AAR reports record fourth quarter and fiscal year 2023 results
- Fourth quarter sales of
$553 million , up16% over the prior year - Fourth quarter GAAP diluted earnings per share from continuing operations of
$0.66 in both Q4 FY2023 and Q4 FY2022 - Record adjusted diluted earnings per share from continuing operations of
$0.83 in Q4 FY2023, up15% from$0.72 in Q4 FY2022 - Fourth quarter cash flow provided by operating activities from continuing operations of
$45 million - Full year sales of
$2.0 billion , up9% over the prior year - Full year GAAP diluted earnings per share from continuing operations of
$2.52 , compared to$2.16 in FY2022; record adjusted earnings of$2.86 in FY2023, up20% from$2.38 in FY2022
WOOD DALE, Ill., July 18, 2023 (GLOBE NEWSWIRE) -- AAR CORP. (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, today reported fourth quarter fiscal year 2023 consolidated sales of
Consolidated fourth quarter sales increased
“Across our domestic and international markets, the demand for commercial air travel is increasing and our airline customers expect this trend to continue. In turn, we have seen sustained high demand for our services which drove another strong quarter of growth,” said John M. Holmes, Chairman, President and Chief Executive Officer of AAR CORP.
Gross profit margins were
Selling, general, and administrative expenses were
Operating margins remained consistent at
Subsequent to the quarter, we announced an extension and expansion of our United Airlines MRO relationship and a planned facility expansion in Miami, Florida. Under the new arrangement, we will increase our narrow body maintenance capacity to provide United Airlines a minimum of 10 lines of support across our Miami and Rockford, Illinois, MRO facilities. To support the additional lines of maintenance, we will add a new three-bay hangar adjacent to our existing nine-bay facility at Miami International Airport. Miami-Dade County has committed to reimburse the expected construction costs of the hangar.
Net interest expense for the quarter was
Cash flow provided by operating activities from continuing operations was
Holmes continued, “The sales growth combined with our actions to improve margins drove record earnings in the fourth quarter. We also delivered solid cash flow, and our balance sheet remains exceptionally strong, which will allow us to continue to make growth investments, as we did with the acquisition of Trax.”
Fiscal year 2023 results
Full fiscal year 2023 consolidated sales were
Full fiscal year 2023 income from continuing operations was
Sales to commercial customers were
Holmes concluded, “I am exceptionally proud of our team and the record results we delivered this year. We expect continued growth in our parts business due to increasing demand for used material and the full ramp-up of recent new parts distribution contract awards. Our hangars are expected to remain largely full throughout the year, and we are excited about the opportunities Trax provides to help further strengthen the AAR value proposition. Our new business pipeline across the commercial and government markets remains strong, and we believe we are well-positioned to continue our growth and margin expansion.”
Change in operating segments
Beginning in the first quarter of fiscal 2024, we implemented a new reporting structure which resulted in the separation of our Aviation Services segment into three new operating segments: Parts Supply, Repair & Engineering, and Integrated Solutions. In conjunction with this re-alignment, we have also changed our measure of segment performance from gross profit to operating income. These changes will be initially reflected in our condensed consolidated financial statements for the quarterly period ended August 31, 2023. We expect to file a Form 8-K later today that will provide certain historical summary financial information under our new operating segment structure for fiscal years 2022 and 2023.
Conference call information
On Tuesday, July 18, 2023, at 3:45 p.m. Central time, AAR will hold a conference call to discuss the results. The conference call can be accessed by registering at https://register.vevent.com/register/BI6e42da77ed2046a0b652f6417faa6d56. Once registered, participants will receive a dial-in number and a unique PIN that will allow them to access the call.
A replay of the conference call will be available for on-demand listening shortly after the completion of the call at https://edge.media-server.com/mmc/p/4efwk2rt and will remain available for approximately one year.
Investor Day information
AAR will host an Investor Day on Thursday, July 20, 2023 at 9 a.m. ET in New York City. During the event, AAR’s senior leadership team will provide an overview of the Company’s strategy, markets, operations, and key growth opportunities. For those not attending the event, a webcast of the presentations and accompanying slides will be available in the investor relations section of our website. Following the event, an archived version of the webcast and accompanying slides will be available for approximately one year on our website.
