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| Statement |
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| So we’re creative to the overall company and it will help drive that improved margin outlook next year |
| We are incredibly excited about the differentiated high margin capability that the Product Support acquisition brings and our team is already pursuing numerous opportunities with our customers |
| Integration is off to a great start and I am very, very excited about what we can do with this business |
| Turning to the results, we delivered another strong quarter |
| Specifically, sales were up 9% year-over-year from $521 million to a third quarter record of $567 million |
| In advance of that though, there is work that, Triumph today has near identical capability to us in certain areas and we believe that Triumph will be able to perform the work that we do today more profitably than we do |
| For Parts Supply, total sales were up 6% year-over-year, driven by strong performance in our Commercial Distribution business |
| In USM, demand remains exceptionally strong, which drove another quarter of growth |
| The day-to-day parts sales are at record levels |
| Having said that, we have the best sourcing team in the world and continue to have the balance sheet flexibility to be able to act quickly when those opportunities do arise |
| And many times in Singapore, in February, in Europe earlier this month, as well as having a number of meetings here in North America, our sales team is extremely excited to sell the higher margin, higher engineered capability that we get with Triumph to our existing customer base |
| Commercial distribution had an exceptional quarter, posting 27% organic growth |
| They’ve got a nice portfolio, again, a small portfolio, but generating healthy revenue and healthy margin of PMAs that is not in any way in conflict with any of our distribution agreements |
| So I think you’ll see a little bit better free cash flow performance on that, with the caveat that the USM market, as John talked about, remains dynamic and we continue to be in a good position to source new material to meet that demand that’s growing |
| In Repair & Engineering, sales were up 10% over the prior year quarter as we were able to drive greater volumes through our hangers |
| I’m proud of the efficiency gains we continue to make with our existing footprint |
| We saw double-digit growth in day-to-day parts sales in USM |
| So they’ve got a great set of capability and a great team, and we’re excited that we’re now together |
| Turning to profitability, our adjusted operating margin was 8.3%, up from 7.6% in the prior year quarter, driven by margin expansion in Parts Supply and Repair & Engineering |
| This represents our 12th straight quarter of year-over-year adjusted operating margin expansion and our margins are now approximately 50% higher than they were before COVID |
| We are especially proud to have made this progress in an inflationary environment in which labor costs in particular have been rising |
| Our adjusted diluted earnings per share from continuing operations were up 13% from $0.75 per share to a third quarter record of $0.85 per share |
| This year we also had a good quarter |
| Last year, we had a very strong quarter |
| The only other color I would give there is that, as we’ve gotten to know the team, as we’ve gotten to know the business even more since closing, we’re really, really excited about where we can take this business |
| The Singapore Airlines award in particular demonstrates the power of the AAR track combination as AAR was instrumental in securing that award |
| So again, a long answer to, I guess, a long set of questions, but we’re very encouraged by the PMA growth |
| And I’d like to add that, once those, again, we’re a little ways away, but once those facility expansions come online in the Repair & Engineering group, the expansion in Oklahoma City and Miami, we’re going to take advantage of the fixed cost basis that’s already existing, leverage that fixed cost base and so those expansions should drive further margin improvement in R&D as well |
| Our commercial sales were up 17.6% year-over-year, driven by commercial growth in each of Parts Supply, Repair & Engineering and Integrated Solutions |
| Our commercial distribution sales were a particular standout as we continue to drive sales growth on existing product lines and expanded newly won product lines as well |
| Statement |
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| Finally, in Expeditionary Services, sales were down 15% over the prior year quarter due to a decline in shipments of pallets to the U.S |
| Our government sales were down 7.4% year-over-year |
| We had seen bookings and I believe we’ve talked about this in prior earnings calls, we had seen government bookings decrease throughout last year |
| Government distribution had a lower quarter than it did last year |
| But that is offset by continued softness in the government market |
| For example, opportunities like the 757 acquisition that we made from American Airlines last year are even more difficult to find |
| The whole assets, the larger dollar assets, those are harder to come by, and so we saw a decline year-over-year in large asset sales |
| If you look at the stated -- inventory levels across the platforms that we support, pretty much without exception, they are below the stated inventory levels to meet the expectations for sustainment |
| Government distribution had a lower quarter when compared to a very strong quarter a year ago |
| What I would say though is that, generally speaking, between that and the slower overall aircraft introduction, we expect the elevated demand to be measured in years |
| So what are -- what’s driving the, I guess, slowdown? Is it just comps? Do you think USM’s going to decline sequentially? Because it sounds like government’s getting better |
| It was just lower than last quarter |
| John, first, I thought I’d go back to a couple of your comments on the business and this concept of a slower OE ramp leaving more older aircraft in service longer |
| Maybe there’s a little bit of volatility in MRO |
| This reflects even tighter supply in this market |
| I imagine this is not going to happen that quickly |
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