AAR CORP. WOOD DALE, Ill., Sept. 24, 2015 /PRNewswire/ -- AAR (NYSE: AIR) today reported first quarter fiscal year 2016 sales of $377.8 million and income from continuing operations of $8.2 million, or $0.23 per diluted share. For the first quarter of the prior fiscal year, the Company reported sales of $395.1 million and income from continuing operations of $11.8 million, or $0.29 per diluted share.
During the quarter, the Company recorded a pre-tax gain of $27.7 million within discontinued operations from the receipt of additional proceeds from the sale of the Telair Cargo Group. Including this impact, the Company reported total net income of $22.9 million in the first quarter, or $0.65 per diluted share. In the prior year period, the Company reported total net income of $14.4 million, or $0.36 per diluted share.
"Performance in the first quarter was in line with our expectations as we continue executing on our industry-leading aviation and government services strategy," said David P. Storch, Chairman, President and Chief Executive Officer of AAR CORP. "In the Aviation Services segment we experienced slight year-over-year growth as we saw flat supply chain performance and higher sales in our aircraft maintenance operations. Our Expeditionary Services segment reported a year-over-year decline in sales due to the mix of our aircraft flying positions and lower mobility product volumes, but the segment grew sequentially as airlift ramped up new programs."
Storch continued, "For the balance of the year, in our Aviation Services segment, we expect continued demand for our MRO services and a return to more robust growth in supply chain. In our Expeditionary Services segment, we expect similar results in the second quarter with sequential improvement through the second half of the year as airlift increases its contracted fleet in different geographies."
Gross profit margin from continuing operations was 14.4% for the first quarter compared to 15.8% last year. In the Aviation Services segment, gross profit margin improved year-over-year due to higher margins in MRO. In the Expeditionary Services segment, gross profit margin declined year-over-year due to the mix of flying positions at airlift.
First quarter sales to commercial customers represented 61% of consolidated sales, compared to 60% of consolidated sales in the first quarter of last year. The balance of the sales was to government customers including defense.
Selling, general and administrative expenses as a percentage of sales were 10.4% for the first quarter, compared to 9.7% last year. This quarter was adversely impacted by increased legal expenses. Net interest expense from continuing operations for the quarter decreased to $1.9 million from $6.3 million last year as net debt declined to $150.8 million from $545.3 million last year. The Company ended the quarter with a net debt to capitalization ratio of 15.0%, versus 35.2% in the prior year quarter.
In the first quarter, the Company paid out dividends to shareholders of $2.6 million and repurchased approximately 300,000 shares for $7.1 million. The Company further invested approximately $20.0 million in net inventory to support future growth in supply chain. Average diluted share count for the quarter was 35.1 million compared to 39.2 million in the first quarter last year.
Conference Call Information
AAR will hold its quarterly conference call at 3:45 p.m. CST on September 24, 2015. 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. CST on September 24, 2015, until 11:59 p.m. CST on October 01, 2015.
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. More 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 Three Months Ended
(In millions except per share data -
unaudited) August 31,
------------------------------------
2015 2014
---- ----
Sales $377.8 $395.1
Cost and expenses:
Cost of sales 323.3 332.7
Selling, general and administrative 39.4 38.5
Earnings from aircraft joint ventures (0.3) 0.6
---- ---
Operating income 14.8 24.5
Loss on extinguishment of debt (0.3) -
Interest expense (2.0) (6.4)
Interest income 0.1 0.1
--- ---
Income from continuing operations before
income taxes 12.6 18.2
Income tax expense 4.4 6.4
--- ---
Income from continuing operations
attributable to AAR 8.2 11.8
Income from discontinued operations 14.7 2.7
Income attributable to noncontrolling
interest from discontinued operations - 0.1
--- ---
Income from discontinued operations
attributable to AAR 14.7 2.6
---- ---
Net income attributable to AAR $22.9 $14.4
===== =====
Earnings per share - Basic
Earnings from continuing operations $0.23 $0.29
Earnings from discontinued operations 0.42 0.07
---- ----
Earnings per share - Basic $0.65 $0.36
===== =====
Earnings per share - Diluted
Earnings from continuing operations $0.23 $0.29
Earnings from discontinued operations 0.42 0.07
---- ----
Earnings per share - Diluted $0.65 $0.36
===== =====
Share Data:
Weighted average shares outstanding -
Basic 34.7 38.8
Weighted average shares outstanding -
Diluted 35.1 39.2
AAR CORP. and Subsidiaries
--------------------------
Consolidated Balance
Sheet Highlights August 31, May 31,
(In millions except
per share data) 2015 2015
------------------- ---- ----
(Unaudited)
Cash and cash
equivalents $28.7 $54.7
Current assets 997.3 954.1
Current liabilities
(excluding debt
accounts) 333.6 343.0
Net property, plant
and equipment 214.4 214.8
Total assets 1,547.2 1,515.0
Total debt 179.5 154.0
Stockholders' equity 857.0 845.1
Book value per share $24.35 $23.87
Shares outstanding 35.2 35.4
Sales By Business
Segment Three Months Ended
(In millions -
unaudited) August 31,
--------------
2015 2014
---- ----
Aviation Services $315.8 $311.6
Expeditionary
Services 62.0 83.5
---- ----
$377.8 $395.1
====== ======
Gross Profit by
Business Segment Three Months Ended
(In millions-
unaudited) August 31,
-------------
2015 2014
---- ----
Aviation Services $49.9 $48.2
Expeditionary
Services 4.6 14.2
--- ----
$54.5 $62.4
===== =====
Diluted Earnings Per
Share Calculation Three Months Ended
(In millions except
per share data-
unaudited) August 31,
-------------------
2015 2014
---- ----
Net income
attributable to AAR $22.9 $14.4
Less: Income
attributable to
participating shares (0.2) (0.2)
---- ----
Net income for
diluted EPS
calculation $22.7 $14.2
===== =====
Weighted average
shares outstanding -
Diluted 35.1 39.2
Diluted earnings per
share $0.65 $0.36
===== =====
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").
Net Debt August 31, August 31,
2015 2014
(In millions- unaudited)
-----------------------
Total debt $179.5 $627.1
Less: Cash and cash equivalents (28.7) (81.8)
----- -----
Net debt $150.8 $545.3
====== ======
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SOURCE AAR CORP.
