AAR Corp reported third-quarter fiscal year 2026 results for the period ended February 28, 2026, posting consolidated sales of $845.1 million, up 25% from $678.2 million in the prior-year quarter. Sales to commercial customers rose 27% or $130 million to represent 73% of total sales, fueled by double-digit organic growth in new parts distribution and contributions from HAECO Americas and ADI acquisitions. Government sales increased 19%, driven by higher volumes and ADI’s government business.
The company swung to net income of $68.0 million, or $1.71 GAAP diluted EPS, from a $8.9 million net loss last year that included a $63.7 million pre-tax charge on the Landing Gear Overhaul divestiture. Adjusted diluted EPS climbed 26% to $1.25 from $0.99. Adjusted EBITDA reached $102.1 million, up 26%, with margin expanding to 12.1% from 12.0%.
GAAP operating margin fell to 7.8% from 10.5%, while adjusted operating margin improved to 10.2% from 9.7%, reflecting strength in higher-margin new parts distribution. Selling, general and administrative expenses rose to $89.8 million from $61.3 million, impacted by a prior-year $11.1 million legal charge reversal and higher acquisition costs of $8.7 million. Net interest expense edged down to $17.1 million from $18.1 million, with diluted shares at 39.5 million versus 35.4 million.
Cash flow from operations totaled $74.7 million, versus an $18.7 million outflow last year. Net debt stood at $816.5 million, with net leverage at 2.17x.