisition and amortization expenses |
|
0.08 |
|
|
–– |
|
|
Government COVID-related subsidies |
|
–– |
|
|
(0.02 |
) |
|
Contract termination/restructuring costs, net |
|
–– |
|
|
(0.01 |
) |
|
Tax effect on
adjustments(a) |
|
(0.41 |
) |
|
–– |
|
|
Adjusted diluted earnings per share from continuing
operations |
$ |
0.78 |
|
$ |
0.61 |
|
(a) Calculation uses estimated statutory tax
rates on non-GAAP adjustments except for the tax effect of the
pension settlement charge which includes income taxes previously
recognized in accumulated other comprehensive loss.
|
Adjusted gross profit margin(In millions -
unaudited) |
Three months ended |
|
|
August 31, 2023 |
May 31, 2023 |
August 31, 2022 |
|
Sales |
$ |
549.7 |
|
$ |
553.3 |
|
$ |
446.3 |
|
|
Contract termination/restructuring costs, net |
|
–– |
|
|
–– |
|
|
0.1 |
|
|
Adjusted sales |
$ |
549.7 |
|
$ |
553.3 |
|
$ |
446.4 |
|
|
|
|
|
|
|
Cost of sales |
$ |
448.4 |
|
$ |
445.2 |
|
$ |
364.4 |
|
|
Contract termination/restructuring costs, net |
|
–– |
|
|
–– |
|
|
0.4 |
|
|
Government COVID-related subsidies |
|
–– |
|
|
–– |
|
|
0.7 |
|
|
Adjusted cost of sales |
$ |
448.4 |
|
$ |
445.2 |
|
$ |
365.5 |
|
|
|
|
|
|
|
Adjusted gross profit margin |
|
18.4 |
% |
|
19.5 |
% |
|
18.1 |
% |
|
Adjusted operating margin(In millions -
unaudited) |
Three months ended |
|
|
August 31, 2023 |
May 31, 2023 |
August 31, 2022 |
|
Adjusted sales |
$ |
549.7 |
|
$ |
553.3 |
|
$ |
446.4 |
|
|
|
|
|
|
|
Operating income |
$ |
25.3 |
|
$ |
36.3 |
|
$ |
31.2 |
|
|
Russian bankruptcy court judgment |
|
11.2 |
|
|
–– |
|
|
–– |
|
|
Investigation and remediation costs |
|
1.1 |
|
|
1.6 |
|
|
0.8 |
|
|
Trax acquisition and amortization expenses |
|
2.8 |
|
|
5.1 |
|
|
–– |
|
|
Government COVID-related subsidies |
|
–– |
|
|
–– |
|
|
(0.7 |
) |
|
Contract termination/restructuring costs, net |
|
–– |
|
|
–– |
|
|
(0.3 |
) |
|
Costs related to strategic projects |
|
–– |
|
|
–– |
|
|
(0.2 |
) |
|
Severance charges |
|
–– |
|
|
–– |
|
|
0.1 |
|
|
Adjusted operating income |
$ |
40.4 |
|
$ |
43.0 |
|
$ |
30.9 |
|
|
|
|
|
|
|
Adjusted operating margin |
|
7.3 |
% |
|
7.8 |
% |
|
6.9 |
% |
|
Adjusted cash provided by (used in) operating activities
from continuing operations(In
millions - unaudited) |
Three months endedAugust 31, |
|
|
|
2023 |
|
|
2022 |
|
|
Cash provided by (used in) operating activities from
continuing operations |
$ |
(18.5 |
) |
$ |
7.0 |
|
|
Amounts outstanding on accounts receivable financing
program: |
|
|
|
Beginning of period |
|
12.8 |
|
|
15.0 |
|
|
End of period |
|
(13.7 |
) |
|
(14.9 |
) |
|
Adjusted cash provided by (used in) operating activities
from continuing operations |
$ |
(19.4 |
) |
$ |
7.1 |
|
|
Adjusted EBITDA(In millions - unaudited) |
Three months endedAugust 31, |
|
Year endedMay 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
Net income (loss) |
$ |
(0.6 |
) |
$ |
22.7 |
|
|
$ |
90.2 |
|
|
Income from discontinued operations |
|
–– |
|
|
(0.4 |
) |
|
|
(0.4 |
) |
|
Income tax expense (benefit) |
|
(6.9 |
) |
|
8.1 |
|
|
|
31.4 |
|
|
Other expense (income), net |
|
–– |
|
|
(0.2 |
) |
|
|
0.8 |
|
|
Interest expense, net |
|
5.4 |
|
|
1.0 |
|
|
|
11.2 |
|
|
Depreciation and amortization |
|
8.4 |
|
|
6.8 |
|
|
|
27.9 |
|
|
Investigation and remediation compliance
costs |
|
1.1 |
|
|
0.8 |
|
|
|
4.7 |
|
|
Pension settlement charge |
|
26.7 |
|
|
–– |
|
|
|
–– |
|
|
Russian bankruptcy court judgment |
|
11.2 |
|
|
–– |
|
|
|
1.8 |
|
|
Losses related to sale and exit of business |
|
0.7 |
|
|
–– |
|
|
|
0.7 |
|
|
Trax acquisition-related expenses |
|
1.8 |
|
|
–– |
|
|
|
6.2 |
|
|
Government COVID-related subsidies, net |
|
–– |
|
|
(0.7 |
) |
|
|
(1.6 |
) |
|
Customer bankruptcy and credit charges |
|
–– |
|
|
–– |
|
|
|
1.5 |
|
|
Contract termination/restructuring costs and
loss provisions, net |
|
–– |
|
|
(0.3 |
) |
|
|
2.0 |
|
|
Costs related to strategic projects |
|
–– |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
Severance charges |
|
–– |
|
|
0.1 |
|
|
|
0.1 |
|
|
Stock-based compensation |
|
4.3 |
|
|
4.1 |
|
|
|
13.5 |
|
|
Adjusted EBITDA |
$ |
52.1 |
|
$ |
41.8 |
|
|
$ |
189.8 |
|
|
Net debt(In millions - unaudited) |
August 31, 2023 |
|
August 31, 2022 |
|
Total debt |
$ |
307.0 |
|
|
$ |
115.0 |
|
| Less: Cash and cash
equivalents |
|
(70.3 |
) |
|
|
(44.3 |
) |
| Net debt |
$ |
236.7 |
|
|
$ |
70.7 |
|
|
Net debt to adjusted EBITDA(In millions -
unaudited) |
|
|
Adjusted EBITDA for the year ended May 31,
2023 |
$ |
189.8 |
|
|
Less: Adjusted EBITDA for the three months ended August 31,
2022 |
|
(41.8 |
) |
|
Plus: Adjusted EBITDA for the three months ended August 31,
2023 |
|
52.1 |
|
|
Adjusted EBITDA for the twelve months ended August 31,
2023 |
$ |
200.1 |
|
|
Net debt at August 31, 2023 |
$ |
236.7 |
|
|
Net debt to Adjusted EBITDA |
|
1.18 |
|
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