About AAR
AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through two operating segments: Aviation Services and Expeditionary Services. Additional information can be found at aarcorp.com.
Contact: Dylan Wolin – Vice President, Strategic & Corporate Development and Treasurer | +1-630-227-2017 | dylan.wolin@aarcorp.com
This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, which reflect management’s expectations about future conditions, including but not limited to the strength of the commercial and government aviation markets, opportunities for and the execution and success of growth investments, and continuing demand for our parts and services.
Forward-looking statements often address our expected future operating and financial performance and financial condition, or sustainability targets, goals, commitments, and other business plans, and often may also be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms.
These forward-looking statements are based on the beliefs of Company management, as well as assumptions and estimates based on information available to the Company as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors, including: (i) factors that adversely affect the commercial aviation industry; (ii) the impact of pandemics and other disease outbreaks, such as COVID-19, and similar public health threats on air travel, worldwide commercial activity and our and our customers’ ability to source parts and components; (iii) a reduction in the level of sales to the branches, agencies and departments of the U.S. government and their contractors (which were
For a discussion of these and other risks and uncertainties, refer to our Annual Report on Form 10-K, Part I, “Item 1A, Risk Factors” and our other filings from time to time with the U.S Securities and Exchange Commission. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The risks described in these reports are not the only risks we face, as additional risks and uncertainties are not currently known or foreseeable or impossible to predict accurately or risks that are beyond the Company’s control or deemed immaterial may materially adversely affect our business, financial condition or results of operations in future periods. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| AAR CORP. and subsidiaries | |||||||||||||||||
| Condensed consolidated statements of income (In millions except per share data - unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Sales | $ | 553.3 | $ | 476.1 | $ | 1,990.5 | $ | 1,820.0 | |||||||||
| Cost and expenses: | |||||||||||||||||
| Cost of sales | 445.2 | 386.3 | 1,620.4 | 1,506.8 | |||||||||||||
| Provision for credit losses | 0.8 | 0.3 | 2.6 | 1.2 | |||||||||||||
| Selling, general and administrative | 70.8 | 56.9 | 230.4 | 202.2 | |||||||||||||
| Loss from joint ventures | (0.2 | ) | (1.2 | ) | (3.2 | ) | (2.9 | ) | |||||||||
| Operating income | 36.3 | 31.4 | 133.9 | 106.9 | |||||||||||||
| Losses related to sale and exit of business | (0.2 | ) | (0.4 | ) | (0.7 | ) | (1.7 | ) | |||||||||
| Interest expense, net | (4.7 | ) | (0.6 | ) | (11.2 | ) | (2.3 | ) | |||||||||
| Other income (expense), net | (1.2 | ) | 0.1 | (0.8 | ) | 2.2 | |||||||||||
| Income from continuing operations before income tax expense | 30.2 | 30.5 | 121.2 | 105.1 | |||||||||||||
| Income tax expense | 7.0 | 6.6 | 31.4 | 26.6 | |||||||||||||
| Income from continuing operations | 23.2 | 23.9 | 89.8 | 78.5 | |||||||||||||
| Income from discontinued operations | –– | –– | 0.4 | 0.2 | |||||||||||||
| Net income | $ | 23.2 | $ | 23.9 | $ | 90.2 | $ | 78.7 | |||||||||
| Earnings per share – Basic: | |||||||||||||||||
| Earnings from continuing operations | $ | 0.67 | $ | 0.67 | $ | 2.55 | $ | 2.19 | |||||||||
| Earnings from discontinued operations | –– | –– | 0.01 | 0.01 | |||||||||||||
