AAR Corp.’s fiscal fourth-quarter earnings dropped 21 percent as the aircraft leasing and maintenance company waits for its commercial aviation business to pick up.
The company has warned that recovery in its commercial-airlines business has been less robust than expected. The recession skewered that market, with a drop in travel and tight credit forcing AAR’s commercial-airline customers to cut back. However, the company’s sales to defense contractors have held up.
Chairman and Chief Executive David P. Storch said the Wood Dale-based company’s focus “remains squarely on capturing new business, solid execution, cost control and maintaining a strong balance sheet.”
For the quarter ended May 31, AAR posted a profit of $11.2 million, or 29 cents a share, down from $14.2 million, or 36 cents a share, a year earlier. Revenue inched up 0.2 percent, to $372.3 million
Last month, AAR predicted earnings would be at the high end of its 25-to-30-cents-a-share projection from May, which was less than the average analysts’ estimate then, according to a survey by Thomson Reuters. Revenue would slightly beat its guidance, which topped out at $365 million, the company had said.
Gross margin fell to 17.9 percent from 19.1 percent, excluding impairment charges. Including them, this year’s margin improved from 16.4 percent a year earlier.
Sales in its defense and government services segment surged 82 percent on the acquisition of Aviation Worldwide Services and the start of the KC-10 logistics program. The company’s largest segment, aviation supply-chain operations, posted a 9.5 percent decline in sales.
The company didn’t discuss its full-year outlook in Tuesday’s release. It had forecast $1.25 to $1.40 a share in earnings and $1.5 billion to $1.6 billion in revenue last month. The original profit projection was well short of analysts views at the time, according to a survey by Thomson Reuters.
AAR shares closed Tuesday up 3.7 percent, to $17.91, and weren’t moving after hours. The stock has dropped 22 percent this year, underperforming the market.
