AIR - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to AAR’s Fiscal Year 2019 First Quarter Earnings Call.

We are joined today by John Holmes, President and CEO; and Mike Milligan, Vice President and CFO.

Before we begin, I’d like to remind you that comments made during the call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as noted in our news release and the Risk Factors section of the company’s Form 10-K for the fiscal year ended May 31, 2018. In providing forward-looking statements, the company assumes no obligation to provide updates to reflect future circumstances or anticipated or unanticipated events. At this time, I would like to turn the call over to AAR’s President and Chief Executive Officer, John Holmes.

John Holmes

great. Hey, much everybody. very good and you afternoon Thank We first quarter all joining discuss our us to XXXX appreciate you results. Overall, it AAR. was a great quarter for

first a adjusted grew $XXX sales XX% from from quarter $XXX share increased the Our to to current a million $X.XX continuing XX.X% operations million, in earnings diluted from our $X.XX per share share and consolidated quarter.

global and as achieved integrated for full were our contractor-operated the multiple align The our our for trading, we all will of Worldwide programs from the WASS and business, million. businesses, sales or the company’s in recognized aftermarket the on by our our Services distribution, contract, forward, the be Services, leverage includes growth we of to segment $XX.X reported operational order double-digit State driven program Department by presented. to operational capability growth Our quarter formally at This to June, results a government-owned, transition. continue periods which capitalize also of were In successful going INL/A reach solutions meaningful fully Aviation program with capabilities Support and the opportunities. WASS Aviation within included contribution end

distribution, saw demand very During double-digit the quarter, we businesses, in and our which in quarter. strong trading, the programs growth healthy had

from the As and a result, sales WASS in segment increased the KC-XX impact our year-over-year, excluding Services X.X% Aviation programs.

we in to we changes. these primarily created good a these of services, working demand We’re this changes and customer heavy softer momentum quarter, to have hangers in to opportunities our schedule businesses, in on for feeling very due the continue. experienced fill and openings. openings have we are about we the close number growth to expect These Also maintenance

to the announced new NEOs. new fleet of NEOs. XX including and XX including business in agreement over well for power-by-the-hour a current-generation NEOs fall. on wins, expanded XX on as XX of Air - I’m will as went recently our AXXX AXXX the with We aircraft new XXXs, This the opportunities, fleet period current and XX this as very beginning our closing their X, business New the generation provide with aircraft, live with September phase support Zealand pleased Speaking as their well covers four-year current

with that, also multi-year turn We ability a demonstrate recently to it our to generation These solutions covering well to NEO over capabilities our detail. successfully financials latest PBH announced as well. I’d deliver another fleet more like Malta, the agreement bit as support their Air our the aircraft. to With to Mike customers, as of in to awards discuss

Michael Milligan

minutes in performance a QX Thanks, John. more fiscal to take I’ll year the detail. few company’s XXXX discuss financial

experienced million We Our or sales were of growth up XX.X%, $XXX.X in $XX.X million in year-over-year. both segments. quarter the

experienced sales WASS while distribution, segment sales Services mobility business segment. trading, our including Services increased increase across parts contract, the the Aviation Expeditionary and programs, in Our the INL/A drove

our due margin sales reflecting the Gross growth. $X.X $XX.X profit during was sales to Overall, gross prior our year, XX.X%, million, expenses our primarily in facilities. maintenance double-digit compared to our XX.X% leverage lower last SG&A were XX.X% quarter, improved volumes airframe of support of structure year, to increased cost XX.X% increased profit million. consolidated profit Services to in to to the $XX.X Our gross million or in million. XX.X% compared Aviation $X.X

to rate As date. at of of improvements we - improvements continue make to we the in to SG&A To pleased that to will achieve our throughout January, targeted make at we end, run XX% our the continue year Day with sales. shared we throughout Investor are progress

