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updated: 9/20/2012 12:24 PM

Strong commercial sales drive AAR 1Q growth

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Aircraft maintenance and support provider AAR Corp., of Wood Dale, reported strong results for the first quarter based on gains in its commercial aircraft services and recent acquisitions.

The company reported consolidated sales of $550.5 million and net income of $18.2 million for the quarter, or $0.45 per diluted share. During the same period last year, AAR reported sales of $485.5 million and net income of $16.6 million, or $0.41 per diluted share. Last year's first quarter sales included $33.3 million from the sale of two aircraft from the company's aircraft portfolio, the company said in a release. There were no aircraft sales in the first quarter of the current fiscal year.

"Our first quarter results were strong, highlighted by market share gains in commercial aviation services, results from our recent acquisitions and improved performance at our airlift operation," said David P. Storch, Chairman and Chief Executive Officer of AAR.

For the first quarter, sales to commercial customers represented 57 percent of consolidated sales. Excluding the aircraft sales, commercial sales increased 43 percent over the prior year's first quarter and 13 percent on an organic basis driven by market share gains in the company's commercial aviation services businesses. The balance of the sales growth was from the fiscal 2012 acquisitions.

Sales to government and defense customers represented 43 percent of consolidated sales and increased 1 percent from the first quarter of last year.

During the quarter, AAR generated $33 million in cash flow from operations and had capital expenditures of $11 million. The company purchased 475,000 of its shares on the open market under its share repurchase program for $6.1 million -- with an average acquisition price of $12.84 per share -- and declared and paid dividends of $3 million. The company also repurchased $13 million face value of its convertible bonds at an effective yield to maturity of 4 percent.

"Based on the results of the first quarter and our current view of the markets we serve, we are updating our annual guidance to a range of $1.60 to $1.70 from our previous guidance of $1.55 to $1.65," Storch said.

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