AAR CORP. (NYSE: AIR) today reported second quarter Fiscal Year
2022 consolidated sales of $436.6 million and income from
continuing operations of $20.8 million, or $0.58 per diluted share.
For the second quarter of the prior year, the Company reported
sales of $403.6 million and income from continuing operations of
$14.4 million, or $0.41 per diluted share. Our adjusted diluted
earnings per share from continuing operations in the second quarter
of Fiscal Year 2022 were $0.53 compared to $0.31 in the second
quarter of the prior year.
Consolidated second quarter sales increased 8%
over the prior year quarter. Our consolidated sales to commercial
customers increased 33% over the prior year quarter due to the
recovery in the commercial market from the impact of COVID-19. Our
consolidated sales to government customers decreased 15% primarily
related to the level of program activity for the modification and
sale of two C-40 aircraft to the U.S. Marine Corps in the prior
year quarter.
Sales to commercial customers were 59% of
consolidated sales compared to 48% in the prior year’s quarter
primarily reflecting the recovery in the commercial market from the
impact of COVID-19.
Gross profit margins increased from 17.2% in the
prior year quarter to 18.0% in the current quarter and adjusted
gross profit margin increased from 13.9% to 16.7%, primarily due to
the favorable impact from our actions to reduce costs and increase
our operating efficiency.
Selling, general and administrative expenses
increased from $43.4 million to $47.1 million mainly due to
restoration of temporary compensation reductions which had been in
place last year. Selling, general and administrative expenses
remained flat as a percent of sales at 10.8% with the favorable
impact from our cost reduction actions offsetting the compensation
restoration.
Operating margin increased from 5.4% in the
prior year quarter to 6.9% in the current quarter and adjusted
operating margin increased from 4.0% to 6.1%, as a result of our
actions to reduce costs and increase our operating efficiency.
Sequentially, our adjusted operating margin increased from 5.5% in
the first quarter to 6.1% in the current quarter primarily due to
strong performance on long-term programs.
“While the global recovery in commercial air
travel continues to be uneven due to COVID-19 variants and
associated travel restrictions, we continue to drive strong
performance. We delivered our fifth straight quarter of adjusted
operating margin improvement and are now exceeding pre-pandemic
levels. We expect this improvement to continue as our higher margin
parts activities fully recover,” said John M. Holmes, President and
Chief Executive Officer of AAR CORP.
During the quarter, we announced a five-year
renewal of our power-by-the-hour component pool and repair support
program for flydubai’s fleet of 33 Boeing 737NG aircraft. We also
announced a sustainability initiative in partnership with Fortress
Transportation and Infrastructure Investors where we will jointly
contribute a percentage of all used serviceable material sales from
our CFM56-5B and -7B partnership to acquire verified carbon offsets
and grant them to the purchasing customers. This new initiative
highlights the environmental benefits of recycling serviceable
material as airlines around the world seek ways to reduce their
overall carbon footprint.
Subsequent to the end of the quarter, we were
awarded a firm fixed price, indefinite delivery/indefinite quantity
contract from the Air Force to support United States Air Forces in
Europe (USAFE) F-16 aircraft. This $365 million, ten-year contract
provides for F-16 depot work as well as Service Life Extension
Program modifications and maintenance.
Holmes continued, “These new business wins
demonstrate the strength of our aviation services offering. The
USAFE award is particularly exciting as we have been supporting
F-16 aircraft for decades and this win takes our involvement with
this widely used platform to a new level given the long-term and
comprehensive nature of this program. Additionally, in partnership
with Fortress, we are leading the aftermarket industry in
Environmental, Social and Governance (ESG) initiatives while
delivering value to our customers.”
Net interest expense for the quarter was $0.4
million compared to $1.3 million last year. Average diluted share
count increased from 35.0 million to 35.6 million in the current
year quarter. During the quarter, we re-paid our Canadian term loan
of $24.7 million using proceeds from our credit facility.
