AAR Reports Fourth Quarter & Fiscal Year 2019 Results

- Fourth quarter sales of $563 million up 19% from $474 million in Q4 FY2018

Published

WOOD DALE, Ill., July 10, 2019 /PRNewswire/ -- AAR CORP. (NYSE: AIR) today reported fourth quarter fiscal year 2019 consolidated sales of $562.7 million and income from continuing operations of $26.6 million, or $0.76 per diluted share.  For the fourth quarter of the prior year, the Company reported sales of $473.5 million and income from continuing operations of $18.1 million, or $0.52 per diluted share.  Reported results include tax benefits which reduced income tax expense by $5.1 million, or $0.15 per diluted share, in the current quarter.  Reported results in the prior year's quarter included tax benefits of $3.2 million, or $0.09 per diluted share.  Our adjusted diluted earnings per share from continuing operations, which excludes these tax benefits and other items, increased 33% to $0.64 in the current quarter from $0.48 last year. 

Consolidated sales increased 19% over the prior year period from continued growth in our programs and parts supply activities.  Our Aviation Services segment experienced significant growth of 18% driven by strong demand for both new and aftermarket parts as well as successful execution on the WASS program and other government programs.  In our Expeditionary Services segment, sales increased 37% as we began executing against recent contract awards. 

"We are exceptionally pleased with our strong performance in the fourth quarter.  Our double-digit organic sales growth and solid cash flow generation were driven by the continued strength in our parts supply and programs activities," said John M. Holmes, President and Chief Executive Officer of AAR CORP. 

During the quarter, we announced a five-year extension of our engine support contract with MTU Maintenance.  We will continue to provide reliable, on-time engine parts to MTU via our Hannover, Germany facility.  Subsequent to the end of the quarter, we also announced a new distribution agreement with Woodward, Inc. to distribute spare piece parts in support of U.S. Government fleets across multiple engine platforms.

Sales to government and defense customers were 35% of consolidated sales compared to 26% in the prior year's quarter reflecting growth from the WASS program and other government programs.  Fourth quarter sales to commercial customers, which also increased during the period, represented 65% of consolidated sales compared to 74% of consolidated sales in the fourth quarter of last year.

Gross profit margin in the current quarter was 16.8% compared to 17.9% in the prior year quarter due primarily to the mix of products and services sold.  Selling, general and administrative expenses as a percentage of sales were 11.2% for the quarter, compared to 13.1% last year, reflecting continued leverage of our cost structure to support our double-digit sales growth. 

Net interest expense for the quarter was $2.1 million compared to $2.2 million last year.  Also during the quarter, the Company paid cash dividends of $2.6 million, or $0.075 per share, and repurchased approximately 291,000 shares for $9.5 million.  Average diluted share count for both this quarter and the prior year quarter was 34.6 million shares. 

Cash flow from operating activities from continuing operations was $44.1 million during the current quarter.  The impact of our accounts receivable financing program resulted in a net reduction of $13.3 million in cash flows during the quarter.

Fiscal Year 2019 Results

Full Fiscal Year 2019 income from continuing operations was $84.1 million, or $2.40 per diluted share.  In Fiscal Year 2018, income from continuing operations was $73.7 million, or $2.11 per share.  Tax benefits reduced income tax expense by $11.6 million, or $0.34 per diluted share, in the current year, and $16.2 million, or $0.47 per diluted share, in the prior year.  Our adjusted diluted earnings per share from continuing operations, which excludes these tax benefits and other items, increased 36% to $2.36 in the current year from $1.73 last year.

Full Fiscal Year 2019 consolidated sales were $2.05 billion, an increase of 17.4% over Fiscal Year 2018.  Aviation Services sales grew by 17.4% as a result of strong performance in our parts supply activities and our successful execution of recent contract awards.  Expeditionary Services sales increased 16.6% in Fiscal Year 2019 reflecting higher volumes in our mobility products activities. 

