WOOD
DALE, Ill., Jan. 7, 2025
/PRNewswire/ -- AAR CORP. (NYSE: AIR), a leading provider
of aviation services to commercial and government operators, MROs,
and OEMs, reported today financial results for the fiscal year 2025
second quarter ended November 30,
2024.
SECOND QUARTER FISCAL YEAR 2025 HIGHLIGHTS
(As
compared to Q2 FY24)
- Sales of $686 million;
increased 26%
- Organic growth of 12%; accelerated from 6% in Q1
- GAAP EPS of $(0.87)
- Adjusted EPS (diluted) of $0.90; increased 11%
- GAAP Net loss of $31
million
- Adjusted EBITDA of $78
million; increased 42%
- Cash flow provided by operating activities of
$22 million
MANAGEMENT COMMENTARY
"AAR delivered another solid quarter with record sales and
improved margins," said John M.
Holmes, AAR's Chairman, President and Chief Executive
Officer. "Our sales grew 26%, underpinned by strong organic growth
of 12%, which accelerated from 6% in the first quarter. We saw 20%
sales growth in our Parts Supply segment, led by a significant
expansion in our commercial new parts distribution activities, and
a return to growth in USM as high demand for engine and airframe
components continued and asset availability improved. Sales
in Repair & Engineering grew 57% year-over-year due to
meaningful contributions from our Product Support acquisition and
continued efficiency gains in our heavy maintenance hangars. The
double-digit sales growth across our commercial and government
businesses have us tracking toward another record year."
Holmes continued, "We were also pleased to secure new business
wins in each of our core segments. In Parts Supply, we signed new
distribution agreements with Chromalloy and Whippany Actuation
Systems, and in Integrated Solutions we extended our Airinmar
contract with Singapore Airlines. Shortly after the quarter closed,
our Repair & Engineering segment announced a joint venture with
Air France to support next generation aircraft in the Asia-Pacific region out of our Thailand facility. Additionally, as part of
our strategy to focus on higher margin activities, we recently
announced the divestiture of our Landing Gear Overhaul business,
which we expect to be immediately accretive to margins and earnings
upon closing."
"Furthermore, we drove significant expansion in our adjusted
EBITDA margins, increasing to 11.4% in the quarter from 10.1% in
the prior year quarter. As we continue to optimize our
portfolio and drive efficiencies throughout our businesses, we
anticipate continued margin expansion in the coming quarters,"
Holmes concluded.
RECENT UPDATES
NEW BUSINESS
- Multi-year engine parts supply agreement to distribute
Chromalloy's Parts Manufacturer Approval (PMA) parts for the
CF6-80C2 engine type
- Multi-year global agreement with Whippany Actuation Systems, a
TransDigm Group business, to distribute all components and
sub-assemblies for their actuation product line
- Extension with Singapore Airlines for Airinmar's full suite of
repair cycle management services
- Agreement to form a joint venture in the Asia-Pacific region with Air France Industries
KLM Engineering & Maintenance to support next generation
aircraft
PORTFOLIO UPDATE
- Subsequent to the quarter, the Company announced an agreement
to divest its Landing Gear Overhaul business for $51 million. The divestiture is part of the
Company's strategy to optimize its portfolio and focus on higher
margin businesses with more significant growth potential.
SECOND QUARTER FISCAL YEAR 2025 RESULTS
Consolidated second quarter sales increased 26% to $686.1 million, compared to $545.4 million in the same quarter last year.
This reflects a 30% increase in consolidated sales to commercial
customers, primarily due to the acquisition of the Product Support
business and strong demand throughout the Company's Parts Supply
segment. Sales to government customers increased 16% from the
same period last year, primarily due to increased order volume for
new parts distribution activities. Sales to commercial customers
were 73% of consolidated sales, compared to 71% in the prior year
quarter.
Second quarter results include after-tax charges of $57.1 million associated with the recently
announced FCPA settlement and related costs. As a result of
these charges, the Company reported a net loss of $30.6 million, or $0.87 per share. For the second quarter of the
prior year, the Company reported net income of $23.8 million, or $0.67 per diluted share. Adjusted diluted
earnings per share in the second quarter of fiscal year 2025 were
$0.90, compared to $0.81 in the second quarter of the prior
year.
