AAR Profit Down, Trims FY Outlook; Shares Fall 8%

(RTTNews) - Aviation and aerospace company AAR Corp. (AIR), Thursday reported a drop in profit for the third quarter, hurt by lower revenues and higher expenses. Both earnings and revenues for the quarter fell short of Wall Street analysts' estimates.

Moving forward, the company lowered its financial outlook for the full year, sending its stock down by about eight percent in after-hours trade.

Wood Dale, Illinois-based AAR's third-quarter profit dropped to $17.9 million or $0.45 per share from $18.4 million or $0.46 per share last year. On average, six analysts polled by Thomson Reuters expected earnings of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.

AAR said its sales for the third quarter fell to $474.4 million from $520.2 million a year ago. Analysts on a consensus expected revenues of $525.63 million for the third quarter.

AAR provides services such as inventory management and aircraft maintenance, as well as products like cargo systems and containers to the commercial and government aviation industry.

Chief Executive David Storch said, "After strong second quarter results, we experienced a challenging third quarter in both of our segments

Sales in the aviation services segment dropped 9.9 percent to $367.8 million from a year ago. Storch said sales in the Aviation Services segment dropped due to lower MRO sales reflecting completion of a significant engineering services program in the second quarter and lower landing gear revenues from unfavorable timing of gear removals.

Technology products segment sales decreased 4.8 percent to $106.6 million, as mobility products business performance weakened.

Gross margin for the quarter improved to 16.6 percent from 14.6 percent last year, but selling, general and administrative expenses, as a percentage of sales, increased to 9.6 percent from 8 percent a year ago.

Looking forward to the full year 2014, AAR now sees earnings of $1.79 to $1.82 per share and revenues of $2.00 billion to $2.05 billion. Analysts currently estimate earnings of $1.97 with revenues of $2.14 billion for the year. Earlier, the company had projected earnings of $1.95 to $2.00 per share and revenues of $2.10 billion to $2.15 billion.

AIR closed Thursday's trading at $30.92, up $0.19 or 0.62%, on the NYSE. In after-hours trade, the company's stock fell $2.34 or 7.57%.