AIR - Earnings call transcript Q3 2024

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Operator

Good afternoon, everyone. Welcome to AAR's Fiscal 2024 Third Quarter Earnings Call.

We are joined today by John Holmes, Chairman, President and Chief Executive Officer; and Sean Gillen, Chief Financial Officer.

Before we begin, I would like to remind you that comments made during the call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

no future are statements these guarantee performance. of Accordingly, the discussed company's section file shortly. XXXX, earnings risks XX-K the and ended and and then the XX, are uncertainties for Form the on Factors These Form release XX-Q May fiscal to in the SEC XXXX, annual which report with year expect for the fiscal ended company's quarter XX, of February Risk we

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

call available shortly be of A for the on conference replay the after AAR's this listening call website. of completion on-demand will

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

John Holmes

joining afternoon, today Thank good you, quarter discuss our us to and everyone. year results. third appreciate fiscal XXXX I you

business. can our and this differentiated & do our we I expands component related to discuss I our the on into is very The to Support transactions this capability repair excited add would here a take opportunity Triumph the current the part Asian acquisition welcome now Engineering great both subsequent off of our business, again scales to about results, we the and next-generation of market. operation, of the just AAR employees the am to start, close meaningfully and the footprint segment, like family. end to Before which repair financing Integration with higher-growth quarter, and platforms previous Product what very, Repair is

strong Turning to the We another quarter. delivered results.

a record Specifically, sales offsetting from commercial XX%, to customers third year-over-year increased X% million $XXX more quarter $XXX than decrease government were customers. X% in Sales a million. of to sales to up

performance in by our up were year-over-year, commercial total Supply, Parts business. X% For distribution strong driven sales

demand individual USM, as remains and sales drove were exceptionally this engine tighter asset significantly another in down growth. whole which parts further, quarter were USM large strong, up market. This of even that supply reflects such whole but In sales transactions aircraft To break down. year-over-year

like to team that that, we opportunities made and more in when opportunities those difficult world XXX year have Airlines find. have said the be are example, act the to last For the the American able quickly acquisition to sourcing best from continue sheet arise. Having we flexibility balance to do even

distribution exceptional highlight commercial distribution would from that XX% by lines had to product growth recently This organic was Commercial wins. announced performance, I of I and like as the driven mentioned early existing ramp well specifically. an strong quarter as posting growth.

a very quarter year distribution to quarter had compared when lower a strong Government ago. a

expect and government have we increasing, However, moving bookings to return growth to that business been forward.

Engineering, were continue XX% our efficiency up our were as prior In drive I'm the over the Repair to & sales gains through volumes existing footprint. able quarter to hangars. of we with greater make proud year we

over power-by-the-hour XX% due flight our the the in prior hours programs up to In were commercial year TRAX. Integrated from Solutions, sales contribution quarter and increased

the Finally, prior to shipments in Force. the due a sales over U.S. were decline pallets quarter XX% Expeditionary year of Services, in to down Air

to a 'XX. our expect return we As DoD's in these FY pallets, to a the have and levels of more reminder, provider normalized we sole-source volumes procurement

Turning to profitability.

margins This they Repair higher are XX% X.X%, & was Parts in Engineering. Supply approximately year up and margin represents expansion and operating straight now before the driven adjusted margin Our quarter of prior expansion, COVID. XXth adjusted than our margin by year-over-year were X.X% quarter operating in from our

have We inflationary in environment costs, particular, which in in been an are progress labor this made especially proud rising. to have

were operations we up cash Our a adjusted continuing $XX With from generated diluted to quarter $X.XX flow share. of million XX% share per activities per respect share third operating cash, $X.XX to from continuing earnings operations. in record per from from

Our end just EBITDA. adjusted growth Xx quarter leverage of and in cash at under net EBITDA flow resulted

