Financial Data and Key Metrics Changes - Total adjusted sales grew 13% to $740 million year over year, with organic sales growth at 17% when excluding landing gear sales from the previous year [9][10] - Adjusted EBITDA increased 18% to $86.7 million, with adjusted EBITDA margins rising to 11.7% from 11.3% [9] - Adjusted diluted EPS increased by 27% to $1.08 from $0.85 in the same quarter last year [10] Business Line Data and Key Metrics Changes - Parts supply sales grew 27% to $318 million, with adjusted EBITDA of $43.8 million, up 34%, and adjusted EBITDA margin increasing to 13.8% from 13.1% [10][11] - Repair and engineering sales decreased 1% to $215 million, but organic sales growth was 8% when excluding landing gear divestiture, with adjusted EBITDA of $28.1 million, up 1% [11][12] - Integrated solutions sales increased by 10% year over year to $185 million, with adjusted EBITDA of $14.2 million, up 5% [12] Market Data and Key Metrics Changes - Adjusted sales growth to government customers increased 21%, while adjusted organic sales to commercial customers increased 15% [9] - Total commercial sales accounted for 71% of total sales, with government sales making up the remaining 29% [9] Company Strategy and Development Direction - The company is focused on driving growth through market share capture and new business, improving margins through cost efficiency, and increasing intellectual property through software investments [5][15] - The acquisition of Aerostrat is expected to enhance software capabilities and expand the reach of Trax software solutions [8][14] - The company aims to continue strengthening its offerings with targeted acquisitions to accelerate its strategy [15][16] Management's Comments on Operating Environment and Future Outlook - Management expects sales growth of 7% to 10% for Q2, with organic sales growth approaching 10% for the full fiscal year [15] - The company is encouraged by the additional assets coming to market, which is expected to drive growth in the USM business [31] - Management highlighted the importance of maintaining cash positivity while investing in inventory to support growth [37] Other Important Information - The company invested over $50 million in inventory to support future growth, particularly in parts supply [14] - Net debt leverage increased slightly from 2.72 times to 2.82 times due to organic and inorganic investments [13] Q&A Session Summary Question: What is behind the slight uptick in full-year expectations? - Management indicated that parts supply is leading the way with a strong quarter showing 27% organic growth [18] Question: Can you comment on the pipeline for new distribution agreements? - Management noted that the majority of recent wins have been from taking market share, with a different exclusive distribution model resonating well [19][20] Question: Do you expect to outgrow the market within distribution? - Management confirmed the expectation to maintain growth above market rates in distribution [24] Question: What are the cross-selling opportunities within repair and engineering? - Management stated that they are in the early stages of executing a cross-selling strategy, with a long pipeline of opportunities [26] Question: Has the trend in USM sales continued into the current quarter? - Management confirmed a meaningful growth in USM business, driven by a loosening supply of assets [31] Question: What is the margin opportunity for parts supply with more USM available? - Management indicated that while USM margins have been depressed, they expect margins to expand as more supply comes to market [32] Question: Is there an agreement with Aerostrat employees to retain key personnel? - Management confirmed an earnout agreement for key team members to incentivize retention [33] Question: What is the company's exposure to engine-related aftermarket services? - Management highlighted significant exposure, with 80% of USM parts being engine-related [41] Question: How far along is Trax in becoming a digital marketplace? - Management stated that they are actively investing in making Trax a digital marketplace, with announcements expected in the first half of 2026 [45]

FY25 Financial Performance - Adjusted sales increased by 20% from $2.3 billion in FY24 to $2.8 billion in FY25[10] - Adjusted EBITDA increased by 34% from $242 million in FY24 to $324 million in FY25[10] - Adjusted EPS increased by 17% from $3.33 in FY24 to $3.91 in FY25[10] - Net leverage decreased from 3.30x in FY24 to 2.72x in FY25[10] Q4 FY25 Financial Performance - Adjusted EPS increased by 32% from $0.88 in Q4 FY24 to $1.16 in Q4 FY25[14] - Adjusted sales increased by 12% from $658.8 million in Q4 FY24 to $735.8 million in Q4 FY25[14] - Adjusted operating income increased by 25% from $61.3 million in Q4 FY24 to $76.9 million in Q4 FY25[14] - Adjusted EBITDA increased by 19% from $76.4 million in Q4 FY24 to $90.9 million in Q4 FY25[14] Segment Performance in Q4 FY25 - Parts Supply sales increased by 17% from $260.3 million in Q4 FY24 to $305.5 million in Q4 FY25[14] - Integrated Solutions sales increased by 10% from $165.8 million in Q4 FY24 to $181.5 million in Q4 FY25[14]

Core Insights - AAR CORP. reported record sales and profitability for fiscal year 2025, achieving a 20% increase in consolidated sales to $2.8 billion compared to fiscal year 2024 [2][13] - The company completed the integration of the Product Support acquisition and divested its Landing Gear Overhaul business for $48 million, optimizing its portfolio [2][6] - AAR's adjusted EBITDA grew by 34% year-over-year, reflecting improved margins and operational efficiency [5][15] Fourth Quarter Fiscal Year 2025 Highlights - Fourth quarter sales increased by 15% to $754.5 million, with adjusted diluted EPS rising 32% to $1.16 [5][8] - Adjusted EBITDA for the fourth quarter was $91 million, up 19%, with an adjusted EBITDA margin of 12.4%, an increase from 11.6% [5][10] - Sales to commercial customers rose by 12%, while sales to government customers increased by 21% [7][12] Fiscal Year 2025 Highlights - Full fiscal year net income was $12.5 million, or $0.35 per diluted share, down from $46.3 million in fiscal year 2024 [15][25] - Adjusted diluted EPS for the year was $3.91, compared to $3.33 in the previous year, indicating improved operating efficiency [15][36] - Operating margins improved to 6.7% from 5.6% in fiscal year 2024, with adjusted operating margins increasing to 9.6% from 8.3% [14][15] Recent Updates - AAR implemented Trax's eMRO and eMobility solutions across Delta TechOps and secured new license agreements for Trax software [6][17] - The company signed a new parts Distribution Supply Chain Alliance charter with the U.S. Defense Logistics Agency [6] - AAR's net leverage decreased from 3.58x to 2.72x, reflecting a stronger balance sheet and reduced debt [12][13] Financial Performance - Selling, general, and administrative expenses decreased to $77.4 million from $94.8 million in the prior year quarter [9] - Cash flow from operating activities for the fourth quarter was $51.4 million, compared to $24.5 million in the prior year quarter [12][27] - As of May 31, 2025, net debt stood at $880.5 million, down from $911.2 million a year earlier [12][38]