Document and Entity Information
Document and Entity Information | 6 Months Ended |
Nov. 30, 2021shares | |
Document and Entity Information | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Nov. 30, 2021 |
Entity File Number | 1-6263 |
Entity Registrant Name | AAR CORP |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 36-2334820 |
Entity Address, Address Line One | One AAR Place |
Entity Address, Address Line Two | 1100 N. Wood Dale Road |
Entity Address, City or Town | Wood Dale |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60191 |
City Area Code | 630 |
Local Phone Number | 227-2000 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 35,468,871 |
Entity Central Index Key | 0000001750 |
Entity Interactive Data Current | Yes |
Current Fiscal Year End Date | --05-31 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2022 |
Amendment Flag | false |
Common Stock | NEW YORK STOCK EXCHANGE, INC. | |
Document and Entity Information | |
Title of 12(b) Security | Common Stock, $1.00 par value |
Trading Symbol | AIR |
Security Exchange Name | NYSE |
Common Stock | CHICAGO STOCK EXCHANGE, INC | |
Document and Entity Information | |
Title of 12(b) Security | Common Stock, $1.00 par value |
Trading Symbol | AIR |
Security Exchange Name | CHX |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Nov. 30, 2021 | May 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 42.7 | $ 51.8 |
Restricted cash | 3.7 | 8.4 |
Accounts receivable, less allowances of $17.8 and $16.4, respectively | 192.1 | 166.7 |
Contract assets | 68.5 | 71.9 |
Inventories | 531.7 | 540.6 |
Rotable assets and equipment on or available for short-term lease | 53.9 | 50.4 |
Assets of discontinued operations | 17.9 | 19.5 |
Other current assets | 36.2 | 27.7 |
Total current assets | 946.7 | 937 |
Property, plant and equipment, net of accumulated depreciation of $254.8 and $260.2 respectively | 106.2 | 120 |
Other assets: | ||
Goodwill and intangible assets, net | 120.9 | 123.8 |
Operating lease right-of-use assets, net | 76.3 | 75.8 |
Rotable assets supporting long-term programs | 173.6 | 184.3 |
Other non-current assets | 105.9 | 98.8 |
Total other assets | 476.7 | 482.7 |
Total assets | 1,529.6 | 1,539.7 |
Current liabilities: | ||
Accounts payable | 124.3 | 127.2 |
Accrued liabilities | 143.1 | 148.3 |
Deferred revenue | 33.6 | 25.9 |
Liabilities of discontinued operations | 19.2 | 35.4 |
Total current liabilities | 320.2 | 336.8 |
Long-term debt | 103.2 | 133.7 |
Operating lease liabilities | 60.5 | 59.9 |
Other liabilities | 38.7 | 34.9 |
Total noncurrent liabilities | 202.4 | 228.5 |
Equity: | ||
Preferred stock, $1.00 par value, authorized 250,000 shares; none issued | 0 | |
Common stock, $1.00 par value, authorized 100,000,000 shares; issued 45,300,786 shares at cost | 45.3 | 45.3 |
Capital surplus | 481.5 | 479.8 |
Retained earnings | 774 | 741.7 |
Treasury stock, 9,831,915 and 9,925,551 shares at cost, respectively | (271.6) | (274.1) |
Accumulated other comprehensive loss | (22.2) | (18.3) |
Total equity | 1,007 | 974.4 |
Total liabilities and equity | $ 1,529.6 | $ 1,539.7 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Nov. 30, 2021 | May 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 250,000 | 250,000 |
Preferred stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 45,300,786 | 45,300,786 |
Treasury stock, shares | 9,831,915 | 9,925,551 |
Accounts receivable, allowances | $ 17.8 | $ 16.4 |
Property, plant and equipment, accumulated depreciation | $ 254.8 | $ 260.2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Sales: | ||||
Sales | $ 436.6 | $ 403.6 | $ 891.7 | $ 804.4 |
Cost and operating expenses: | ||||
Provision for doubtful accounts | 0.8 | 4.4 | 0.8 | 4.4 |
Selling, general and administrative | 47.1 | 43.4 | 96.4 | 88.7 |
Total cost and operating expenses | 406.1 | 381.9 | 845.9 | 779.4 |
Loss from joint ventures | (0.4) | (0.1) | (0.6) | (0.2) |
Operating income | 30.1 | 21.6 | 45.2 | 24.8 |
Loss on sale of business | (1.3) | (1.3) | (19.5) | |
Other income (expense), net | 0.3 | (0.7) | 1 | (0.5) |
Interest expense | (0.5) | (1.3) | (1.2) | (3) |
Interest income | 0.1 | 0.1 | 0.1 | |
Income from continuing operations before provision for income taxes | 28.7 | 19.6 | 43.8 | 1.9 |
Provision for income taxes | 7.9 | 5.2 | 11.8 | 1.4 |
Income from continuing operations | 20.8 | 14.4 | 32 | 0.5 |
Income (Loss) from discontinued operations, net of tax | (6.2) | 0.3 | (6.8) | |
Net income (loss) | $ 20.8 | $ 8.2 | $ 32.3 | $ (6.3) |
Earnings (Loss) per share - basic: | ||||
Earnings from continuing operations | $ 0.59 | $ 0.41 | $ 0.90 | $ 0.01 |
Income (Loss) from discontinued operations | 0 | (0.18) | 0.01 | (0.20) |
Earnings (Loss) per share - basic | 0.59 | 0.23 | 0.91 | (0.19) |
Earnings (Loss) per share - diluted: | ||||
Earnings from continuing operations | 0.58 | 0.41 | 0.89 | 0.01 |
Income (Loss) from discontinued operations | 0 | (0.18) | 0.01 | (0.19) |
Earnings (Loss) per share - diluted | $ 0.58 | $ 0.23 | $ 0.90 | $ (0.18) |
Products | ||||
Sales: | ||||
Sales | $ 252 | $ 233.1 | $ 514.1 | $ 469.4 |
Cost and operating expenses: | ||||
Cost | 202.1 | 194.3 | 419.7 | 398.8 |
Services | ||||
Sales: | ||||
Sales | 184.6 | 170.5 | 377.6 | 335 |
Cost and operating expenses: | ||||
Cost | $ 156.1 | $ 139.8 | $ 329 | $ 287.5 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) | $ 20.8 | $ 8.2 | $ 32.3 | $ (6.3) |
Other comprehensive income, net of tax: | ||||
Currency translation adjustments | (3.9) | 1.1 | (4.5) | 2.3 |
Pension and other post-retirement plans, net of tax of $0 and ($0.5) for the three months ended November 30, 2021 and 2020, respectively, and $0.1 and ($0.4) for the six months ended November 30, 2021 and 2020, respectively | 0.3 | (1) | 0.6 | (0.7) |
Other comprehensive income (loss), net of tax | (3.6) | 0.1 | (3.9) | 1.6 |
Comprehensive income (loss) | $ 17.2 | $ 8.3 | $ 28.4 | $ (4.7) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrecognized pension and post retirement costs, tax expense (benefit) | $ 0 | $ 0.5 | $ 0.1 | $ 0.4 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Cash flows provided from (used in) operating activities: | ||
Net income (loss) | $ 32.3 | $ (6.3) |
Less: (Income) Loss from discontinued operations | (0.3) | 6.8 |
Income from continuing operations | 32 | 0.5 |
Adjustments to reconcile income from continuing operations to net cash provided from (used in) operating activities: | ||
Depreciation and intangible amortization | 17.8 | 18.2 |
Stock-based compensation | 4.7 | 4.5 |
Provision for doubtful accounts | 0.8 | 4.4 |
Deferred tax provision | (0.1) | 1 |
Loss from joint ventures | 0.6 | 0.2 |
Loss on sale of business | 1.3 | 19.5 |
Customer contract termination costs | 2.2 | |
Impairment charges | 2.9 | 7 |
Changes in certain assets and liabilities: | ||
Accounts receivable | (26.2) | (4.8) |
Contract assets | 3.2 | (7.5) |
Inventories | 8 | 30.2 |
Prepaid expenses and other current assets | (8.7) | 36.8 |
Rotable assets supporting long-term programs | 1.8 | (0.9) |
Accounts payable | (2.3) | 8.8 |
Accrued and other liabilities | 0.9 | 0.2 |
Payroll Support Program deferred credit | 23.6 | |
Deferred revenue on long-term programs | 0.7 | (60.4) |
Other | (4) | (16.1) |
Net cash provided from operating activities - continuing operations | 33.4 | 67.4 |
Net cash used in operating activities - discontinued operations | (14.2) | (1.9) |
Net cash provided from operating activities | 19.2 | 65.5 |
Cash flows provided from (used in) investing activities: | ||
Property, plant and equipment expenditures | (6) | (6) |
Proceeds from termination of life insurance policies | 10 | |
Proceeds from asset disposals | 7.3 | 0 |
Investments in joint ventures | (4) | 0 |
Proceeds from sale of business | 1.6 | |
Net cash provided from (used in) investing activities | (2.7) | 5.6 |
Cash flows provided from (used in) financing activities: | ||
Short-term borrowings, net | (5) | (390) |
Repayment of long-term borrowings | (24.7) | 0 |
Cash dividends | (0.1) | |
Stock compensation activity | (0.4) | (1.5) |
Net cash used in financing activities | (30.1) | (382.9) |
Effect of exchange rate changes on cash | (0.2) | 0.1 |
Decrease in cash and cash equivalents | (13.8) | (311.7) |
Cash, cash equivalents, and restricted cash at beginning of period | 60.2 | 424.7 |
Cash, cash equivalents, and restricted cash at end of period | $ 46.4 | 113 |
Payroll Support Program Promissory Note | ||
Cash flows provided from (used in) financing activities: | ||
Proceeds from Payroll Support Program note | $ 8.7 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Millions | Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at May. 31, 2020 | $ 45.3 | $ 478.6 | $ 706 | $ (282.7) | $ (44.6) | $ 902.6 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 0 | 0 | (14.5) | 0 | 0 | (14.5) |
Cash dividends | 0 | 0 | (0.1) | 0 | 0 | (0.1) |
Stock option activity | 0 | 0.5 | 0 | 0.5 | 0 | 1 |
Restricted stock activity | 0 | (6) | 0 | 6.1 | 0 | 0.1 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 1.5 | 1.5 |
Balance at Aug. 31, 2020 | 45.3 | 473.1 | 691.4 | (276.1) | (43.1) | 890.6 |
Balance at May. 31, 2020 | 45.3 | 478.6 | 706 | (282.7) | (44.6) | 902.6 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | (6.3) | |||||
Other comprehensive income, net of tax | 1.6 | |||||
Balance at Nov. 30, 2020 | 45.3 | 475.1 | 699.6 | (276.3) | (43) | 900.7 |
