AAR (AIR) Q2 2026 earnings summary

Executive summary

• Achieved 16% year-over-year sales growth to $795.3 million in Q2 FY2026, led by 29% growth in Parts Supply and strong demand in commercial and government markets, with notable contributions from recent acquisitions.

• Completed acquisitions of ADI for $138 million and HAECO Americas for $77 million, and announced agreement to acquire Aircraft Reconfig Technologies for $35 million, expanding parts distribution, heavy maintenance, and engineering capabilities.

• Renewed key exclusive distribution agreements and expanded digital capabilities through partnerships and customer wins, including Trax software adoption by major airlines.

• Net income for the quarter was $34.6 million, reversing a prior-year net loss.

• Maintained strategic balance sheet flexibility, reducing net debt leverage to 2.49x, within the long-term target range.

Financial highlights

• Total sales reached $795.3 million, up 16% year-over-year, with 12% organic growth.

• Adjusted EBITDA increased 23% to $97 million; adjusted EBITDA margin rose to 12.1% from 11.4%.

• Adjusted operating income grew 28% to $81.2 million; adjusted operating margin improved to 10.2% from 9.2%.

• Adjusted diluted EPS rose 31% to $1.18; GAAP diluted EPS was $0.90.

• Net income margin improved to 4.4% from -4.5% year-over-year.

Outlook and guidance

• Q3 FY2026 total sales growth expected at 20–22%, with organic growth of 8–11%.

• Full-year FY2026 sales growth projected near 17%, organic growth near 11%.

• Adjusted operating margin guidance raised to approaching 11%.

• Margin dilution expected in the near term due to HAECO integration, with improvement anticipated over the next 12–18 months.

• Material supply constraints anticipated to persist through FY26, with additional capacity coming online in 2H FY26 and FY27.