Aerospace and defense products and services supplier, AAR Corp. AIR reported third-quarter fiscal 2016 (ended Feb 29, 2016) earnings of 26 cents per share, missing the Zacks Consensus Estimate by 3.7%. Quarterly earnings also plunged 72.6% from the year-ago level of 95 cents.
Shares of the company gained 4.97% following the earnings release on Mar 22 after the closing bell.
Revenues
In the quarter under review, consolidated sales were $402.8 million, missing the Zacks Consensus Estimate of $415 million by 2.9%. On a year-over-year basis, however, revenues improved 6% primarily due to higher contribution from its Aviation Services segment.
Segment Details
In the reported quarter, Aviation Services revenues of $349.2 million contributed approximately 86.7% to the total revenue. Segmental revenues surged 10% from the year-ago quarter on the back of an industry-leading supply chain.
The Expeditionary Services segment contributed the remaining 13.3% to quarterly revenues, corresponding to $53.6 million, down 13.1% year over year.
Operational Highlights
In the fiscal third quarter, AAR Corp.’s cost of sales increased 4.4% year over year to $344.5 million.
Selling, general and administrative expenses inched up 2.2% to $42.6 million.
The company incurred interest expense of $1.7 million, lower than $6.4 million in the year-ago quarter.
Financial Update
AAR Corp.’s cash and cash equivalents, as of Feb 29, 2016, were $50.4 million, down from $54.7 million as of May 31, 2015.
Net property, plant and equipment were $222.4 million, as of Feb 29, 2016 compared with $214.8 million as of May 31, 2015.
As of Feb 29, 2016, total debt increased to $195.7 million from $154 million as of May 31, 2015.
Dividend, Repurchase and Investment
During the third quarter, the company paid dividend of $2.6 million, or 7.5 cents per share, and repurchased approximately 312,000 shares for $7.3 million, or $23.44 per share.
Zacks Rank & Key Picks
AAR Corp. has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include TransDigm Group Incorporated TDG, CPI Aerostructures Inc. CVUand HEICO Corporation HEI, each sporting a Zacks Rank #1 (Strong Buy).
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