Aviation services provider AAR reported its fiscal year 2026 results for the first quarter ended August 31, 2025. The company said its new parts distribution was a key driver, generating “meaningful” double-digit growth.
Sales were up 12% to $740 million, compared to the same period last year. Sales to commercial customers increased 11%, largely due to double-digit growth in both aftermarket parts trading and new parts distribution.
Customer sales make up 71% of AAR's overall sales in the quarter. Sales to government customers were up 15%, mainly driven by increased order volume for new parts distribution activities.
Cost of sales were up from $544.5 million to $605.9 million.
Gross profits were up from $117.2 million to $133.7 million, while operating income improved from $43.4 million to $64.9 million. Operating margin improved from 6.6% last year to 8.8%.
Net income nearly doubled from $18 million last year to $34.4 million, or an earnings per share (EPS) result of 96 cents, up from 50 cents last year.
“We saw exceptional performance out of our new parts Distribution activities as we continue to win new business and expand our market share,” said AAR chairman, president and CEO John Holmes.
He added that cost discipline and strong operational performance across both its parts supply and repair & engineering segments resulted in an 18% adjusted EBITDA increase, totalling $87 million. The company's adjusted EBITDA margin increased 0.4 percentage points to 11.7%.
For the second fiscal year quarter, AAR anticipates a 7-10% sales growth and an adjusted operating margin of between 9.6% and 10%. This outlook is driven by continued strong growth for both government and commercial parts supply distribution services, along with a persistent “dynamic environment” in the current fiscal year for used services materials.
For the full fiscal year, the company raised its guidance for organic sales to be up from 9% to 10% as a result of the “strong start” to the year.
“Part supply is definitely leading the way,” explained Holmes during the company's earnings call. “We continue to be very pleased with our progress in the new parts distribution market. And the wins that we've got there continue to gain traction.”
As of the end of the quarter, AAR had $91.6 million in cash and cash equivalents. The company's net debt was $950 million.