Selling, general, and administrative expenses were $133.1 million in the current quarter, compared
to $65.7 million in the prior year
quarter. The second quarter included $59.2 million for the settlement of FCPA
allegations and related costs. Acquisition, amortization, and
integration expenses were $4.4
million in the quarter, compared to $3.1 million in the prior year quarter.
Operating margins were (0.3)% in the quarter, compared to 7.0%
in the prior year quarter. Adjusted operating margin increased to
9.2% in the current year quarter from 8.1% in the prior year
quarter, primarily as a result of growth in commercial sales.
Sequentially, our adjusted operating margin increased from 9.1% to
9.2%, driven by improved profitability in our Repair &
Engineering segment.
Net interest expense for the quarter was $18.8 million, compared to $5.6 million last year, primarily due to
increased debt levels as a result of funding the Product Support
acquisition. Average diluted share count increased from 35.3
million shares in the prior year quarter to 35.5 million shares in
the current year quarter. Debt repayment remains a priority, but
the Company will also continue to evaluate other attractive
investment opportunities as well as share repurchases for capital
deployment. Currently, $52.5
million remains on the existing $150
million share repurchase program.
Cash flow provided by operating activities was $22.0 million during the current quarter,
compared to cash provided of $17.4
million in the prior year quarter. Excluding the
accounts receivable financing program, cash flow provided by
operating activities was $27.1
million in the current quarter. As of November 30, 2024, net debt was $935.3 million and net leverage, pro forma for
the last 12 months adjusted EBITDA of the Product Support business,
was 3.17x.
Holmes concluded, "We anticipate continued strong sales growth
in the second half of fiscal year 2025. We also expect
further margin expansion in the same period as we realize the
benefits from continued growth in Parts Supply, synergies from the
Product Support acquisition, and the completion of our recently
announced divestiture. These margins should improve even further in
fiscal year 2026 as we grow the higher margin Product Support
business and our hangar expansions in Miami and Oklahoma
City come online. Finally, we remain on track to reduce
leverage following the Product Support acquisition as EBITDA
increases and we generate operating cash."
Conference call information
On Tuesday, January 7, 2025, at
4 p.m. Central time, AAR will hold a
conference call to discuss the results. A listen-only webcast and
slides can be accessed at
https://edge.media-server.com/mmc/p/ajocdbor. Participants may join
via phone by registering at
https://register.vevent.com/register/BIbb0ac5ff18564eedbc99a44684780b13.
Once registered, participants will receive a dial-in number and a
unique PIN that will allow them to access the call. A replay
of the conference call will be available for on-demand listening
shortly after the completion of the call at the webcast link and
will remain available for approximately one year.
The slides are also available on AAR's website at
https://www.aarcorp.com/en/investors/events-and-presentations/.
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 four operating
segments: Parts Supply, Repair & Engineering, Integrated
Solutions, and Expeditionary Services. Additional information can
be found at aarcorp.com/.
Contact: Denise Pacioni – Director of Investor
Relations | +1-630-227-5830 | investors@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, continued demand in the commercial and government
aviation markets, anticipated activities and benefits under
extended, expanded and new services, supply and distribution
agreements, focus on our strategy, opportunities for capital
deployment and margin improvement, earnings performance, debt
management, cash flow generation, increased EBITDA, contributions
from our recent acquisitions, benefits from our expected
divestiture, expectations for our parts distribution activities,
and expansions of our heavy maintenance aircraft
hangars.
