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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended August 31, 2022

or

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                   

Commission File Number: 1-6263

AAR CORP.

(Exact name of registrant as specified in its charter)

Delaware

    

36-2334820

(State or other jurisdiction of incorporation
or organization)

(I.R.S. Employer Identification No.)

One AAR Place, 1100 N. Wood Dale Road
Wood DaleIllinois

    

60191

(Address of principal executive offices)

(Zip Code)

(630) 227-2000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $1.00 par value

AIR

New York Stock Exchange

Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  No 

As of August 31, 2022 there were 35,083,089 shares of the registrant’s Common Stock, $1.00 par value per share, outstanding.

Table of Contents

AAR CORP. and Subsidiaries
Quarterly Report on Form 10-Q

For the Quarter Ended August 31, 2022

Table of Contents

Page

Part I — FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Income

5

Condensed Consolidated Statements of Comprehensive Income

6

Condensed Consolidated Statements of Cash Flows

7

Condensed Consolidated Statements of Changes in Equity

8

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

26

Part II — OTHER INFORMATION

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 6.

Exhibits

28

Exhibit Index

28

Signatures

29

2

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

AAR CORP. and Subsidiaries

Condensed Consolidated Balance Sheets

As of August 31, 2022 and May 31, 2022

(In millions, except share data)

ASSETS

August 31, 

May 31, 

2022

2022

    

(Unaudited)  

    

Current assets:

Cash and cash equivalents

$

44.3

$

53.5

Restricted cash

4.1

5.4

Accounts receivable, less allowances of $17.5 and $17.9, respectively

220.8

214.0

Contract assets

87.5

73.6

Inventories

 

575.8

 

550.5

Rotable assets and equipment on or available for short-term lease

 

52.8

 

53.6

Assets of discontinued operations

16.1

16.2

Prepaid expenses and other current assets

33.8

40.4

Total current assets

 

1,035.2

 

1,007.2

Property, plant, and equipment, net of accumulated depreciation of $259.7 and $258.3 respectively

111.4

109.6

Other assets:

Goodwill and intangible assets, net

 

117.6

 

119.7

Operating lease right-of-use assets, net

69.9

73.0

Rotable assets supporting long-term programs

167.7

166.6

Other non-current assets

 

97.1

 

97.8

 

452.3

 

457.1

$

1,598.9

$

1,573.9

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

3

Table of Contents

AAR CORP. and Subsidiaries

Condensed Consolidated Balance Sheets

As of August 31, 2022 and May 31, 2022

(In millions, except share data)

LIABILITIES AND EQUITY

August 31, 

May 31, 

2022

2022

    

(Unaudited)  

    

Current liabilities:

Accounts payable

$

194.5

$

156.4

Accrued liabilities

 

147.2

 

174.6

Liabilities of discontinued operations

16.2

17.2

Total current liabilities

 

357.9

 

348.2

Long-term debt

 

114.1

 

98.9

Operating lease liabilities

54.3

57.4

Deferred tax liabilities

 

20.1

 

20.0

Other liabilities

 

16.0

 

14.9

 

204.5

 

191.2

Equity:

Preferred stock, $1.00 par value, authorized 250,000 shares; none issued

 

 

Common stock, $1.00 par value, authorized 100,000,000 shares; issued 45,300,786 shares at cost

 

45.3

 

45.3

Capital surplus

 

476.8

 

477.5

Retained earnings

 

843.1

 

820.4

Treasury stock, 10,217,697 and 9,909,702 shares at cost, respectively

 

(306.0)

 

(289.1)

Accumulated other comprehensive loss

 

(22.7)

 

(19.6)

Total equity

 

1,036.5

 

1,034.5

$

1,598.9

$

1,573.9

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

4

Table of Contents

AAR CORP. and Subsidiaries

Condensed Consolidated Statements of Income

For the Three Months Ended August 31, 2022 and 2021

(Unaudited)

(In millions, except share data)

Three Months Ended

August 31, 

    

2022

    

2021

Sales:

Sales from products

$

265.2

$

262.1

Sales from services

 

181.1

 

193.0

 

446.3

 

455.1

Cost and operating expenses:

Cost of products

 

214.0

 

217.6

Cost of services

 

150.4

 

172.9

Selling, general, and administrative

 

50.1

 

49.3

 

414.5

 

439.8

Loss from joint ventures

(0.6)

(0.2)

Operating income

 

31.2

 

15.1

Other income, net

0.2

0.7

Interest expense

 

(1.1)

 

(0.7)

Interest income

 

0.1

 

Income from continuing operations before provision for income taxes

30.4

15.1

Provision for income taxes

8.1

3.9

Income from continuing operations

22.3

11.2

Income from discontinued operations, net of tax

0.4

0.3

Net income

$

22.7

$

11.5

Earnings per share – basic:

Earnings from continuing operations

$

0.63

$

0.32

Earnings from discontinued operations

0.01

0.01

Earnings per share – basic

$

0.64

$

0.33

Earnings per share – diluted:

Earnings from continuing operations

$

0.62

$

0.31

Earnings from discontinued operations

0.01

0.01

Earnings per share – diluted

$

0.63

$

0.32

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

5

Table of Contents

AAR CORP. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended August 31, 2022 and 2021

