AAR(AIR) - 2025 Q3 - Quarterly Results

Financial Performance - Sales for Q3 FY2025 were $678.2 million, a 20% increase from$ 567.3 million in Q3 FY2024[9] - Adjusted diluted EPS for Q3 FY2025 was $0.99, up 16% from$ 0.85 in the same quarter last year[10] - Adjusted EBITDA increased 39% to $81 million, with an adjusted EBITDA margin rising to 12.0% from 10.3% year-over-year[4] - Sales to commercial customers rose 22%, accounting for 72% of total consolidated sales, while sales to government customers increased by 15%[9] - The company reported a net loss of$ 8.9 million, or $0.25 per share, compared to a net income of$ 14.0 million, or $0.39 per diluted share, in the prior year[10] - Adjusted net income for the nine months ended February 28, 2025, was$ 98.1 million, compared to $87.1 million in 2024, reflecting a growth of 12.0%[33] - Adjusted diluted earnings per share for the three months ended February 28, 2025, was$ 0.99, compared to $0.85 in 2024, an increase of 16.5%[34] Cash Flow and Expenses - Cash flow used in operating activities was$ 18.7 million, impacted by a $56 million FCPA settlement during the quarter[14] - The company reported a net cash used in operating activities of$ (18.7) million for the three months ended February 28, 2025, compared to $20.4 million provided in the same period of 2024[28] - Cash used in operating activities was$ (18.7) million for the three months ended February 28, 2025, compared to cash provided of $20.4 million in the same period last year[35] - The adjusted cash provided by operating activities was$ (15.0) million for the three months ended February 28, 2025, compared to $20.4 million in the same period last year[35] - Acquisition, integration, and amortization expenses totaled$ 7.5 million for the three months ended February 28, 2025, slightly up from $7.2 million in the previous quarter[35] - The company reported interest expense of$ 18.1 million for the three months ended February 28, 2025, compared to $11.3 million in the same period last year[35] Asset and Debt Management - Total assets increased to$ 2,859.1 million as of February 28, 2025, up from $2,770.0 million in May 2024, representing a growth of 3.2%[26] - Long-term debt increased to$ 1,022.3 million as of February 28, 2025, compared to $985.4 million in May 2024, indicating a rise of 3.8%[26] - Net debt rose significantly to$ 947.6 million as of February 28, 2025, compared to $207.8 million a year earlier, with a net debt to adjusted EBITDA ratio of 3.06[36] - The company aims for further margin expansion and deleveraging, reducing net leverage from 3.58x to 3.06x over the past year[15] Segment Performance - Parts Supply segment revenue for the three months ended February 28, 2025, was$ 270.7 million, a 11.7% increase from $242.3 million in the same period of 2024[30] - Operating income for the Repair & Engineering segment increased to$ 19.0 million for the three months ended February 28, 2025, up from $11.5 million in 2024, a rise of 65.2%[30] Strategic Initiatives - AAR announced a multi-year exclusive agreement with Chromalloy for the distribution of BELAC PW4000 PMA parts, enhancing its aftermarket service offerings[5] - The divestiture of the Landing Gear Overhaul business is expected to be completed for$ 51 million in Q4 FY2025, as part of the company's portfolio optimization strategy[7] - The company incurred $64.0 million in losses related to the sale and exit of business/joint ventures for the three months ended February 28, 2025[35]