AAR Corp. (AIR, Financial) filed Quarterly Report for the period ended 2009-11-30.
AAR Corp. is a worldwide leader in supplying aftermarket products and services to the global aerospace/aviation industry. It provides aircraft, engines and engine parts; airframe and accessories products; overhaul, repair and maintenance services and company-manufactured products to customers in all segments of this industry, including the world's largest commercial airlines and air cargo operators, original equipment manufacturers, domestic and foreign military and government agencies, aircraft leasing companies and maintenance service providers. Aar Corp. has a market cap of $907 million; its shares were traded at around $23.3 with a P/E ratio of 15.03 and P/S ratio of 0.64. Aar Corp. had an annual average earning growth of 52.7% over the past 5 years.
At November 30, 2009, our liquidity and capital resources included cash of $105,703 and working capital of $611,689. Our revolving credit agreement, as amended (the Credit Agreement) with various financial institutions, as lenders, and Bank of America National Association as successor by merger to LaSalle Bank National Association (Bank of America), as administrative agent for the lenders, provides us with unsecured revolving borrowing capacity of up to $250,000. Under certain circumstances, we may request an increase to the revolving commitment by an aggregate amount of up to $75,000, not to exceed $325,000 in total. The term of our Credit Agreement extends to August 31, 2011. Borrowings under the Credit Agreement bear interest at the London Interbank Offered Rate (LIBOR) plus 100 to 237.5 basis points based on certain financial measurements. Borrowings outstanding under this facility at November 30, 2009 were $20,000, and there were $10,764 of outstanding letters of credit which reduced the availability of this facility. In addition to our Credit Agreement, we also have $3,624 available under a foreign line of credit.
During the six-month period ended November 30, 2009, cash flow from operations was $58,136 primarily as a result of a reduction in accounts receivable of $30,171 and net income attributable to AAR and noncontrolling interest and depreciation and amortization of $45,584, partially offset by a decrease in accounts payable and accrued liabilities of $34,765.
During the six-month period ended November 30, 2009, our financing activities used $49,670 of cash primarily due to a reduction in borrowings of $49,481, which includes the retirement of convertible notes for $9,115 cash, the payoff of non-recourse debt of $9,261 and the reduction in borrowings outstanding under our revolving credit agreement of $30,000.
In June 2005, we announced that our Cargo Systems business was selected to provide cargo handling systems for the new Airbus A400M Military Transport Aircraft (A400M). We are a subcontractor to Pfalz Flugzeugwerke GmbH (PFW) on this Airbus program. Our portion of the revenue from this program is expected to exceed $300,000 through fiscal 2020, based on sales projections of the A400M. During fiscal 2009, Airbus agreed to reimburse AAR and PFW 20.0 million euros for costs incurred to develop the A400M system. AARs share of this reimbursement was $18,700 and reduced the amount of capitalized program development costs. As of November 30, 2009, we have capitalized, net of the $18,700 reimbursement, approximately $45,300 of costs associated with the engineering and development of the cargo system. Sales and related cost of sales will be recognized on
Mesa Airlines and subsidiaries (Mesa) is a customer of the Company and in May 2008, warned it may have to file for bankruptcy protection if it could not resolve a contract dispute with one of its customers. In addition to the ongoing dispute with their customer, Mesa reported substantial losses in the twelve-month period ended September 30, 2009. We have been informed by Mesa that they are contemplating significantly reducing or eliminating entirely, their fleet of ERJ 145 and CRJ 200 aircraft. In November 2009, the Company and Mesa amended their parts supply and maintenance agreements for those fleets to provide Mesa with increased flexibility to respond to demand fluctuations in the 50-seat aircraft market. During fiscal 2009, our consolidated sales to Mesa were $70,700, of which $45,500 was in the Aviation Supply Chain segment (of which approximately $29,000 related to the ERJ 145 and CRJ 200 aircraft) and $25,200 was in the Maintenance, Repair and Overhaul segment (of which approximately $9,000 related to the ERJ 145 and CRJ 200 aircraft).
Read the The complete ReportAIR is in the portfolios of Arnold Schneider of Schneider Capital Management, Westport Asset Management, John Buckingham of Al Frank Asset Management, Inc., Bruce Kovner of Caxton Associates, Chuck Royce of ROYCE & ASSOCIATES.
AAR Corp. is a worldwide leader in supplying aftermarket products and services to the global aerospace/aviation industry. It provides aircraft, engines and engine parts; airframe and accessories products; overhaul, repair and maintenance services and company-manufactured products to customers in all segments of this industry, including the world's largest commercial airlines and air cargo operators, original equipment manufacturers, domestic and foreign military and government agencies, aircraft leasing companies and maintenance service providers. Aar Corp. has a market cap of $907 million; its shares were traded at around $23.3 with a P/E ratio of 15.03 and P/S ratio of 0.64. Aar Corp. had an annual average earning growth of 52.7% over the past 5 years.
