AAR Corp Reports Strong Q3 Sales Growth Amid Mixed Earnings
Wood Dale, Friday, 28 March 2025.
Despite a $678 million 20% sales increase, AAR Corp’s Q3 results showed a $9 million net loss due to a significant pre-tax charge. Adjusted EPS exceeded expectations at $0.99.
Financial Performance Overview
AAR Corp (NYSE: AIR) reported their third quarter fiscal year 2025 results on March 27, 2025, showcasing a significant revenue increase to $678 million, marking a 20% year-over-year growth [1][2]. However, the company recorded a net loss of $8.9 million, or $(0.25) per share, primarily due to a $63.7 million pre-tax charge related to divestitures [4]. On an adjusted basis, the company achieved diluted earnings per share of $0.99, surpassing analyst expectations [5].
Operational Highlights and Margin Improvements
The company demonstrated robust operational performance with adjusted EBITDA reaching $81 million, representing a 39% increase from the previous year [1]. The adjusted EBITDA margin expanded significantly from 10.3% to 12.0% [2]. Commercial customer sales constituted 72% of total revenue, while government sales showed a 15% increase compared to the prior year [2]. The company’s net leverage ratio improved to 3.06x from 3.58x following the Product Support acquisition [2].
Strategic Business Developments
During the quarter, AAR Corp secured several strategic agreements strengthening its market position. Notable developments include exclusive distribution agreements with Unison for Defense Logistics Agency parts and with Chromalloy for PW4000 engine turbine blades [1]. The company also established a multi-year partnership with Cebu Pacific Air for CFM56 engine nacelle maintenance services and signed a license agreement with Cathay Pacific for Trax software [1]. Additionally, AAR Corp expects to complete the sale of its Landing Gear Overhaul business for $51 million in the fourth quarter of fiscal year 2025 [1].
Future Outlook and Financial Guidance
Looking ahead, AAR Corp projects mid-single-digit sales growth for Q4 FY2025 compared to the same quarter last year, with an adjusted operating margin expected between 9.7% and 9.9% [3]. The company anticipates maintaining its momentum through continued demand in aviation markets and further benefits from recent acquisitions, including Trax USA Corp and Triumph Group’s Product Support Business [3]. The effective tax rate for Q4 is projected to be approximately 30% [3].