AAR (AIR) Q4 2007 earnings summary

Executive summary

• FY2007 sales exceeded $1B, with record earnings and growth across all four operating segments.

• Net income was a record $58.7M; income from continuing operations rose 66% and sales grew 20%.

• Strategy centered on organic growth, acquisitions, broader capabilities, and closer integration into customer operations.

Financial highlights

• Net sales were $1.061B vs. $885.5M in FY2006; income from continuing operations was $59.447M vs. $35.823M.

• Diluted EPS from continuing operations was $1.42 vs. $0.96 in FY2006.

• Record net income was $58.7M; after-tax margin was 5.5%, and operating margin improved 160 bps to 9%.

• SG&A declined to just below 10% of sales.

Outlook and guidance

• FY2008 and beyond: target revenue growth faster than industry, driven by supply-chain programs, defense capabilities, regional aircraft support, Asian sales, and acquisitions.

• Margin priorities include cost-structure leverage, lean initiatives, greater efficiency, and more higher-margin engineering content.

• FMTV shelter deliveries were expected to rise from 24 to 40 systems per month to meet demand growth over the next two years.