As delever. Support our acquisition for Pro finance net and with of to Product EBITDA entirely end our know, decision flow ability at the The QX X.Xx forma and finance in continued debt elected with we the growth resulting generation debt. was EBITDA. you adjusted the leverage acquisition, new cash to entirely the reflects to confidence

Turning to new business.

announced supply During military with multiyear distribution AMETEK new products certain a we the government. agreement the to to quarter, U.S.

support extension component services and flight with expansion We for contract also Airlines. a ASL hour announced multiyear

well announced in TRAX The award particular TRAX to provide services services demonstrates AAR e-mobility and EMRO the We as agreements that to also in of as power Singapore AAR the award. securing instrumental Airline as to EMRO Aviation. Singapore was Airlines combination, Archer

Aviation engine Finally, CFMXX-XB surplus we partnership just FTAI yesterday an This morning, to to and agreement USM our predictability further announced supply drives material provide into with leverages operations. Pacific. our long-term agreement Cebu

that, over the CFO, our Sean and to in detail. discuss results With the it I'll Gillen, turn more to acquisition

Sean Gillen

John. Thanks,

million quarter were year-over-year. Our up of $XXX.X X.X% in sales the

were Supply, in Repair driven of and Engineering commercial XX.X% each year-over-year, sales & Parts Integrated Solutions. Our up by growth commercial

existing standout Our newly won well. we as growth lines were sales product particular commercial continue lines and to distribution drive product a as on sales expanded

year-over-year. X.X% government Our were sales down

to Services. within see sales activities have government started as in Solutions Integrated a However, sequentially, distribution, our and recovery were government we up X% Expeditionary

commercial margin margin in in by year Gross as strong XX.X%, including Supply XX.X%. was from XX.X% government in profit the in Parts business high-margin was the as quarter, our Integrated profit business offering. up was profit gross XX.X%, well driven Solutions, TRAX quarter prior in margin performance our and the Gross

costs. included SG&A expenses, of quarter $X.X amortization $X.X Support million of investigation acquisition Product expenses of million and transaction were and Triumph million. the in $XX This million $X TRAX expenses,

SG&A Excluding $XX.X items, million sales. of XX.X% these was or

that Product not Net included the $X.X million $XX.X will acquisition which to going for financing quarter for Support forward. the of was commitment interest related expense million, costs recur bridge the

This activities in investment the of inventory $XX.X specifically operating sales Parts operations quarter. by net in significant is provided we mentioned, Supply, as distribution, flow which, Cash growth from commercial million. was continuing in had

was QX of end the at X.XXx. leverage net Our

Product Support indicated, facility, we X.XX%, consisting acquisition the acquisition. from million with revolving of of we upsized an incremental rate John in credit $XXX financed unsecured As our new notes approximately with $XXX draw of debt with and conjunction $XXX an entirely interest which the million by million

balance In with financing approximately million QX, floating the and we be interest the expenses. rate revolver of and consists from notes expect the amortization expense to million, $X.X our net of $XX.X the associated rate which fixed

accounting. associated income our Going forward and operating consistent and EPS noncash with will adjusted purchase our for TRAX, exclude reporting adjusted amortization with expense

results in the as to QX integration next as transaction costs recognized exclude XX that we Our expenses to well will expect XX also months. adjusted incur over

generate $XX of from we a Support synergies and As run rate full will expect we year indicated reminder, acquisition fiscal the in million accretive to that expect XXXX. Product that be it

to operating expect be slightly dilutive profit. interest as associated exceed it we acquisition QX, incremental in to expense However, the earnings with modestly the incremental will

XX.X%. the effective indicated not rate savings we basis, and annual will million approximately step will we $X generate next adjusted tax tax adjusted will of years. our up previously, As which EPS, This our approximately tax also XX the impact tax for GAAP to we of be or rate each expect cash

confidence and and in the partially prepayable merits reflects Their allowed facilitates that their revolver to to our acquisition forward. take John, our AAR commitment I of thank back support the flexible Before the acquisition. $XXX to turning opportunity us additional of delevering financing their to finance would the group call of the our with like the million to acquisition, debt for going this bank

to Thank will John. you attention, over now I back for your the call and turn

John Holmes

Sean. you, Thank Great.