$X.XX continuing for X.X% were in from share. quarter. million, operations compared compensation, stock-based the year to severance, the restructuring or adjusted sales XX.X% charges prior current Our diluted and excluding SG&A per was Income expenses, $XX.X of quarter,

income tax compared year’s prior year were average during the to Interest adjusted from related the or amortization expenditures was an and quarter. to share increase stock year, underlying $X.XX quarter to per for and rate. $XX.X million. Capital reform quarter tax million $X.X favorably continuing $X.XX benefit for income $X.X the expense per rates million, in in the $XX.X diluted million compensation. prior in compared last Our to by and lower quarter tax share million tax expense a Overall, the operations was from impacted due diluted $XX.X the or borrowings interest and depreciation the million was higher $X.X was

low we significant average higher maintained While borrowings the experienced liquidity. during and we leverage quarter,

Overall, remain business levels making our units, and our ratios our including activities. with confident coverage supply debt we low disciplined Our parts strong investments the in high. and are to availability are approach

discussed, the cash to positive for overall previously John. while use we half cash As the positive With in the expect over thereafter I’ll that, call year, first back to turn flow cash turning and becoming of year. the

John Holmes

the we’ve to Thanks, and with as our Overall, as sales growth. year, earnings pleased start very strong are a had significant double-digit Mike. well growth we our

SG&A the as and of improved We’re sales a operating reduction in percentage pleased also with margins.

make pipeline see our remains growth. in and investments We’re balance both commercial our opportunities markets, government encouraged and that giving by support flexibility the our sheet us we strong, the disciplined and continued to of robust

in time very point, this operator to to for I’m includes $X.X from share, a share $X.XX continuing confident questions. for and and million. Thank of range reiterating billion it EBITDA of the and that I’m the interest team, $XXX we per our turn in back deliver at over are $XXX of to $X.X I’ll to for diluted the FY the to will guidance And earnings which continue you $X.XX million XXXX, in performance. sales AAR. in range proud billion, your a operations our strong range share of We

Operator

comes Credit you. with line the from Thank Instructions] question Robert of [Operator first Suisse. Our Spingarn

open. line is Your

Robert Spingarn

Good afternoon.

John Holmes

how are Hey, Rob, you?

Robert Spingarn

question on or you, Hey, for A of a questions maybe Services. John. couple Aviation

Expeditionary? may what have on touched Just and then of earlier, that, more that. - top but have I some around questions behind and realignment the strategy in you at left the line the a couple Just now level, this why is

John Holmes

Yes, sure.

inherent systems, the is lot that and core a strong felt supply that’s made it We On from perspective fact sense labor run a businesses to those management realignment, very business business, each of area. the in the programs synergy and in that alongside government more that two given and GOCO the have the other.

great far, so a off And to that’s start.

on As in doing I Department transition Services team a mentioned, has pleased our that is the job. and - extremely that’s been running State that’s this Aviation great with INL,

Robert Spingarn

how in think - into this to be grower AS? just than business it, the And So do Expeditionary? or rest that a of and feel what Is does that trending that do leave we next? year we clear about about lower how

John Holmes

fair Yes, right, comment fair question. or

it time, for a mobility low up they’ve The bidding but in is got few business, point. quarters, last pallet business, and of So, business, a feel last to. awards the where a moment business. actually and business number we about. the backdrop from they’ve now right a RFPs the We’ve that portion in containers, year, of the they’re couple that responded announced overall quite good shelters, opportunities it’s inside at of in -- That our larger at it’s

the given and pretty we’re the So, that area Expeditionary there. about the that the the the of business, well. pretty Services revenue is other but growth the mobility bulk we’re in - business doing business feeling feeling - composites macro that in good good is prospects about And environment

Robert Spingarn

And the AS, at then seems just in it going that you’re back now contract run over to that there. rate INL

John Holmes

Right.

Robert Spingarn

that maybe I’m core mature, we guessing, of about but think Should INL doesn’t level growth, that wrong. it’s at I’m this I the X%, growth now about think but want have growth to that

do the that from margins, about how dilution think this we growth and MRO and AS lower So activity? then both to from

John Holmes

half point operating year-over-year. saw were we up we Well, a level, the - margin

and as you and if supply the programs as the grow. in think a about great our outside strength to of INL we’ve deal trading in seen the commercial programs business, of government continue So, distribution the well businesses, business the mix, parts business,

rates you high businesses encouraged those as of know, MRO. And than we’re in areas. So, the very growth those all are margin by

Robert Spingarn

a XX% rate those good X%, for Is run XX%?

