AAR reported quarterly net sales of $305.7 million and income from continuing operations of $17.7 million for the fourth quarter of fiscal 2007.
Sales grew 22% year-over-year, and income from continuing operations increased 33% compared to last year.
For the Company’s fiscal year 2007, net sales were a record $1,061.2 million, and income from continuing operations was a record $59.4 million, or $1.42 per diluted share. Sales increased 20% versus the prior year, and income from continuing operations grew 66%.
The record sales and earnings performance was fueled by the alignment of the Company’s products and services to high-growth markets, effective merchandising and solid execution. The Company achieved double-digit sales growth in all four segments for the quarter and the year. Value-added supply chain solutions, aftermarket replacement parts, airframe maintenance, landing gear services, specialized mobility products and aircraft sales were the main growth areas for the year.
“I am very proud of the exceptional results our team produced in fiscal 2007,” says David P. Storch, chairman and chief executive officer of AAR CORP. “We expanded our business in all four segments, achieved record sales and earnings, and made significant investments to position the Company for growth, including the completion of two acquisitions.”
Aviation Supply Chain – Sales grew 14% to $146.6 million for the quarter and 18% to $543.7 million for the year versus the same periods a year ago. The growth in this segment is primarily attributable to a full year of activity for two major supply chain programs, the introduction of new programs and increased demand in the parts arbitrage business.
Maintenance, Repair and Overhaul – Sales increased 13% to $65.2 million for the quarter and 16% to $211.5 million for the year compared to the same periods last year as the Company benefited from growth in its commercial and regional aircraft maintenance and landing gear businesses. AAR acquired the assets of Reebaire Aircraft Inc. in January 2007, doubling its regional aircraft MRO capacity.
Structures and Systems – Sales grew 34% to $80.2 million for the quarter and 15% to $264.1 million for the year versus the same periods a year ago. The Company continued to experience higher demand for specialized mobility products. AAR acquired Brown International in April 2007, adding higher-value systems integration capability. The composite structures business was also a significant contributor for the segment.
Aircraft Sales and Leasing – Operating income, which includes earnings from aircraft joint ventures, increased $1.8 million or 144% for the quarter and $8.6 million or 319% for the year on a year-over-year basis. As of May 31, 2007, the total number of aircraft held in joint ventures was twelve, and the number of aircraft in the Company’s wholly-owned portfolio was nine.
Sales to both major customer groups, commercial and defense, increased substantially during the year. Commercial sales grew 22% for the fourth quarter and 23% for the year. Defense sales grew 24% for the quarter and 14% for the year.
As a percentage of sales, selling, general and administrative costs were 9.4% for the quarter and 9.9% for the year. The operating profit margin was 9.2% in the fourth quarter and 9.0% for the year, up from 8.4% and 7.4%, respectively, in the same periods last year.
“We made meaningful progress on our margin goals for the year, and we continue to track toward a 10% operating margin for fiscal 2008 and a 12.5% operating margin within the next three year planning cycle,” Storch continues. “As we enter our new year, we are focused on increasing our presence in Asia and Europe, growing our business in regional and defense markets and improving our margins through increased engineering content and operational efficiencies.”