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AAR Corp (AIR) Earnings Beat, Sales Miss Estimates in Q2

AAR Corp.AIR reported second-quarter fiscal 2019 adjusted earnings of 59 cents per share, which surpassed the Zacks Consensus Estimate of 57 cents by 3.5%. The adjusted figure reflected a year-over-year improvement of 51% from 39 cents registered in the year-ago quarter.

Notably, solid improvement in sales led to bottom-line growth on a year-over-year basis.

Excluding one-time items, the company reported earnings of 32 cents from continuing operations compared with 38 cents in second-quarter fiscal 2018.

AAR Corp. Price, Consensus and EPS Surprise

AAR Corp. Price, Consensus and EPS Surprise | AAR Corp. Quote

Total Sales

In the reported quarter, net sales of $493.3 million missed the Zacks Consensus Estimate of $502 million by 1.8%. However, the top line increased 17.3% from $420.6 million registered in the year-ago quarter.

The year-over-year improvement in sales was driven by continued growth in the company's trading, distribution and programs activities.

Segment Details

In the fiscal second quarter, sales from the Aviation Services segment summed $462.9 million, up 18.2% year over year.

Expeditionary Services garnered sales of $30.4 million, up 5.2% from $28.9 million in the year-ago quarter.

Highlights of the Release

AAR Corp's cost of sales in the reported quarter increased 18.6% year over year to $415 million.

Selling, general and administrative expenses inched up 0.6% to $49.1 million.

The company incurred interest expenses of $2.4 million compared with $1.8 million in second-quarter fiscal 2018.

Financial Condition

As of Nov 30, 2018, AAR Corp's cash and cash equivalents amounted to $25.7 million compared with $31.1 million as of May 31, 2018.

As of Nov 30, 2018, net property, plant and equipment expenses were $133.4 million compared with $133.2 million as of May 31, 2018.

As of Nov 30, 2018, total debt increased to $220.3 million from $178.9 million as of May 31, 2018.

Zacks Rank & Stock to Consider

AAR Corp currently has a Zacks Rank #4 (Sell).

A better-ranked stock in the same space is Aerojet Rocketdyne Holdings, Inc. AJRD sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Aerojet Rocketdyne delivered average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 43.3% north to $1.82 over the past 90 days.

Other Defense Releases

Huntington Ingalls' HII third-quarter 2018 earnings of $5.29 per share surpassed the Zacks Consensus Estimate of $4.14 by 27.8%.

Curtiss-Wright CW reported third-quarter 2018 adjusted earnings of $1.70 per share, which outpaced the Zacks Consensus Estimate of $1.58 by 7.6%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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