Aar Corp. · NYSE:AIR
Aar — Investor Presentation (July 2005)
30 slides from Aar's investor presentation, July 2005
Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation July 2005 1
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 Products and Services Markets/Regions Growth and Financial Highlights Summary 3
Slide 4: AAR Overview
AAR Overview NYSE: AIR 54 years as market leader History of profitability Four reporting segments Aviation Supply Chain Maintenance, Repair & Overhaul Structures and Systems Aircraft Sales and Leasing 2,600 employees strong Global presence AAR World Headquarters in Wood Dale, Illinois 4
Slide 5: 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 6: 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 BAE Systems Alitalia Bombardier American Airlines Government Boeing America West Japanese Defense Connexion by Boeing Asiana Agency EADS Britair UK M
Slide 7: Agenda: Products and Services
Agenda AAR Overview Products and Services Markets/Regions Growth and Financial Highlights Summary 7
Slide 8: Total Support for Aviation/Aerospace
Total Support for Aviation/Aerospace Aviation Supply Chain Maintenance, Repair & Overhaul ► Airframe Parts Supply & Repair ► Aircraft Maintenance ► Engine Parts Supply ► Landing Gear Services ► Inventory Management Programs ► Aircraft Storage ► PMA Development & Supply ► Business Systems Integration
Slide 9: Sales by Segment
Sales by Segment FY2005 Sales = $748M Aircraft Structures & Systems Sales and Leasing $201M $45M 6% 27% 52% 15% Maintenance, Aviation Supply Repair & Overhaul Chain $112M $390M 9 Diverse product offering...
Slide 10: 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 11: Aviation Supply Chain
Aviation Supply Chain Commercial, regional, military and general aviation customers Component supply and repair End-to-end supply chain offering Broad range of products Combine supply chain and IT skills with experience, leadership and brand recognition Leverage parts supply and repair capabilities
Slide 12: Maintenance, Repair and Overhaul
Maintenance, Repair and Overhaul Commercial, regional and military customers Heavy maintenance capabilities Airframe maintenance Landing gear systems World-class facility at IMC with industry-leading turn times Joint venture in Malaysia 12 Complete heavy maintenance offering...
Slide 13: Structures and Systems
Structures and Systems Government, commercial and industrial customers Specialized mobility products Pallets Mobile shelters Containers Cargo loading systems Composite structures Industrial gas turbine 13 Grow OE offering; increase after-sales services...
Slide 14: Aircraft Sales and Leasing
Aircraft Sales and Leasing Commercial and financial institution customers Buy, sell and lease aircraft Technical advisory services Joint ventures 14 Seek niche opportunities with financial partners...
Slide 15: Agenda: Markets/Regions
Agenda AAR Overview Products and Services Markets/Regions Growth and Financial Highlights Summary 15
Slide 16: Sales by Market and Sales by Region
Sales by Market Sales by Region 17% 7% 4% 61% 36% 72% 1% 2% Commercial Aviation $453 North America $533 Defense Services $271 Europe $129 General Aviation $15 Asia/Pacific $55 Industrial Products $9 Other $31 Commercial Aviation Asia and Europe sales growth of 26%; grew 47% and 34%, Government 8%...
Slide 17: Agenda: Growth and Financial Highlights
Agenda AAR Overview Products and Services Markets/Regions Growth and Financial Highlights Summary 17
Slide 18: History of Growth and Profitability
History of Growth and Profitability 50 consecutive years of Sales ($M) profitability prior to 9/11/2001 1200 Customer focus and 1000 diversified mix have enabled steady growth 800 600 After every industry down cycle we’ve reached new 400 heights in sales and earnings 200 Achieved 18% sales and earni
Slide 19: Financial Trends
Financial Trends Sales Operating Income $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 FY20
Slide 20: Financial Highlights
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 12 consecutive quarters of positive cash flow from operations*
Slide 21: Fourth Quarter FY2005 Income Statement
Fourth Quarter FY2005 Income Statement FY2005 FY2004 Variance Sales $209.9 $176.8 19% Gross Profit $35.1 $27.5 28% 16.7% 15.6% Operating Income $9.0 $6.0 51% 4.3% 3.4% Net Interest $3.7 $3.8 -3% 1.8% 2.2% Income Taxes $2.1 ($0.5) 501% 1.0% -0.3% Income from Continuing Operations $5.8 $2.7 119% 2.8%
Slide 22: FY2005 Income Statement
FY2005 Income Statement FY2005 FY2004 Variance Sales $747.8 $644.5 16% Gross Profit $120.8 $100.6 20% 16.2% 15.6% Operating Income $33.5 $20.3 65% 4.5% 3.1% Net Interest $15.3 $16.9 -10% 2.0% 2.6% Income Taxes $3.1 ($1.2) 350% 0.4% -0.2% Income from Continuing Operations $18.6 $4.6 307% 2.5% 0.7% Ne
Slide 23: Balance Sheet Highlights
Balance Sheet Highlights May 31, May 31, 2005 2004 Cash and cash equivalents $ 50,338 $ 41,010 Net receivables 127,121 104,661 Net inventory 204,990 206,899 Equipment on short-term lease 50,487 40,346 Equipment on long-term lease 67,663 84,271 Total assets 732,230 709,292 Recourse debt 202,042 220,0
Slide 24: Financial Goals
Financial Goals Sales growth of 12-15% Continuous improvement in gross profit margin Target operating profit margin of 10% Working capital to be largely self-funded Annual Capex of $12-15 million (below D&A) Debt to Capital below 40% Leverage existing cost structure 24
Slide 25: Long-Term Growth Drivers
Long-Term Growth Drivers Positive trends in commercial market Growth in ASMs, fleet size and GDP Aging of regional fleet Outsourcing to reduce costs Positive trends in defense services market More rapidly deployable U.S. military force U.S. military cost reductions by outsourcing non- core functions
Slide 26: Macro Indicators
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 2001 2002 2003 2004 2005 Revenue Passenger Miles (000s) 65,000,000 60,000,000 55,000,000 ASMs approaching 50,000,000 and RPMs abov
Slide 27: AAR in the News
AAR in the News June 2005 June 2005 AARTo AAR ToProvide ProvideCargo CargoSystems Systems March 2005 March 2005 ForThe For TheAIRBUS AIRBUSA400M A400M AARAnnounces AAR Announces UnitedAirlines United Airlinesas as LaunchCustomer Customerforfor June 2005 Launch June 2005 AARAircraft AAR AircraftServi
Slide 28: Agenda: Summary
Agenda AAR Overview Products and Services Markets/Regions Growth and Financial Highlights Summary 28
Slide 29: Strong Momentum, Primed for Growth
Strong Momentum, Primed for Growth Improved financial results and balance sheet Achieving growth in Europe and Asia Well-positioned to capitalize on industry recovery and outsourcing trends in commercial and regional markets Positive trend in defense services market Leadership team and workforce foc
Slide 30: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation July 2005 30