Aar Corp 10-Q for FY2026 Q3

Aar Corp (AIR)

10-Q 2026-03-25 For: 2026-02-28

Added on April 04, 2026

About this 10-Q

Aar Corp filed this 10-Q on March 25, 2026, covering the quarter ended February 28, 2026 (FY2026 Q3).

Headline figures

Quarter ended February 28, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $845.1M; up 24.6% from $678.2M a year earlier
Net income: $68M; compared with a net loss of $8.9M a year earlier
Diluted EPS: $1.71; compared with -$0.25 a year earlier

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Delaware		36-2334820
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One AAR Place, 1100 N. Wood Dale Road Wood Dale, Illinois		60191
(Address of principal executive offices)		(Zip Code)

		Page
Part I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Cash Flows	7
	Condensed Consolidated Statements of Changes in Equity	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

Part II — OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 5.	Other Information	43
Item 6.	Exhibits	44

Exhibit Index		44
Signatures		45


ASSETS

	February 28,		May 31,
	2026		2025
	(Unaudited)
Current assets:
Cash and cash equivalents	$	78.5	$	96.5
Restricted cash		21.6		12.7
Accounts receivable, less allowances of $13.3 and $10.7, respectively		426.2		354.8
Contract assets		142.3		140.3
Inventories		958.2		809.2
Prepaid expenses and other current assets		136.9		97.1
Total current assets		1,763.7		1,510.6

Property, plant, and equipment, net of accumulated depreciation of $274.7 and $278.7, respectively		163.2		158.5

Other assets:
Goodwill		552.3		530.8
Intangible assets, net of accumulated amortization of $46.7 and $29.5, respectively		288.6		219.6
Rotable assets supporting long-term programs		188.0		172.4
Lease right-of-use assets, net		192.8		93.3
Other non-current assets		183.9		159.4
		1,405.6		1,175.5
	$	3,332.5	$	2,844.6


LIABILITIES AND EQUITY

	February 28,		May 31,
	2026		2025
	(Unaudited)
Current liabilities:
Accounts payable	$	324.0	$	303.1
Accrued liabilities		329.0		251.6
Total current liabilities		653.0		554.7

Long-term debt		888.3		968.0
Lease liabilities		91.4		79.6
Deferred tax liabilities		18.0		18.4
Other liabilities		38.4		12.3
		1,036.1		1,078.3

Equity:
Preferred stock, $1.00 par value, authorized 250,000 shares; none issued		—		––
Common stock, $1.00 par value, authorized 100,000,000 shares; issued 48,750,786 and 45,300,786 shares at cost, respectively		48.8		45.3
Capital surplus		784.5		505.2
Retained earnings		1,106.4		969.4
Treasury stock, 8,986,518 and 9,470,781 shares at cost, respectively		(291.6)		(302.7)
Accumulated other comprehensive loss		(4.7)		(5.6)
Total equity		1,643.4		1,211.6
	$	3,332.5	$	2,844.6


	Three Months Ended					Nine Months Ended
	February 28,					February 28,
	2026			2025		2026		2025
Sales:
Sales from products	$	539.5		$	416.6	$	1,536.6	$	1,235.5
Sales from services		305.6			261.6		843.4		790.5
		845.1			678.2		2,380.0		2,026.0
Cost of sales:
Cost of products		440.2			332.1		1,254.1		1,008.4
Cost of services		250.2			214.4		680.6		640.1
		690.4			546.5		1,934.7		1,648.5
Gross profit		154.7			131.7		445.3		377.5
Provision for (Recovery of) credit losses		0.5			(0.2)		2.2		(0.3)
Selling, general and administrative		89.8			61.3		249.7		270.3
Earnings from joint ventures		1.4			0.5		4.3		4.7
Operating income		65.8			71.1		197.7		112.2
Bargain purchase gain		35.7			—		35.7		—
Gain on sale of headquarters building		9.8			—		9.8		—
Gain (Loss) related to sale and exit of business		(0.4)			(64.0)		0.2		(65.3)
Other expense, net		(0.7)			(0.1)		(1.0)		(0.4)
Interest expense		(17.5)			(18.5)		(55.4)		(56.6)
Interest income		0.4			0.4		1.2		1.4
Income (Loss) before income taxes		93.1			(11.1)		188.2		(8.7)
Income tax expense (benefit)		25.1			(2.2)		51.2		12.8
Net income (loss)	$	68.0		$	(8.9)	$	137.0	$	(21.5)