Highlight of Business Operations:
Operating income increased $11,312 or 75.6% compared with the prior year as the prior year included the $21,033 pre-tax aircraft impairment charge. Current year operating income was negatively impacted by the reduction in sales and gross profit in the Aviation Supply Chain and Maintenance, Repair and Overhaul segments, as well as a decline in earnings from joint ventures. Selling, general and administrative expenses declined $614 from the prior year, even while including approximately $2,200 of expense associated with the launch of AAR Global Solutions in fiscal 2010. Earnings from joint ventures declined $4,353 or 99.7%, principally due to increased depreciation expense recorded in the aircraft joint ventures as a result of reducing the useful lives of certain narrow-body aircraft to 25 years, as well as less aircraft owned in joint venture as compared to the prior year. Net interest expense declined $1,749 or 22.1% compared to the prior year due to a reduction in outstanding borrowings. Our effective income tax rate increased slightly to 34.4% in the second quarter of fiscal 2010 compared to 34.0% last year. The Company expects its effective income tax rate, excluding the impact of unusual items, if any, to be approximately 34.5% for the balance of the fiscal year.At November 30, 2009, our liquidity and capital resources included cash of $105,703 and working capital of $611,689. Our revolving credit agreement, as amended (the Credit Agreement) with various financial institutions, as lenders, and Bank of America National Association as successor by merger to LaSalle Bank National Association (Bank of America), as administrative agent for the lenders, provides us with unsecured revolving borrowing capacity of up to $250,000. Under certain circumstances, we may request an increase to the revolving commitment by an aggregate amount of up to $75,000, not to exceed $325,000 in total. The term of our Credit Agreement extends to August 31, 2011. Borrowings under the Credit Agreement bear interest at the London Interbank Offered Rate (LIBOR) plus 100 to 237.5 basis points based on certain financial measurements. Borrowings outstanding under this facility at November 30, 2009 were $20,000, and there were $10,764 of outstanding letters of credit which reduced the availability of this facility. In addition to our Credit Agreement, we also have $3,624 available under a foreign line of credit.
During the six-month period ended November 30, 2009, cash flow from operations was $58,136 primarily as a result of a reduction in accounts receivable of $30,171 and net income attributable to AAR and noncontrolling interest and depreciation and amortization of $45,584, partially offset by a decrease in accounts payable and accrued liabilities of $34,765.
During the six-month period ended November 30, 2009, our financing activities used $49,670 of cash primarily due to a reduction in borrowings of $49,481, which includes the retirement of convertible notes for $9,115 cash, the payoff of non-recourse debt of $9,261 and the reduction in borrowings outstanding under our revolving credit agreement of $30,000.
In June 2005, we announced that our Cargo Systems business was selected to provide cargo handling systems for the new Airbus A400M Military Transport Aircraft (A400M). We are a subcontractor to Pfalz Flugzeugwerke GmbH (PFW) on this Airbus program. Our portion of the revenue from this program is expected to exceed $300,000 through fiscal 2020, based on sales projections of the A400M. During fiscal 2009, Airbus agreed to reimburse AAR and PFW 20.0 million euros for costs incurred to develop the A400M system. AARs share of this reimbursement was $18,700 and reduced the amount of capitalized program development costs. As of November 30, 2009, we have capitalized, net of the $18,700 reimbursement, approximately $45,300 of costs associated with the engineering and development of the cargo system. Sales and related cost of sales will be recognized on
Mesa Airlines and subsidiaries (Mesa) is a customer of the Company and in May 2008, warned it may have to file for bankruptcy protection if it could not resolve a contract dispute with one of its customers. In addition to the ongoing dispute with their customer, Mesa reported substantial losses in the twelve-month period ended September 30, 2009. We have been informed by Mesa that they are contemplating significantly reducing or eliminating entirely, their fleet of ERJ 145 and CRJ 200 aircraft. In November 2009, the Company and Mesa amended their parts supply and maintenance agreements for those fleets to provide Mesa with increased flexibility to respond to demand fluctuations in the 50-seat aircraft market. During fiscal 2009, our consolidated sales to Mesa were $70,700, of which $45,500 was in the Aviation Supply Chain segment (of which approximately $29,000 related to the ERJ 145 and CRJ 200 aircraft) and $25,200 was in the Maintenance, Repair and Overhaul segment (of which approximately $9,000 related to the ERJ 145 and CRJ 200 aircraft).
Read the The complete ReportAIR is in the portfolios of Arnold Schneider of Schneider Capital Management, Westport Asset Management, John Buckingham of Al Frank Asset Management, Inc., Bruce Kovner of Caxton Associates, Chuck Royce of ROYCE & ASSOCIATES.
