AAR Reports First Quarter 2021 Results

First quarter sales of $401 million, down 26% from the prior year reflecting the impact of COVID-19First quarter GAAP diluted loss per share from continuing operations of $(0.40)Adjusted diluted earnings per share from continuing operations of $0.17, which exclude the impact of the Composites sale and other itemsWOOD DALE, Ill., Sept. 24, 2020 (GLOBE NEWSWIRE) — AAR CORP. (NYSE: AIR) today reported first quarter Fiscal Year 2021 consolidated sales of $400.8 million and loss from continuing operations of $13.9 million, or $0.40 per diluted share. For the first quarter of the prior year, the Company reported sales of $541.5 million and income from continuing operations of $17.1 million, or $0.49 per diluted share. Our adjusted diluted earnings per share from continuing operations in the first quarter of Fiscal Year 2021 were $0.17 compared to $0.57 in the first quarter of the prior year. Current quarter results included net pretax adjustments of $26.2 million, or $0.57 per share, primarily related to the sale of our Composites business, restructuring costs, and CARES Act support.Consolidated first quarter sales decreased 26% from the prior year quarter. Our consolidated sales to commercial customers decreased 48% from the prior year quarter due to the continued impact of COVID-19. Our consolidated sales to government customers increased 10% as a result of strong performance on existing government program contracts as well as shipments against the recently awarded U.S. Air Force pallet contract award in our Mobility business.Sales to government and defense customers were 56% of consolidated sales compared to 38% in the prior year’s quarter reflecting growth from recent government contract awards and the continued impact of COVID-19 on commercial volumes.“Over the last three quarters, we have taken multiple actions to execute on our strategic plan to focus and improve on our core aviation services offering. We have divested certain non-core businesses, consolidated our facility footprint, and exited or restructured several underperforming contracts. We have also taken steps to permanently reduce our fixed and variable costs. We believe all of these actions have positioned us for improved operating margins as demand recovers in the commercial aviation business,” said John M. Holmes, President and Chief Executive Officer of AAR CORP.Gross profit margins decreased to 12.1% in the current quarter from 15.1% in the prior year quarter due primarily to the reduced commercial volumes. Expeditionary Services profitability increased significantly to 10.8% from 5.4% as execution on the U.S. Air Force pallet contract drove favorability in the Mobility business.During the quarter, we were awarded a new three-year contract from the Royal Netherlands Air Force to repair F-16 jet fuel starters. Our Airinmar subsidiary also recently announced two contracts to provide component repair cycle management and aircraft warranty solutions for Frontier Airlines and Air Methods, the world’s largest civilian helicopter operator.Selling, general and administrative expenses decreased to $45.3 million from $58.1 million reflecting the impact of our actions to reduce both our fixed and variable cost structure. As a percentage of sales, selling, general and administrative expenses were 11.3% for the quarter compared to 10.7% last year as a result of the significant decrease in commercial sales more than offsetting the favorable impact from the cost reduction actions.Net interest expense for the quarter was $1.6 million compared to $2.1 million last year. Average diluted share count was 35.0 million in both the current and prior year quarter.Cash flow provided by operating activities from continuing operations was $39.8 million during the current quarter, which included $48.5 million related to our receipt of funding from the CARES Act through the Payroll Support Program. Cash flow was also impacted by an $18.6 million reduction in the level of our accounts receivable financing program which we have reduced over the last two quarters. Excluding the impact of the CARES Act and the accounts receivable financing program, cash flow provided by operating activities from continuing operations was $9.9 million.Holmes concluded, “While the environment for the airline industry remains uncertain, we are focused on managing working capital and are pleased with our ability to generate positive cash flow in the quarter. We were also able to make certain investments to support our long-term growth. We are encouraged by the stability we have recently seen in our commercial business and the continued growth in our government business. Additionally, as the commercial aviation market recovers, we expect airlines will be even more focused on cost savings, which aligns with our lower cost services offering. Our strong industry position and our financial strength allow us to benefit from these opportunities and deliver for our customers.”Conference Call InformationAAR will hold its quarterly conference call at 3:45 p.m. CT on September 24, 2020. 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 8882878). The replay will be available from 7:15 p.m. CT on September 24, 2020 until 10:59 p.m. CT on September 29, 2020.About AARAAR 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
AAR CORP. and Subsidiaries
AAR CORP. and Subsidiaries
AAR CORP. and Subsidiaries