{"success":true,"data":{"pressRelease":{"id":"154610","rtpr_id":"nPnh8vdGa-20260928","ticker":"AIR","exchange":"NYSE","all_tickers":["AIR"],"title":"AAR reports first quarter fiscal year 2027 results","author":"PR Newswire","published_at":"2026-09-28T20:51:00.107Z","article_body":"AAR reports first quarter fiscal year 2027 results\nPR Newswire\n\nWOOD DALE, Ill., Sept. 28, 2026\n\nWOOD DALE, Ill., Sept. 28, 2026 /PRNewswire/ -- AAR CORP. (NYSE: AIR) (the\n\"Company\" or \"AAR\"), a leading parts, repair, and software platform in the\naviation aftermarket, reported today financial results for the fiscal year\n2027 first quarter ended August 31, 2026.\n\nIn a separate press release issued today, AAR announced it has entered into a\ndefinitive agreement to acquire a controlling interest in MRO Holdings. For\nadditional information on the transaction, please refer to the\ntransaction-specific press release and the investor presentation on the\nInvestors section of AAR's website. Due to this agreement, AAR's previously\nscheduled earnings conference call has been rescheduled to 7:00 AM CT on\nTuesday, September 29, 2026.\n\nFIRST QUARTER FISCAL YEAR 2027 HIGHLIGHTS\n(As compared to Q1 FY2026)\n\n * Sales of $918 million; increased 24%\n * GAAP diluted EPS of $1.00\n * Adjusted diluted EPS of $1.49; increased 38%\n * GAAP Net income of $40 million\n * Adjusted EBITDA of $117 million; increased 34%\n * Adjusted EBITDA margin increased from 11.7% to 12.7%\n\"This was a very strong start to our fiscal year,\" said John M. Holmes, AAR's\nChairman, President and CEO. \"Our airline customers continue to experience\nstrong demand for air travel, which in turn is driving strong demand for our\nservices, as evidenced by our results this quarter. Total sales were up 24%,\nand we saw growth across all three core segments. In our Parts Supply segment,\ntotal growth of 31% was led by 23% organic growth in new parts Distribution on\nstrength in both Commercial and Government end markets. Our Repair,\nEngineering & Software (RE&S) segment reported 31% sales growth,\ndriven by our Airframe MRO, Component MRO, and software activities. Government\nSolutions was up 4% driven by strength in Mobility Systems.\n\n\"Our sales growth resulted in an adjusted EBITDA increase of 34% in the\nquarter and adjusted EBITDA margins of 12.7%, up 100 basis points year over\nyear. Total adjusted EBITDA margin from the Parts Supply, RE&S, and\nGovernment Solutions segments was 13.3%.\n\n\"Cash from operations in the quarter was $56 million, helping to further\nreduce net leverage to 1.81x.\n\n\"Along with our strong fiscal first quarter earnings, we also announced an\nagreement to acquire a 65% controlling interest in MRO Holdings. Over the\nlast several years, AAR has taken important steps to reshape our portfolio\ninto an integrated Parts, Repair, and Software aviation aftermarket platform.\nThrough the acquisition of MRO Holdings, AAR will achieve scale that\nsignificantly accelerates our strategy as heavy maintenance helps drive\nrevenue to all other areas of the company. Further, the transaction structure\nallows us to partner with a proven team that brings decades of experience in a\nstrategically important region while also providing the financial flexibility\nto continue to pursue AAR's broader strategy. This acquisition is highly\nstrategic for AAR and marks a significant step in our long-term growth plan.\"\n\nHolmes concluded, \"Our strategy has been successful over the last several\nyears as we have delivered above-market growth and consistent margin\nexpansion. The acquisition of MRO Holdings will further propel this growth and\ndrive a meaningful step-up in our margin profile. The strategy, portfolio, and\ncombination add to the strength and resilience of our aftermarket platform.\nGiven our solid first quarter results and continued demand for our solutions,\nwe remain confident in our ability to deliver another year of strong\nperformance in fiscal 2027.\"\n\nFIRST QUARTER FISCAL YEAR 2027 RESULTS\n\nConsolidated first quarter sales increased 24% to $918.0 million, compared to\n$739.6 million in the same quarter last year. Sales to commercial customers\nincreased 28%, or $147.5 million, primarily due to the acquisition\ncontributions combined with continued above-market Commercial Distribution\nsales. Sales to government customers increased 14%, or $30.9, over the same\nperiod last year, primarily due to increased volumes in our new parts\ndistribution activities. Sales to commercial customers were 73% of\nconsolidated sales, compared to 71% in the prior year quarter.\n\nThe Company reported net income of $40.1 million, or $1.00 per diluted share.\nFor the first quarter of the prior year, the Company reported net income of\n$34.4 million, or $0.95 per diluted share. Adjusted diluted earnings per share\nin the first quarter of fiscal year 2027 were $1.49, compared to $1.08 in the\nfirst quarter of the prior year.\n\nSelling, general, and administrative expenses were $107.0 million in the\ncurrent quarter, compared to $71.8 million in the prior year quarter.\n Acquisition, amortization, and integration expenses were $19.6 million in\nthe quarter, compared to $4.4 million in the prior year quarter.\n\nOperating margins were 7.9% in the quarter, compared to 8.8% in the prior year\nquarter. Adjusted operating margin increased to 10.6% in the current year\nquarter from 9.7% in the prior year quarter, primarily as a result of growth\nin our Parts Supply segment and increased profitability in our Government\nSolutions segment.\n\nNet interest expense for the quarter was $16.2 million, compared to $18.5\nmillion last year. Average diluted share count increased from 35.9 million\nshares in the prior year quarter to 39.9 million shares in the current year\nquarter.\n\nCash flow provided by operating activities was $55.8 million during the\ncurrent quarter, compared to $44.9 million of cash used in the prior year\nquarter. As of August 31, 2026, net debt was $780.5 million and net leverage\nwas 1.81x.\n\nSECOND QUARTER AND FULL YEAR FISCAL 2027 GUIDANCE\n\nThe Company is providing the following guidance for the second quarter and\nfull year fiscal 2027. This guidance does not include any impact of the MRO\nHoldings acquisition:\n Second quarter FY 2027\n\nAs of September 28, 2026\n Sales growth (ex. LCP)(1) 14% - 16%\n Adjusted EBITDA margin (ex. LCP)(2) 13.0% - 13.4%\n\n (1) Reflects total sales growth excluding the Legacy Commercial Programs\n segment\n (2) Reflects Adjusted EBITDA margin excluding the Legacy Commercial Programs\n segment\n\n Full year FY 2027\n As of September 28, 2026 Prior (as of July 28, 2026)\n Sales growth (ex. LCP)(1) Low teens Low double-digits to low teens\n\nConference call information\n\nOn Tuesday, September 29, 2026, at 7:00 a.m. Central Time, AAR will hold a\nconference call to discuss the quarterly results and the announced acquisition\nof MRO Holdings. A listen-only webcast and slides can be accessed at\nhttps://edge.media-server.com/mmc/p/ogsm2rh7\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=3638083906&u=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fogsm2rh7&a=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fogsm2rh7)\n. Participants may join via phone by registering at\nhttps://register-conf.media-server.com/register/BIe2a403237161465d99fb8af7cc93b3e8\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=163649347&u=https%3A%2F%2Fregister-conf.media-server.com%2Fregister%2FBIe2a403237161465d99fb8af7cc93b3e8&a=https%3A%2F%2Fregister-conf.media-server.com%2Fregister%2FBIe2a403237161465d99fb8af7cc93b3e8)\n. Once registered, participants will receive a dial-in number and a unique PIN\nthat will allow them to access the call.