Regarding and the the parts means associated good market for is new requirements for This continued forward, and well aircraft generation demand aircraft current GTF engine will issues remain maintenance news AAR. as delivery challenges going as the and other strong. the

global means to While this existing supply demand. significant high to continue sourcing we this USM will coming to we remain growth distribution network also secure well awards. continue meet new commercial tight, from contract This sustained as will material as expect demand for lines activities where our to that our means both leverage

'XX, Miami to that ground Engineering, our Once am complete we & to higher Repair these In ways both this our the network. quarter. to to utilizing in quarter. and XX% expect excited we FY approximately look Oklahoma meantime, throughput, for this drive MRO will airframe growth our we capacity I will in and existing did our add In on facility footprint expansions announce break City like

a year. Integrated strong we made have of In opportunities, we Solutions, expect calendar commercial this and will government awards and pipeline be both

of encouraged also high suite by the EMRO TRAX are level customer interest of the offerings. We in

approximately X% acquisition. growth sales. contribution expect to expect to Regarding which the contribution acquisition from the $XX we reflects revenue of the in Product the in Support Support QX, margins from including adjusted operating of teens, high the And mid- approximately million $XX Product million accretive overall, we

More move into our are 'XX win. and is the we Singapore to recently positioned growth our the margin acquisition well incredibly as as behind announced combination The FY the generally, is working and TRAX we well thesis out proving evidenced beyond. by continue expansion and

We high-margin opportunities the acquisition are incredibly excited numerous Product and already team that customers. our our Support about with differentiated the capability brings, is pursuing

executing extremely are strong, focused remain we end our on growth Overall, strategy. on and markets our

the With for that, questions. operator it I'll over to turn

Operator

come And will Instructions] Research. line Melius from of question with [Operator Spingarn our the Robert first

Robert Spingarn

lowering business. airplanes it's long curious get driving of I'd is go demand work or comments couple on if here. How business. on I How longer. them. just is a few to a this that because it thought concept that's of ramp, an service affect MRO questions the your affecting Parts older because more you airline a increasing slower leaving OE aircraft -- have schedule I I'm can't the enough And different John, first, out back of really, to in that

John Holmes

operation, really The you're a first to the to it's drive. respect the a Parts, utilization, point It's generation more very longer great parts aircraft very fleet obviously, Yes. is on going and your absolutely. in high requirements that's question. seeing -- current With

Parts the it's news for So business. good

more the For over will it be maintenance requirements. will heavy It positive. medium drive maintenance business, term, a the

expected maintenance for event. going aircraft be to that going retired are up got You've that end were now in to another

the to immediate a schedules adjust movement However, our like things term, the airlines airlines move Southwest, is X of maintenance getting of customers, to OEM. of as driving the lot the United delivery big out around in they're in look at that new the to schedules it and

immediate little it a the bit churn positive for balance, on for us. in will creating be us of a But it's term. So the

Robert Spingarn

then Is sequentially growth the various solid, year-on-year Supply, the But there a through The through little a wanted of higher, think had might we the about just quarters, I to quarter? front to bit line expected then focusing in you quarter. on quarter, was Okay. top prior think Parts just have when about look growth X.X% we at And on good months margins. and how we terms trend? X.X% do back the of comparing of that of quarter but

John Holmes

You've I I trend fairly there. to I it's But much that the really buckets X right? a of kind parse would throughout of in X.X%, wouldn't got major point quarter. mean steady.

got level new those you take You've distribution to want USM. I And parts got X then within you've and buckets, a further.

