AAR (AIR) Q1 2027 & Acquisition earnings summary

Executive summary

• Announced acquisition of a 65% controlling interest in MRO Holdings at a $4.0B enterprise value, significantly expanding scale and capabilities in the aviation aftermarket sector; the deal is expected to be accretive to adjusted EPS in the first full fiscal year post-closing.

• Q1 FY27 sales reached $918M, up 24% year-over-year, with strong growth across Parts, Repair, and Software segments.

• Adjusted EBITDA for Q1 was $117M (12.7% margin), up 100 bps YoY, and adjusted diluted EPS grew 38% to $1.49.

• Record Q1 adjusted cash from operations at $57M, representing 48% of adjusted EBITDA.

• The acquisition is expected to significantly enhance scale, margins, and cash flow.

Financial highlights

• Q1 FY27 sales: $918M (+24% YoY); adjusted EBITDA: $117M (12.7% margin, +100 bps YoY); adjusted operating income: $97M (10.6% margin, +90 bps YoY).

• Adjusted diluted EPS: $1.49 (+38% YoY); GAAP diluted EPS: $1.00.

• Q1 adjusted cash from operations: $57M (48% of adjusted EBITDA); net income: $40.1M.

• Net debt at quarter-end was $780.5M; net leverage reduced to 1.81x.

• Consolidated sales mix: 73% commercial, 27% government/defense.

Outlook and guidance

• Q2 FY27 sales growth (ex-LCP): 14–16%; FY27 sales growth (ex-LCP): low teens.

• Q2 FY27 adjusted EBITDA margin (ex-LCP): 13.0–13.4%; estimated tax rate: 28%.

• Guidance does not include impact of MRO Holdings acquisition.

• Updated long-term target for adjusted EBITDA margin to 19–20% within 3–4 years post-acquisition.