| Earnings per share – Basic | $ | 0.67 | $ | 0.67 | $ | 2.56 | $ | 2.20 | |||||||||
| Earnings per share – Diluted: | |||||||||||||||||
| Earnings from continuing operations | $ | 0.66 | $ | 0.66 | $ | 2.52 | $ | 2.16 | |||||||||
| Earnings from discontinued operations | –– | –– | 0.01 | 0.01 | |||||||||||||
| Earnings per share – Diluted | $ | 0.66 | $ | 0.66 | $ | 2.53 | $ | 2.17 | |||||||||
| Share data: | |||||||||||||||||
| Weighted average shares outstanding – Basic | 34.4 | 35.1 | 34.7 | 35.6 | |||||||||||||
| Weighted average shares outstanding – Diluted | 34.8 | 35.7 | 35.1 | 36.0 | |||||||||||||
| AAR CORP. and subsidiaries | |||||||
| Condensed consolidated balance sheets (In millions) | May 31, 2023 | May 31, 2022 | |||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 68.4 | $ | 53.5 | |||
| Restricted cash | 13.4 | 5.4 | |||||
| Accounts receivable, net | 241.3 | 214.0 | |||||
| Contract assets | 86.9 | 73.6 | |||||
| Inventories, net | 574.1 | 550.5 | |||||
| Rotable assets and equipment on or available for lease | 50.6 | 53.6 | |||||
| Assets of discontinued operations | 13.5 | 16.2 | |||||
| Other current assets | 49.7 | 40.4 | |||||
| Total current assets | 1,097.9 | 1,007.2 | |||||
| Property, plant, and equipment, net | 126.1 | 109.6 | |||||
| Operating lease right-of-use assets, net | 63.7 | 73.0 | |||||
| Goodwill and intangible assets, net | 239.5 | 119.7 | |||||
| Rotable assets supporting long-term programs | 178.1 | 166.6 | |||||
| Other non-current assets | 127.8 | 97.8 | |||||
| Total assets | $ | 1,833.1 | $ | 1,573.9 | |||
| LIABILITIES AND EQUITY | |||||||
| Accounts payable and accrued liabilities | $ | 338.1 | $ | 331.0 | |||
| Liabilities of discontinued operations | 13.4 | 17.2 | |||||
| Total current liabilities | 351.5 | 348.2 | |||||
| Long-term debt | 269.7 | 98.9 | |||||
| Operating lease liabilities | 48.2 | 57.4 | |||||
| Other liabilities | 64.6 | 34.9 | |||||
| Total liabilities | 734.0 | 539.4 | |||||
| Equity | 1,099.1 | 1,034.5 | |||||
| Total liabilities and equity | $ | 1,833.1 | $ | 1,573.9 | |||
| AAR CORP. and subsidiaries | |||||||||||||||
| Condensed consolidated statements of cash flows (In millions – unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Cash flows provided by operating activities: | |||||||||||||||
| Net income | $ | 23.2 | $ | 23.9 | $ | 90.2 | $ | 78.7 | |||||||
| Income from discontinued operations | –– | –– | (0.4 | ) | (0.2 | ) | |||||||||
| Income from continuing operations | 23.2 | 23.9 | 89.8 | 78.5 | |||||||||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities | |||||||||||||||
| Depreciation and amortization | 7.7 | 7.6 | 27.9 | 33.1 | |||||||||||
| Amortization of stock-based compensation | 3.1 | 2.4 | 13.5 | 8.2 | |||||||||||
| Provision for credit losses | 0.8 | 0.3 | 2.6 | 1.2 | |||||||||||
| Pension settlement charges | –– | 0.7 | –– | 1.4 | |||||||||||
| Impairment charges | 1.0 | –– | 1.0 | 2.9 | |||||||||||
| Changes in certain assets and liabilities: | |||||||||||||||
| Accounts receivable | 8.3 | (4.9 | ) | (18.1 | ) | (49.0 | ) | ||||||||
| Contract assets | 4.8 | (4.8 | ) | (13.7 | ) | (1.9 | ) | ||||||||
| Inventories | (3.4 | ) | (15.0 | ) | (23.6 | ) | (10.4 | ) | |||||||
| Prepaid expenses and other current assets | 0.2 | 12.5 | (8.6 | ) | (10.2 | ) | |||||||||
| Rotable assets supporting long-term programs | (6.1 | ) | 1.6 | (19.3 | ) | 3.0 | |||||||||
| Accounts payable and accrued liabilities | 6.7 | 1.7 | (6.4 | ) | 18.9 | ||||||||||
| Deferred revenue on long-term programs | (6.2 | ) | 1.3 | (4.0 | ) | 3.8 | |||||||||
| Other | 5.2 | 12.9 | (17.3 | ) | 10.3 | ||||||||||
| Net cash provided by operating activities – continuing operations | 45.3 | 40.2 | 23.8 | 89.8 | |||||||||||
| Net cash used in operating activities – discontinued operations | (0.1 | ) | (0.1 | ) | (0.5 | ) | (14.6 | ) | |||||||