Balance at Aug. 31, 2020 | 45.3 | 473.1 | 691.4 | (276.1) | (43.1) | 890.6 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 0 | 0 | 8.2 | 0 | 0 | 8.2 |
Stock option activity | 0 | 1.1 | 0 | 0.1 | 0 | 1.2 |
Restricted stock activity | 0 | 0.9 | 0 | (0.3) | 0 | 0.6 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 0.1 | 0.1 |
Balance at Nov. 30, 2020 | 45.3 | 475.1 | 699.6 | (276.3) | (43) | 900.7 |
Balance at May. 31, 2021 | 45.3 | 479.8 | 741.7 | (274.1) | (18.3) | 974.4 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 0 | 0 | 11.5 | 0 | 0 | 11.5 |
Stock option activity | 0 | 1.1 | 0 | 0.2 | 0 | 1.3 |
Restricted stock activity | 0 | (1) | 0 | 2.3 | 0 | 1.3 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | (0.3) | (0.3) |
Balance at Aug. 31, 2021 | 45.3 | 479.9 | 753.2 | (271.6) | (18.6) | 988.2 |
Balance at May. 31, 2021 | 45.3 | 479.8 | 741.7 | (274.1) | (18.3) | 974.4 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 32.3 | |||||
Other comprehensive income, net of tax | (3.9) | |||||
Balance at Nov. 30, 2021 | 45.3 | 481.5 | 774 | (271.6) | (22.2) | 1,007 |
Balance at Aug. 31, 2021 | 45.3 | 479.9 | 753.2 | (271.6) | (18.6) | 988.2 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 0 | 0 | 20.8 | 0 | 0 | 20.8 |
Stock option activity | 0 | 0.9 | 0 | 0 | 0 | 0.9 |
Restricted stock activity | 0 | 0.7 | 0 | 0 | 0 | 0.7 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | (3.6) | (3.6) |
Balance at Nov. 30, 2021 | $ 45.3 | $ 481.5 | $ 774 | $ (271.6) | $ (22.2) | $ 1,007 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Nov. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | Note 1 – Basis of Presentation AAR CORP. and its subsidiaries are referred to herein collectively as “AAR,” “Company,” “we,” “us,” or “our,” unless the context indicates otherwise. The accompanying Condensed Consolidated Financial Statements include the accounts of AAR and its subsidiaries after elimination of intercompany accounts and transactions. We have prepared these statements without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The Condensed Consolidated Balance Sheet as of May 31, 2021 has been derived from audited financial statements. To prepare the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”), management has made a number of estimates and assumptions relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Certain information and note disclosures, normally included in comprehensive financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to such rules and regulations of the SEC. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the Condensed Consolidated Balance Sheet of AAR CORP. and its subsidiaries as of November 30, 2021, the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income (Loss) for the three- and six-month periods ended November 30, 2021 and 2020, the Condensed Consolidated Statements of Cash Flows for the six-month periods ended November 30, 2021 and 2020, and the Condensed Consolidated Statement of Changes in Equity for the three- and six-month periods ended November 30, 2021 and 2020. The results of operations for such interim periods are not necessarily indicative of the results for the full year. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Nov. 30, 2021 | |
Discontinued operation, Disposed of by sale | COCO | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Discontinued Operations | Note 2 – Discontinued Operations During the third quarter of fiscal 2018, we decided to pursue the sale of our Contractor-Owned, Contractor-Operated (“COCO”) business previously included in our Expeditionary Services segment. Due to this strategic shift, the assets, liabilities, and results of operations of our COCO business have been reported as discontinued operations for all periods presented. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to our continuing operations. In the fourth quarter of fiscal 2020, we completed the sale of the last operating contract of the COCO business shortly after government approval. Our continuing involvement in the COCO business is limited to the lease of certain aircraft which is an obligation of the acquirer of this contract. The assets and liabilities of our discontinued operations are primarily comprised of right-of-use assets and lease-related liabilities. |
Sale of Composites Business
Sale of Composites Business | 6 Months Ended |
Nov. 30, 2021 | |
Disposed of by sale | Composites Business | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sale of Composites Business | Note 3 – Sale of Composites Business On August 31, 2020, we completed the sale of our aerostructures and aerospace products operations located in Clearwater, Florida and Sacramento, California (“Composites”). The Composites business was formerly included in our Expeditionary Services segment. We recognized a loss on the sale of the Composites business of $19.5 million in the first quarter of fiscal 2021. In the fourth quarter of fiscal 2021, the post-closing working capital adjustment was finalized resulting in an additional loss of $0.7 million. The sale also included contingent consideration of up to $6.5 million based on the achievement of sales targets over a three-year period subsequent to the sale. Sales forecasts for the Composites business now indicate that it is unlikely that the sales targets will be achieved. We recognized a charge of $1.3 million in the three-month period ended November 30, 2021 to reflect the fair value of the contingent consideration at zero. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Nov. 30, 2021 | |
Revenue Recognition | |
Revenue Recognition | Note 4 – Revenue Recognition Revenue is measured based on the consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. Our unit of accounting for revenue recognition is a performance obligation included in our customer contracts. A performance obligation reflects the distinct good or service that we must transfer to a customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our contract with the customer is considered one performance obligation as it includes factors such as the good or service being provided is significantly integrated with other promises in the contract, the service provided significantly modifies or customizes another good or service or the good or service is highly interdependent or interrelated. If the contract has more than one performance obligation, we determine the standalone price of each distinct good or service underlying each performance obligation and allocate the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known. Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. The majority of our sales from products are recognized at a point in time upon transfer of control to the customer, which generally occurs upon shipment. In connection with certain sales of products, we also provide logistics services, which include inventory management, replenishment, and other related services. The price of such services is generally included in the price of the products delivered to the customer, and revenues are recognized upon delivery of the product, at which point the customer has obtained control of the product. We do not account for these services separate from the related product sales as the services are inputs required to fulfill part orders received from customers. For our performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services is transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved include future labor costs and efficiencies, overhead costs, and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. For contracts that are deemed to be loss contracts, we establish forward loss reserves for total estimated costs that are in excess of total estimated consideration in the period in which they become known. When contracts are modified, we consider whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original goods or services provided, are accounted for as if they were part of that existing contract with the effect of the contract modification recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct, they are accounted for as a new contract and performance obligation, which are recognized prospectively. Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. These changes are primarily adjustments to the estimated profitability for our long-term programs where we provide component inventory management and/or repair services. For the three-month period ended November 30, 2021, we recognized favorable and (unfavorable) cumulative catch-up adjustments of $8.2 million and $(2.3) million, respectively. For the three-month period ended November 30, 2020, we recognized favorable cumulative catch-up adjustments of $2.5 million. When considering these adjustments on a net basis, we recognized net favorable adjustments of $5.9 million and $2.5 million in the three-month periods ended November 30, 2021 and 2020, respectively. For the six-month period ended November 30, 2021, we recognized favorable and (unfavorable) cumulative catch-up adjustments of $8.2 million and $(3.3) million, respectively. For the six-month period ended November 30, 2020, we recognized favorable cumulative catch-up adjustments of $2.8 million. When considering these adjustments on a net basis, we recognized net favorable adjustments of $4.9 million and $2.8 million in the six-month periods ended November 30, 2021 and 2020, respectively. Under most of our U.S. government contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered and fair compensation for work performed, the costs of settling and paying other claims, and a reasonable profit on the costs incurred or committed. We have elected to use certain practical expedients permitted under ASU No. 2014-09, Revenue from Contracts with Customers Contract Assets and Liabilities The timing of revenue recognition, customer billings, and cash collections results in a contract asset or contract liability at the end of each reporting period. Contract assets consist of costs incurred where revenue recognized over time using the cost-to-cost model exceeds the amounts billed to customers. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of our performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. Contract assets and contract liabilities are determined on a contract-by-contract basis. Net contract assets and liabilities are as follows: November 30, May 31, 2021 2021 Change Contract assets – current $ 68.5 $ 71.9 $ (3.4) Contract assets – non-current 24.0 21.6 2.4 Contract liabilities: Deferred revenue – current (33.6) (25.9) (7.7) Deferred revenue on long-term contracts (9.1) (5.4) (3.7) Net contract assets $ 49.8 $ 62.2 $ (12.4) Contract assets – non-current is reported within Other non-current assets and Deferred revenue on long-term contracts is reported within Other liabilities on our Condensed Consolidated Balance Sheets. Changes in contract assets and contract liabilities primarily result from the timing difference between our performance of services and payments from customers. During the three-month period ended August 31, 2020, we terminated a commercial power-by-the-hour (“PBH”) customer contract which resulted in a charge of $2.2 million. One of our PBH customers notified us in June 2021 that the customer would terminate its contract with us earlier than we originally anticipated. In conjunction with the early termination, we recognized a charge of $5.2 million in the three-month period ended August 31, 2021, which included a reduction in contract assets and revenue of $1.0 million and the establishment of loss reserves of $4.2 million. As of November 30, 2021, our Condensed Consolidated Balance Sheet included remaining forward loss reserves of $2.2 million classified in Accrued liabilities. During fiscal 2020, we established forward loss reserves for a certain PBH contract where total estimated costs are in excess of the total estimated consideration over the remainder of the contract. As of November 30, 2021, our Condensed Consolidated Balance Sheet included remaining forward loss reserves of $1.7 million classified in Accrued liabilities. To support our PBH customer contracts, we previously entered into an agreement with a component repair facility to outsource a portion of the component repair and overhaul services. The agreement included certain minimum repair volume guarantees, which we have not met due to the impact of COVID-19 on commercial passenger aircraft flight hours. During fiscal 2021, we recognized a $4.5 million charge to reflect our estimated obligation over the remainder of the agreement for not achieving the minimum volume guarantees. During the three-month period ended August 31, 2021, we recognized a $1.7 million charge to increase the obligation reflecting the revised estimated shortfall on the minimum volume guarantee. As of November 30, 2021, our Condensed Consolidated Balance Sheet included remaining loss reserves of $4.6 million with $1.5 million classified as current in Accrued liabilities and $3.1 million classified as long-term in Other liabilities. Changes in our deferred revenue were as follows for the three- and six-month periods ended November 30, 2021 and 2020: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Deferred revenue at beginning of period $ (33.0) $ (85.4) $ (31.3) $ (99.2) Revenue deferred (72.0) (50.8) (122.1) (123.0) Revenue recognized 58.6 87.6 105.0 176.1 Other 3.7 0.2 5.7 (2.3) Deferred revenue at end of period $ (42.7) $ (48.4) $ (42.7) $ (48.4) Remaining Performance Obligations As of November 30, 2021, we had approximately $780 million of remaining performance obligations, also referred to as firm backlog, which excludes unexercised contract options and potential orders under our indefinite-delivery, indefinite-quantity (IDIQ) contracts. We expect that approximately 50% of this backlog Disaggregation of Revenue Sales across the major customer markets for each of our reportable segments for the three- and six-month periods ended November 30, 2021 and 2020 were as follows: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Aviation Services: Commercial $ 257.0 $ 192.2 $ 524.2 $ 361.8 Government and defense 162.3 192.8 330.7 386.8 $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services: Commercial $ 0.7 $ 2.0 $ 0.8 $ 7.7 Government and defense 16.6 16.6 36.0 48.1 $ 17.3 $ 18.6 $ 36.8 $ 55.8 Sales by geographic region for the three- and six-month periods ended November 30, 2021 and 2020 were as follows: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Aviation Services: North America $ 341.2 $ 314.1 $ 688.8 $ 608.9 Europe/Africa 50.4 45.7 112.4 96.7 Other 27.7 25.2 53.7 43.0 $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services: North America $ 17.3 $ 18.4 $ 36.6 $ 53.3 Europe/Africa — 0.2 0.2 2.4 Other — — — 0.1 $ 17.3 $ 18.6 $ 36.8 $ 55.8 |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Nov. 30, 2021 | |
Accounts Receivable | |
Accounts Receivable | Note 5 – Accounts Receivable Financial instruments that potentially subject us to concentrations of market or credit risk consist principally of trade receivables. While our trade receivables are diverse and represent a number of entities and geographic regions, the majority are with the U.S. government and its contractors and entities in the aviation industry. The composition of our accounts receivable is as follows: November 30, May 31, 2021 2021 U.S. Government contracts: Trade receivables $ 22.8 $ 24.1 Unbilled receivables 21.1 25.2 43.9 49.3 All other customers: Trade receivables 131.6 104.9 Unbilled receivables 16.6 12.5 148.2 117.4 $ 192.1 $ 166.7 |
Restructuring and Impairment Co
Restructuring and Impairment Costs | 6 Months Ended |
Nov. 30, 2021 | |
Restructuring and Impairment Costs. | |
Restructuring and Impairment Costs | Note 6 – Restructuring and Impairment Costs During the six-month period ended November 30, 2020, we incurred severance and furlough-related costs of $8.2 million, which were included as a component of Cost of sales and Selling, general and administrative on our Condensed Consolidated Statements of Operations. In accordance with ASC 360, Property, Plant and Equipment In light of declines in commercial airline volumes and commercial program contract terminations in fiscal 2020 and 2021, we evaluated future cash flows related to certain rotable assets supporting long-term programs and recognized asset impairment charges of $5.8 million in the three-month period ended August 31, 2020. In conjunction with the early termination notice we received in June 2021 from one of our PBH customers, we evaluated future cash flows related to the rotable assets supporting that fleet type and recognized asset impairment charges of $2.3 million in the three-month period ended August 31, 2021. |
Accounting for Stock-Based Comp
Accounting for Stock-Based Compensation | 6 Months Ended |
Nov. 30, 2021 | |
Accounting for Stock-Based Compensation | |
Accounting for Stock-Based Compensation | Note 7 – Accounting for Stock-Based Compensation Restricted Stock In the three-month period ended August 31, 2021, as part of our annual long-term stock incentive compensation, we granted 43,010 shares of performance-based restricted stock and 50,845 shares of time-based restricted stock to eligible employees. The grant date fair value per share for these shares was $37.74 (the closing price on the grant date). We also granted 32,307 shares of time-based restricted stock to members of the Board of Directors with a grant date fair value per share of $42.56 (the closing price on the grant date). Expense charged to operations for restricted stock during each of the three-month periods ended November 30, 2021 and 2020 was $0.8 million and $0.8 million, respectively, and $2.7 million and $2.7 million during the six-month periods ended November 30, 2021 and 2020, respectively. Stock Options In July 2021, as part of our annual long-term stock incentive compensation, we granted 143,745 stock options to eligible employees at an exercise price of $37.74 and grant date fair value of $13.36. The fair value of stock options was estimated using the Black-Scholes option pricing model with the following assumptions: Risk-free interest rate 0.8 % Expected volatility of common stock 41.6 % Dividend yield 0.8 % Expected option term in years 5.3 The total intrinsic value of stock options exercised during the six-month periods ended November 30, 2021 and 2020 was $0.1 million and $0.1 million, respectively. Expense charged to operations for stock options during the three-month periods ended November 30, 2021 and 2020 was $0.9 million and $1.0 million, respectively, and during the six-month periods ended November 30, 2021 and 2020 was $2.1 million and $1.8 million, respectively. |
Inventories
Inventories | 6 Months Ended |
Nov. 30, 2021 | |
Inventories | |
