AAR reports third quarter fiscal year 2026 results

Rhea-AI Summary

AAR (NYSE: AIR) reported Q3 FY2026 results for the quarter ended Feb 28, 2026, with total sales of $845.1M, up 25% year‑over‑year, GAAP diluted EPS of $1.71, adjusted diluted EPS of $1.25 (up 26%), and adjusted EBITDA of $102M (up 26%).

Parts Supply grew sharply (+45%), organic adjusted sales rose 14% in the quarter, net income was $68.0M, operating cash flow was $74.7M, and net leverage improved to 2.17x. The company reiterated FY2026 guidance with Q4 sales growth of 19%–21%.

Positive

• Total sales +25% to $845.1M
• Adjusted diluted EPS +26% to $1.25
• Adjusted EBITDA +26% to $102M
• Parts Supply segment growth +45%
• Net leverage improved to 2.17x

Negative

• GAAP operating margin declined to 7.8%
• Selling, general, and administrative expenses rose to $89.8M
• Average diluted shares increased to 39.5M (equity offering)

Market Reaction – AIR

+12.90% $121.72

15m delay 33 alerts

+12.90% Since News

$121.72 Last Price

$112.62 $122.55 Day Range

+$550M Valuation Impact

$4.82B Market Cap

1.3x Rel. Volume

Following this news, AIR has gained 12.90%, reflecting a significant positive market reaction. Our momentum scanner has triggered 33 alerts so far, indicating elevated trading interest and price volatility. The stock is currently trading at $121.72. This price movement has added approximately $550M to the company's valuation.

Data tracked by StockTitan Argus (15 min delayed). Upgrade to Silver for real-time data.

Key Figures

Q3 FY2026 Sales: $845.1M GAAP Diluted EPS: $1.71 Adjusted Diluted EPS: $1.25 +5 more

8 metrics

Q3 FY2026 Sales $845.1M Consolidated third quarter sales, up 25% vs Q3 FY2025

GAAP Diluted EPS $1.71 Q3 FY2026 GAAP diluted EPS

Adjusted Diluted EPS $1.25 Q3 FY2026, up 26% vs prior-year quarter

GAAP Net Income $68M Q3 FY2026 net income

Adjusted EBITDA $102M Q3 FY2026, up 26% year-over-year

Adjusted EBITDA Margin 12.1% Q3 FY2026 vs 12.0% in Q3 FY2025

Net Leverage 2.17x As of Feb 28, 2026, within 2.0x–2.5x target range

Q4 FY2026 Sales Growth Guide 19%–21% Fourth quarter FY2026 total sales growth guidance

Market Reality Check

Price: $107.99 Vol: Volume 453,910 is about i...

normal vol

$107.99 Last Close

Volume Volume 453,910 is about in line with the 20-day average (0.96x relative volume). normal

Technical Price $103.49 is trading above the 200-day MA at $86.13.

Peers on Argus

AIR gained 2.13% on strong Q3 earnings while close peers showed mixed moves (e.g...

AIR gained 2.13% on strong Q3 earnings while close peers showed mixed moves (e.g., TGI +0.7%, SPR +0.92%, VSEC -2.02%), indicating a stock-specific reaction rather than a broad sector move.

Previous Earnings Reports

5 past events · Latest: Jan 06 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 06	Q2 2026 earnings	Positive	+2.1%	Strong Q2 growth, margin expansion, and accretive acquisitions with higher guidance.
Sep 23	Q1 2026 earnings	Positive	+4.2%	Double-digit sales growth and rising adjusted EPS and EBITDA margins.
Jul 16	FY2025 results	Positive	+13.7%	Strong Q4 and full-year sales growth with higher adjusted EPS and margins.
Mar 27	Q3 2025 earnings	Positive	-16.4%	Robust growth but GAAP loss from divestiture-related charge drove negative reaction.
Jan 07	Q2 2025 earnings	Positive	+8.7%	Record sales and margin expansion despite FCPA-related GAAP loss.

Pattern Detected

Earnings releases have generally been followed by positive price reactions, with one notable selloff despite strong operational metrics.

Recent Company History

Over the past year, AIR has consistently reported strong earnings growth, including Q1 FY2026 sales of $740M, Q2 FY2026 sales of $795.3M, and Q4 FY2025 sales up 15% to $754.5M. Adjusted EPS and EBITDA margins have trended higher, while net leverage moved down from 3.06x to 2.49x. The current Q3 FY2026 report, with $845.1M sales and higher adjusted EPS, continues this pattern of steady expansion in parts distribution and repair activities.