| Net cash provided by operating activities | 45.2 | 40.1 | 23.3 | 75.2 | |||||||||||
| Cash flows used in investing activities: | |||||||||||||||
| Property, plant, and equipment expenditures | (7.0 | ) | (7.1 | ) | (29.5 | ) | (17.3 | ) | |||||||
| Payment for acquisition of Trax, net of cash acquired | (103.3 | ) | –– | (103.3 | ) | –– | |||||||||
| Other | (0.4 | ) | (2.5 | ) | (5.2 | ) | 0.8 | ||||||||
| Net cash used in investing activities | (110.7 | ) | (9.6 | ) | (138.0 | ) | (16.5 | ) | |||||||
| Cash flows provided by (used in) financing activities: | |||||||||||||||
| Short-term borrowings (repayments) on Revolving Credit Facility, net | 84.0 | (4.5 | ) | 172.0 | (34.2 | ) | |||||||||
| Purchase of treasury stock | –– | (22.2 | ) | (50.1 | ) | (42.4 | ) | ||||||||
| Other | 9.2 | 12.2 | 15.8 | 16.8 | |||||||||||
| Net cash provided by (used in) financing activities | 93.2 | (14.5 | ) | 137.7 | (59.8 | ) | |||||||||
| Effect of exchange rate changes on cash | –– | (0.1 | ) | (0.1 | ) | (0.2 | ) | ||||||||
| Increase (Decrease) in cash and cash equivalents | 27.7 | 15.9 | 22.9 | (1.3 | ) | ||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 54.1 | 43.0 | 58.9 | 60.2 | |||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 81.8 | $ | 58.9 | $ | 81.8 | $ | 58.9 | |||||||
| AAR CORP. and subsidiaries | |||||||||||||||
| Sales by business segment (In millions - unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Aviation Services | $ | 529.9 | $ | 452.9 | $ | 1,898.7 | $ | 1,745.8 | |||||||
| Expeditionary Services | 23.4 | 23.2 | 91.8 | 74.2 | |||||||||||
| $ | 553.3 | $ | 476.1 | $ | 1,990.5 | $ | 1,820.0 | ||||||||
| Gross profit by business segment (In millions- unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Aviation Services | $ | 104.1 | $ | 84.7 | $ | 355.1 | $ | 297.5 | |||||||
| Expeditionary Services | 4.0 | 5.1 | 15.0 | 15.7 | |||||||||||
| $ | 108.1 | $ | 89.8 | $ | 370.1 | $ | 313.2 | ||||||||
Adjusted income from continuing operations, adjusted diluted earnings per share from continuing operations, adjusted sales, adjusted cost of sales, adjusted gross profit margin, adjusted operating margin, adjusted cash provided by operating activities from continuing operations, adjusted EBITDA, net debt, and net debt to adjusted EBITDA are “non-GAAP financial measures” as defined in Regulation G of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We believe these non-GAAP financial measures are relevant and useful for investors as they illustrate our core operating performance, cash flows and leverage unaffected by the impact of certain items that management does not believe are indicative of our ongoing and core operating activities. When reviewed in conjunction with our GAAP results and the accompanying reconciliations, we believe these non-GAAP financial measures provide additional information that is useful to gain an understanding of the factors and trends affecting our business and provide a means by which to compare our operating performance and leverage against that of other companies in the industries we compete. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Our non-GAAP financial measures reflect adjustments for certain items including, but not limited to, the following:
- Investigation and remediation compliance costs comprised of legal and professional fees related to addressing potential violations of the U.S. Foreign Corrupt Practices Act, which we self-reported to the U.S. Department of Justice and other agencies.
- Contract termination/restructuring costs comprised of gains and losses that are recognized at the time of modifying, terminating, or restructuring certain customer and vendor contracts, including adjustments for forward loss provisions on long-term contracts.
