AAR Corp
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.44%.
Did AIR Beat Earnings? Q1 2026 Results
AAR Corp opened fiscal 2026 with a convincing beat on both top and bottom lines, as the aviation services company reported first-quarter adjusted diluted EPS of $1.08, clearing the $0.98 consensus estimate by 9.76%, while revenue climbed 11.8% year-over-year to $739.60 million against expectations of $689.45 million. The standout driver was the Parts Supply segment, which surged 27% organically to $317.80 million, fueled by strong aftermarket parts trading and rapid expansion in new parts Distribution, where AAR continues to win customers and build market share. Adjusted EBITDA rose 18% to $86.70 million, with margins expanding to 11.7%, as volume leverage and Distribution profitability more than offset a $44.90 million operating cash outflow tied to deliberate inventory investment. A recently signed multi-year service extension with Cebu Pacific added further evidence of broadening commercial momentum. Looking ahead, management guided for 7%-10% sales growth in Q2 FY26 and targets bringing net leverage down to 2.0x-2.5x during the fiscal year, with sold-out hangar expansions in Oklahoma City and Miami set to provide additional capacity tailwinds.
- New parts Distribution activities driving meaningful double-digit growth
- Strong demand for aftermarket parts in Parts Supply
- 17% adjusted organic sales growth
- Adjusted EBITDA margin expansion to 11.7% from 11.3%
- Cost discipline and lower SG&A expenses
- USM delivered meaningful growth in quarter
- Sales to commercial customers increased 11%, sales to government customers increased 15%
“Our first quarter was a strong start to the fiscal year as we drove significant growth across all of our segments. Adjusted sales were up 17% organically largely driven by Parts Supply which was up 27% in the quarter. Once again, we saw exceptional performance out of our new parts Distribution activities as we continue to win new business and expand our market share.”
AAR CEO, on the earnings call
Forward Guidance & Outlook
For Q2 FY2026, AAR guides for 7%-10% sales growth from an organic base of $665.7 million (excluding Landing Gear sales), adjusted operating margin of 9.6%-10.0%, and an estimated tax rate of 28%. Management expects continued strong growth in both commercial and government Distribution within Parts Supply, full utilization with additional capacity coming online in 2H FY26 and FY27 for USM, airframe MRO near capacity with additional hangars in Oklahoma City and Miami sold out, Trax continuing to deliver high growth within Integrated Solutions, and expects to generate positive operating cash flows over the remainder of fiscal 2026. The company targets achieving net leverage of 2.0x-2.5x during fiscal 2026.
AIR YoY Financials
AIR Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.