\n\nA replay of the conference call will be available for on-demand listening\nshortly after the completion of the call at the webcast link and will remain\navailable for approximately one year.\n\nThe slides are also available on AAR's website at\nhttps://www.aarcorp.com/en/investors/\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=1071422223&u=https%3A%2F%2Fwww.aarcorp.com%2Fen%2Finvestors%2F&a=https%3A%2F%2Fwww.aarcorp.com%2Fen%2Finvestors%2F)\n.\n\nAbout AAR\n\nAAR is a global aerospace and defense aftermarket solutions company with\noperations in over 20 countries. Headquartered in the Chicago area, AAR\nsupports commercial and government customers through four operating segments:\nParts Supply; Repair, Engineering, and Software; and Government Solutions.\nAdditional information can be found at aarcorp.com/\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=445309487&u=https%3A%2F%2Fwww.aarcorp.com%2F&a=aarcorp.com%2F)\n.\n\nContact: Chris Tillett – Investor Relations | +1-630-227-5830 |\ninvestors@aarcorp.com (mailto:investors@aarcorp.com)\n\nThis press release contains certain statements relating to future results,\nwhich are forward-looking statements as that term is defined in the Private\nSecurities Litigation Reform Act of 1995, which reflect management's\nexpectations about future conditions, including, but not limited to, our\nsecond quarter and full year FY 2027 guidance, execution of strategies,\ncontinued demand in the commercial and government aviation markets; market\nposition; anticipated activities and benefits related to new or expanding\nbusiness relationships; expected contributions and synergies related to\nacquisitions; expansion of capabilities and operational footprint;\nopportunities for margin improvement through operations, integration\nactivities and other efficiency initiatives; and continued sales and margin\ngrowth, earnings performance, debt management, and capital allocation.\n\nForward-looking statements often address our expected future operating and\nfinancial performance and financial condition, or targets, goals, commitments,\nand other business plans, and often may also be identified because they\ncontain words such as \"anticipate,\" \"continue,\" \"estimate,\" \"expect,\"\n\"project,\" \"plan,\" \"potential,\" \"predict,\" \"intend,\" \"believe,\" \"may,\"\n\"might,\" \"will,\" \"would,\" \"should,\" \"seek,\" \"could,\" \"positions,\" \"likely,\"\n\"target,\" \"goal,\" \"strategy\" or similar expressions and the negatives of those\nterms.\n\nThese forward-looking statements are subject to certain risks and\nuncertainties that may cause actual results to differ materially from\nhistorical results or those anticipated, depending on a variety of factors,\nincluding: factors that adversely affect the commercial aviation industry;\nadverse events and negative publicity in the aviation industry; a reduction in\nsales to the U.S. government and its contractors; cost overruns and losses on\nfixed-price contracts; nonperformance by subcontractors or suppliers; our\nability to manage our operational footprint; a reduction in outsourcing of\nmaintenance and repair activity by airlines; a shortage of skilled personnel\nor work stoppages; competition from other companies; financial, operational\nand legal risks arising as a result of operating internationally; the failure\nto complete, integrate and realize the anticipated benefits of acquisitions,\nincluding execution of related operational and financial plans; circumstances\nassociated with divestitures; the inability to recover costs due to\nfluctuations in market values for aviation products and equipment; cyber or\nother security threats or disruptions; the need to make significant capital\nexpenditures to keep pace with technological developments in our industry;\nrestrictions on the use of intellectual property and tooling important to our\nbusiness; the inability to protect the value of our intellectual property; our\nability to manage our debt and fund our other liquidity needs; limitations on\nour ability to access the debt and equity capital markets or to draw down\nfunds under loan agreements; non-compliance with restrictive and financial\ncovenants contained in our debt and loan agreements; changes in or\nnon-compliance with laws and regulations related to federal contractors, the\naviation industry, international operations, safety and environmental matters,\nand the costs of complying with such laws and regulations; exposure to product\nliability and property claims that may be in excess of our liability insurance\ncoverage; the risk that the MRO Holdings acquisition (the \"Acquisition\") may\nnot be completed in a timely manner or at all; the failure to satisfy the\nclosing conditions to the Acquisition, including the receipt of required\nregulatory approvals; the occurrence of any event, change or other\ncircumstance or condition that could give rise to the termination of the share\npurchase agreement governing the Acquisition, including in certain\ncircumstances requiring the Company to pay a termination fee; the ability of\nthe Company to obtain the necessary financing arrangements; the effect of the\nannouncement or pendency of the Acquisition on the Company's business\nrelationships, operating results and business generally; risks that the\nAcquisition may disrupt the Company's current business plans and operations;\nthe Company's ability to retain and hire key personnel in light of the\nAcquisition; risks related to diverting management's attention from the\nCompany's ongoing business operations; unexpected costs, charges or expenses\nresulting from the Acquisition; potential litigation relating to the\nAcquisition; the ability of the Company to successfully integrate MRO Holdings\nand its subsidiaries following the closing of the Acquisition and to achieve\nthe anticipated benefits of the Acquisition, including estimated cost and\noperational synergies, and the timeline to realize such benefits; the effects\nof the Acquisition on the Company's earnings, financial condition, net\nleverage ratio and credit ratings; the risk that the conditions to the\npotential private placement are not satisfied; the fact that the potential\nprivate placement may cause dilution to the Company's existing stockholders;\nthe impact of the Acquisition on the Company's business and future financial\ncondition and operating results, including the ability of the Company or MRO\nHoldings to repay or prepay indebtedness incurred in connection with the\ntransaction or otherwise; and other factors disclosed in the section entitled\n\"Risk Factors\" of the Company's Annual Report on Form 10-K for the fiscal year\nended May 31, 2026, as may be updated or supplemented by any subsequent\nfilings with the Securities and Exchange Commission. Should one or more of\nthese risks or uncertainties materialize adversely, or should underlying\nassumptions or estimates prove incorrect, actual results may vary materially\nfrom those described.\n\nThe Company derives many of its forward-looking statements from its operating\nbudgets and forecasts, which are based on many detailed assumptions. While the\nCompany believes that its assumptions are reasonable, it cautions that it is\nvery difficult to predict the impact of known factors, and it is impossible to\nanticipate all factors that could affect actual results. These events and\nuncertainties are difficult or impossible to predict accurately and many are\nbeyond the Company's control. The risks described in these reports are not the\nonly risks the Company faces, as additional risks and uncertainties not\ncurrently known or foreseeable or deemed immaterial may materially adversely\naffect the Company's business, financial condition or results of operations in\nfuture periods. All forward-looking statements attributable to the Company, or\npersons acting on its behalf, are expressly qualified in their entirety by the\nforegoing cautionary statements. The forward-looking statements included in\nthis press release are made only as of the date hereof. The Company assumes no\nobligation to update or revise any forward-looking statement, whether as a\nresult of new information, future events or otherwise, except as required by\nlaw.