(Unaudited)

(In millions)

Three Months Ended

August 31,

    

2022

    

2021

Net income

$

22.7

$

11.5

Other comprehensive income (loss), net of tax:

Currency translation adjustments

(3.3)

(0.6)

Pension and other post-retirement plans, net of tax

0.2

0.3

Other comprehensive loss, net of tax

(3.1)

(0.3)

Comprehensive income

$

19.6

$

11.2

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

6

Table of Contents

AAR CORP. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended August 31, 2022 and 2021

(Unaudited)

(In millions)

Three Months Ended

August 31, 

    

2022

    

2021

Cash flows provided from operating activities:

Net income

$

22.7

$

11.5

Less: Income from discontinued operations

(0.4)

(0.3)

Income from continuing operations

22.3

11.2

Adjustments to reconcile income from continuing operations to net cash provided from operating activities:

Depreciation and intangible amortization

 

6.8

 

8.9

Stock-based compensation

 

4.1

 

3.1

Loss from joint ventures

0.6

0.2

Impairment charges

 

 

2.3

Changes in certain assets and liabilities:

Accounts receivable

 

(7.7)

 

(14.5)

Contract assets

(14.2)

(2.8)

Inventories

 

(26.0)

 

14.4

Prepaid expenses and other current assets

6.6

(4.9)

Rotable assets supporting long-term programs

 

(3.1)

 

0.9

Accounts payable

 

38.4

 

17.3

Accrued and other liabilities

 

(27.2)

(14.4)

Deferred revenue on long-term programs

6.5

(2.0)

Other

(0.1)

 

(2.2)

Net cash provided from operating activities - continuing operations

 

7.0

 

17.5

Net cash used in operating activities - discontinued operations

 

(0.2)

 

(14.6)

Net cash provided from operating activities

6.8

2.9

Cash flows used in investing activities:

Property, plant, and equipment expenditures

(6.7)

(2.2)

Other

(4.0)

(2.7)

Net cash used in investing activities – continuing operations

(10.7)

(4.9)

Cash flows used in financing activities:

Short-term borrowings (repayments) on Revolving Credit Facility, net

15.0

(5.0)

Purchase of treasury stock

(21.9)

Stock compensation activity

 

0.4

 

(0.5)

Net cash used in financing activities – continuing operations

 

(6.5)

 

(5.5)

Effect of exchange rate changes on cash

 

(0.1)

(0.1)

Decrease in cash and cash equivalents

(10.5)

(7.6)

Cash, cash equivalents, and restricted cash at beginning of period

 

58.9

60.2

Cash, cash equivalents, and restricted cash at end of period

$

48.4

$

52.6

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

7

Table of Contents

AAR CORP. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

For the Three Months Ended August 31, 2022 and 2021

(Unaudited)

(In millions)

Accumulated

Other

Common

Capital

Retained

Treasury

Comprehensive

    

Stock

    

Surplus

    

Earnings

    

Stock

    

Loss

    

Total Equity

Balance, May 31, 2022

$

45.3

$

477.5

$

820.4

$

(289.1)

$

(19.6)

$

1,034.5

Net income

 

 

 

22.7

22.7

Stock option activity

 

 

1.0

 

1.5

2.5

Restricted stock activity

 

 

(1.7)

 

3.5

1.8

Repurchase of shares

(21.9)

(21.9)

Other comprehensive loss, net of tax

 

 

 

(3.1)

(3.1)

Balance,August 31, 2022

$

45.3

$

476.8

$

843.1

$

(306.0)

$

(22.7)

$

1,036.5

Accumulated

Other

Common

Capital

Retained

Treasury

Comprehensive

    

Stock

    

Surplus

    

Earnings

    

Stock

    

Loss

    

Total Equity

Balance, May 31, 2021

$

45.3

$

479.8

$

741.7

$

(274.1)

$

(18.3)

$

974.4

Net income

 

 

 

11.5

 

 

 

11.5

Stock option activity

 

 

1.1

 

 

0.2

 

 

1.3

Restricted stock activity

 

 

(1.0)

 

 

2.3

 

 

1.3

Other comprehensive loss, net of tax

 

 

 

 

 

(0.3)

 

(0.3)

Balance, August 31, 2021

$

45.3

$

479.9

$

753.2

$

(271.6)

$

(18.6)

$

988.2

The accompanying Notes to Condensed Consolidated Financial

Statements are an integral part of these statements.

8

Table of Contents

AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Note 1 – Basis of Presentation

AAR CORP. and its subsidiaries are referred to herein collectively as “AAR,” “Company,” “we,” “us,” or “our,” unless the context indicates otherwise. The accompanying Condensed Consolidated Financial Statements include the accounts of AAR and its subsidiaries after elimination of intercompany accounts and transactions.

We have prepared these statements without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The Condensed Consolidated Balance Sheet as of May 31, 2022 has been derived from audited financial statements. To prepare the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”), management has made a number of estimates and assumptions relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Certain information and note disclosures, normally included in comprehensive financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to such rules and regulations of the SEC. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our latest Annual Report on Form 10-K.

