AAR(US:AIR)2026-01-06 21:27Financial Performance - Total sales for Q2 FY2026 reached $795 million, a 16% increase compared to $686.1 million in Q2 FY2025[11] - Organic sales growth was 12%, with Parts Supply business sales up 29% and new parts Distribution achieving 32% organic sales growth[3] - Adjusted EBITDA increased by 23% to $97 million, with adjusted EBITDA margin rising from 11.4% to 12.1%[4] - The company reported adjusted diluted EPS of $1.18, a 31% increase from $0.90 in the same quarter last year[6] - Sales for the three months ended November 30, 2025, reached $795.3 million, a 15.9% increase compared to $686.1 million in the same period of 2024[41] - Adjusted EBITDA for the three months ended November 30, 2025, was $96.5 million, compared to $78.4 million for the same period in 2024, indicating a 23.3% increase[42] - Adjusted net income for the three months ended November 30, 2025, was $45.4 million, compared to $32.3 million for the same period in 2024, reflecting a year-over-year increase of 40.6%[39] - Adjusted diluted earnings per share for the three months ended November 30, 2025, was $1.18, up from $0.90 in the same period of 2024, representing a 31.1% increase[40] - Net income for the three months ended November 30, 2025, was $34.6 million, a significant recovery from a net loss of $30.6 million in the same period of 2024[28] - Earnings per share (EPS) for the three months ended November 30, 2025, was $0.91, compared to a loss per share of $0.87 in the same period of 2024[28] Strategic Acquisitions - AAR completed two strategic acquisitions: ADI for $138 million and HAECO Americas for $77 million, enhancing its Parts Supply and Repair & Engineering segments[15] - AAR secured $850 million in airframe heavy maintenance contracts as part of the HAECO Americas acquisition, effectively selling out acquired capacity for several years[7] Sales Growth and Segments - Sales to government customers increased by 23%, driven by higher order volumes for new parts Distribution activities[11] - Parts Supply segment sales for the three months ended November 30, 2025, were $353.6 million, up 29.2% from $273.7 million in 2024[35] - Integrated Solutions segment operating income increased to $13.9 million for the three months ended November 30, 2025, compared to $6.5 million in 2024[35] - Organic sales growth for the three months ended November 30, 2025, was 12.2%, after accounting for the impact of divestitures and acquisitions[41] Financial Health and Leverage - Net leverage stood at 2.49x, indicating a strong balance sheet with capacity for further investments[8] - The net debt at November 30, 2025, was $884.4 million, down from $935.3 million at the same time in 2024[42] - The net debt to adjusted EBITDA ratio as of November 30, 2025, was 2.49, indicating a manageable leverage position[43] Cash Flow and Operating Activities - Cash flow from operating activities was $13.6 million, down from $22 million in the prior year quarter[17] - Cash provided by operating activities for the three months ended November 30, 2025, was $13.6 million, a decrease from $22.0 million in the same period of 2024[41] - The company incurred $14.2 million in acquisition, integration, and amortization expenses for the three months ended November 30, 2025[39] Future Outlook - The company expects total sales growth of 20% to 22% for Q3 FY2026 and adjusted operating margin between 9.8% and 10.1%[18] Asset Management - Total assets increased to $3,242.5 million as of November 30, 2025, up from $2,844.6 million as of May 31, 2025[31] - Cash and cash equivalents at the end of the period were $96.2 million, compared to $82.5 million at the end of the same period in 2024[32] - Gross profit for the six months ended November 30, 2025, rose to $290.6 million, compared to $245.8 million in 2024, reflecting a 18.2% increase[28]