Aar Corp. · NYSE:AIR
Aar — Jefferies 2014 Global Industrials Conference
22 slides from Aar's conference presentation, Aug 15, 2014
Slide 1: AAR CORP. Jefferies 2014 Global Industrials Conference
AAR CORP. Investor Presentation Jefferies 2014 Global Industrials Conference August 11-14, 2014
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 3
Slide 4: Established Niche Player Serving Global Aviation & Aerospace
Established Niche Player Serving Global Aviation & Aerospace 4 Leading provider of Aviation Services and specialized Technology Products to commercial and defense/govt. markets NYSE: AIR Diversified $2.0B+ revenue stream Over 60 years as a market leader in aviation support Over 6,000 employees at mo
Slide 5: An Industry Leader Across Multiple Businesses
5 An Industry Leader Across Multiple Businesses Aviation Services Technology Products Number one independent provider of aircraft maintenance, repair and overhaul (MRO) and modifications in North America and the third largest worldwide Operates network of six airframe repair facilities across the U.
Slide 6: Diversified Portfolio Managed Through Two Segments
Diversified Portfolio Managed Through Two Segments 6 Commercial 46% ($0.9B) Defense 31% ($0.6B) MRO Supply Chain Airlift Aviation Services 77% ($1.5B)* Commercial 14% ($0.3B) Defense 10% ($0.2B) Machining Cargo Mobility Technology Products 23% ($0.5B)* * FY 2014. Commercial and Defense percentages b
Slide 7: Global Presence Serving Customers in More Than Countries
Global Presence Serving Customers in More Than 100 Countries 7 SUPPLY CHAIN LOCATIONS Abu Dhabi, UAE Adelaide, Australia Al Dhafra, UAE* Amsterdam, Netherlands Atlanta, Georgia* Brussels, Belgium Cherry Point, North Carolina* Chicago, Illinois (Headquarters) Doha, Qatar Eindhoven, Netherlands* Ft. W
Slide 8: Serving Niche and Growing Aviation Markets
Serving Niche and Growing Aviation Markets 8 Global MRO Market $60.7 $89.0 $B Parts Distribution & Surplus Parts Market ~$12B ~$17B $B ~68% ~67% Global Cargo Market Mobility Market $B ~$0.9B ~$1.4B $B ~$1.3B ~$1.2B Source: ICF International ~20% ~21% Denotes AAR market presence ~23% ~22%
Slide 9: Customer-Centric Value Proposition
Customer–Centric Value Proposition 9 Aviation Services Technology Products * FY 2014. (Denotes growth vs. FY2013)
Slide 10: Diversified Platform Across Multiple Dimensions
Diversified Platform Across Multiple Dimensions 10 Sales $2.0B+* Commercial (7.0%)* Defense (1.4%)* Aviation Svc. (3.4%)* Tech Prod. (9.2%)* * FY 2014. (Denotes growth vs. FY2013) NA (9.2%)* Europe 21.9%* Asia (0.7%)* RoW (11.3%)* Segment End-Market Geography
Slide 11: Strong Customer Relationships
Strong Customer Relationships 11 NATO U.S. DoD U.K. MoD Colombian Air Force U.S. Marshals Service Airlines OEMs Cargo & Leasing Government
Slide 12: Financial Performance
Financial Performance 12
Slide 13: Navigated Through Five Major Industry Cycles
Navigated Through Five Major Industry Cycles 13 Arab Oil Embargo Fuel Crisis Conflicts in Iran Economic Downturn Gulf War September 11 Attacks “Great Recession” 12% CAGR Sales ($B) After Each Down Cycle, AAR Has Emerged a Stronger and More Diverse Company
Slide 14: FY2014 Performance Highlights
FY2014 Performance Highlights 14 Financial Operational Q4 2014 Sales of $505.4 million improved sequentially, but were lower than prior year period sales of $553.8 million Diluted EPS of $0.43, exceeding consensus of $0.41 Generated strong cash flow from operations of $63.1 million and free cash flo
Slide 15: Q4 FY2014 Income Statement Highlights
Q4 FY2014 Income Statement Highlights 15 ($ in million) 4Q FY2014 4Q FY2013 3Q FY2014 4Q FY’14 Favorable / (Unfavorable) vs. 4Q’13 3Q’14 Sales $505.4 $553.8 $474.4 ($48.4) $31.0 Gross Profit % Margin $85.8 17.0% $90.1* 16.3% $78.7 16.6% ($4.3) 0.7% $7.1 0.4% SG&A % Margin $53.3 10.5% $52.5 9.5% $45.
Slide 16: FY2014 Highlights
FY2014 Highlights 16 ($ in million) FY2014 FY2013 Favorable / (Unfavorable) Sales 2,035.0 $2,137.3 ($102.3) Gross Profit % Margin $340.2 16.7% $344.0* 16.1% ($3.8) 0.6% SG&A % Margin $197.6 9.7% $198.4 9.3% ($0.8) (0.4%) Operating Income % Margin $145.7 7.2% $152.4* 7.1% ($6.7) 0.1% Net Interest Exp
Slide 17: Balance Sheet and Cash Flow Highlights
*4Q FY2013 LTM EBITDA adjusted for $29.8 million KC-10 charge. ($ in million) 4Q FY2014 4Q FY2013 3Q FY2014 4Q FY’14 Favorable / (Unfavorable) vs. 4Q’13 3Q’14 Total Debt $634.0 $708.6 $714.4 $74.6 $80.4 Cash $89.2 $75.3 $114.7 $13.9 ($25.5) Net Debt $544.8 $633.3 $599.7 $88.5 $54.9 LTM EBITDA $234.8
Slide 18: Leverage & Liquidity Levels
Leverage & Liquidity Levels 18 $ in million ($ in million) Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Total Debt 792.2 787.6 778.9 722.8 708.6 702.2 680.8 714.4 634.0 Cash 67.7 67.7 69.2 47.4 75.3 90.9 98.5 114.7 89.2 Available Cash 386.9 360.0 363.8 332.9 417.5 435.9 463.9 439.9 424.5 To
Slide 19: AAR Today: A Diversified $2.0B+ Business
AAR Today: A Diversified $2.0B+ Business 19 EPS Revenue ($B) $181M $203M $140M $180M $228M $243M $235M $1.4B $1.4B $1.4B $1.8B $2.1B $2.14B $2.04B ~$235M $2.10- $2.15B $1.80- $1.90 Diverse Capabilities + Unique Value Propositions = Steady Growth EBITDA EPS
Slide 20: AAR Non-Stop
20 AAR Non-Stop * Source: ATE&M Awards, 2014 ** Source: Airline Economics magazine, 2012
Slide 21: Appendix
Appendix 21
Slide 22: Non-GAAP Disclosure Reconciliation
22 Non-GAAP Disclosure Reconciliation ($ 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