AAR Corp (NYSE:AIR) stock fell 12.99% (As on March 28, 11:28:49 AM UTC-4, Source: Google Finance) after the company reported third-quarter fiscal 2025 results that beat earnings expectations but missed on revenue. The company reported a net loss of $8.9 million, or $0.25 per share, due to a $63.7 million pre-tax charge related to the planned divestiture of its Landing Gear Overhaul business. Third quarter results include a pre-tax charge of $63.7 million associated with the recently announced divestiture of the Company’s Landing Gear Overhaul business. AAR expects further margin expansion through growth in new parts distribution, software services, and realization of acquisition synergies. The company reduced its net leverage ratio from 3.58x to 3.06x in the past year and anticipates additional deleveraging. Adjusted operating margin increased to 9.7% in the current year quarter from 8.3% in the prior year quarter, primarily as a result of growth in Repair & Engineering. Sequentially, the adjusted operating margin increased from 9.2% to 9.7%, driven by improved profitability in Parts Supply as well as Trax and government-related services in Integrated Solutions. Net interest expense for the quarter was $18.1 million, compared to $11.3 million last year, primarily due to increased debt levels as a result of funding the Product Support acquisition. Cash flow used in operating activities was $18.7 million during the current quarter, compared to $20.4 million of cash provided in the prior year quarter. As a reminder, during the quarter, the company paid the $56 million FCPA settlement which was a use of cash within operating activities. As of February 28, 2025, net debt was $947.6 million.

AIR in the third quarter of FY25 has reported the adjusted earnings per share of 99 cents, beating the analysts’ estimates for the adjusted earnings per share of 98 cents. The company had reported the adjusted revenue growth of 20 percent to $678 million in the third quarter of FY25, missing the analysts’ estimates for revenue of $698.97 million. This reflects a 22% increase in consolidated sales to commercial customers, primarily due to the Product Support acquisition and strong demand throughout the Company’s Parts Supply segment. Sales to government customers increased 15% from the same period last year, primarily due to increased order volume for new parts Distribution activities. Sales to commercial customers were 72% of consolidated sales, compared to 70% in the prior year quarter.