Earnings (Loss) per share – basic	$	1.72		$	(0.25)	$	3.61	$	(0.61)
Earnings (Loss) per share – diluted	$	1.71		$	(0.25)	$	3.59	$	(0.61)

Share data used for earnings per share:
Weighted average shares outstanding – basic		39.3			35.4		37.8		35.4
Weighted average shares outstanding – diluted		39.5			35.4		38.0		35.4


														Accumulated
														Other
		Common			Capital			Retained			Treasury			Comprehensive
		Stock			Surplus			Earnings			Stock			Loss			Total Equity
Balance, May 31, 2025		$	45.3		$	505.2		$	969.4		$	(302.7)		$	(5.6)		$	1,211.6
Net income			—			—			34.4			—			—			34.4
Stock option activity			—			2.5			—			4.2			—			6.7
Restricted stock activity			—			(4.2)			—			0.4			—			(3.8)
Other comprehensive income, net of tax			—			—			—			—			0.4			0.4
Balance, August 31, 2025		$	45.3		$	503.5		$	1,003.8		$	(298.1)		$	(5.2)		$	1,249.3
Net income			—			—			34.6			—			—			34.6
Issuance of common stock			3.5			270.4			—			—			—			273.9
Stock option activity			—			1.1			—			0.3			—			1.4
Restricted stock activity			—			3.2			—			—			—			3.2
Other comprehensive loss, net of tax			—			—			—			—			(1.2)			(1.2)
Balance, November 30, 2025		$	48.8		$	778.2		$	1,038.4		$	(297.8)		$	(6.4)		$	1,561.2
Net income			—			—			68.0			—			—			68.0
Stock option activity			—			2.4			—			7.3			—			9.7
Restricted stock activity			—			3.9			—			(1.1)			—			2.8
Other comprehensive income, net of tax			—			—			—			—			1.7			1.7
Balance, February 28, 2026		$	48.8		$	784.5		$	1,106.4		$	(291.6)		$	(4.7)		$	1,643.4


Accounts receivable	$	24.5
Contract assets		16.1
Inventory		16.2
Property and equipment		11.5
Right-of-use assets		92.0
Other assets		3.7
Accounts payable and accrued liabilities		(35.3)
Lease liabilities		(15.0)
Net assets acquired		113.7
Bargain purchase gain		(35.7)
Purchase price, net of cash acquired	$	78.0


Accounts receivable	$	13.1
Inventory		66.6
Intangible assets		75.8
Other assets		5.4
Accounts payable and other liabilities		(32.8)
Net assets acquired		128.1
Goodwill		9.0
Purchase price, net of cash acquired	$	137.1


Current assets	$	0.7
Intangible assets		10.3
Deferred revenue		(0.6)
Deferred tax liabilities		(2.6)
Net assets acquired		7.8
Goodwill		12.3
Purchase price, net of cash acquired	$	20.1


Accounts receivable	$	42.3
Contract assets		18.7
Inventory		62.8
Rotable assets		21.9
Property & equipment		44.6
Intangible assets		179.4
Investment in joint venture		17.9
Other assets		4.1
Accounts payable		(21.6)
Other liabilities		(14.9)
Net assets acquired		355.2
Goodwill		364.8
Purchase price, net of cash acquired	$	720.0


Risk-free interest rate	3.9	%
Expected volatility of common stock	34.1	%
Dividend yield	0.0	%
Expected option term in years	4.8


		Currency
		Translation		Pension
		Adjustments		Plans		Total
Balance at December 1, 2025		$	(3.2)	$	(3.2)	$	(6.4)
Other comprehensive income			1.7		—		1.7
Balance at February 28, 2026		$	(1.5)	$	(3.2)	$	(4.7)

Balance at December 1, 2024		$	(7.3)	$	(3.3)	$	(10.6)
Other comprehensive loss			(1.5)		—		(1.5)
Balance at February 28, 2025		$	(8.8)	$	(3.3)	$	(12.1)