- Customer bankruptcy and credit charges (recoveries) reflecting the impact of bankruptcies and other credit charges primarily resulting from the significant impact of the COVID-19 pandemic on the commercial aviation industry.
- Costs related to strategic projects consisting of professional fees for significant projects related to strategic financings and acquisitions, including due diligence costs.
- Losses related to the sale and exit from our Composites manufacturing business including legal fees for the performance guarantee associated with the Composites’ A220 aircraft contract and charges associated with the change in fair value of the contingent consideration from the sale.
- Expenses associated with our Trax acquisition including professional fees for legal, due diligence, and other acquisition activities, intangible asset amortization, and compensation expense related to contingent consideration and retention agreements.
Adjusted EBITDA is income from continuing operations before interest income (expense), other income (expense), income taxes, depreciation and amortization, stock-based compensation, and items of an unusual nature including but not limited to business divestitures and acquisitions, workforce actions, subsidies and costs, impairment and exit charges, facility consolidation and repositioning costs, investigation and remediation compliance costs, purchase accounting and legal settlements, strategic project costs, equity investments gains and losses, Trax acquisition and amortization expenses, and significant customer events such as early terminations, contract restructurings, forward loss provisions and bankruptcies.
Pursuant to the requirements of Regulation G of the Exchange Act, we are providing the following tables that reconcile the above-mentioned non-GAAP financial measures to the most directly comparable GAAP financial measures:
| Adjusted income from continuing operations (In millions - unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Income from continuing operations | $ | 23.2 | $ | 23.9 | $ | 89.8 | $ | 78.5 | |||||||
| Investigation and remediation compliance costs | 1.6 | 1.1 | 4.7 | 3.7 | |||||||||||
| Losses related to sale and exit of business | 0.2 | 0.4 | 0.7 | 1.7 | |||||||||||
| Trax acquisition and amortization expenses | 5.1 | –– | 7.0 | –– | |||||||||||
| Loss on equity investments, net | 1.0 | –– | 0.1 | –– | |||||||||||
| Government COVID-related subsidies | –– | (1.1 | ) | (1.6 | ) | (4.9 | ) | ||||||||
| Customer bankruptcy and credit charges | –– | –– | 1.5 | 1.0 | |||||||||||
| Russian bankruptcy court clawback judgment | –– | –– | 1.8 | –– | |||||||||||
| Contract termination/restructuring costs and loss provisions, net | –– | (0.3 | ) | 2.0 | 0.9 | ||||||||||
| Costs related to strategic projects | –– | 1.8 | (0.2 | ) | 1.8 | ||||||||||
| Severance and pension settlement charges | –– | 0.7 | 0.1 | 3.3 | |||||||||||
| Asset impairment and exit charges | –– | 0.1 | –– | 3.5 | |||||||||||
| Facility consolidation and repositioning costs | –– | –– | –– | 0.2 | |||||||||||
| Recognition of foreign currency translation adjustments | –– | –– | –– | 0.2 | |||||||||||
| Gain on settlement of purchase accounting liabilities | –– | –– | –– | (1.0 | ) | ||||||||||
| Tax effect on adjustments (a) | (2.0 | ) | (0.6 | ) | (4.1 | ) | (2.6 | ) | |||||||
| Adjusted income from continuing operations | $ | 29.1 | $ | 26.0 | $ | 101.8 | $ | 86.3 | |||||||
(a) Calculation uses estimated statutory tax rates on non-GAAP adjustments.
