The updated FY2026 organic sales growth guidance was lowered to ~8% from prior ~16%, while total sales growth guidance was raised to ~12% from ~12% (flat). The organic slowdown is notable and may weigh on sentiment. Monitor the Q4 FY26 earnings release for actual results vs. the 'approaching 11%' organic growth target. The segment realignment and new 3-year targets provide a clearer long-term framework but are not near-term catalysts.
Price Chart
Executive Summary
AAR hosted an Investor Day on May 12, 2026, presenting a strategic update and new 3-year financial targets. The company reported strong historical performance with LTM Q3 FY26 adjusted sales of $3.1B and adjusted EBITDA of $376M, and set targets of 8-12% adjusted sales CAGR, 13-14%+ adjusted EBITDA margin, and ~15%+ adjusted EPS CAGR for total AAR excluding Legacy Commercial Programs. The filing also detailed a segment realignment effective Q4 FY26, combining Government Programs and Mobility into a new Government Solutions segment, and repositioning software into Repair & Engineering.
Key Facts
- LTM Q3 FY26 adjusted sales of $3.1B and adjusted EBITDA of $376M (12.1% margin).
- New 3-year targets: 8-12% adj. sales CAGR, 13-14%+ adj. EBITDA margin, ~15%+ adj. EPS CAGR (ex-Legacy Commercial Programs).
- Q4 FY26 outlook: total adj. sales growth approaching 19% (prior ~17%), organic adj. sales growth approaching 11%.
- FY2026 outlook: total adj. sales growth ~12% (prior ~12%), organic adj. sales growth ~8% (prior ~16%).
- Segment realignment effective Q4 FY26: new Government Solutions segment, software moved to Repair, Engineering & Software, Legacy Commercial Programs becomes separate segment.
- Parts Supply segment LTM Q3 FY26: $1.4B sales (+30% YoY), $201M adj. EBITDA (+42% YoY), 14.7% margin (+123 bps YoY).
- Repair, Engineering & Software segment LTM Q3 FY26: $1.0B sales (+8% YoY), $127M adj. EBITDA (+1% YoY), 12.7% margin (-85 bps YoY).
- Government Solutions segment LTM Q3 FY26: $514M adj. sales (+12% YoY), $56M adj. EBITDA (+56% YoY), 10.9% margin (+320 bps YoY).
- Pro forma adjusted net leverage at 2.17x as of Feb 28, 2026; total available liquidity of $840M.
- Awarded 10-year, $365M IDIQ contract for F-16 maintenance.
Financial Impact
Investor Day presentation with updated 3-year financial targets; no hard guidance revision that would materially change near-term consensus.
Risk Factors
- FY2026 organic sales growth guidance lowered to ~8% from ~16% (prior as of Jan 6, 2026), signaling potential headwinds.
- Repair, Engineering & Software segment margin contracted 85 bps YoY to 12.7%.
- Legacy Commercial Programs segment remains a drag with negative operating income.
- Elevated net leverage at 2.17x (pro forma) limits balance sheet flexibility for further M&A.
- Potential impact of higher jet fuel prices on commercial air travel demand noted as a headwind.
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001104659-26-058989 |
| Document: tm2613847d1_8k.htm | 0001104659-26-058989 |
| Document: 0001104659-26-058989-index-headers.html | 0001104659-26-058989 |
| Document: 0001104659-26-058989-index.html | 0001104659-26-058989 |
| Document: 0001104659-26-058989.txt | 0001104659-26-058989 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 27, 2026 today | 8-K | $96.07 | awaiting T+1 | — | $100.08 (+4.17%) |
Oct 26, 2026 1d ago | 144 | $97.34 | awaiting T+1 | — | $100.08 (+2.81%) |
Oct 26, 2026 1d ago | 8-K | $97.34 $100.08 | ▲ +2.81% | ▲ +2.25% | $100.08 (+2.81%) |
Oct 20, 2026 7d ago | 144 | $99.64 $96.67 | ▼ −2.98% | ▼ −1.80% | $100.08 (+0.44%) |
Sep 28, 2026 28d ago | 8-K | $106.75 $101.47 | ▼ −4.95% | ▼ −4.74% | $100.08 (−6.25%) |
Sep 28, 2026 29d ago | Press Release | $106.75 $101.47 | ▼ −4.95% | ▼ −4.74% | $100.08 (−6.25%) |
Sep 24, 2026 4w ago | 8-K | $120.56 $116.11 | ▼ −3.69% | ▼ −4.23% | $100.08 (−16.99%) |
Sep 15, 2026 6w ago | Press Release | $117.23 | awaiting T+1 | — | $100.08 (−14.63%) |
Aug 10, 2026 11w ago | DEFA14A | $142.69 $145.45 | ▲ +1.93% | ▲ +2.25% | $100.08 (−29.86%) |
Aug 4, 2026 12w ago | DEFA14A | $149.43 $146.83 | ▼ −1.74% | ▼ −1.54% | $100.08 (−33.03%) |
US Market Status
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