AIR AAR Corp

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): January 7, 2025

 

AAR CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		1-6263		36-2334820
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

One AAR Place

1100 N. Wood Dale Road

Wood Dale, Illinois 60191

(Address and Zip Code of Principal Executive Offices)

Registrant’s telephone number, including area code: (630) 227-2000

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, $1.00 par value		AIR		New York Stock Exchange
				Chicago Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule  405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).                             Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On January 7, 2025, AAR CORP. (the “Company”) issued a press release and supplemental slide presentation reporting the Company’s financial results for the second quarter ended November 30, 2024. Copies of the Company’s press release and supplemental slide presentation are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.

 

The information furnished under Item 2.02 of this Current Report on Form 8-K and the exhibit attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933, as amended, if such subsequent filing specifically references this Form 8-K.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)   Exhibits.

 

Exhibit No.		Description
99.1		Press Release issued by AAR CORP. dated January 7, 2025.
99.2		Slide Presentation by AAR CORP. dated January 7, 2025.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 7, 2025
	AAR CORP.
	By:
		/s/ SEAN M. GILLEN
		Sean M. Gillen
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

 

 

 

Exhibit 99.1

 

AAR reports second quarter fiscal year 2025 results

 

Wood Dale, Illinois, January 7, 2025 — 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

 

 

 

 

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

 

 

 

Exhibit 99.2

 

Fiscal Q 2 202 5 Earnings Call NYSE: AIR January 7 , 202 5

Forward - looking statements 1 © 2024 AAR CORP. All rights reserved worldwide. Note: All results and expectations in the presentation reflect continuing operations unless otherwise noted. This presentation may contain 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 . 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, such as the acquisition of Trax USA Corp. and the Product Support Business of Triumph Group Inc.; (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 filed from time to time with the U.S. Securities and Exchange Commission. 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. Non - GAAP Financial Measures: This presentation includes certain non - GAAP financial measures. Please refer to the Appendix for additional information on these non - GAAP financial measures and reconciliations to the comparable GAAP measures. Unless otherwise noted, the statements included and the information provided in this presentation are made as of January 7, 2025.

Q 2 FY 202 5 H ighlights As compared to Q 2 FY 202 4 Sales $6 86 M + 26 % Adj op erating margin 9. 2 % +1 1 0 bps Adj EPS $0. 90 + 11 % • Record second quarter sales of $686 million, up 26% year over year » Organic sales growth of 12% » Commercial sales increased 30%, driven by Parts Supply and Repair & Engineering segments » Government sales increased 16%, primarily due to Parts Supply segment • Significant increase in second quarter adjusted EBITDA margin and adjusted operating margin » Product Support and Heavy Maintenance primarily driving margin expansion • Adjusted EPS of $0.90, up 11% year over year » Strong demand and driving efficiencies throughout business, yielding improved results Adj EBITDA margin 11.4 % + 130 bps 2 © 2024 AAR CORP. All rights reserved worldwide. See Appendix for reconciliation of Non - GAAP financial measures Strong sales driving top line growth; operational efficiencies improving margins

Appendix

Non - GAAP financial measures 8 © 2024 AAR CORP. All rights reserved worldwide. This presentation includes financial results for the Company with respect to adjusted diluted earnings per share, adjusted EBITDA and adjusted operating income, which 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 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, workforce actions, COVID - related subsidies and costs, impairment and exit charges, facility consolidation and repositioning costs, FCPA investigation settlement and related costs, equity investment gains and losses, pension settlement charges, legal judgments, acquisition, integration and amortization expenses from recent acquisition activity, and significant customer events such as early terminations, contract restructurings, forward loss provisions, and bankruptcies. Adjusted operating income is adjusted EBITDA gross of depreciation and amortization and stock - based compensation. Pursuant to the requirements of Regulation G of the Exchange Act, we provide tables that reconcile the above - mentioned non - GAAP financial measures to the most directly comparable GAAP financial measures in the Appendix at the end of this presentation.