Historical Comparison

+2.4% avg move · AIR’s past 5 earnings releases saw an average move of about 2.43%, mostly positive. Today’s 2.13% ga...

earnings

+2.4%

Average Historical Move earnings

AIR’s past 5 earnings releases saw an average move of about 2.43%, mostly positive. Today’s 2.13% gain on Q3 FY2026 results is consistent with that typical post-earnings reaction size.

Earnings releases show a progression of rising sales, expanding adjusted EBITDA margins near 12%, and declining net leverage from above 3x toward the low 2x range as parts distribution and MRO platforms scale.

Market Pulse Summary

The stock is surging +12.9% following this news. A strong positive reaction aligns with AIR’s histor...

Analysis

The stock is surging +12.9% following this news. A strong positive reaction aligns with AIR’s history of constructive moves on earnings, where past reports often saw gains around the low single digits. With continued sales growth, higher adjusted margins, and reduced net leverage, prior upside moves sometimes faded when growth or integration risks re-emerged. Investors would likely watch acquisition execution, mix toward higher-margin offerings, and any slowdown in commercial and government demand as potential drivers of future volatility.

Key Terms

gaap diluted eps, adjusted diluted eps, adjusted ebitda, adjusted ebitda margin, +4 more

8 terms

gaap diluted eps financial

"Sales of $845 million; increased 25%GAAP diluted EPS of $1.71Adjusted diluted EPS of $1.25"

GAAP diluted EPS is a company's net income per share calculated using Generally Accepted Accounting Principles after assuming all potential shares from stock options, warrants or convertible securities have been issued. Investors use it to see how much profit each share would receive if all these claims became actual shares; like checking how big each pizza slice would be if more people joined the table, it reveals the potential downside to per-share earnings and supports fair comparisons across firms.

adjusted diluted eps financial

"GAAP diluted EPS of $1.71Adjusted diluted EPS of $1.25; increased 26%"

Adjusted diluted EPS is a company’s profit per share after adding back or removing one-time items (like restructuring costs or gains) and dividing by the number of shares including potential shares from options and convertible securities. Investors use it as a cleaner view of ongoing earnings—like looking at a car’s regular fuel efficiency rather than a trip boosted by downhill coasting—to judge underlying performance and compare companies without temporary distortions.

adjusted ebitda financial

"GAAP Net income of $68 millionAdjusted EBITDA of $102 million; increased 26%"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

adjusted ebitda margin financial

"Adjusted EBITDA margin increased to 12.1% from 12.0%"

Adjusted EBITDA margin shows how much profit a company makes from its core operations, expressed as a percentage of its total revenue, after removing certain one-time or unusual expenses and income. It helps investors understand the company's true earning ability from regular business activities, making it easier to compare performance over time or with other companies. Think of it as measuring the efficiency of a business in turning sales into profits, excluding irregular adjustments.

organic adjusted sales growth financial

"Total sales were up 25%, including 14% organic adjusted sales growth"

Organic adjusted sales growth measures how much a company’s revenue rises after removing the effects of acquisitions or divestitures, currency swings, and one-off items, showing growth generated by the company’s core operations. Investors use it to judge the true momentum and health of the business—like comparing the same set of stores year-to-year—because it strips out external or temporary factors that can make headline sales look better or worse than the underlying performance.

net leverage financial

"Cash from operations was $75 million in the quarter, which helped us to reduce net leverage to 2.17x."

Net leverage measures how many years it would take for a company to pay off its outstanding debt using its annual operating cash flow, after subtracting cash on hand from total debt. Think of it like a household’s mortgage balance minus savings divided by yearly income; a lower number means the company is in a safer position to handle debt, while a higher number signals greater financial risk and potential pressure on profits or growth.

organic sales growth financial

"Organic sales growth 1 | 6% - 8%"

Organic sales growth measures how much a company’s revenue rises from its regular business activity — like selling more products, charging higher prices, or selling to more customers — without counting money from buying other businesses or one-time currency effects. Investors watch it because it shows whether demand and the company’s core operations are genuinely getting stronger, similar to judging a garden by how much the plants you planted yourself are growing rather than by adding bought potted plants.

adjusted operating margin financial

"Adjusted operating margin | 10.2% - 10.5%"

Adjusted operating margin shows how much profit a company makes from its core business activities, after removing unusual or one-time costs and income. It helps investors see the company's true profitability by providing a clearer picture, similar to removing unexpected expenses to understand the regular performance. This metric is useful for comparing companies or tracking performance over time, as it highlights consistent earning power.

