AAR (AIR) Q3 2026 earnings summary

Executive summary

• Third quarter FY2026 sales rose 25% year-over-year to $845.1 million, with 14% organic adjusted sales growth, driven by strong commercial demand and recent acquisitions including HAECO Americas and ADI.

• GAAP net income reached $68 million, reversing a prior-year net loss, and adjusted diluted EPS increased 26% to $1.25.

• 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 recent acquisitions is ahead of schedule, and the A-R-T acquisition is expected to close in Q4 FY2026.

• Maintained a strong balance sheet and disciplined capital allocation, supported by robust operating cash flow and a public equity offering.

Financial highlights

• Quarterly sales reached $845.1 million, up 24.6% year-over-year; adjusted EBITDA grew 26% to $102.1 million, with margin expanding to 12.1%.

• Quarterly net income was $68.0 million; adjusted EPS increased 26% to $1.25; diluted EPS was $1.71.

• Operating income for the quarter was $65.8 million; adjusted operating income rose 31% to $86.2 million, with margin up to 10.2%.

• Cash flow from operations was $74.7 million; 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%, adjusted operating margin 10.2%-10.5%, estimated tax rate 28%.

• 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.