Non - GAAP financial measures A djusted sales, operating income, operating margin, EBITDA, and EBITDA margin 9 © 2024 AAR CORP. All rights reserved worldwide. Q2 FY25 Q2 FY24 Parts Repair & Integrated Expeditionary Corporate Parts Repair & Integrated Expeditionary Corporate ($ in millions) Supply Engineering Solutions Services & Other Consolidated Supply Engineering Solutions Services & Other Consolidated Sales $273.7 $228.8 $163.4 $20.2 $0.0 $686.1 $227.6 $145.4 $156.6 $15.8 $0.0 $545.4 Operating income (loss) 31.6 22.8 6.5 2.2 (65.4) (2.3) 28.4 11.3 6.4 0.9 (8.7) 38.3 Operting income margin 11.5% 10.0% 4.0% 10.9% NA -0.3% 12.5% 7.8% 4.1% 5.7% NA 7.0% Operating income (loss) 31.6 22.8 6.5 2.2 (65.4) ($2.3) $28.4 $11.3 $6.4 $0.9 ($8.7) $38.3 FCPA settlement and investigation costs - - - - 59.2 59.2 - - - - 2.6 2.6 Acquisition, integration & amortization expenses - 5.3 1.8 - 0.1 7.2 - - 2.7 - 0.4 3.1 Gain related to sale of joint venture - (0.7) - - - (0.7) - - - - - - Adjusted operating income $31.6 $27.4 $8.3 $2.2 ($6.1) $63.4 $28.4 $11.3 $9.1 $0.9 ($5.7) $44.0 Adjusted operating margin 11.5% 12.0% 5.1% 10.9% NA 9.2% 12.5% 7.8% 5.8% 5.7% NA 8.1% Operating income (loss) $31.6 $22.8 $6.5 $2.2 ($65.4) ($2.3) $28.4 $11.3 $6.4 $0.9 ($8.7) $38.3 Depreciation and amortization 1.8 6.3 4.4 0.4 1.1 14.0 1.3 1.8 4.1 0.4 1.1 8.7 Stock-based compensation 0.5 0.1 0.6 - 3.8 5.0 0.3 0.2 0.3 - 2.8 3.6 FCPA settlement & investigation costs - - - - 59.2 59.2 - - - - 2.6 2.6 Acquisition and integration expenses - 2.4 0.8 - - 3.2 - - 1.7 - 0.4 2.1 Gain related to sale of joint venture - (0.7) - - - (0.7) - - - - - - Adjusted EBITDA $33.9 $30.9 $12.3 $2.6 ($1.3) $78.4 $30.0 $13.3 $12.5 $1.3 ($1.8) $55.3 Adjusted EBITDA margin 12.4% 13.5% 7.5% 12.9% NA 11.4% 13.2% 9.1% 8.0% 8.2% NA 10.1%

Non - GAAP financial measures Adjusted EBITDA and EBITDA margin 1 1 © 2024 AAR CORP. All rights reserved worldwide.

Non - GAAP financial measures Adjusted diluted earnings per share 1 2 © 2024 AAR CORP. All rights reserved worldwide. Q2 FY25 Q2 FY24 Earnings (loss) per share ($0.87) $0.67 FCPA settlement and investigation costs 1.67 0.08 Acquisition, integration, and amortization expenses 0.20 0.09 Loss related to sale of business/joint venture, net $0.01 0.02 Tax effect on adjustments (a) (0.11) (0.05) Adjusted diluted earnings per share $0.90 $0.81 (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

 

 

v3.24.4

Cover	Jan. 07, 2025
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 07, 2025
Entity File Number	1-6263
Entity Registrant Name	AAR CORP.
Entity Central Index Key	0000001750
Entity Tax Identification Number	36-2334820
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	One AAR Place
Entity Address, Address Line Two	1100 N. Wood Dale Road
Entity Address, City or Town	Wood Dale
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60191
City Area Code	630
Local Phone Number	227-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member] | NYSE CHICAGO, INC. [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	AIR
Security Exchange Name	CHX
Common Stock [Member] | NEW YORK STOCK EXCHANGE, INC. [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	AIR
Security Exchange Name	NYSE

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