Financial Data and Key Metrics Changes - Sales increased by 10% year-over-year from $410 million to $452 million, with adjusted diluted earnings per share from continuing operations rising 70% from $0.37 to $0.63 [4][8] - Adjusted operating margin improved to 6.7%, up from 6.1% in the previous quarter, exceeding pre-COVID levels despite commercial sales being down more than 25% [5][12] - Generated $16 million in cash from operating activities, with a strong balance sheet showing net leverage of 0.4 times [6][11] Business Line Data and Key Metrics Changes - Aviation Services segment sales rose 12.4%, while Expeditionary Services segment sales decreased by $6.4 million due to a delayed pallet order [8] - Commercial sales increased by 28% year-over-year, while government sales declined by 8%, primarily due to the Afghanistan withdrawal [8][9] - Gross profit margin was 17.8%, down from 21% in the prior year, but adjusted gross profit margin improved to 17.3% from 16.1% [9][10] Market Data and Key Metrics Changes - Domestic commercial customers remain optimistic about recovery in business and leisure travel, leading to increased parts volume [12][13] - Government sales are expected to decline further in Q4, with Afghanistan sales dropping from $8 million to approximately $1 million [8][28] Company Strategy and Development Direction - The company is focusing on expanding its parts business and has secured a 10-year renewal of a component MRO contract for NATO's E-3A AWACS aircraft [6][12] - A new exclusive distribution agreement with Collins Aerospace aims to penetrate the business jet market, indicating a strategic move towards growth in adjacent markets [6][12] Management's Comments on Operating Environment and Future Outlook - The company is monitoring the impact of rising fuel prices on airline customers' operating costs, which could drive demand for lower-cost solutions [12][19] - Management expects modest sequential sales growth in Q4 and a more significant inflection in FY 2023, contingent on the recovery trajectory from COVID [13][29] Other Important Information - The company has taken proactive measures to address labor shortages, which have been higher than pre-pandemic levels, allowing it to manage through the current environment effectively [12][36] - The company has a strong focus on capital allocation, with plans for organic investments in the parts business and potential acquisitions [21][22] Q&A Session Summary Question: Performance of MRO vs. Parts Businesses - Management indicated that both MRO and parts businesses performed consistently, with parts volumes recovering as the impact of the Omicron variant subsided [15][16] Question: Impact of Higher Fuel Prices - Management noted that the ability of airlines to pass on fuel price increases to consumers will significantly influence their operating costs and demand for lower-cost solutions [18][19] Question: Capital Allocation Strategy - The company plans to invest organically in the parts business and explore inorganic opportunities through acquisitions while continuing share repurchases [20][21] Question: Customer Behavior Changes Due to Fuel Prices - Management reported no significant behavioral changes from customers regarding maintenance or upgrades, as they focus on preparing for a strong recovery in demand [24][25] Question: Government Opportunities Related to Ukraine - Management identified potential areas for increased demand due to the Ukraine situation, including sustainment dollars for the current fleet and elevated demand for mobility products [30][31][32] Question: Labor Market and Margin Impact - Management is in constructive dialogue with customers regarding potential wage adjustments, which could create margin headwinds, but they remain optimistic about overall margin performance [36][37] Question: New Distribution Agreement with Collins - Management highlighted a coordinated effort with Collins and other OEMs, emphasizing their unique value proposition as an independent distributor [39][40] Question: Expected Growth in 2023 - Management anticipates growth driven by parts recovery and new business wins, with a stable performance expected from MRO operations [42][43]

Financial Data and Key Metrics Changes - Sales increased by 8% year-over-year from $404 million to $437 million, and adjusted diluted earnings per share from continuing operations rose by 71% from $0.31 to $0.53 [6][12] - Adjusted operating margin was 6.1% for the quarter, up from 5.5% in the first quarter, and exceeded pre-COVID levels despite a decline in sales [7][17] - Generated $16 million from operating activities from continuing operations, with total cash flow from operating activities reaching $142 million over the last six quarters [8][15] Business Line Data and Key Metrics Changes - Aviation Services segment sales increased by 8.9%, while Expeditionary Services segment sales decreased by $1.3 million [12] - Commercial sales rose by 33%, while government sales fell by 15%, primarily due to reduced activity on specific programs [12] - Gross