AAR Q1 Profit Down, Cuts FY Outlook - Update

(RTTNews) - Aviation and aerospace company AAR Corp. (AIR), Tuesday reported a decline in first-quarter profit, hurt mainly by lower revenues, with both earnings and revenue falling short of Wall Street estimates. Moving ahead, the company lowered its financial outlook for the full year.

Wood Dale, Illinois-based AAR's first-quarter profit dropped to $14.4 million or $0.36 per share from $17.9 million or $0.45 per share last year. On average, five analysts polled by Thomson Reuters estimated earnings of $0.38 per share for the quarter. Analysts' estimates typically exclude special items.

AAR said sales for the quarter dropped to $469.2 million from $514.5 million last year. Analysts had a consensus revenue estimate of $489.53 million for the quarter.

"Although performance in the first quarter was in line with our expectations, sales in both segments were down for the quarter," said CEO David Storch. AAR provides services such as inventory management and aircraft maintenance, as well as products like cargo systems and containers to the commercial and government aviation industry.

Sales in the aviation services dropped to $363.7 million from $393.7 million a year ago. Storch said sales in the segment dropped due to lower defense sales reflecting largely the draw down of aircraft positions in Afghanistan and a delay in commencement of new contracts in Africa for airlift business.

Technology products segment sales decreased to $105.5 million from $120.8 million last year, as mobility products business declined.

Looking forward to the full year, AAR now expects earnings of $1.65 to $1.75 per share on revenues of $2 billion to $2.05 billion. Analysts currently expect earnings of $1.87 per share on revenues of $2.11 billion for the year.

Earlier, the company expected earnings of $1.80 to $1.90 per share on revenues of $2.1 billion to $2.15 billion.

"Over the balance of the year, we expect lower results for our businesses that support the military's operational tempo - airlift and mobility. While we expect continued strength in our commercial and defense supply chain businesses, as well as improvement in our MRO performance, this will not fully offset the anticipated reductions related to military operations," Storch observed.

AIR closed Tuesday's trading at $28.00, up $0.07 or 0.25%, on the NYSE. The stock dropped $0.80 or 2.86% in the after-hours trade.