John Holmes

we’ve a growth to know, got of or goal you as long-term - would projection I XX%. Yes, X%

we the so, about range. that good And - feel about

Robert Spingarn

all Okay, right.

the at end upper you’re So lately?

John Holmes

Yes.

Robert Spingarn

volumes in little the of lighter just margins a bit going then your what And little took that and Okay. therefore margins, there? on on was pressure the a were MRO

John Holmes

that again? Sorry, Rob, say

Robert Spingarn

The there also the was INL, talked gross did - about of that you margins, but about see margins, was I lower something assume contributing? I some volumes MRO

John Holmes

have the volumes There lower have in did volumes the was. you Yes, out, we didn’t fixed a business, obviously. and that quarter, come cost cost the fixed do - MRO base in

- that QX, margin gross a lower expect regard. so stronger improve. quarter you that slightly gross expect much So We saw in lower to do in MRO in margin a we profit

Robert Spingarn

it’s under because much as just able to the look, the to to shop, and - the were season into just too that a not people put they speak, then summer was were just aircraft closer so demand? And

John Holmes

yes. Yes, phenomenally,

Robert Spingarn

Okay, excellent. Thank you very much.

John Holmes

just And more one more - just point. one Yes.

Robert Spingarn

Yes.

John Holmes

don’t businesses lose of mean, continue can businesses. we those. businesses those are invest the right in strength the now in want exceptionally parts see I doing I and the to and in sight to the and programs strength - see well opportunity

Robert Spingarn

Okay.

John Holmes

MRO. mentioned, those businesses in margin stronger as are, are those just And I

Robert Spingarn

right. All

I’ll out. step Okay,

John Holmes

Thanks, Rob.

Robert Spingarn

Sure.

Operator

Thank you.

of Our of comes from next CJS question Larry Securities. Solow the line

please? question, Your

Lawrence Solow

Great, thanks. Good afternoon.

of contract, of hurts the Just the MRO Aviation the an somewhat that’s lower, to to the in margin on margin is up plus, year-over-year the Services. from more drop MRO that opposed If it cost side INL volume? sort drop the follow was in as impact

John Holmes

as you increase Yes, period. profit saw came in point SG&A saw impact op X.X% as But bit again, of in while our a X.X% a INL saw margin, well we of percentage same operating little from margin sales the MRO. margin, down, we the so it - as in decrease gross

Lawrence Solow

more the - aircraft, issues every season, busy thing that, alleviated, is some guys strong for MRO, ones more you And I new quarter? the seasonal or could on in older you in or some delayed I the which pressure only that thought to guess, the deliveries in the the been year. that is - something that publicized has out up Is flying a air bleed this There stay that them longer was of feel air. kept some of normally not well some the seasonally which quarter into at

John Holmes

It mentioned, got. I we’ve could continue, as

those fill you’re reason. had Those operating the lessors have have all, historically, - opportunities been that’s right had seasonally, and that’s of first aircrafts extended. leases to slots. And So with those lessors certain we’ve

So we have fill in as some into go right focused season. if we those drop on but this slots we’re two, of now to or quarter slots. we’ve next one-off a that we opportunities number We the open I do, opportunities didn’t up see those do mentioned, got

Lawrence Solow

And more… the

John Holmes

stronger the through And business we as rest go seasonal gets data year. the of

Lawrence Solow

into sort building more seasonally? unchanged. margin improvement, your it you’re in which of a the that is of guidance, MRO… Is So improvement Is

John Holmes

Yes…

Lawrence Solow

everything? of mix a it Is

John Holmes

you’ve Seasonally, there. higher But programs margin and to everything. businesses of mixture are the a MRO. those well, get pick performing it’s parts Yes, businesses businesses Correct. are in again, very the up and

if of those you improved a the see bit have MRO, strength in So still a softness we result even little of margins of a as businesses.

Lawrence Solow

the the meeting is I then is you And your INL, Is pleased. of the - early I is profit the - mentioned early how it State sort it’s meeting about you - Is guess? - know your it expectations, Department it’s in the ramp. guys,

John Holmes

right yes, Yes, it we to we’re expect where be.

Lawrence Solow

And you said mobility, share I like guess on of the that’s then Okay. Expeditionary? lion’s

John Holmes

Yes.