\n AAR CORP. and subsidiaries\n\n \n Condensed consolidated statements of income\n (In millions except per share data - unaudited) Three months ended\n August 31,\n 2026 2025\n\n Sales $918.00 $739.60\n Cost of sales 741.7 605.9\n Gross profit 176.3 133.7\n Selling, general and administrative 107 71.8\n Earnings from joint ventures 2.8 3\n Operating income 72.1 64.9\n Gain related to sale and exit of businesses, net –– 0.7\n Interest expense, net (16.2) (18.5)\n Other expense, net (0.5) (0.1)\n Income before income tax expense 55.4 47\n Income tax expense 15.3 12.6\n Net income $40.10 $34.40\n\n Earnings per share – Basic $1.01 $0.96\n Earnings per share – Diluted $1.00 $0.95\n\n Shares used for earnings per share:\n Weighted average shares outstanding – Basic 39.6 35.7\n Weighted average shares outstanding – Diluted 39.9 35.9\n\n \n AAR CORP. and subsidiaries\n\n \n Condensed consolidated balance sheets August 31, May 31,\n (In millions)\n2026\n2026\n (unaudited)\n ASSETS\n Cash and cash equivalents $ 104.5 $ 84.0\n Restricted cash 8.6 23.8\n Accounts receivable, net 436.4 386.8\n Contract assets 147.3 148.4\n Inventories, net 1,008.9 979.0\n Other current assets 134.1 120.1\n Total current assets 1,839.8 1,742.1\n Property, plant, and equipment, net 172.3 166.9\n Goodwill and intangible assets, net 852.7 861.9\n Operating lease right-of-use assets, net 205.3 210.8\n Rotable assets, net 150.4 180.3\n Other non-current assets 206.4 193.9\n Total assets $ 3,426.9 $ 3,355.9\n\n LIABILITIES AND EQUITY\n Accounts payable $ 337.9 $ 295.6\n Accrued liabilities 312.8 317.6\n Total current liabilities 650.7 613.2\n Long-term debt 879.6 893.9\n Operating lease liabilities 98.8 101.1\n Other non-current liabilities 55.4 43.9\n Total liabilities 1,684.5 1,652.1\n Equity 1,742.4 1,703.8\n Total liabilities and equity $ 3,426.9 $ 3,355.9\n\n \n AAR CORP. and subsidiaries\n\n \n Condensed consolidated statements of cash flows Three months ended\n (In millions – unaudited)\nAugust 31,\n 2026 2025\n Cash flows provided by (used in) operating activities:\n Net income $ 40.1 $ 34.4\n Adjustments to reconcile net income to net cash provided by (used in)\n operating activities:\n Depreciation and amortization 19.6 14.5\n Stock-based compensation expense 7.8 5.3\n Changes in certain assets and liabilities:\n Accounts receivable (50.5) (8.5)\n Contract assets 13.3 (6.4)\n Inventories (41.1) (51.8)\n Other current assets (15.4) 3.5\n Rotable assets 27.5 (3.5)\n Accounts payable and accrued liabilities 40.8 (16.7)\n Other 13.7 (15.7)\n Net cash provided by (used in) operating activities 55.8 (44.9)\n\n Cash flows used in investing activities:\n Property, plant, and equipment expenditures (11.8) (8.7)\n Acquisitions, net of cash acquired (6.2) (11.9)\n Investment (7.5) ––\n Hangar expansion activity, net (0.5) (4.2)\n Other 0.4 1.0\n Net cash used in investing activities (25.6) (23.8)\n\n Cash flows provided by (used in) financing activities:\n Short-term borrowings (repayments) on Revolving Credit Facility, net (15.0) (97.0)\n Proceeds from long-term borrowings –– 153.0\n Financing costs –– (2.5)\n Stock compensation activity (9.9) (2.4)\n Net cash provided by (used in) financing activities (24.9) 51.1\n Increase (Decrease) in cash, cash equivalents, and restricted 5.3 (17.6)\n cash\n Cash, cash equivalents, and restricted cash at beginning of 107.8 109.2\n period\n Cash, cash equivalents, and restricted cash at end of period $113.1 $ 91.6\n\n \n AAR CORP. and subsidiaries\n\n \n Third-party sales by segment Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Parts Supply $ 414.8 $ 317.8\n Repair, Engineering, and Software 297.5 226.4\n Government Solutions 138.8 133.9\n Legacy Commercial Programs 66.9 61.5\n $ 918.0 $ 739.6\n\n Operating income (loss) by segment Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Parts Supply $ 55.3 $ 40.9\n Repair, Engineering, and Software 16.0 20.0\n Government Solutions 19.1 12.7\n Legacy Commercial Programs 2.9 0.4\n 93.3 74.0\n Corporate and other (21.2) (9.1)\n $ 72.1 $ 64.9\n\nAdjusted net income, adjusted diluted earnings per share, organic sales\ngrowth, adjusted operating margin, adjusted cash flow provided by (used in)\noperating activities, adjusted EBITDA, adjusted EBITDA margin, net debt, and\nnet debt to adjusted EBITDA (net leverage) are \"non-GAAP financial measures\"\nas defined in Regulation G of the Securities Exchange Act of 1934, as amended\n(the \"Exchange Act\"). We believe these non-GAAP financial measures are\nrelevant and useful for investors as they illustrate our core operating\nperformance, cash flows, and leverage unaffected by the impact of certain\nitems that management does not believe are indicative of our ongoing and core\noperating activities. When reviewed in conjunction with our GAAP results and\nthe accompanying reconciliations, we believe these non-GAAP financial\nmeasures provide additional information that is useful to gain an\nunderstanding of the factors and trends affecting our business and provide a\nmeans by which to compare our operating performance and leverage against that\nof other companies in the industries we compete. These non-GAAP measures\nshould be considered as a supplement to, and not as a substitute for, or\nsuperior to, the corresponding measures calculated in accordance with\nGAAP.\n\nOur non-GAAP financial measures reflect adjustments for certain items\nincluding, but not limited to, the following:\n\n * Expenses associated with recent acquisition activity, including professional\nfees for legal, due diligence, and other acquisition activities, intangible\nasset amortization, integration costs, non-cash rent expense associated with\ncertain acquired leases classified within operating lease right-of-use assets,\nbargain purchase gains, and compensation expense related to contingent\nconsideration and retention agreements.\n * Losses related to our exit from our Indian joint venture, our Landing Gear\nOverhaul business, and our Composites manufacturing business, including legal\nfees for the performance guarantee associated with the Composites' A220\naircraft contract.\nAdjusted EBITDA is net income before interest income (expense), other income\n(expense), income taxes, depreciation and amortization, stock-based\ncompensation, and items of an unusual nature including but not limited to\nbusiness divestitures and acquisitions, acquisition, integration, and\namortization expenses from recent acquisition activity (see detailed\ndescription above), headquarters relocation activity, product line exits, and\nseverance charges. Although our non-GAAP financial measures exclude\namortization expense associated with acquired intangible assets, they do not\nexclude the sales generated by the acquired businesses or otherwise\nattributable to those intangible assets.\n\nThe Company is not providing a reconciliation of forward-looking financial\nmeasures to the most directly comparable forward-looking GAAP measure because\nthe information is not available without unreasonable effort. This is due to\nthe inherent difficulty of forecasting the timing and amount of certain items,\nsuch as, but not limited to, unusual gains and losses, the ultimate outcome of\npending litigation, the impact and timing of potential acquisitions and\ndivestitures, and other structural changes or their probable significance.