Sales to government and defense customers were 33% of consolidated sales compared to 25% in the prior year reflecting growth from the WASS program and other government programs.  Sales to commercial customers, which also increased over the prior year, represented 67% of consolidated sales compared to 75% of consolidated sales last year.

Net interest expense for Fiscal Year 2019 was $8.5 million compared to $7.9 million last year.  During the year, the Company paid cash dividends of $10.5 million, or $0.30 per share, and repurchased approximately 313,000 shares for $10.3 million

Net debt at May 31, 2019 was $121.6 million compared to $147.8 million at May 31, 2018.  Cash flow from operating activities from continuing operations was $60.5 million in Fiscal Year 2019 compared to $55.8 million in Fiscal Year 2018.  Our accounts receivable financing program provided a benefit to cash flows of $14.5 million in Fiscal Year 2019 compared to a benefit of $71.7 million in the prior year.

Outlook

We are announcing financial guidance for Fiscal Year 2020 of sales in the range of $2.1 to $2.2 billion and adjusted diluted earnings per share from continuing operations of $2.45 to $2.65.  At the midpoint of the ranges, this represents sales growth of 5% and adjusted earnings per share growth of 8%.  We expect selling, general and administrative expenses to be approximately 10.5% of sales and anticipate an effective tax rate of 24% in Fiscal Year 2020.  In Fiscal Year 2019, we had an adjusted effective tax rate of 18.5%.

Holmes concluded, "Overall, we are pleased with the performance in Fiscal Year 2019. Our cash flow generation of $102 million in the second half of the year further improved our balance sheet providing us additional flexibility to deploy capital to execute our growth strategy and drive shareholder return.  We are well-positioned for continued success in Fiscal Year 2020 given the strength we see across our global commercial and government markets."    

Conference Call Information                                                          

AAR will hold its quarterly conference call at 3:45 p.m. CT on July 10, 2019. The conference call can be accessed by calling 866-802-4322 from inside the U.S. or +1-703-639-1319 from outside the U.S.  A replay of the conference call will also be available by calling 855-859-2056 from inside the U.S. or 404-537-3406 from outside the U.S. (access code 5488863). The replay will be available from 7:15 p.m. CT on July 10, 2019 until 10:59 p.m. CT on July 17, 2019.

Investor Day Information                                                    

AAR will hold an Investor Day on Wednesday, July 17, 2019 at 8:30 a.m. ET in New York City. AAR's senior leadership team will provide an overview of the company's strategy and key opportunities.  For those not attending the event, an audio webcast of the presentations and accompanying slides will be available in the investor relations section of our website.

About AAR

AAR is a global aerospace and defense aftermarket solutions company that employs more than 6,000 people in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR's Aviation Services include parts supply; OEM solutions; integrated solutions; maintenance, repair, overhaul; and engineering. AAR's Expeditionary Services include mobility systems and composite manufacturing operations. Additional information can be found at www.aarcorp.com.                  

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission.

