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AAR Corp. (AIR) Q2 Earnings Meet Estimates, Revenues Top

Aerospace and defense products and services supplier, AAR Corp.AIR reported second-quarter fiscal 2016 (ended Nov 30, 2015) earnings of 30 cents per share, in line with the Zacks Consensus Estimate. Quarterly earnings, however, declined 14.3% from the year-ago level of 35 cents, hurt by the poorly performing Expeditionary Services segment.

Aar Corporation - Earnings Surprise | FindTheBest

Revenues

In the quarter under review, consolidated sales were $423.8 million, beating the Zacks Consensus Estimate of $396 million by 7%. On a year-over-year basis, revenues increased 5.1% primarily due to higher contribution from its Aviation Services segment.

Segment Details

In the reported quarter, Aviation Services' revenues of $359.6 million contributed approximately 85% to the total revenue. Segmental revenues increased 10.6% from the year-ago quarter on the back of an industry-leading supply chain and MRO service platforms deliveries.

The Expeditionary Services segment contributed the balance 15% to quarterly revenues, corresponding to $64.2 million, down 17.1% year over year.

Operational Highlights

In the fiscal second quarter, AAR Corp.'s cost of sales increased 8.3% year over year to $363.9 million.

Selling, general and administrative expenses increased 6% year over year to $42.5 million.

The company incurred interest expense of $1.5 million in the reported quarter versus $6.6 million a year-ago.

Financial Update

AAR Corp.'s cash and cash equivalents, as of Nov 30, 2015, were $62.8 million, down from $54.7 million as of May 31, 2015.

Net property, plant and equipment were $205.1 million, as of Nov 30, 2015, compared with $214.8 million as of May 31, 2015.

As of Nov 30, 2015, total debt increased to $170.3 million from $154 million as of May 31, 2015.

At the end of the second quarter, the company's net debt-to-capital ratio stood at 11% and it has approximately $450 million of available liquidity.

Dividend, Repurchase and Investment

In the second quarter of fiscal 2016, the company paid dividends worth $2.6 million and repurchased about 142,000 shares worth $2.8 million in the reported quarter. Since Mar 2015, AAR Corp. has returned about $167 million to shareholders through dividends and share repurchases.

Zacks Rank

AAR Corp. has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include TransDigm Group Incorporated TDG , Orbital ATK, Inc. OA and Raytheon Co. RTN . While TransDigm Group sports a Zacks Rank #1 (Strong Buy), Orbital ATK and Raytheon hold a Zacks Rank #2 (Buy).

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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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