Cash flow provided by operating activities from
continuing operations was $15.9 million during the current quarter.
Excluding our accounts receivable financing program, our cash flow
provided by operating activities from continuing operations was
$25.9 million in the current quarter. Over the last six quarters,
our cash flow provided by operating activities from continuing
operations has totaled $141.9 million.
Holmes concluded, “Throughout the pandemic, we
have demonstrated our ability to drive consistent cash flows. This
has resulted in an exceptionally strong balance sheet, which allows
us to continue to invest in our business while returning capital to
shareholders. In addition to deploying capital to fund our
continued growth, we will also return capital to shareholders
through our $150 million share repurchase program, which we
announced today and will commence this quarter.”
Conference Call Information
AAR will hold its quarterly conference call at
3:45 p.m. CT on December 21, 2021. 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
8483239). The replay will be available from 7:15 p.m. CT on
December 21, 2021 until 10:59 p.m. CT on December 27, 2021.
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 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
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 (i) the ability to
continue to drive strong performance, (ii) our expectations
regarding the continued improvement in our adjusted operating
margin and our higher margin parts activities to fully recover,
(iii) the continued strength of our aviation services offering,
(iv) the ability to lead the aftermarket industry in Environmental,
Social and Governance (ESG) initiatives while delivering value to
our customers, (v) our ability to continue to drive strong cash
flows, (vi) maintaining an exceptionally strong balance sheet to
allow us to continue to invest in our business while returning
capital to shareholders, and (vii) our expectation that we will
continue to deploy capital into each of our parts, repair and
government activities.
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
continued impact of the COVID-19 pandemic 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 (which were 44.7% of total sales in fiscal 2021);
(iv) non-compliance with laws and regulations relating to the
formation, administration and performance of our U.S. government
contracts; (v) cost overruns and losses on fixed-price contracts;
(vi) nonperformance by subcontractors or suppliers; (vii) 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; (viii) a reduction in outsourcing of maintenance activity
by airlines; (ix) a shortage of the skilled personnel on whom we
depend to operate our business, or work stoppages; (x) competition
from other companies, including original equipment manufacturers,
some of which have greater financial resources than we do; (xi)
financial and operational risks arising as a result of operating
internationally; (xii) inability to integrate acquisitions
effectively and execute our operational and financial plan related
to the acquisitions; (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) limitations on our
ability to access the debt and equity capital markets or to draw
down funds under loan agreements; (xvi) non-compliance with
restrictive and financial covenants contained in certain of our
loan agreements, and government funding received under the CARES
Act; (xvii) restrictions on paying, or failure to maintain or pay
dividends; (xviii) exposure to product liability and property
claims that may be in excess of our liability insurance coverage;
(xix) threats to our systems technology from equipment failures’
cyber and other security y breaches or other disruptions; (xx) the
costs of compliance, and liability for non-compliance, with
environmental regulations, including future requirements regarding
climate change; and (xxi) a need to make significant capital
expenditures to keep pace with technological developments in our
industry. 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 Quarterly Reports on Form 10-Q.
