Aar Corp. · NYSE:AIR
Aar — Baird 2019 Global Industrial Conference
20 slides from Aar's conference presentation, Nov 6, 2019
Slide 1: Baird 2019 Global Industrial Conference
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 0 Baird 2019 Global Industrial Conference November 6, 2019
Slide 2: Forward-Looking Statements
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 1 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 1
Slide 3: Aviation Services Market Expert Since 1955
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 2 Aviation Services Market Expert Since 1955 Leading independent provider of aviation services to commercial and government markets NYSE: AIR $2B revenue 65 years as a market leader in aviation support Approximately 6,00
Slide 4: Company Overview
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 3 Company Overview Integrated Solutions • Flight hour - based component support • Contractor logistics support (CLS) • Performance - based logistics (PBL) • Serviceable and OEM factory - new parts • Engine solutions, man
Slide 5: Corporate Strategy
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 4 Corporate Strategy x Entrepreneurial x Nimble x Portfolio Drive connected businesses that reinforce collective growth prospects Expand margins through differentiated capabilities / i ntellectual property Utilize data a
Slide 6: Connected Businesses Model
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 5 Connected Businesses Model Unique Value Proposition Parts Supply • Transactional data collection • Exclusive relationships with OEMs and customers • Inventory pooling with programs Repair & Engineering • Strategic rela
Slide 7: Differentiated Capabilities and Predictable Revenue
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 6 Differentiated Capabilities and Predictable Revenue Parts Supply Repair & Engineering Integrated Solutions • Exclusive aftermarket parts supply contracts • Exclusive new parts OEM distribution contracts • Long - term n
Slide 8: Parts Supply: Overview
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 7 Parts Supply: Overview Key OEM Partners Key offerings Customers • Serviceable and OEM factory - new parts • Engine solutions, management, leasing and exchange • Aircraft sales and leasing • Online P AAR TS TM Store
Slide 9: Repair & Engineering: Overview
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 8 Repair & Engineering: Overview Oklahoma City • Narrow body & regional MRO • 300,000 SF • Narrow & wide body MRO • 1.1 million SF Indianapolis • Narrow & wide body MRO • 226,000 SF • Landing gear MRO • 150,000 SF Miami
Slide 10: Integrated Solutions: Overview
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 9 Integrated Solutions: Overview Commercial: Flight - hour - based component support | Government: Contractor Logistics Support , supply chain management 250,000 repair transactions “Tailored, deployable, scalable” Suppl
Slide 11: Digital Solutions: Overview
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 10 Digital Solutions: Overview P AAR TS TM Store E - commerce portal AIR volution TM Parts repair management software • > 1 million parts available online • Factory - new parts from > 30 OEMs • Overhauled, serviceable an
Slide 12: Historical Financial Performance ($M)
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 11 $1.27 $1.45 $1.73 $2.44 14.2% 19.3% 41.0% FY16A FY17A FY18A FY19A $739 $851 $983 $1,023 10.5% 9.5% 9.2% 11.3% FY16A FY17A FY18A FY19A $77.8 $80.5 $90.5 $115.3 5.1% 5.1% 5.2% 5.6% FY16A FY17A FY18A FY19A $1,525 $1,591
Slide 13: Q1 FY20 Income Statement Highlights
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 12 Q1 FY20 Income Statement Highlights in millions except EPS Q1 FY20 Q1 FY19 Variance Sales $541.5 $466.3 $75.2 Gross Profit $81.6 $71.2 $10.4 % Margin 15.1% 15.3% (0.2%) SG&A $58.1 $48.2 $9.9 % Margin 10.7% 10.3% 0.3%
Slide 14: FY20 – Financial Guidance
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 13 FY20 – Financial Guidance P&L Metrics FY20 Guidance Sales $2.1 to $2.2 Billion Adjusted Diluted EPS $2.45 – $2.65 Other Metrics SG&A % of Sales ~ 10.5% Effective Tax R ate 24%
Slide 15: AAR Investment Highlights
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 14 AAR Investment Highlights 1 2 3 4 Supportive macroeconomic environment with strong global aviation aftermarket growth and robust government spending expected Leading aftermarket parts supplier distinctly positioned to
Slide 16: Appendix
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 15 Appendix
Slide 17: Non-GAAP Financial Measures
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 16 Non - GAAP Financial Measures Adjusted operating income, adjusted diluted earnings per share from continuing operations, adjusted return on invested capital, adjusted EBITDA, and net debt are “non - GAAP financial mea
Slide 18: Non-GAAP Financial Measures: Adjusted Diluted EPS
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 17 Non - GAAP Financial Measures Adjusted Diluted EPS from Continuing Operations FY2016 FY2017 FY2018 FY2019 Q1 FY19 Q1 FY20 Diluted EPS from continuing operations 1.30$ 1.51$ 2.11$ 2.40$ 0.54$ 0.49$ Deferred tax re-meas
Slide 19: Non-GAAP Financial Measures (Cont'd): Adjusted EBITDA
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 18 Non - GAAP Financial Measures (Cont’d) Adjusted EBITDA FY2019 Q1 FY19 Q1 FY20 (In millions) Net income 7.5$ 15.1$ 4.4$ Loss from discontinued operations 76.6 3.8 12.7 Income tax expense (benefit) 4.9 2.3 3.4 Other exp
Slide 20: Non-GAAP Financial Measures (Cont'd): Adjusted Income
AAR CORP. All rights reserved worldwide. Confidential and proprietary document. 19 Non - GAAP Financial Measures (Cont’d) Adjusted Income from Continuing Operations Q1 FY19 Q1 FY20 (In millions - unaudited) Income from Continuing Operations 18.9$ 17.1$ Investigation and remediation compliance costs,