Inventories | Note 8 – Inventories The summary of inventories is as follows: November 30, May 31, 2021 2021 Aircraft and engine parts, components and finished goods $ 453.1 $ 468.4 Raw materials and parts 58.7 53.0 Work-in-process 19.9 19.2 $ 531.7 $ 540.6 During the three-month period ended November 30, 2020, we decided to exit a product line in our engineering operations and recognized a $1.2 million charge to reserve against the remaining inventory. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Nov. 30, 2021 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | Note 9 – Supplemental Cash Flow Information Six Months Ended November 30, 2021 2020 Interest paid $ 0.7 $ 2.6 Income taxes paid 10.9 2.2 Income tax refunds received 0.5 0.1 |
Sale of Receivables
Sale of Receivables | 6 Months Ended |
Nov. 30, 2021 | |
Sale of Receivables | |
Sale of Receivables | Note 10 – Sale of Receivables On February 23, 2018, we entered into a Purchase Agreement with Citibank N.A. (“Purchaser”) for the sale, from time to time, of certain accounts receivable due from certain customers (the “Purchase Agreement”). Under the Purchase Agreement, the maximum amount of receivables sold is limited to $150 million and Purchaser may, but is not required to, purchase the eligible receivables we offer to sell. The term of the Purchase Agreement runs through February 22, 2022, however, the Purchase Agreement may also be terminated earlier under certain circumstances. The term of the Purchase Agreement shall be automatically extended for annual terms unless either party provides advance notice that they do not intend to extend the term. We have no retained interests in the sold receivables, other than limited recourse obligations in certain circumstances, and only perform collection and administrative functions for the Purchaser. We account for these receivable transfers as sales under ASC 860, Transfers and Servicing During the six-month periods ended November 30, 2021 and 2020, we sold $158.4 million and $243.1 million, respectively, of receivables under the Purchase Agreement and remitted $176.8 million and $268.5 million, respectively, to the Purchaser on their behalf. As of November 30, 2021 and May 31, 2021, we had collected cash of $3.7 million and $8.4 million, respectively, which was not yet remitted to the Purchaser as of those dates and was classified as Restricted cash on our Condensed Consolidated Balance Sheets. We recognize discounts on the sale of our receivables and other fees related to the Purchase Agreement in Other expense, net on our Condensed Consolidated Statements of Operations. We incurred discounts on the sale of our receivables of $0 million and $0.1 million during the three-month periods ended November 30, 2021 and 2020, respectively, and $0.1 million and $0.2 million during the six-month periods ended November 30, 2021 and 2020, respectively. |
Government Subsidies
Government Subsidies | 6 Months Ended |
Nov. 30, 2021 | |
Government Subsidies | |
Government Subsidies | Note 11 – Government Subsidies On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the U.S. in response to the COVID-19 pandemic. The CARES Act includes provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, and other areas. The payroll tax deferral requires that the deferred payroll taxes be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. As of November 30, 2021, we have deferred payroll taxes of $12.4 million of which $6.2 million are included in Accrued liabilities and $6.2 million in Other liabilities on our Condensed Consolidated Balance Sheet. During the three-month period ended August 31, 2020, we received $57.2 million from the U.S. Treasury Department through the Payroll Support Program under the CARES Act. This funding included a $48.5 million cash grant which is to be used exclusively for the continuation of payment of employee wages, salaries and benefits for employees of certain maintenance, repair, and overhaul (“MRO”) facilities. The grant was recognized as contra-expense on our Condensed Consolidated Statement of Operations as the eligible wages, salaries and benefits were incurred. In fiscal 2021, we recognized the full amount of the grant as contra-expense within Cost of sales and Selling, general and administrative expenses of $47.5 million and $1.0 million, respectively. The remaining funding of $8.7 million was a low interest 10-year senior unsecured promissory note (“Promissory Note”) which included interest at a rate per annum equal to the sum of (i) 1.0% for the first five years, and the applicable secured overnight financing rate plus 2.0% in years six through ten plus (ii) in kind interest of 3.0% for the first five years and increasing by 1.0% each year over the remaining term. The Promissory Note was pre-payable at par at any time and we re-paid the Promissory Note in full during the fourth quarter of fiscal 2021. Certain corporate restrictions continue to apply to us which include restrictions on employee compensation. The restrictions previously applicable to us relating to dividends, stock repurchases, and certain workforce actions have lapsed. Other countries have enacted legislation similar to the CARES Act to provide relief and stimulus measures to assist companies in mitigating the financial impact from COVID-19 and supporting their employees. Our foreign subsidiaries recognized subsidies of $2.5 million and $1.6 million during the three-months ended November 30, 2021 and 2020, respectively, and $2.8 million and $4.9 million during the six-months ended November 30, 2021 and 2020, respectively, from foreign governments which have been deducted from the related expenses on our Condensed Consolidated Statements of Operations. |
Financing Arrangements
Financing Arrangements | 6 Months Ended |
Nov. 30, 2021 | |
Financing Arrangements | |
Financing Arrangements | Note 12 – Financing Arrangements A summary of the carrying amount of our debt is as follows: November 30, May 31, 2021 2021 Revolving Credit Facility expiring September 25, 2024 with interest payable monthly $ 104.5 $ 109.5 Term loan due November 1, 2021 with interest payable monthly — 25.7 Total debt 104.5 135.2 Debt issuance costs, net (1.3) (1.5) Long-term debt $ 103.2 $ 133.7 At November 30, 2021, our debt had a fair value that approximates its carrying value and is classified as Level 2 in the fair value hierarchy. On October 18, 2017, we entered into a Credit Agreement with the Canadian Imperial Bank of Commerce, as lender (the “Credit Agreement”). The Credit Agreement provided a Canadian $31 million term loan with the proceeds used to fund the acquisition of two MRO facilities in Canada from Premier Aviation. The term loan was paid in full at the expiration of the Credit Agreement on November 1, 2021. We maintain a Revolving Credit Facility with various financial institutions, as lenders, and Bank of America, N.A., as administrative agent for the lenders, which provides the Company an aggregate revolving credit commitment of $600 million and matures September 25, 2024. Under certain circumstances, we have the ability to request, but our lenders are not required to grant, an increase to the revolving credit commitment by an aggregate amount of up to $300 million, not to exceed $900 million in total. Borrowings under the Revolving Credit Facility bear interest at the offered Eurodollar Rate plus 87.5 175 75 Borrowings outstanding under the Revolving Credit Facility at November 30, 2021 were $104.5 million and there were approximately $12.1 million of outstanding letters of credit, which reduced the availability of this facility to $483.4 million. Our financing arrangements also require us to comply with leverage and interest coverage ratios, maintain a minimum net working capital level, and comply with certain affirmative and negative covenants, including those relating to financial reporting and notification, payment of indebtedness, cash dividends, taxes and other obligations, compliance with applicable laws, and limitations on additional liens, indebtedness, acquisitions, investments and disposition of assets. The Revolving Credit Facility also requires our significant domestic subsidiaries, and any subsidiaries that guarantee our other indebtedness, to provide a guarantee of payment under the Revolving Credit Facility. At November 30, 2021, we were in compliance with the financial and other covenants in our financing agreements. |
Other Non-current Assets
Other Non-current Assets | 6 Months Ended |
Nov. 30, 2021 | |
Other Non-current Assets | |