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 Ended November
30, |
|
Six Months Ended November
30, |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
Sales |
$ |
436.6 |
|
|
$ |
403.6 |
|
|
$ |
891.7 |
|
|
$ |
804.4 |
|
Cost and expenses: |
|
|
|
|
|
|
|
Cost of sales |
|
358.2 |
|
|
|
334.1 |
|
|
|
748.7 |
|
|
|
686.3 |
|
Provision for doubtful accounts |
|
0.8 |
|
|
|
4.4 |
|
|
|
0.8 |
|
|
|
4.4 |
|
Selling, general and administrative |
|
47.1 |
|
|
|
43.4 |
|
|
|
96.4 |
|
|
|
88.7 |
|
Loss from joint ventures |
|
(0.4 |
) |
|
|
(0.1 |
) |
|
|
(0.6 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
Operating income |
|
30.1 |
|
|
|
21.6 |
|
|
|
45.2 |
|
|
|
24.8 |
|
Loss on sale of business |
|
(1.3 |
) |
|
|
–– |
|
|
|
(1.3 |
) |
|
|
(19.5 |
) |
Interest expense, net |
|
(0.4 |
) |
|
|
(1.3 |
) |
|
|
(1.1 |
) |
|
|
(2.9 |
) |
Other income (expense), net |
|
0.3 |
|
|
|
(0.7 |
) |
|
|
1.0 |
|
|
|
(0.5 |
) |
|
|
|
|
|
|
|
|
Income from continuing operations before income tax
expense |
|
28.7 |
|
|
|
19.6 |
|
|
|
43.8 |
|
|
|
1.9 |
|
Income tax expense |
|
7.9 |
|
|
|
5.2 |
|
|
|
11.8 |
|
|
|
1.4 |
|
Income from continuing operations |
|
20.8 |
|
|
|
14.4 |
|
|
|
32.0 |
|
|
|
0.5 |
|
Income (Loss) from discontinued operations |
|
–– |
|
|
|
(6.2 |
) |
|
|
0.3 |
|
|
|
(6.8 |
) |
Net income (loss) |
$ |
20.8 |
|
|
$ |
8.2 |
|
|
$ |
32.3 |
|
|
$ |
(6.3 |
) |
|
|
|
|
|
|
|
|
Earnings per share – Basic: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.59 |
|
|
$ |
0.41 |
|
|
$ |
0.90 |
|
|
$ |
0.01 |
|
Loss from discontinued operations |
|
–– |
|
|
|
(0.18 |
) |
|
|
0.01 |
|
|
|
(0.20 |
) |
Earnings per share – Basic |
$ |
0.59 |
|
|
$ |
0.23 |
|
|
$ |
0.91 |
|
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
Earnings per share – Diluted: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.58 |
|
|
$ |
0.41 |
|
|
$ |
0.89 |
|
|
$ |
0.01 |
|
Loss from discontinued operations |
|
–– |
|
|
|
(0.18 |
) |
|
|
0.01 |
|
|
|
(0.19 |
) |
Earnings per share – Diluted |
$ |
0.58 |
|
|
$ |
0.23 |
|
|
$ |
0.90 |
|
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
Share Data: |
|
|
|
|
|
|
|
Weighted average shares outstanding – Basic |
|
35.1 |
|
|
|
34.9 |
|
|
|
35.1 |
|
|
|
34.9 |
|
Weighted average shares outstanding – Diluted |
|
35.6 |
|
|
|
35.0 |
|
|
|
35.6 |
|
|
|
35.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR CORP. and Subsidiaries
|
|
|
|
Condensed Consolidated
Balance Sheets(In millions) |
November 30,2021 |
|
May 31,2021 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
42.7 |
|
$ |
51.8 |
Restricted
cash |
|
3.7 |
|
|
8.4 |
Accounts receivable,
net |
|
192.1 |
|
|
166.7 |
Contract
assets |
|
68.5 |
|
|
71.9 |
Inventories,
net |
|
531.7 |
|
|
540.6 |
Rotable assets and
equipment on or available for lease |
|
53.9 |
|
|
50.4 |
Assets of discontinued
operations |
|
17.9 |
|
|
19.5 |
Other current
assets |