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries
Consolidated Statements of Income Three Months Ended Twelve Months Ended
(In millions except per share data - unaudited) May 31, May 31,
2019 2018 2019 2018
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3
Cost and expenses:
     Cost of sales 468.0 388.8 1,722.3 1,453.7
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5
     Selling, general and administrative 63.3 61.8 215.4 208.1
Operating income 29.3 22.8 98.3 86.0
Interest expense, net (2.1) (2.2) (8.5) (7.9)
Other expense, net (0.4) (0.4) (0.8) (0.9)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2
Income tax expense 0.2 2.1 4.9 3.5
Income from continuing operations 26.6 18.1 84.1 73.7
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6
Earnings per share – Basic:
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44
Earnings per share – Diluted:
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Share Data:
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer.
Consolidated Statements of Income Three Months Ended Twelve Months Ended
(In millions except per share data - unaudited) May 31, May 31,
2019 2018 2019 2018
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3
Cost and expenses:
     Cost of sales 468.0 388.8 1,722.3 1,453.7
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5
     Selling, general and administrative 63.3 61.8 215.4 208.1
Operating income 29.3 22.8 98.3 86.0
Interest expense, net (2.1) (2.2) (8.5) (7.9)
Other expense, net (0.4) (0.4) (0.8) (0.9)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2
Income tax expense 0.2 2.1 4.9 3.5
Income from continuing operations 26.6 18.1 84.1 73.7
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6
Earnings per share – Basic:
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44
Earnings per share – Diluted:
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Share Data:
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer.
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31,
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018
2019 2018 2019 2018 (unaudited)
ASSETS
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1
Cost and expenses: Restricted cash 19.8 10.5
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7
Rotable assets and equipment on or available for lease 65.3 87.2
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0
Other current assets 36.2 26.2
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2
Goodwill and intangible assets, net 138.4 146.5
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY
Accounts payable and accrued liabilities $ 328.3 $ 308.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9
     Total liabilities 611.3 588.4
Earnings per share – Diluted: Equity 905.9 936.3
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Share Data:
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer.
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31,
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018
ASSETS Cash flows provided from operating activities:
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5
Other current assets 36.2 26.2     Changes in certain assets and liabilities:
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer.
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31,
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented.
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31,
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

Adjusted income from continuing operations, adjusted diluted earnings per share from continuing operations, adjusted selling, general, and administrative expenses, adjusted EBITDA, net debt, and our adjusted effective income tax rate are "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  We believe these non-GAAP financial measures are relevant and useful for investors as they provide a better understanding of our actual operating performance unaffected by the impact of certain items.  When reviewed in conjunction with our GAAP results and the accompanying reconciliations, we believe these non-GAAP financial measures provide additional information that is useful to gain an understanding of the factors and trends affecting our business and provide a means by which to compare our operating performance against that of other companies in the industries we compete.  These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.  Adjusted EBITDA is income from continuing operations before interest income (expense), other income (expense), income taxes, depreciation and amortization, stock-based compensation and other items of an unusual nature including but not limited to severance, facility repositioning costs and significant customer bankruptcies. 

