AAR Reports Strong Second Quarter Fiscal Year 2026 Results
AAR CORP. (NYSE: AIR), a prominent provider of aviation services for commercial and government operators, MROs, and OEMs, has announced its financial results for the second quarter of fiscal year 2026, which concluded on November 30, 2025. The company showcased impressive growth metrics, highlighting increased sales and profitability across various segments.
Key Financial Highlights
- Sales: $795 million, an increase of 16% compared to the same quarter last year.
- GAAP Diluted EPS: $0.90.
- Adjusted Diluted EPS: $1.18, marking a 31% increase.
- GAAP Net Income: $35 million.
- Adjusted EBITDA: $97 million, up 23% from the prior year.
- Adjusted EBITDA Margin: Improved to 12.1%, compared to 11.4% in Q2 FY2025.
Management Insights
John M. Holmes, Chairman, President, and CEO of AAR, stated, "AAR delivered another outstanding quarter, achieving solid results throughout all segments of our business and advancing our strategic objectives through our recent acquisitions." The 16% sales growth included 12% organic growth, primarily driven by the Parts Supply business, which saw a remarkable 29% increase in sales.
Holmes further elaborated on parts distribution, saying, "Within Parts Supply, new parts distribution had another exceptional quarter with organic sales growth of 32% as we continue to capture market share." Additionally, the Repair & Engineering segment also reported growth, and sales to government customers rose by 23%.
Strategic Acquisitions and Operational Growth
During the quarter, AAR successfully completed two strategic acquisitions: ADI in Parts Supply and HAECO Americas in Repair & Engineering. These acquisitions are pivotal in strengthening AAR's distinctive new parts distribution activities and expanding its airframe heavy maintenance capabilities. Holmes noted that "the HAECO Americas acquisition secures agreements with key customers totaling approximately $850 million," effectively maximizing the capacity acquired.
AAR's robust balance sheet displays a net leverage ratio of 2.49x, which affords the company significant capacity for continued investment in both organic growth and acquisitions.
Recent Business Developments
- AAR secured $850 million in airframe heavy maintenance contracts related to the HAECO Americas acquisition.
- Agreements with Malaysia Airlines and Eaton have been finalized for various aerospace services.
- Trax, AAR's software solution used by over 100 airlines, continues to gain traction, providing essential management and procurement features.
Financial Performance Overview
Consolidated sales for the second quarter reached $795.3 million, an increase from $686.1 million in the prior year. Sales to commercial customers rose by 13%, while those to government customers surged by 23%.
The company recorded a net income of $34.6 million or $0.90 per diluted share, a significant turnaround from a net loss of $30.6 million in the previous year. Adjusted diluted earnings per share improved notably from $0.90 to $1.18.
Future Outlook
AAR continues to set ambitious goals for the remainder of fiscal year 2026. The company anticipates further revenue growth driven primarily by the integration of its new acquisitions and the advancement of its operational efficiencies. As AAR strives to maintain its position as a leader in aviation services, stakeholders can expect a strategic focus on profitability and market share expansion.