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AAR Corp. Message Board

  • analyst112 analyst112 May 24, 2012 11:05 AM Flag

    10-Q

    In the Government and Defense Services segment, sales decreased $13,620 or 9.2% compared to the prior year. "We expect our businesses that support the DoD within our Structures and Systems segment may be adversely affected" by cuts in budgets. So they are trying to diversify quickly--Telair and Nordisk acquisitions are the vehicles. They overpaid for both --$325 million. That leads to more interest charges with the 7 1/4% new debt. Classic mistake--acquire another biz when yours is going South.

    They are also trying to recover $97million for Airbus on the A400M transport. Airbus will cut this program as France pulls out of mid East. Potential write off here.

    At best they may be able to keep cash flow flat but growth seems out of the question and DOD could hit them hard. Estimates will be cut after the awful results next quarter. There is no chance they will earn $.49 as they just reported $.41 ex the tax credit. Maybe $.35 and the stock will take another hit. Buy in single digits next year.

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