commercial And our if you had So parts new mentioned, year-over-year out in about you that organic XX% outstanding parts that's We're growth the look business, an there. at just set, as distribution. in quarter. peer new the we best see distribution, commercial

we're distribution way going. the So with really is happy commercial

had than year, a lower also lower last prior seen talked quarter very quarter. good strong year. had calls, last bookings, this This year. have quarter. earnings a government Last we last decrease in had believe we was it a It quarter. bookings we about year, We throughout distribution and I just we've did Government seen had than

now. effects the of that feeling we're So

bookings the On the we increasing government several months. flip side, now last seeing are

that return we distribution So the expect will in well. growth government to drive as

parts a on parts couple side. -- of the commercial on So moving distribution new the

to we flipping aircraft are moment this USM, parts whole easier in levels. sales large packages into at are day-to-day USM, time USM. parts kind to saw double-digit of down whole that mentioned, sales. The record asset We growth then over to part break And day-to-day over engines, sales, in which and flipping X we day-to-day are part buckets: in the the then sales are as source. the at and Those

them. The whole So on reselling to come larger our assets, those we're the we're and getting those hands and by. are assets, dollar them repairing harder

the continue large the our to And global sourcing decline we to of saw on meet team network right year-over-year focus a demand. sales. the to is in asset so that obviously, to assets leverage get hands And the

I wanted to So through. take you anyway,

You And got a more moving that few you different a gives hopefully, below color. X.X%. parts little that

Robert Spingarn

if of components why to ago, aircraft, the aircraft, on somewhere, the that full to that the et service. smaller guess Yes. doesn't USM moment parts in cetera? I that to or want the a that put easier by you an you that of and Is made And airline are full is go, want let just comment a batches aircraft it back they have reason? than full come --

John Holmes

Yes, that's -- exactly.

You shops are terms service. in And whole full. are full The slots right the of now. want then in the aircraft engine engine,

it to And so if spare operating. a engine, on you've want and wing you're got going a

Robert Spingarn

just then on engines. one more And Okay.

market? the and extending airlines MAX old engines, networks have LEAP. engines, MRO in any Pratt turbofan and these maintenance lives Given geared getting with GTF the into we their you interest still and see and for situations, of build-out aircraft CFM a engine the on with the Do

John Holmes

are At et MROs the up question frequently. relatively biggest trading MTUs, comes Delta TechOps, this in customers our business the themselves, cetera. engine time, That the

with not we're customers. the so our competing of And business in

to engine MRO across broadening the Our preference support to the is demand supplier network. be that

Robert Spingarn

then one And margins. quick one just Sean on for Okay.

they've been Just doing well.

is business fiscal accretive at double-digit And operating with demand within in airframe the margins, Repair margins close could these 'XX? then be to Engineering, acquisitions, & Parts you point the for strong, strong being TRAX asset Your to and MRO. some Triumph

Sean Gillen

Yes.

focus. think that's certainly the I

heard if the Supply Part mix Product As be all continued QX, John of the of we'll Triumph say, think and towards acquisition that's TRAX, impact the getting And in about X%. margins we to XX%. think as you that around Support as accretive well shift and you

Operator

of come with Bert will Stifel. line And that from the Subin

Bert Subin

there. past sales like questions follow of you one up though, quarter, the there. mid-single-digit of imply high-teens would the fourth just lot organic the we did If about you X% gave think the to this to for pretty contributors to a seem quarter. It on guide a versus growth maybe growth to the mid- upbeat seems John, just outlook

is put Is sequentially, it USM better. like just But getting maybe parts So MRO. what's Maybe to better, comps? going driving in sounds slowdown? is think of the, guess, it bit little it distribution you I I is it's volatility together, strong. Do there's little a government a seems all because decline it like if still

equation? just understand So can help you me that

John Holmes

performance Yes. strong part last it of comps had is I'd obviously say some year.

