SECOND QUARTER FISCAL YEAR 2025 HIGHLIGHTS

(As compared to Q2 FY24)

• Sales of $686 million; increased 26%
• Organic growth of 12%; accelerated from 6% in Q1
• GAAP EPS of $(0.87)
• Adjusted EPS (diluted) of $0.90; increased 11%
• GAAP Net loss of $31 million
• Adjusted EBITDA of $78 million; increased 42%
• Cash flow provided by operating activities of $22 million

MANAGEMENT COMMENTARY

“AAR delivered another solid quarter with record sales and improved margins,” said John M. Holmes, AAR’s Chairman, President and Chief Executive Officer. “Our sales grew 26%, underpinned by strong organic growth of 12%, which accelerated from 6% in the first quarter. We saw 20% sales growth in our Parts Supply segment, led by a significant expansion in our commercial new parts distribution activities, and a return to growth in USM as high demand for engine and airframe components continued and asset availability improved.  Sales in Repair & Engineering grew 57% year-over-year due to meaningful contributions from our Product Support acquisition and continued efficiency gains in our heavy maintenance hangars. The double-digit sales growth across our commercial and government businesses have us tracking toward another record year.”

Holmes continued, “We were also pleased to secure new business wins in each of our core segments. In Parts Supply, we signed new distribution agreements with Chromalloy and Whippany Actuation Systems, and in Integrated Solutions we extended our Airinmar contract with Singapore Airlines. Shortly after the quarter closed, our Repair & Engineering segment announced a joint venture with Air France to support next generation aircraft in the Asia-Pacific region out of our Thailand facility. Additionally, as part of our strategy to focus on higher margin activities, we recently announced the divestiture of our Landing Gear Overhaul business, which we expect to be immediately accretive to margins and earnings upon closing.”

“Furthermore, we drove significant expansion in our adjusted EBITDA margins, increasing to 11.4% in the quarter from 10.1% in the prior year quarter.  As we continue to optimize our portfolio and drive efficiencies throughout our businesses, we anticipate continued margin expansion in the coming quarters,” Holmes concluded.

RECENT UPDATES

            NEW BUSINESS

• Multi-year engine parts supply agreement to distribute Chromalloy’s Parts Manufacturer Approval (PMA) parts for the CF6-80C2 engine type
• Multi-year global agreement with Whippany Actuation Systems, a TransDigm Group business, to distribute all components and sub-assemblies for their actuation product line
• Extension with Singapore Airlines for Airinmar’s full suite of repair cycle management services
• Agreement to form a joint venture in the Asia-Pacific region with Air France Industries KLM Engineering & Maintenance to support next generation aircraft

            PORTFOLIO UPDATE

• Subsequent to the quarter, the Company announced an agreement to divest its Landing Gear Overhaul business for $51 million.  The divestiture is part of the Company’s strategy to optimize its portfolio and focus on higher margin businesses with more significant growth potential.