Aar Corp. · NYSE:AIR
Aar — Cowen & Company 34th Annual Aerospace/Defense Conference (February 2013)
21 slides from Aar's conference presentation, Feb 7, 2013
Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation Cowen & Company 34th Annual Aerospace/Defense Conference February 7, 2013
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: Key Investment Highlights
Key Investment Highlights Balanced portfolio of businesses Independent leader in aftermarket solutions: commercial and defense MRO Supply Chain Proven track record of reducing costs and improving productivity Market leader in cargo products: commercial and defense Design, engineer and manufacture St
Slide 4: Company Overview & Strategy
Company Overview & Strategy
Slide 5: Market Leader Serving Aviation & Aerospace
Diversified $2B+ revenue stream 60 years as a market leader in aviation support Over 6,000 employees at more than 60 locations worldwide History of safety, compliance, consistent profitability and financial strength Leading provider of aviation services and technology products to commercial and defe
Slide 6: Providing High Value Aviation Services and Technology Products
Aviation Services Technology Products Competitive Advantage Innovative products Design & certification capabilities Fully integrated with OEM Recognized centers of excellence Value added assemblies Customer Benefits Full service provider Lower cost solutions Fewer people Less capital Avoiding obsole
Slide 7: Serving Commercial and Defense Markets
Commercial 45% of total sales Defense 29% of total sales Commercial 14% of total sales Defense 12% of total sales Aviation Services Technology Products Balance between commercial and defense Commercial 59% of total sales Defense 41% of total sales AAR CORP. ...To Commercial and Defense Markets * Per
Slide 8: Building a Well Balanced and Diversified Portfolio
Aviation Services Technology Products Commercial 45% Defense 29% Commercial 14% Defense 12% Machining Cargo MRO Supply Chain Strong portfolio of aerospace & defense businesses provides balance, strength and consistency through the cycles Mobility Airlift Percentages reflect Q2 YTD FY 2013 Building a
Slide 9: Navigated Through 5 Major Industry Cycles
Arab Oil Embargo Fuel Crisis Conflicts in Iran Economic Downturn Gulf War September 11 Attacks “Great Recession” Sales ($B) After each down cycle AAR has emerged a stronger and more diverse company 2012 Navigated Through 5 Major Industry Cycles 2013E
Slide 10: Current FY13 Operating Environment
Commercial +26%* Q2 YTD FY13 financial performance Revenues up 10% and EPS up 7% Operating margins up to 7.2% vs. 6.9% Strong growth opportunities in Commercial Leadership position in commercial aftermarket MRO and Supply Chain services Aviation Services segment to deliver full solution to customers
Slide 11: AAR in Commercial: Well Positioned
Strong Value Proposition as outsourcing services saves airlines money 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 reduce cost = increased outsourcing Airlines investing
Slide 12: AAR in Defense
Strong derivative benefit from commercial success Strong Value Proposition via lowering cost and doing “more without more” Long-Term Requirements for Airlift Services Defense flat Proven track record Cost reductions and efficiency gains a central strategy in future budgets: Commercial Off The Shelf
Slide 13: Deep Management Team to Execute Strategy
Michael Sharp Interim Chief Financial Officer and Treasurer Joined AAR in 1996 An accomplished and experienced leadership team dedicated to delivering shareholder value Terry Stinson Group Vice President, Technology Products Joined AAR in 2007 40+ years in Industry John Holmes Group Vice President,
Slide 14: Growth Initiatives
Growth Initiatives Cross-sell services and leverage platform Delta Air Canada Columbian Air Force Expand capabilities Airinmar repair management solutions Increase design and engineering content Pursue geographic expansion Telair, Nordisk and Airinmar acquisitions accelerated global presence Opened
Slide 15: Key Strategic Principles
Key Strategic Principles I. Enhance leadership position in Aviation Services • International expansion • Product line extension • Engineering content • End to end solutions II. Enhance leadership position in technology Products • Design • Engineering • Precision manufacturing • Assembly • Aftermarke
Slide 16: Financial Performance
Financial Performance
Slide 17: AAR Today: A Diversified $2B+ Business
EBITDA* $1.4B $1.4B $1.4B $1.8B $2.1B Diverse capabilities + robust value propositions = steady growth Defense Commercial AAR Today: A Diversified $2B+ Business * EBITDA is defined in the Appendix $2.1B - $2.2B $181M $205M $174M $180M $224M $245M - $255M EPS $1.70 - $1.80 Revenue ($B) $0.0 $0.5 $1.0
Slide 18: Generating Cash Flow From Operations
Generated $356M in operating cash flow during the last three fiscal years Cash reinvested in the business Acquisitions and Airlift growth Significantly lower capital expenditure plan of $55M in FY13 Capital expenditures of $19M through Q2 YTD period FY 13 Cash flow: Q2 YTD Cash flow from operations:
Slide 19: Key Investment Highlights
Innovation + execution = growth Key Investment Highlights Balanced portfolio of businesses Independent leader in aftermarket solutions: commercial and defense MRO Supply Chain Proven track record of reducing costs and improving productivity Market leader in cargo products: commercial and defense Des
Slide 20: Appendix
Appendix
Slide 21: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation Pursuant to SEC Regulation G, the Company has included the following reconciliation of operating income reported on the basis of Generally Accepted Accounting Principles (“GAAP”) to EBITDA on a non-GAAP basis. The Company believes the non-GAAP EBITDA and ratios usi
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