But in So expect driving it. see government, your that's certainly a quarter. we government, would would not improving a on comment things meaningful we bit overall, that of in improvement this say I but

and government to similar but strong we So a in much real as commercial in distribution as trading, going offset see dynamic as continued commercial QX in in the as well have you're the by performance market. in hangars that is softness

as FY we As match through be will nice commercial a expect we strength markets expected growth in move to continued return to which our to well. the government, 'XX, in

Bert Subin

large can a the government seems the 'XX, at look if things for indicate On President's budget point, granted, and like request FY lot of change, I it cycle. a to retirement

toward to get government start to increased sustainment optimism there's FY it better indications Because we And like so than that's into Are far, that really 'XX. once seeing get of any spending. that? you different seems something not going

curious from. just I'm that's coming So where

John Holmes

the yet We're that translated Yes. hearing hasn't thing orders. into same

look inventory levels, we support, levels below you without that meet of the state to pretty across much the expectations the sustainment. they If for the exception, at levels, stated platforms inventory are

expect levels. to So at absolutely and stated pallets do a those some we particular parts meet replenishment in point, in

yet. the haven't point We seen inflection

leading are we that translating distribution, in significant that not I a to into seeing be starting and bookings As government inflection. better call indicator something mentioned, better could would But which see we a trend. yet it's months you're

Bert Subin

steadier the is MRO differential in in more clarify, parts is the is I parts opportunity? guess, so and weakness the is government, to -- of Just sort

John Holmes

is distribution in business, like business. yes, parts has the opportunity, been MRO steady. the government Government The

in opportunities at programs government government we've business, the chain so grow AAR, For overall got to supply the program.

We a Expeditionary business big. And you'll improvement there the you've then see see while, of that through. awarded. year. they're that take to expect out awards bids not business, have again, number out once happen, there the this have mobility We been come awards pallet when but start to calendar they yet got the would come They a

in overall government different few So we the AAR a business. got buckets

Bert Subin

it. Got

Okay.

one for Just last Sean. one

opportunity. And then post the moderate that start You I into flattish, can that, how of Parts any guess color about maybe cash? XX% Supply Or getting we does you an free maybe about of just an to some maybe color gave year. the post think distribution? parts as to I falls opportunity, is get assume, that? give seems a parts think Does follow-on It you parts better start USM, next but some closer where some to us as distribution sort to to there's growth? like as Can on breakdown that distribution there's matures, of on

Sean Gillen

segment, think Parts And part if be Yes. will you for in improvement margin XX%, USM Supply And Supply of distribution, about company, to and is specifically next think do part company has as the outlook think led year, the that you but that help I big next accretive the also the growth continued year. we to close margin drive to Parts a growing margin so by and highest highest-growing operating improved that. will been about the overall think commercial continue in

quarter, terms million of quarter. cash And in operating $XX then flow, cash this of in good free

look this growth. little investment inventory bit help the heavier a fiscal that earlier on drive to year, If some you of

dynamic, about, that's to the we material USM demand position in new to be continue a on meet we that, flow this well cash generating market, the caveat big a as performance with to source good talked little think that year, that better growing. and John cash get as remains bit As I delevering into EBITDA, growing see fiscal obviously, and next as free on a focus you'll

Operator

Sullivan Benchmark come the from Josh Company. of with The that will And line

Joshua Sullivan

prepared looks cycle in at the sense is When GTF remarks. the this your on your long view out supplemental GTF how like peak worker? called you issues What's John, on the your in it just point?

John Holmes

very think right industry the to is popular now. in ask I a question that

So aircraft anyone know introduction, we I is say, I else. that that that, overall though, measured expect don't slower and you in between demand speaking, generally insight than could better the be years. I What give would elevated to the

Joshua Sullivan

on with parts we point volume it. similar Is increase relationship, of to CFM expect a an this to relationship down pipe? point? CB expecting the Got the maturing additional Got you're follow should And it. FTAI where at and then relationships in the

John Holmes

grown The the relationship from The of with and have grow FTAI will is relationship has continue partners. expectations, that both to initial us going well. beyond great very They're very, expectations here. it

So that business, the and that expect to grow. is USM a meaningful contributor to continue we to