In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the Condensed Consolidated Balance Sheet of AAR CORP. and its subsidiaries as of August 31, 2022, the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended August 31, 2022 and 2021, the Condensed Consolidated Statements of Cash Flows for the three-month periods ended August 31, 2022 and 2021, and the Condensed Consolidated Statement of Changes in Equity for the three-month periods ended August 31, 2022 and 2021. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

Note 2 – Discontinued Operations

During the third quarter of fiscal 2018, we decided to pursue the sale of our Contractor-Owned, Contractor-Operated (“COCO”) business previously included in our Expeditionary Services segment. Due to this strategic shift, the assets, liabilities, and results of operations of our COCO business have been reported as discontinued operations for all periods presented. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to our continuing operations.

In the fourth quarter of fiscal 2020, we completed the sale of the last operating contract of the COCO business shortly after government approval. Our continuing involvement in the COCO business is limited to the lease of certain aircraft which is an obligation of the acquirer of this contract. The assets and liabilities of our discontinued operations are primarily comprised of right-of-use assets and lease-related liabilities.

Note 3 – Revenue Recognition

Revenue is measured based on the consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer.

Our unit of accounting for revenue recognition is a performance obligation included in our customer contracts. A performance obligation reflects the distinct good or service that we must transfer to a customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our contract with the customer is considered one performance obligation as it includes factors such as whether the good or service being provided is significantly integrated with other promises in the contract, whether the service provided significantly modifies or customizes another good or service or whether the good or service is highly interdependent or interrelated. If the contract has more than one performance obligation, we determine the standalone price of each distinct good or service underlying each performance obligation and allocate the transaction price based on their relative standalone selling prices.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known.

Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. The majority of our sales from products typically represent distinct performance obligations and are recognized at a point in time upon transfer of control to the customer, which generally occurs upon shipment. In connection with certain sales of products, we also provide logistics services, which include inventory management, replenishment, and other related services. The price of such services is generally included in the price of the products delivered to the customer, and revenues are recognized upon delivery of the product, at which point the customer has obtained control of the product. We do not account for these services separate from the related product sales as the services are inputs required to fulfill part orders received from customers.

For our performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation.

We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved can include customer volume, future labor costs and efficiencies, repair or overhaul costs, overhead costs, and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. For contracts that are deemed to be loss contracts, we establish forward loss reserves for total estimated costs that are in excess of total estimated consideration in the period in which they become known.

We utilize the portfolio approach to estimate the amount of revenue to recognize for certain contracts which require over-time revenue recognition. Such contracts are grouped together either by revenue stream, customer or product line with each portfolio of contracts grouped together based on having similar characteristics. The portfolio approach is utilized only when the result of the accounting is not expected to be materially different than if applied to individual contracts.

We also may enter into offset agreements or conditions as part of obtaining orders for our products and services from certain government customers in foreign countries. These agreements are designed to enhance the social and economic environment of the foreign country by requiring the contractor to promote investment in the country. These agreements also may be satisfied through our use of cash or other means of providing financial support for in-country projects with local companies. The amounts ultimately applied against our offset agreements are based on negotiations with the customer and satisfaction of our offset obligations are included in the estimates of our total costs to complete the contract.

When contracts are modified, we consider whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original goods or services provided, are accounted for as if they were part of that existing contract with the effect of the contract modification recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct, they are accounted for as a new contract and performance obligation, which are recognized prospectively.

Certain contracts with customers have options for the customer to acquire additional goods or services. In most cases, the pricing of these options are reflective of the standalone selling price of the good or service. These options do not provide the customer with a material right and are accounted for only when the customer exercises the option to purchase the additional goods or services. If the option on the customer contract was not indicative of the standalone selling price of the good or service, the material right would be accounted for as a separate performance obligation.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Under most of our U.S. government contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered and fair compensation for work performed, the costs of settling and paying other claims, and a reasonable profit on the costs incurred or committed.

In the ordinary course of business, agencies of the U.S. and other governments audit our claimed indirect costs and conduct inquiries and investigations of our business practices with respect to government contracts to determine whether our operations are conducted in accordance with these requirements and the terms of the relevant contracts. U.S. government agencies, including the Defense Contract Audit Agency (“DCAA”), routinely audit our claimed indirect costs, for compliance with the Cost Accounting Standards and the Federal Acquisition Regulations. These agencies also conduct reviews and investigations and make inquiries regarding our accounting and other systems in connection with our performance and business practices with respect to our government contracts and subcontracts. As of August 31, 2022, our Condensed Consolidated Balance Sheet included $2.6 million of reserves for estimated adjustments to claimed indirect costs.

Costs to fulfill and obtain a contract are considered for capitalization based on contract specific facts and circumstances. The incremental costs to fulfill a contract, including setup and implementation costs prior to beginning the period of performance, may be capitalized when expenses are incurred prior to the start of satisfying a performance obligation. The capitalized costs are subsequently expensed over the contract’s period of performance.

We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in Cost of sales on our Condensed Consolidated Statements of Income and are not considered a performance obligation to our customers. Our reported sales on our Condensed Consolidated Statements of Income are net of any sales or related non-income taxes. We also utilize the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer.

