Wood Dale, IL-based AAR Corp. AIR provided an insight into its third-quarter fiscal 2015 results wherein it anticipates results to fall quite short of expectations. The company also predicted a possible reason for this.
According to AAR Corp., reductions in both flight hours and flying positions have cost the company nearly $7.6 million in operating profit in the third quarter ended Feb 28 as compared to the previous quarter.
Moreover, one-time adjustments including the $40 million pre-tax impairment charge related to the Precision Systems manufacturing business, a $6 million pre-tax charge related to the company’s change in classification for its held for sale items and a $2.5 million pre-tax charge related to the employee severance may further lead to disappointing results.
Considering these charges, the company anticipates a loss of 73 – 76 cents per share in the third quarter of fiscal 2015.
Additionally, the company declared the sale of the Telair Cargo Group, which is expected to close in the fourth quarter of fiscal 2015 (ending May 31, 2015), should generate about $600 million as net cash proceeds. The company plans to use these proceeds to redeem its 7.25% senior notes worth $325 million in Apr 2015.
The pre-tax gain of $200 million related to the sale will be recorded by the company. Also, the company’s board of directors authorized the repurchase of up to $250 million of the stock.
It is expected that AAR Corp. will release its third-quarter fiscal 2015 results by the first week of April, once it finalizes the Telair Cargo Group sale.
AAR Corp. reported earnings beat in two of the last four quarters, delivering a negative surprise of 6.16% on an average. It has an Earnings ESP of -12.20% and a Zacks Rank #4 (Sell).
Better-ranked stocks in the same sector include Rockwell Collins Inc. COL, Spirit AeroSystems Holdings, Inc. SPR and TransDigm Group Inc. TDG, each carrying a Zacks Rank #2 (Buy).
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