Other Non-current Assets | Note 13 – Other Non-current Assets Investments in Joint Ventures Our investments in joint ventures include $10.7 million for our 40% ownership interest in a joint venture in India to develop and operate an airframe maintenance facility. The facility received certain regulatory approvals and commenced airframe maintenance operations in the second quarter of fiscal 2022. The investment balance as of November 30, 2021 includes $9.4 million related to the guarantee liability recognized in conjunction with our guarantee of 40% of the Indian joint venture’s debt. The Indian joint venture is accounted for using the equity method. In addition, each of the partners in the Indian joint venture has a loan to the joint venture proportionate to its equity ownership. Our loan to the Indian joint venture under this arrangement was $3.1 million as of November 30, 2021. License Fees In June 2011, we entered into a ten-year agreement with Unison Industries (“Unison”) to be the exclusive worldwide aftermarket distributor for Unison’s electrical components, sensors, switches and other systems for aircraft and industrial uses. In June 2020, we entered into an extension and expansion of our agreement with Unison including a new termination date of December 31, 2031, an initial $25.0 million license fee paid in June 2020 to Unison, and annual license fees at a fixed percentage of our net sales of Unison products. The June 2020 payment of $25.0 million was capitalized and is being amortized on a straight-line basis over the term of the new agreement. Split-Dollar Life Insurance Arrangements We previously entered into split-dollar life insurance agreements to benefit certain former executives and officers. Under the terms of the arrangements, we made premium payments on the individuals’ behalf, and we retained a collateral interest in the policies generally to the extent of the premiums we previously paid. During the second quarter of fiscal 2021, certain split-dollar life insurance agreements were terminated and we received $12.0 million for reimbursement of both the life insurance premiums we previously paid and a portion of our prior tax payments made on the individuals’ behalf related to their imputed income on the policies. The reimbursement of the premiums paid of $10.0 million has been classified as cash flow from investing activities with the remainder included in cash flow from operating activities as it represents the reimbursement of a portion of the taxes previously paid and expensed. In the second quarter of fiscal 2021, we recognized a benefit of $1.3 million in Selling, general and administrative expenses on the Condensed Consolidated Statement of Operations for the net recovery of the taxes previously paid on behalf of the individuals. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Nov. 30, 2021 | |
Earnings per Share | |
Earnings per Share | Note 14 – Earnings per Share The computation of basic earnings per share is based on the weighted average number of common shares outstanding during each period. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options and shares issuable upon vesting of restricted stock awards. In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method A reconciliation of the computations of basic and diluted earnings per share information for the three- and six-month periods ended November 30, 2021 and 2020 is as follows: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Basic and Diluted EPS Income from continuing operations $ 20.8 $ 14.4 $ 32.0 $ 0.5 Less income attributable to participating shares (0.1) (0.1) (0.2) — Income from continuing operations attributable to common shareholders 20.7 14.3 31.8 0.5 Income (Loss) from discontinued operations attributable to common shareholders — (6.2) 0.3 (6.8) Net income (loss) attributable to common shareholders for earnings per share $ 20.7 $ 8.1 $ 32.1 $ (6.3) Weighted Average Shares: Weighted average common shares outstanding – basic 35.1 34.9 35.1 34.9 Additional shares from the assumed exercise of stock options 0.5 0.1 0.5 0.1 Weighted average common shares outstanding – diluted 35.6 35.0 35.6 35.0 Earnings (Loss) per share – basic: Earnings from continuing operations $ 0.59 $ 0.41 $ 0.90 $ 0.01 Income (Loss) from discontinued operations — (0.18) 0.01 (0.20) Earnings (Loss) per share - basic $ 0.59 $ 0.23 $ 0.91 $ (0.19) Earnings (Loss) per share – diluted: Earnings from continuing operations $ 0.58 $ 0.41 $ 0.89 $ 0.01 Income (Loss) from discontinued operations — (0.18) 0.01 (0.19) Earnings (Loss) per share - diluted $ 0.58 $ 0.23 $ 0.90 $ (0.18) The potential dilutive effect of 1,195,000 and 1,743,000 shares relating to stock options was excluded from the computation of weighted average common shares outstanding – diluted for the three-month periods ended November 30, 2021 and 2020, respectively, as the shares would have been anti-dilutive. The potential dilutive effect of 790,000 and 1,743,000 shares relating to stock options was excluded from the computation of weighted average common shares outstanding - diluted for the six-month periods ended November 30, 2021 and 2020, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Nov. 30, 2021 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | Note 15 – Accumulated Other Comprehensive Loss Changes in our accumulated other comprehensive loss (“AOCL”) by component for the three- and six-month periods ended November 30, 2021 and 2020 were as follows: Currency Translation Pension Adjustments Plans Total Balance at September 1, 2021 $ 3.3 $ (21.9) $ (18.6) Other comprehensive income before reclassifications (3.7) — (3.7) Amounts reclassified from AOCL (0.2) 0.3 0.1 Total other comprehensive income (loss) (3.9) 0.3 (3.6) Balance at November 30, 2021 $ (0.6) $ (21.6) $ (22.2) Balance at September 1, 2020 $ (0.8) $ (42.3) $ (43.1) Other comprehensive loss before reclassifications 1.1 (1.2) (0.1) Amounts reclassified from AOCL — 0.2 0.2 Total other comprehensive income (loss) 1.1 (1.0) 0.1 Balance at November 30, 2020 $ 0.3 $ (43.3) $ (43.0) Currency Translation Pension Adjustments Plans Total Balance at June 1, 2021 $ 3.9 $ (22.2) $ (18.3) Other comprehensive income before reclassifications (4.3) — (4.3) Amounts reclassified from AOCL (0.2) 0.6 0.4 Total other comprehensive income (loss) (4.5) 0.6 (3.9) Balance at November 30, 2021 $ (0.6) $ (21.6) $ (22.2) Balance at June 1, 2020 $ (2.0) $ (42.6) $ (44.6) Other comprehensive loss before reclassifications 2.3 (1.2) 1.1 Amounts reclassified from AOCL — 0.5 0.5 Total other comprehensive income (loss) 2.3 (0.7) 1.6 Balance at November 30, 2020 $ 0.3 $ (43.3) $ (43.0) |
Business Segment Information
Business Segment Information | 6 Months Ended |
Nov. 30, 2021 | |
Business Segment Information | |
Business Segment Information | Note 16 – Business Segment Information Consistent with how our chief operating decision making officer (our Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two reportable segments: Aviation Services Expeditionary Services The Aviation Services segment consists of aftermarket support and services offerings that provide spare parts and maintenance support for aircraft operated by our commercial and government/defense customers. Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance-based logistics programs, customer fleet management and operations, and aircraft component repair management services. The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components. Cost of sales consists principally of the cost of product, direct labor, and overhead. The Expeditionary Services segment consists of primarily manufacturing operations with sales derived from the design and manufacture of pallets, shelters, and containers used to support the U.S. military’s requirements for a mobile and agile force, including engineering, design, and system integration services for specialized command and control systems. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead. The accounting policies for the segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements included in our a Our chief operating decision making officer (our Chief Executive Officer) evaluates performance based on our segments and utilizes gross profit as a primary profitability measure. Gross profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Selected financial information for each segment is as follows: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Sales: Aviation Services $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services 17.3 18.6 36.8 55.8 $ 436.6 $ 403.6 $ 891.7 $ 804.4 Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Gross profit: Aviation Services $ 74.0 $ 66.8 $ 134.9 $ 111.4 Expeditionary Services 4.4 2.7 8.1 6.7 $ 78.4 $ 69.5 $ 143.0 $ 118.1 The following table reconciles segment gross profit to income from continuing operations before provision for income taxes: Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Segment gross profit $ 78.4 $ 69.5 $ 143.0 $ 118.1 Selling, general and administrative (47.1) (43.4) (96.4) (88.7) Loss from joint ventures (0.4) (0.1) (0.6) (0.2) Provision for doubtful accounts (0.8) (4.4) (0.8) (4.4) Loss on sale of business (1.3) — (1.3) (19.5) Other income(expenses), net 0.3 (0.7) 1.0 (0.5) Interest expense (0.5) (1.3) (1.2) (3.0) Interest income 0.1 — 0.1 0.1 Income from continuing operations before provision for income taxes $ 28.7 $ 19.6 $ 43.8 $ 1.9 |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Nov. 30, 2021 | |
Legal Proceedings | |
