News Spotlight: AAR Corp. (AIR)

AAR Corp. stock identified change of 31.40% away from 52-week low price and recently located move of -23.89% off 52-week high price. It has market worth of $1353.92M and dividend yield of 0.77%. AIR stock has been recorded 17.09% away from 50 day moving average and 3.24% away from 200 day moving average. Moving closer, we can see that shares have been trading 11.17% off 20-day moving average.

AAR CORP. (NYSE: AIR) declared 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.”     The Industrial Goods sector company, AAR Corp. noticed change of 0.80% to $39.21 along volume of 794701 shares in recent session compared to an average volume of 252.86K. The stock observed return of 6.12% in 5 days trading activity. The stock was at 16.11% over one month performance. AIR’s shares are at 18.32% for the quarter and driving a -18.47% return over the course of the past year and is now at 5.01% since this point in 2018.  The average volatility for the week at 2.19% and for month was at 2.66%. There are 34.53M shares outstanding and 33.08M shares are floated in market. Right now the stock beta is 1.15.

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