AAR (AIR) Q4 2005 earnings summary

Executive summary

• FY2005 sales rose 16% to $747.8M, with growth across all four operating segments and increased market share.

• Income from continuing operations reached $18.6M, or $0.55 diluted EPS, versus $4.6M and $0.14 in FY2004.

• Record operating cash flow of $51M funded strategic investments and balance-sheet strengthening.

Financial highlights

• Net sales were $747.8M in FY2005, compared with $644.5M in FY2004 and $599.8M in FY2003.

• Income from continuing operations was $18.6M; diluted EPS from continuing operations was $0.55.

• Sales to airline customers increased 26% YoY; government and defense sales increased 8% YoY.

• Cash flow from operations reached a record $51M.

Outlook and guidance

• Growth strategy emphasizes new program wins, greater commercial and defense market penetration, selective acquisitions, and international expansion in Asia and Europe.

• Component repair market spending is projected to rise from $7.6B in 2004 to $12.3B in 2014, a projected 62% increase.

• Post-year-end A400M cargo systems program deliveries are expected to begin toward the end of FY2007.

• Long-term defense outlook is favorable, supported by mobile deployment strategies and industry partnerships, although record mobility product volumes are not expected to continue.