AAR (AIR) Q4 2000 earnings summary

Executive summary

• Fiscal 2000 total sales were $1.024B, a record, while net income fell 15.6% YoY to $35.2M amid weaker fourth-quarter demand and a $4.0M bad-debt reserve charge.

• Sales excluding pass-through items rose 4.3% to $957.5M; diluted EPS was $1.28, or $1.39 excluding the bad-debt charge.

• Positive operating cash flow, investments in repair capabilities and technology, and growth in regional and military repair services supported strategic expansion.

Financial highlights

• Total sales fell 2.5% to $1,024.3M from $1,050.6M; sales before pass-through items rose 4.3% to $957.5M from $918.0M.

• Net income declined 15.6% to $35.2M from $41.7M; diluted EPS was $1.28 vs. $1.49, or $1.39 excluding a $4.0M bad-debt reserve charge.

• Operating income decreased to $70.7M from $77.4M; gross profit was nearly flat at $172.9M vs. $173.3M.

• SG&A rose 6.6% to $102.2M, including the fourth-quarter $4.0M bad-debt reserve increase and higher e-business costs.

Outlook and guidance

• Near-term conditions expected to remain challenging; initiatives target sales growth, margin expansion, operational excellence and working-capital efficiency.

• Plans included expanding aircraft and engine sales and leasing, inventory and maintenance programs, FAA-authorized parts manufacturing, repair engineering and e-business sales.

• Growth opportunities expected from a larger global commercial and regional fleet and increased U.S. government outsourcing.