AAR reports first quarter fiscal year 2025 results

Core Insights - AAR CORP. reported first quarter fiscal year 2025 sales of $661.7 million, a 20% increase compared to the prior year, with net income of $18.0 million or $0.50 per diluted share, compared to a net loss of $0.6 million or $0.02 per diluted share in the same quarter last year [1][2][12] - Adjusted diluted earnings per share rose to $0.85, up 9% from $0.78 in the first quarter of the previous fiscal year [1][2][22] - The sales growth was driven by a 20% increase in both commercial and government sectors, attributed to the acquisition of the Product Support business and organic growth [2][12] Financial Performance - Consolidated sales to commercial and government customers both increased by 20% year-over-year, with commercial sales representing 71% of total sales [2] - The company achieved 26% organic growth in new parts distribution activities and saw strong operational performance in hangars [2] - Selling, general, and administrative expenses were $75.9 million, slightly up from $74.7 million in the prior year [3] - Operating margins improved to 6.6% from 4.6% in the prior year, with adjusted operating margins increasing from 7.3% to 9.1% [3][23] Contracts and Acquisitions - AAR CORP. secured multiple new contracts, including two five-year firm fixed price IDIQ contracts with a total ceiling value of approximately $2.4 billion from the U.S. Navy for maintenance and repair of the P-8A Poseidon Aircraft fleet [3][4] - The recent acquisition of the Product Support business has exceeded expectations and contributed significantly to sales growth [2][3] Debt and Cash Flow - Net interest expense for the quarter was $18.3 million, up from $5.4 million in the previous year, primarily due to increased debt levels from the Product Support acquisition [3][4] - As of August 31, 2024, net debt stood at $942.7 million, with a net leverage ratio of 3.31x when adjusted for the last twelve months of adjusted EBITDA from the Product Support business [4][25] Operational Highlights - Cash flow used in operating activities was $18.6 million, consistent with the prior year [4][15] - The company continues to prioritize debt repayment while evaluating share repurchases and other investment opportunities, with $52.5 million remaining on its $150 million share repurchase program [3][4]