\nEach of the adjustments has not occurred, are out of the Company's control\nand/or cannot be reasonably predicted. For this reason, the Company is unable\nto address the probable significance of the unavailable information.\n\nPursuant to the requirements of Regulation G of the Exchange Act, we are\nproviding the following tables that reconcile the above-mentioned non-GAAP\nfinancial measures to the most directly comparable GAAP financial measures:\n Adjusted net income Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Net income $ 40.1 $ 34.4\n Acquisition, integration, and amortization expenses 24.9 6.4\n Gain related to sale of businesses, net –– (0.7)\n Severance charges –– 1.0\n Government COVID-related subsidy liability reversal –– (0.7)\n Tax effect on adjustments ((a)) (5.0) (1.4)\n Adjusted net income $ 60.0 $ 39.0\n\n((a) Calculation uses estimated statutory tax rates on non-GAAP adjustments\nexcept for the impact from certain acquisition-related non-deductible items.)\n Adjusted diluted earnings per share Three months ended\n\n(unaudited)\nAugust 31,\n 2026 2025\n Diluted earnings per share $ 1.00 $ 0.95\n Acquisition, integration, and amortization expenses 0.62 0.18\n Gain related to sale of businesses, net –– (0.02)\n Severance charges –– 0.03\n Government COVID-related subsidy liability reversal –– (0.02)\n Tax effect on adjustments ((a)) (0.13) (0.04)\n Adjusted diluted earnings per share $ 1.49 $ 1.08\n\n((a) Calculation uses estimated statutory tax rates on non-GAAP adjustments\nexcept for the impact from certain acquisition-related non-deductible items.)\n Adjusted operating margin Three months ended\n\n(In millions - unaudited)\n August 31, May 31, August 31,\n 2026 2026 2025\n Operating income $ 72.1 $ 80.1 $64.9\n Acquisition, integration, and amortization expenses 24.9 17.0 6.4\n Severance charges –– –– 1.0\n Government COVID-related subsidy, net –– –– (0.7)\n Adjusted operating income $ 97.0 $ 98.0 $ 71.6\n\n Operating margin 7.9 % 8.6 % 8.8 %\n Adjusted operating margin 10.6 % 10.6 % 9.7 %\n\n \n Organic sales growth for the three months ended August 31, 2026\n\n(unaudited)\n\n GAAP sales growth 24.1 %\n Impact of acquisitions within the last twelve months (13.3)\n Organic sales growth 10.8 %\n\n \n Adjusted cash flows provided by (used in) operating activities Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Cash flows provided by (used in) operating activities $ 55.8 $ (44.9)\n Amounts outstanding on accounts receivable financing program:\n Beginning of period 25.7 21.3\n End of period (25.0) (24.3)\n Adjusted cash flows provided by (used in) operating activities $ 56.5 $ (47.9)\n\n \n Adjusted EBITDA Three months ended Year ended\n\n(In millions - unaudited)\nAugust 31,\nMay 31,\n 2026 2025 2026\n Net income $ 40.1 $ 34.4 $ 187.7\n Income tax expense 15.3 12.6 58.2\n Other expense, net 0.5 0.1 2.1\n Interest expense, net 16.2 18.5 70.5\n Depreciation and amortization 18.8 13.8 72.1\n Acquisition and integration expenses 17.8 2.4 28.2\n Gains related to sale and exit of business/joint venture, net –– (0.7) (1.4)\n Bargain purchase gain –– –– (29.5)\n Gain on sale of headquarters building –– –– (9.8)\n Impairment charge related to product line exit –– –– 4.9\n Severance charges –– 1.0 1.0\n Government COVID-related subsidy, net –– (0.7) (0.7)\n Stock-based compensation 7.8 5.3 17.8\n Adjusted EBITDA $ 116.5 $ 86.7 $ 401.1\n\n Net income margin 4.4 % 4.7 %\n Adjusted EBITDA margin 12.7 % 11.7 %\n\n Net debt August 31, August 31,\n\n(In millions – unaudited) 2026 2025\n Total debt $ 885.0 $ 1,030.0\n Less: Cash and cash equivalents (104.5) (80.0)\n Net debt $ 780.5 $ 950.0\n\n \n Net debt to adjusted EBITDA\n\n(In millions - unaudited)\n Adjusted EBITDA for the year ended May 31, 2026 $ 401.1\n Less: Adjusted EBITDA for the three months ended August 31, 2025 (86.7)\n Plus: Adjusted EBITDA for the three months ended August 31, 2026 116.5\n Adjusted EBITDA for the twelve months ended August 31, 2026 $ 430.9\n Net debt at August 31, 2026 $ 780.5\n Net debt to Adjusted EBITDA 1.81\n\n \n\nView original content to download\nmultimedia:https://www.prnewswire.com/news-releases/aar-reports-first-quarter-fiscal-year-2027-results-302891946.html\n(https://www.prnewswire.com/news-releases/aar-reports-first-quarter-fiscal-year-2027-results-302891946.html)\n\nSOURCE AAR CORP.\n\n\n\nPhoto: \nhttps://mmx.prnewswire.com/media/MS1879096/AAR-Logo.jpg?id=OA2973868\n\nCopyright (c) 2026 PR Newswire Association,LLC. All Rights Reserved.","article_body_html":"","raw_payload":{"data":{"id":"nPnh8vdGa-20260928","title":"AAR reports first quarter fiscal year 2027 results","author":"PR Newswire","ticker":"AIR","created":"2026-09-28T20:51:00.107Z","tickers":["AIR"],"exchange":"NYSE","article_body":"AAR reports first quarter fiscal year 2027 results\nPR Newswire\n\nWOOD DALE, Ill., Sept. 28, 2026\n\nWOOD DALE, Ill., Sept. 28, 2026 /PRNewswire/ -- AAR CORP. (NYSE: AIR) (the\n\"Company\" or \"AAR\"), a leading parts, repair, and software platform in the\naviation aftermarket, reported today financial results for the fiscal year\n2027 first quarter ended August 31, 2026.\n\nIn a separate press release issued today, AAR announced it has entered into a\ndefinitive agreement to acquire a controlling interest in MRO Holdings. For\nadditional information on the transaction, please refer to the\ntransaction-specific press release and the investor presentation on the\nInvestors section of AAR's website. Due to this agreement, AAR's previously\nscheduled earnings conference call has been rescheduled to 7:00 AM CT on\nTuesday, September 29, 2026.\n\nFIRST QUARTER FISCAL YEAR 2027 HIGHLIGHTS\n(As compared to Q1 FY2026)\n\n * Sales of $918 million; increased 24%\n * GAAP diluted EPS of $1.00\n * Adjusted diluted EPS of $1.49; increased 38%\n * GAAP Net income of $40 million\n * Adjusted EBITDA of $117 million; increased 34%\n * Adjusted EBITDA margin increased from 11.7% to 12.7%\n\"This was a very strong start to our fiscal year,\" said John M. Holmes, AAR's\nChairman, President and CEO. \"Our airline customers continue to experience\nstrong demand for air travel, which in turn is driving strong demand for our\nservices, as evidenced by our results this quarter. Total sales were up 24%,\nand we saw growth across all three core segments. In our Parts Supply segment,\ntotal growth of 31% was led by 23% organic growth in new parts Distribution on\nstrength in both Commercial and Government end markets. Our Repair,\nEngineering & Software (RE&S) segment reported 31% sales growth,\ndriven by our Airframe MRO, Component MRO, and software activities. Government\nSolutions was up 4% driven by strength in Mobility Systems.\n\n\"Our sales growth resulted in an adjusted EBITDA increase of 34% in the\nquarter and adjusted EBITDA margins of 12.7%, up 100 basis points year over\nyear. Total adjusted EBITDA margin from the Parts Supply, RE&S, and\nGovernment Solutions segments was 13.3%.\n\n\"Cash from operations in the quarter was $56 million, helping to further\nreduce net leverage to 1.81x.\n\n\"Along with our strong fiscal first quarter earnings, we also announced an\nagreement to acquire a 65% controlling interest in MRO Holdings. Over the\nlast several years, AAR has taken important steps to reshape our portfolio\ninto an integrated Parts, Repair, and Software aviation aftermarket platform.