Pursuant to the requirements of Regulation G of the Exchange Act, we are providing the following tables that reconcile the above mentioned non-GAAP financial measures to the most directly comparable GAAP financial measures: 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1)
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) ––
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 ––
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 ––
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation.
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1)
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) ––
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 ––
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 ––
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Diluted Earnings per Share from Continuing Operations (unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7 Diluted earnings per share from continuing operations $  0.76 $ 0.52 $  2.40 $ 2.11
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1) Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (0.03) –– (0.41)
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1) State income tax benefit (b) (0.15) (0.06) (0.15) (0.06)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) –– Recognition of previously reserved income tax benefits (b) –– –– (0.19) ––
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 –– Customer bankruptcy charge, net of tax –– –– 0.27 ––
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 –– Facility repositioning costs, net of tax 0.02 –– 0.02 ––
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1 Severance and pension settlement charges, net of tax 0.01 0.05 0.01 0.09
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6 Adjusted diluted earnings per share from continuing operations $  0.64 $ 0.48 $  2.36 $ 1.73
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Diluted Earnings per Share from Continuing Operations (unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation.
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7 Diluted earnings per share from continuing operations $  0.76 $ 0.52 $  2.40 $ 2.11
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1) Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (0.03) –– (0.41)
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1) State income tax benefit (b) (0.15) (0.06) (0.15) (0.06)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) –– Recognition of previously reserved income tax benefits (b) –– –– (0.19) ––
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 –– Customer bankruptcy charge, net of tax –– –– 0.27 ––
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 –– Facility repositioning costs, net of tax 0.02 –– 0.02 ––
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1 Severance and pension settlement charges, net of tax 0.01 0.05 0.01 0.09
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6 Adjusted diluted earnings per share from continuing operations $  0.64 $ 0.48 $  2.36 $ 1.73
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31,
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) ––
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8)
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5)
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Diluted Earnings per Share from Continuing Operations (unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Selling, General and Administrative Expenses (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7 Diluted earnings per share from continuing operations $  0.76 $ 0.52 $  2.40 $ 2.11 Selling, general and administrative expenses $ 63.3 $ 61.8 $  215.4 $208.1
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1) Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (0.03) –– (0.41) Severance charges (0.1) (2.5) (0.2) (4.4)
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1) State income tax benefit (b) (0.15) (0.06) (0.15) (0.06) Stock-based compensation (4.7) (6.6) (13.5) (15.3)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) –– Recognition of previously reserved income tax benefits (b) –– –– (0.19) –– Adjusted selling, general and administrative expenses $ 58.5 $ 52.7 $ 201.7 $ 188.4
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 –– Customer bankruptcy charge, net of tax –– –– 0.27 ––
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 –– Facility repositioning costs, net of tax 0.02 –– 0.02 –– Adjusted EBITDA (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31,
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1 Severance and pension settlement charges, net of tax 0.01 0.05 0.01 0.09 2019 2018 2019 2018
