AAR Corp First Quarter Earnings Fall Short

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Last Update: 16-Sep-11 09:48 ET

AAR Corp (AIR $22.01 -0.64) reported first quarter earnings of $0.41 per share, $0.03 worse than the Capital IQ Consensus Estimate of $0.44.

Revenues rose 18.5% year/year to $479.3 million versus the $450.9 million consensus.

Sales to defense customers increased 2% in the first quarter compared to last year. While the co experienced sales growth at AAR Airlift and at its Defense Logistics businesses, sales were lower at its Mobility Products unit. The company expects second quarter revs at the Mobility Products business to increase $10 million to $15 million from first quarter levels as it ramps up production on two programs.

"Our commercial businesses delivered solid top-line growth while we maintained steady overall results in our businesses supporting government and defense customers. As we look ahead to the remainder of the year, we are encouraged as all major programs that were up for renewal at AAR Airlift were renewed during the quarter, we have a major new customer in MRO, and will have a significant increase in production and delivery of shelters at Mobility. Our margin performance was below expectations as the seasonal softness at MRO and our Mobility business led to production inefficiencies. Based on what we see today, we are confident that we will produce steady improvement in our operating margins as we expect sales growth at our Mobility Products unit, improved mix at MRO and as other initiatives gain momentum."