AAR reports first quarter fiscal year 2012 results

Wood-Dale-based AAR today reported fiscal year 2012 first quarter sales of $479.3 million and income from continuing operations of $17.0 million, or $0.41 diluted earnings per share. For the first quarter of last fiscal year, the Company reported sales of $404.4 million and income from continuing operations of $14.0 million, or $0.36 diluted earnings per share.

Sales to commercial customers increased 40% compared to the first quarter of last year, driven by robust demand for spare parts support and completion of the sale of two aircraft from the Company's aircraft portfolio. The sale of the two aircraft contributed $33.3 million to revenue and is consistent with the Company's ongoing commitment to reduce its investment in its aircraft sales and leasing portfolio. Sales growth to commercial customers was 21% excluding the sale of the two aircraft. The Company also reported year-over-year growth at its MRO facilities attributable to share gains and strength at its landing gear business.

Sales to defense customers increased 2% in the first quarter compared to last year. While the Company experienced sales growth at AAR Airlift and at its Defense Logistics businesses, sales were lower at its Mobility Products unit. The Company expects second quarter revenues at the Mobility Products business to increase $10.0 to $15.0 million from first quarter levels as it ramps up production on two programs.

Consolidated gross profit margin was 15.6% for the first quarter compared to 17.3% last year.  The reduction in the consolidated gross profit margin was due to lower volume within the Structures and Systems segment, the impact from the sale of the two aircraft and unfavorable mix in MRO.

Selling, general and administrative expenses as a percentage of sales declined to 8.7% compared to 10.2% in the year ago period due to leveraging the Company's cost structure and the impact from the sale of the two aircraft. Excluding sales of the two aircraft, selling, general and administrative expenses as a percent of sales were 9.4% for the first quarter of fiscal 2012.

“Our commercial businesses delivered solid top-line growth while we maintained steady overall results in our businesses supporting government and defense customers. As we look ahead to the remainder of the year, we are encouraged as all major programs that were up for renewal at AAR Airlift were renewed during the quarter, we have a major new customer in MRO, and will have a significant increase in production and delivery of shelters at Mobility,” said David P. Storch, Chairman and Chief Executive Officer at AAR CORP.  “Our margin performance was below expectations as the seasonal softness at MRO and our Mobility business led to production inefficiencies. Based on what we see today, we are confident that we will produce steady improvement in our operating margins as we expect sales growth at our Mobility Products unit, improved mix at MRO and as other initiatives gain momentum.”

The Company will provide sales and earnings guidance for fiscal 2012 at its investor day scheduled for October 5, 2011 in New York.

AAR is a leading provider of products and value-added services to the worldwide aerospace and government and defense industries.  With facilities and sales locations around the world, AAR uses its close-to-the-customer business model to serve aviation and government and defense customers through four operating segments: Aviation Supply Chain; Government and Defense Services; Maintenance, Repair and Overhaul; and Structures and Systems. More information can be found at www.aarcorp.com.

AAR will hold its quarterly conference call at 7:30 a.m. CDT on September 16, 2011. The conference call can be accessed by calling 866-206-6900 from inside the U.S. or 703-639-1110 from outside the U.S.  A replay of the call will be available by calling 888-266-2081 from inside the U.S. or 703-925-2533 from outside the U.S. (access code 1550238) from 11:30 a.m. CDT on September 16, 2011 until 11:59 p.m. CDT on September 23, 2011.