AAR Corp. (NYSE:AIR) Q4 2023 Earnings Conference Call July 18, 2023 4:45 PM ET

Company Participants

John Holmes - Chairman, President and CEO

Sean Gillen - CFO

Conference Call Participants

Peter Osterland - Truist Securities

Kenneth Herbert - RBC Capital Markets

Joshua Sullivan - The Benchmark Company

Robert Spingarn - Melius Research

Operator

Good afternoon, everyone, and welcome to AAR's Fiscal 2023 Fourth Quarter Earnings Call. We're joined today by John Holmes, Chairman, President and Chief Executive Officer; and Sean Gillen, Chief Financial Officer.

Before we begin, I would like to remind you that the comments made during the call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company's earnings release and the Risk Factors section of the company's Form 10-K for the fiscal year ended May 31, 2022 and Form 10-Q for the fiscal quarter ended February 28, 2023.

In providing the forward-looking statements, the company assumes no obligation to provide updates to reflect future circumstances or anticipated or unanticipated events. Certain non-GAAP financial information will be discussed on the call today. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the company's earnings release.

At this time, I would like to turn the call over to AAR's Chairman, President and CEO, John Holmes.

John Holmes

Thank you. Good afternoon, everyone. I appreciate you joining us today to discuss our fourth quarter and full year fiscal 2023 results.

For the full year, sales increased 9% from $1.8 billion to $2 billion. Our adjusted diluted earnings per share from continuing operations increased 20% from $2.38 per share to a record $2.86 per share which is driven by both sales growth and our increase in adjusted operating margin from 6.3% to 7.5%. The strong performance reflects continued execution on our strategy to leverage our improved cost structure and capture growth in higher margin activity.

For the fourth quarter, sales were up 60% year-over-year, from $476 million to $553 million. Sales to commercial customers increased 31% while as expected, sales to government customers decreased 7% due primarily to the completion of certain government programs in the prior year quarter. Adjusted operating margin was 7.8% up from 7% in the prior year quarter and adjusted diluted earnings per share from continuing operations were up 15% from $0.76 per share to a record $0.83 per share.