Cumulative Catch-up Adjustments

Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. These changes are primarily adjustments to the estimated profitability for our long-term programs where we provide component inventory management, supply chain logistics programs, and/or repair services.

For the three-month period ended August 31, 2022, we recognized a favorable cumulative catch-up adjustment of $2.9 million. For the three-month period ended August 31, 2021, we recognized an unfavorable cumulative catch-up adjustment of $1.0 million.

Contract Assets and Liabilities

The timing of revenue recognition, customer billings, and cash collections results in a contract asset or contract liability at the end of each reporting period. For instances where we recognize revenue prior to having an unconditional right to payment, we record a contract asset or liability. When an unconditional right to consideration exists, we reduce our contract asset or liability and recognize an unbilled or trade receivable. When amounts are dependent on factors other than the passage of time in order for payment from a customer to be due, we record a contract asset which consists of costs incurred where revenue recognized over time using the cost-to-cost model exceeds the amounts billed to customers. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of our performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. Contract assets and contract liabilities are determined on a contract-by-contract basis.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Net contract assets and liabilities are as follows:

August 31, 

May 31, 

    

2022

    

2022

    

Change 

Contract assets – current

$

87.5

$

73.6

$

13.9

Contract assets – non-current

17.5

22.5

(5.0)

Contract liabilities:

Deferred revenue – current

(21.9)

(20.5)

(1.4)

Deferred revenue on long-term contracts

(11.6)

 

(10.1)

 

(1.5)

Net contract assets

$

71.5

$

65.5

$

6.0

Contract assets – non-current is reported within Other non-current assets, contract liabilities – current is reported within Accrued liabilities, and deferred revenue on long-term contracts is reported within Other liabilities on our Condensed Consolidated Balance Sheets. Changes in contract assets and contract liabilities primarily result from the timing difference between our performance of services and payments from customers.

One of our power-by-the-hour (“PBH”) customers notified us in June 2021 that the customer would terminate its contract with us earlier than we originally anticipated. In conjunction with the early termination, we recognized a charge of $5.2 million in the three-month period ended August 31, 2021, which included a reduction in contract assets and revenue of $1.0 million and the establishment of loss reserves of $4.2 million. We also evaluated future cash flows related to the rotable assets supporting the fleet type used by this customer and recognized asset impairment charges of $2.3 million in the three-month period ended August 31, 2021.

To support our PBH customer contracts, we previously entered into an agreement with a component repair facility to outsource a portion of the component repair and overhaul services. The agreement included certain minimum repair volume guarantees, which we have not met due to the impact of COVID-19 on commercial passenger aircraft flight hours. During fiscal 2021, we recognized a $4.5 million charge to reflect our estimated obligation over the remainder of the agreement for not achieving the minimum volume guarantees. During the three-month period ended August 31, 2021, we recognized a $1.7 million charge to increase the obligation reflecting the revised estimated shortfall on the minimum volume guarantee. As of August 31, 2022, our Condensed Consolidated Balance Sheet included remaining loss reserves of $3.1 million with $2.3 million classified as current in Accrued liabilities and $0.8 million classified as long-term in Other liabilities.

Changes in our deferred revenue were as follows for the three-month periods ended August 31, 2022 and 2021:

    

Three Months Ended

August 31, 

2022

    

2021

Deferred revenue at beginning of period

$

(30.6)

$

(31.3)

Revenue deferred

(57.5)

(50.1)

Revenue recognized

53.5

46.4

Other

1.1

2.0

Deferred revenue at end of period

$

(33.5)

$

(33.0)

Remaining Performance Obligations

As of August 31, 2022, we had approximately $820 million of remaining performance obligations, also referred to as firm backlog, which excludes unexercised contract options and potential orders under our indefinite-delivery, indefinite-quantity contracts. We expect that approximately 40% of this backlog will be recognized as revenue over the next 12 months with approximately 35% of the remainder recognized over the next three years. The amount of remaining performance obligations that are expected to be recognized as revenue beyond 12 months, primarily relates to our long-term programs where we provide component inventory management, supply chain logistics programs and/or repair services.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Disaggregation of Revenue

Sales across the major customer markets for each of our reportable segments for the three-month periods ended August 31, 2022 and 2021 were as follows:

Three Months Ended

    

August 31, 

2022

    

2021

Aviation Services:

 

Commercial

$

292.1

$

267.2

Government and defense

131.9

168.4

$

424.0

$

435.6

Expeditionary Services:

Commercial

$

1.5

$

0.1

Government and defense

20.8

19.4

$

22.3

$

19.5

Sales by geographic region for the three-month periods ended August 31, 2022 and 2021 were as follows:

Three Months Ended

August 31, 

    

2022

    

2021

Aviation Services:

 

North America

$

323.3

$

347.6

Europe/Africa

62.4

62.0

Other

38.3

26.0

$

424.0

$

435.6

Expeditionary Services:

North America

$

21.9

$

19.3

Europe/Africa

0.4

0.2

$

22.3

$

19.5

Note 4 – Accounts Receivable

Financial instruments that potentially subject us to concentrations of market or credit risk consist principally of trade receivables. While our trade receivables are diverse and represent a number of entities and geographic regions, the majority are with the U.S. government and its contractors and entities in the aviation industry. The composition of our accounts receivable is as follows:

August 31, 

May 31, 

    

2022

    

2022

U.S. Government contracts:

 

  

 

  

Trade receivables

$

24.1

$

31.6

Unbilled receivables

 

15.2

 

25.9

 

39.3

 

57.5

All other customers:

 

 

  

Trade receivables

 

148.0

 

136.8

Unbilled receivables

 

33.5

 

19.7

 

181.5

 

156.5

$

220.8

$

214.0

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Note 5 – Accounting for Stock-Based Compensation

Restricted Stock

In the three-month period ended August 31, 2022, as part of our annual long-term stock incentive compensation, we granted 74,660 shares of performance-based restricted stock and 93,450 shares of time-based restricted stock to eligible employees. The grant date fair value per share for these shares was $41.88 (the closing price per share of our common stock on the grant date). We also granted 28,314 shares of time-based restricted stock to members of the Board of Directors with a grant date fair value per share of $48.56 (the closing price per share of our common stock on the grant date).

Expense charged to operations for restricted stock during each of the three-month periods ended August 31, 2022 and 2021 was $3.0 million and $1.9 million, respectively.

Stock Options

In July 2022, as part of our annual long-term stock incentive compensation, we granted 221,900 stock options to eligible employees at an exercise price per share of $41.88 and grant date fair value per share of $17.61. The fair value of stock options was estimated using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate

    

3.1

%

Expected volatility of common stock

 

42.2

%

Dividend yield

 

0.0

%

Expected option term in years

 

5.2

The total intrinsic value of stock options exercised during the three-month periods ended August 31, 2022 and 2021 was $0.9 million and $0.1 million, respectively. Expense charged to operations for stock options during the three-month periods ended August 31, 2022 and 2021 was $1.1 million and $1.2 million, respectively.

Note 6 – Inventories

The summary of inventories is as follows:

August 31, 

    

May 31, 

    

2022

    

2022

Aircraft and engine parts, components and finished goods

$

496.2

$

465.9

Raw materials and parts

 

54.6

 

62.2

Work-in-process

25.0

22.4

$

575.8

$

550.5

Note 7 – Supplemental Cash Flow Information

Three Months Ended

August 31, 

    

2022

    

2021

Interest paid

$

0.8

$

0.3

Income taxes paid

 

4.1

 

5.3

Income tax refunds received

0.2

0.2

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Note 8 – Sale of Receivables

On February 23, 2018, we entered into a Purchase Agreement with Citibank N.A. (“Purchaser”) for the sale, from time to time, of certain accounts receivable due from certain customers (the “Purchase Agreement”). Under the Purchase Agreement, the maximum amount of receivables sold is limited to $150 million and Purchaser may, but is not required to, purchase the eligible receivables we offer to sell. The term of the Purchase Agreement runs through February 22, 2023, however, the Purchase Agreement may also be terminated earlier under certain circumstances. The term of the Purchase Agreement shall be automatically extended for annual terms unless either party provides advance notice that they do not intend to extend the term.

We have no retained interests in the sold receivables, other than limited recourse obligations in certain circumstances, and only perform collection and administrative functions for the Purchaser. We account for these receivable transfers as sales under ASC 860, Transfers and Servicing, and de-recognize the sold receivables from our Condensed Consolidated Balance Sheets.

During the three-month periods ended August 31, 2022 and 2021, we sold $43.4 million and $87.5 million, respectively, of receivables under the Purchase Agreement and remitted $43.5 million and $95.9 million, respectively, to the Purchaser on their behalf. As of August 31, 2022 and May 31, 2022, we had collected cash of $4.1 million and $5.4 million, respectively, which was not yet remitted to the Purchaser as of those dates and was classified as Restricted cash on our Condensed Consolidated Balance Sheets.

We recognize discounts on the sale of our receivables and other fees related to the Purchase Agreement in Other income, net on our Condensed Consolidated Statements of Income. We incurred discounts on the sale of our receivables of $0.1 million and $0.1 million during the three-month periods ended August 31, 2022 and 2021, respectively.

Note 9 – Government Subsidies

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the U.S. in response to the COVID-19 pandemic. The CARES Act includes provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, and other areas. The payroll tax deferral requires that the deferred payroll taxes be paid over two years, with the first half, or $6.2 million, paid in December 2021 and the other half to be paid by December 31, 2022. As of August 31, 2022, we have deferred payroll taxes of $6.2 million which are included in Accrued liabilities on our Condensed Consolidated Balance Sheet.

Other countries have enacted legislation similar to the CARES Act to provide relief and stimulus measures to assist companies in mitigating the financial impact from COVID-19 and supporting their employees. During the three-month periods ended August 31, 2022 and 2021, respectively, our foreign subsidiaries recognized employment subsidies of $0.7 million and $0.3 million from foreign governments which have been deducted from the related expenses on our Condensed Consolidated Statements of Income.

