AAR Reports Second Quarter Fiscal Year 2015 Results
Within the Aviation Services segment, sales decreased 11.1% to
Within the Technology Products segment, sales declined by 3.2%. Commercial and military cargo sales experienced double-digit growth offset by lower sales of mobility products.
"Today we reported second quarter FY 2015 results in line with our expectations. Sales to commercial customers increased 2.1% primarily due to the double-digit growth from our Aviation Services supply chain business," said
During the quarter, the Company experienced the following business wins:
Commercial
- Renewed a five-year agreement with Allegiant for airframe maintenance of their MD-80 and 757 fleet of aircraft.
- Supported approximately 100 aircraft from the Company's supply chain hub in
Brussels where an additional power-by-the-hour contract for a new customer's fleet of 737s is expected.
Government and defense
- Awarded a
$49 million contract by theDepartment of the Navy , Naval Supply Systems Command, to provide personnel recovery, casualty evacuation and search and rescue airlift services inWest Africa . - Received a one-year extension on the vertical replenishment contract for airlift services for U.S. Naval vessels in the
Western Pacific and Indian Oceans. - Selected by AMMROC (Advanced Military Maintenance Repair and Overhaul Center), the
Abu Dhabi -based Joint Venture betweenMubadala Development Company , Sikorsky andLockheed Martin , to support the design, outfitting and integration of key areas of AMMROC's state-of-the-art facility inAl Ain ,UAE .
Second quarter sales to commercial customers represented 64.7% of consolidated sales, compared to 57.4% of consolidated sales in the second quarter of last year, while sales to government and defense customers represented the balance.
Consolidated gross profit margin was 16.0% for the second quarter down from 16.8% last year due to unfavorable margin mix. Aviation Services segment gross profit margin was 16.9%, up slightly from 16.8% in the prior year period, and Technology Products gross profit margin declined to 13.0% from 17.0% in the prior year period.
Selling, general and administrative expenses declined
Net interest expense for the quarter decreased to
During the quarter, the Company generated
Average diluted share count for the quarter was 39.1 million compared to 39.2 million in the second quarter last year.
Conference Call Information
AAR will hold its quarterly conference call at
About AAR
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, 2014. 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 November 30, |
Six Months Ended November 30, |
|||||
2014 |
2013 |
2014 |
2013 |
||||
Sales |
$ 490.0 |
$ 540.7 |
$ 959.2 |
$ 1,055.2 |
|||
Cost and expenses: |
|||||||
Cost of sales |
411.5 |
449.7 |
805.4 |
879.5 |
|||
Selling, general and administrative |
47.1 |
51.1 |
92.0 |
98.8 |
|||
Earnings from aircraft joint ventures |
0.7 |
0.8 |
1.3 |
2.0 |
|||
Operating income |
32.1 |
40.7 |
63.1 |
78.9 |
|||
Interest expense |
9.6 |
10.5 |
19.2 |
21.5 |
|||
Interest income |
0.1 |
0.3 |
0.2 |
0.6 |
|||
Income before income tax expense |
22.6 |
30.5 |
44.1 |
58.0 |
|||
Income tax expense |
7.4 |
10.5 |
14.4 |
20.0 |
|||
Net income attributable to AAR and noncontrolling interest |
15.2 |
20.0 |
29.7 |
38.0 |
|||
Income attributable to noncontrolling interest |
- |
- |
(0.1) |
(0.1) |
|||
Net income attributable to AAR |
$ 15.2 |
$ 20.0 |
$ 29.6 |
$ 37.9 |
|||
Earnings per share – Basic |
$ 0.38 |
$ 0.51 |
$ 0.75 |
$ 0.96 |
|||
Earnings per share – Diluted |
$ 0.38 |
$ 0.50 |
$ 0.74 |
$ 0.95 |
|||
Share Data: |
|||||||
Average shares outstanding – Basic |
38.7 |
38.6 |
38.7 |
38.6 |
|||
Average shares outstanding – Diluted |
39.1 |
39.2 |
39.2 |
39.1 |
|||
AAR CORP. and Subsidiaries |
||||
Consolidated Balance Sheet Highlights (In millions except per share data) |
November 30, |
May 31, |
||
Cash and cash equivalents |
$ 92.6 |
$ 89.2 |
||
Current assets |
1,214.8 |
1,116.9 |
||
Current liabilities (excluding debt accounts) |
353.6 |
332.4 |
||
Net property, plant and equipment |
288.5 |
314.9 |
||
Total assets |
2,227.7 |
2,199.5 |
||
Total debt |
635.3 |
634.0 |
||
Stockholders' equity |
1,002.1 |
1,000.7 |
||
Book value per share |
$ 25.18 |
$ 25.27 |
||
Shares outstanding |
39.8 |
39.6 |
||
Sales By Business Segment (In millions - unaudited) |
Three Months Ended |
Six Months Ended |
||
2014 |
2013 |
2014 |
2013 |
|
Aviation Services |
$ 377.7 |
$ 424.7 |
$ 741.4 |
$ 818.4 |
Technology Products |
112.3 |
116.0 |
217.8 |
236.8 |
$ 490.0 |
$ 540.7 |
$ 959.2 |
$ 1,055.2 |
|
Gross Profit by Business Segment (In millions - unaudited) |
Three Months Ended November 30, |
Six Months Ended November 30, |
||
2014 |
2013 |
2014 |
2013 |
|
Aviation Services |
$ 63.9 |
$ 71.3 |
$ 123.0 |
$ 136.8 |
Technology Products |
14.6 |
19.7 |
30.8 |
38.9 |
$ 78.5 |
$ 91.0 |
$ 153.8 |
$ 175.7 |
|
Diluted Earnings Per Share Calculation (In millions except per share data - unaudited) |
Three Months Ended November 30, |
Six Months Ended November 30, |
||
2014 |
2013 |
2014 |
2013 |
|
Net income attributable to AAR |
$ 15.2 |
$ 20.0 |
$ 29.6 |
$ 37.9 |
Less: Income attributable to participating shares |
(0.3) |
(0.4) |
(0.6) |
(0.8) |
Net income for diluted EPS calculation |
$ 14.9 |
$ 19.6 |
$ 29.0 |
$ 37.1 |
Diluted shares outstanding |
39.1 |
39.2 |
39.2 |
39.1 |
Diluted earnings per share |
$ 0.38 |
$ 0.50 |
$ 0.74 |
$ 0.95 |
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 free cash flow for the three-month period ended November 30, 2014 to evaluate its financial results and trends, and believes it is useful for the reader of this press release. |
Free Cash Flow (In millions - unaudited) |
Three Months Ended |
2014 |
|
Net cash provided from operating activities |
$16.0 |
Less: Property, plant and equipment expenditures |
(8.0) |
Free Cash Flow |
$8.0 |
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SOURCE
John Fortson, Vice President, Chief Financial Officer | (630) 227-2075 | john.fortson@aarcorp.com