Illinois-based aviation services company AAR recorded third quarter fiscal year 2023 (Q3 FY 2023) sales of $521 million, up 15% year-on-year.
The sales contributed to GAAP diluted earnings per share from continuing operations of $0.62, compared to $0.63 in Q3 FY2022, with adjusted diluted earnings per share from continuing operations of $0.75, up 19% from $0.63.
The company, which recently announced the acquisition of aircraft software business TRAX, said Q3 cash flow from continuing operations was around $17 million.
Consolidated third quarter sales increased 15% year-on-year, with sales to commercial customers up 28% but those to government customers down 3%, leaving sales to commercial customers at 65% of consolidated sales.
Gross profit margins were 18.1%m compared to 17.8% in the prior year quarter. Adjusted gross profit margin increased from 17.3% to 18.1%, outcomes which AAR said were "primarily due to the favourable impact of our previous actions to reduce costs and improve our operating efficiency".
Selling, general, and administrative expenses were $56.7 million in the quarter, which included increased investments in digital initiatives as well as $3.7 million "related to Trax acquisition costs and a Russian bankruptcy court judgement".
Operating margins were 6.5% while adjusted operating margin increased slightly to 7.6% due to "the growth in commercial sales".
AAR's net debt was $135.3 million at the end of February 2023, leaving it with net leverage of 0.75x, down from 0.88x three months earlier, and with $300.8 million available on a revolving credit facility.
“We drove strong performance across our entire portfolio particularly in our USM and new parts distribution activities where we had made investments during the second quarter. Additionally, we are very pleased to have completed the acquisition of Trax which brings well-established, industry-leading digital offerings to our portfolio. Over time, we expect Trax will become a unique channel to market for our parts and services,” said John M Holmes, AAR's chairman, president and chief Executive.