AAR Corp. (AIR)

AAR Corp. (AIR) stock dropped by 5.94% due to the release of its third quarter 2024 results, which showed EPS missed expectation.

• Key Financial Results: The company reported a revenue of $567.3m, up 8.9% from 3Q 2023. Net income was $14.0m, down 35% from 3Q 2023. Profit margin stood at 2.5%, down from 4.1% in 3Q 2023, driven by higher expenses. EPS disappointed investors to be at $0.40, down from $0.63 in 3Q 2023.
• Earnings and Revenue Growth: Revenue was in line with analyst estimates, but earnings per share (EPS) missed estimates by 51%. Looking ahead, revenue is forecast to grow 14% per year on average for the next 3 years, compared to a 6.6% growth forecast for the Aerospace & Defense industry in the US. In summary, while AAR Corp. has seen revenue growth, its net income and profit margin have decreased, leading to a drop in stock price. The company's future revenue growth forecasts are strong compared to industry averages, which may provide some optimism for investors.

AAR Corp. (AIR) stock dropped by 10.20% due to the company's mixed Q2 FY24 sales report, which missed expectations.

• Q2 FY24 Sales Miss:AAR Corp reported Q2 FY24 sales of $545.4 million, a 16% YoY increase but below the consensus estimate of $557.2 million. Strong sales to commercial customers, up 24% YoY, were driven by parts demand. Government customer sales grew 1% YoY.
• Margin Improvement and Earnings: Adjusted gross profit margin rose to 19.0% from 18.8% YoY due to operational efficiency. Adjusted operating margin increased to 8.1% from 7.6% YoY, led by higher commercial sales. Adjusted EPS from continuing operations increased 17% YoY to $0.81, beating expectations.
• Acquisition and Financial Strategy: AAR Corp announced the acquisition of Triumph Group Inc's Product Support business for $725 million. The deal includes expected tax benefits and is expected to be accretive to revenue growth and adjusted EPS in the first full fiscal year. Permanent financing will combine debt and equity, aiming for pro forma net leverage of about 3.0x at closing, with strong combined free cash flow for further deleveraging post-acquisition.