AAR Corp
Q4 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.43%.
Did AIR Beat Earnings? Q4 2025 Results
AAR Corp closed out fiscal year 2025 with a standout fourth quarter, posting adjusted diluted EPS of $1.16 against a consensus estimate of $1.00, a 16.00% beat, while revenue of $754.50 million topped the $694.01 million estimate by 8.72% and climbed 14.9% year over year. The primary engine behind the outperformance was Parts Supply, where over 20% organic growth in new parts Distribution, fueled by both market expansion and share gains, drove segment sales to $305.50 million at adjusted EBITDA margins of 17.1%. Adjusted EBITDA for the quarter rose 19% to $90.90 million, with margins expanding 80 basis points to 12.4%, capping a full fiscal year in which consolidated sales reached $2.78 billion, up 20%. AAR's stock climbed in aftermarket trading following the release, reflecting investor confidence in the company's trajectory. Looking ahead, management guided Q1 FY2026 sales growth of 6% to 11% off an adjusted base of $633.00 million, with adjusted operating margins of 9.6% to 10.0%, while targeting net leverage of 2.0x to 2.5x by year end.
- Over 20% organic growth in new parts Distribution activities driven by market growth and market share gains
- Strong demand across commercial and government end-markets
- Favorable mix in Parts Supply driving adjusted operating margin expansion from 9.3% to 10.5%
- Product Support acquisition integration substantially completed
- Commercial customer sales increased 12% and government customer sales increased 21% year-over-year
“In Fiscal Year 2025, we delivered record sales and profitability and made meaningful progress against our strategic objectives. We substantially completed the integration of the Product Support acquisition and continued to optimize our portfolio with the divestiture of our Landing Gear Overhaul business. We further invested in our fast growing new parts Distribution activities, launched two hangar expansions, and announced several key new business wins for our Trax software solution. We continued to reduce our net leverage, ending the fiscal year at 2.72x. Our optimized portfolio, combined with our strengthened balance sheet, is delivering higher growth, higher margins, and stronger returns.”
AAR CEO, on the earnings call
Forward Guidance & Outlook
For Q1 FY2026, AAR guided to 6%–11% sales growth from a Q1 FY25 adjusted sales base of $633 million (excluding Landing Gear sales of $19.2 million), adjusted operating margin of 9.6%–10.0%, and an estimated tax rate of 28%. Note that Q1 is a seasonally slower sales quarter. For the full FY2026, the company expects to achieve its target net leverage range of 2.0x–2.5x. Management expects continued market share gains in Parts Supply, particularly in new parts Distribution; expansion of Repair & Engineering capabilities and footprint including Oklahoma City and Miami hangar expansions; continued Trax growth trajectory with new business wins and customer upgrades; and conversion of a large pipeline of government opportunities. The company plans to fully complete Product Support integration and realize $10M in cost synergies. AAR expects further growth and margin expansion in FY2026, with Parts Supply Distribution growing at mid-teens above-market rates in both commercial and government channels.
AIR YoY Financials
AIR Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.