AAR Corp (AIR) Q1 Earnings Top Estimates On Higher Y/Y Sales

AAR Corp. (NYSE:AIR) reported first-quarter fiscal 2020 adjusted earnings of 57 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents by 9.6%. The figure reflected a year-over-year improvement of 5.6% from 54 cents reported in the year-ago quarter.

The year-over-year growth can be primarily attributed to solid improvement in sales.

Excluding one-time items, the company reported earnings of 49 cents from continuing operations compared with 54 cents in first-quarter fiscal 2019.

Total Sales

In the reported quarter, net sales of $541.5 million exceeded the Zacks Consensus Estimate of $498 million by 8.7%. The top line also increased 16.1% from $466.3 million in the year-ago quarter.

The year-over-year increase in sales was driven by continued growth in the company’s programs and parts supply activities.

Segment Details

In the fiscal first quarter, revenues from the Aviation Services segment summed $511.8 million, up 16.7% year over year, driven by improved performance in Maintenance, Repair and Overhaul (MRO), acquisition of new government contract awards and continued strong demand for both new and aftermarket parts.

Expeditionary Services generated revenues of $29.7 million, up 6.5% from $27.9 million in the year-ago quarter, led by an increase in volumes from recent contract awards.

Highlights of the Release

AAR Corp’s cost of sales in the reported quarter grew 16.4% year over year to $459.9 million.

Selling, general and administrative expenses rose 20.5% to $58.1 million.

The company incurred interest expenses of $2.1 million compared with $1.6 million in first-quarter fiscal 2019.

AAR Corp. Price, Consensus and EPS Surprise

Financial Condition

As of Aug 31, 2019, AAR Corp’s cash and cash equivalents amounted to $39.9 million compared with $21.3 million as of May 31, 2019.

As of Aug 31, net property, plant and equipment were worth $132.7 million compared with $132.8 million as of May 31.

As of Aug 31, long-term debt increased to $202.2 million from $141.7 million as of May 31.

Outlook

AAR Corp reaffirmed its financial guidance for fiscal 2020, which includes sales of $2.1-$2.2 billion and adjusted diluted earnings per share from continuing operations of $2.45-$2.65. The company expects selling, general and administrative expenses to be approximately 10.5% of sales and anticipates an effective tax rate of 24% for the fiscal.

Zacks Rank

AAR Corp currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Defense Releases

Textron Inc. (NYSE:TXT) reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 9.4%. The bottom line also increased 6.9% from 87 cents in the year-ago quarter.

Lockheed Martin Corp. (NYSE:LMT) reported second-quarter 2019 earnings of $5 per share, which surpassed the Zacks Consensus Estimate of $4.74 by 5.5%. The bottom line also improved 23.5% from $4.05 in the year-ago quarter.

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) reported second-quarter 2019 earnings of 8 cents per share, which surpassed the Zacks Consensus Estimate of 7 cents by 14.3%. The bottom line also improved from the prior-year quarter’s earnings of 2 cents per share.

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