Legal Proceedings | Note 17 – Legal Proceedings We are not a party to any material pending legal proceeding (including any governmental or environmental proceeding) other than routine litigation incidental to our business, except for the following: Department of Justice Investigation As previously reported, the U.S. Department of Justice (“DoJ”), acting through the U.S. Attorney’s Office for the Southern District of Illinois, conducted an investigation of AAR Airlift Group, Inc. (“Airlift”), a wholly-owned subsidiary of AAR CORP., under the federal civil False Claims Act (“FCA”). The investigation related to Airlift’s performance of several contracts awarded by the U.S. Transportation Command (“TRANSCOM”) concerning the operations and maintenance of rotary-wing and fixed-wing aircraft in Afghanistan and Africa, as well as several U.S. Navy contracts. In June 2018, the DoJ informed Airlift that part of the investigation was precipitated by a lawsuit filed under the qui tam provisions of the FCA by a former employee of Airlift. In June 2021, Airlift and the DoJ reached an agreement to settle the FCA investigation and related matters for approximately $11.5 million which concluded the DoJ investigation into Airlift’s contracts with TRANSCOM and the U.S. Navy. As part of the settlement, Airlift and AAR did not admit any wrongdoing. We recognized charges of $11.0 million in discontinued operations in fiscal 2021 related to this agreement and related matters. As of May 31, 2021, our reserve was $12.7 million and payment for the entire matter was made in the first quarter of fiscal 2022. Self-Reporting of Potential Foreign Corrupt Practices Act Violations The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, in fiscal 2019, we self-reported these matters to the DoJ, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company is fully cooperating with the reviews by these agencies, although we are unable at this time to predict what action, if any, they may take. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Revenue Recognition | |
Schedule of net contract assets and liabilities | November 30, May 31, 2021 2021 Change Contract assets – current $ 68.5 $ 71.9 $ (3.4) Contract assets – non-current 24.0 21.6 2.4 Contract liabilities: Deferred revenue – current (33.6) (25.9) (7.7) Deferred revenue on long-term contracts (9.1) (5.4) (3.7) Net contract assets $ 49.8 $ 62.2 $ (12.4) |
Schedule of changes in deferred revenue after adoption of ASC 606 | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Deferred revenue at beginning of period $ (33.0) $ (85.4) $ (31.3) $ (99.2) Revenue deferred (72.0) (50.8) (122.1) (123.0) Revenue recognized 58.6 87.6 105.0 176.1 Other 3.7 0.2 5.7 (2.3) Deferred revenue at end of period $ (42.7) $ (48.4) $ (42.7) $ (48.4) |
Schedule of sales across the major customer markets for each of our reportable segments | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Aviation Services: Commercial $ 257.0 $ 192.2 $ 524.2 $ 361.8 Government and defense 162.3 192.8 330.7 386.8 $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services: Commercial $ 0.7 $ 2.0 $ 0.8 $ 7.7 Government and defense 16.6 16.6 36.0 48.1 $ 17.3 $ 18.6 $ 36.8 $ 55.8 |
Schedule of sales by geographic region | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Aviation Services: North America $ 341.2 $ 314.1 $ 688.8 $ 608.9 Europe/Africa 50.4 45.7 112.4 96.7 Other 27.7 25.2 53.7 43.0 $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services: North America $ 17.3 $ 18.4 $ 36.6 $ 53.3 Europe/Africa — 0.2 0.2 2.4 Other — — — 0.1 $ 17.3 $ 18.6 $ 36.8 $ 55.8 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Accounts Receivable | |
Schedule of accounts receivable | November 30, May 31, 2021 2021 U.S. Government contracts: Trade receivables $ 22.8 $ 24.1 Unbilled receivables 21.1 25.2 43.9 49.3 All other customers: Trade receivables 131.6 104.9 Unbilled receivables 16.6 12.5 148.2 117.4 $ 192.1 $ 166.7 |
Accounting for Stock-Based Co_2
Accounting for Stock-Based Compensation (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Accounting for Stock-Based Compensation | |
Schedule of assumptions used in the Black-Scholes option pricing model to estimate the fair value of stock option grant | Risk-free interest rate 0.8 % Expected volatility of common stock 41.6 % Dividend yield 0.8 % Expected option term in years 5.3 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Inventories | |
Summary of inventories | November 30, May 31, 2021 2021 Aircraft and engine parts, components and finished goods $ 453.1 $ 468.4 Raw materials and parts 58.7 53.0 Work-in-process 19.9 19.2 $ 531.7 $ 540.6 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Supplemental Cash Flow Information | |
Schedule of supplemental information on cash flows | Six Months Ended November 30, 2021 2020 Interest paid $ 0.7 $ 2.6 Income taxes paid 10.9 2.2 Income tax refunds received 0.5 0.1 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Financing Arrangements | |
Schedule of carrying amount of debt | November 30, May 31, 2021 2021 Revolving Credit Facility expiring September 25, 2024 with interest payable monthly $ 104.5 $ 109.5 Term loan due November 1, 2021 with interest payable monthly — 25.7 Total debt 104.5 135.2 Debt issuance costs, net (1.3) (1.5) Long-term debt $ 103.2 $ 133.7 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Earnings per Share | |
Schedule of reconciliation of computations of basic and diluted earnings per share information | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Basic and Diluted EPS Income from continuing operations $ 20.8 $ 14.4 $ 32.0 $ 0.5 Less income attributable to participating shares (0.1) (0.1) (0.2) — Income from continuing operations attributable to common shareholders 20.7 14.3 31.8 0.5 Income (Loss) from discontinued operations attributable to common shareholders — (6.2) 0.3 (6.8) Net income (loss) attributable to common shareholders for earnings per share $ 20.7 $ 8.1 $ 32.1 $ (6.3) Weighted Average Shares: Weighted average common shares outstanding – basic 35.1 34.9 35.1 34.9 Additional shares from the assumed exercise of stock options 0.5 0.1 0.5 0.1 Weighted average common shares outstanding – diluted 35.6 35.0 35.6 35.0 Earnings (Loss) per share – basic: Earnings from continuing operations $ 0.59 $ 0.41 $ 0.90 $ 0.01 Income (Loss) from discontinued operations — (0.18) 0.01 (0.20) Earnings (Loss) per share - basic $ 0.59 $ 0.23 $ 0.91 $ (0.19) Earnings (Loss) per share – diluted: Earnings from continuing operations $ 0.58 $ 0.41 $ 0.89 $ 0.01 Income (Loss) from discontinued operations — (0.18) 0.01 (0.19) Earnings (Loss) per share - diluted $ 0.58 $ 0.23 $ 0.90 $ (0.18) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Accumulated Other Comprehensive Loss | |
Schedule of changes in accumulated other comprehensive loss ("AOCL") by component | Currency Translation Pension Adjustments Plans Total Balance at September 1, 2021 $ 3.3 $ (21.9) $ (18.6) Other comprehensive income before reclassifications (3.7) — (3.7) Amounts reclassified from AOCL (0.2) 0.3 0.1 Total other comprehensive income (loss) (3.9) 0.3 (3.6) Balance at November 30, 2021 $ (0.6) $ (21.6) $ (22.2) Balance at September 1, 2020 $ (0.8) $ (42.3) $ (43.1) Other comprehensive loss before reclassifications 1.1 (1.2) (0.1) Amounts reclassified from AOCL — 0.2 0.2 Total other comprehensive income (loss) 1.1 (1.0) 0.1 Balance at November 30, 2020 $ 0.3 $ (43.3) $ (43.0) Currency Translation Pension Adjustments Plans Total Balance at June 1, 2021 $ 3.9 $ (22.2) $ (18.3) Other comprehensive income before reclassifications (4.3) — (4.3) Amounts reclassified from AOCL (0.2) 0.6 0.4 Total other comprehensive income (loss) (4.5) 0.6 (3.9) Balance at November 30, 2021 $ (0.6) $ (21.6) $ (22.2) Balance at June 1, 2020 $ (2.0) $ (42.6) $ (44.6) Other comprehensive loss before reclassifications 2.3 (1.2) 1.1 Amounts reclassified from AOCL — 0.5 0.5 Total other comprehensive income (loss) 2.3 (0.7) 1.6 Balance at November 30, 2020 $ 0.3 $ (43.3) $ (43.0) |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Nov. 30, 2021 | |
Business Segment Information | |
Schedule of selected financial information for each reportable segment | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Sales: Aviation Services $ 419.3 $ 385.0 $ 854.9 $ 748.6 Expeditionary Services 17.3 18.6 36.8 55.8 $ 436.6 $ 403.6 $ 891.7 $ 804.4 Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Gross profit: Aviation Services $ 74.0 $ 66.8 $ 134.9 $ 111.4 Expeditionary Services 4.4 2.7 8.1 6.7 $ 78.4 $ 69.5 $ 143.0 $ 118.1 |
Schedule of reconciliation of segment gross profit to income from continuing operations before provision for income taxes | Three Months Ended Six Months Ended November 30, November 30, 2021 2020 2021 2020 Segment gross profit $ 78.4 $ 69.5 $ 143.0 $ 118.1 Selling, general and administrative (47.1) (43.4) (96.4) (88.7) Loss from joint ventures (0.4) (0.1) (0.6) (0.2) Provision for doubtful accounts (0.8) (4.4) (0.8) (4.4) Loss on sale of business (1.3) — (1.3) (19.5) Other income(expenses), net 0.3 (0.7) 1.0 (0.5) Interest expense (0.5) (1.3) (1.2) (3.0) Interest income 0.1 — 0.1 0.1 Income from continuing operations before provision for income taxes $ 28.7 $ 19.6 $ 43.8 $ 1.9 |
Sale of Composites Business (De
Sale of Composites Business (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | May 31, 2021 | Aug. 31, 2020 | Nov. 30, 2020 | |
Discontinued Operations | ||||
Cash consideration received | $ 1.6 | |||
Composites Business | ||||
Discontinued Operations | ||||
Loss on the sale of the composites business | $ (19.5) | |||
Maximum contingent consideration | $ 6.5 | |||
Cash consideration received | $ 0.7 | |||
Composites Business | Discontinued operation, Disposed of by sale | ||||
Discontinued Operations | ||||
Disposal group, recognized charge | $ 1.3 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Revenue Recognition | ||||
Unfavorable cumulative catch-up adjustments | $ (2.3) | $ (3.3) | ||
Favorable cumulative catch-up adjustments | 8.2 | $ 2.5 | 8.2 | $ 2.8 |
Cumulative catch-up adjustments, net | $ 5.9 | $ 2.5 | $ 4.9 | $ 2.8 |
Practical Expedient, Incremental costs of obtaining a contract | true | |||
Practical Expedient, Remaining performance obligations | true |
