AAR Provides Outlook on First Quarter Results
WOOD DALE, Ill., Aug. 24 /PRNewswire-FirstCall/ -- AAR CORP. (NYSE: AIR), today commented that results for the first quarter ending August 31, 2009, will be below its expectations due to lower sales and gross margin in the Company's businesses that support commercial aviation as airlines further reduce inventory levels and maintenance visits in response to economic pressure and tight credit markets. First quarter results will also be impacted by startup costs associated with AAR Global Solutions, the Company's newly formed government contracting joint venture. Sales and earnings are expected to be up on a year over year basis for businesses that support defense and government customers.
The Company expects first quarter sales to be $330 to $345 million and diluted earnings per share of $0.23 to $0.27 while still forecasting positive cash flow from operations for the period. First quarter earnings per share includes a preliminary estimate of the impact of adopting FSP APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion," which is expected to reduce first quarter fiscal 2010 earnings per share by $0.02. In last year's first quarter, sales were $359.9 million and diluted earnings per share from continuing operations were $0.39 per share after adjusting for the estimated effect of the adoption of FSP APB 14-1.
"Weakness in the commercial markets has been amplified this quarter as airlines have taken further steps to reduce costs and conserve cash. We had been expecting a pick-up in our parts business in August but that has not materialized," said David P. Storch, Chairman and Chief Executive Officer of AAR CORP.
Storch continued, "We are well positioned to serve our customers when these trends reverse, and based on dialogue with our customers, we expect demand for aftermarket parts to recover in the early part of calendar year 2010. Our defense and government services businesses continue to perform well and meet our expectations. Overall, we expect to see modest sequential improvement in our consolidated second quarter results."
This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled "Risk Factors", included in the Company's May 31, 2009 Form 10-K. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission.
SOURCE AAR CORP.
