AAR (AIR) Q4 2026 earnings summary

Executive summary

• Achieved record Q4 and FY2026 results with strong growth in sales, profitability, and cash flow, driven by a connected platform strategy in parts, repair, and software.

• Q4 adjusted sales rose 26% year-over-year to $928 million, with adjusted EBITDA up 27% to $116 million, and adjusted EPS up 32% to $1.53.

• FY2026 adjusted sales increased 20% to $3.31 billion, adjusted EBITDA up 24% to $401 million, and adjusted EPS up 29% to $5.05.

• Growth was supported by portfolio optimization, strategic acquisitions, and new technology launches, including successful integration of acquired businesses.

• Segment realignment was announced, including the wind-down of Legacy Commercial Programs to focus on higher-margin growth areas.

Financial highlights

• Q4 total sales reached $928 million, up 26% year-over-year, with 13% organic growth.

• Adjusted EBITDA margin for Q4 was 12.5%, up 10 bps year-over-year; full-year adjusted EBITDA margin was 12.1%.

• Q4 adjusted operating margin was 10.6%, and full-year adjusted operating margin improved to 10.2%.

• Net debt at year-end was $816 million, with net leverage reduced to 2.03x adjusted EBITDA.

• Cash flow from operations was $58 million in Q4 and $94 million for the year.

Outlook and guidance

• FY2027 Q1 sales growth (excluding Legacy Commercial Programs) expected at 21–23%, with adjusted EBITDA margin of 12.25–12.75%.

• Full-year FY2027 sales growth (ex-LCP) projected in the low double digits to low teens, with continued margin expansion and HAECO Americas integration completion by 2H FY2027.

• Management expects further margin expansion as integration synergies are realized and sales mix shifts to higher-margin offerings.

• No anticipated slowdown in 2028 or 2029; confident in meeting/exceeding three-year growth targets.

• Continued focus on high-growth activities, recurring software revenue, and improved government program mix.