Note 10 – Financing Arrangements

A summary of the carrying amount of our debt is as follows:

August 31, 

May 31, 

    

2022

    

2022

Revolving Credit Facility expiring September 25, 2024 with interest payable monthly

$

115.0

$

100.0

Debt issuance costs, net

 

(0.9)

 

(1.1)

Long-term debt

$

114.1

$

98.9

At August 31, 2022, our debt had a fair value that approximates its carrying value and is classified as Level 2 in the fair value hierarchy.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

On October 18, 2017, we entered into a Credit Agreement with the Canadian Imperial Bank of Commerce, as lender (the “Credit Agreement”). The Credit Agreement provided a Canadian $31 million term loan with the proceeds used to fund the acquisition of two maintenance, repair, and overhaul (“MRO”) facilities in Canada from Premier Aviation. The term loan was paid in full at the expiration of the Credit Agreement on November 1, 2021.

We maintain a Revolving Credit Facility with various financial institutions, as lenders, and Bank of America, N.A., as administrative agent for the lenders, which provides the Company an aggregate revolving credit commitment of $600 million and matures September 25, 2024. Under certain circumstances, we have the ability to request, but our lenders are not required to grant, an increase to the revolving credit commitment by an aggregate amount of up to $300 million, not to exceed $900 million in total. Borrowings under the Revolving Credit Facility bear interest at the offered Eurodollar Rate plus 87.5 to 175 basis points based on certain financial measurements if a Eurodollar Rate loan, or at the offered fluctuating Base Rate plus 0 to 75 basis points based on certain financial measurements if a Base Rate loan.

Borrowings outstanding under the Revolving Credit Facility at August 31, 2022 were $115.0 million and there were approximately $11.3 million of outstanding letters of credit, which reduced the availability of this facility to $473.7 million.

Our financing arrangements also require us to comply with leverage and interest coverage ratios, maintain a minimum net working capital level, and comply with certain affirmative and negative covenants, including those relating to financial reporting and notification, payment of indebtedness, cash dividends, taxes and other obligations, compliance with applicable laws, and limitations on additional liens, indebtedness, acquisitions, investments and disposition of assets. The Revolving Credit Facility also requires our significant domestic subsidiaries, and any subsidiaries that guarantee our other indebtedness, to provide a guarantee of payment under the Revolving Credit Facility. At August 31, 2022, we were in compliance with the financial and other covenants in our financing agreements.

Note 11 – Other Non-current Assets

Investment in Indian Joint Venture

As of August 31, 2022, our investments in joint ventures include $11.3 million for our 40% ownership interest in a joint venture in India to develop and operate an airframe maintenance facility. The facility received certain regulatory approvals and commenced airframe maintenance operations in the second quarter of fiscal 2022.

The investment balance as of August 31, 2022 includes $8.8 million related to a guarantee liability recognized in conjunction with our guarantee of 40% of the Indian joint venture’s debt. In addition, each of the partners in the Indian joint venture has a loan to the joint venture proportionate to its equity ownership. Our loan to the Indian joint venture under this arrangement was $3.2 million as of August 31, 2022.

We account for our share of the earnings or losses of the Indian joint venture using the equity method with a reporting lag of two months, as the financial statements of the Indian joint venture are not completed on a basis that is sufficient for us to apply the equity method on a current basis. Our share of the Indian joint venture’s losses for the three-month periods ended August 31, 2022 and 2021 were $0.2 million and $0 million, respectively.

Note 12 – Earnings per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during each period. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options and shares issuable upon vesting of restricted stock awards.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, our unvested restricted stock awards are deemed participating securities since these shares are entitled to participate in dividends declared on common shares. During periods of net income, the calculation of earnings per share for common stock excludes income attributable to unvested restricted stock awards from the numerator and excludes the dilutive impact of those shares from the denominator. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

A reconciliation of the computations of basic and diluted earnings per share information for the three-month periods ended August 31, 2022 and 2021 is as follows:

Three Months Ended

August 31, 

    

2022

    

2021

Basic and Diluted EPS:

Income from continuing operations

$

22.3

$

11.2

Less income attributable to participating shares

(0.3)

(0.1)

Income from continuing operations attributable to common shareholders

22.0

11.1

Income from discontinued operations attributable to common shareholders

0.4

0.3

Net income attributable to common shareholders for earnings per share

22.4

$

11.4

Weighted Average Shares:

Weighted average common shares outstanding–basic

34.9

35.1

Additional shares from assumed exercise of stock options

0.5

0.6

Weighted average common shares outstanding–diluted

35.4

35.7

Earnings per share – basic:

Earnings from continuing operations

$

0.63

$

0.32

Income from discontinued operations

0.01

0.01

Earnings per share – basic

$

0.64

$

0.33

Earnings per share – diluted:

Earnings from continuing operations

$

0.62

$

0.31

Income from discontinued operations

0.01

0.01

Earnings per share – diluted

$

0.63

$

0.32

The potential dilutive effect of 230,000 and 793,000 shares relating to stock options was excluded from the computation of weighted average common shares outstanding – diluted for the three-month periods ended August 31, 2022 and 2021, respectively, as the shares would have been anti-dilutive.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Note 13 – Accumulated Other Comprehensive Loss

Changes in our accumulated other comprehensive loss (“AOCL”) by component for the three-month periods ended August 31, 2022 and 2021 were as follows:

Currency

Translation

Pension

    

Adjustments

    

Plans

    

Total

Balance at June 1, 2022

$

(2.8)

$

(16.8)

$

(19.6)

Other comprehensive income before reclassifications

(3.3)

(3.3)

Amounts reclassified from AOCL

0.2

0.2

Total other comprehensive income (loss)

(3.3)

0.2

(3.1)

Balance at August 31, 2022

$

(6.1)

$

(16.6)

$

(22.7)

Balance at June 1, 2021

$

3.9

$

(22.2)

$

(18.3)

Other comprehensive loss before reclassifications

(0.6)

(0.6)

Amounts reclassified from AOCL

0.3

0.3

Total other comprehensive income (loss)

(0.6)

0.3

(0.3)

Balance at August 31, 2021

$

3.3

$

(21.9)

$

(18.6)

Note 14 – Business Segment Information

Consistent with how our chief operating decision making officer (our Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two reportable segments: Aviation Services comprised of supply chain and MRO activities and Expeditionary Services comprised of manufacturing activities.

The Aviation Services segment consists of aftermarket support and services offerings that provide spare parts and maintenance support for aircraft operated by our commercial and government/defense customers. Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance-based logistics programs, customer fleet management and operations, and aircraft component repair management services. The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components. Cost of sales consists principally of the cost of product, direct labor, and overhead.

The Expeditionary Services segment consists of primarily manufacturing operations with sales derived from the design and manufacture of pallets, shelters, and containers used to support the U.S. military’s requirements for a mobile and agile force, including engineering, design, and system integration services for specialized command and control systems. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

The accounting policies for the segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements included in our annual Report on Form 10-K for the year ended May 31, 2022.

Our chief operating decision making officer (our Chief Executive Officer) evaluates performance based on our segments and utilizes gross profit as a primary profitability measure. Gross profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

Selected financial information for each segment is as follows:

Three Months Ended

    

August 31, 

2022

    

2021

Net sales:

Aviation Services

$

424.0

$

435.6

Expeditionary Services

22.3

19.5

$

446.3

$

455.1

Three Months Ended

    

August 31, 

2022

    

2021

Gross profit:

Aviation Services

$

78.0

$

60.9

Expeditionary Services

3.9

3.7

$

81.9

$

64.6

The following table reconciles segment gross profit to income from continuing operations before provision for income taxes:

Three Months Ended

    

August 31, 

2022

    

2021

Segment gross profit

$

81.9

$

64.6

Selling, general, and administrative

(50.1)

(49.3)

Loss from joint ventures

(0.6)

(0.2)

Other income, net

0.2

0.7

Interest expense

(1.1)

(0.7)

Interest income

0.1

Income from continuing operations before provision for income taxes

$

30.4

$

15.1

Note 15 – Legal Proceedings

We are involved in various claims and legal actions, including environmental matters, arising in the ordinary course of business. We are not a party to any material pending legal proceeding (including any governmental or environmental proceeding) other than routine litigation incidental to our business except for the following:

Department of Justice Investigation

As previously reported, the U.S. Department of Justice (“DoJ”), acting through the U.S. Attorney’s Office for the Southern District of Illinois, conducted an investigation of AAR Airlift Group, Inc. (“Airlift”), a wholly-owned subsidiary of AAR CORP., under the federal civil False Claims Act (“FCA”). The investigation related to Airlift’s performance of several contracts awarded by the U.S. Transportation Command (“TRANSCOM”) concerning the operations and maintenance of rotary-wing and fixed-wing aircraft in Afghanistan and Africa, as well as several U.S. Navy contracts. In June 2018, the DoJ informed Airlift that part of the investigation was precipitated by a lawsuit filed under the qui tam provisions of the FCA by a former employee of Airlift.

In June 2021, Airlift and the DoJ reached an agreement to settle the FCA investigation and related matters for approximately $11.5 million which concluded the DoJ investigation into Airlift’s contracts with TRANSCOM and the U.S. Navy. As part of the settlement, Airlift and AAR did not admit any wrongdoing.

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AAR CORP. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

August 31, 2022

(Unaudited)

(Dollars in millions, except per share amounts)

We recognized charges of $11.0 million in discontinued operations in fiscal 2021 related to this agreement and related matters with payment for the entire matter made in the first quarter of fiscal 2022.

Self-Reporting of Potential Foreign Corrupt Practices Act Violations

The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, in fiscal 2019, we self-reported these matters to the DoJ, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company is fully cooperating with the reviews by these agencies, although we are unable at this time to predict what action, if any, they may take.

Russian Bankruptcy Litigation

During calendar years 2016 and 2017, certain of the Company’s subsidiaries purchased four engines from VIM-AVIA Airlines, LLC (“VIM-AVIA”), a company organized in Russia. Subsequent to the purchase of the engines, VIM-AVIA declared bankruptcy in Russian courts, and shortly thereafter the receiver of the VIM-AVIA bankruptcy estate and one of the major creditors of VIM-AVIA filed a claw-back action against our subsidiaries alleging that the contracts entered into with VIM-AVIA in the 2016-2017 timeframe are invalid. The clawback action alleges that our subsidiaries owe the VIM-AVIA bankruptcy estate approximately $13 million, the alleged fair market value of the four engines at the time of sale.

