AAR's 2Q Sales Surge: Gains Across Customer Base Drive Record Performance

AAR CORP. (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, reported a significant sales surge in its fiscal year 2025 second quarter, ended November 30, 2024. The company's sales increased by 26% to $686.1 million, compared to $545.4 million in the same quarter last year. This impressive growth was driven by gains across various customer segments and strategic initiatives.



AAR's sales growth was underpinned by strong organic growth of 12%, which accelerated from 6% in the first quarter. The company's Parts Supply segment led the charge with a 20% sales growth, driven by a significant expansion in commercial new parts distribution activities and a return to growth in Used Serviceable Material (USM). High demand for engine and airframe components, coupled with improved asset availability, contributed to this segment's robust performance.

The Repair & Engineering segment also contributed significantly to AAR's sales surge, with a 57% year-over-year increase. This growth was primarily due to meaningful contributions from the Product Support acquisition and continued efficiency gains in heavy maintenance hangars. The acquisition of the Product Support business in March 2024 has proven to be a strategic move, scaling AAR's Component Services and adding complementary services, proprietary capabilities, and a footprint in the fast-growing Asia-Pacific region.



AAR's focus on higher margin activities, such as the divestiture of the Landing Gear Overhaul business, also contributed to the company's financial performance. The divestiture, announced subsequent to the second quarter, is part of AAR's strategy to optimize its portfolio and focus on higher margin businesses with more significant growth potential. This move is expected to be immediately accretive to margins and earnings upon closing, indicating a positive impact on the company's bottom line.

AAR's Chairman, President, and Chief Executive Officer, John M. Holmes, stated that the company drove significant expansion in its adjusted EBITDA margins, increasing to 11.4% in the quarter from 10.1% in the prior year quarter. This expansion, coupled with the divestiture, reflects AAR's commitment to enhancing its financial performance by focusing on higher margin activities.

In conclusion, AAR's 2Q sales surge, driven by gains across customer segments and strategic initiatives, positions the company for continued growth and success. With a strong focus on higher margin activities and a commitment to optimizing its portfolio, AAR is well-positioned to deliver on its promises and create value for shareholders.