AAR Q3 Earnings Surpass Estimates, Sales Increase Year Over Year

Zacks Equity Research

Wed, Apr 2, 2025, 4:36 AM 3 min read

AAR Corp. AIR reported third-quarter fiscal 2025 adjusted earnings of 99 cents per share, which surpassed the Zacks Consensus Estimate of 96 cents by 3.1%. The bottom line improved 16.5% from the year-ago quarter’s level of 85 cents.

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The company reported a GAAP loss of 25 cents per share against earnings per share of 39 cents in the prior-year quarter.

The year-over-year improvement in the bottom line can be attributed to strong demand.

AIR’s Total Sales

In the quarter under review, AAR generated net sales of $678.2 million. The reported figure missed the Zacks Consensus Estimate of $699 million by 3%. However, the figure increased 19.5% from $567.3 million recorded in the year-ago quarter.

The year-over-year improvement can be attributed primarily to the acquisition of Product Support and strong demand throughout the company’s Parts Supply segment.

AAR Corp. Price, Consensus and EPS Surprise

AAR Corp. price-consensus-eps-surprise-chart | AAR Corp. Quote

AAR: Segment Details

In the fiscal third quarter, sales in the Parts Supply segment totaled $270.7 million, up 11.7% year over year.

Repair & engineering reported sales of $215.9 million, up 53.3% from the prior-year period’s level.

Integrated solutions sales amounted to $162.9 million, down 1.6% from the year-ago quarter’s reported number.

Expeditionary Services recorded sales of $28.7 million, up 53.5% year over year.

AIR’s Operational Update

AIR’s adjusted operating margin increased from 8.3% to 9.7%, driven by improved profitability in the Repair & Engineering segment.

Selling, general and administrative expenses amounted to $61.3 million compared with $77 million a year ago.

Net interest expenses for the quarter totaled $18.1 million compared with $11.3 million in the year-ago period. The year-on-year increase in interest expense was primarily due to increased debt levels as a result of funding the Product Support acquisition.

Financial Details of AAR

As of Feb. 28, 2025, AAR’s cash and cash equivalents amounted to $84.4 million compared with $85.8 million as of May 31, 2024.

The company’s long-term debt totaled $1.02 billion as of Feb. 28, 2025, up from $0.985 billion as of May 31, 2024.

In the first nine months of fiscal 2025, net cash (used)/ provided from operating activities was ($15.3) million compared with net cash flow of $19.3 million in the year-ago period.