|
36.2 |
|
|
27.7 |
Total current assets |
|
946.7 |
|
|
937.0 |
Property, plant, and
equipment, net |
|
106.2 |
|
|
120.0 |
Operating lease
right-of-use assets, net |
|
76.3 |
|
|
75.8 |
Goodwill and
intangible assets, net |
|
120.9 |
|
|
123.8 |
Rotable assets
supporting long-term programs |
|
173.6 |
|
|
184.3 |
Other non-current
assets |
|
105.9 |
|
|
98.8 |
Total assets |
$ |
1,529.6 |
|
$ |
1,539.7 |
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Accounts payable and
accrued liabilities |
$ |
301.0 |
|
$ |
301.4 |
Liabilities of
discontinued operations |
|
19.2 |
|
|
35.4 |
Total current liabilities |
|
320.2 |
|
|
336.8 |
Long-term
debt |
|
103.2 |
|
|
133.7 |
Operating lease
liabilities |
|
60.5 |
|
|
59.9 |
Other liabilities and
deferred income |
|
38.7 |
|
|
34.9 |
Total liabilities |
|
522.6 |
|
|
565.3 |
Equity |
|
1,007.0 |
|
|
974.4 |
Total liabilities and equity |
|
1,529.6 |
|
$ |
1,539.7 |
|
|
|
|
|
|
AAR CORP. and Subsidiaries
|
|
|
|
Condensed Consolidated Statements of Cash Flows(In
millions – unaudited) |
Three Months EndedNovember
30, |
|
Six Months EndedNovember 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Cash flows provided from operating
activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
20.8 |
|
|
$ |
8.2 |
|
|
$ |
32.3 |
|
|
$ |
(6.3 |
) |
Loss (Income) from discontinued operations |
|
–– |
|
|
|
6.2 |
|
|
|
(0.3 |
) |
|
|
6.8 |
|
Income from continuing operations |
|
20.8 |
|
|
|
14.4 |
|
|
|
32.0 |
|
|
|
0.5 |
|
Adjustments to reconcile income from continuing operations
to net cash provided from operating
activities |
|
|
|
|
|
|
|
Depreciation and intangible amortization |
|
8.9 |
|
|
|
9.2 |
|
|
|
17.8 |
|
|
|
18.2 |
|
Amortization of stock-based compensation |
|
1.6 |
|
|
|
1.8 |
|
|
|
4.7 |
|
|
|
4.5 |
|
Provision for doubtful accounts |
|
0.8 |
|
|
|
4.4 |
|
|
|
0.8 |
|
|
|
4.4 |
|
Loss on sale of business |
|
1.3 |
|
|
|
–– |
|
|
|
1.3 |
|
|
|
19.5 |
|
Contract termination and restructuring costs |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
2.2 |
|
Impairment charges |
|
0.6 |
|
|
|
1.2 |
|
|
|
2.9 |
|
|
|
7.0 |
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(11.7 |
) |
|
|
(7.5 |
) |
|
|
(26.2 |
) |
|
|
(4.8 |
) |
Contract assets |
|
6.0 |
|
|
|
(7.4 |
) |
|
|
3.2 |
|
|
|
(7.5 |
) |
Inventories |
|
(6.4 |
) |
|
|
11.4 |
|
|
|
8.0 |
|
|
|
30.2 |
|
Rotable assets supporting long-term programs |
|
0.9 |
|
|
|
(1.9 |
) |
|
|
1.8 |
|
|
|
(0.9 |
) |
Accounts payable and accrued liabilities |
|
(4.3 |
) |
|
|
34.1 |
|
|
|
(1.4 |
) |
|
|
9.0 |
|
Payroll Support Program deferred credit |
|
–– |
|
|
|
(17.2 |
) |
|
|
–– |
|
|
|
23.6 |
|
Deferred revenue on long-term programs |
|
2.7 |
|
|
|
(42.5 |
) |
|
|
0.7 |
|
|
|
(60.4 |
) |
Other |
|
(5.3 |
) |
|
|
27.6 |
|
|
|
(12.2 |
) |
|
|
21.9 |
|
Net cash provided from operating activities – continuing
operations |
|
15.9 |
|
|