\nThrough the acquisition of MRO Holdings, AAR will achieve scale that\nsignificantly accelerates our strategy as heavy maintenance helps drive\nrevenue to all other areas of the company. Further, the transaction structure\nallows us to partner with a proven team that brings decades of experience in a\nstrategically important region while also providing the financial flexibility\nto continue to pursue AAR's broader strategy. This acquisition is highly\nstrategic for AAR and marks a significant step in our long-term growth plan.\"\n\nHolmes concluded, \"Our strategy has been successful over the last several\nyears as we have delivered above-market growth and consistent margin\nexpansion. The acquisition of MRO Holdings will further propel this growth and\ndrive a meaningful step-up in our margin profile. The strategy, portfolio, and\ncombination add to the strength and resilience of our aftermarket platform.\nGiven our solid first quarter results and continued demand for our solutions,\nwe remain confident in our ability to deliver another year of strong\nperformance in fiscal 2027.\"\n\nFIRST QUARTER FISCAL YEAR 2027 RESULTS\n\nConsolidated first quarter sales increased 24% to $918.0 million, compared to\n$739.6 million in the same quarter last year. Sales to commercial customers\nincreased 28%, or $147.5 million, primarily due to the acquisition\ncontributions combined with continued above-market Commercial Distribution\nsales. Sales to government customers increased 14%, or $30.9, over the same\nperiod last year, primarily due to increased volumes in our new parts\ndistribution activities. Sales to commercial customers were 73% of\nconsolidated sales, compared to 71% in the prior year quarter.\n\nThe Company reported net income of $40.1 million, or $1.00 per diluted share.\nFor the first quarter of the prior year, the Company reported net income of\n$34.4 million, or $0.95 per diluted share. Adjusted diluted earnings per share\nin the first quarter of fiscal year 2027 were $1.49, compared to $1.08 in the\nfirst quarter of the prior year.\n\nSelling, general, and administrative expenses were $107.0 million in the\ncurrent quarter, compared to $71.8 million in the prior year quarter.\n Acquisition, amortization, and integration expenses were $19.6 million in\nthe quarter, compared to $4.4 million in the prior year quarter.\n\nOperating margins were 7.9% in the quarter, compared to 8.8% in the prior year\nquarter. Adjusted operating margin increased to 10.6% in the current year\nquarter from 9.7% in the prior year quarter, primarily as a result of growth\nin our Parts Supply segment and increased profitability in our Government\nSolutions segment.\n\nNet interest expense for the quarter was $16.2 million, compared to $18.5\nmillion last year. Average diluted share count increased from 35.9 million\nshares in the prior year quarter to 39.9 million shares in the current year\nquarter.\n\nCash flow provided by operating activities was $55.8 million during the\ncurrent quarter, compared to $44.9 million of cash used in the prior year\nquarter. As of August 31, 2026, net debt was $780.5 million and net leverage\nwas 1.81x.\n\nSECOND QUARTER AND FULL YEAR FISCAL 2027 GUIDANCE\n\nThe Company is providing the following guidance for the second quarter and\nfull year fiscal 2027. This guidance does not include any impact of the MRO\nHoldings acquisition:\n Second quarter FY 2027\n\nAs of September 28, 2026\n Sales growth (ex. LCP)(1) 14% - 16%\n Adjusted EBITDA margin (ex. LCP)(2) 13.0% - 13.4%\n\n (1) Reflects total sales growth excluding the Legacy Commercial Programs\n segment\n (2) Reflects Adjusted EBITDA margin excluding the Legacy Commercial Programs\n segment\n\n Full year FY 2027\n As of September 28, 2026 Prior (as of July 28, 2026)\n Sales growth (ex. LCP)(1) Low teens Low double-digits to low teens\n\nConference call information\n\nOn Tuesday, September 29, 2026, at 7:00 a.m. Central Time, AAR will hold a\nconference call to discuss the quarterly results and the announced acquisition\nof MRO Holdings. A listen-only webcast and slides can be accessed at\nhttps://edge.media-server.com/mmc/p/ogsm2rh7\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=3638083906&u=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fogsm2rh7&a=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fogsm2rh7)\n. Participants may join via phone by registering at\nhttps://register-conf.media-server.com/register/BIe2a403237161465d99fb8af7cc93b3e8\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=163649347&u=https%3A%2F%2Fregister-conf.media-server.com%2Fregister%2FBIe2a403237161465d99fb8af7cc93b3e8&a=https%3A%2F%2Fregister-conf.media-server.com%2Fregister%2FBIe2a403237161465d99fb8af7cc93b3e8)\n. Once registered, participants will receive a dial-in number and a unique PIN\nthat will allow them to access the call.\n\nA replay of the conference call will be available for on-demand listening\nshortly after the completion of the call at the webcast link and will remain\navailable for approximately one year.\n\nThe slides are also available on AAR's website at\nhttps://www.aarcorp.com/en/investors/\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=1071422223&u=https%3A%2F%2Fwww.aarcorp.com%2Fen%2Finvestors%2F&a=https%3A%2F%2Fwww.aarcorp.com%2Fen%2Finvestors%2F)\n.\n\nAbout AAR\n\nAAR is a global aerospace and defense aftermarket solutions company with\noperations in over 20 countries. Headquartered in the Chicago area, AAR\nsupports commercial and government customers through four operating segments:\nParts Supply; Repair, Engineering, and Software; and Government Solutions.\nAdditional information can be found at aarcorp.com/\n(https://edge.prnewswire.com/c/link/?t=0&l=en&o=4784169-1&h=445309487&u=https%3A%2F%2Fwww.aarcorp.com%2F&a=aarcorp.com%2F)\n.\n\nContact: Chris Tillett – Investor Relations | +1-630-227-5830 |\ninvestors@aarcorp.com (mailto:investors@aarcorp.com)\n\nThis press release contains certain statements relating to future results,\nwhich are forward-looking statements as that term is defined in the Private\nSecurities Litigation Reform Act of 1995, which reflect management's\nexpectations about future conditions, including, but not limited to, our\nsecond quarter and full year FY 2027 guidance, execution of strategies,\ncontinued demand in the commercial and government aviation markets; market\nposition; anticipated activities and benefits related to new or expanding\nbusiness relationships; expected contributions and synergies related to\nacquisitions; expansion of capabilities and operational footprint;\nopportunities for margin improvement through operations, integration\nactivities and other efficiency initiatives; and continued sales and margin\ngrowth, earnings performance, debt management, and capital allocation.\n\nForward-looking statements often address our expected future operating and\nfinancial performance and financial condition, or targets, goals, commitments,\nand other business plans, and often may also be identified because they\ncontain words such as \"anticipate,\" \"continue,\" \"estimate,\" \"expect,\"\n\"project,\" \"plan,\" \"potential,\" \"predict,\" \"intend,\" \"believe,\" \"may,\"\n\"might,\" \"will,\" \"would,\" \"should,\" \"seek,\" \"could,\" \"positions,\" \"likely,\"\n\"target,\" \"goal,\" \"strategy\" or similar expressions and the negatives of those\nterms.