|
|
Forward-looking
statements often address our expected future operating and
financial performance and financial condition, or 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) adverse events and negative publicity in the aviation
industry; (iii) a reduction in sales to the U.S. government and its
contractors; (iv) cost overruns and losses on fixed-price
contracts; (v) nonperformance by subcontractors or suppliers; (vi)
a reduction in outsourcing of maintenance activity by airlines;
(vii) a shortage of skilled personnel or work stoppages; (viii)
competition from other companies; (ix) financial, operational and
legal risks arising as a result of operating internationally; (x)
inability to integrate acquisitions effectively and execute
operational and financial plans related to the acquisitions; (xi)
failure to realize the anticipated benefits of acquisitions; (xii)
circumstances associated with divestitures; (xiii) inability to
recover costs due to fluctuations in market values for aviation
products and equipment; (xiv) cyber or other security threats or
disruptions; (xv) a need to make significant capital expenditures
to keep pace with technological developments in our industry; (xvi)
restrictions on use of intellectual property and tooling important
to our business; (xvii) inability to fully execute our stock
repurchase program and return capital to stockholders; (xviii)
limitations on our ability to access the debt and equity capital
markets or to draw down funds under loan agreements; (xix)
non-compliance with restrictive and financial covenants contained
in our debt and loan agreements; (xx) changes in or non-compliance
with laws and regulations related to federal contractors, the
aviation industry, international operations, safety, and
environmental matters, and the costs of complying with such laws
and regulations; and (xxi) exposure to product liability and
property claims that may be in excess of our liability insurance
coverage. 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 other filings
from time to time with the U.S Securities and Exchange
Commission. 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,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
|
|
|
|
Sales
|
$
686.1
|
|
$ 545.4
|
|
$
1,347.8
|
|
$ 1,095.1
|
|
Cost of
sales
|
557.5
|
|
442.0
|
|
1,102.0
|
|
890.4
|
|
Gross
profit
|
128.6
|
|
103.4
|
|
245.8
|
|
204.7
|
|
Provision for (Recovery
of) credit losses
|
(0.3)
|
|
––
|
|
(0.1)
|
|
0.4
|
|
Selling, general, and
administrative
|
133.1
|
|
65.7
|
|
209.0
|
|
140.4
|
|
Earnings (Loss) from
joint ventures
|
1.9
|
|
0.6
|
|
4.2
|
|
(0.3)
|
|
Operating income
(loss)
|
(2.3)
|
|
38.3
|
|
41.1
|
|
63.6
|
|
Pension settlement
charge
|
––
|
|
––
|
|
––
|
|
(26.7)
|
|
Losses related to
sale and exit of business, net
|
(1.2)
|
|
(0.9)
|
|
(1.3)
|
|
(1.6)
|
|
Interest expense,
net
|
(18.8)
|
|
(5.6)
|
|
(37.1)
|
|
(11.0)
|
|
Other expense,
net
|
(0.2)
|
|
(0.1)
|
|
(0.3)
|
|
(0.1)
|
|
Income (Loss) before
income tax expense
|
(22.5)
|
|
31.7
|
|
2.4
|
|
24.2
|
|
Income tax
expense
|
8.1
|
|
7.9
|
|
15.0
|
|
1.0
|
|
Net income
(loss)
|
$
(30.6)
|
|
$ 23.8
|
|
$
(12.6)
|
|
$ 23.2
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
share – Basic
|
$
(0.87)
|
|
$ 0.67
|
|
$
(0.36)
|
|
$ 0.66
|
|
Earnings (Loss) per
share – Diluted
|
$
(0.87)
|
|
$ 0.67
|
|
$
(0.36)
|
|
$ 0.65
|
|
|
|
|
|
|
|
|
|
Share data used for
earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – Basic
|
35.2
|
|
34.9
|
|
35.2
|
|
34.9
|
|
Weighted average
shares outstanding – Diluted
|
35.2
|
|
35.3
|
|
35.2
|
|
35.3
|
|
AAR CORP. and
subsidiaries
|
|
|
|
|
|
