AAR Corp. reported third-quarter fiscal 2026 sales of $845.1 million, up 25% from $678.2 million a year earlier.
Commercial revenue rose 27%, or $130 million, while government revenue increased 19%. Commercial customers accounted for 73% of consolidated sales, up from 72% in the prior-year quarter.
Net income was $68.0 million, versus a net loss of $8.9 million in the same quarter last year. Diluted earnings per share came to $1.71, compared with a loss of $0.25 per share a year ago. Adjusted diluted EPS increased to $1.25 from $0.99, a 26% increase.
Adjusted EBITDA climbed 26% to $102 million from the prior-year quarter, and adjusted EBITDA margin edged up to 12.1% from 12.0%. Adjusted operating margin rose to 10.2% from 9.7%.
Operating margin, however, fell to 7.8% from 10.5% a year earlier. Selling, general and administrative expenses increased to $89.8 million from $61.3 million, and acquisition, amortization and integration expenses rose to $8.7 million from $5.3 million.
Net interest expense declined to $17.1 million from $18.1 million.
Cash from operations totaled $74.7 million, compared with cash used in operations of $18.7 million in the prior-year quarter. Net debt stood at $816.5 million, and net leverage was 2.17x.
Within the business, parts supply sales grew 45%, including 36% organic growth in new parts distribution. New parts distribution sales to government customers rose 55% organically. Repair and engineering also posted higher sales, while Trax added recurring software revenue.
For the fourth quarter, AAR guided to total sales growth of 19% to 21%, organic sales growth of 6% to 8%, and adjusted operating margin of 10.2% to 10.5%.
For the full year, the company now expects total sales growth of about 19%, up from a prior view of approaching 17%, and organic sales growth of about 12%, up from a prior estimate of approaching 11%. Following these announcements, the company's shares moved -0.62%, and are now trading at a price of $105.08. Check out the company's full 8-K submission here.