|
27.6 |
|
|
|
33.4 |
|
|
|
67.4 |
|
Net cash provided from (used in) operating activities –
discontinued operations |
|
0.4 |
|
|
|
(1.0 |
) |
|
|
(14.2 |
) |
|
|
(1.9 |
) |
Net cash provided from operating activities |
|
16.3 |
|
|
|
26.6 |
|
|
|
19.2 |
|
|
|
65.5 |
|
|
|
|
|
|
|
|
|
Cash flows provided from (used in) investing
activities: |
|
|
|
|
|
|
|
Property, plant and equipment expenditures |
|
(3.8 |
) |
|
|
(2.7 |
) |
|
|
(6.0 |
) |
|
|
(6.0 |
) |
Proceeds from termination of life insurance
policies |
|
–– |
|
|
|
10.0 |
|
|
|
–– |
|
|
|
10.0 |
|
Other |
|
6.0 |
|
|
|
–– |
|
|
|
3.3 |
|
|
|
1.6 |
|
Net cash provided from (used in) investing
activities |
|
2.2 |
|
|
|
7.3 |
|
|
|
(2.7 |
) |
|
|
5.6 |
|
|
|
|
|
|
|
|
|
Cash flows used in financing activities: |
|
|
|
|
|
|
|
Repayments on borrowings, net |
|
(24.7 |
) |
|
|
(35.0 |
) |
|
|
(29.7 |
) |
|
|
(381.3 |
) |
Cash dividends |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
(0.1 |
) |
Other |
|
0.1 |
|
|
|
–– |
|
|
|
(0.4 |
) |
|
|
(1.5 |
) |
Net cash used in financing activities |
|
(24.6 |
) |
|
|
(35.0 |
) |
|
|
(30.1 |
) |
|
|
(382.9 |
) |
Effect of exchange rate changes on cash |
|
(0.1 |
) |
|
|
–– |
|
|
|
(0.2 |
) |
|
|
0.1 |
|
Decrease in cash and cash equivalents |
|
(6.2 |
) |
|
|
(1.1 |
) |
|
|
(13.8 |
) |
|
|
(311.7 |
) |
Cash, cash equivalents, and restricted cash at beginning of
period |
|
52.6 |
|
|
|
114.1 |
|
|
|
60.2 |
|
|
|
424.7 |
|
Cash, cash equivalents, and restricted cash at end of
period |
$ |
46.4 |
|
|
$ |
113.0 |
|
|
$ |
46.4 |
|
|
$ |
113.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR CORP. and Subsidiaries
|
|
|
|
Sales By Business Segment(In millions -
unaudited) |
Three Months EndedNovember
30, |
|
Six Months EndedNovember 30, |
|
2021 |
2020 |
|
2021 |
2020 |
Aviation Services |
$ |
419.3 |
$ |
385.0 |
|
$ |
854.9 |
$ |
748.6 |
Expeditionary Services |
|
17.3 |
|
18.6 |
|
|
36.8 |
|
55.8 |
|
$ |
436.6 |
$ |
403.6 |
|
$ |
891.7 |
$ |
804.4 |
Gross Profit by Business Segment(In millions-
unaudited) |
Three Months EndedNovember
30, |
|
Six Months EndedNovember 30, |
|
2021 |
2020 |
|
2021 |
2020 |
Aviation Services |
$ |
74.0 |
$ |
66.8 |
|
$ |
134.9 |
$ |
111.4 |
Expeditionary Services |
|
4.4 |
|
2.7 |
|
|
8.1 |
|
6.7 |
|
$ |
78.4 |
$ |
69.5 |
|
$ |
143.0 |
$ |
118.1 |
|
|
|
|
|
|
|
|
|
|
Adjusted income from continuing operations,
adjusted diluted earnings per share from continuing operations,
adjusted sales, adjusted cost of goods sold, adjusted gross profit
margin, adjusted selling, general, and administrative expenses,
adjusted cash flow from provided by (used in) operating activities
from continuing operations, 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 illustrate our actual operating
performance unaffected by the impact of certain 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. 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. 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, workforce actions,