\n\nThese forward-looking statements are subject to certain risks and\nuncertainties that may cause actual results to differ materially from\nhistorical results or those anticipated, depending on a variety of factors,\nincluding: factors that adversely affect the commercial aviation industry;\nadverse events and negative publicity in the aviation industry; a reduction in\nsales to the U.S. government and its contractors; cost overruns and losses on\nfixed-price contracts; nonperformance by subcontractors or suppliers; our\nability to manage our operational footprint; a reduction in outsourcing of\nmaintenance and repair activity by airlines; a shortage of skilled personnel\nor work stoppages; competition from other companies; financial, operational\nand legal risks arising as a result of operating internationally; the failure\nto complete, integrate and realize the anticipated benefits of acquisitions,\nincluding execution of related operational and financial plans; circumstances\nassociated with divestitures; the inability to recover costs due to\nfluctuations in market values for aviation products and equipment; cyber or\nother security threats or disruptions; the need to make significant capital\nexpenditures to keep pace with technological developments in our industry;\nrestrictions on the use of intellectual property and tooling important to our\nbusiness; the inability to protect the value of our intellectual property; our\nability to manage our debt and fund our other liquidity needs; limitations on\nour ability to access the debt and equity capital markets or to draw down\nfunds under loan agreements; non-compliance with restrictive and financial\ncovenants contained in our debt and loan agreements; changes in or\nnon-compliance with laws and regulations related to federal contractors, the\naviation industry, international operations, safety and environmental matters,\nand the costs of complying with such laws and regulations; exposure to product\nliability and property claims that may be in excess of our liability insurance\ncoverage; the risk that the MRO Holdings acquisition (the \"Acquisition\") may\nnot be completed in a timely manner or at all; the failure to satisfy the\nclosing conditions to the Acquisition, including the receipt of required\nregulatory approvals; the occurrence of any event, change or other\ncircumstance or condition that could give rise to the termination of the share\npurchase agreement governing the Acquisition, including in certain\ncircumstances requiring the Company to pay a termination fee; the ability of\nthe Company to obtain the necessary financing arrangements; the effect of the\nannouncement or pendency of the Acquisition on the Company's business\nrelationships, operating results and business generally; risks that the\nAcquisition may disrupt the Company's current business plans and operations;\nthe Company's ability to retain and hire key personnel in light of the\nAcquisition; risks related to diverting management's attention from the\nCompany's ongoing business operations; unexpected costs, charges or expenses\nresulting from the Acquisition; potential litigation relating to the\nAcquisition; the ability of the Company to successfully integrate MRO Holdings\nand its subsidiaries following the closing of the Acquisition and to achieve\nthe anticipated benefits of the Acquisition, including estimated cost and\noperational synergies, and the timeline to realize such benefits; the effects\nof the Acquisition on the Company's earnings, financial condition, net\nleverage ratio and credit ratings; the risk that the conditions to the\npotential private placement are not satisfied; the fact that the potential\nprivate placement may cause dilution to the Company's existing stockholders;\nthe impact of the Acquisition on the Company's business and future financial\ncondition and operating results, including the ability of the Company or MRO\nHoldings to repay or prepay indebtedness incurred in connection with the\ntransaction or otherwise; and other factors disclosed in the section entitled\n\"Risk Factors\" of the Company's Annual Report on Form 10-K for the fiscal year\nended May 31, 2026, as may be updated or supplemented by any subsequent\nfilings with the Securities and Exchange Commission. Should one or more of\nthese risks or uncertainties materialize adversely, or should underlying\nassumptions or estimates prove incorrect, actual results may vary materially\nfrom those described.\n\nThe Company derives many of its forward-looking statements from its operating\nbudgets and forecasts, which are based on many detailed assumptions. While the\nCompany believes that its assumptions are reasonable, it cautions that it is\nvery difficult to predict the impact of known factors, and it is impossible to\nanticipate all factors that could affect actual results. These events and\nuncertainties are difficult or impossible to predict accurately and many are\nbeyond the Company's control. The risks described in these reports are not the\nonly risks the Company faces, as additional risks and uncertainties not\ncurrently known or foreseeable or deemed immaterial may materially adversely\naffect the Company's business, financial condition or results of operations in\nfuture periods. All forward-looking statements attributable to the Company, or\npersons acting on its behalf, are expressly qualified in their entirety by the\nforegoing cautionary statements. The forward-looking statements included in\nthis press release are made only as of the date hereof. The Company assumes no\nobligation to update or revise any forward-looking statement, whether as a\nresult of new information, future events or otherwise, except as required by\nlaw.\n AAR CORP. and subsidiaries\n\n \n Condensed consolidated statements of income\n (In millions except per share data - unaudited) Three months ended\n August 31,\n 2026 2025\n\n Sales $918.00 $739.60\n Cost of sales 741.7 605.9\n Gross profit 176.3 133.7\n Selling, general and administrative 107 71.8\n Earnings from joint ventures 2.8 3\n Operating income 72.1 64.9\n Gain related to sale and exit of businesses, net –– 0.7\n Interest expense, net (16.2) (18.5)\n Other expense, net (0.5) (0.1)\n Income before income tax expense 55.4 47\n Income tax expense 15.3 12.6\n Net income $40.10 $34.40\n\n Earnings per share – Basic $1.01 $0.96\n Earnings per share – Diluted $1.00 $0.95\n\n Shares used for earnings per share:\n Weighted average shares outstanding – Basic 39.6 35.7\n Weighted average shares outstanding – Diluted 39.9 35.9\n\n \n AAR CORP. and subsidiaries\n\n \n Condensed consolidated balance sheets August 31, May 31,\n (In millions)\n2026\n2026\n (unaudited)\n ASSETS\n Cash and cash equivalents $ 104.5 $ 84.0\n Restricted cash 8.6 23.8\n Accounts receivable, net 436.4 386.8\n Contract assets 147.3 148.4\n Inventories, net 1,008.9 979.0\n Other current assets 134.1 120.1\n Total current assets 1,839.8 1,742.1\n Property, plant, and equipment, net 172.3 166.9\n Goodwill and intangible assets, net 852.7 861.9\n Operating lease right-of-use assets, net 205.3 210.8\n Rotable assets, net 150.4 180.3\n Other non-current assets 206.4 193.9\n Total assets $ 3,426.9 $ 3,355.9\n\n LIABILITIES AND EQUITY\n Accounts payable $ 337.9 $ 295.6\n Accrued liabilities 312.8 317.6\n Total current liabilities 650.7 613.2\n Long-term debt 879.6 893.9\n Operating lease liabilities 98.8 101.1\n Other non-current liabilities 55.4 43.9\n Total liabilities 1,684.5 1,652.1\n Equity 1,742.4 1,703.8\n Total liabilities and equity $ 3,426.9 $ 3,355.9\n\n \n AAR CORP. and subsidiaries\n\n \n Condensed consolidated statements of cash flows Three months ended\n (In millions – unaudited)\nAugust 31,\n 2026 2025\n Cash flows provided by (used in) operating activities:\n Net income $ 40.1 $ 34.4\n Adjustments to reconcile net income to net cash provided by (used in)\n operating activities:\n Depreciation and amortization 19.6 14.5\n Stock-based compensation expense 7.8 5.3\n Changes in certain assets and liabilities:\n Accounts receivable (50.5) (8.5)\n Contract assets 13.3 (6.4)\n Inventories (41.1) (51.8)\n Other current assets (15.4) 3.5\n Rotable assets 27.5 (3.5)\n Accounts payable and accrued liabilities 40.8 (16.7)\n Other 13.7 (15.7)\n Net cash provided by (used