Joshua Sullivan

it. far as it Triumph the Got Is airline suppliers? third-party capabilities internal or with you particularly as organic? markets, think assets, And just you're you biggest into share what taking do Do the expansion is? from then Asian opportunity think

John Holmes

set facility Yes. of Great got the Asia. the question. have We they the -- about attractive most Triumph side. in in the capability acquisition the as those over that's And there, the up next-gen the particularly things was AXXX. of They've like very majority are unique fleets on where capability platforms the one going. They -- with world XXX, to into are move structure and

We're to there as that competitive well to the facility. repair to And the side fleets there on are to will that's as the we lot as accessory investment growth the region region we and comes be capability broaden new is of see the back that those the of providers structure make large expand X in of at limited as work a capability because those -- capability we fleets. component the west. support mature, mature. Furthermore, the can in looking opportunities aircraft X organic set So that we somewhat in only the opportunities

a solid lot So now having we opportunity Asia. a very footprint see in of

Operator

Struhsaker from that And line with Truist Sam come Securities. will of the

Samuel Struhsaker

for addition was that talk for thinking in how to bit maybe or combined? a the profile cover that, On I forward. trajectory as maybe new Ciarmoli more cash you little more Mike kind kind costs the just of the evening. of if flow moving then well a about in integration business free curious, detail the little the can this guys acquisition in about of And

John Holmes

and -- Sean here. Sure. I want to take about you looking can second. at the He'll talk integration I'm

Okay.

Triumph because we of got in integration, with XX to get So take months. obviously expect of that facilities the our the that the take costs More to be of of the we'll overall and and requires to XX couple which the time period of to of translates back half from transferring some done cost. real be other that's work a up will to work integration Triumph is government the that setting reconfiguration physical sites, investment site,

that outlay. In advance we're be Triumph is areas, today near of do certain do. quarters we work we able that, that than today from we few work that in to perform a has though, believe So there and us capability that cash away more to profitably identical Triumph the will

And higher capability so transferring synergy the transfer to no at from we AAR existing start to little benefit environment volume already profit by investment. exists a realize that sites requires will And volume to site. were Triumph to

not a a long that the integration throughout beginning, XX-month way it's cash, and it say ramp XX- will period. to So of at lot the to

Sean Gillen

And little said of add John over to million excess be period run of integration integration talked rate onetime expect, time a I'd that of in that the of $XX we've terms just synergies. expect in to the the I'd costs kind cost about.

continue that, to years to delever flow than think a next couple bit years, opportunity tends changes over of sure support is over be you've to past focused cash work. inventory the seasonality flow. disciplined working of there. and specifically I the terms to to nuance making think, also cash cash generating so, the really only And QX Supply. seen obviously, do but on think put QX. lot to what I trajectory, here. X.X a In notable Other free Parts There's we're we've got nothing of net than money to stronger real the little our We'll of I to free quarter around a capital

Operator

with RBC Capital come Ken Herbert will that Markets. line of from And the

Stephen Strackhouse

for This is Ken. on Strackhouse Steve

kind it more couple really wanted on just one we were asked even like margins realized double back thinking the a looks kind but to and it might there give sounds kind have couple of guys to of Is It your time. I ago. just or about within & of are driving kind Day, in times, just click like rate or Triumph, of take kind better Investor quarter well ex Engineering maybe anticipated. margins of a I X those you higher? run So doing of of a you months Parts than Supply Repair that's on margins things

John Holmes

Yes. we I would say that overall, of that the team the is executing plan envisioned. ahead originally

but of once City facility the the to base. and in fixed already going in online Oklahoma cost nice little You're Repair Supply, we're that which -- group, expansions of cost the by Parts base out & really Miami, Engineering really, group. And strong we're away, definition in to Repair I'd and the once Engineering is leverage again, seeing expansion a that's advantage growth a execution higher, that those take ways come like the fixed & add existing,

well. And so as drive those further should expansions in improvement margin R&D

Stephen Strackhouse

you're one on you profile But is now that then digits of internally? change the any is high more, the growth any thinking maybe thinking headed a guys And the change in [indiscernible] how in-house. kind month that there, realize full Great. there in margin in Triumph for terms just about or about maybe single have you're update. there of I

