AAR Q2 Profit Rises, Cuts FY Outlook - Update

(RTTNews) - Aviation and aerospace company AAR Corp. (AIR), Thursday reported an increase in profit for the second quarter, driven mainly by revenue growth at its aviation services segment. Both earnings and revenues for the quarter came in ahead of Wall Street analysts' estimates.

Moving forward, the company lowered its financial outlook for the full year.

Wood Dale Illinois-based AAR's second-quarter profit rose to $20.0 million or $0.50 per share from $17.8 million or $0.44 per share last year. On average, five analysts polled by Thomson Reuters expected earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

AAR said its sales for the quarter grew to $540.7 million from $512.8 million last year. Analysts on a consensus expected sales of $536.14 million for the quarter.

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.

Chief Executive David Storch said, "Our Aviation Services segment performed well in the quarter, with strong revenue growth, while our Technology Products declined slightly in comparison to prior year."

Sales in the aviation services segment increased 8.7 percent to $424.7 million, driven by growth in the company's supply chain operations, while technology products segment sales dropped 4.9 percent to $116.0 million.

Gross margin dropped to 16.8 percent from 17.0 percent last year due to unfavorable margin mix. Selling, general and administrative expenses, as a percentage of sales, declined to 9.5 percent from 9.9 percent last year.

Looking forward to the fiscal year 2014, the company now expect earnings in the range of $1.95 to $2.00 per share and revenues of $2.10 billion to $2.15 billion. Analysts currently expect full-year earnings of $2.05 per share on revenues of $2.19 billion.

Earlier, AAR expected earnings of $2.00 to $2.05 per share on revenues of $2.175 billion to $2.225 billion.

AAR is currently trading at $30.39, down $0.17 or 0.56%, on the NYSE. The stock, however, gained $0.21 or 0.69% in the after-hours trade.