in) operating activities 55.8 (44.9)\n\n Cash flows used in investing activities:\n Property, plant, and equipment expenditures (11.8) (8.7)\n Acquisitions, net of cash acquired (6.2) (11.9)\n Investment (7.5) ––\n Hangar expansion activity, net (0.5) (4.2)\n Other 0.4 1.0\n Net cash used in investing activities (25.6) (23.8)\n\n Cash flows provided by (used in) financing activities:\n Short-term borrowings (repayments) on Revolving Credit Facility, net (15.0) (97.0)\n Proceeds from long-term borrowings –– 153.0\n Financing costs –– (2.5)\n Stock compensation activity (9.9) (2.4)\n Net cash provided by (used in) financing activities (24.9) 51.1\n Increase (Decrease) in cash, cash equivalents, and restricted 5.3 (17.6)\n cash\n Cash, cash equivalents, and restricted cash at beginning of 107.8 109.2\n period\n Cash, cash equivalents, and restricted cash at end of period $113.1 $ 91.6\n\n \n AAR CORP. and subsidiaries\n\n \n Third-party sales by segment Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Parts Supply $ 414.8 $ 317.8\n Repair, Engineering, and Software 297.5 226.4\n Government Solutions 138.8 133.9\n Legacy Commercial Programs 66.9 61.5\n $ 918.0 $ 739.6\n\n Operating income (loss) by segment Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Parts Supply $ 55.3 $ 40.9\n Repair, Engineering, and Software 16.0 20.0\n Government Solutions 19.1 12.7\n Legacy Commercial Programs 2.9 0.4\n 93.3 74.0\n Corporate and other (21.2) (9.1)\n $ 72.1 $ 64.9\n\nAdjusted net income, adjusted diluted earnings per share, organic sales\ngrowth, adjusted operating margin, adjusted cash flow provided by (used in)\noperating activities, adjusted EBITDA, adjusted EBITDA margin, net debt, and\nnet debt to adjusted EBITDA (net leverage) are \"non-GAAP financial measures\"\nas defined in Regulation G of the Securities Exchange Act of 1934, as amended\n(the \"Exchange Act\"). We believe these non-GAAP financial measures are\nrelevant and useful for investors as they illustrate our core operating\nperformance, cash flows, and leverage unaffected by the impact of certain\nitems that management does not believe are indicative of our ongoing and core\noperating activities. When reviewed in conjunction with our GAAP results and\nthe accompanying reconciliations, we believe these non-GAAP financial\nmeasures provide additional information that is useful to gain an\nunderstanding of the factors and trends affecting our business and provide a\nmeans by which to compare our operating performance and leverage against that\nof other companies in the industries we compete. These non-GAAP measures\nshould be considered as a supplement to, and not as a substitute for, or\nsuperior to, the corresponding measures calculated in accordance with\nGAAP.\n\nOur non-GAAP financial measures reflect adjustments for certain items\nincluding, but not limited to, the following:\n\n * Expenses associated with recent acquisition activity, including professional\nfees for legal, due diligence, and other acquisition activities, intangible\nasset amortization, integration costs, non-cash rent expense associated with\ncertain acquired leases classified within operating lease right-of-use assets,\nbargain purchase gains, and compensation expense related to contingent\nconsideration and retention agreements.\n * Losses related to our exit from our Indian joint venture, our Landing Gear\nOverhaul business, and our Composites manufacturing business, including legal\nfees for the performance guarantee associated with the Composites' A220\naircraft contract.\nAdjusted EBITDA is net income before interest income (expense), other income\n(expense), income taxes, depreciation and amortization, stock-based\ncompensation, and items of an unusual nature including but not limited to\nbusiness divestitures and acquisitions, acquisition, integration, and\namortization expenses from recent acquisition activity (see detailed\ndescription above), headquarters relocation activity, product line exits, and\nseverance charges. Although our non-GAAP financial measures exclude\namortization expense associated with acquired intangible assets, they do not\nexclude the sales generated by the acquired businesses or otherwise\nattributable to those intangible assets.\n\nThe Company is not providing a reconciliation of forward-looking financial\nmeasures to the most directly comparable forward-looking GAAP measure because\nthe information is not available without unreasonable effort. This is due to\nthe inherent difficulty of forecasting the timing and amount of certain items,\nsuch as, but not limited to, unusual gains and losses, the ultimate outcome of\npending litigation, the impact and timing of potential acquisitions and\ndivestitures, and other structural changes or their probable significance.\nEach of the adjustments has not occurred, are out of the Company's control\nand/or cannot be reasonably predicted. For this reason, the Company is unable\nto address the probable significance of the unavailable information.\n\nPursuant to the requirements of Regulation G of the Exchange Act, we are\nproviding the following tables that reconcile the above-mentioned non-GAAP\nfinancial measures to the most directly comparable GAAP financial measures:\n Adjusted net income Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Net income $ 40.1 $ 34.4\n Acquisition, integration, and amortization expenses 24.9 6.4\n Gain related to sale of businesses, net –– (0.7)\n Severance charges –– 1.0\n Government COVID-related subsidy liability reversal –– (0.7)\n Tax effect on adjustments ((a)) (5.0) (1.4)\n Adjusted net income $ 60.0 $ 39.0\n\n((a) Calculation uses estimated statutory tax rates on non-GAAP adjustments\nexcept for the impact from certain acquisition-related non-deductible items.)\n Adjusted diluted earnings per share Three months ended\n\n(unaudited)\nAugust 31,\n 2026 2025\n Diluted earnings per share $ 1.00 $ 0.95\n Acquisition, integration, and amortization expenses 0.62 0.18\n Gain related to sale of businesses, net –– (0.02)\n Severance charges –– 0.03\n Government COVID-related subsidy liability reversal –– (0.02)\n Tax effect on adjustments ((a)) (0.13) (0.04)\n Adjusted diluted earnings per share $ 1.49 $ 1.08\n\n((a) Calculation uses estimated statutory tax rates on non-GAAP adjustments\nexcept for the impact from certain acquisition-related non-deductible items.)\n Adjusted operating margin Three months ended\n\n(In millions - unaudited)\n August 31, May 31, August 31,\n 2026 2026 2025\n Operating income $ 72.1 $ 80.1 $64.9\n Acquisition, integration, and amortization expenses 24.9 17.0 6.4\n Severance charges –– –– 1.0\n Government COVID-related subsidy, net –– –– (0.7)\n Adjusted operating income $ 97.0 $ 98.0 $ 71.6\n\n Operating margin 7.9 % 8.6 % 8.8 %\n Adjusted operating margin 10.6 % 10.6 % 9.7 %\n\n \n Organic sales growth for the three months ended August 31, 2026\n\n(unaudited)\n\n GAAP sales growth 24.1 %\n Impact of acquisitions within the last twelve months (13.3)\n Organic sales growth 10.8 %\n\n \n Adjusted cash flows provided by (used in) operating activities Three months ended\n\n(In millions - unaudited)\nAugust 31,\n 2026 2025\n Cash flows provided by (used in) operating activities $ 55.8 $ (44.9)\n Amounts outstanding on accounts receivable financing program:\n Beginning of period 25.7 21.3\n End of period (25.0) (24.3)\n Adjusted cash flows provided by (used in) operating activities $ 56.5 $ (47.9)\n\n \n Adjusted EBITDA Three months ended Year ended\n\n(In millions - unaudited)\nAugust 31,\nMay 31,\n 2026 2025 2026\n Net income $ 40.1 $ 34.4 $ 187.7\n Income tax expense 15.3 12.6 58.2\n Other expense, net 0.5 0.1 2.1\n Interest expense, net 16.2 18.5 70.5\n Depreciation and