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6 Adjusted diluted earnings per share from continuing operations $  0.64 $ 0.48 $  2.36 $ 1.73 Net income $ 22.8 $ 12.0 $   7.5 $ 15.6
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended Loss from discontinued operations 3.8 6.1 76.6 58.1
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31, Income tax expense 0.2 2.1 4.9 3.5
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018 Other expense, net 0.4 0.4 0.8 0.9
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3 Interest expense, net 2.1 2.2 8.5 7.9
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3 Depreciation and intangible amortization 11.5 9.1 42.8 40.5
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6 Customer bankruptcy charge –– –– 12.4 ––
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) –– Severance charges 0.1 2.6 0.2 4.5
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8) Facility repositioning costs 0.9 –– 0.9 ––
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5) Stock-based compensation 4.7 6.6 13.5 15.3
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8 Adjusted EBITDA $ 46.5 $ 41.1 $  168.1 $ 146.3
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Diluted Earnings per Share from Continuing Operations (unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Selling, General and Administrative Expenses (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Net Debt (In millions- unaudited) May 31, 2019 May 31, 2018
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 Total debt $ 142.9 $178.9
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7 Diluted earnings per share from continuing operations $  0.76 $ 0.52 $  2.40 $ 2.11 Selling, general and administrative expenses $ 63.3 $ 61.8 $  215.4 $208.1 Less: Cash and cash equivalents (21.3) (31.1)
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1) Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (0.03) –– (0.41) Severance charges (0.1) (2.5) (0.2) (4.4) Net debt $ 121.6 $147.8
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1) State income tax benefit (b) (0.15) (0.06) (0.15) (0.06) Stock-based compensation (4.7) (6.6) (13.5) (15.3)
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) –– Recognition of previously reserved income tax benefits (b) –– –– (0.19) –– Adjusted selling, general and administrative expenses $ 58.5 $ 52.7 $ 201.7 $ 188.4 Net Debt to Adjusted EBITDA (In millions - unaudited) May 31, 2019 May 31, 2018
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 –– Customer bankruptcy charge, net of tax –– –– 0.27 –– Adjusted EBITDA for the twelve months ended $ 168.1 $ 146.3
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 –– Facility repositioning costs, net of tax 0.02 –– 0.02 –– Adjusted EBITDA (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Net debt at period end 121.6 147.8
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1 Severance and pension settlement charges, net of tax 0.01 0.05 0.01 0.09 2019 2018 2019 2018 Net debt to Adjusted EBITDA 0.72 1.01
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6 Adjusted diluted earnings per share from continuing operations $  0.64 $ 0.48 $  2.36 $ 1.73 Net income $ 22.8 $ 12.0 $   7.5 $ 15.6
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended Loss from discontinued operations 3.8 6.1 76.6 58.1
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31, Income tax expense 0.2 2.1 4.9 3.5
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018 Other expense, net 0.4 0.4 0.8 0.9
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3 Interest expense, net 2.1 2.2 8.5 7.9
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3 Depreciation and intangible amortization 11.5 9.1 42.8 40.5
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6 Customer bankruptcy charge –– –– 12.4 ––
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) –– Severance charges 0.1 2.6 0.2 4.5
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8) Facility repositioning costs 0.9 –– 0.9 ––
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5) Stock-based compensation 4.7 6.6 13.5 15.3
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8 Adjusted EBITDA $ 46.5 $ 41.1 $  168.1 $ 146.3
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's Form 10-K for the fiscal year ended May 31, 2018. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.  These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control.  The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission. AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries AAR CORP. and Subsidiaries Adjusted Income from Continuing Operations (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Diluted Earnings per Share from Continuing Operations (unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Adjusted Selling, General and Administrative Expenses (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Net Debt (In millions- unaudited) May 31, 2019 May 31, 2018 Adjusted Effective Income Tax Rate (unaudited) Year ended May 31, 2019
