Key Highlights

● AAR closed at $106.75 on Tuesday, September 29, down 7.25% from the prior close of $115.09.

● First-quarter fiscal 2027 sales rose 24% to $918.0 million, and adjusted Diluted Earnings per Share reached $1.49, up 38%.

● AAR agreed to buy a 65% controlling interest in MRO Holdings for $1.8 billion, valuing the Business at $4.0 billion.

● Funding includes about $2.1 billion of new Debt and Equity at $135 per share, with closing expected in February 2027.

AAR Corp. (NYSE:AIR) reported strong first-quarter fiscal 2027 results and agreed to acquire a controlling interest in MRO Holdings on Monday, September 28, and its shares fell 7.25% the next day, closing at $106.75 on Tuesday, September 29, 2026, against a prior close of $115.09. The Dow Jones Industrial Average eased 0.26% to 51,349.92 over the same session.

A Strong First Quarter

AAR reported results on Monday, September 28. Sales were $918.0 million, up 24% from a year earlier, and adjusted diluted earnings per share were $1.49, up 38% and above an analyst consensus of $1.29. GAAP diluted earnings per share were $1.00. Adjusted EBITDA rose 34% to $117 million, lifting the Margin to 12.7% from 11.7%, and Operating Cash Flow was $55.8 million compared with $44.9 million used a year earlier. Chief Executive Officer John Holmes called it a very strong start to the fiscal year, with Demand robust across all three core segments.

The MRO Holdings Transaction

AAR agreed to acquire a 65% controlling interest in MRO Holdings for $1.8 billion in equity value, or a $4.0 billion Enterprise value including $1.3 billion of debt repayment, about 10.7 times forecast 2026 adjusted EBITDA. MRO Holdings provides aircraft maintenance, repair and overhaul services across the Americas, with roughly 10,000 professionals and 115 lines of airframe maintenance capacity at facilities in El Salvador, Mexico, Colombia and the United States. It expects 2026 sales of about $1.0 billion and adjusted EBITDA of $285 million.

AAR expects the deal to lift consolidated adjusted EBITDA margins from about 12% to about 16% before synergies, with $75 million of annual cost synergies and a long-term margin target of 19% to 20% within three to four years. It holds Options to acquire the remaining 35% over time.

Financing and Guidance

The transaction is funded by about $2.1 billion of new debt under a fully committed bridge facility, about $780 million of equity issued to existing MRO Holdings shareholders at $135 per share and about $230 million from a Private Equity offering led by The Pritzker Organization. Closing is expected in fiscal third quarter 2027, around February 2027, pending regulatory approvals. For the second quarter, AAR guided to sales growth of 14% to 16% excluding LCP and an adjusted EBITDA margin of 13.0% to 13.4%, and to low-teens sales growth for the full year on the same basis.

Leverage and Timing

Net Leverage was 1.81 times at the end of the quarter, before the new debt. The shares closed at $106.75 within a 52-week range of $76.10 to $154.00, below the $135 per-share price at which equity is being issued to MRO Holdings shareholders.