AI-generated analysis. Not financial advice.

WOOD DALE, Ill., March 24, 2026 /PRNewswire/ -- AAR CORP. (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, reported today financial results for the fiscal year 2026 third quarter ended February 28, 2026.

THIRD QUARTER FISCAL YEAR 2026 HIGHLIGHTS
(As compared to Q3 FY2025)

• Sales of $845 million; increased 25%
• GAAP diluted EPS of $1.71
• Adjusted diluted EPS of $1.25; increased 26%
• GAAP Net income of $68 million
• Adjusted EBITDA of $102 million; increased 26%
• Adjusted EBITDA margin increased to 12.1% from 12.0%

"AAR delivered another outstanding quarter, continuing our momentum. Total sales were up 25%, including 14% organic adjusted sales growth," stated John M. Holmes, AAR's Chairman, President and CEO. "We saw growth across each of our parts, repair, and software platform activities in the quarter. Our Parts Supply segment grew 45% led by 36% organic growth in our new parts Distribution activity. Within new parts Distribution we saw 55% organic growth in sales to our government customers. Our Repair & Engineering business also reported strong sales growth in the period on continued volume increases in our hangars and component repair facilities, while Trax results showcased further expansion of its recurring software revenue.

"Our continued strong revenue growth translated to an adjusted EBITDA increase of 26% in the quarter, and we expanded our adjusted EBITDA margins from 12.0% to 12.1% year over year. We expect continued margin expansion as we shift our sales mix to higher margin offerings as well as realize synergies from our recent acquisitions.

"Regarding acquisitions, the execution of our integration and performance improvement plan for HAECO Americas is progressing well and is ahead of schedule. Furthermore, our acquisition of ADI is exceeding our expectations, and we continue to find new opportunities for growth, particularly given its government product lines. Finally, we remain on track to close our acquisition of A-R-T in the fourth quarter of fiscal year 2026.

"We also made solid progress with respect to our leverage. Cash from operations was $75 million in the quarter, which helped us to reduce net leverage to 2.17x. We are now comfortably within our target range of 2.0x to 2.5x, giving us flexibility to continue funding our strategic growth.

Holmes concluded, "We see significant opportunity for continued profitable growth ahead, supported by resilient and growing demand for our aviation aftermarket solutions. We are closely following the conflict in the Middle East and are in constant contact with our customers. Fundamental demand for air travel remains extremely strong, and we are the preferred solution for the markets we serve. We remain extremely well positioned in the market and are committed to delivering for our customers in all environments while executing on our disciplined growth strategy."

RECENT UPDATES

• Commenced exclusive distribution agreement with TRIUMPH for its actuation power line on Boeing and Airbus commercial platforms
• Recently awarded new multi-year contracts with the U.S. Air Force to repair and build new pallets at our Mobility Systems location worth up to $450 million
• Completed Oklahoma City Airframe MRO facility expansion, inducted first aircraft in early March
• Trax signed a multi-year contract expansion with Air Atlanta Icelandic to add eMobility and cloud hosting solutions to its current eMRO platform offering
• Signed a new agreement with Otto Instrument Service to distribute the LASEREF IV inertial reference system product line, further broadening our new parts Distribution activities in the business aviation market

THIRD QUARTER FISCAL YEAR 2026 RESULTS

Consolidated third quarter sales increased 25% to $845.1 million, compared to $678.2 million in the same quarter last year. Sales to commercial customers increased 27%, or $130 million, primarily due to double-digit organic growth across new parts Distribution within the Company's Parts Supply segment and the impact of the Company's acquisitions of HAECO Americas and ADI. Sales to government customers increased 19% over the same period last year, primarily due to increased order volume for new parts Distribution activities and the impact of ADI's sales to government customers. Sales to commercial customers were 73% of consolidated sales, compared to 72% in the prior year quarter.