		Three Months Ended February 28, 2026
								Selling,			Other
					Cost of			General and			Segment			Operating
		Sales			Sales			Administrative			Items			Income
Parts Supply		$	392.5		$	311.4		$	31.7		$	(1.3)		$	50.7
Repair & Engineering			265.3			222.9			27.4			(0.1)			15.1
Integrated Solutions			167.8			140.8			17.7			(0.1)			9.4
Expeditionary Services			19.5			15.1			1.5			0.1			2.8
		$	845.1		$	690.2		$	78.3		$	(1.4)		$	78.0
Corporate and other															(12.2)
															65.8
Bargain purchase gain															35.7
Gain on sale of headquarters building															9.8
Loss related to sale and exit of businesses, net															(0.4)
Other expense, net															(0.7)
Interest expense															(17.5)
Interest income															0.4
Income before income taxes														$	93.1


		Three Months Ended February 28, 2025
								Selling,			Other
					Cost of			General and			Segment			Operating
		Sales			Sales			Administrative			Items			Income
Parts Supply		$	270.7		$	215.9		$	10.1		$	(0.7)		$	45.4
Repair & Engineering			215.9			173.3			23.4			0.2			19.0
Integrated Solutions			162.9			136.2			17.3			(0.2)			9.6
Expeditionary Services			28.7			20.4			1.9			—			6.4
		$	678.2		$	545.8		$	52.7		$	(0.7)		$	80.4
Corporate and other															(9.3)
															71.1
Losses related to sale and exit of businesses															(64.0)
Other expense, net															(0.1)
Interest expense															(18.5)
Interest income															0.4
Income before income taxes														$	(11.1)


		Three Months Ended						Nine Months Ended
		February 28,						February 28,
		2026			2025			2026			2025
Deferred revenue at beginning of period		$	(45.8)		$	(29.6)		$	(46.7)		$	(21.9)
Revenue deferred			(205.5)			(101.8)			(373.2)			(271.8)
Revenue recognized			168.1			81.8			344.4			243.5
Other⁽¹⁾			(4.5)			(1.6)			(12.2)			(1.0)
Deferred revenue at end of period		$	(87.7)		$	(51.2)		$	(87.7)		$	(51.2)


	Three Months Ended					Nine Months Ended
	February 28,					February 28,
	2026			2025		2026		2025
Parts Supply:
Commercial	$	300.0		$	220.9	$	822.6	$	652.1
Government and defense		92.5			49.8		241.3		142.0
	$	392.5		$	270.7	$	1,063.9	$	794.1

Repair & Engineering:
Commercial	$	245.8		$	193.6	$	665.6	$	591.5
Government and defense		19.5			22.3		58.8		70.8
	$	265.3		$	215.9	$	724.4	$	662.3

Integrated Solutions:
Commercial	$	68.7		$	69.4	$	214.1	$	211.4
Government and defense		99.1			93.5		314.5		283.8
	$	167.8		$	162.9	$	528.6	$	495.2

Expeditionary Services:
Commercial	$	1.3		$	1.6	$	3.2	$	3.6
Government and defense		18.2			27.1		59.9		70.8
	$	19.5		$	28.7	$	63.1	$	74.4


	February 28,		May 31,
	2026		2025
U.S. Government contracts:
Trade receivables	$	42.7	$	26.6
Unbilled receivables		6.0		13.4
		48.7		40.0
All other customers:
Trade receivables		346.5		283.4
Unbilled receivables		31.0		31.4
		377.5		314.8
	$	426.2	$	354.8


	February 28,			May 31,
	2026			2025
Aircraft and engine parts, components and finished goods	$	781.0		$	659.4
Raw materials and parts		142.9			119.9
Work-in-process		34.3			29.9
	$	958.2		$	809.2


		Nine Months Ended February 28, 2026
								Selling,			Other
					Cost of			General and			Segment			Operating
		Sales			Sales			Administrative			Items			Income
Parts Supply		$	1,063.9		$	851.6		$	84.7		$	(4.9)		$	132.5
Repair & Engineering			724.4			589.8			75.2			1.2			58.2
Integrated Solutions			528.6			443.5			52.4			(0.3)			33.0
Expeditionary Services			63.1			49.9			5.0			—			8.2
		$	2,380.0		$	1,934.8		$	217.3		$	(4.0)		$	231.9
Corporate and other															(34.2)
															197.7
Bargain purchase gain															35.7
Gain on sale of headquarters building															9.8
Gain related to sale and exit of businesses, net															0.2
Other expense, net															(1.0)
Interest expense															(55.4)
Interest income															1.2
Income before income taxes														$	188.2


