On September 15, 2011, AAR Corp. (AIR) posted favorable first-quarter 2012 financial results. The company’s net income surged by approximately 21.8% to $16.6 million or 41 cents per diluted share compared with $13.7 million or 36 cents per diluted share earned in the prior-year quarter. Earnings per share missed the Zacks Consensus Estimate of 43 cents per share marginally.
Revenue
In the first quarter of 2012, consolidated sales were $479.3 million, up from $404.4 million in the first quarter of 2011. Sales were primarily driven by robust demand for spare parts from government and defense customers and completion of two major aircraft sales within the portfolio.
Revenue from the Aviation Supply Chain business was $154.9 million, up 54.4% year over year and accounted for about 32.3% of total revenue. Government and Defense Services revenue of approximately $150 million accounted for 31.3% of total revenue and increased substantially from $129.3 million in the year-ago quarter.
Maintenance, Repair and Overhaul segment, which accounted for roughly 19.4% of total revenue, generated revenue of $93.2 million, up 21.4% year over year. Structures and Systems revenue was $81.2 million (16.9% of total revenue), down from $98 million in the year-ago quarter.
Margins
Cost of sales in the quarter spiked 21% year over year to $404.5 million. The company’s consolidated gross profit margin plummeted 15.6% in the reported quarter from 17.3% in the year-ago comparable quarter. Lower volume within the Structures and Systems segment, impacted by the sale of the two aircrafts and unfavorable mix in MRO in the reported quarter, led to a reduction in the consolidated gross profit margin. Selling, general and administrative expense of was recorded at $41.7 million up marginally from $41.2 million in the year ago quarter.
Balance Sheet
Exiting the first quarter of 2012, AAR Corp’s cash and cash equivalents was approximately $35.5 million, up compared with $57.4 million in the previous quarter. Net property, plant and equipment were $335.3 million, up from $324.4 million in the previous quarter.
Going forward, the company expects sales growth at the Mobility Products unit and improved mix at MRO along with a steady improvement in operating margins.
Based in Wood Dale, Illinois, AAR Corp. provides various products and services to the aviation and defense industries worldwide. The company operates in four segments: Aviation Supply Chain; Maintenance, Repair, and Overhaul; Structures and Systems; and Government & Defense Services. The company competes directly with its peers such as Goodrich Corp (GR), Boeing Co (BA), Lockheed Martin Corporation (LMT).
AAR CORP (AIR): Free Stock Analysis Report
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GOODRICH CORP (GR): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
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