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AAR Corp. (AIR) Misses Q1 Earnings and Revenue Estimates

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Aerospace and defense products and services supplier, AAR Corp.AIR reported first-quarter fiscal 2016 (ended Aug 31, 2015) earnings of 23 cents per share, missing the Zacks Consensus Estimate of 28 cents by 17.9%. Quarterly earnings declined 20.7% year over year, hurt by the poorly performing aircraft joint ventures and low operating income.

Aar Corporation - Earnings Surprise | FindTheBest

Revenues

In the quarter under review, consolidated sales were $377.8 million, missing the Zacks Consensus Estimate of $414 million by 8.7%. On a year-over-year basis, revenues decreased 4.4% primarily due to lower contribution from its Expeditionary Services segment.

Segment Details

In the reported quarter, Aviation Services' revenues of $315.8 million comprised 83.6% of total revenues. Segmental revenues increased 1.3% from the year-ago quarter on the back of higher aircraft maintenance sales.

The Expeditionary Services segment contributed 16.4% to quarterly revenues, corresponding to $62.0 million, down 25.7% year over year.

Operational Highlights

In the fiscal first quarter, AAR Corp.'s cost of sales declined 2.8% year over year to $323.3 million.

Gross profit margin from continuing operations was 14.4% in the reported quarter compared with 15.8% in the prior-year period.

Selling, general and administrative expenses increased 2.3% year over year to $39.4 million.

The company incurred interest expense of $2 million in the reported quarter, up 68.8% year over year.

Financial Update

AAR Corp.'s cash and cash equivalents as of Aug 31, 2015, came in at $28.7 million, down from $54.7 million as of May 31, 2015.

Net property, plant and equipment were $214.4 million as of Aug 31, 2015, compared with $214.8 million as of May 31, 2015.

As of Aug 31, 2015, total debt increased significantly to $179.5 million from $154 million as of May 31, 2015.

Dividend, Repurchase and Investment

In the first quarter of fiscal 2016, the company paid dividends of $2.6 million and repurchased about 300,000 shares worth $7.1 million in the reported quarter.

AAR Corp. also invested around $20.0 million in net inventory to support future supply chain expansion.

A Glance at its Peer

Triumph Group Inc. TGI reported adjusted earnings from continuing operations for the first-quarter fiscal 2016 (ended Jun 30, 2015) of $1.31 per share, lagging the Zacks Consensus Estimate of $1.33 by 1.5%. However, earnings increased 10.1% from $1.19 per share a year ago.

Zacks Rank

AAR Corp. has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include LMI Aerospace Inc. LMIA and Raytheon Company RTN . While LMI Aerospace sports a Zacks Rank #1 (Strong Buy), Raytheon carries a Zacks Rank #2 (Buy).

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RAYTHEON CO (RTN): Free Stock Analysis Report

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LMI AEROSPACE (LMIA): Free Stock Analysis Report

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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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