10-K · July 21, 2026
AAR delivered a strong FY2026 inflection, with sales up 19.0% to $3.308 billion, operating income up 50.0% to $277.8 million, and GAAP diluted EPS of $4.86 versus $0.35 in FY2025. Its strategy is focused on scaling…
Earnings analysis · 10-Q
AIR earnings analysis
Filed September 29, 2026 · Our reading of the company's report
The latest report
AAR delivered strong year-over-year growth, with revenue up 24.1% to $918.0M, gross margin rising to 19.2%, and operating cash flow recovering to $55.8M. Parts Supply and Government Solutions produced meaningful profit…
Read full summary
AAR delivered strong year-over-year growth, with revenue up 24.1% to $918.0M, gross margin rising to 19.2%, and operating cash flow recovering to $55.8M. Parts Supply and Government Solutions produced meaningful profit growth, but Repair, Engineering, and Software margins fell to 5.4% from 8.8%, while consolidated operating margin declined to approximately 7.9% from 8.8%. The pending $3.0B MRO Holdings acquisition creates substantial leverage and execution risk, including approximately $2.1B of planned new debt, so the overall outlook is balanced despite solid current demand and backlog.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.0
What stood out
-
Strong revenue and gross-profit growth
Revenue increased 24.1% year over year to $918.0M, while gross profit rose 31.9% to $176.3M. Consolidated gross margin improved to 19.2% from 18.1%, although operating margin was 7.9% versus 8.8% a year earlier.
-
Parts Supply delivered strong growth
Parts Supply revenue increased 30.5% to $414.8M and operating income increased 35.2% to $55.3M, with operating margin expanding to 13.3% from 12.9%. ADI contributed $43.7M of segment sales.
-
Government profitability improved sharply
Government Solutions revenue grew 3.7% to $138.8M, while operating income rose 50.4% to $19.1M and operating margin expanded to 13.8% from 9.5%, driven primarily by higher Mobility Systems volumes.
-
Cash generation rebounded
Operating cash flow improved to $55.8M from a $44.9M use of cash in the prior-year quarter. After $11.8M of capital expenditures, free cash flow was approximately $44.0M.
-
Backlog supports near-term revenue
Firm backlog was approximately $866M at August 31, 2026, with approximately 70% expected to convert to revenue over the next 12 months and another 15% over the following 12 months.
-
Liquidity remains adequate
Cash and cash equivalents increased to $104.5M from $84.0M at May 31, 2026, while working capital was $1,189.1M. The company reported $632.3M of revolver availability and compliance with all financial covenants.
What to watch
-
MRO segment margin deterioration
Repair, Engineering, and Software revenue grew 31.4% to $297.5M, but operating income declined 20.0% to $16.0M and margin fell to 5.4% from 8.8%. Management cited lower Airframe MRO profitability and $4.9M of Trax contingent-consideration compensation expense.
-
Acquisition adds leverage and execution risk
The pending MRO Holdings acquisition is expected to require approximately $2.1B of new debt compared with AAR's $879.6M of long-term debt at August 31, 2026. The filing also states that closing is subject to regulatory approvals and other conditions and may not occur on a timely basis or at all.
-
MRO integration and synergy risk
The company added risk disclosures that integration may not deliver anticipated benefits and could cause unanticipated costs, management diversion, and operational challenges. The transaction is approximately $3.0B, includes $7.3M of expensed transaction costs, and would give AAR control of 65% of MRO Holdings.
-
Working-capital investment remains elevated
Accounts receivable increased to $436.4M from $386.8M and inventories increased to $1,008.9M from $979.0M, contributing to cash uses of $50.5M for receivables and $41.1M for inventories in operating cash flow.
-
Acquisition costs pressure operating leverage
SG&A increased 49.0% to $107.0M, and SG&A as a percentage of sales increased to 11.7% from 9.7%, primarily because of $22.0M of incremental acquisition-related expenses.
-
Uncapped performance-guarantee exposure
A customer has asserted at least $32M of damages under an uncapped performance guarantee related to the former Composites business. AAR states that loss is reasonably possible but cannot estimate a range of loss.
Management's outlook
The 10-Q provides no quantitative revenue or EPS guidance. Management expects the MRO Holdings acquisition to close in the third quarter of fiscal 2027 and expects to fund it with approximately $2.1B of new debt, $780M of equity issuance, and $230M from a PIPE offering.
Earlier filings 4
10-Q · March 25, 2026
AAR reported a strong top-line quarter with sales of $845.1M (up $166.9M or 24.6% vs $678.2M a year ago) and a return to profitability: net income of $68.0M and diluted EPS of $1.71 for the quarter. Results were…
10-Q · September 23, 2025
AAR reported quarterly revenue of $739.6 million (up $77.9 million or 11.8% vs. $661.7 million a year ago) and diluted EPS of $0.95 (vs. $0.50 a year ago), driven by higher product sales. Operating income rose to $64.9…
10-Q · January 8, 2025
AAR reported quarterly sales of $686.1 million (up $140.7M or ~25.8% vs. $545.4M a year ago) driven largely by product sales and the inclusion of the acquired Product Support business. Despite revenue growth and a gross…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.