AAR Corp. delivered a standout second quarter, with consolidated sales rising 16% year-over-year to $795 million. Organic growth of 12% was driven primarily by the Parts Supply segment, where sales surged 29%, including a 32% increase in new parts Distribution. The Repair & Engineering segment also contributed to overall growth through enhanced hangar efficiency and higher component repair volumes. Sales to government customers climbed 23%, reflecting increased order volume for new parts Distribution activities. GAAP net income swung to $35 million from a prior-year loss, while adjusted diluted EPS rose 31% to $1.18. Adjusted EBITDA increased 23% to $97 million, expanding the margin to 12.1% from 11.4%, and adjusted operating margin improved to 10.2% from 9.2%.

During the quarter AAR completed two transformative acquisitions: ADI for $138 million, bolstering new parts Distribution with added OEM relationships and production-facing channels; and HAECO Americas for $77 million, extending the company’s airframe heavy maintenance footprint. In connection with the HAECO Americas deal, AAR secured approximately $850 million in multi-year maintenance contracts, effectively selling out acquired capacity. Additional wins included a multi-year agreement with Malaysia Airlines for warranty management services, authorization as an Eaton service center in EMEA, and enhanced integrations between Trax and Aeroxchange. Post-quarter, exclusive Distribution contracts were renewed with Collins Aerospace and Arkwin Industries, and Thai Airways selected AAR’s Trax system for its digital MRO upgrade.

Analyst confidence in AAR has firmed, with the consensus price target rising from $91.2 to $100 over the past year. While the majority of the coverage reflects optimism tied to the company’s above-market growth in new parts Distribution, expanding repair capabilities and software solutions uptake, a more conservative view from one KeyBanc analyst sets a target of $83. This divergence underscores both the upside potential driven by strategic initiatives and the caution around execution risks as AAR integrates recent acquisitions and scales its software business globally.