Aar Corp. · NYSE:AIR
Aar — Investor Presentation (November 2005)
29 slides from Aar's investor presentation, Nov 15, 2005
Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation November 15, 2005 0
Slide 2: Forward-Looking Statements
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 w
Slide 3: Agenda
Agenda ► AAR Overview ► Market Trends ► Financial Highlights/Trends ► Significant Wins ► Summary 2
Slide 4: AAR Overview
AAR Overview ► Global Presence ► NYSE: AIR > 40 AAR locations in 13 ► TTM Revenues: $783M countries ► Four reporting segments ► TTM EBITDA: $67M > Aviation Supply Chain ► Market Cap: $531M > Maintenance, Repair & Overhaul ► Average Daily Volume: > Structures and Systems 228 Thousand shares > Aircraf
Slide 5: History of Growth and Profitability
History of Growth and Profitability ► Proven track record of Sales ($M) adapting to market changes 1200 ► Profitable 52 out of 54 years 1000 in business 800 ► Achieved 18% sales and earnings growth during the 600 1990s 400 ► After every industry down 200 cycle we’ve reached new heights in sales and
Slide 6: Total Support for Aviation/Aerospace
Total Support for Aviation/Aerospace Aviation Supply Chain Structures & Systems ► Supply Chain Management ► Mobility Systems ► Inventory Acquisition ► Replenishment ► Pallets and Containers ► Line Station Support ► Repair ► Shelters ► Logistics ► Disposal ► Integration/Services ► Distribution ► Carg
Slide 7: Sales Trend by Segment
Sales Trend by Segment Aviation Supply Chain Maintenance, Repair & Overhaul $400 $115 $390 $110 $111.9 $390.1 $380 $105 $106.4 $370 $100 $360 $358.4 $95 $350 $349.5 $90 $93.4 $340 $330 $85 $320 $80 FY2003 FY2004 FY2005 FY2003 FY2004 FY2005 Structures and Systems Aircraft Sales and Leasing $250 $50 $
Slide 8: AAR Global Footprint
AAR Global Footprint Garden City, NY Teterboro, NJ Frankfort, NY Hannover * Amsterdam Livonia, MI Waddington * Cadillac, MI London Indianapolis, IN Mitcham Chicago, IL Cherry Point, NC Jacksonville, FL Miami, FL Naples Clearwater, FL Tokyo Paris Macon, GA Shanghai Atlanta, GA Zhuhai * Kuala Lumpur S
Slide 9: Serving the Worldwide Aviation Industry
Serving the Worldwide Aviation Industry OEMs/MROs Airlines Cargo Carriers ► Airbus ► Air France ► DHL ► Alenia ► Air New Zealand ► FedEx ► Avio ► Alaska Air Lines ► UPS ► Alitalia ► BAE Systems ► American Airlines ► Bombardier ► America West Government ► Boeing ► Asiana ► Japanese Defense Agency ► C
Slide 10: Agenda
Agenda ► AAR Overview ► Market Trends ► Financial Highlights/Trends ► Significant Wins ► Summary 9
Slide 11: Commercial Macro Indicators
Commercial Macro Indicators Available Seat Miles (000s) 85,000,000 80,000,000 75,000,000 70,000,000 65,000,000 60,000,000 55,000,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Revenue Passenger Miles (000s) 2001 2002 2003 2004 2005 70,000,000 65,000,000 Continued year-over- 60,000,000 55,000,00
Slide 12: Commercial Macro Indicators
Commercial Macro Indicators Market Outlook - MRO ► MRO spending expected 30 25 to exceed $25 billion Modifications 20 Airframe Maintenance 15 by 2014 10 Line Maintenance 5 0 2004 2009 2014 ► Component repair market Market Outlook - Component Repair is projected to surpass 14 12 $10 billion by 2010 1
Slide 13: Market Trends – Airlines
Market Trends – Airlines ► U.S. airline market in turmoil > Northwest and Delta filings will result in a reduction in fleet size ► Worldwide market under pressure from high fuel costs Industry dynamics driving unprecedented demand for cost-saving alternatives 12
Slide 14: Market Trends – Airlines
Market Trends – Airlines ► Seeking alternatives for Maintenance, Repair and Overhaul > AAR provides high-quality, lower cost contract maintenance > AAR’s Indianapolis operation is well positioned to capitalize on this demand – Eager, experienced workforce – Attractive lease agreement – Profitable af
Slide 15: Market Trends – Defense
Market Trends – Defense ► Looking to accomplish more with limited resources ► Smaller, more mobile fighting forces ► Turning to industry to improve operational readiness Growing acceptance of strategic partnerships to improve readiness and contain costs 14
