AAR Corp Parts Supply and Engineering Initiatives
Forward-looking statements
Note: All results and expectations in the presentation reflect continuing operations unless otherwise noted.
This presentation contains 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, which reflect management's
expectations about future conditions. Forward-looking statements often address our expected future operating and financial performance and financial condition, or targets, goals, commitments, and other business plans,
and often may also be identified because they contain words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "might," "plan," "potential," "predict," "project," "seek," "should,"
"target," "will," "would," or similar expressions and the negatives of those terms. These forward-looking statements are based on the beliefs of Company management, as well as assumptions and estimates based on
information available to the Company as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or
those anticipated, depending on a variety of factors, including: (i) factors that adversely affect the commercial aviation industry; (ii) the impact of pandemics and other disease outbreaks, such as COVID-19, and similar
public health threats on air travel, worldwide commercial activity and our and our customers' ability to source parts and components; (iii) a reduction in the level of sales to the branches, agencies and departments of the
U.S. government and their contractors (which were 29% of consolidated sales in fiscal year 2023); (iv) (v) cost overruns and losses on fixed-price contracts; (vi) nonperformance by subcontractors or suppliers; (vii) changes
in or non-compliance with laws and regulations that may affect certain of our aviation and government and defense related activities that are subject to licensing, certification and other regulatory requirements imposed by
the FAA, the U.S. State Department and other regulatory agencies, both domestic and foreign; (viii) a reduction in outsourcing of maintenance activity by airlines; (ix) a shortage of the skilled personnel on whom we depend
to operate our business, or work stoppages; (x) competition from other companies, including original equipment manufacturers, some of which have greater financial resources than we do; (xi) financial and operational risks
arising as a result of operating internationally; (xii) inability to integrate acquisitions effectively and execute our operational and financial plan related to the acquisitions; (xiii) failure to realize the anticipated benefits of the
acquisition of Trax USA Corp. ("Trax") and difficulties integrating Trax's operations: (xiv) inability to recover our costs due to fluctuations in market values for aviation products and equipment caused by various factors,
including reductions in air travel, airline bankruptcies, consolidations and fleet reductions; (xv) asset impairment charges we may be required to recognize to reflect the non-recoverability of our assets or lowered
expectations regarding businesses we have acquired; (xvi) threats to our systems technology from equipment failures, cyber or other security threats or other disruptions; (xvii) a need to make significant capital expenditures
to keep pace with technological developments in our industry; (xviii) a need to reduce the carrying value of our assets; (xix) inability to fully execute our stock repurchase program and return capital to our stockholders; (xvii)
restrictions on paying, or failure to maintain or pay dividends; (xx) limitations on our ability to access the debt and equity capital markets or to draw down funds under loan agreements; (xxi) non-compliance with restrictive
and financial covenants contained in certain of our loan agreements; (xxii) non-compliance with laws and regulations relating to the formation, administration and performance of our U.S. government contracts; (xxiii)
exposure to product liability and property claims that may be in excess of our liability insurance coverage; (xxiv) impacts from stakeholder and market focus on environmental, social and governance matters; and (xxv) the
costs of compliance, and liability for non-compliance, with environmental regulations, including future requirements regarding climate change and environmental, social and governance matters. Should one or more of those
risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. Those events and uncertainties are difficult or impossible
to predict accurately and many are beyond our control. For a discussion of these and other risks and uncertainties, refer to our Annual Report on Form 10-K, Part I, "Item 1A, Risk Factors" and our other filings filed from time
to time with the U.S. Securities and Exchange Commission. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control. We assume no obligation to update
any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Fiscal 2024 Segment Realignment: As previously announced, during the first quarter of fiscal 2024, our chief operating decision maker implemented changes to the organization of the business, allocation of resources,
and performance assessment. Specifically, this new structure resulted in the separation of our Aviation Services segment into three new operating segments: Parts Supply, Integrated Solutions and Repair & Engineering.
Beginning with the first quarter of fiscal 2024, the Company will report under this new structure using the following four operating segments: Parts Supply, Integrated Solutions, Repair & Engineering and Expeditionary
Services. These changes will be initially reflected in the Company's unaudited condensed consolidated financial statements for the quarterly period ending August 31, 2023.
This presentation and the related discussion, other than references to historical periods unless specifically noted, reference the new reportable segments effective the beginning of fiscal 2024.
See the Company's Current Report on Form 8-K, furnished on July 18, 2023, for certain recast historical summary financial information under the Company's new operating segment structure for fiscal years 2022 and 2023
and for the previously reported quarters in fiscal year 2023.
Presentation Materials: The statements included and the information provided in this presentation are made as of July 20, 2023.
Non-GAAP Financial Measures: This presentation includes certain non-GAAP financial measures. Please refer to the Appendix for additional information on these non-GAAP financial measures and reconciliations to the
comparable GAAP measures.
AAR
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