		Nine Months Ended February 28, 2025
								Selling,			Other
					Cost of			General and			Segment			Operating
		Sales			Sales			Administrative			Items			Income
Parts Supply		$	794.1		$	635.0		$	53.1		$	(1.1)		$	107.1
Repair & Engineering			662.3			528.6			74.1			(3.3)			62.9
Integrated Solutions			495.2			420.8			51.2			(0.6)			23.8
Expeditionary Services			74.4			62.4			5.1			—			6.9
		$	2,026.0		$	1,646.8		$	183.5		$	(5.0)		$	200.7
Corporate and other															(88.5)
															112.2
Losses related to sale and exit of businesses															(65.3)
Other expense, net															(0.4)
Interest expense															(56.6)
Interest income															1.4
Loss before income taxes														$	(8.7)


	Three Months Ended February 28, 2026						Three Months Ended February 28, 2025
	Third-Party		Inter-segment		Total		Third-Party		Inter-segment		Total
	Sales		Sales		Sales		Sales		Sales		Sales
Parts Supply	$	392.5	$	8.0	$	400.5	$	270.7	$	7.3	$	278.0
Repair & Engineering		265.3		17.7		283.0		215.9		20.5		236.4
Integrated Solutions		167.8		2.5		170.3		162.9		0.5		163.4
Expeditionary Services		19.5		—		19.5		28.7		—		28.7
	$	845.1	$	28.2	$	873.3	$	678.2	$	28.3	$	706.5


	Three Months Ended February 28,								Nine Months Ended February 28,
	2026			2025			% Change		2026			2025			% Change
Sales:
Commercial	$	615.8		$	485.5		26.8	%	$	1,705.5		$	1,458.6		16.9	%
Government and defense		229.3			192.7		19.0	%		674.5			567.4		18.9	%
	$	845.1		$	678.2		24.6	%	$	2,380.0		$	2,026.0		17.5	%

Gross Profit:
Commercial	$	98.9		$	95.6		3.5	%	$	298.5		$	286.2		4.3	%
Government and defense		55.8			36.1		54.6	%		146.8			91.3		60.8	%
	$	154.7		$	131.7		17.5	%	$	445.3		$	377.5		18.0	%

Gross Profit Margin:
Commercial		16.1	%		19.7	%				17.5	%		19.6	%
Government and defense		24.3	%		18.7	%				21.8	%		16.1	%
Consolidated		18.3	%		19.4	%				18.7	%		18.6	%

Exhibit No.	Description		Exhibits

31.	Rule 13a-14(a)/15(d)-14(a) Certifications	31.1	Section 302 Certification of Chief Executive Officer of Registrant (filed herewith).

		31.2	Section 302 Certification of Chief Financial Officer of Registrant (filed herewith).

32.	Section 1350 Certifications	32.1	Section 906 Certification of Chief Executive Officer of Registrant (filed herewith).

		32.2	Section 906 Certification of Chief Financial Officer of Registrant (filed herewith).

101.	Interactive Data File	101	The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2026, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at February 28, 2026 and May 31, 2025, (ii) Condensed Consolidated Statements of Operations for the three- and nine-months ended February 28, 2026 and 2025, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three- and nine-months ended February 28, 2026 and 2025, (iv) Condensed Consolidated Statements of Cash Flows for the nine-months ended February 28, 2026 and 2025, (v) Condensed Consolidated Statement of Changes in Equity for the three- and nine-months ended February 28, 2026 and 2025, and (vi) Notes to Condensed Consolidated Financial Statements.**

104.	Cover Page Interactive Data File	104	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

		AAR CORP.
		(Registrant)



Date:	March 24, 2026	/s/ DYLAN WOLIN
		Dylan Wolin
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

DATE: March 24, 2026
	/s/ JOHN M. HOLMES
	John M. Holmes
	Chairman, President, and Chief Executive Officer (Principal Executive Officer)