The Company reported net income of $68.0 million, or $1.71 per diluted share. For the third quarter of the prior year, the Company reported a net loss of $8.9 million, or $0.25 per share. The prior year quarter included a pre-tax charge of $63.7 million associated with the divestiture of the Company's Landing Gear Overhaul business. Adjusted diluted earnings per share in the third quarter of fiscal year 2026 were $1.25, compared to $0.99 in the third quarter of the prior year.

Selling, general, and administrative expenses were $89.8 million in the current quarter, compared to $61.3 million in the prior year quarter. The prior year quarter included the reversal of a legal charge of $11.1 million related to a Russian court judgment, which we successfully appealed. Acquisition, amortization, and integration expenses were $8.7 million in the quarter, compared to $5.3 million in the prior year quarter.

Operating margins were 7.8% in the quarter, compared to 10.5% in the prior year quarter. Adjusted operating margin increased to 10.2% in the current year quarter from 9.7% in the prior year quarter, primarily as a result of increased volume and profitability in the Company's new parts Distribution activities.

Net interest expense for the quarter was $17.1 million, compared to $18.1 million last year. Average diluted share count increased from 35.4 million shares in the prior year quarter to 39.5 million shares in the current year quarter primarily due to the Company's equity offering in the second quarter of fiscal year 2026.

Cash flow provided by operating activities was $74.7 million during the current quarter, compared to cash used in operating activities of $18.7 million in the prior year quarter. As of February 28, 2026, net debt was $816.5 million and net leverage was 2.17x.

FOURTH QUARTER AND FULL YEAR FY2026 GUIDANCE

The Company is providing the following guidance for the fourth quarter and full year fiscal 2026:

	Fourth quarter FY2026 As of March 24, 2026
Total sales growth	19% - 21%
Organic sales growth1	6% - 8%
Adjusted operating margin	10.2% - 10.5%

1 Organic sales growth reflects growth from prior year adjusted organic sales for the relevant period, which excludes Landing Gear sales and impact of acquisitions completed in FY2026.

 

	Full year FY2026
	Prior As of January 6, 2026	Current As of March 24, 2026
Total sales growth	Approaching 17%	~19%
Organic sales growth1	Approaching 11%	~12%

Conference call information

On Tuesday, March 24, 2026, at 4 p.m. Central time, AAR will hold a conference call to discuss the results. A listen-only webcast and slides can be accessed at https://edge.media-server.com/mmc/p/8n3xaah2. Participants may join via phone by registering at https://register-conf.media-server.com/register/BI0f6731dbbd854a97a0fbedce9ab66e73. 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 the webcast link and will remain available for approximately one year.

The slides are also available on AAR's website at https://www.aarcorp.com/en/investors/quarterly-results/. 

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 four operating segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services. Additional information can be found at aarcorp.com/.

Contact: Chris Tillett – Investor Relations | +1-630-227-5830 | investors@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, our fourth quarter and full year FY2026 guidance, execution of strategies, continued demand in the commercial and government aviation markets; market position; anticipated activities and benefits related to new or expanding business relationships; expected contributions and synergies related to acquisitions; expansion of capabilities and operational footprint; opportunities for margin improvement through operations, integration activities and other efficiency initiatives; and continued sales and margin growth, earnings performance, debt management, and capital allocation.

Forward-looking statements often address our expected future operating and financial performance and financial condition, or 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) adverse events and negative publicity in the aviation industry; (iii) a reduction in sales to the U.S. government and its contractors; (iv) cost overruns and losses on fixed-price contracts; (v) nonperformance by subcontractors or suppliers; (vi) our ability to manage our operational footprint; (vii) a reduction in outsourcing of maintenance activity by airlines; (viii) a shortage of skilled personnel or work stoppages; (ix) competition from other companies; (x) financial, operational and legal risks arising as a result of operating internationally; (xi) inability to integrate acquisitions effectively and execute operational and financial plans related to the acquisitions; (xii) failure to realize the anticipated benefits of acquisitions; (xiii) circumstances associated with divestitures; (xiv) inability to recover costs due to fluctuations in market values for aviation products and equipment; (xv) cyber or other security threats or disruptions; (xvi) a need to make significant capital expenditures to keep pace with technological developments in our industry; (xvii) restrictions on use of intellectual property and tooling important to our business; (xviii) inability to fully execute our stock repurchase program and return capital to stockholders; (xix) limitations on our ability to access the debt and equity capital markets or to draw down funds under loan agreements; (xx) our ability to manage our debt; (xxi) non-compliance with restrictive and financial covenants contained in our debt and loan agreements; (xxii) changes in or non-compliance with laws and regulations related to federal contractors, the aviation industry, international operations, safety, and environmental matters, and the costs of complying with such laws and regulations; and (xxiii) exposure to product liability and property claims that may be in excess of our liability insurance coverage.  Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. 

