AAR (AIR) Q1 2026 earnings summary

Executive summary

• Achieved 17% organic adjusted sales growth and margin expansion in Q1 FY26, driven by strong performance in Parts Supply, new distribution wins, and software acquisitions including Aerostrat.

• Net income rose to $34.4 million from $18.0 million year-over-year, with adjusted diluted EPS up 27% to $1.08.

• Expanded exclusive distribution agreements, notably with AmSafe Bridport, and secured major software wins with Trax.

• Continued progress on MRO capacity expansions in Oklahoma City and Miami, supporting operational efficiency and throughput.

• Executed a restructuring plan, eliminating 60 positions and incurring $1.0 million in severance charges.

Financial highlights

• Total adjusted sales grew 13% year-over-year to $740 million; organic sales growth was 17% excluding last year's landing gear sales.

• Adjusted EBITDA increased 18% to $87 million, with margin rising to 11.7% from 11.3%.

• Adjusted operating income rose 21% to $71.6 million; operating income increased to $64.9 million from $43.4 million.

• Adjusted diluted EPS increased 27% to $1.08; net income margin improved to 4.7%.

• Commercial sales comprised 71% of total sales, government sales 29%.

Outlook and guidance

• Q2 sales growth expected at 7%-10% (excluding landing gear impact), with adjusted operating margin of 9.6%-10%.

• Full-year organic sales growth outlook raised to nearly 10%, up from 9% previously.

• Multi-year backlog in Repair & Engineering; new capacity in Oklahoma City and Miami already sold out for 2026.

• Expects positive operating cash flows for the remainder of the fiscal year.

• Continued above-market growth anticipated in distribution, with mid-teens rate expected.