Lawrence Solow

know I like you a you mistaken. that of have know, IDIQ, certainly the environment have the if do last for not think, small I I Can that a think discuss? that? better summer, you just actually think little in maybe this But obviously thought piece I’m help get quarter hand growth you little be you I bit will contracts secured, I better just the spending. it’s seems will

John Holmes

business balance contracts have about But hand individual just of individual do of year. that of filling growth orders the at we the that in the feel the We and those filling overall, timing was orders. good for

Lawrence Solow

that Okay. release you’re you’re miscellaneous taking assume in a couple not is your you just in adjusted show you’re But I calculation, comp And the not Do that out stock EPS out then stock - correct? SG&A comp. your you questions. of guys taking

John Holmes

we not. are No,

Michael Milligan

No, we’re not.

Lawrence Solow

to was little higher a confirm reason any looks And for wanted or it or? year-over-year just comp or that like I that good. Okay, stock one. almost bit double

Michael Milligan

performed higher. little been Just company well as like ongoing has has bit incentive the the performed well. result, expense stock programs of a and a the And -

Lawrence Solow

did Okay. obviously… it discontinued it And know somewhat ops, - year. last Last because I your you’ve than question, obviously, Afghanistan, more lost

John Holmes

Right.

Lawrence Solow

stuff. [ph] You lost a lot [branding] that of

John Holmes

Yes.

Lawrence Solow

at time I something Is business. this or going to continue drag? you can, to away there Is is it cash from might, your know, a can’t and your of Are some you potential be buyers, just flow? least clipped walk some that there or the anyway of

John Holmes

on of very above. that going it’s now the to and of a the big ours a that All We’ve of with business, soon. to process focus complete exit parties number right got active

Lawrence Solow

Okay.

a but business? time to be on So during you’re you’ll put confident year, only it, table fiscal not to sometime sell this able maybe that

John Holmes

Yes, that’s plan. our

Lawrence Solow

great. Thank Okay, you.

Operator

you. Thank

Our next question comes from Canaccord. Ken of Herbert

Your open. line is

Ken Herbert

Mike. and John afternoon, good Hi,

John Holmes

Hey, Ken.

Ken Herbert

John, should don’t businesses, provide that? sound provide very on year? you those, first over support you few give strength, least commented sense can about or specifically but trying maybe New last that I’m or the that bid know And maybe Hey, to and Air that as and you’ve activity any any maybe business several to business? of Air I or a the the get metrics distribution I you, times breakout to just Zealand or around opportunity pipeline the data Aviation Malta. or how with now, color you sort to but pipeline just opportunity set or specifically any a or points just Services, and the grown details help how of ask think can in wanted set the how the we to at or that’s the within compared growth, quarters you last programs to optimistic, programs on But and to maybe within congratulations backlog about

John Holmes

we’ve unsatisfying I’ll than pipeline. taking we’ve Sure. that an growing rate We We you faster good give overall our a about at market the for been and the - answer. feel been lower X,XXX this and at point, got supportive ago. healthy year is it a to cost base aircraft We’ve market support our aircraft marginal of was a than share. a new very

So becoming - and in pipeline competitive we about it very it’s strong. more we’re market that feel good remains the

Ken Herbert

growing Okay, do or just that you New Dubai really or And is that’s like Air this Zealand as deliveries? fly the you’re sense other opportunity is airlines a share, just helpful. increased get their or that airlines taking

John Holmes

well It’s both. with the moving It’s as market. as taking share

Ken Herbert

Okay.

And helpful. in growth maybe terms headwind to it was over Okay, the to of line the points five that that’s looks right the in think quarter. that MRO a way business, about Is jumping it? to six the of like as top

John Holmes

the don’t on individual we - wouldn’t to want rates. we Yes, comment growth

Ken Herbert

the Okay. I’m the just trying MRO open of the impact to of in get a slots sort sort the financial side? of

John Holmes

far Yes, I mean, you’re probably too not off.

