On December 15, 2011,
AAR Corp
.
(
AIR
) posted favorable second-quarter 2012 financial results. The
company's net income improved by approximately 4.2% to $17.5
million or 43 cents per diluted share compared with $16.8 million
or 42 cents per diluted share earned in the prior-year quarter.
Earnings per share, however, missed the Zacks Consensus Estimate of
46 cents in the reported quarter.
Revenue
In the second quarter of 2012, consolidated sales were $475.9
million, up from $440.5 million in the second quarter of 2011. The
sales rise was mainly attributable to robust demand for spare parts
from government and defense customers. Sales to commercial
customers increased 11% y/y, principally driven by strength at the
company's supply chain business. Sales to government and defense
customers increased 5% compared to last year due to sales growth at
AAR Airlift and at the Defense Logistics business.
During the quarter, the company acquired Airinmar Holdings
Limited (Airinmar), a leading provider of repair management
services. Further, AAR Corp. signed a definitive purchase agreement
to acquire Telair International GmbH (Telair) and Nordisk Aviation
Products, AS (Nordisk) from Teleflex Incorporated.
Revenue from the Aviation Supply Chain business was $143.4
million, up 28.8% year over year, accounting for about 30.1% of
total revenue. Government and Defense Services revenue of
approximately $142.4 million accounted for 29.9% of total revenue,
increasing substantially from $134.4 million in the year-ago
quarter.
Maintenance, Repair and Overhaul segment, which accounted for
roughly 19.3% of total revenue, generated revenue of $91.9 million,
down 7.2% year over year. Structures and Systems revenue was $98.3
million (20.7% of total revenue), up from $95.8 million in the
year-ago quarter.
Margins
Cost of sales in the quarter spiked 8.7% year over year to
$398.7 million. The company's operating margin plummeted marginally
to 7.2% in the reported quarter from 8.0% in the year-ago
comparable quarter. Gross profit margins were lower in the
company''s Government and Defense Services segment due to
lower-than-expected aircraft availability at AAR Airlift
and in the Structures and Systems
However, AAR Corp. experienced margin improvement primarily due
to increased sales and better product availability at the Aviation
Supply Chain segment along with operational efficiencies at the
company's airframe maintenance centers.
Selling, general and administrative expense was recorded at
$43.1 million, up from $40.9 million in the year-ago quarter.
Balance Sheet
Exiting the second quarter of 2012, AAR Corp's cash and cash
equivalents were approximately $27.9 million, down compared with
$35.5 million in the previous quarter. Net property, plant and
equipment were $345.1 million, up from $335.3 million in the
previous quarter.
During the quarter, the company paid a quarterly cash dividend
of $0.075 per share to its stockholders and also purchased 145,000
shares of AAR Corp. stock; pursuant to its board of directors share
repurchase authorization at an average acquisition price of
$18.07.
Based in Wood Dale, Illinois, AAR Corp. provides various
products and services to the aviation and defense industries
worldwide. The company operates in four segments: Aviation Supply
Chain; Maintenance, Repair, and Overhaul; Structures and Systems;
and Government & Defense Services. The company competes
directly with its peers such as
Goodrich Corp
(
GR
),
Boeing Co
(
BA
),
Lockheed Martin Corporation
(
LMT
).
AAR CORP (
AIR
): Free Stock Analysis Report
BOEING CO (
BA
): Free Stock Analysis Report
GOODRICH CORP (
GR
): Free Stock Analysis Report
LOCKHEED MARTIN (
LMT
): Free Stock Analysis Report
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