AAR reports second quarter fiscal year 2026 results

Core Insights - AAR CORP. reported a strong second quarter for fiscal year 2026, with total sales increasing by 16% to $795.3 million compared to $686.1 million in the same quarter last year, driven by organic growth of 12% and a notable 29% increase in Parts Supply sales [2][10] - The company achieved a 23% growth in adjusted EBITDA, with adjusted margins expanding from 11.4% to 12.1%, indicating improved operational efficiency and profitability [3][8] - Recent strategic acquisitions, including ADI and HAECO Americas, are expected to enhance AAR's market position and drive future growth, particularly in new parts distribution and airframe heavy maintenance [4][5] Financial Performance - Total sales for the second quarter reached $795 million, a 16% increase year-over-year, with sales to commercial customers up 13% and sales to government customers up 23% [10][11] - The company reported a net income of $34.6 million, or $0.90 per diluted share, a significant recovery from a net loss of $30.6 million in the prior year quarter [11][27] - Adjusted diluted earnings per share increased by 31% to $1.18, reflecting strong operational performance [8][11] Operational Highlights - The Parts Supply segment saw a remarkable 29% increase in sales, with new parts distribution achieving 32% organic sales growth [2][10] - The Repair & Engineering segment also contributed to growth, benefiting from increased efficiency and volume in component repair facilities [2][3] - AAR's balance sheet remains robust, with net leverage at 2.49x, providing capacity for further investments [6][15] Strategic Acquisitions - The acquisition of ADI enhances AAR's distribution capabilities and expands its product offerings, creating a new growth vector in the Parts Supply segment [4] - The HAECO Americas acquisition solidifies AAR's position in airframe heavy maintenance, with secured agreements totaling approximately $850 million, effectively utilizing the acquired capacity [5][7] - AAR is also in the process of acquiring Aircraft Reconfig Technologies for $35 million, expected to close in the fourth quarter of fiscal year 2026 [17] Future Guidance - For the third quarter of fiscal year 2026, AAR anticipates total sales growth of 20% to 22% and organic sales growth of 8% to 11% [18] - The full year guidance has been updated to reflect total sales growth approaching 17% and organic sales growth approaching 11% [19]