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 filed 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, except as required by law.

AAR CORP. and subsidiaries
Condensed consolidated statements of   operations (In millions except per share data - unaudited)	Three months ended February 28,					Nine months ended February 28,
	2026		2025			2026		2025
Sales	$ 845.1			$ 678.2		$ 2,380.0		$ 2,026.0
Cost of sales	690.4			546.5		1,934.7		1,648.5
Gross profit	154.7			131.7		445.3		377.5
Provision for (Recovery of) credit losses	0.5			(0.2)		2.2		(0.3)
Selling, general, and administrative	89.8			61.3		249.7		270.3
Earnings from joint ventures	1.4			0.5		4.3		4.7
Operating income	65.8			71.1		197.7		112.2
Bargain purchase gain	35.7			––		35.7		––
Gain on sale of headquarters building	9.8			––		9.8		––
Gain (Loss) related to sale and exit of   businesses, net	(0.4)			(64.0)		0.2		(65.3)
Interest expense, net	(17.1)			(18.1)		(54.2)		(55.2)
Other expense, net	(0.7)			(0.1)		(1.0)		(0.4)
Income (Loss) before income tax expense   (benefit)	93.1			(11.1)		188.2		(8.7)
Income tax expense (benefit)	25.1			(2.2)		51.2		12.8
Net income (loss)	$ 68.0			$ (8.9)		$ 137.0		$ (21.5)
Earnings (Loss) per share – Basic	$ 1.72			$ (0.25)		$ 3.61		$ (0.61)
Earnings (Loss) per share – Diluted	$ 1.71			$ (0.25)		$ 3.59		$ (0.61)
Share data used for earnings (loss) per share:
Weighted average shares outstanding – Basic	39.3			35.4		37.8		35.4
Weighted average shares outstanding – Diluted	39.5			35.4		38.0		35.4

 

AAR CORP. and subsidiaries
Condensed consolidated balance sheets (In millions)	February 28, 2026		May 31, 2025
	(unaudited)
ASSETS
Cash and cash equivalents	$ 78.5		$ 96.5
Restricted cash	21.6		12.7
Accounts receivable, net	426.2		354.8
Contract assets	142.3		140.3
Inventories, net	958.2		809.2
Other current assets	136.9		97.1
Total current assets	1,763.7		1,510.6
Property, plant, and equipment, net	163.2		158.5
Goodwill and intangible assets, net	840.9		750.4
Rotable assets supporting long-term programs	188.0		172.4
Operating lease right-of-use assets, net	192.8		93.3
Other non-current assets	183.9		159.4
Total assets	$ 3,332.5		$ 2,844.6
LIABILITIES AND EQUITY
Accounts payable	$ 324.0		$ 303.1
Other current liabilities	329.0		251.6
Total current liabilities	653.0		554.7
Long-term debt	888.3		968.0
Operating lease liabilities	91.4		79.6
Other non-current liabilities	56.4		30.7
Total liabilities	1,689.1		1,633.0
Equity	1,643.4		1,211.6
Total liabilities and equity	$ 3,332.5		$ 2,844.6

 