profit margin improved to 18% from 17.2% year-over-year, with adjusted gross profit margin rising to 16.7% from 13.9% [13] Market Data and Key Metrics Changes - Commercial sales were up 33%, while government sales were down 15%, indicating a recovery in commercial markets but challenges in government contracts [12] - The company noted that parts supply, its highest margin activity, remained stable despite some delays caused by subcontractors and freight issues [6][10] Company Strategy and Development Direction - The company is focused on organic investments, acquisitions, and returning capital to shareholders, with a $150 million share repurchase program announced [11][15] - AAR aims to grow its business beyond recovery, particularly in the USM market, and is pursuing new long-term exclusive distribution agreements [17] - The recent $365 million contract with the U.S. Air Force for F-16 maintenance is expected to enhance the company's government program portfolio [10][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of the Omicron variant on commercial passenger traffic but expressed confidence in margin expansion and cash flow generation [5][17] - The company expects MRO activities to remain at current levels, with parts demand anticipated to recover as global travel restrictions ease [16][17] - Management is optimistic about the backlog and parts supply, expecting sequential growth in Q3 [17] Other Important Information - The company has seen a tight labor market, but initiatives taken during and before COVID-19 have positioned it well to manage labor needs [43][44] - The company is monitoring the impact of new COVID-19 variants on its operations and customer maintenance plans [5][28] Q&A Session Summary Question: Growth in the commercial business - Management indicated that growth was spread evenly across MRO and parts businesses, with most growth coming from parts [20] Question: Timing of recovery in parts trading - Management noted that recovery in international markets is crucial for parts demand, with clarity on travel restrictions needed for consistent demand [22][23] Question: Impact of Omicron variant - Management stated that the response to Omicron has been more rapid than Delta, but they expect sequential growth based on current backlog [28] Question: F-16 contract ramp-up - Management expects the F-16 contract to contribute meaningfully in FY '23, with a relatively compressed ramp-up time [34] Question: Labor market conditions - Management acknowledged the tight labor market but expressed confidence in their ability to meet schedules due to customer collaboration [43][44]

Financial Data and Key Metrics Changes - Sales increased by 14% from $401 million to $455 million year-over-year, with adjusted diluted earnings per share rising 206% from $0.17 to $0.52 [5][10] - Operating margin improved to 5.5% on an adjusted basis, up from 2.5% last year and 5.2% in the previous quarter [6][10] - Generated $18 million from operating activities, with cash flow from continuing operations at $26 million excluding accounts receivable financing [7][13] Business Line Data and Key Metrics Changes - Sales to commercial customers rose by 52%, while sales to government and defense customers decreased by 17% [5] - Aviation Services segment sales increased by 19.8%, driven by recovery in commercial markets, while Expeditionary Services segment sales decreased by $17.7 million due to divestiture [10] - Gross profit margin improved to 14.2% from 12.1% year-over-year, with adjusted gross profit margin at 16.1% compared to 13% last year [10] Market Data and Key Metrics Changes - Strong demand for airframe MRO services was noted, with the majority of MRO volume being standard maintenance work rather than catch-up work [6] - The company experienced sequential growth of 4% from Q4 to Q1, with a 17% increase in commercial activities [5] Company Strategy and Development Direction - The company aims to maintain strong demand for MRO activities as airlines focus on readiness for air travel recovery and preserving maintenance supply chains [14] - The exit from Afghanistan and nearing completion of certain government programs may impact near-term business, but new contracts like the one with the Department of Energy are expected to offset this [14][15] - The company is positioned to grow its government business through additional program wins and expansions of current positions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a recovery occurring despite uncertainties, highlighting a strong balance sheet and full pipelines in both government and commercial sectors [15] - The company expects Q2 performance to be similar to Q1, indicating stability in both top and bottom lines [18] Other Important Information - The company announced several new business wins, including an exclusive agreement with Arkwin and a contract with the Department of Energy [8] - The company played a critical role in the U.S. withdrawal from Afghanistan, successfully transporting U.S. embassy personnel [9] Q&A Session Summary