The Company strongly disputes all claims asserted in the clawback action, believes it has meritorious defenses, and is vigorously defending itself in the Russian court system. However, with the developments in the Russia/Ukraine conflict, the U.S. and its North Atlantic Treaty Organization allies imposed a range of sanctions and export controls in February 2022 on Russian entities and individuals. These sanctions and export controls have resulted in heightened tensions between the United States and Russia and a hostile business and legal environment for foreign companies in Russia. As a result, we now believe that a loss related to this matter is reasonably possible, rather than remote, although we are not able to estimate of the range of possible losses at this time.

Performance Guarantee

In conjunction with the fiscal 2021 sale of our Composites business, we retained a performance guarantee to a customer of the Composites business under an existing contract providing flap track fairings on the A220 aircraft (“A220 Contract”). The term of the A220 Contract and our performance guarantee extend for the duration that A220 aircraft are in service and the customer continues to maintain support for the A220 aircraft. The performance guarantee does not contain a financial cap.

In March 2022, the buyer of the Composites business filed for bankruptcy and moved to have the bankruptcy court reject the A220 Contract. The buyer’s customer also notified us that they believe the buyer has failed to timely deliver products in accordance with the terms of the A220 Contract and that they have incurred losses, and will incur additional losses, related to the non-compliance that are covered by our performance guarantee. The losses claimed include delay damages, incremental labor costs, legal expenses, and other related costs.

While we believe that we have numerous defenses available against this claim that we will vigorously pursue, it is reasonably possible that we will incur a loss from the performance guarantee. Due to the preliminary nature of the claim we are unable, however, to estimate a range of loss on the performance guarantee. There can be no assurance that the performance guarantee will not have a material adverse effect on our operations, financial position and cash flows.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions)

General Overview

We report our activities in two reportable segments: Aviation Services comprised of supply chain and maintenance, repair, and overhaul (“MRO”) activities and Expeditionary Services comprised of manufacturing activities.

The Aviation Services segment consists of aftermarket support and services offerings that provide spare parts and maintenance support for aircraft operated by our commercial and government/defense customers. Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance-based logistics programs, customer fleet management and operations, and aircraft component repair management services. The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components. Cost of sales consists principally of the cost of materials, direct labor, and overhead.

The Expeditionary Services segment consists of primarily manufacturing operations with sales derived from the design and manufacture of pallets, shelters, and containers used to support the U.S. military’s requirements for a mobile and agile force including engineering, design, and system integration services for specialized command and control systems. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

Our chief operating decision making officer (our Chief Executive Officer) evaluates performance based on our segments and utilizes gross profit as a primary profitability measure. Gross profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around differences in products and services.

The accounting policies for the segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2022.

Business Trends and Outlook

Consolidated sales for the first quarter of fiscal 2023 decreased $8.8 million or 1.9% from the prior year quarter primarily due to a decrease in sales of $11.6 million or 2.7% in our Aviation Services segment. Consolidated sales to commercial customers increased $26.3 million or 9.8% over the prior year quarter due to the continuing recovery in commercial passenger air traffic from the impact of COVID-19. Our consolidated sales to government customers decreased $35.1 million or 18.7% primarily due to the completion of certain government programs, including Afghanistan contracts.

Over the long-term, we expect to see strength in our Aviation Services segment given its offerings of value-added services to both commercial and government and defense customers. We believe long-term commercial and government growth trends are favorable. Both our commercial and government businesses are subject to the economic environment, impact of COVID-19, public policy decisions or other factors that could adversely impact our business, financial condition or results of operations in the future.

As we continue to experience recovery and growth in our operations, our long-term strategy continues to emphasize investing in the business and capitalizing on opportunities in those markets. Our long-term strategy also emphasizes the return of capital to shareholders. In December 2021, our Board of Directors authorized a renewal of our stock repurchase program. The authorization has no expiration date and permits the Company to repurchase up to $150 million of our common stock. We were able to return capital to shareholders through common stock repurchases under this program of $64.3 million to date and expect to fully utilize the authorization by the end of calendar 2023.

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Results of Operations

Three-Month Periods Ended August 31, 2022 and 2021

Sales and gross profit for our two business segments for the three-months ended August 31, 2022 and 2021 were as follows:

Three Months Ended August 31, 

 

    

2022

    

2021

    

% Change

 

Sales:

Aviation Services:

Commercial

$

292.1

$

267.2

9.3

%

Government and defense

131.9

168.4

(21.7)

%

$

424.0

$

435.6

(2.7)

%

Expeditionary Services:

Commercial

$

1.5

$

0.1

nm

Government and defense

20.8

19.4

7.2

%

$

22.3

$

19.5

14.4

%

Three Months Ended August 31, 

 

    

2022

    

2021

    

% Change

 

Gross Profit:

Aviation Services:

Commercial

$

53.5

$

30.5

75.4

%

Government and defense

24.5

30.4

(19.4)

%

$

78.0

$

60.9

28.1

%

Expeditionary Services:

Commercial

$

$

n/a

Government and defense

3.9

3.7

5.4

%

$

3.9