subsidies and costs, impairment charges, facility consolidation and
repositioning costs, investigation and remediation compliance
costs, 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
(a)(In millions - unaudited) |
Three Months EndedNovember
30, |
|
Six Months EndedNovember 30, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
Income from continuing operations |
$ |
20.8 |
|
$ |
14.4 |
|
|
$ |
32.0 |
|
$ |
0.5 |
|
Investigation and remediation compliance
costs |
|
0.6 |
|
|
2.1 |
|
|
|
0.7 |
|
|
3.1 |
|
Loss on sale of business |
|
1.0 |
|
|
–– |
|
|
|
1.0 |
|
|
14.8 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
(3.3 |
) |
|
3.3 |
|
|
|
1.7 |
|
|
5.1 |
|
Customer bankruptcy and credit charges |
|
0.7 |
|
|
1.0 |
|
|
|
0.7 |
|
|
1.1 |
|
Asset impairment charges |
|
0.5 |
|
|
1.0 |
|
|
|
2.2 |
|
|
5.4 |
|
Government COVID-related subsidies |
|
(1.9 |
) |
|
(14.2 |
) |
|
|
(2.1 |
) |
|
(22.6 |
) |
Facility consolidation and repositioning
costs |
|
0.1 |
|
|
0.3 |
|
|
|
0.2 |
|
|
1.8 |
|
Severance and furlough costs |
|
0.5 |
|
|
2.4 |
|
|
|
1.2 |
|
|
6.9 |
|
Recognition of foreign currency translation
adjustments |
|
0.2 |
|
|
–– |
|
|
|
0.2 |
|
|
–– |
|
Strategic financing evaluation costs |
|
–– |
|
|
0.6 |
|
|
|
–– |
|
|
0.8 |
|
Adjusted income from continuing operations |
$ |
19.2 |
|
$ |
10.9 |
|
|
$ |
37.8 |
|
$ |
16.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) All adjustments are presented net of applicable
income taxes.
Adjusted Diluted Earnings per Share from Continuing
Operations (a)(In millions -
unaudited) |
Three Months EndedNovember
30, |
|
Six
Months EndedNovember
30, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
Diluted earnings per share from continuing
operations |
$ |
0.58 |
|
$ |
0.41 |
|
|
$ |
0.89 |
|
$ |
0.01 |
|
Investigation and remediation compliance
costs |
|
0.01 |
|
|
0.06 |
|
|
|
0.02 |
|
|
0.09 |
|
Loss on sale of business |
|
0.03 |
|
|
–– |
|
|
|
0.03 |
|
|
0.42 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
(0.09 |
) |
|
0.10 |
|
|
|
0.05 |
|
|
0.15 |
|
Customer bankruptcy and credit charges |
|
0.02 |
|
|
0.04 |
|
|
|
0.02 |
|
|
0.04 |
|
Asset impairment charges |
|
0.01 |
|
|
0.02 |
|
|
|
0.06 |
|
|
0.15 |
|
Government COVID-related subsidies |
|
(0.05 |
) |
|
(0.41 |
) |
|
|
(0.06 |
) |
|
(0.65 |
) |
Facility consolidation and repositioning
costs |
|
0.01 |
|
|
0.01 |
|
|
|
0.01 |
|
|
0.05 |
|
Severance and furlough costs |
|
0.01 |
|
|
0.07 |
|
|
|
0.03 |
|
|
0.20 |
|
Strategic financing evaluation costs |
|
–– |
|
|
0.01 |
|
|
|
–– |
|
|
0.02 |
|
Adjusted diluted earnings per share from continuing
operations |
$ |
0.53 |
|
$ |
0.31 |
|
|
$ |
1.05 |
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) All adjustments are presented net of applicable
income taxes.
