Wood Dale, Ill. – September 28, 2026 -- AAR CORP. (NYSE: AIR) reported first-quarter fiscal 2027 sales of $918 million, a 24% jump from $739.6 million a year earlier, as the aviation aftermarket supplier simultaneously disclosed a definitive agreement to acquire a 65% controlling interest in MRO Holdings.
Sales climb 24% on parts distribution and repair growth
The quarter ended August 31, 2026, saw growth across all three core segments. Parts Supply sales rose 31%, driven by 23% organic growth in new parts distribution across commercial and government markets. The Repair, Engineering & Software segment grew 31% on airframe MRO, component MRO, and software activity, while Government Solutions increased 4% on Mobility Systems strength.
Commercial customer sales rose 28%, or $147.5 million, lifting commercial's share of consolidated sales to 73% from 71% a year earlier. Government sales increased 14%, or $30.9 million, on higher new-parts distribution volumes.
Adjusted EBITDA rises 34% as margin expands to 12.7%
Adjusted EBITDA reached $117 million, up 34% year over year, with margin expanding 100 basis points to 12.7% from 11.7%. Adjusted EBITDA margin across the Parts Supply, RE&S, and Government Solutions segments totaled 13.3%. Adjusted operating margin rose to 10.6% from 9.7%, though GAAP operating margin slipped to 7.9% from 8.8% as SG&A expenses increased to $107.0 million from $71.8 million and acquisition, amortization, and integration expenses climbed to $19.6 million from $4.4 million.
GAAP net income totaled $40.1 million, or $1.00 per diluted share, versus $34.4 million, or $0.95 per diluted share, a year earlier. Adjusted diluted EPS rose to $1.49 from $1.08, a 38% increase, despite average diluted shares outstanding rising to 39.9 million from 35.9 million.
AAR to acquire 65% stake in MRO Holdings
AAR announced separately that it has entered a definitive agreement to acquire a 65% controlling interest in MRO Holdings, a move the company said accelerates its strategy of building an integrated parts, repair, and software aviation aftermarket platform. Chairman, President and CEO John M. Holmes said heavy maintenance from the acquired business is expected to drive revenue across AAR's other segments, and that the deal structure preserves financial flexibility to pursue further growth while partnering with a team experienced in a strategically important region.
Net leverage falls to 1.81x on $56 million operating cash flow
Cash from operations totaled $55.8 million in the quarter, compared with $44.9 million of cash used in the prior-year period. Net interest expense declined to $16.2 million from $18.5 million. As of August 31, 2026, net debt stood at $780.5 million, with net leverage reduced to 1.81x.
Because of the MRO Holdings announcement, AAR rescheduled its previously planned earnings conference call to 7:00 a.m. Central Time on September 29, 2026. The company's second-quarter and full-year fiscal 2027 guidance excludes any impact from the pending acquisition.