AAR Corp Reports 24% Sales Growth in Q1 2027

By Tamara Parker • Tuesday, September 29 01:45 • Permanent Link

AAR reported first-quarter fiscal 2027 sales of $918 million, up 24% from $739.6 million a year earlier, as growth accelerated across all three core segments.

Net income rose to $40.1 million from $34.4 million, while diluted earnings per share increased to $1.00 from $0.95. Adjusted diluted EPS climbed to $1.49 from $1.08, a 38% increase.

Adjusted EBITDA reached $117 million, up 34% from the prior-year quarter, and adjusted EBITDA margin improved to 12.7% from 11.7%, a gain of 100 basis points. Adjusted operating margin also widened, rising to 10.6% from 9.7%.

Commercial sales increased 28%, adding $147.5 million, while government sales rose 14%, or $30.9 million. Commercial customers accounted for 73% of consolidated sales, up from 71% a year ago.

By segment, parts supply posted 31% growth, led by 23% organic growth in new parts distribution. Repair, engineering and software also grew 31%, driven by airframe MRO, component MRO and software. Government solutions increased 4%, supported by mobility systems.

Operating expenses moved higher alongside the growth. Selling, general and administrative expenses increased to $107.0 million from $71.8 million, and acquisition, amortization and integration expenses rose to $19.6 million from $4.4 million.

Operating margin came in at 7.9%, down from 8.8% in the prior-year quarter, while net interest expense declined to $16.2 million from $18.5 million. Average diluted shares rose to 39.9 million from 35.9 million.

Cash from operations improved to $55.8 million from a use of $44.9 million a year earlier. Net debt was $780.5 million at quarter-end, and net leverage stood at 1.81x.

For the second quarter, AAR is guiding to sales growth of 14% to 16% excluding legacy commercial programs, with adjusted EBITDA margin of 13.0% to 13.4% excluding those programs. For the full year, the company now expects low-teens sales growth excluding legacy commercial programs, compared with its prior view of low double-digits to low teens. As a result of these announcements, the company's shares have moved -3.69% on the market, and are now trading at a price of $116.11. For more information, read the company's full 8-K submission here.

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