Revenue Recognition - Contract
Revenue Recognition - Contract Assets and Liabilities and Remaining Performance Obligations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Nov. 30, 2021 | Aug. 31, 2021 | Nov. 30, 2020 | Aug. 31, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | May 31, 2021 | |
Contract Assets and Liabilities | |||||||
Contract assets - current | $ 68.5 | $ 68.5 | $ 71.9 | ||||
Contract assets - non-current | 24 | 24 | 21.6 | ||||
Contract liabilities: | |||||||
Contract liabilities - current | (33.6) | (33.6) | (25.9) | ||||
Deferred revenue on long-term contracts | (9.1) | (9.1) | (5.4) | ||||
Net contract assets (liabilities) | 49.8 | 49.8 | $ 62.2 | ||||
Change in contract assets - current | (3.4) | ||||||
Change in contract assets - Noncurrent | 2.4 | ||||||
Change in contract liabilities - current | (7.7) | ||||||
Change in contract liabilities - non-current | (3.7) | ||||||
Change in net contract assets | (12.4) | ||||||
Charge related to termination of PBH customer contract | $ 2.2 | ||||||
PBH forward loss reserve | 1.7 | 1.7 | |||||
Change in contract assets | (3.2) | $ 7.5 | |||||
Change in Contract with Customer, Liability | |||||||
Deferred revenue at beginning of period | (33) | $ (31.3) | $ (85.4) | (99.2) | (31.3) | (99.2) | |
Revenue deferred | (72) | (50.8) | (122.1) | (123) | |||
Revenue recognized | 58.6 | 87.6 | 105 | 176.1 | |||
Other | 3.7 | 0.2 | 5.7 | (2.3) | |||
Deferred revenue at end of period | (42.7) | (33) | $ (48.4) | $ (85.4) | (42.7) | $ (48.4) | |
Remaining Performance Obligations | |||||||
Remaining performance obligation | 780 | $ 780 | |||||
Accrued liabilities | |||||||
Contract liabilities: | |||||||
PBH forward loss reserve | $ 2.2 | ||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-09-01 | |||||||
Remaining Performance Obligations | |||||||
Remaining performance obligation (as a percent) | 50.00% | 50.00% | |||||
Expected timing of satisfaction of remaining performance obligation | 12 months | 12 months | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-09-01 | |||||||
Remaining Performance Obligations | |||||||
Remaining performance obligation (as a percent) | 50.00% | 50.00% | |||||
Expected timing of satisfaction of remaining performance obligation | 3 years | 3 years | |||||
PBH contracts | |||||||
Contract liabilities: | |||||||
PBH forward loss reserve | $ 4.6 | $ 4.6 | |||||
Charge related to early termination of PBH customer contract | 5.2 | ||||||
Change in contract assets | 1 | ||||||
PBH forward loss reserve | 4.2 | ||||||
Charge to increase obligation reflecting revised estimated shortfall on minimum volume guarantee | $ 1.7 | ||||||
Contract Charges on non-achievement of minimum volume guarantees | 4.5 | ||||||
PBH contracts | Accrued liabilities | |||||||
Contract liabilities: | |||||||
PBH forward loss reserve | 1.5 | 1.5 | |||||
PBH contracts | Other liabilities | |||||||
Contract liabilities: | |||||||
PBH forward loss reserve | $ 3.1 | $ 3.1 |
Revenue recognition - Disaggreg
Revenue recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Disaggregation of revenue by major customer markets | ||||
Net sales | $ 436.6 | $ 403.6 | $ 891.7 | $ 804.4 |
Aviation Services | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 419.3 | 385 | 854.9 | 748.6 |
Aviation Services | North America | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 341.2 | 314.1 | 688.8 | 608.9 |
Aviation Services | Europe/Africa | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 50.4 | 45.7 | 112.4 | 96.7 |
Aviation Services | Other | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 27.7 | 25.2 | 53.7 | 43 |
Aviation Services | Commercial | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 257 | 192.2 | 524.2 | 361.8 |
Aviation Services | Government and defense | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 162.3 | 192.8 | 330.7 | 386.8 |
Expeditionary Services | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 17.3 | 18.6 | 36.8 | 55.8 |
Expeditionary Services | North America | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 17.3 | 18.4 | 36.6 | 53.3 |
Expeditionary Services | Europe/Africa | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 0 | 0.2 | 0.2 | 2.4 |
Expeditionary Services | Other | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 0 | 0 | 0 | 0.1 |
Expeditionary Services | Commercial | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | 0.7 | 2 | 0.8 | 7.7 |
Expeditionary Services | Government and defense | ||||
Disaggregation of revenue by major customer markets | ||||
Net sales | $ 16.6 | $ 16.6 | $ 36 | $ 48.1 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Millions | Nov. 30, 2021 | May 31, 2021 |
Accounts Receivable | ||
Accounts receivable | $ 192.1 | $ 166.7 |
U.S. Government Contract | ||
Accounts Receivable | ||
Accounts receivable | 43.9 | 49.3 |
Unbilled receivables | 21.1 | 25.2 |
U.S. Government Contract | Trade receivables | ||
Accounts Receivable | ||
Accounts receivable | 22.8 | 24.1 |
All other customers | ||
Accounts Receivable | ||
Accounts receivable | 148.2 | 117.4 |
Unbilled receivables | 16.6 | 12.5 |
All other customers | Trade receivables | ||
Accounts Receivable | ||
Accounts receivable | $ 131.6 | $ 104.9 |
Restructuring and Impairment _2
Restructuring and Impairment Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Restructuring and Impairment Costs | ||||
Rotable asset impairment charges | $ 5.8 | $ 2.9 | $ 7 | |
Cost of sales and Selling, general and administrative expenses | ||||
Restructuring and Impairment Costs | ||||
Severance and furlough-related costs | $ 8.2 | |||
PBH contracts | ||||
Restructuring and Impairment Costs | ||||
Rotable asset impairment charges | $ 2.3 |
Accounting for Stock-Based Co_3
Accounting for Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Nov. 30, 2021 | Aug. 31, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Stock options, additional disclosures | ||||||
Compensation expense | $ (0.4) | $ (1.5) | ||||
Assumptions used in the Black-Scholes option pricing models to estimate the fair value of each stock option grant | ||||||
Risk-free interest rate | 0.80% | |||||
Expected volatility of common stock | 41.60% | |||||
Dividend yield | 0.80% | |||||
Expected option term in years | 5 years 3 months 18 days | |||||
Restricted stock | ||||||
Stock options, additional disclosures | ||||||
Compensation expense | $ 0.8 | $ 0.8 | $ 2.7 | 2.7 | ||
Performance-based restricted stock | ||||||
Stock options, additional disclosures | ||||||
Granted (in shares) | 43,010 | |||||
Stock appreciation units | ||||||
Stock options, additional disclosures | ||||||
Granted (in shares) | 50,845 | |||||
Granted (in dollars per share) | $ 37.74 | |||||
Stock appreciation units | Board of Directors | ||||||
Stock options, additional disclosures | ||||||
Granted (in shares) | 32,307 | |||||
Granted (in dollars per share) | $ 42.56 | |||||
Stock options | ||||||
Stock options, additional disclosures | ||||||
Granted (in shares) | 143,745 | |||||
Granted (in dollars per share) | $ 37.74 | |||||
Weighted average fair value of stock options granted (in dollars per share) | $ 13.36 | |||||
Total intrinsic value of stock options exercised | 0.1 | 0.1 | ||||
Compensation expense | $ 0.9 | $ 1 | $ 2.1 | $ 1.8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2021 | May 31, 2021 | |
Inventories | |||
Aircraft and engine parts, components and finished goods | $ 453.1 | $ 468.4 | |
Raw materials and parts | 58.7 | 53 | |
Work-in-process | 19.9 | 19.2 | |
Total inventories | $ 531.7 | $ 540.6 | |
Inventory loss charged to reserves | $ 1.2 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Supplemental Cash Flow Information | ||
Interest paid | $ 0.7 | $ 2.6 |
Income taxes paid | 10.9 | 2.2 |
Income tax refunds received | $ 0.5 | $ 0.1 |
Sale of Receivables (Details)
Sale of Receivables (Details) - USD ($) $ in Millions | Feb. 23, 2018 | Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | May 31, 2021 |
Sale of Receivables | ||||||
Sale of receivables | $ 158.4 | $ 243.1 | ||||
Retained interests | $ 0 | 0 | ||||
Remitted receivables | 176.8 | 268.5 | ||||
Restricted cash | 3.7 | 3.7 | $ 8.4 | |||
Maximum | ||||||
Sale of Receivables | ||||||
Sale of receivables | $ 150 | |||||
Other expense, net | ||||||
Sale of Receivables | ||||||
Discount and other fees | $ 0 | $ 0.1 | $ 0.1 | $ 0.2 |
Government Subsidies (Details)
Government Subsidies (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Nov. 30, 2021 | Nov. 30, 2020 | Aug. 31, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | May 31, 2021 | |
Cost of sales | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Contra-expense recognized for grant received from the Payroll Support Program under the CARES Act | $ 47.5 | |||||
Selling, general and administrative expenses | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Contra-expense recognized for grant received from the Payroll Support Program under the CARES Act | $ 1 | |||||
Covid-19 | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Period for repayment of deferred payroll taxes, CARES Act | 2 years | |||||
Deferred payroll taxes, CARES Act | $ 12.4 | $ 12.4 | ||||
Proceeds From Government Assistance Cares Act | $ 57.2 | |||||
Grant proceeds to be used for payment of employee wages, salaries and benefits under the CARES Act | 48.5 | |||||
Foreign subsidies received related to COVID-19 | 2.5 | $ 1.6 | 2.8 | $ 4.9 | ||