AAR CORP. and subsidiaries
Condensed consolidated statements of cash flows (In millions – unaudited)	Three months ended February 28,				Nine months ended February 28,
	2026		2025		2026		2025
Cash flows provided by (used in) operating activities:
Net income (loss)	$ 68.0		$ (8.9)		$ 137.0		$ (21.5)
Adjustments to reconcile net income (loss) to net cash provided by (used in)      operating activities
Depreciation and amortization	21.0		14.7		53.5		43.5
Stock-based compensation expense	3.7		5.6		13.3		15.6
Bargain purchase gain	(35.7)		––		(35.7)		––
Gain on sale of building	(9.8)		––		(9.8)		––
Impairment charge	––		63.0		––		63.0
Changes in certain assets and liabilities:
Accounts receivable	(24.5)		(8.9)		(35.1)		(42.2)
Contract assets	10.5		(10.6)		14.2		(37.8)
Inventories	(47.2)		(19.2)		(65.5)		(76.6)
Other current assets	4.4		(8.1)		(23.9)		(12.9)
Rotable assets supporting long-term programs	19.0		(12.1)		(25.6)		(24.2)
Accounts payable and accrued liabilities	53.7		(31.1)		25.1		71.5
Other	11.6		(3.1)		(4.1)		6.3
Net cash provided by (used in) operating activities	74.7		(18.7)		43.4		(15.3)
Cash flows used in investing activities:
Property, plant, and equipment expenditures	(8.5)		(8.5)		(24.6)		(24.7)
Proceeds from sale of building	24.8		4.7		24.8		4.7
Acquisitions, net of cash acquired	(0.4)		––		(222.0)		2.9
Hangar expansion activity, net	(24.0)		0.5		(24.5)		(1.6)
Other	(6.6)		(0.4)		(5.5)		1.8
Net cash used in investing activities	(14.7)		(3.7)		(251.8)		(16.9)
Cash flows provided by (used in) financing activities:
Short-term borrowings (repayments) on Revolving Credit Facility, net	(65.0)		35.0		(232.0)		35.0
Proceeds from equity offering, net	––		––		273.9		––
Proceeds from long-term borrowings, net	––		––		153.0		––
Other	8.9		5.8		4.4		2.0
Net cash provided by (used in) financing activities	(56.1)		40.8		199.3		37.0
Increase (Decrease) in cash and cash equivalents	3.9		18.4		(9.1)		4.8
Cash, cash equivalents, and restricted cash at beginning of period	96.2		82.5		109.2		96.1
Cash, cash equivalents, and restricted cash at end of period	$100.1		$ 100.9		$ 100.1		$ 100.9

 

AAR CORP. and subsidiaries
Third-party sales by segment (In millions - unaudited)	Three months ended February 28,			Nine months ended February 28,
	2026	2025		2026	2025
Parts Supply	$ 392.5	$ 270.7		$ 1,063.9	$   794.1
Repair & Engineering	265.3	215.9		724.4	662.3
Integrated Solutions	167.8	162.9		528.6	495.2
Expeditionary Services	19.5	28.7		63.1	74.4
	$ 845.1	$ 678.2		$ 2,380.0	$ 2,026.0
Operating income (loss) by segment (In millions- unaudited)	Three months ended February 28,			Nine months ended February 28,
	2026	2025		2026	2025
Parts Supply	$ 50.7	$ 45.4		$ 132.5	$ 107.1
Repair & Engineering	15.1	19.0		58.2	62.9
Integrated Solutions	9.4	9.6		33.0	23.8
Expeditionary Services	2.8	6.4		8.2	6.9
	78.0	80.4		231.9	200.7
Corporate and other	(12.2)	(9.3)		(34.2)	(88.5)
	$ 65.8	$ 71.1		$ 197.7	$ 112.2

Adjusted net income, adjusted diluted earnings per share, organic adjusted sales growth, adjusted operating margin, adjusted cash flow used in operating activities, adjusted EBITDA, adjusted EBITDA margin, net debt, and net debt to adjusted EBITDA (net leverage) 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:

• Costs associated with U.S. Foreign Corrupt Practices Act ("FCPA") matters that we self-reported to the U.S. Department of Justice and other agencies, including investigation costs and settlement charges.
• Expenses associated with recent acquisition activity, including professional fees for legal, due diligence, and other acquisition activities, intangible asset amortization (including amortization of favorable lease assets classified within operating lease right-of-use assets), integration costs, bargain purchase gains, and compensation expense related to contingent consideration and retention agreements.
• Legal judgments and reversals related to or impacted by the Russia/Ukraine conflict.
• Contract termination costs and benefits are comprised of gains and losses that are recognized at the time of modifying, terminating, or restructuring certain customer and vendor contracts, including the impact from the U.S. government exercising their termination for convenience in the first quarter of fiscal year 2025 for our Mobility Systems business's new-generation pallet contract.
• Losses related to our exit from our Indian joint venture, our Landing Gear Overhaul business, and our Composites manufacturing business, including legal fees for the performance guarantee associated with the Composites' A220 aircraft contract.

