On this page of StockholderLetter.com we present the latest annual shareholder letter from AAR CORP — ticker symbol AIR. Reading current and past AIR letters to shareholders can bring important insights into the investment thesis.

 •  8/4/2026 Letter Continued (Full PDF)
 •  8/8/2023 AIR Stockholder Letter
 •  8/6/2024 AIR Stockholder Letter
 •  8/5/2025 AIR Stockholder Letter
 •  More "Aerospace & Defense" Category Stockholder Letters
 •  AIR Benford's Law Stock Score = 87

AIR Shareholder/Stockholder Letter Transcript:

2026 Annual Report
Doing it right.
Nonstop.
TM

Fiscal Year 2026 was a year of
significant progress for AAR. We
set a series of financial records,
completed four acquisitions,
progressed and completed facility
expansions, launched innovative
new software products, and further
defined our strategy focusing on
Parts, Repair, and Software.
Dear fellow shareholders,
The energy across AAR   s global operations fueled a year
of strong execution. We delivered the high standards our
commercial and government customers expect with the
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leading us to add nonstop to our longstanding brand
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Our focus
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focus on higher-margin businesses with stronger returns on
capital. We re-segmented the Company and announced the
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AAR   s repositioned portfolio and focused strategy drove
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industry leading turnaround times at our Airframe MRO
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software offering.
We continued to strengthen our software portfolio with the
launch of Airvoyant5/  CP #+ RQYGTGF CXKCVKQP RTQEWTGOGPV 
solution that automates the historically complex parts
sourcing process. The strong market reception reinforces the
The strength of our execution translated into the highest
increasing importance of advanced automation in aviation
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procurement and supply chain management.
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Our strategy
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both organically and through acquisitions. We completed
the expansion of our Airframe MRO facility in Oklahoma City
and began supporting a long-term customer   s increased
demand for maintenance capacity. Construction on our

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expect to begin servicing additional maintenance lines from
the new hangar this autumn.
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four acquisitions strengthened key areas of our business and
further reinforced our competitive position across the
aviation aftermarket.
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and accelerating our strategy to grow market share.
Photo Credit: NYSE
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of heavy maintenance.
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approach to safety across our growing repair network. We
also conducted an anonymous safety culture survey that
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exceeding industry benchmarks across key measures of safety
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solution and creates opportunities to expand both customer
available to raise concerns and make recommendations.
bases with a broader set of software solutions.
The strength of our safety culture earned recognition from
5/
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continued sponsoring collaborative information-sharing
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through an AAR-led innovation forum are being evaluated for
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Our culture
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acquired businesses whose expertise is already strengthening
AAR and enhancing the value we deliver to customers. Across
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Our future
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delivered record results for customers and shareholders.
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that support AAR   s next phase of growth.
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investment in AAR.
we support team members but also in the value we deliver
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John M. Holmes
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# #4      Annual Repor t
| 1

Financial highlights
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2026
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Operating performance
$ 3,308.0
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Operating income


277.8




4.86




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Financial position
Working capital
1,128.9
Total assets
3,355.9
Total debt


900.0
1,703.8
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Adjusted operating margin
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2026
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    $ 3,308.0    

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Adjusted sales
$ 3,308.0    

Operating income


277.8    
54.0
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Asset impairment and exit charges
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(0.7)    
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4.9




1.0



Contract termination costs

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Adjusted operating income

Adjusted operating margin


337.0

10.2%

Adjusted diluted EPS
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2026
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4.86

1.40    



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(0.77)

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(0.26)

Asset impairment and exit charges
0.13

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0.03

(0.02)    
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0.02
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Adjusted diluted EPS
(a)

(0.32)   

5.05


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Tax effect on adjustments C


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Calculation uses estimated statutory tax rates on non-GAAP adjustments except for the impact from non-deductible items
including the bargain purchase gain and the FCPA settlement charge.
2

A AR 2026 Annual Repor t












Adjusted EBITDA
Net debt
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2026
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$ 187.7
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58.2
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2.1
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Total debt
72.1
Acquisition and integration expenses
28.2
(29.5)
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Less: Cash and cash equivalents
(84.0)
Net debt
$ 816.0
(9.8)
Net debt to adjusted EBITDA
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Asset impairment and exit charge
4.9
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1.0
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(0.7)
Net debt to adjusted EBITDA
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17.8
Adjusted EBITDA
$ 900.0
70.5
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2026
/C[   
2026
$ 401.1
816.0
2.03
$ 401.1
Adjusted sales, adjusted operating income, adjusted operating margin, adjusted diluted
    Legal judgments related to or impacted by the Russia / Ukraine conflict.
EPS, adjusted EBITDA, net debt, and net debt to adjusted EBITDA (net leverage) are
    Contract termination / restructuring costs comprised of gains and losses that are
   non-GAAP financial measures    as defined in Regulation G of the Securities Exchange
recognized at the time of modifying, terminating, or restructuring certain customer
Act of 1934, as amended (the    Exchange Act   ). We believe these non-GAAP financial
and vendor contracts, including the impact from the U.S. government exercising their
measures are relevant and useful for investors as they illustrate our core operating
termination for convenience in the first quarter of Fiscal Year 2025 for our Mobility
performance and leverage unaffected by the impact of certain items that management
does not believe are indicative of our ongoing and core operating activities. When
Systems business   s new-generation pallet contract.
    Losses related to our exit from our Indian joint venture, our Landing Gear Overhaul
reviewed in conjunction with our GAAP results and the accompanying reconciliations,
business, and our Composites manufacturing business, including legal fees for the
we believe these non-GAAP financial measures provide additional information that is
performance guarantee associated with the Composites    A220 aircraft contract.
useful to gain an understanding of the factors and trends affecting our business and
provide a means by which to compare our operating performance and leverage against
that of other companies in the industries we compete. These non-GAAP measures
should be considered as a supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP. Our non-GAAP financial
measures reflect adjustments for certain items including, but not limited to, the following:
    Costs associated with U.S. Foreign Corrupt Practices Act (   FCPA   ) matters that we
Adjusted EBITDA is net income before interest income (expense), other income
(expense), income taxes, depreciation and amortization, stock-based compensation,
and items of an unusual nature including but not limited to business divestitures and
acquisitions, FCPA investigation, settlement and remediation compliance costs, certain
legal judgments, acquisition, integration, and amortization expenses from recent
acquisition activity, headquarters relocation activity, product line exits, and significant
customer contract terminations.
self-reported to the U.S. Department of Justice and other agencies, including
investigation costs and settlement charges.
    Expenses associated with recent acquisition activity, including professional fees for
legal, due diligence, and other acquisition activities, intangible asset amortization
(including amortization of favorable lease assets classified within operating lease
right-of-use assets), integration costs, bargain purchase gains and compensation
expense related to contingent consideration and retention agreements.
A AR 2026 Annual Repor t
| 3

8/4/2026 Letter Continued (Full PDF)

 

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