AAR Corp (NYSE:AIR) stock rose 7.79% (As on January 8, 11:22:46 AM UTC-4, Source: Google Finance) after the company reported fiscal second quarter results that beat analyst expectations, driven by robust demand across its commercial and government businesses. AAR saw strong organic growth of 12% in the quarter, accelerating from 6% in Q1. The Parts Supply segment grew sales by 20%, led by a significant expansion in our commercial new parts distribution activities, and a return to growth in USM as high demand for engine and airframe components continued and asset availability improved. Repair & Engineering revenue surged 57% compared to last year, due to meaningful contributions from our Product Support acquisition and continued efficiency gains in our heavy maintenance hangars. The double-digit sales growth across the commercial and government businesses have the company tracking toward another record year. The company’s adjusted EBITDA margin expanded to 11.4% from 10.1% in the prior year quarter. AAR expects continued margin expansion in coming quarters as it optimizes its portfolio and drives efficiencies. Looking ahead, AAR anticipates “continued strong sales growth in the second half of fiscal year 2025” along with further margin improvements. The company remains on track to reduce leverage following its recent Product Support acquisition.

Moreover, in Parts Supply, the company has signed new distribution agreements with Chromalloy and Whippany Actuation Systems, and in Integrated Solutions the company extended the Airinmar contract with Singapore Airlines. Shortly after the quarter closed, the Repair & Engineering segment announced a joint venture with Air France to support next generation aircraft in the Asia-Pacific region out of the Thailand facility. Additionally, as part of the strategy to focus on higher margin activities, the company recently announced the divestiture of the Landing Gear Overhaul business, which the company expects to be immediately accretive to margins and earnings upon closing.

AIR in the second quarter of FY 25 has reported the adjusted earnings per share of 90 cents, beating the analysts’ estimates for the adjusted earnings per share of 88 cents. The company had reported the adjusted revenue growth of 26 percent to $686.1 million in the second quarter of FY 25, beating the analysts’ estimates for revenue of $654.18 million. Adjusted operating margin increased to 9.2% in the current year quarter from 8.1% in the prior year quarter, primarily as a result of growth in commercial sales. Sequentially, the adjusted operating margin increased from 9.1% to 9.2%, driven by improved profitability in the Repair & Engineering segment.