Ill.-based aerospace/defense products and services supplier,
) reported fiscal first quarter 2014 (ending August 31, 2013)
earnings of 45 cents a share, beating the Zacks Consensus
Estimate by a penny. However, the reported figure was flat with
the year-ago level. The beat mainly reflects better margins and
In the fiscal first quarter of 2014, consolidated sales were
$514.5 million, down 6.5% year over year and also below the Zacks
Consensus Estimate of $538.0 million. The company's top line
experienced an overall decline primarily due to an expected sales
reduction in its Technology Products division.
In the quarter, Aviation Services' revenues of $393.7 million
comprised almost 77% of total revenue. Segment revenues decreased
1.1% from the year-ago comparable quarter.
The Technology Products segment contributed approximately 23% of
the total revenue in the quarter, corresponding to $120.8
million, down 20.7% year over year.
Cost of sales in the reported quarter declined 6.6% year over
year to $429.8 million and represented 84% of total revenue.
Selling, general and administrative expense was $47.7 million,
down 10.5% year over year.
The company's operating margin improved 40 basis points to 7.4%
in the reported quarter from 7.0% in the year-ago comparable
Balance Sheet/Cash Flow
Exiting the fiscal first quarter 2014, AAR Corp's cash and cash
equivalents were approximately $90.9 million, up from the fiscal
2013 level of $75.3 million. Net property, plant and equipment
were $351.2 million, down from $361.7 million in the fiscal 2013.
Total outstanding debt was $702.2 million.
Cash flow from operations in fiscal first quarter 2014 was $27.5
million and free cash flow was $20.3 million.
Management reaffirmed its earnings per share guidance for fiscal
2014 in the range of $2.00-$2.05 and revenues in the band of
$2.175 billion to $2.225 billion. AAR Corp. is confident of its
supply chain and repair businesses in fiscal 2014 given its
robust position in the growing global outsourced maintenance
supply chain market.
Although sales from AAR Corp.'s Aviation Services division
dropped from the year-earlier level, the company remains
confident of returning to growth in the second quarter. And at
the Technology Products segment, sales of mobility products are
expected to remain almost flat for the balance of the fiscal year
on a year-over-year basis.
Currently, AAR Corp. has a Zacks Rank #3 (Hold). However, other
aviation companies like
Alliant Techsystems Inc.
Elbit Systems Ltd.
B/E Aerospace Inc.
) are worth looking into now. While Alliant Techsystems and Elbit
Systems sport a Zacks Rank #1 (Strong Buy), B/E Aerospace carries
a Zacks Rank #2 (Buy).
AAR CORP (AIR): Free Stock Analysis Report
ALLIANT TECHSYS (ATK): Free Stock Analysis
B/E AEROSPACE (BEAV): Free Stock Analysis
ELBIT SYSTEMS (ESLT): Free Stock Analysis
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