Question: Will Q2 performance be similar to Q1? - Management indicated that they expect both top and bottom line performance to be similar to Q1, but noted the uncertain environment [18] Question: What drove the strong sequential growth in Aviation Services? - The growth was largely driven by demand in the trading business, with international customers like Air Canada contributing positively [20] Question: What factors contributed to the sequential decline in gross margin? - A slight mix change on the government side contributed to the decline, with previous quarter events driving outsized profitability [22] Question: How is the relationship with Fortress trending? - The relationship is performing well, with expectations that it will continue to contribute positively throughout the year [24] Question: What is the outlook on retirements and USM availability? - There has been an increase in available assets recently, but it is too early to call it a trend [27] Question: Is the MRO business seeing better pricing? - Pricing has remained stable due to long-term contracts, with improved efficiency in operations contributing to performance [29] Question: What is the risk associated with the remaining programs? - Management feels confident about the remaining portfolio and highlighted the successful extension of contracts with long-term customers [31]

Financial Data and Key Metrics Changes - Sales for fiscal year 2021 decreased by 20% from $2.07 billion to $1.65 billion, while adjusted diluted earnings per share from continuing operations decreased by 39% from $2.15 to $1.31 [4][6] - For Q4, sales increased by 5% from $417 million to $438 million, and adjusted diluted earnings per share increased by 81% from $0.26 to $0.47 [4][5] - Operating margin for Q4 was 5.2%, up from 3.2% in the prior year [5] Business Line Data and Key Metrics Changes - Sales to commercial customers increased by 3%, while sales to government and defense customers increased by 7% [5] - Aviation Services segment sales were up 6.5%, driven by strong government performance and recovery in commercial [10] - Expeditionary Services segment sales were down slightly due to the divestiture of the Composites business [10] Market Data and Key Metrics Changes - The commercial parts supply business has not yet seen significant recovery, as operators continue to consume existing inventory [6] - The company reported strong performance in MRO operations as airlines performed maintenance in anticipation of increased travel [6][14] - The China market experienced a record year, with domestic flying recovering significantly [22] Company Strategy and Development Direction - The company has focused on cost reduction and efficiency optimization, including consolidating facilities and exiting underperforming contracts [7][12] - New business partnerships have been established, including agreements with Fortress and Honeywell, to enhance service offerings [8][10] - The company aims to maintain a strong balance sheet and leverage efficiency gains for future growth [8][14] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the recovery in US domestic leisure flying and anticipates a return to business travel [14] - The company is cautious about the pace of commercial air travel recovery due to uncertainties like the emergence of COVID-19 variants [15] - Management expects Q1 performance to be similar to or modestly better than Q4, despite Q1 typically being the slowest quarter [15] Other Important Information - The company generated $23.5 million from operating activities in Q4 and reduced accounts receivable financing by $9.8 million [6][13] - SG&A expenses were $48.8 million, with an adjusted figure of $46.7 million, reflecting cost control measures [12][13] - The company expects to recognize an impairment charge of $5 million to $10 million in Q1 of fiscal 2022 due to a terminated contract [11] Q&A Session Summary Question: Can you expand on MRO and parts trends? - MRO was stable throughout Q4, with slight improvement in parts trading observed at the beginning of Q1 [19] Question: Is there strength from cargo obscuring passenger weakness? - Cargo business has been stable, with air travel in the US pacing ahead [21] Question: What is the outlook for MRO and parts recovery? - MRO may be smaller but more profitable, while parts business could exceed pre-COVID levels due to increased acceptance of used materials [25][24] Question: What is the current utilization in MRO? - The company has significant capacity left but is focused on attracting skilled labor rather than relying on contract labor [28] Question: Are there any cost inflation pressures? - Most structural changes for margin improvement have been implemented, with future improvements expected from revenue recovery [32] Question: What is the outlook for the defense business? - There is uncertainty in defense contracts, but new distribution agreements are expected to provide growth [46][57] Question: What is the company's exposure to Afghanistan? - One program is being restructured, with a neutral to positive financial impact expected [59] Question: How does the company view PMA opportunities? - The company continues to pursue PMA as part of its growth strategy [55] Question: What are the expectations for cash flow in fiscal 2022? - The company will focus on managing working capital while investing in new opportunities [74]

