AAR (AIR) investor relations material

Executive summary

• Third quarter FY2026 sales rose 25% year-over-year to $845.1 million, with 14% organic adjusted sales growth and strong performance across all business segments, driven by robust commercial and government demand and recent acquisitions.

• Adjusted operating income rose 31%, adjusted EBITDA and adjusted EPS both increased 26% year-over-year, and GAAP net income reached $68 million, reversing a prior-year net loss.

• Growth was broad-based across parts, repair, and software platforms, with Parts Supply segment sales up 45% and new parts Distribution up 36% organically.

• Integration of HAECO Americas and ADI ahead of schedule; Oklahoma City hangar expansion completed, Miami on track, and A-R-T acquisition expected to close in Q4 FY2026.

• Trax software platform delivered record results, expanding recurring revenue base and signing multi-year contracts.

Financial highlights

• Total sales reached $845.1 million, up 25% year-over-year; adjusted EBITDA grew 26% to $102.1 million with margin expanding to 12.1%.

• Adjusted operating income was $86.2 million, margin improved by 50 bps to 10.2%; adjusted diluted EPS rose 26% to $1.25 per share.

• GAAP net income for the quarter was $68.0 million, with diluted EPS of $1.71; net income margin was 8.0%.

• Cash flow from operations was $74.7 million for the quarter; net debt stood at $816.5 million as of February 28, 2026.

• Gross margin for the quarter was 18.3%; government and defense gross margin was 24.3%.

Outlook and guidance

• Q4 FY2026 guidance: total sales growth of 19–21%, organic sales growth of 6–8%, and adjusted operating margin of 10.2–10.5%.

• Full-year FY2026 guidance: total sales growth ~19%, organic sales growth ~12%, both improved from prior outlook.

• Management expects continued margin expansion and profitable growth, driven by higher-margin offerings and acquisition synergies.

• Approximately 60% of $780 million backlog expected to be recognized as revenue over the next 12 months.

• Ample liquidity and capital resources expected to meet requirements for at least the next 12 months.