AAR Corp Posts 16% Q2 Sales Growth to $795M, Boosts EPS 31%
AAR reported Q2 fiscal 2026 sales of $795.3M (up 16%), adjusted EPS $1.18 (+31%), and adjusted EBITDA of $97M (+23%) with a 12.1% margin. It acquired ADI ($138M) and HAECO Americas ($77M), secured $850M in airframe maintenance contracts and expects Q3 sales growth of 20–22%.
1. Robust Second Quarter Financial Performance
AAR Corp. delivered a strong second quarter for fiscal 2026, reporting sales of $795 million, a 16% increase versus the year-ago period. GAAP diluted earnings per share were $0.90, while adjusted diluted EPS rose 31% to $1.18. Net income swung from a prior-year loss of $30.6 million (which included a $57.1 million FCPA-related charge) to a gain of $34.6 million. Adjusted EBITDA climbed 23% to $97 million, and the adjusted EBITDA margin expanded to 12.1% from 11.4% as volume growth and operational efficiencies drove profitability higher across all segments.
2. Segment Growth Driven by Parts Supply and Repair & Engineering
Organic sales growth of 12% was led by the Parts Supply segment, which saw overall sales rise 29%, with new parts Distribution up 32% as the company continued to capture market share through its exclusive distribution model. The Repair & Engineering segment also posted solid gains, reflecting improved hangar utilization and higher volume at component repair facilities. Government customer orders increased 23%, underscoring continued momentum in aftermarket support contracts for military and government fleets.
3. Strategic Acquisitions Expand Capabilities and Backlog
During the quarter, AAR closed two bolt-on acquisitions: ADI, a production-facing distributor, for $138 million, and HAECO Americas, a leading airframe heavy maintenance provider, for $77 million. The ADI deal broadens new parts Distribution into OEM production channels, while the HAECO Americas purchase added $850 million of multi-year maintenance contracts and effectively sold out the acquired capacity for several years. Management expects synergies from these transactions to drive margin expansion and improve facility performance over time.
4. Strong Balance Sheet and Upward Guidance Support Investor Confidence
At quarter end, net leverage stood at 2.49x, providing capacity for continued organic and inorganic investments. Selling, general and administrative expenses declined materially year over year, excluding one-time FCPA charges, and adjusted operating margin improved to 10.2%. For the third quarter, AAR projects total sales growth of 20%–22% with organic growth of 8%–11% and an adjusted operating margin of 9.8%–10.1%. Full-year sales growth is now expected to approach 17% with organic growth nearing 11%, reflecting strong backlog, recent acquisitions, and the company’s expanding software-enabled aftermarket offerings.