John Holmes

about even color offers would can know this of there closing, what I cross-sell lot Triumph lot that ARR to where gone more what know and No, the of the we've with areas business as what only opportunity we gotten team, as really, announced give since business. There's we we're can take a The described when is consistent the a I lot excited would to with of a offers. it's really other we've we where say we acquisition.

set we're got we're that great they've great excited team, a So now a of and together. capability and

Operator

line will Blair. William Louie the of DiPalma come that And from with

Louie Dipalma

your lot John, there on focus components? the question, in you to a individual cost Triumph with originally little deal answer a revenue each announced, mentioned but we are But this was the deal? what part the the When the was sum better aspect. Triumph about how should synergies last opportunities of for bit make the the think a to the than of the deal

John Holmes

Sure. that, hard come number I $XX about buckets. you'd of would above general. footprint synergies very have we've a a cost and from talk synergies that The minimum. Over that feel that couple very, those are we in described, million at good just rationalization and about

the opportunity The I to today to get lot the before repair lot our spend to vendors power-by-the-hour is money, repair. of with out of AAR, other first, We revenue, a we first in-source work commercial money send are programs. a support managing. we repair lot And that we business. And also to acquire that trading charge through a of repair, we're in spend repair of most parties that repair in our not Triumph. millions to goes assets that of

got earlier having time North sales February, world, in this best the meetings month point $XX in we've and as So spending number I be commercial over would above as of in to aftermarket your there's here on the million. And in really America. a Europe, Singapore that synergy well in trading. opportunity believe in then as to in-source those repairs, and well programs both the from general, team It as a revenues commercial

capability sell existing extremely is we margin, team excited sales Triumph that Our to customer higher to the get with higher our base. engineered

our And from through that as there'll some to the with so as while channels. of we would suggest Triumph be volume sales haven't returns it yet, team lot had sales opportunity our quantified we've of internal largest AAR's conversations that put early a initial customers the well

Louie Dipalma

of X-year the I yesterday, was when TRAX. believe, And acquired you've Great. anniversary

John Holmes

little was. It We Yes. a celebration. had

Louie Dipalma

how grade you I on Yes, what wondering, are it has And debt, and the expectations like? look has the deal a an be had A+? pipeline the was bookings report your and if the how card, to does the deal met TRAX would were

John Holmes

The overall, we a of well, I it's the definitely highlight celebrating in or but where deal. mistake made Chicago, versus expectations couple not only we Miami deal very, was and exceeding has XX would it's very think say I things. yesterday meeting gone TRAX as degrees, about the

big airline AAR a deal announced fleet not weren't with that if the happened and deal for for we'll very the have relationships happened Singapore, ultimately, be in that's that that it which in would a customer large TRAX, SIAA, SIAA. First, at big with the complicated had we a speed it with we

are of with relationships, So product with TRAX that putting with the bigger is certainly large of today right that, of backing AAR carriers the a they way other they are it the for enterprise be tracks a smaller AAR. believe there where great that to a great in I would that in company considered now, played very out don't thesis number there. Related a if weren't together with competitions

So doors in open absolutely And first was out. the priority first year it, proving that's since owning for our TRAX. to

But on of The for priority was little we time former channel very on opportunity than more parts. a an the to the have ultimately a ours. to still parts focus the the platform We've sales that more leverage as That spending the much former still we anticipated to pursue. is strategy focused absolutely element been is is might TRAX network of year. AAR bit something second that and a first the the in intend TRAX sell ultimately probably through