Adjusted EBITDA is net income 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, FCPA settlement and investigation costs, certain legal judgments, acquisition, integration, and amortization expenses from recent acquisition activity, headquarters relocation activity, product line exits, and significant customer contract terminations.

The Company is not providing a reconciliation of forward-looking financial measures to the most directly comparable forward-looking GAAP measure because the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, unusual gains and losses, the ultimate outcome of pending litigation, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. Each of the adjustments has not occurred, are out of the Company's control and/or cannot be reasonably predicted. For this reason, the Company is unable to address the probable significance of the unavailable information.

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 net income (In millions - unaudited)	Three months ended February 28,			Nine months ended February 28,
	2026	2025		2026	2025
Net income (loss)	$ 68.0	$   (8.9)		$137.0	$ (21.5)
Acquisition, integration, and amortization expenses	15.5	7.5		36.1	23.6
Bargain purchase gain	(35.7)	––		(35.7)	––
Gain on sale of headquarters building	(9.8)	––		(9.8)	––
Impairment charge related to product line exit	4.9	––		4.9	––
Loss on equity investments	0.3	––		0.3	––
Loss (Gain) related to sale of business/joint venture, net	0.4	64.0		(0.2)	63.2
Severance charges	––	––		1.0	––
Government COVID-related subsidy liability reversal	––	––		(0.7)	––
FCPA settlement and investigation costs	––	1.1		––	65.3
Russian bankruptcy court judgment (reversal)	––	(11.1)		––	(11.1)
Contract termination cost (benefit)	––	(3.0)		––	0.2
Tax effect on adjustments (a)	6.0	(14.2)		1.1	(21.6)
Adjusted net income	$ 49.6	$ 35.4		$ 134.0	$ 98.1

(a) Calculation uses estimated statutory tax rates on non-GAAP adjustments except for the impact of the non-deductible portion of the FCPA settlement charge.

 

Adjusted diluted earnings per share (unaudited)	Three months ended February 28,			Nine months ended February 28,
	2026	2025		2026	2025
Diluted earnings (loss) per share	$ 1.71	$ (0.25)		$ 3.59	$ (0.61)
Acquisition, integration, and amortization expenses	0.39	0.21		0.95	0.66
Bargain purchase gain	(0.90)	––		(0.94)	––
Gain on sale of headquarters building	(0.25)	––		(0.26)	––
Impairment charge related to product line exit	0.12	––		0.13	––
Loss on sale of equity investment	0.01	––		0.01	––
Loss (Gain) related to sale of business/joint venture, net	0.01	1.80		(0.01)	1.78
Severance charges	––	––		0.03	––
Government COVID-related subsidy liability reversal	––	––		(0.02)	––
FCPA settlement and investigation costs	––	0.03		––	1.84
Russian bankruptcy court judgment (reversal)	––	(0.31)		––	(0.31)
Contract termination benefit	––	(0.09)		––	––
Tax effect on adjustments (a)	0.16	(0.40)		0.03	(0.61)
Adjusted diluted earnings per share	$ 1.25	$ 0.99		$ 3.51	$ 2.75

(a) Calculation uses estimated statutory tax rates on non-GAAP adjustments except for the impact of the non-deductible portion of the FCPA settlement charge.

 

Adjusted operating margin (In millions - unaudited)	Three months ended
	February 28, 2026	November 30, 2025	February 28, 2025
Sales	$ 845.1	$ 795.3	$ 678.2
Contract termination benefit	––	––	(4.0)
Adjusted sales	$ 845.1	$ 795.3	$ 674.2
Operating income	$   65.8	$ 67.0	$ 71.1
Acquisition, integration, and amortization expenses	15.5	14.2	7.5
Impairment charge related to product line exit	4.9	––	––
Russian bankruptcy court judgment (reversal)	––	––	(11.1)
Contract termination benefit	––	––	(3.0)
FCPA settlement and investigation costs	––	––	1.1
Adjusted operating income	$  86.2	$ 81.2	$ 65.6
Operating margin	7.8 %	8.4 %	10.5 %
Adjusted operating margin	10.2 %	10.2 %	9.7 %

 

Organic adjusted sales growth for the three months ended February 28, 2026 (unaudited)
GAAP sales growth	24.6 %
Impact of contract termination benefit	0.3
Impact of Landing Gear Overhaul divestiture	3.6
Impact of acquisitions within the last twelve months	(14.4)
Organic adjusted sales growth	14.1 %