Financial Data and Key Metrics Changes - Sales decreased 26% year-over-year from $553 million to $410 million, and adjusted diluted earnings per share from continuing operations decreased 45% from $0.67 to $0.37 [3][4] - Adjusted gross margin improved sequentially from 13.9% to 16.1%, and operating margin improved from 4% to 5% [5][11] - Cash generated from operating activities was $18 million, with a net debt to adjusted EBITDA ratio of 1.1 times [6][11] Business Line Data and Key Metrics Changes - Sales to commercial customers decreased 42%, while sales to government and defense customers increased 4%, accounting for 49% of total sales [3][4] - MRO segment saw a sequential increase in hangar activity due to increased demand, while commercial parts activities remained stable [4][7] - Government business continued strong performance with year-over-year growth for three consecutive quarters [55] Market Data and Key Metrics Changes - Domestic leisure travel demand has increased, with expectations for broader commercial market recovery as vaccine distribution progresses [12] - International markets, particularly Europe and the Rest of Asia, remain soft compared to pre-COVID levels, while China domestic is nearly back to pre-COVID levels [38] Company Strategy and Development Direction - The company plans to leverage its current cost structure to drive continued margin improvement while investing in USM and distribution activities, as well as technology and digital initiatives [12] - Focus on maintaining and expanding margin gains by being selective about the work taken on in the MRO segment [66] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about modest sequential improvement in Q4 and continued recovery thereafter as travel restrictions are lifted [12] - The company is committed to maintaining a strong balance sheet to fund growth opportunities [12] Other Important Information - The company fully recognized its deferred credit from the CARES Act in Q3 and will no longer have income associated with it [9] - A tentative agreement was reached with the Department of Justice to settle an investigation for approximately $11.5 million [10] Q&A Session Summary Question: Sequential performance trends in commercial business parts versus MRO - Management noted a 7% sequential growth in commercial sales, primarily driven by MRO segment activity [15][16] Question: Expectations for fourth quarter revenues - Management expects modest sequential improvement from Q3 to Q4, but not ready to call for year-over-year improvement [28] Question: Margins and overhead sustainability - The majority of overhead reductions are expected to be sustainable through recovery, with a focus on maintaining margin improvements [24][25] Question: Domestic versus international commercial exposure - Historically, the business mix is 65% domestic and 35% international, with domestic recovery pacing ahead of international [38] Question: Fortress deal significance - The Fortress deal is expected to be a meaningful contributor to future results, with initial material received [40] Question: Pricing and supply dynamics in the parts market - Management noted significant variation in pricing based on asset type but refrained from providing specific details for competitive reasons [46] Question: Future state department funding visibility - There is currently no meaningful change expected regarding additional state department funding [59]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended November 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-6263 AAR CORP. (Exact name of registrant as specified in its charter) Delaware 36-2334820 (State or other jurisdiction of i ...

AAR Corp. (NYSE:AIR) Q2 2021 Earnings Conference Call December 17, 2020 4:45 PM ET Company Participants John Holmes - CEO, President & Director Sean Gillen - VP & CFO Conference Call Participants Robert Spingarn - Crédit Suisse Joseph DeNardi - Stifel, Nicolaus & Company Ken Herbert - Canaccord Genuity Michael Ciarmoli - Truist Securities Operator Good afternoon, ladies and gentlemen, and welcome to AAR's Fiscal 2021 Second Quarter Earnings Call. We are joined today by John Holmes, President and Chief Execu ...

AAR Corp. (NYSE:AIR) Q1 2021 Results Earnings Conference Call September 24, 2020 4:45 PM ET Company Participants John Holmes - President and CEO Sean Gillen - Chief Financial Officer Conference Call Participants Robert Spingarn - Credit Suisse Joseph DeNardi - Stifel Ken Herbert - Canaccord Michael Ciarmoli - Truist Josh Sullivan - The Benchmark Company Operator Good afternoon, ladies and gentlemen. And welcome to AAR’s Fiscal 2021 First Quarter Earnings Call. We are joined today by John Holmes, President a ...