| Adjusted diluted earnings per share from continuing operations (unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.66 | $ | 0.66 | $ | 2.52 | $ | 2.16 | |||||||
| Investigation and remediation compliance costs | 0.04 | 0.03 | 0.13 | 0.10 | |||||||||||
| Losses related to sale and exit of business | 0.01 | 0.01 | 0.02 | 0.05 | |||||||||||
| Trax acquisition and amortization expenses | 0.15 | –– | 0.21 | –– | |||||||||||
| Loss on equity investments, net | 0.03 | –– | 0.01 | –– | |||||||||||
| Government COVID-related subsidies | –– | (0.03 | ) | (0.05 | ) | (0.14 | ) | ||||||||
| Customer bankruptcy and credit charges | –– | –– | 0.04 | 0.03 | |||||||||||
| Russian bankruptcy court clawback judgment | –– | –– | 0.05 | –– | |||||||||||
| Contract termination/restructuring costs and loss provisions, net | –– | (0.01 | ) | 0.06 | 0.02 | ||||||||||
| Costs related to strategic projects | –– | 0.05 | –– | 0.05 | |||||||||||
| Severance and pension settlement charges | –– | 0.02 | –– | 0.10 | |||||||||||
| Asset impairment and exit charges | –– | –– | –– | 0.10 | |||||||||||
| Facility consolidation and repositioning costs | –– | –– | –– | 0.01 | |||||||||||
| Gain on settlement of purchase accounting liabilities | –– | –– | –– | (0.03 | ) | ||||||||||
| Tax effect on adjustments (a) | (0.06 | ) | (0.01 | ) | (0.13 | ) | (0.07 | ) | |||||||
| Adjusted diluted earnings per share from continuing operations | $ | 0.83 | $ | 0.72 | $ | 2.86 | $ | 2.38 | |||||||
(a) Calculation uses estimated statutory tax rates on non-GAAP adjustments.
| Adjusted gross profit margin (In millions - unaudited) | Three months ended | Year ended | |||||||||||||||||
| May 31, 2023 | February 28, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | |||||||||||||||
| Sales | $ | 553.3 | $ | 521.1 | $ | 476.1 | $ | 1,990.5 | $ | 1,820.0 | |||||||||
| Contract termination/restructuring costs, net | –– | –– | (1.2 | ) | 0.1 | (2.9 | ) | ||||||||||||
| Adjusted sales | $ | 553.3 | $ | 521.1 | $ | 474.9 | $ | 1,990.6 | $ | 1,817.1 | |||||||||
| Cost of sales | $ | 445.2 | $ | 426.8 | $ | 386.3 | $ | 1,620.4 | $ | 1,506.8 | |||||||||
| Contract termination/restructuring costs and loss provisions, net | –– | –– | (0.9 | ) | (1.9 | ) | (3.8 | ) | |||||||||||
| Government COVID-related subsidies | –– | –– | 1.1 | 0.7 | 4.8 | ||||||||||||||
| Facility consolidation and repositioning costs | –– | –– | –– | –– | (0.2 | ) | |||||||||||||
| Asset impairment and exit charges | –– | –– | –– | –– | (2.9 | ) | |||||||||||||
| Severance charges | –– | –– | –– | –– | (0.6 | ) | |||||||||||||
| Adjusted cost of sales | $ | 445.2 | $ | 426.8 | $ | 386.5 | $ | 1,619.2 | $ | 1,504.1 | |||||||||
| Adjusted gross profit margin | 19.5 | % | 18.1 | % | 18.6 | % | 18.7 | % | 17.2 | % | |||||||||
| Adjusted operating margin (In millions - unaudited) | Three months ended | Year ended | |||||||||||||||||
| May 31, 2023 | February 28, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | |||||||||||||||
| Adjusted sales | $ | 553.3 | $ | 521.1 | $ | 474.9 | $ | 1,990.6 | $ | 1,817.1 | |||||||||
| Operating income | $ | 36.3 | $ | 34.0 | $ | 31.4 | $ | 133.9 | $ | 106.9 | |||||||||
| Investigation and remediation costs | 1.6 | 1.2 | 1.1 | 4.7 | 3.7 | ||||||||||||||
| Trax acquisition and amortization expenses | 5.1 | 1.9 | –– | 7.0 | –– | ||||||||||||||
| Government COVID-related subsidies | –– | (0.9 | ) | (1.1 | ) | (1.6 | ) | (4.9 | ) | ||||||||||
