AAR Corp. Soars to New Heights in Q3 2025 with Record Sales and Adjusted EPS
AAR Corp., a leading provider of industrial solutions, has achieved another remarkable quarter in its fiscal year 2025, posting record results in both sales and adjusted earnings per share (EPS). Chairman, President, and CEO John Holmes highlighted the company's strong performance during the third quarter earnings call on March 27, 2025.
With a 20% year-over-year increase in sales to $678 million, AAR set a new record for its third-quarter sales. The company saw continued strength across its business segments, with consolidated sales to commercial customers increasing by 22% from the same quarter last year and sales to government customers growing by 15%. This significant growth was accompanied by meaningful improvements to the bottom line results, with adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) reaching $81.2 million, a 39% increase from the same quarter last year.
The company's EBITDA margin increased to 12%, driven by strong performance in its new parts distribution activities and airframe MRO (Maintenance, Repair, and Overhaul) operations, as well as its product support acquisition. As a result of this sales growth and margin expansion, adjusted EPS grew 16% to $0.99 compared to $0.85 from the same period last year.
AAR's Parts Supply business segment continued to be its largest contributor, accounting for nearly 40% of company sales overall. Third-quarter sales in this segment reached approximately $271 million, a 12% increase compared to the same quarter last year. Adjusted EBITDA for parts supply was $36.8 million, 12% higher than the same quarter last year.
The company's new parts distribution business has been a standout performer, growing organically by double digits for each of the last 13 quarters and now representing approximately 60% of its Parts Supply segment. AAR's role as an independent distributor, combined with its focus on exclusive contracts, offers compelling value proposition for its customers and OEM (Original Equipment Manufacturer) partners.
One notable example of this is a multiyear agreement to exclusively distribute select Unison parts under the company's supplier capabilities contract with the Defense Logistics Agency. This agreement demonstrates AAR's ability to drive growth through strategic partnerships and exclusive distribution contracts, further solidifying its position as a leading provider of industrial solutions.
AAR's strong balance sheet and disciplined capital allocation strategy have positioned the company for investments that will continue to drive growth. With its record sales and adjusted EPS in Q3 2025, AAR Corp. has once again demonstrated its ability to execute on its growth strategy and deliver exceptional results.
