AAR Announces Fourth Quarter & Fiscal Year 2018 Results
- Fourth quarter sales of
- Fourth quarter diluted earnings per share from continuing operations of
- Full year sales of
- Full year diluted earnings per share from continuing operations of
Consolidated sales increased
"We are very pleased with the fourth quarter and full year results as well as the progress we made on our long-term strategic growth plan. We drove strong results across all of our businesses, captured multiple new long-term contract awards and made investments to further strengthen the AAR value proposition," said
In
Consolidated gross profit margins increased to 17.9% in the current quarter from 17.3% in the prior year quarter driven by strong Aviation Services sales volumes. Fourth quarter sales to commercial customers represented 74.1% of consolidated sales, compared to 76.2% of consolidated sales in the fourth quarter of last year. Sales to government and defense customers represented 25.9% of consolidated sales compared to 23.8% in the prior year's quarter.
Selling, general and administrative expenses as a percentage of sales were 13.1% for the quarter, compared to 12.1% last year. During the quarter, we incurred approximately
Net interest expense from continuing operations for the quarter was
Fiscal Year 2018 Results
Full Fiscal Year 2018 consolidated sales were
Full Fiscal Year 2018 income from continuing operations was
Sales to commercial customers in Fiscal Year 2018 represented 75.5% of consolidated sales as compared to 72.4% in Fiscal Year 2017, with sales to government and defense customers representing the balance in each year.
Net interest expense for Fiscal Year 2018 was
Net debt at
Outlook
The Company is reaffirming Fiscal Year 2019 guidance of sales in the range of
Holmes continued, "We enter Fiscal Year 2019 with strong momentum and we are focused on executing on our recent contract awards. The demand for our Aviation Services businesses remains very strong and we have a healthy pipeline of opportunities in both the government and commercial markets. For these reasons and as a result of the investments we made in Fiscal Year 2018, we are well positioned and I am excited about the year ahead."
Conference Call Information
AAR will hold its quarterly conference call at
About AAR
AAR is a global aftermarket solutions company that employs more than 5,500 people in over 20 countries. Based in
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, 2017. 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 May 31, |
Twelve Months Ended May 31, |
||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||
Sales |
$473.5 |
$450.5 |
$1,748.3 |
$1,590.8 |
||||||||||
Cost and expenses: |
||||||||||||||
Cost of sales |
388.8 |
372.6 |
1,453.7 |
1,327.4 |
||||||||||
Selling, general and administrative |
61.9 |
54.5 |
208.6 |
181.1 |
||||||||||
Operating income |
22.8 |
23.4 |
86.0 |
82.3 |
||||||||||
Interest expense, net |
(2.2) |
(1.5) |
(7.9) |
(5.2) |
||||||||||
Other expense |
(0.4) |
- |
(0.9) |
- |
||||||||||
Income from continuing operations before income tax expense |
20.2 |
21.9 |
77.2 |
77.1 |
||||||||||
Income tax expense |
2.1 |
5.6 |
3.5 |
25.1 |
||||||||||
Income from continuing operations |
18.1 |
16.3 |
73.7 |
52.0 |
||||||||||
Income (Loss) from discontinued operations |
(6.1) |
4.9 |
(58.1) |
4.5 |
||||||||||
Net income |
$12.0 |
$21.2 |
$15.6 |
$56.5 |
||||||||||
Earnings per share – basic: |
||||||||||||||
Continuing operations |
$0.53 |
$0.48 |
$2.14 |
$1.53 |
||||||||||
Discontinued operations |
(0.18) |
0.14 |
(1.70) |
0.13 |
||||||||||
Earnings per share – Basic |
$0.35 |
$0.62 |
$0.44 |
$1.66 |
||||||||||
Earnings per share – diluted: |
||||||||||||||
Continuing operations |
$0.52 |
$0.48 |
$2.11 |
$1.51 |
||||||||||
Discontinued operations |
(0.18) |
0.14 |
(1.70) |
0.13 |
||||||||||
Earnings per share – Diluted |
$0.34 |
$0.62 |
$0.41 |
$1.64 |
||||||||||
Share Data: |
||||||||||||||
Average shares outstanding – Basic |
34.0 |
33.8 |
34.2 |
33.9 |
||||||||||
Average shares outstanding – Diluted |
