AAR Corp delivered a solid QQ1 2026 performance, underscored by accelerated top-line growth and margin expansion driven by strength in Parts Supply and accelerating software-enabled offerings. Total adjusted sales rose 13% year over year to $740 million, with 17% organic growth excluding last year’s landing gear sale. The company highlighted the resilience of its exclusive distribution model, which continues to gain OEM participation and market share, contributing to above-market growth in new parts distribution (over 20% in multiple years) and a 27% rise in Parts Supply revenue in the quarter. EBITDA and operating margins improved, aided by cost discipline and efficiency initiatives in the paperless hangar rollout, delivering an adjusted EBITDA margin of 11.7% and adjusted operating margin of 9.7%. Net income and earnings per share also reflected leverage from growth, with adjusted diluted EPS rising 27% to $1.08.
Management signaled durability of the growth trajectory into 2026, with Q2 guidance calling for 7-10% sales growth (excluding landed gear) and adjusted operating margins of 9.6-10%. For the full year, AAR expects organic sales growth approaching 10%. The strategic focus remains on market share gains, software/IP investments (Traxx, AeroStrat), and disciplined portfolio optimization to drive higher-margin growth. The mix remains biased toward commercial and government segments (71% commercial, 29% government), with strong government demand and durable engine-related aftermarket exposure supporting ongoing expansion. The quarter also featured meaningful investments in inventory and the AeroStrat acquisition, signaling a balance between growth investments and the intent to remain cash positive for the year.
In summary, the QQ1 2026 results reinforce AAR’s thesis of growth through exclusive distribution, cross-selling from heavy-maintenance capabilities into component services, and software-enabled offerings that scale with airline demand. Investors should monitor the pace of UFM/USM asset availability, the integration of AeroStrat, progress on the paperless-hangar rollout, and the company’s ability to convert cross-selling opportunities into sustained margin expansion.