Condensed consolidated balance
sheets
(In
millions)
|
November
30,
2024
|
|
May
31,
2024
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
61.7
|
|
$ 85.8
|
|
Restricted
cash
|
20.8
|
|
10.3
|
|
Accounts receivable,
net
|
320.4
|
|
287.2
|
|
Contract
assets
|
150.2
|
|
123.2
|
|
Inventories,
net
|
790.0
|
|
733.1
|
|
Rotable assets and
equipment on or available for lease
|
65.5
|
|
81.5
|
|
Other current
assets
|
89.4
|
|
68.5
|
|
Total current
assets
|
1,498.0
|
|
1,389.6
|
|
Property, plant, and
equipment, net
|
167.0
|
|
171.7
|
|
Goodwill and
intangible assets, net
|
770.5
|
|
790.2
|
|
Rotable assets
supporting long-term programs
|
174.0
|
|
166.3
|
|
Operating lease
right-of-use assets, net
|
90.5
|
|
96.6
|
|
Other non-current
assets
|
149.3
|
|
155.6
|
|
Total
assets
|
$
2,849.3
|
|
$ 2,770.0
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Accounts
payable
|
$
291.8
|
|
$ 238.0
|
|
Other current
liabilities
|
266.5
|
|
228.9
|
|
Total current
liabilities
|
558.3
|
|
466.9
|
|
Long-term
debt
|
986.7
|
|
985.4
|
|
Operating lease
liabilities
|
78.0
|
|
80.3
|
|
Other liabilities
and deferred revenue
|
44.7
|
|
47.6
|
|
Total
liabilities
|
1,667.7
|
|
1,580.2
|
|
Equity
|
1,181.6
|
|
1,189.8
|
|
Total liabilities and
equity
|
$
2,849.3
|
|
$ 2,770.0
|
|
AAR CORP. and
subsidiaries
|
|
|
Condensed consolidated statements of cash
flows
(In millions –
unaudited)
|
Three months
ended
November
30,
|
|
Six
months
ended
November
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(30.6)
|
|
$ 23.8
|
|
$
(12.6)
|
|
$ 23.2
|
|
Adjustments
to reconcile net income (loss) to net cash provided by (used
in)
operating
activities
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
14.6
|
|
8.7
|
|
28.8
|
|
17.1
|
|
Stock-based compensation expense
|
5.0
|
|
3.6
|
|
10.0
|
|
7.9
|
|
Loss (Earnings) from joint ventures
|
(1.9)
|
|
––
|
|
(4.2)
|
|
0.3
|
|
Pension settlement charge
|
––
|
|
––
|
|
––
|
|
26.7
|
|
Provision for (Recovery of) credit
losses
|
(0.3)
|
|
––
|
|
(0.1)
|
|
0.4
|
|
Changes in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(9.6)
|
|
34.2
|
|
(33.3)
|
|
(6.3)
|
|
Contract
assets
|
(2.7)
|
|
(0.1)
|
|
(27.2)
|
|
(12.4)
|
|
Inventories
|
(42.6)
|
|
(31.7)
|
|
(57.4)
|
|
(71.5)
|
|
Prepaid expenses
and other current
assets
|
(2.1)
|
|
(1.4)
|
|
(10.6)
|
|
(10.2)
|
|
Rotable assets
supporting long-term programs
|
(5.6)
|
|
(3.0)
|
|
(12.1)
|
|
(4.0)
|
|
Accounts payable
and accrued liabilities
|
94.1
|
|
(7.0)
|
|
102.6
|
|
47.2
|
|
Deferred revenue on
long-term programs
|
(6.5)
|
|
(5.2)
|
|
(6.4)
|
|
(9.5)
|
|
Other
|
10.2
|
|
(4.5)
|
|
25.9
|
|
(10.0)
|
|
Net cash
provided by (used in) operating activities – continuing
operations
|
22.0
|
|
17.4
|
|
3.4
|
|
(1.1)
|
|
Net cash used
in operating activities – discontinued operations
|
––
|
|
––
|
|
––
|
|
(0.2)
|
|
Net cash
provided by (used in) operating activities
|
22.0
|
|
17.4
|
|
3.4
|
|
(1.3)
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
|
Property,
plant, and equipment
expenditures
|
(8.3)
|
|
(7.3)
|
|
(16.2)
|
|
(16.4)
|
|
Other
|
0.4
|
|
(1.4)
|
|
3.0
|
|
(3.9)
|
|
Net cash used in
investing activities
|
(7.9)
|
|
(8.7)
|
|
(13.2)
|
|
(20.3)
|
|
|
|
|
|
|
|
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
|
|
Short-term
borrowings (repayments) on Revolving Credit Facility,
net
|
5.0
|
|
(30.0)
|
|
––
|
|
5.0
|
|
Other
|
0.3
|
|
6.6
|
|
(3.8)
|
|
10.3
|
|
Net cash provided by
(used in) financing activities
|
5.3
|
|
(23.4)
|
|
(3.8)
|
|
15.3
|
|
Increase (Decrease)
in cash and cash
equivalents
|
19.4
|
|
(14.7)
|
|
(13.6)
|
|
(6.3)
|
|
Cash, cash
equivalents, and restricted cash at beginning of
