Aar Corp. · NYSE:AIR
Aar — Credit Suisse 4th Annual Small & Mid Cap Conference 2013
22 slides from Aar's conference presentation, Sep 18, 2013
Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation Credit Suisse 4th Annual Small & Mid Cap Conference September 17-18, 2013
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements 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: Key Investment Highlights
3 Key Investment Highlights . Balanced portfolio of businesses – Leading provider of Aftermarket Solutions for the global aviation industry . Maintenance, Repair and Overhaul (MRO) . Aviation Supply Chain . Airlift Services – Recognized market leader in cargo systems and specialized mobility product
Slide 4: Financial 2013 Performance Highlights – Delivering Strong Results
4 Financial 2013 Performance Highlights – Delivering Strong Results Operating . Record sales of $2.14B, up 4% over prior year . Generated $125M of free cash flow . Reduced net debt position by $91M . Returned $27M to shareholders – Repurchased nearly 1 million shares at an average price of $14.90 –
Slide 5: Company Overview & Strategy
Company Overview & Strategy
Slide 6: Established Niche Player Serving Global Aviation & Aerospace
6 . Diversified $2.1B+ revenue stream . 60 years as a market leader in aviation support . Over 6,000 employees at more than 60 locations worldwide . Customer-centric business model Leading provider of Aviation Services and specialized Technology Products to commercial and defense/govt. markets Estab
Slide 7: A Leader in Aviation Services
7 . Number one independent provider of aircraft maintenance, repair and overhaul (MRO) and modifications in North America . Oklahoma City . Indianapolis . Miami . Ranked among the top providers of aircraft parts and supply chain services in the world . Supply chain management and logistics programs
Slide 8: Expanding MRO Platform into Wide-Body Market
8 Expanding MRO Platform into Wide-Body Market . 520,000 sf. of MRO service and administrative space . Can accommodate up to seven widebody or ten narrow-body aircraft . On-going facility expansion for an additional 118,000 sf. of space North America, 32% Europe, 28% Asia , 25% Middle East, 6% South
Slide 9: A Leading Provider of Technology Products
9 Technology Products A Leading Provider of Technology Products . Leading provider of Cargo Systems . OEM: Airbus A330, A340, and A400M, Boeing 747-8, CH-47 helicopter . Conversions: Airbus A330, Boeing 747-400 and 767-200/300 . Manufactures the lightest certified cargo container in the industry . D
Slide 10: Strong Platform and High Value Add Partner to Customers
10 Aviation Services Technology Products Competitive Advantage Innovative products Design & certification capabilities Fully integrated with OEM Customer Benefits Full service provider Lower cost solutions • Fewer people • Less capital • Avoiding obsolescence Faster service High-quality results Comp
Slide 11: Well Balanced and Diversified Portfolio
11 Commercial 47% ($1.0B) Defense 29% ($0.6B) Commercial 14% ($0.3B) Defense 10% ($0.2B) Machining Cargo MRO Supply Chain Strong portfolio of aerospace and defense businesses provides balance, strength and consistency through industry cycles Mobility Airlift Percentages reflect FY 2013 With a Well B
Slide 12: Navigated Through 5 Major Industry Cycles
12 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Arab Oil Embargo Fuel Crisis Conflicts in Iran Economic Downturn Gulf War September 11 Attacks “Great Recession” Sales ($B)* After each d
Slide 13: AAR in Commercial: Strong Value Proposition
13 Well Positioned with leading international and domestic airlines Strong Value Proposition outsourcing = savings . Outsourcing trend set to continue (e.g., Air Canada) .Worldwide third party MRO CAGR of 3.3% through 2022** . Increasing demand for integrated support services . Airlines looking to r
Slide 14: AAR in Defense: Strong Value Proposition
14 Defense customers utilize AAR for cost savings Strong Value Proposition “Commercial Off-The- Shelf Solutions” (COTS) Long-Term Requirements for Airlift Services Defense flat . Proven track record . Cost reductions and efficiency gains a central strategy in future budgets . Leadership position in
Slide 15: Strong Customer Relationships
15 Strong Customer Relationships NATO U.S. DoD U.K. MoD Colombian Air Force Airlines OEMs Cargo Government U.S. Marshals Service
Slide 16: Growth Initiatives
16 Growth Initiatives . Cross-sell services and leverage platform – Created Aviation Services Group . Air Canada Supply Chain/MRO/Landing Gear . UK Flybe Supply Chain/MRO . ExpressJet MRO/Landing Gear . Colombian Air Force . U.S. Marshals Service . Liebherr-Aerospace/MRO/Landing Gear . Expand capabi
Slide 17: Financial Performance
Financial Performance
Slide 18: AAR Today: A Diversified $2B+ Business
18 $0.00 $0.75 $1.50 $2.25 $3.00 $3.75 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 2008 2009 2010 2011 2012 2013 2014 Guidance Revenue ($B) EBITDA* $1.4B $1.4B $1.4B $1.8B $2.1B Diverse capabilities + unique value propositions = steady growth Defense Commercial AAR Today: A Diversified $2B+ Business * EBITDA is d
Slide 19: Generating Strong Cash Flow From Operations
19 . Generated $366M in operating cash flow during the last three fiscal years (FY2011 – FY2013) . Cash reinvested in the business – Acquisitions – Airlift growth . FY2013 Cash flow from Operations of $163 million* – Reduction in net debt: $91M – Capital expenditures: $38M – Acquisitions: $21M – Sha
Slide 20: AAR Delivers
20 • Revenue CAGR of ~9% over the last five years Sustained Growth • #1 MRO in North America; # 3 worldwide* • Voted Parts Supplier of the Year** Leading Position in Niche Commercial Markets • Superior cash generating profile with free cash flow >2.0x Net Income Strong Cash Flow AAR Delivers * Sourc
Slide 21: Appendix
Appendix
Slide 22: Non-GAAP Disclosure Reconciliation
22 ($ in millions) FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Net income attributable to AAR $68.2 $56.8 $44.6 $69.8 $67.7 $55.0 Provision for income taxes 36.6 27.5 21.0 33.6 25.5 26.8 Interest expense, net 27.7 30.0 25.8 30.3 36.5 40.1 Loss (gain) on debt extinguishment 2.0 (14.7) (0.9) (0.1) 0.7 0
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