amortization 18.8 13.8 72.1\n Acquisition and integration expenses 17.8 2.4 28.2\n Gains related to sale and exit of business/joint venture, net –– (0.7) (1.4)\n Bargain purchase gain –– –– (29.5)\n Gain on sale of headquarters building –– –– (9.8)\n Impairment charge related to product line exit –– –– 4.9\n Severance charges –– 1.0 1.0\n Government COVID-related subsidy, net –– (0.7) (0.7)\n Stock-based compensation 7.8 5.3 17.8\n Adjusted EBITDA $ 116.5 $ 86.7 $ 401.1\n\n Net income margin 4.4 % 4.7 %\n Adjusted EBITDA margin 12.7 % 11.7 %\n\n Net debt August 31, August 31,\n\n(In millions – unaudited) 2026 2025\n Total debt $ 885.0 $ 1,030.0\n Less: Cash and cash equivalents (104.5) (80.0)\n Net debt $ 780.5 $ 950.0\n\n \n Net debt to adjusted EBITDA\n\n(In millions - unaudited)\n Adjusted EBITDA for the year ended May 31, 2026 $ 401.1\n Less: Adjusted EBITDA for the three months ended August 31, 2025 (86.7)\n Plus: Adjusted EBITDA for the three months ended August 31, 2026 116.5\n Adjusted EBITDA for the twelve months ended August 31, 2026 $ 430.9\n Net debt at August 31, 2026 $ 780.5\n Net debt to Adjusted EBITDA 1.81\n\n \n\nView original content to download\nmultimedia:https://www.prnewswire.com/news-releases/aar-reports-first-quarter-fiscal-year-2027-results-302891946.html\n(https://www.prnewswire.com/news-releases/aar-reports-first-quarter-fiscal-year-2027-results-302891946.html)\n\nSOURCE AAR CORP.\n\n\n\nPhoto: \nhttps://mmx.prnewswire.com/media/MS1879096/AAR-Logo.jpg?id=OA2973868\n\nCopyright (c) 2026 PR Newswire Association,LLC. All Rights Reserved."},"type":"article","timestamp":"2026-09-28T20:51:00.181798199Z","server_sent_at_ms":1790628660181},"received_at":"2026-09-28T20:51:00.370Z","source_url":"https://www.prnewswire.com/news-releases/aar-reports-first-quarter-fiscal-year-2027-results-302891946.html"},"analysis":{"id":"143370","press_release_id":"154610","analysis_json":{"industry":{"label":"Aerospace & Defense","sector":"Industrials"},"redFlags":["GAAP operating margin declined to 7.9% from 8.8% on higher acquisition, amortization and integration expenses","Diluted share count rose from 35.9M to 39.9M year-over-year","MRO Holdings deal brings integration, financing, and potential private-placement dilution risks per forward-looking statements"],"eventType":"earnings","narrative":"AAR CORP reported Q1 FY2027 sales of $918 million, up 24% year-over-year, with GAAP diluted EPS of $1.00 and adjusted diluted EPS of $1.49, up 38%.\n\nAdjusted EBITDA rose 34% to $117 million with margin expanding 100bps to 12.7%, and operating cash flow of $56 million helped cut net leverage to 1.81x.\n\nThe company raised full-year FY2027 sales growth guidance (ex. Legacy Commercial Programs) to low teens and guided Q2 sales growth of 14%-16%, excluding any MRO Holdings impact.\n\nSeparately, AAR announced a definitive agreement to acquire a 65% controlling interest in MRO Holdings; its earnings call was rescheduled to 7:00 AM CT on September 29 to discuss both.","sentiment":"bullish","agentHooks":{"shouldPost":true,"suggestedAngle":"Beat-and-raise quarter plus a 65% MRO Holdings controlling stake — aftermarket consolidation accelerating margins."},"keyFigures":{"eps":1,"revenue":918000000,"guidance":"Q2 FY27 sales growth (ex. LCP) 14%-16%, adjusted EBITDA margin (ex. LCP) 13.0%-13.4%; FY27 sales growth (ex. LCP) low teens, raised from low double-digits to low teens","revenueYoy":"24%","customDimensions":{"net_debt":780500000,"net_leverage":1.81,"adjusted_ebitda":116500000,"gaap_net_income":40100000,"adjusted_eps_yoy":"38%","adjusted_ebitda_yoy":"34%","operating_cash_flow":55800000,"adjusted_diluted_eps":1.49,"organic_sales_growth":"10.8%","adjusted_ebitda_margin":"12.7%","adjusted_operating_margin":"10.6%"}},"quotedText":"This acquisition is highly strategic for AAR and marks a significant step in our long-term growth plan.","namedEntities":{"people":[{"name":"John M. Holmes","role":"Chairman, President and CEO"},{"name":"Chris Tillett","role":"Investor Relations contact"}],"products":[],"companies":[{"name":"AAR CORP.","ticker":"AIR","relationship":"filer"},{"name":"MRO Holdings","relationship":"acquisition target (65% controlling interest)"}],"dollarAmounts":[{"amount":"$918 million","context":"Q1 FY2027 consolidated sales"},{"amount":"$40 million","context":"Q1 FY2027 GAAP net income"},{"amount":"$117 million","context":"Q1 FY2027 adjusted EBITDA"},{"amount":"$56 million","context":"Q1 FY2027 cash from operations"},{"amount":"$780.5 million","context":"net debt at August 31, 2026"}]},"materialImpact":{"score":4,"reasoning":"Strong quarter: sales up 24% to $918M, adjusted EPS up 38% to $1.49, adjusted EBITDA up 34% with 100bps margin expansion, plus raised full-year guidance and announcement of a controlling (65%) stake acquisition in MRO Holdings. No consensus figures stated, so not a confirmed >10% surprise, but broad-based acceleration is material."},"tickerRelevance":{"others":[],"primary":"AIR"},"globalImportance":55,"audienceRelevance":40,"eventTypeSecondary":["guidance_update","m_and_a"],"importanceComponents":{"tickerTier":"mid-cap","eventGravity":"strong earnings beat + raised guidance + simultaneous M&A announcement","sectorWeight":"aerospace aftermarket demand tailwind"}},"event_type":"earnings","event_type_secondary":["guidance_update","m_and_a"],"sentiment":"bullish","material_impact_score":4,"narrative":"AAR CORP reported Q1 FY2027 sales of $918 million, up 24% year-over-year, with GAAP diluted EPS of $1.00 and adjusted diluted EPS of $1.49, up 38%.\n\nAdjusted EBITDA rose 34% to $117 million with margin expanding 100bps to 12.7%, and operating cash flow of $56 million helped cut net leverage to 1.81x.\n\nThe company raised full-year FY2027 sales growth guidance (ex. Legacy Commercial Programs) to low teens and guided Q2 sales growth of 14%-16%, excluding any MRO Holdings impact.\n\nSeparately, AAR announced a definitive agreement to acquire a 65% controlling interest in MRO Holdings; its earnings call was rescheduled to 7:00 AM CT on September 29 to discuss both.","key_figures":{"eps":1,"revenue":918000000,"guidance":"Q2 FY27 sales growth (ex. LCP) 14%-16%, adjusted EBITDA margin (ex. LCP) 13.0%-13.4%; FY27 sales growth (ex. LCP) low teens, raised from low double-digits to low teens","revenueYoy":"24%","customDimensions":{"net_debt":780500000,"net_leverage":1.81,"adjusted_ebitda":116500000,"gaap_net_income":40100000,"adjusted_eps_yoy":"38%","adjusted_ebitda_yoy":"34%","operating_cash_flow":55800000,"adjusted_diluted_eps":1.49,"organic_sales_growth":"10.8%","adjusted_ebitda_margin":"12.7%","adjusted_operating_margin":"10.6%"}},"named_entities":{"people":[{"name":"John M. Holmes","role":"Chairman, President and CEO"},{"name":"Chris Tillett","role":"Investor Relations contact"}],"products":[],"companies":[{"name":"AAR CORP.","ticker":"AIR","relationship":"filer"},{"name":"MRO Holdings","relationship":"acquisition target (65% controlling interest)"}],"dollarAmounts":[{"amount":"$918 million","context":"Q1 FY2027 consolidated sales"},{"amount":"$40 million","context":"Q1 FY2027 GAAP net income"},{"amount":"$117 million","context":"Q1 FY2027 adjusted EBITDA"},{"amount":"$56 million","context":"Q1 FY2027 cash from operations"},{"amount":"$780.5 million","context":"net debt at August 31, 2026"}]},"model_name":"glm-5.3-flashx","prompt_hash":"sha256:727b4b9429a443af","schema_hash":"sha256:05005c02d9cffac9","created_at":"2026-09-28T20:51:07.408Z","global_importance":55,"audience_relevance":40,"importance_components":{"tickerTier":"mid-cap","eventGravity":"strong earnings beat + raised guidance + simultaneous M&A announcement","sectorWeight":"aerospace aftermarket demand tailwind"}},"durationMs":6824,"modelName":"glm-5.3-flashx"}}