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Investing.com -- Shares of AAR Corp (NYSE:AIR) gained 2.8% Wednesday after the aviation services provider reported fourth-quarter fiscal 2025 results that easily topped Wall Street expectations, fueled by continued strength in both its commercial and government-facing businesses. Strong demand across new parts distribution and integrated solutions helped power a 15% revenue increase to $755 million, decisively ahead of consensus forecasts.
Adjusted earnings per share for the quarter came in at $1.16, beating analyst estimates by $0.16, while adjusted EBITDA climbed 19% to $91 million. The company also expanded its adjusted EBITDA margin to 12.4% from 11.6% the prior year, reflecting improved operational leverage and favorable sales mix.
“Our fiscal fourth quarter was an extremely strong finish to a record year," said John M. Holmes, AAR’s Chairman, President, and Chief Executive Officer. "We delivered double-digit sales and earnings growth over the prior year quarter."
Holmes noted that AAR’s new parts distribution business remained the company’s fastest-growing line, registering over 20% organic growth. Commercial customer sales — 69% of consolidated revenue — rose 12% year-over-year, while government revenue jumped 21%, supported by expanding order volumes and strength in integrated solutions.
In addition to solid top-line performance, AAR continued deleveraging following its Product Support acquisition, reducing net leverage to 2.72x from 3.58x a year before. Operating margin climbed to 9.7%, almost double the 5.0% margin reported in the prior-year quarter, supported by scale in parts supply and reduced operating expenses.
For the full fiscal year, AAR posted $2.8 billion in revenue, up 20%, while adjusted diluted EPS increased 17% to $3.91. Despite a GAAP net income decline due to non-operating charges, the company reported adjusted EBITDA of $324 million, a 34% jump from the prior year.
Holmes expressed confidence about fiscal 2026, suggesting continued market share gains in Parts Supply and expansion in Repair & Engineering. “We are well-positioned within our markets and expect to drive further growth and margin expansion in our fiscal 2026,” he said.
With a strengthened balance sheet and several new contract wins — including with the U.S. Defense Logistics Agency and Delta TechOps, AAR is poised to benefit from continued growth in global aviation demand. The company also highlighted successful integration of recent acquisitions and portfolio optimization efforts, including the divestiture of its landing gear overhaul business.