(a) The twelve months ended May 31, 2019 includes a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. (a) In the first quarter of fiscal 2019, we re-aligned the composition of our operating segments to leverage the full breadth of our operational expertise in Aviation Services.  Our government-owned, contractor-operated business, which includes the INL/A WASS program, was previously included in our Expeditionary Services segment and is now reported within our Aviation Services segment for all periods presented. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 (b) Effective with the three months ended May 31, 2019, our adjusted results exclude tax benefits or expenses associated with significant changes in our income tax valuation allowances or income tax reserves.  Prior periods have been restated to conform to the current period presentation. 2019 2018 2019 2018 Total debt $ 142.9 $178.9 Income from continuing operations before income tax expense (in millions) $  89.0
Income from continuing operations $ 26.6 $ 18.1 $  84.1 $ 73.7 Diluted earnings per share from continuing operations $  0.76 $ 0.52 $  2.40 $ 2.11 Selling, general and administrative expenses $ 63.3 $ 61.8 $  215.4 $208.1 Less: Cash and cash equivalents (21.3) (31.1) Income tax expense (in millions) 4.9
Consolidated Statements of Income Three Months Ended Twelve Months Ended Consolidated Balance Sheets May 31, May 31, Consolidated Statements of Cash Flows Three Months Ended Twelve Months Ended Sales By Business Segment (a) Three Months Ended Twelve Months Ended Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (1.1) –– (14.1) Deferred tax re-measurement from the Tax Cuts and Jobs Act –– (0.03) –– (0.41) Severance charges (0.1) (2.5) (0.2) (4.4) Net debt $ 121.6 $147.8 Effective tax rate 5.5%
(In millions except per share data - unaudited) May 31, May 31, (In millions) 2019 2018 (In millions – unaudited) May 31, May 31, (In millions - unaudited) May 31, May 31, State income tax benefit (b) (5.1) (2.1) (5.1) (2.1) State income tax benefit (b) (0.15) (0.06) (0.15) (0.06) Stock-based compensation (4.7) (6.6) (13.5) (15.3) Impact of:
2019 2018 2019 2018 (unaudited) 2019 2018 2019 2018 2019 2018 2019 2018 Recognition of previously reserved income tax benefits (b) –– –– (6.5) –– Recognition of previously reserved income tax benefits (b) –– –– (0.19) –– Adjusted selling, general and administrative expenses $ 58.5 $ 52.7 $ 201.7 $ 188.4 Net Debt to Adjusted EBITDA (In millions - unaudited) May 31, 2019 May 31, 2018    State income tax benefit of $5.1 million 5.7%
ASSETS Cash flows provided from operating activities: Aviation Services $ 522.0 $ 443.8 $ 1,920.6 $ 1,635.8 Customer bankruptcy charge, net of tax –– –– 9.6 –– Customer bankruptcy charge, net of tax –– –– 0.27 –– Adjusted EBITDA for the twelve months ended $ 168.1 $ 146.3    Recognition of previously reserved income tax benefit of $6.5 million 7.3%
Sales $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Cash and cash equivalents $ 21.3 $ 31.1   Net income $ 22.8 $ 12.0 $ 7.5 $ 15.6 Expeditionary Services 40.7 29.7 131.2 112.5 Facility repositioning costs, net of tax 0.7 –– 0.7 –– Facility repositioning costs, net of tax 0.02 –– 0.02 –– Adjusted EBITDA (In millions - unaudited) Three Months Ended May 31, Twelve Months Ended May 31, Net debt at period end 121.6 147.8 Adjusted effective tax rate 18.5%
Cost and expenses: Restricted cash 19.8 10.5   Less: Loss from discontinued operations 3.8 6.1 76.6 58.1 $ 562.7 $ 473.5 $ 2,051.8 $ 1,748.3 Severance and pension settlement charges, net of tax 0.1 1.8 0.3 3.1 Severance and pension settlement charges, net of tax 0.01 0.05 0.01 0.09 2019 2018 2019 2018 Net debt to Adjusted EBITDA 0.72 1.01
     Cost of sales 468.0 388.8 1,722.3 1,453.7 Accounts receivable, net 197.8 202.0   Income from continuing operations 26.6 18.1 84.1 73.7 Adjusted income from continuing operations $ 22.3 $ 16.7 $  83.1 $ 60.6 Adjusted diluted earnings per share from continuing operations $  0.64 $ 0.48 $  2.36 $ 1.73 Net income $ 22.8 $ 12.0 $   7.5 $ 15.6
     Provision for doubtful accounts (a) 2.1 0.1 15.8 0.5 Contract assets 59.2 ––   Adjustments to reconcile income from continuing operations to net cash provided from operating activities Gross Profit by Business Segment (a) Three Months Ended Twelve Months Ended Loss from discontinued operations 3.8 6.1 76.6 58.1
