Aar Corp. · NYSE:AIR
Aar — Wells Fargo Industrial & Construction Conference 2015
23 slides from Aar's conference presentation, May 6, 2015
Slide 1: AAR Corp. Wells Fargo Industrial & Construction Conference
AAR CORP. Wells Fargo Industrial & Construction Conference New York May 5 - 6, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 This presentation includes 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
Slide 3: Company Overview
& Company Overview {QAAR® | Celebrating (6, years 3
Slide 4: Established Player Serving the Global Aviation Services Market
Established Player Serving the Global Aviation Services Market 4 Leading provider of: Aviation Services Expeditionary Services to commercial and defense / govt. markets NYSE: AIR $1.8B revenue Over 5,000 employees at more than 60 countries worldwide Close-to-customer business model
Slide 5: Path to "New" AAR: Recent Corporate Developments
5 Path to “New” AAR Recent Corporate Developments Sold Telair Cargo Group – Telair Europe, Nordisk and U.S. Cargo loading manufacturing units Transaction value is $725 million (subject to adjustments) Net Proceeds greater than $600 million (after estimated cash taxes and expenses) Discontinued Opera
Slide 6: Path to "New" AAR: 4Q FY2015 Anticipated Actions
6 Path to “New” AAR 4Q FY2015 Anticipated Actions Sale of Telair Cargo Group Sale of underperforming assets Commercial aircraft portfolio optimization Inventory sales Airlift asset sales Refinancing Make-Whole premium Write-off of unamortized financing costs Termination of interest rate swap Reducti
Slide 7: Path to "New" AAR: Rationale for Transactions
7 Path to “New” AAR Rationale for Transactions Repositions AAR as an industry-leading aviation services company by streamlining operations, focusing on higher-margin activities, and delivering best-in-class services to customers Creates immediate value for AAR’s shareholders: Crystalizes valuation I
Slide 8: Company Overview
Company Overview 8 Aftermarket Parts Supply Aviation Services ~$1.5B Airlift Mobility Expeditionary Services ~$0.3B Programs PBH Repair Management Distribution, C&E Trading Fixed- and rotary-wing expeditionary airlift services Mission support, logistics resupply and training Aircraft modification Pa
Slide 9: Aviation Services: Aftermarket Parts Supply
Aviation Services Aftermarket Parts Supply 9 Over 1,000 Aircraft supported Over 150,000 ROs / year Over $600M repair spend / year Over 10,000 P/Ns supported 25 Customers Over 50 worldwide locations Over $100M of C&E inventory holdings Over 200,000 annual shipments 25 key OEM partners Over 70,000 P/N
Slide 10: Aviation Services: MRO
Aviation Services MRO 10 Oklahoma City Regional & Narrow body 300,000 sf in six hangars Full airframe paint capabilities Miami Narrow & Wide body 226,000 sf in three hangars Full airframe paint capabilities Indianapolis Narrow & Wide body 1.1 Million sf in 10 hangars Full airframe paint capabilities
Slide 11: Expeditionary Services: Airlift Mobility
Expeditionary Services 11 Airlift Mobility Rotary & fixed wing flight operations Austere environments Search & rescue Personnel, cargo, combi, and external cargo capable Day, night, & all-weather operations Shelter systems – transportable by air, land and sea and patented for rapid on- and off-loadi
Slide 12: Serving Niche and Growing Aviation Markets
Serving Niche and Growing Aviation Markets 12 Global MRO Market ~$61 ~$90 $B Parts Distribution & Surplus Parts Market ~$12 ~$17 $B ~68% ~67% Source: ICF International ~20% ~21% Denotes AAR market presence ~23% ~22% Continued MRO outsourcing OEM push into certain MRO markets Overseas wide-body aircr
Slide 13: Strong Customer Relationships
Strong Customer Relationships 13 NATO U.S. DoD U.K. MoD Colombian Air Force U.S. Marshals Service Airlines OEMs Cargo & Leasing Government
Slide 14: Financial Performance
© Financial Performance QAAR™ | Celebrating (e.g years “
Slide 15: Navigated Through Five Major Industry Cycles
Navigated Through Five Major Industry Cycles 15 Arab Oil Embargo Fuel Crisis Conflicts in Iran Economic Downturn Gulf War September 11 Attacks “Great Recession” 12% CAGR Sales ($B) After Each Down Cycle, AAR Has Emerged as a Stronger Company 15% CAGR - 0.5 1.0 1.5 2.0 2.5 1970 1971 1972 1973 1974 19
Slide 16: 3Q FY2015 Highlights
3Q FY2015 Highlights 16 Sales of $380.1 million EPS of $0.05 per share from continuing operations, ($0.94) per share from discontinued operations. Results included: $46.4 million pre-tax impairment charge for write-down of Precision Systems Manufacturing $4.7 million pre-tax impairment charge to red
Slide 17: 3Q FY2015 Income Statement Highlights
3Q FY2015 Income Statement Highlights 17 Prior Year Prior Quarter in millions except EPS 3Q15 3Q14 2Q15 PY PQ Sales $380.1 $399.9 $403.4 ($19.8) ($23.3) Gross Profit $50.0 $66.3 $67.3 ($16.3) ($17.2) % Margin 13.2% 16.6% 16.7% (3.4%) (3.5%) SG&A $41.6 $37.7 $40.1 ($3.9) ($1.5) % Margin 11.0% 9.4% 9.
Slide 18: 3Q FY2015 Leverage & Liquidity Levels
3Q FY2015 Leverage & Liquidity Levels 18 $ in million ($ in million) Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 PF Q4’15 Total Debt 722.8 708.6 702.2 680.8 714.4 634.0 627.1 635.3 643.3 ~200.0 Cash 47.4 75.3 90.9 98.5 114.7 89.2 81.8 92.6 67.0 ~70.0 Available Cash 332.9 417.5 435.9 463.9
Slide 19: 3Q FY2015 Debt Composition Maturity Tower
3Q FY2015 Debt Composition 19 Maturity Tower $ in million ($ in million) 2015 2016 2017 2018 2019 2020 2021 2022 RCF 185.0 Huntington 23.0* DBJ Facility 20.0** HY Notes 325.0 Convert 2.25% 49.8 Other 11.0 25.0 * Monthly amortization of $700k. ** Amortization of $5m every six months. As of Feb. 28 -
Slide 20: 4Q FY2015E Pro Forma Debt Composition Maturity Tower
4Q FY2015E Pro Forma Debt Composition 20 Maturity Tower $ in million ($ in million) 2015 2016 2017 2018 2019 2020 2021 2022 RCF 0 - 100 DBJ Facility 20.0* Convert 2.25% 49.8 Other 11.0 25.0 * Amortization of $5m every six months. New Revolving Credit Facility as of March 24, 2015 $61 $20 $500 FY 201
Slide 21: Key Investment Highlights
Key Investment Highlights 21 Commitment to Strong Shareholder Returns Long-term aftermarket growth Strong and deep relationship with key industry players Time-proven, value-added service provider Strong balance sheet AAR Value Drivers Investment Proposition Industry-leading positions Focus on EPS gr
Slide 22: Appendix
© Appendix QAAR™ | Celebrating & years 2
Slide 23: Non-GAAP Disclosure Reconciliation
23 Non-GAAP Disclosure Reconciliation ($ in millions) FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Net income attributable to AAR $68.2 $56.8 $44.6 $69.8 $67.7 $55.0 $73.2 Provision for income taxes 36.6 27.5 21.0 33.6 25.5 26.8 32.1 Interest expense, net 27.7 30.0 25.8 30.3 36.5 40.1 40.4 Loss
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