Adjusted Gross Profit Margin(In millions -
unaudited) |
Three Months Ended |
|
November30, 2021 |
August31, 2021 |
November30, 2020 |
Sales |
$ |
436.6 |
|
$ |
455.1 |
|
$ |
403.6 |
|
Contract termination/restructuring costs, net |
|
(2.5 |
) |
|
1.0 |
|
|
(2.3 |
) |
Customer bankruptcy and credit charges |
|
–– |
|
|
–– |
|
|
0.4 |
|
Adjusted sales |
$ |
434.1 |
|
$ |
456.1 |
|
$ |
401.7 |
|
|
|
|
|
Cost of sales |
$ |
358.2 |
|
$ |
390.5 |
|
$ |
334.1 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
1.9 |
|
|
(5.7 |
) |
|
(3.3 |
) |
Government COVID-related subsidies, net |
|
2.5 |
|
|
0.3 |
|
|
18.1 |
|
Facility consolidation and repositioning
costs |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.4 |
) |
Asset impairment charges |
|
(0.6 |
) |
|
(2.3 |
) |
|
(1.2 |
) |
Severance and furlough costs |
|
(0.5 |
) |
|
(0.1 |
) |
|
(1.5 |
) |
Adjusted cost of sales |
$ |
361.4 |
|
$ |
382.6 |
|
$ |
345.8 |
|
|
|
|
|
Adjusted gross profit margin |
|
16.7 |
% |
|
16.1 |
% |
|
13.9 |
% |
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Margin(In millions -
unaudited) |
Three Months Ended |
|
November30, 2021 |
August31, 2021 |
November30, 2020 |
November30, 2019 |
Adjusted sales |
$ |
434.1 |
|
$ |
456.1 |
|
$ |
401.7 |
|
$ |
560.9 |
|
|
|
|
|
|
Operating income |
$ |
30.1 |
|
$ |
15.1 |
|
$ |
21.6 |
|
$ |
28.1 |
|
Investigation and remediation costs |
|
0.8 |
|
|
0.2 |
|
|
2.8 |
|
|
2.4 |
|
Contract termination/restructuring costs
and loss provisions, net |
|
(4.4 |
) |
|
6.7 |
|
|
4.5 |
|
|
–– |
|
Customer bankruptcy and credit charges |
|
1.0 |
|
|
–– |
|
|
1.3 |
|
|
–– |
|
Government COVID-related subsidies |
|
(2.5 |
) |
|
(0.3 |
) |
|
(18.7 |
) |
|
–– |
|
Facility consolidation and repositioning
costs |
|
0.1 |
|
|
0.1 |
|
|
0.4 |
|
|
–– |
|
Asset impairment charges |
|
0.6 |
|
|
2.3 |
|
|
1.2 |
|
|
–– |
|
Severance and furlough costs |
|
0.8 |
|
|
0.9 |
|
|
2.2 |
|
|
0.9 |
|
Strategic financing evaluation costs |
|
–– |
|
|
–– |
|
|
0.7 |
|
|
–– |
|
Adjusted operating income |
$ |
26.5 |
|
$ |
25.0 |
|
$ |
16.0 |
|
$ |
31.4 |
|
|
|
|
|
|
Adjusted operating margin |
|
6.1 |
% |
|
5.5 |
% |
|
4.0 |
% |
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Cash Provided by Operating Activities
from Continuing Operations(In
millions - unaudited) |
Three Months EndedNovember
30, |
|
Six
Months EndedNovember
30, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
Cash provided by operating activities from continuing
operations |
$ |
15.9 |
|
$ |
27.6 |
|
|
$ |
33.4 |
|
$ |
67.4 |
|
Amounts outstanding on accounts receivable financing
program: |
|
|
|
|
|
Beginning of period |
|
30.2 |
|
|
55.7 |
|
|
|
38.6 |
|
|
74.3 |
|
End of period |
|
(20.2 |
) |
|
(48.9 |
) |
|
|
(20.2 |
) |
|