period
|
63.1
|
|
90.2
|
|
96.1
|
|
81.8
|
|
Cash, cash
equivalents, and restricted cash at end of
period
|
$
82.5
|
|
$ 75.5
|
|
$
82.5
|
|
$ 75.5
|
|
AAR CORP. and
subsidiaries
|
|
|
Third-party sales by
segment
(In millions -
unaudited)
|
Three months
ended
November
30,
|
|
Six months
ended
November
30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Parts
Supply
|
$
273.7
|
$ 227.6
|
|
$
523.4
|
$ 464.4
|
|
Repair &
Engineering
|
228.8
|
145.4
|
|
446.4
|
282.9
|
|
Integrated
Solutions
|
163.4
|
156.6
|
|
332.3
|
312.9
|
|
Expeditionary
Services
|
20.2
|
15.8
|
|
45.7
|
34.9
|
|
$
686.1
|
$ 545.4
|
|
$
1,347.8
|
$ 1,095.1
|
|
|
|
|
|
Operating income (loss)
by segment
(In millions-
unaudited)
|
Three months
ended
November
30,
|
|
Six months
ended
November
30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Parts
Supply
|
$
31.6
|
$ 28.4
|
|
$
61.7
|
$ 43.5
|
|
Repair &
Engineering
|
22.8
|
11.3
|
|
43.9
|
20.4
|
|
Integrated
Solutions
|
6.5
|
6.4
|
|
14.2
|
14.1
|
|
Expeditionary
Services
|
2.2
|
0.9
|
|
0.5
|
2.2
|
|
63.1
|
47.0
|
|
120.3
|
80.2
|
|
Corporate and
other
|
(65.4)
|
(8.7)
|
|
(79.2)
|
(16.6)
|
|
$
(2.3)
|
$ 38.3
|
|
$
41.1
|
$ 63.6
|
Adjusted net income, adjusted diluted earnings per share,
adjusted operating margin, adjusted cash provided by (used in)
operating activities, adjusted EBITDA, net debt, net debt to
adjusted EBITDA (net leverage), and net debt to pro forma adjusted
EBITDA (net pro forma leverage) 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 core operating performance, cash flows, and leverage
unaffected by the impact of certain items that management does not
believe are indicative of our ongoing and core operating
activities. 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 and leverage 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.
Our non-GAAP financial measures reflect adjustments for certain
items including, but not limited to, the following:
- Costs associated with U.S. Foreign Corrupt Practices Act
("FCPA") matters that we self-reported to the U.S. Department of
Justice and other agencies, including investigation costs and
settlement charges.
- Expenses associated with recent acquisition activity, including
professional fees for legal, due diligence, and other acquisition
activities, bridge financing fees, intangible asset amortization,
integration costs, and compensation expense related to contingent
consideration and retention agreements.
- Pension settlement charges associated with the settlement and
termination of our frozen defined benefit pension plan.
- Legal judgments related to or impacted by the Russia/Ukraine conflict.
- Contract termination/restructuring costs comprised of gains and
losses that are recognized at the time of modifying, terminating,
or restructuring certain customer and vendor contracts, including
the loss recognized from the U.S. government exercising their
termination for convenience in the first quarter of fiscal 2025 for
our Mobility business's new-generation pallet contract.
- Losses related to our exit from our Indian joint venture, our
Landing Gear Overhaul business, and our Composites manufacturing
business, including legal fees for the performance guarantee
associated with the Composites' A220 aircraft contract.
Adjusted EBITDA is net income (loss) 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 and
acquisitions, FCPA investigation, settlement and remediation
compliance costs, pension settlement charges, certain legal
judgments, acquisition, integration, and amortization expenses from
recent acquisition activity, and significant customer contract
terminations.
