Overview

• US aviation aftermarket platform's Q4 sales rose 23%, beating analyst expectations

• Adjusted diluted EPS for Q4 increased 32%, beating analyst expectations

• Company to wind down Legacy Commercial Programs business as part of segment realignment

Outlook

• AAR Corp sees Q1 FY2027 sales growth (ex. LCP) of 21%-23%

• Company expects Q1 FY2027 adjusted EBITDA margin (ex. LCP) of 12.25%-12.75%

• AAR Corp sees FY2027 sales growth (ex. LCP) in low double-digits to low teens

Result Drivers

• PARTS SUPPLY GROWTH - Sales in the Parts Supply segment rose 39% in Q4, with new parts Distribution organic growth at 19%

• REPAIR AND SOFTWARE EXPANSION - Repair, Engineering, and Software segment sales grew 35% in Q4, driven by increased Component MRO activity, higher Airframe MRO volumes, and growth in recurring software revenue

• ACQUISITION IMPACT - Acquisitions, including HAECO Americas and ADI, contributed to commercial and government sales growth, though HAECO Americas had a short-term dilutive impact on margins

Company press release: ID:nPn9GB8R5a

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q4 Sales	Beat	$928 mln	$868.54 mln (7 Analysts)
Q4 Adjusted EPS	Beat	$1.53	$1.38 (7 Analysts)
Q4 EPS		$1.27
Q4 Net Income		$50.7 mln

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the aerospace & defense peer group is "buy"

• Wall Street's median 12-month price target for AAR Corp is $130.00, about 4.2% below its July 20 closing price of $135.69

• The stock recently traded at 24 times the next 12-month earnings vs. a P/E of 20 three months ago

Reuters Recommended Reads

• July 19 - Jet engine maker CFM to invest $2 billion to speed repairs

• July 21 - Sweden's CTT Systems Q2 sales fall, profit declines

• July 20 - Honeywell Aerospace wins IndiGo avionics deal; Aeromexico to deploy runway safety technology

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.