(48.9 |
) |
Adjusted cash provided by operating activities
from continuing operations |
$ |
25.9 |
|
$ |
34.4 |
|
|
$ |
51.8 |
|
$ |
92.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(In millions - unaudited) |
Three Months EndedNovember
30, |
|
Six Months EndedNovember 30, |
|
Year Ended May 31, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
Net income (loss) |
$ |
20.8 |
|
$ |
8.2 |
|
|
$ |
32.3 |
|
$ |
(6.3 |
) |
|
$ |
35.8 |
|
Loss (Income) from discontinued operations |
|
–– |
|
|
6.2 |
|
|
|
(0.3 |
) |
|
6.8 |
|
|
|
10.5 |
|
Income tax expense |
|
7.9 |
|
|
5.2 |
|
|
|
11.8 |
|
|
1.4 |
|
|
|
18.2 |
|
Other (income) expense, net |
|
(0.3 |
) |
|
0.7 |
|
|
|
(1.0 |
) |
|
0.5 |
|
|
|
(4.3 |
) |
Interest expense, net |
|
0.4 |
|
|
1.3 |
|
|
|
1.1 |
|
|
2.9 |
|
|
|
4.8 |
|
Depreciation and intangible amortization |
|
8.9 |
|
|
9.2 |
|
|
|
17.8 |
|
|
18.2 |
|
|
|
36.3 |
|
Investigation and remediation compliance
costs |
|
0.8 |
|
|
2.8 |
|
|
|
1.0 |
|
|
4.1 |
|
|
|
4.4 |
|
Loss on sale of business |
|
1.3 |
|
|
–– |
|
|
|
1.3 |
|
|
19.5 |
|
|
|
20.2 |
|
Asset impairment charges |
|
0.6 |
|
|
1.2 |
|
|
|
2.9 |
|
|
7.0 |
|
|
|
7.0 |
|
Contract termination/restructuring costs and
loss provisions, net |
|
(4.4 |
) |
|
4.5 |
|
|
|
2.3 |
|
|
6.7 |
|
|
|
9.3 |
|
Customer bankruptcy and credit charges |
|
1.0 |
|
|
1.3 |
|
|
|
1.0 |
|
|
1.5 |
|
|
|
4.9 |
|
Government COVID-related subsidies, net |
|
(2.5 |
) |
|
(18.7 |
) |
|
|
(2.8 |
) |
|
(29.8 |
) |
|
|
(56.2 |
) |
Facility consolidation and repositioning
costs |
|
0.1 |
|
|
0.4 |
|
|
|
0.2 |
|
|
2.4 |
|
|
|
4.5 |
|
Severance and furlough costs |
|
0.8 |
|
|
2.2 |
|
|
|
1.7 |
|
|
8.2 |
|
|
|
9.0 |
|
Strategic financing evaluation costs |
|
–– |
|
|
0.7 |
|
|
|
–– |
|
|
1.0 |
|
|
|
1.0 |
|
Stock-based compensation |
|
1.6 |
|
|
1.8 |
|
|
|
4.7 |
|
|
4.5 |
|
|
|
9.2 |
|
Adjusted EBITDA |
$ |
37.0 |
|
$ |
27.0 |
|
|
$ |
74.0 |
|
$ |
48.6 |
|
|
$ |
114.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt(In millions- unaudited) |
November 30, 2021 |
|
November 30, 2020 |
Total debt |
$ |
104.5 |
|
|
$ |
222.1 |
|
Less: Cash and cash
equivalents |
|
(42.7 |
) |
|
|
(110.0 |
) |
Net debt |
$ |
61.8 |
|
|
$ |
112.1 |
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted EBITDA(In millions -
unaudited) |
|
Adjusted EBITDA for the year ended May 31,
2021 |
$ |
114.6 |
|
Less: Adjusted EBITDA for the six months ended November 30,
2020 |
|
(48.6 |
) |
Plus: Adjusted EBITDA for the six months ended November 30,
2021 |
|
74.0 |
|
Adjusted EBITDA for the twelve months ended November 30,
2021 |
$ |
140.0 |
|
Net debt at November 30, 2021 |
$ |
61.8 |
|
Net debt to Adjusted EBITDA |
|
0.44 |
|
|
|
|
|
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