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 net
income
(In millions -
unaudited)
|
Three months
ended
November
30,
|
|
Six months
ended
November
30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Net income
(loss)
|
$
(30.6)
|
$ 23.8
|
|
$
(12.6)
|
$ 23.2
|
|
FCPA settlement and
investigation costs
|
59.2
|
2.6
|
|
64.2
|
3.7
|
|
Acquisition,
integration, and amortization expenses
|
7.2
|
3.1
|
|
16.1
|
5.9
|
|
Loss (Gain) related
to sale of business/joint venture, net
|
0.5
|
0.9
|
|
(0.8)
|
1.6
|
|
Russian bankruptcy
court judgment
|
––
|
––
|
|
––
|
11.2
|
|
Contract termination
costs
|
––
|
––
|
|
3.2
|
––
|
|
Pension settlement
charge
|
––
|
––
|
|
––
|
26.7
|
|
Tax effect on
adjustments (a)
|
(4.0)
|
(1.6)
|
|
(7.4)
|
(16.2)
|
|
Adjusted net
income
|
$
32.3
|
$ 28.8
|
|
$
62.7
|
$ 56.1
|
|
|
|
(a)
|
Calculation uses
estimated statutory tax rates on non-GAAP adjustments except for
the impact of the non-deductible portion of the FCPA settlement
charge and the tax effect of the pension settlement charge, which
includes income taxes previously recognized in accumulated other
comprehensive loss.
|
|
Adjusted diluted
earnings per share
(unaudited)
|
Three months
ended
November
30,
|
|
Six
months
ended
November
30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Diluted earnings
(loss) per share
|
$
(0.87)
|
$ 0.67
|
|
$
(0.36)
|
$ 0.65
|
|
FCPA settlement and
investigation costs
|
1.67
|
0.08
|
|
1.81
|
0.10
|
|
Acquisition,
integration, and amortization expenses
|
0.20
|
0.09
|
|
0.45
|
0.17
|
|
Loss (Gain) related
to sale of business/joint venture, net
|
0.01
|
0.02
|
|
(0.02)
|
0.04
|
|
Russian bankruptcy
court judgment
|
––
|
––
|
|
––
|
0.32
|
|
Contract termination
costs
|
––
|
––
|
|
0.09
|
––
|
|
Pension settlement
charge
|
––
|
––
|
|
––
|
0.76
|
|
Tax effect on
adjustments (a)
|
(0.11)
|
(0.05)
|
|
(0.21)
|
(0.46)
|
|
Adjusted diluted
earnings per share
|
$
0.90
|
$ 0.81
|
|
$
1.76
|
$ 1.58
|
|
|
|
(a)
|
Calculation uses
estimated statutory tax rates on non-GAAP adjustments except for
the impact of the non-deductible portion of the FCPA settlement
charge and the tax effect of the pension settlement charge, which
includes income taxes previously recognized in accumulated other
comprehensive loss.
|
|
Adjusted operating
margin
(In millions -
unaudited)
|
Three months
ended
|
|
November
30, 2024
|
August
31, 2024
|
November
30, 2023
|
|
Sales
|
$
686.1
|
$ 661.7
|
$ 545.4
|
|
Contract termination
costs
|
––
|
(9.5)
|
––
|
|
Adjusted
sales
|
$
686.1
|
$ 652.2
|
$ 545.4
|
|
|
|
|
|
Operating income
(loss)
|
$
(2.3)
|
$
43.4
|
$
38.3
|
|
FCPA settlement and
investigation costs
|
59.2
|
5.0
|
2.6
|
|
Acquisition,
integration, and amortization expenses
|
7.2
|
9.0
|
3.1
|
|
Contract termination
costs
|
––
|
3.2
|
––
|
|
Gain related to sale
of joint venture
|
(0.7)
|
(1.4)
|
––
|
|
Adjusted operating
income
|
$
63.4
|
$
59.2
|
$
44.0
|
|
|
|
|
|
Adjusted operating
margin
|
9.2 %