Operator

a with have do from follow-up we Melius Robert And Spingarn Research. question

Robert Spingarn

And here. we'll if that could mentioned each be? would for that touched sheet. process one and have start might I on you we of give of balance you I you, us in -- than timing talked on pace maybe about. Sean, go -- as later? they both and And you of what just the just Is might how color sale things Services actually I just already the with something quickly, Expeditionary the factor on delevering rather be wondered sooner that you, some that

Sean Gillen

Yes.

net target have acquisition we first, X.Xx back obviously, to pro forma. leverage maybe on the of Xx, a of at X this Just

get is focus that's range I be of flow down the for be that. you get just business. a there. divestiture and that we'd just EBITDA And growth the combined an -- I'd Obviously, high to to at there would months quicker. associated bit would organic say divestiture cash any across generation That'd with and the no the that be time XX back to line So looking XX be to Xx, end would think

Robert Spingarn

Okay. can to on all want any put around Is is you color I divesting? say other there we that? that mean,

John Holmes

focus say not is that, core forward. just going to that future of would the Expeditionary obviously, we ours. is highlighted have And Services deleveraging I a

balance our was in a differently. pursue to However, sheet it bit earnest. have necessarily balance made quarter sense wouldn't Obviously, looks where the a little that sheet ago,

we're to a lot there. So attention more process paying a potential

Robert Spingarn

Okay.

there list might And a of bit. I suppliers? And of good. process of can something to I quickly. Triumph early. other lengthy business, quarter you little then question not yours your I PMA in and That's first, PMA going not in the approval is their this parts is about some process? together? from in agreements table. starting happen last -- it's know like where parts -- John, parts back to Okay. go PMA a aggregate that this somewhat I distribution a that associated And gridlock in PMA talked then it just to OEM impacting your to of to the on with any imagine parts the we push you relative with see? about programs to the you But the you FAA it's run is -- the Are afoul could accelerate putting brings on this you last wondered is, have are what airplane part to what the the cost just position wanted said so of

John Holmes

of PMA Yes. ours, focus very actually of Great because And early asked ours. set of a questions. happy focus is that I'm you about an

of So just a couple thoughts.

for AAR's own to it internal continues effort, along all, of move First PMA well.

parts Again, of this your seen with, we deal point, any of small have sort about things approval have are slowness, part we there. based effort, we're office so moving question, excited potential now right that's to for the at on the very last not inside out related We but along. AAR, the that several a of

nice a again, on conflict of in healthy PMAs As for is it Triumph, distribution about than agreements. a would small I portfolio, before more to we're got not in were that it revenue even way portfolio, of relates margin closed. balance, that our excited healthy any the the and They've PMA potential say generating with but we any

So interior parts. largely

play distribution. aircraft different of where a So it's totally than part in the we

encouraging. that's So

not in portfolio. really there other engaged this that's marketing they PMA The is activities occurred for meaningful thing any are

have their which we have, portfolio distribution our think grow they that again, on, existing sales just market, the the by they channels we their given So that just impressive putting can, are PMAs PMAs of parts small number through PMAs. to of

Third approval set have. thing they've that is we is and and got I what that further advanced procedures mentioned design an engineering process of than PMA

as the able parts we more hangars, in PMA because good terms X,XXX on have data year of and data as a a of working we're make in lot of much see. collect that they to a we aircraft what aircraft our than candidates might have are in volume We

access data procedures, our engineering their, approval advanced a combination. that's you and if say, I So would combine good plus more to

So we're as guess, relatively portfolio. comes growth. of long very these revenue and the encouraged with you Having set again, PMA small said overall the but all answer inside likely long high AAR to, that now dollars that, together, of are a today high a we're it growth. I But questions, by margin know,

Operator

showing like time. at to call management would remarks. questions I further closing no turn the back now any I'm over to for this

John Holmes

listen, being here and look thoughtful the questions, forward time we Thank interest back quarter. very you the and we really the next to appreciate with you. everybody, Well, and

Operator

you for Thank participating. program. today's concludes This all

You may now disconnect.

AAR (AIR) 21 Mar 242024 Q3 Earnings call transcript