     Selling, general and administrative 63.3 61.8 215.4 208.1 Inventories, net 523.7 460.7     Depreciation and intangible amortization 11.5 9.1 42.8 40.5 (In millions- unaudited) May 31, May 31, Income tax expense 0.2 2.1 4.9 3.5
Rotable assets and equipment on or available for lease 65.3 87.2     Amortization of stock-based compensation 4.7 6.6 13.5 15.3 2019 2018 2019 2018 Other expense, net 0.4 0.4 0.8 0.9
Operating income 29.3 22.8 98.3 86.0 Assets of discontinued operations 29.2 125.0     Provision for doubtful accounts 2.1 0.1 15.8 0.5 Aviation Services $ 89.6 $ 79.4 $ 313.3 $ 275.3 Interest expense, net 2.1 2.2 8.5 7.9
Other current assets 36.2 26.2     Changes in certain assets and liabilities: Expeditionary Services  5.1 5.3 16.2 19.3 Depreciation and intangible amortization 11.5 9.1 42.8 40.5
Interest expense, net (2.1) (2.2) (8.5) (7.9)      Total current assets 952.5 942.7       Accounts receivable 38.9 0.6 (34.4) 35.4 $ 94.7 $ 84.7 $ 329.5 $ 294.6 Customer bankruptcy charge –– –– 12.4 ––
Other expense, net (0.4) (0.4) (0.8) (0.9) Property, plant, and equipment, net 132.8 133.2       Contract assets (4.5) –– (9.7) –– Severance charges 0.1 2.6 0.2 4.5
Goodwill and intangible assets, net 138.4 146.5       Inventories (9.1) 10.9 (80.9) (25.8) Facility repositioning costs 0.9 –– 0.9 ––
Income from continuing operations before income tax expense 26.8 20.2 89.0 77.2 Rotable assets supporting long-term programs 216.0 183.4       Rotable assets supporting long-term programs (11.0) (2.8) (49.2) (38.5) Stock-based compensation 4.7 6.6 13.5 15.3
Income tax expense 0.2 2.1 4.9 3.5 Other non-current assets 77.5 118.9       Accounts payable and accrued liabilities (10.1) 13.3 40.4 9.8 Adjusted EBITDA $ 46.5 $ 41.1 $  168.1 $ 146.3
Income from continuing operations 26.6 18.1 84.1 73.7      Total assets $ 1,517.2 $ 1,524.7       Other (5.0) (15.7) 38.1 (55.1)
Loss from discontinued operations (3.8) (6.1) (76.6) (58.1)   Net cash provided from operating activities – continuing operations 44.1 40.2 60.5 55.8
Net income $ 22.8 $ 12.0 $ 7.5 $  15.6 LIABILITIES AND EQUITY   Net cash provided from (used in) operating activities – discontinued operations (1.2) (8.8) 6.9 8.5
Accounts payable and accrued liabilities $ 328.3 $ 308.3   Net cash provided from operating activities 42.9 31.4 67.4 64.3
Earnings per share – Basic: Liabilities of discontinued operations 29.2 25.0
     Earnings from continuing operations $  0.77 $ 0.53 $  2.42 $ 2.14      Total current liabilities 357.5 333.3 Cash flows used in investing activities:
     Loss from discontinued operations (0.11) (0.18) (2.22) (1.70) Long-term debt 141.7 177.2   Property, plant and equipment expenditures (5.1) (3.6) (17.4) (22.0)
     Earnings per share – Basic $  0.66 $ 0.35 $  0.20 $ 0.44 Other liabilities and deferred income 112.1 77.9   Payments for acquisitions  –– –– (2.3) (22.9)
     Total liabilities 611.3 588.4   Other    (0.1) (2.7) 1.2 6.3
Earnings per share – Diluted: Equity 905.9 936.3   Net cash used in investing activities – continuing operations (5.2) (6.3) (18.5) (38.6)
     Earnings from continuing operations $  0.76 $  0.52 $  2.40 $ 2.11      Total liabilities and equity $ 1,517.2 $1,524.7   Net cash provided from (used in) investing activities – discontinued operations –– 0.4 (0.5) (4.3)
     Loss from discontinued operations (0.11) (0.18) (2.19) (1.70)   Net cash used in investing activities  (5.2) (5.9) (19.0) (42.9)
     Earnings per share – Diluted $  0.65 $  0.34 $  0.21 $ 0.41
Cash flows provided from financing activities:
Share Data:   Proceeds from (repayments on) borrowings, net (35.0) (17.0) (35.0) 23.8
Weighted average shares outstanding – Basic 34.3 34.0 34.5 34.2   Cash dividends   (2.6) (2.6) (10.5) (10.3)
Weighted average shares outstanding – Diluted 34.6 34.6 34.9 34.6   Purchase of treasury stock (9.5) –– (10.3) (13.1)
  Other    0.2 1.6 8.5 11.3
Net cash provided from (used in) financing activities – continuing operations (46.9) (18.0) (47.3) 11.7
Net cash used in financing activities – discontinued operations –– (0.4) (1.4) (1.7)
Net cash provided from (used in) financing activities (46.9) (18.4) (48.7) 10.0
Effect of exchange rate changes on cash (0.1) (0.1) (0.2) (0.1)
Increase (Decrease) in cash and cash equivalents (9.3) 7.0 (0.5) 31.3
Cash, cash equivalents, and restricted cash at beginning of period 50.4 34.6 41.6 10.3
Cash, cash equivalents, and restricted cash at end of period $ 41.1 $ 41.6 $ 41.1 $ 41.6

 

 

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SOURCE AAR

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