 

Adjusted cash provided by (used in) operating activities (In millions - unaudited)	Three months ended February 28,			Nine months ended February 28,
	2026	2025		2026	2025
Cash provided by (used in) operating activities	$ 74.7	$ (18.7)		$  43.4	$ (15.3)
Amounts outstanding on accounts receivable financing program:
Beginning of period	28.1	23.9		21.3	13.7
End of period	(28.2)	(20.2)		(28.2)	(20.2)
Adjusted cash provided by (used in) operating activities	$ 74.6	$ (15.0)		$ 36.5	$ (21.8)

 

Adjusted EBITDA (In millions - unaudited)	Three months ended February 28,			Nine months ended February 28,			Year ended May 31,
	2026	2025		2026	2025		2025
Net income (loss)	$ 68.0	$  (8.9)		$137.0	$ (21.5)		$  12.5
Income tax expense (benefit)	25.1	(2.2)		51.2	12.8		26.4
Other expense, net	0.7	0.1		1.0	0.4		0.3
Interest expense, net	17.1	18.1		54.2	55.2		73.6
Depreciation and amortization	20.2	14.0		51.1	41.5		55.2
Acquisition and integration expenses	7.5	3.5		18.0	11.7		10.8
Bargain purchase gain	(35.7)	––		(35.7)	––		––
Gain on sale of headquarters building	(9.8)	––		(9.8)	––		––
Impairment charge related to product line exit	4.9	––		4.9	––		––
Losses related to sale of business/joint    venture, net	0.4	64.0		(0.2)	63.2		70.3
Severance charges	––	––		1.0	––		––
Government COVID-related subsidy    liability reversal	––	––		(0.7)	––		0.8
FCPA settlement and investigation costs	––	1.1		––	65.3		65.3
Russian bankruptcy court judgment	––	(11.1)		––	(11.1)		(11.1)
Contract termination cost (benefit)	––	(3.0)		––	0.2		0.2
Stock-based compensation	3.7	5.6		13.3	15.6		19.9
Adjusted EBITDA	$ 102.1	$ 81.2		$ 285.3	$ 233.3		$ 324.2
Net income margin	8.0 %	(1.3) %
Adjusted EBITDA margin	12.1 %	12.0 %

 

Net debt (In millions - unaudited)	February 28, 2026		February 28, 2025
Total debt	$895.0		$1,032.0
Less: Cash and cash equivalents	(78.5)		(84.4)
Net debt	$816.5		$947.6

 

Net debt to adjusted EBITDA (In millions - unaudited)
Adjusted EBITDA for the year ended May 31, 2025	$ 324.2
Less:  Adjusted EBITDA for the nine months ended February 28, 2025	(233.3)
Plus:  Adjusted EBITDA for the nine months ended February 28, 2026	285.3
Adjusted EBITDA for the twelve months ended February 28, 2026	$ 376.2
Net debt at  February 28, 2026	$ 816.5
Net debt to Adjusted EBITDA	2.17

 

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SOURCE AAR CORP.

FAQ

What were AAR (AIR) Q3 FY2026 sales and EPS reported March 24, 2026?

AAR reported $845.1M in Q3 FY2026 sales and GAAP diluted EPS of $1.71. According to the company, adjusted diluted EPS was $1.25, representing a 26% increase versus the prior-year quarter.

How did AAR (AIR) parts and repair businesses perform in Q3 FY2026?

Parts Supply grew 45%, driven by new parts Distribution and 36% organic growth. According to the company, Repair & Engineering also reported strong sales from higher hangar and component repair volumes.

What guidance did AAR (AIR) provide for Q4 FY2026 and full-year FY2026?

For Q4 FY2026 the company guided total sales growth of 19%–21% and organic growth of 6%–8%. According to the company, full‑year FY2026 total sales are now ~19% growth with ~12% organic growth.

How did AAR (AIR) improve its leverage and cash flow in Q3 FY2026?

Operating cash flow was $74.7M in the quarter, helping reduce net leverage to 2.17x. According to the company, this places leverage comfortably inside its 2.0x–2.5x target range.

What impact did acquisitions have on AAR (AIR) Q3 FY2026 results?

Acquisitions including HAECO Americas and ADI contributed to revenue and government sales growth. According to the company, ADI exceeded expectations and integration of HAECO Americas is ahead of schedule.