Ken Herbert

Okay.

demand, slots on as season. the we the Could maybe now And of maybe and from the margins or MRO spills look to just as even second, through relief the you that a talk any out on roughly pricing a - helpful. with fill strong getting rates where, side? of be Okay, that’s those in And into like the that MRO flying sounds the that third you obviously, to maybe about and you’re It the move flying moving summer a pricing into seeing you quarter. the business? tailwind fiscal labor year? airlines bit obviously, are Can

John Holmes

remains market labor the Well, tight.

the time. much better do season, busy we we than this prepared tight feel year to did market last into at this labor Going deal with

encouraged we’re that. by So

this a right command market what our over in through we’re now. we’ve this on is customers. seen our expect are We performance performance, again and and strong and over leader to And with we focused

We command a expect the - pricing to We better yes. market. in

Ken Herbert

us, remind benefits Okay. rate? in that’s tax reform - then All the quarter. should assume of Can just full-year we that again, helpful. finally, the a obviously, the you for tax right, And what

Michael Milligan

on expect Going to forward, quarterly rate Ken, our we’ll to - XX% be we tax a basis. XX%

Ken Herbert

mike All there. you right. much. thank Well, pass very the perfect. Okay, I’ll

John Holmes

Thanks, Ken.

Michael Milligan

Thanks, Ken.

Operator

Thank you.

comes from Global. question Sullivan of Seaport Our Josh next

question, please? Your

Joshua Sullivan

afternoon. good Hi,

John Holmes

Good afternoon.

Joshua Sullivan

ramping what of - you KRW? is power-by-the-hour I’m the growth in contracts, some these relative parts that’s business, Just on of strength here what versus do airlines? traffic contracts the global air to that these curious won some on we the the just think the portion of that there you’ve how strength in of contracts

John Holmes

benefiting spend. they’re both well as And overall market we nicely. both growing. of the a share, They’re as growing taking result as Yes, growing again, are from

Joshua Sullivan

some know Indian factors this there gating but specifically? pipeline the any at What talk And progress the there, joint the about Okay. can about you then, I venture point? are just talked with you

John Holmes

Yes.

So for that. well. That’s asking going thanks about

under We weather to first on calendar slightly opening, working It’s are continue baseload to on first been we delayed there. of and customers. quarter XXXX securing in But facility. the be construction over track for due conditions we’re our a

Joshua Sullivan

Okay. need catch over changed then to And just we point. Does at the When see leasing business lastly, changeover soft aircraft that some at some at seasonal to assume those coming business here. do point? shift in I we right a do up all? see - be the

John Holmes

when we and one whether about the the with less check. that out, puts It has work So when from existing on not extended available means slots that it. is get that depends stay aircraft for transitioning operator lessors, if the words, is maintenance wherever to or other got of a work In it that fees. have with that operator the depends. we doing then operator those with on not leases lessor come If that talk and operator lease also that existing is the to it going another, extended the depends the company aircraft and aircraft us is with AAR’s, interim

depends aircraft. those the movement happens So of ultimately, what it just with on

Joshua Sullivan

it. got Thank Okay, you.

Operator

you. Thank

comes from SunTrust. Our Michael next question of Ciarmoli

question, Your please?

Michael Ciarmoli

questions. good Hey, evening, Thanks the guys. for taking

John Holmes

Mike. Hi,

Michael Ciarmoli

Just clarification. the one on tax

So I think, said for XX% full-year. to XX% you the

or kind should we one-time be items? we XX.X% expect rate, forward do a kind going of is a anymore or benefits linear - should expect we anticipate to that fairly going - So tax up of

Michael Milligan

favorable little over Mike, the forward. course that XX% - we’re full-year. We to the don’t XX% a going be quarters will of this in point, At the probably to Yes. we about rate

Michael Ciarmoli

talked quarter gross here in the with know, I open get And we of some then, on pick on it. is or mean, or the about obviously to is the margins? it gross backfilling predicated overall down, MRO. expect But gross the up up. the those you some that Should to the balance seasonal next margins. going it just - I strength margins the volume, you got Okay, John, those just slots pull slots, seasonal margins with of

John Holmes

Yes, are margins the the that continued seasonal in and businesses, you up the strength programs The business. gross which it’s said. parts pull higher margins and growth what

expect improvement we do see to So there.

Michael Ciarmoli

comfortable kind the in you’ve year? to have it, Got think, it. seasonal guys earlier shortages - pick get won’t of going And you the the any feel other you the up, got labor, even earlier you year, with back in experienced that, that

John Holmes

Yes.