Slide 16: Market Trends – Defense
Market Trends – Defense ► Operations, Maintenance & Global Defense Spending - 2004 Personnel made up 70% of 800 600 global defense spending 400 in 2004 200 > Defense organizations are adopting 0 RDT&E Procurement Operations, Maintenance commercial best-practices & Personnel ► Aging military fleets r
Slide 17: Market Trends – Defense
Market Trends – Defense AAR — ready to respond ► Proven track record and well positioned to take on more defense programs > Experience and best practices in program and supply chain management > Northrop Grumman > Hamilton Sundstrand > GE Aircraft Engines ► Ability to supply more specialized mobilit
Slide 18: Agenda
Agenda ► AAR Overview ► Market Trends ► Financial Highlights/Trends ► Significant Wins ► Summary 17
Slide 19: FY2005 Financial Highlights
FY2005 Financial Highlights ► Improved financial performance for FY2005 > Sales up 16% > Gross Margin up 20% > Gross Margin % up from 15.6% to 16.2% > Income from continuing operations up 307% ► Generated record cash flow from operations of $51M in FY2005 ► Cash and available credit lines of $118M a
Slide 20: Financial Trends
Financial Trends Sales EBITIncome Operating $800.0 $40.0 4.5% 5.0% $750.0 $35.0 $748 3.1% 4.0% $700.0 $30.0 $33.5 $650.0 $25.0 3.0% $600.0 $630 $644 $20.0 $600 $20.3 2.0% $550.0 $15.0 1.2% 1.1% $500.0 $10.0 1.0% $450.0 $5.0 $7.4 $6.3 $400.0 $0.0 0.0% FY2002 FY2003 FY2004 FY2005 FY2002 FY2003 FY2004
Slide 21: First Quarter FY2006 Highlights
First Quarter FY2006 Highlights ► 22% sales growth and 109% net income from continuing operations growth ► 25% growth in commercial/regional sales; 16% growth in defense services sales ► Asia and Europe sales up 45% and 9% ► EBIT margin of 5.5% vs. 4.0% last year ► Diluted EPS increase from $0.07 to
Slide 22: Quarterly Financial Trends
Quarterly Financial Trends SALES EBIT $220 $12 $210 $10 $200 $190 $8 $180 $6 $170 $160 $4 $150 $2 $140 $0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY04 FY04 FY04 FY05 FY05 FY05 FY05 FY06 FY04 FY04 FY04 FY05 FY05 FY05 FY05 FY06 NET RECOURSE DEBT DILUTED EARNINGS PER SHARE $230 $0.20 $220 $210
Slide 23: Agenda
Agenda ► AAR Overview ► Market Trends ► Financial Highlights/Trends ► Significant Wins ► Summary 22
Slide 24: Significant Wins
Significant Wins ► Mesa Air Group > Providing end-to-end supply chain management solution > Valued at $200M in sales ► Airbus A400M Military Transport Aircraft > Designing and manufacturing cargo loading systems for Airbus > Valued at $300M in sales 23
Slide 25: Significant Wins
Significant Wins ► United Kingdom Ministry of Defense > Provide parts logistics and supply chain management solutions for fleet of AWACS aircraft > Valued at $400M in sales ► U.S. Air Force > AAR selected to supply specialized pallets to the USAF > Received $54M in orders to date as part of a five y
Slide 26: Special Recognition
Special Recognition ► FAA recognized AAR for excellence in training and education on the part of their Aviation Maintenance Technicians > AAR received Diamond Certificate of Excellence Awards at all FAA-certified Repair stations > AAR received Corporate-level Diamond Award > Special recognition for
Slide 27: Agenda
Agenda ► AAR Overview ► Market Trends ► Financial Highlights/Trends ► Significant Wins ► Summary 26
Slide 28: Strong Momentum, Primed for Growth
Strong Momentum, Primed for Growth ► Commercial aviation opportunities > Improving macro trends and industry changes > Pressure to pursue cost-saving alternatives > AAR has capacity, experience and know how to provide value-added solutions to customers ► Defense services opportunities > Emphasis on
Slide 29: Strong Momentum, Primed for Growth
Strong Momentum, Primed for Growth ► Solid financial performance in FY2005 ► Strong performance in the First Quarter FY2006 ► Significant new wins and recognition > Mesa supply chain management program > Airbus cargo systems > U.S. Air Force pallet contract > U.K. Ministry of Defence AWACS program >