Aar Corp. · NYSE:AIR
Aar — SG Cowen & Co. presentation, November 2005
29 slides from Aar's conference presentation, Nov 18, 2005
Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation SG Cowen & Co. November 2005 SG Cowen
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
2 a Agenda > AAR Overview > Market Trends > Financial Highlights/Trends > Significant Wins > Summary.
Slide 4: AAR Overview
AAR Overview > Global Presence > NYSE: AIR > 40 AAR locations in 13 . GOUneIES: > TTM Revenues: $783M » Four reporting segments > TTM EBITDA: $67M > Aviation Supply Chain > Market Cap: $531M > Maintenance, Repair & . Overhaul > Average Daily Volume: > Structures and Systems 228 Thousand shares > Air
Slide 5: History of Growth and Profitability
a History of Growth and Profitability > Proven track record of adapting to market changes Sales ($M) > Profitable 52 out of 54 years in business ‘neat > Achieved 18% sales and earnings growth during the 600 1990s > After every industry down cycle we've reached new heights in sales and earnings o Me
Slide 6: Total Support for Aviation/Aerospace
a Total Support for Aviation/Aerospace Aviation Su y Structures & Systems >» Supply Chain Management > Mobility Systems » Inventory Acquisition» Replenishment » Pallets and Containers » Line Station Support» Repair > Shelters > Logistics > Disposal » Integration/Services > Distribution >» Cargo Syst
Slide 7: Sales Trend by Segment
a Sales Trend by Segment Aviation Supply Chain Maintenance, Repair & Overhaul so os $90 [rsa sn10 inne $0 108 TE) sm s100 seco soo | [aa 98 Be fre soo | eas $0 $05 $20 $00 va Frame Fra005 ya Fra00e Fra005 ‘Structures and Systems Aircraft Sales and Leasing 50 0 us = 2 “0 a fran 85 150 [rieae 0 5 sioo
Slide 8: AAR Global Footprint
a AAR Global Footprint Garden City, NY Teterboro, Nioy/ Franigont,.NY. // Fa hy ‘Amsterdam Hannover * on eA Waddington | : \ rndaneote tenon | ora 2 Mitcham — @— ChomyPoint, NC x Jcksonlle, FL \ SS Mami FL Noe | sGlearwater, FL Tokyo Macon, GA — ‘Shanghai ina, GA Zhuhai | Kuala Lumpur [| [/ Mempnis,
Slide 9: Serving the Worldwide Aviation Industry
a Serving the Worldwide Aviation Industry OEMs/MROs Airbus Alenia Avio BAE Systems Bombardier Boeing Connexion by Boeing EADS GE HAECO Hamilton Sundstrand Honeywell HI L3 Communications Lockheed MTU Northrop Grumman Pratt & Whitney Sikorsky vvyvv¥VYYYVYY YY YY Airlines Air France Air New Zealand Ala
Slide 10: Agenda
cc Agenda » AAR Overview > Market Trends > Financial Highlights/Trends > Significant Wins > Summary.
Slide 11: Commercial Macro Indicators
Commercial Macro Indicators Available Seat Miles (000s) Continued year-over- year improvements in ASMs and RPMs
Slide 12: Commercial Macro Indicators
Commercial Macro Indicators > MRO spending expected to exceed $25 billion fevctcatons 39 by 2014 etatomenanonnce 1 pinensee as ° > Component repair market is projected to surpass an $10 billion by 2010 8 é H > Commercial airline fleet to 3 grow by 10,000 aircraft over the next 10 years OWide body Re
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 cost-saving alternatives
Slide 14: Market Trends — Airlines
ei se a 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
Slide 15: Market Trends — Defense
SE a 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 u
Slide 16: Market Trends — Defense
Market Trends — Defense > Operations, Maintenance & Personnel made up 70% of ia global defense spending in 2004 Global Defense Spending - 2004 ‘400 200) > Defense organizations are adopting * wise rere crete commercial best-practices snare > Aging military fleets requiring more aren se aa maintenanc
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 5 "Northrop Grumman »’ Hamilton Sundstrand > GE Aircraft Engines > Ability to supply more specialized mobil
Slide 18: Agenda
cc Agenda » AAR Overview > Market Trends » Financial Highlights/Trends > Significant Wins > Summary.
Slide 19: FY2005 Financial Highlights
a 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
Slide 20: Financial Trends
Financial Trends Sales EBIT sev sao 7500 350 s7o00 00 1%, 40% e500 5250 20% seo00 200 ses00 sof te 44 20% $000 sino 1.0% 500 $60 S000 s00 00% Fyo2 = Fr2ou3Fvanos = FYa005 rym FY FY2004 —FY2005 Selling, General and Admin EBITDA 900 ptt ram | | sr00 stom 2% cr 600 5 808 Seo 120% fe 129% ss00 58 1% fo
Slide 21: First Quarter FY2006 Highlights
a 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
Slide 22: Quarterly Financial Trends
Quarterly Financial Trends ‘SALES EBIT wx i Pe | | tel $170 + . Ha t 2 Ee He 2 2 oo ew Oot FyOs FYO4 FYO4 FYOS FYOS FYOS FYOS FYOS Fyod FYO4 FYOS FYOS FYOS FYOS FYOS FYO NET RECOURSE DEBT DILUTED EARNINGS PER SHARE eo sum Be 0 sus en io _ nes | io is 00 ee ae aa SO ea 2.3 4 4 @ ooo ie av th Be Se Be
Slide 23: Link to searchable text
Link to searchable text of slide shown above
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 = inecticnes > Valued at $300M in sales FRB
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 3) ® Diamond Award > Special
Slide 27: Agenda
cc Agenda » AAR Overview > Market Trends > Financial Highlights/Trends > Significant Wins > Summary
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: Searchable text section of graphics
Searchable text section of graphics shown above [ GRAPHIC] AAR CORP. Investor Presentation SG Cowen & Co. November 2005 [LOGO] [LOGO] F orward-Looking Statements This presentation includes certain statements relating to future results, which are forward-looking statements as that term is defined in