As I better a mentioned, initiatives of that in things going we it’s that busier we of the place we feel number still working market. deal with number much But put a in order to tight are and the season. that into - the the

Michael Ciarmoli

And just some just it. I today. saw one, last maybe Got news then

Just Southwest, do work I guess, them. for you

any I activity on maintenance think and does implications you in have level co-funding their for currently that Southwest? the Maryland, do facility of

John Holmes

No, we’re not.

Michael Ciarmoli

okay. Okay,

just know… capacity them, that’s not more So it’s for to going

John Holmes

Yes…

Michael Ciarmoli

…it’s to they’re more like anything not that or that? be going in-house bringing

John Holmes

thinking with that conflict if the maintenance No, work the not be I’m in no. that would for release And heavy that’s of them. necessarily same we do

Michael Ciarmoli

Thanks, Got it. All Perfect. right. guys.

John Holmes

Okay, thank you.

Operator

you. Thank

from Our Market. Capital of NOBLE Klieve next question comes Ben

Your question, please?

Ben Klieve

All few from you. right. here. A Thank

you that our may on of here? INL you First here. program update can from front on what the kind like quarter, Within look think seasonality us

Michael Milligan

that as run a million We as we year are contract, we Day, it do fairly now Ben. the - that it as At spread Investor evenly throughout see about see hey, full we year steady. see articulated, $XXX the see rate. at we We it and

Ben Klieve

don’t growth quarters the you. domestic international a have row international factor - announcement Thank international you mean, another seem look next I’m months, front, roughly perfect. multiple on international the you of here as to you lot I to How XX how relative look here as do - it a here, - Is front, momentum see for growth? you. same? just over, say, above compared if know you growth? here? expansion And for you curious to on the just one after several do in Okay, it Is out XX I a the at domestic

John Holmes

growth Yes. focus This growth, international international quarter, we a in a but ours. domestic sales the similar rate, this got worldwide. both saw We’ve - team big and of remains a great

a As can of see capturing business. lot success there, having you they’re

this up take about joint India over getting excited We’re to a the east. and running and AAR there facility farther brand venture

is real expansion international ours. So a of focus

Ben Klieve

WASS any vehicle? IDIQ, on that Okay. task And update roll to off orders you then on when expect the

John Holmes

Yes.

under surprise So it’s timeline. another no the believe the protest got - go And there. protest, my we’ve under I about - month GAO to

So situation orders end by so given we is fluid a would the the hope that just But out. IDIQ, see bidders of calendar a we’d on number guess. coming of year, task the the first that the that’s

Ben Klieve

always Okay. a Yes, fair It’s guess. enough.

John Holmes

Yes.

Ben Klieve

And one last me. for

more So that always we want to you’re I understand data able than provide.

curious by into - the what more your Aviation I think that segment. long. two How one segment segments to I’m granularly, in do separately future, Expeditionary out reported a that you are about Services standalone rolling wouldn’t I in to forward? is be breaking that mean, reporting about or Given expect reporting for think current thinking kind up end going you’re Do segment here of you to future future going from perspective? you today going your you’re the

John Holmes

interest Certainly, detail. getting granular we understand more the in

and and dialogue that’s something about to assess. the segment we’ll the We are with ongoing reporting in auditors continue others an

Ben Klieve

Thanks back queue. in enough. Fair taking I’ll right. for All get questions. my

John Holmes

All Thank right, Ben. you.

Operator

a [Operator Robert from Instructions] We have Spingarn question with Suisse. Credit Thank you. follow-up

Your line is open.

Robert Spingarn

of just couple I Yes, a things. more had

On and I down XX.X% targeted SG&A, the you’ve think, XX%. you got to

we… do how So

John Holmes

right. That’s

Robert Spingarn

trending get when or about are mean, want to that get think do just are plan? here? from we should you you we of there? as ahead could tracking And you XX% …how I below you

John Holmes

the got target continues or target improvement slightly get got we’ve throughout rate. grow there. to with articulated to We’re business run continued We’ve the the back that Investor point. a below as to in XX% XX%. get to line we expectations at back with And this Consistent we at to what Day, year, that expect

Robert Spingarn

Okay.

