AAR (AIR) Q4 2001 earnings summary

Executive summary

• FY 2001 marked 50 years in business; results faced weaker airline profitability, higher fuel and labor costs, and a softening global economy.

• Sequential EPS improved each quarter, and operating cash flow reached a record $46,093 thousand, the 12th consecutive year of positive operating cash flow.

Financial highlights

• Total sales were $874,255 thousand vs. $1,024,333 thousand in FY 2000; sales excluding pass-through were $853,659 thousand, down 10.8%.

• Operating income was $40,390 thousand vs. $70,658 thousand; net income was $18,531 thousand vs. $35,163 thousand.

• Diluted EPS was $0.69 vs. $1.28; FY 2001 net income included a $3,300 thousand tax benefit from reversal of pre-FY 1998 tax liabilities.

• Gross profit was $136,467 thousand vs. $172,853 thousand; FY 2001 included a $5,400 thousand inventory provision tied to a major program customer.

Outlook and guidance

• Priorities include newer-generation aircraft and engine inventory, Airbus and regional-jet support, integrated airline solutions, and U.S. military logistics outsourcing.

• Management expressed confidence in navigating the cycle and cited continued worldwide air-traffic growth as a long-term source of commercial-market opportunity.