1Q profit, sales rise for AAI's parent

War keeps demand high for unmanned aircraft, trainers

May 10, 2007|By Allison Connolly | Allison Connolly,Sun reporter

AAI Corp. parent United Industrial Corp. saw sales and profit rise in the first quarter, with the war continuing to fuel demand for AAI's unmanned aircraft systems and aircraft maintenance trainers.

Net income from continuing operations rose 31 percent to $10 million, or 75 cents per diluted share, from $7.7 million, or 61 cents per share, for the comparable period a year ago. The Hunt Valley-based company reported a loss of $800,000 on discontinued operations after divesting Detroit Stoker Co., which makes combustion equipment for alternative-energy companies.

Including results from continuing and discontinued operations, United Industrial posted net earnings of $9.2 million, or 69 cents per diluted share, compared with $8.6 million, or 67 cents per share, a year ago.

Sales for the quarter rose 25 percent to $160.8 million, from $128.7 million for the year-earlier period.

Earnings beat analysts' expectations by 2 cents, according to Thomson Financial.

"We're quite pleased with the progression in 2007," said analyst Michael S. Lewis of BB&T Capital Markets, which does or expects to do business with United Industrial.

Acquisitions made last year contributed $18.5 million to sales, but did not have an impact on earnings because of the costs associated with integrating them.

AAI manufactures and maintains Shadow unmanned drones, which collect data and video intelligence and relay it to controllers on the ground. Shadow drones have logged 177,000 hours to date, mostly for the Army in Iraq and Afghanistan. The Navy and Marine Corps are in the process of integrating the Shadow as a follow-on to the company's first drone, the Pioneer.

Chief Executive Officer Frederick M. Strader told analysts in a conference call yesterday that the Army plans to buy more Shadow systems, but "how much [money] will flow to us and exactly when is really hard to say quite yet."

The company is now incorporating a laser designator in the Shadow, allowing it to highlight targets on the ground. Strader said orders are ramping up for the company's One System of remote video terminals, which allows the controller to collect data and video from multiple types of drones at one time.

"One System is the growth driver in the future, in my opinion," Lewis said.

AAI Services Corp. produces maintenance training simulators for such military aircraft as the C-17 cargo plane and F-22 fighter jet, and provides technical support and services to commercial and government customers.

United Industrial closed up 98 cents yesterday at $53.25 per share.


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