| Customer bankruptcy and credit charges | –– | 1.8 | –– | 1.5 | 1.0 | ||||||||||||||
| Russian bankruptcy court clawback judgment | –– | 1.8 | –– | 1.8 | –– | ||||||||||||||
| Contract termination/restructuring costs and loss provisions, net | –– | –– | (0.3 | ) | 2.0 | 0.9 | |||||||||||||
| Costs related to strategic projects | –– | –– | 1.8 | (0.2 | ) | 1.8 | |||||||||||||
| Asset impairment and exit charges | –– | –– | 0.1 | –– | 3.5 | ||||||||||||||
| Facility consolidation and repositioning costs | –– | 0.2 | |||||||||||||||||
| Severance charges | –– | –– | 0.1 | 0.1 | 2.0 | ||||||||||||||
| Adjusted operating income | $ | 43.0 | $ | 39.8 | $ | 33.1 | $ | 149.2 | $ | 115.1 | |||||||||
| Adjusted operating margin | 7.8 | % | 7.6 | % | 7.0 | % | 7.5 | % | 6.3 | % | |||||||||
| Adjusted cash provided by operating activities from continuing operations (In millions - unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Cash provided by operating activities from continuing operations | $ | 45.3 | $ | 40.2 | $ | 23.8 | $ | 89.8 | |||||||
| Amounts outstanding on accounts receivable financing program: | |||||||||||||||
| Beginning of period | 16.3 | 18.0 | 15.0 | 38.6 | |||||||||||
| End of period | (12.8 | ) | (15.0 | ) | (12.8 | ) | (15.0 | ) | |||||||
| Adjusted cash provided by operating activities from continuing operations | $ | 48.8 | $ | 43.2 | $ | 26.0 | $ | 113.4 | |||||||
| Adjusted EBITDA (In millions - unaudited) | Three months ended May 31, | Year ended May 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income | $ | 23.2 | $ | 23.9 | $ | 90.2 | $ | 78.7 | |||||||
| Income from discontinued operations | –– | –– | (0.4 | ) | (0.2 | ) | |||||||||
| Income tax expense | 7.0 | 6.6 | 31.4 | 26.6 | |||||||||||
| Other expense (income), net | 1.2 | (0.1 | ) | 0.8 | (2.2 | ) | |||||||||
| Interest expense, net | 4.7 | 0.6 | 11.2 | 2.3 | |||||||||||
| Depreciation and amortization | 7.7 | 7.6 | 27.9 | 33.1 | |||||||||||
| Investigation and remediation compliance costs | 1.6 | 1.1 | 4.7 | 3.7 | |||||||||||
| Losses related to sale and exit of business | 0.2 | 0.4 | 0.7 | 1.7 | |||||||||||
| Trax acquisition-related expenses | 4.3 | –– | 6.2 | –– | |||||||||||
| Government COVID-related subsidies, net | –– | (1.1 | ) | (1.6 | ) | (4.9 | ) | ||||||||
| Customer bankruptcy and credit charges | –– | –– | 1.5 | 1.0 | |||||||||||
| Russian bankruptcy court clawback judgment | –– | –– | 1.8 | –– | |||||||||||
| Contract termination/restructuring costs and loss provisions, net | –– | (0.3 | ) | 2.0 | 0.9 | ||||||||||
| Costs related to strategic projects | –– | 1.8 | (0.2 | ) | 1.8 | ||||||||||
| Severance charges | –– | 0.1 | 0.1 | 2.0 | |||||||||||
| Asset impairment and exit charges | –– | 0.1 | –– | 3.5 | |||||||||||
| Facility consolidation and repositioning costs | –– | –– | –– | 0.2 | |||||||||||
| Stock-based compensation | 3.1 | 2.4 | 13.5 | 8.2 | |||||||||||
| Adjusted EBITDA | $ | 53.0 | $ | 43.1 | $ | 189.8 | $ | 156.4 | |||||||
| Net debt (In millions - unaudited) | May 31, 2023 | May 31, 2022 | |||||
| Total debt | $ | 272.0 | $ | 100.0 | |||
| Less: Cash and cash equivalents | (68.4 | ) | (53.5 | ) | |||
| Net debt | $ | 203.6 | $ | 46.5 | |||
| Net debt to adjusted EBITDA (In millions - unaudited) | May 31, 2023 | May 31, 2022 | |||||
| Adjusted EBITDA for the year ended | $ | 189.8 | $ | 156.4 | |||
| Net debt at period end | 203.6 | 46.5 | |||||
| Net debt to Adjusted EBITDA | 1.07 | 0.30 | |||||