ask wanted to you parts that trading. of in strength is that across I key AS to specifically some obviously, happening. so, businesses And about those

there related there market how some about the that parts market? in the Is that business? opportunities are some up that a strong of businesses are? Are disaggregated that bigger roll and others a make the of to talked You’ve trading

John Holmes

We’re investments a several our we’ve of got have away We’ve share. We’ve gone and successful over competitors A the in expanding They’re They’re wonderful right got. with than extremely opportunities we’ve touch our step those team markets. to anybody able there. able back years. to in team. through their material is to now very out better been to goal people. out been and last number And the take that else continue

Robert Spingarn

Is more risk see return we trading stay that there side? and elevated there is fuel bit secular start any we as little will, retirements, deliver a or new you slowdown prices some a on if aircraft the and in to that acceleration,

John Holmes

fuel the well we’re our material, on. which ours, of to Certainly, commentary close market, demand eye years, that our access But confident. something the out we’re the several a and competency is ability given material quite right we the coming is prices customers as see as over the of our keeping in next position the core now the for

Robert Spingarn

Okay. going parts to might the target? back have just areas there that in given you’d your And balance ability I then was to of just before, had Are to where M&A, some sheet support asked where like trading. about But M&A. is general, and lastly, you just that I other sort

John Holmes

looking. always we’re Rob,

always we’ve quarters, few last the which got for - right we’re our said we’ve invested opportunity. cash is eye being open but obviously always in the our - growth, seeing. organic As we’re And

Robert Spingarn

look The pipeline the for targets? that? How’s Okay.

John Holmes

things are out there. There

M&A, and our very valuations we to know, a always you healthy, going approach change had nothing that’s very there’s are approach. As to disciplined

Robert Spingarn

Okay, great. Thank you.

Operator

you. Thank

follow-up Our from next of question a Ken Herbert Canaccord. is

Your line open. is

Ken Herbert

as sort business. a Hi, John. looking a How your more to adding outlook growth into very do for calendar in of relative the trying business? number through you know a distribution see to get just the as been distribution platform of you runway I the platform. to OEMs your steady sense part growth just that on Are wanted successful OEMs distribution? on new once from I’m of distribution to of OEM your you’ve that utilizing partners sense bringing just or follow-up alternative new there organic I XXXX? just sort partners within to are getting

John Holmes

in good a it’s distribution see is for Ken, and growth in current distribution the of success partners ways. feeding - Thanks, see on itself healthy partners. lot see of a And we opportunities Yes. of We current pipeline question. a with that new then both. the very We distribution business

the We’re channels really service our because or programs business, to both business, with different for parts so known many customers, such we commercial have or this market our MRO becoming business. as our

We commercial a of had we real that turned which the multiple nice touch And Viasat. with great selling have customers and franchise. then also with into partner success a we’ve the deal points into OEMs DLA, has

a we of high the to pipeline continue So expectations business it’s is have growth. strong and that

Ken Herbert

I think the for Okay, United expanded that’s which investments the great. just when and MRO you’ve of push the lot know I into Canada business was very to seem you of MRO work to outside recently, And finally, on historically, reluctance obviously you, a great business, U.S.-centric again, it on India. have And States.

other But in parts envelope. I clear of mean, world. in So you’re what’s that I pushing we’re fleets growth seeing the a next? guess,

should business? MRO about India, think, think foothold. a of great the we how gives expansion you maybe But I international

John Holmes

the we now, running, - Right with of we’re now, getting getting that, because Yes. feel we’ve of initial point on getting successful in, launch India secured great success be focused And in would us being puts got that, us. on right some that in But and focused the there. ventures. a we’re position up front deal those that and other customers getting

Ken Herbert

Thanks, Thanks, Mike. John. Great.

John Holmes

All right. Thanks, Ken.

Michael Milligan

Thanks, Ken.

Operator

Holmes closing Thank remarks. you. Sir? over At this time, to I’d for John like the to any back call turn

John Holmes

and we’ll appreciate and you interest, questions all Really, very Thank the get much. time work. back I the appreciate to and the

Operator

sir. you, Thank

John Holmes

All right.

Operator

this your gentlemen, wonderful day. Thank participation have today’s and concludes you and Ladies a conference. for

at time. You disconnect this may

AAR (AIR) 25 Sep 182019 Q1 Earnings call transcript