Slide 1: AAR CORP. Investor Presentation
AAR CORP. Investor Presentation GABELLI CONFERENCE September 6, 2012
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: Company Overview & Strategy, Financial Performance, Segment Review
AAR CORP. Company Overview & Strategy Financial Performance Segment Review
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 6,300 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 defense m
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: To Commercial and Defense Markets
Commercial 45% of total sales Defense 26% of total sales Commercial 13% of total sales Defense 16% of total sales Aviation Services Technology Products Balance between commercial and defense Commercial 58% of total sales Defense 42% of total sales AAR CORP. ...To Commercial and Defense Markets Last
Slide 8: Building a Well Balanced and Diversified Portfolio
Aviation Services Technology Products Commercial 45% Defense 26% Commercial 13% Defense 16% Machining Cargo MRO Supply Chain Strong portfolio of aerospace & defense businesses provides balance, strength and consistency through the cycles Mobility Airlift Last nine months annualized through August 31
Slide 9: Current FY13 Operating Environment
Defense Commercial +20% (+13% organic *) Align with customers as they seek to do more without more Q1 FY13 Revenue estimate $540 to $550 Million EPS estimate $0.42 to $0.45 Growth opportunities in both Commercial and Defense markets Commercial/Defense split moving towards 60/40 from 50/50. Continued
Slide 10: AAR in Commercial
Well Positioned with leading international passenger and cargo airlines Strong Value Proposition as outsourcing services saves airlines money Market Share Gains Outsourcing trend set to continue (e.g., American Airlines) Worldwide third party MRO CAGR of 4% through 2021 Increasing demand for integra
Slide 11: AAR in Defense
Defense customers utilize AAR for cost savings Well Positioned around more stable funding areas Strong Value Proposition via lowering cost and doing more without more Stability Defense flat Cost reductions and efficiency gains a central strategy in future budgets Operations and Maintenance budgets e
Slide 12: Deep Management Team to Execute Strategy
Rick Poulton Chief Financial Officer and Treasurer 6 years with AAR 21 years in Industry An accomplished and experienced leadership team dedicated to delivering shareholder value Terry Stinson Group Vice President, Structures & Systems 5 years with AAR 40 years in Industry John Holmes Group Vice Pre
Slide 13: Key Strategic Principles
Deliver Superior Returns for Shareholders Enter attractive markets Increase value-add to customers Improve operating margins Aviation Services / Technology Products Move to bolster Commercial Business U.S. / International Provide operating flexibility Cash flow positive in each segment Build scale a
Slide 14: Financial Performance
Financial Performance
Slide 15: AAR Today: A Diversified $2B Business
$1.4B $1.4B $1.4B $1.8B $2.1B $0 $0.5 $1.0 $1.5 $2.0 $2.5B Diverse capabilities + unique value propositions = steady growth $1.1B Defense Commercial AAR Today: A Diversified $2B Business $3.75 $3.00 $2.25 $1.50 $0.75 $0.00 EPS Revenue $2.1B - $2.2B $1.55 - $1.65 Guidance $93M EBITDA* *EBITDA is defi
Slide 16: Navigated Through 5 Major Industry Cycles
Arab Oil Embargo Fuel Crisis Conflicts in Iran Economic Downturn Gulf War September 11 Attacks “Great Recession” Sales ($B) After each down cycle AAR has emerged a stronger and more diverse company 2012 Navigated Through 5 Major Industry Cycles 2013E
Slide 17: Generating Cash Flow From Operations
Generated over $356 million in operating cash flow during the past three fiscal years Cash was deployed back into the business over the last two years Significantly lower Capital Expense plan of $55 million in FY13 Net capital expenditures of $10M (estimate) in Q1 FY 13 Cash flow: First quarter Cash
Slide 18: Summary
Innovation + execution = growth Leading provider of aviation services and technology products A well balanced portfolio with a consistent value proposition across our markets Well positioned to capitalize on opportunities in commercial and defense markets Summary
Slide 19: Appendix
Appendix
Slide 20: 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