Companies /Industrials

AAR Corp

NYSE: AIR Aerospace & Defense
$135.90
▼ $2.68 (−1.93%) today
Markets closed · 10:00pm ET

Q3 2025 Earnings

Reported Mar 27, 2025, 4:39pm ET · SEC source
$0.99
Beat +2.70%
EPS · est. $0.96
$678.2M
Miss −2.99%
Revenue · est. $699.1M
−6.2%
Trailing market
AIR vs S&P since report
6 quarters
Consecutive EPS beats

Market Reaction

% change · around the report
−18%−12%−6%0Mar 27Mar 28report 4:39pm ETearnings−2.0%−16.5%
−18%−12%−6%0Mar 27Mar 28earnings−2.0%−16.5%
AIR −16.5%S&P 500 −2.0%
−18%−12%−6%0Mar 27Mar 28report 4:39pm ETearnings−2.7%−16.5%
−18%−12%−6%0Mar 27Mar 28earnings−2.7%−16.5%
AIR −16.5%NASDAQ −2.7%
−27%−18%−9%0Mar 26Apr 4report 4:39pm ETearnings−10.8%−26.5%
−27%−18%−9%0Mar 26Apr 4earnings−10.8%−26.5%
AIR −26.5%S&P 500 −10.8%
−27%−18%−9%0Mar 26Apr 4report 4:39pm ETearnings−12.1%−26.5%
−27%−18%−9%0Mar 26Apr 4earnings−12.1%−26.5%
AIR −26.5%NASDAQ −12.1%
−16.40%
Day of report
−2.01%
Next session
−12.36%
One week
−6.44%
30 days

S&P 500 over the same 30 days: −0.20%.

Did AIR Beat Earnings? Q3 2025 Results

AAR Corp. posted record fiscal third-quarter results for the period ended February 28, 2025, with adjusted diluted EPS climbing 16% to $0.99 and consolidated revenue rising 20% year-over-year to $678.20 million, underscoring the durability of demand across its aviation aftermarket platform. The standout driver was the Repair & Engineering segment, where the integration of the Product Support acquisition from Triumph Group and strong Airframe MRO throughput pushed segment sales up 53% to $215.90 million, with segment adjusted EBITDA more than doubling and margins expanding from 9.4% to 12.9%. GAAP results were weighed down by a $63.70 million pre-tax charge tied to the planned divestiture of the Landing Gear Overhaul business, expected to close for $51 million in the current quarter. Net leverage stood at 3.06x at quarter-end, down from 3.58x at acquisition close, with management targeting 2.0 to 2.5x as deleveraging continues into fiscal 2026. For Q4, AAR guided to mid-single-digit sales growth and adjusted operating margin between 9.7% and 9.9%.

Key Takeaways
  • Product Support acquisition from Triumph Group driving Repair & Engineering sales and margin expansion
  • Strong demand for new parts Distribution in both commercial and government activities
  • Increased throughput within Airframe MRO facilities
  • Trax software delivering strong margin performance in Integrated Solutions
  • EBITDA margin expanded from 10.3% to 12.0% year-over-year driven by acquisition contributions and internal efficiency initiatives
  • Reversal of $11.1 million Russian court judgment legal charge
  • Sales to commercial customers increased 22%; sales to government customers increased 15%

“We delivered another strong quarter of significant year-over-year sales and earnings growth. Sales were 20% higher than in the same quarter last year as demand remains elevated for our aftermarket services. Parts Supply sales increased 12%, driven by impressive gains in our new parts Distribution with both commercial and government activities. Our Repair & Engineering segment sales increased more than 53% year-over-year, with significant contributions from the Product Support acquisition as well as increased throughput within our Airframe MRO facilities. Integrated Solutions also posted meaningful earnings growth from both commercial and government programs as well as notable contributions from Trax.”

AAR CEO, on the earnings call

Forward Guidance & Outlook

For Q4 FY25, AAR expects sales growth of mid-single digits year-over-year (high single-digits excluding the Landing Gear divestiture), adjusted operating margin between 9.7–9.9%, net interest expense consistent with Q3 at approximately $18 million, and a Q4 effective tax rate of approximately 30%. Management anticipates continued sales growth, further margin expansion through new parts Distribution, Trax, Airframe MRO efficiencies, and Product Support synergies. The company expects further deleveraging in Q4 FY25 and throughout FY2026, targeting net leverage of 2.0–2.5x. The Landing Gear Overhaul divestiture for $51 million is expected to close in Q4 FY25.

AIR YoY Financials

Revenue$678.2M
Gross Profit$131.7M
Operating Income$71.1M
Net Income$-8,900,000

AIR Revenue by Segment

Parts Supply$270.7M+12.0%
Repair, Engineering, and Software
Repair & Engineering$215.9M+53.0%
Integrated Solutions$162.9M−2.0%
Government Solutions
Legacy Commercial Programs
Expeditionary Services$28.7M

Figures from SEC filings and company reports. Not investment advice.