|
9.1 %
|
8.1 %
|
|
Adjusted cash provided
by (used in) operating activities
(In millions -
unaudited)
|
Three months
ended
November
30,
|
|
Six
months
ended
November
30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Cash provided by
(used in) operating activities
|
$
22.0
|
$ 17.4
|
|
$ 3.4
|
$ (1.3)
|
|
Amounts outstanding
on accounts receivable financing program:
|
|
|
|
|
|
|
Beginning of
period
|
29.0
|
13.7
|
|
13.7
|
12.8
|
|
End of
period
|
(23.9)
|
(13.7)
|
|
(23.9)
|
(13.7)
|
|
Adjusted cash
provided by (used in) operating activities
|
$
27.1
|
$ 17.4
|
|
$
(6.8)
|
$ (2.2)
|
|
Adjusted
EBITDA
(In millions -
unaudited)
|
Three months
ended
November
30,
|
|
Six months
ended
November
30,
|
|
Year ended
May 31,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
2024
|
|
Net income
(loss)
|
$(30.6)
|
$23.8
|
|
$
(12.6)
|
$ 23.2
|
|
$ 46.3
|
|
Income tax
expense
|
8.1
|
7.9
|
|
15.0
|
1.0
|
|
12.0
|
|
Other expense,
net
|
0.2
|
0.1
|
|
0.3
|
0.1
|
|
0.4
|
|
Interest expense,
net
|
18.8
|
5.6
|
|
37.1
|
11.0
|
|
41.0
|
|
Depreciation and
amortization
|
14.0
|
8.7
|
|
27.5
|
17.1
|
|
41.2
|
|
FCPA settlement and
investigation costs
|
59.2
|
2.6
|
|
64.2
|
3.7
|
|
10.5
|
|
Loss (Gain) related
to sale of business/joint
venture, net
|
0.5
|
0.9
|
|
(0.8)
|
1.6
|
|
2.8
|
|
Russian bankruptcy
court judgment
|
––
|
––
|
|
––
|
11.2
|
|
11.2
|
|
Acquisition and
integration expenses
|
3.2
|
2.1
|
|
8.2
|
3.9
|
|
29.7
|
|
Contract
termination/restructuring costs and loss
provisions, net
|
––
|
––
|
|
3.2
|
––
|
|
4.8
|
|
Pension settlement
charge
|
––
|
––
|
|
––
|
26.7
|
|
26.7
|
|
Severance
charges
|
––
|
––
|
|
––
|
––
|
|
0.5
|
|
Stock-based
compensation
|
5.0
|
3.6
|
|
10.0
|
7.9
|
|
15.3
|
|
Adjusted
EBITDA
|
$
78.4
|
$ 55.3
|
|
$
152.1
|
$ 107.4
|
|
$ 242.4
|
|
Net debt
(In millions -
unaudited)
|
November
30, 2024
|
|
November
30, 2023
|
|
Total
debt
|
$997.0
|
|
$277.0
|
|
Less: Cash and cash
equivalents
|
(61.7)
|
|
(65.1)
|
|
Net
debt
|
$935.3
|
|
$211.9
|
|
Net debt to adjusted
EBITDA
(In millions -
unaudited)
|
|
|
Adjusted EBITDA for
the year ended May 31, 2024
|
$
242.4
|
|
Less: Adjusted
EBITDA for the six months ended November 30, 2023
|
(107.4)
|
|
Plus: Adjusted
EBITDA for the six months ended November 30, 2024
|
152.1
|
|
Adjusted EBITDA for
the twelve months ended November 30, 2024
|
$
287.1
|
|
Net debt at November
30, 2024
|
$
935.3
|
|
Net debt to Adjusted
EBITDA
|
3.26
|
|
|
|
Net debt to pro forma adjusted
EBITDA
(In millions - unaudited)
|
|
|
AAR CORP. adjusted
EBITDA for the twelve months ended November 30, 2024
|
$
287.1
|
|
Plus: Product Support adjusted EBITDA for the
three months ended February 29, 2024
|
7.7
|
|
Pro forma adjusted EBITDA for the twelve months ended
November 30, 2024
|
$
294.8
|
|
AAR CORP. net debt at November 30,
2024
|
$
935.3
|
|
Net debt to pro forma adjusted
EBITDA
|
3.17
|
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SOURCE AAR CORP.