Covid-19 | Accrued Liabilities | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Deferred payroll taxes, CARES Act | 6.2 | 6.2 | ||||
Covid-19 | Other liabilities | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Deferred payroll taxes, CARES Act | 6.2 | 6.2 | ||||
Covid-19 | Payroll Support Program Promissory Note | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Promissory note proceeds | $ 8.7 | $ 8.7 | ||||
Debt instrument term | 10 years | |||||
First five years | Covid-19 | Payroll Support Program Promissory Note | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Interest rate (as a percent) | 1.00% | 1.00% | ||||
Six to ten years | Covid-19 | Payroll Support Program Promissory Note | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Interest rate (as a percent) | 2.00% | 2.00% | ||||
First five years, interest in kind | Covid-19 | Payroll Support Program Promissory Note | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||
Remaining term, interest in kind | Covid-19 | Payroll Support Program Promissory Note | ||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Annual increase to the interest rate (as a percent) | 1.00% | 1.00% |
Financing Arrangements (Details
Financing Arrangements (Details) $ in Millions | Oct. 18, 2017USD ($)facility | Nov. 30, 2021USD ($) | May 31, 2021USD ($) |
Financing Arrangements | |||
Total debt | $ 104.5 | $ 135.2 | |
Debt issuance costs, net | (1.3) | (1.5) | |
Long-term debt | 103.2 | 133.7 | |
Term loan | |||
Financing Arrangements | |||
Total debt | 0 | 25.7 | |
Maximum borrowing capacity | $ 31 | ||
Revolving credit facility expiring April 24, 2018 with interest payable monthly | |||
Financing Arrangements | |||
Total debt | 104.5 | 109.5 | |
Revolving credit facility | |||
Financing Arrangements | |||
Long-term debt | $ 133.7 | ||
Revolving credit facility | Revolving credit facility expiring April 24, 2018 with interest payable monthly | |||
Financing Arrangements | |||
Total debt | 104.5 | ||
Maximum borrowing capacity | 600 | ||
Line Of Credit Facility Additional Borrowing Capacity | 300 | ||
Line Of Credit Facility Maximum And Additional Borrowing Capacity | 900 | ||
Remaining borrowing capacity | 483.4 | ||
Revolving credit facility | Revolving credit facility expiring April 24, 2018 with interest payable monthly | Letter of Credit | |||
Financing Arrangements | |||
Total debt | $ 12.1 | ||
Revolving credit facility | Eurodollar rate | Revolving credit facility expiring April 24, 2018 with interest payable monthly | Minimum | |||
Financing Arrangements | |||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.875% | ||
Revolving credit facility | Eurodollar rate | Revolving credit facility expiring April 24, 2018 with interest payable monthly | Maximum | |||
Financing Arrangements | |||
Debt Instrument Basis Spread On Variable Rate After Amendment | 1.75% | ||
Revolving credit facility | Base rate | Revolving credit facility expiring April 24, 2018 with interest payable monthly | Minimum | |||
Financing Arrangements | |||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.00% | ||
Revolving credit facility | Base rate | Revolving credit facility expiring April 24, 2018 with interest payable monthly | Maximum | |||
Financing Arrangements | |||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.75% | ||
MRO facilities acquired in Canada owned by Premier Aviation | |||
Financing Arrangements | |||
Number of facilities acquired | facility | 2 |
Other Non-current Assets - Inve
Other Non-current Assets - Investments in Joint Ventures (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2011 | Nov. 30, 2021 | |
Split-Dollar Life Insurance Arrangements | |||
Investments in Joint Ventures | |||
Receivable reimbursement of life insurance premiums | $ 12 | ||
Premiums paid of life insurance | 10 | ||
Split-Dollar Life Insurance Arrangements | Selling, general and administrative expenses | |||
Investments in Joint Ventures | |||
Recognized benefit on life insurance | 1.3 | ||
Unison Industries | |||
License Fees | |||
Agreement period (in years) | 10 years | ||
Payment of license fee | $ 25 | ||
License fee capitalized | $ 25 | ||
Owned Through Joint Ventures | |||
Investments in Joint Ventures | |||
Investments in joint ventures | $ 10.7 | ||
Membership interest in joint ventures (as a percent) | 40.00% | ||
Amount of guarantee liability recognized | $ 9.4 | ||
Percentage on outstanding debt | 40.00% | ||
Loan to joint venture | $ 3.1 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Earnings per Share | ||||
Effect, participating securities | $ 0 | |||
Basic and Diluted EPS: | ||||
Income from continuing operations | $ 20.8 | $ 14.4 | 32 | $ 0.5 |
Less income attributable to participating shares | (0.1) | (0.1) | (0.2) | 0 |
Income from continuing operations attributable to common shareholders | 20.7 | 14.3 | 31.8 | 0.5 |
Income (Loss) from discontinued operations attributable to common shareholders | 0 | (6.2) | 0.3 | (6.8) |
Net income (loss) attributable to common stockholders for earnings per share | $ 20.7 | $ 8.1 | $ 32.1 | $ (6.3) |
Weighted Average Shares: | ||||
Weighted average common shares outstanding - basic | 35,100,000 | 34,900,000 | 35,100,000 | 34,900,000 |
Additional shares from assumed exercise of stock options | 500,000 | 100,000 | 500,000 | 100,000 |
Weighted average common shares outstanding - diluted | 35,600,000 | 35,000,000 | 35,600,000 | 35,000,000 |
Earnings (Loss) per share - basic: | ||||
Earnings from continuing operations | $ 0.59 | $ 0.41 | $ 0.90 | $ 0.01 |
Income (Loss) from discontinued operations | 0 | (0.18) | 0.01 | (0.20) |
Earnings (Loss) per share - basic | 0.59 | 0.23 | 0.91 | (0.19) |
Earnings (Loss) per share - diluted: | ||||
Earnings from continuing operations | 0.58 | 0.41 | 0.89 | 0.01 |
Income (Loss) from discontinued operations | 0 | (0.18) | 0.01 | (0.19) |
Earnings (Loss) per share - diluted | $ 0.58 | $ 0.23 | $ 0.90 | $ (0.18) |
Antidilutive shares excluded from the computation of diluted earnings per share (in shares) | 0 | 1,743,000 | 0 | 1,743,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2021 | Aug. 31, 2021 | Nov. 30, 2020 | Aug. 31, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Accumulated Other Comprehensive Loss | ||||||
Balance at beginning of the period | $ (18.6) | $ (18.3) | $ (43.1) | $ (44.6) | $ (18.3) | $ (44.6) |
Other comprehensive income before reclassifications | (3.7) | (0.1) | (4.3) | 1.1 | ||
Amounts reclassified from AOCL | 0.1 | 0.2 | 0.4 | 0.5 | ||
Total other comprehensive income (loss) | (3.6) | (0.3) | 0.1 | 1.5 | (3.9) | 1.6 |
Balance at end of the period | (22.2) | (18.6) | (43) | (43.1) | (22.2) | (43) |
Currency Translation Adjustments | ||||||
Accumulated Other Comprehensive Loss | ||||||
Balance at beginning of the period | 3.3 | 3.9 | (0.8) | (2) | 3.9 | (2) |
Other comprehensive income before reclassifications | (3.7) | 1.1 | (4.3) | 2.3 | ||
Amounts reclassified from AOCL | (0.2) | (0.2) | ||||
Total other comprehensive income (loss) | (3.9) | 1.1 | (4.5) | 2.3 | ||
Balance at end of the period | (0.6) | 3.3 | 0.3 | (0.8) | (0.6) | 0.3 |
Pensions Plans | ||||||
Accumulated Other Comprehensive Loss | ||||||
Balance at beginning of the period | (21.9) | (22.2) | (42.3) | (42.6) | (22.2) | (42.6) |
Other comprehensive income before reclassifications | (1.2) | (1.2) | ||||
Amounts reclassified from AOCL | 0.3 | 0.2 | 0.6 | 0.5 | ||
Total other comprehensive income (loss) | 0.3 | (1) | 0.6 | (0.7) | ||
Balance at end of the period | $ (21.6) | $ (21.9) | $ (43.3) | $ (42.3) | $ (21.6) | $ (43.3) |
Business Segment Information -
Business Segment Information - Sales and Gross Profit (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021USD ($) | Nov. 30, 2020USD ($) | Nov. 30, 2021USD ($)segment | Nov. 30, 2020USD ($) | |
Disaggregation of revenue by major customer markets | ||||
Operating segments (in segments) | segment | 2 | |||
Sales | $ 436.6 | $ 403.6 | $ 891.7 | $ 804.4 |
Gross profit | 78.4 | 69.5 | 143 | 118.1 |
Aviation Services | ||||
Disaggregation of revenue by major customer markets | ||||
Sales | 419.3 | 385 | 854.9 | 748.6 |
Gross profit | 74 | 66.8 | 134.9 | 111.4 |
Expeditionary Services | ||||
Disaggregation of revenue by major customer markets | ||||
Sales | 17.3 | 18.6 | 36.8 | 55.8 |
Gross profit | $ 4.4 | $ 2.7 | $ 8.1 | $ 6.7 |
Business Segment Information _2
Business Segment Information - Reconciliation of Gross Profit to Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | |
Reconciliation of segment gross profit to income from continuing operations before provision for income taxes | ||||
Segment gross profit | $ 78.4 | $ 69.5 | $ 143 | $ 118.1 |
Selling, general and administrative | (47.1) | (43.4) | (96.4) | (88.7) |
Loss from joint ventures | (0.4) | (0.1) | (0.6) | (0.2) |
Provision for doubtful accounts | (0.8) | (4.4) | (0.8) | (4.4) |
Loss on sale of business | (1.3) | (1.3) | (19.5) | |
Other income (expense), net | 0.3 | (0.7) | 1 | (0.5) |
Interest expense | (0.5) | (1.3) | (1.2) | (3) |
Interest income | 0.1 | 0.1 | 0.1 | |
Income from continuing operations before provision for income taxes | $ 28.7 | $ 19.6 | $ 43.8 | $ 1.9 |
Legal Proceedings (Details)
Legal Proceedings (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jun. 30, 2021 | May 31, 2021 | |
Legal Proceedings | ||
Litigation reserve | $ 12.7 | |
Loss contingency, loss recognized in period | $ 11 | |
Litigation Settlement, Amount Awarded to Other Party | $ 11.5 |