34.6 |
34.3 |
34.6 |
34.3 |
AAR CORP. and Subsidiaries |
||||
Consolidated Balance Sheet Highlights (In millions except per share data – unaudited) |
May 31, 2018 |
May 31, 2017 |
||
Cash and cash equivalents |
$ 31.1 |
$ 10.3 |
||
Current assets |
942.7 |
888.4 |
||
Current liabilities (excluding debt accounts) |
333.3 |
334.9 |
||
Property, plant and equipment, net |
133.2 |
117.2 |
||
Total assets |
1,524.7 |
1,504.1 |
||
Total debt |
178.9 |
156.2 |
||
Stockholders' equity |
936.3 |
914.2 |
||
Book value per share |
$26.98 |
$26.58 |
||
Shares outstanding |
34.7 |
34.4 |
||
Sales By Business Segment (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Aviation Services |
$ 429.6 |
$ 421.3 |
$ 1,618.9 |
$ 1,485.4 |
Expeditionary Services |
43.9 |
29.2 |
129.4 |
105.4 |
$ 473.5 |
$ 450.5 |
$ 1,748.3 |
$ 1,590.8 |
|
Gross Profit by Business Segment (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Aviation Services |
$ 76.4 |
$ 73.4 |
$ 271.9 |
$ 246.0 |
Expeditionary Services |
8.3 |
4.5 |
22.7 |
17.4 |
$ 84.7 |
$ 77.9 |
$ 294.6 |
$ 263.4 |
|
Adjusted income from continuing operations, adjusted diluted earnings per share from continuing operations, adjusted selling, general, and administrative expenses, 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 provide a better understanding of our actual operating performance unaffected by the impact of severance charges and other 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. Adjusted EBITDA is income from continuing operations before interest expense, interest income, income taxes, depreciation and amortization, stock-based compensation and other items of an unusual nature including severance and gains on certain asset sales.
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:
Net Debt (In millions- unaudited) |
May 31, 2018 |
May 31, 2017 |
|
Total debt |
$178.9 |
$156.2 |
|
Less: Cash and cash equivalents |
(31.1) |
(10.3) |
|
Net debt |
$147.8 |
$145.9 |
Adjusted Income from Continuing Operations (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Income from continuing operations |
$ 18.1 |
$ 16.3 |
$ 73.7 |
$52.0 |
Deferred tax re-measurement from the Tax Cuts and Jobs Act |
(1.1) |
– |
(14.1) |
– |
Severance and restructuring charges, net of tax |
1.8 |
0.1 |
3.1 |
0.5 |
Adjusted income from continuing operations |
$ 18.8 |
$ 16.4 |
$ 62.7 |
$ 52.5 |
Adjusted Diluted Earnings per Share from Continuing Operations (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Diluted earnings per share from continuing operations |
$ 0.52 |
$ 0.48 |
$ 2.11 |
$1.51 |
Deferred tax re-measurement from the Tax Cuts and Jobs Act |
(0.03) |
– |
(0.41) |
– |
Severance and restructuring charges, net of tax |
0.05 |
0.01 |
0.09 |
0.02 |
Adjusted diluted earnings per share from continuing operations |
$ 0.54 |
$ 0.49 |
$ 1.79 |
$ 1.53 |
Adjusted Selling, General and Administrative Expenses (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Selling, general and administrative expenses |
$ 61.9 |
$ 54.5 |
$ 208.6 |
$181.1 |
Severance and restructuring charges |
(2.5) |
(0.2) |
(4.4) |
(0.8) |
Stock-based compensation |
(6.6) |
(3.4) |
(15.3) |
(11.0) |
Adjusted selling, general and administrative expenses |
$ 52.8 |
$ 50.9 |
$ 188.9 |
$ 169.3 |
Adjusted EBITDA (In millions - unaudited) |
Three Months Ended May 31, |
Twelve Months Ended May 31, |
||
2018 |
2017 |
2018 |
2017 |
|
Net income |
$ 12.0 |
$ 21.2 |
$ 15.6 |
$ 56.5 |
(Income) Loss from discontinued operations |
6.1 |
(4.9) |
58.1 |
(4.5) |
Income tax expense |
2.1 |
5.6 |
3.5 |
25.1 |
Other expense |
0.4 |
- |
0.9 |
- |
Interest expense, net |
2.2 |
1.5 |
7.9 |
5.2 |
Depreciation and intangible amortization |
9.1 |
9.5 |
40.5 |
35.7 |
Severance and restructuring charges |
2.6 |
0.2 |
4.5 |
0.8 |
Gain on asset disposal |
- |
- |
- |
(2.6) |
Stock-based compensation |
6.6 |
3.4 |
15.3 |
11.0 |
Adjusted EBITDA |
$ 41.1 |
$ 36.5 |
$ 146.3 |
$127.2 |
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SOURCE
Jason Secore, Vice President, Treasurer | (630) 227-2075 | jason.secore@aarcorp.com