AAR Corp (NYSE:AIR), a provider of aviation services, stock rose 4.44% (As on September 24, 11:25:59 AM UTC-4, Source: Google Finance) after the company reported first quarter fiscal 2026 results that exceeded analyst expectations. AAR’s Parts Supply segment was the standout performer, with 27% growth driving much of the company’s 17% organic sales increase. The company also reported improved profitability, with adjusted EBITDA rising 18% to $87 million and adjusted EBITDA margin expanding to 11.7% from 11.3% YoY. Commercial customer sales, which represented 71% of total revenue, increased 11% to approximately $525 million, driven by double-digit growth in aftermarket parts trading and new parts distribution. Government customer sales grew even faster at 15% YoY. The company made strategic investments during the quarter, including the acquisition of Aerostrat, a maintenance planning software company, for $15 million plus potential contingent consideration of up to $5 million. Despite these strong results, AAR reported cash flow used in operating activities of $44.9 million during the quarter, compared to $18.6 million used in the prior year period, as the company invested to support growth, particularly in its Parts Supply segment.

Moreover, the company expanded Trax’s agreement with JetBlue Airways to include eMobility and its cloud hosting solution. The company has secured multi-year exclusive defense agreement with AmSafe Bridport, a TransDigm company, to distribute their product lines across the KC-46 and C-40 platforms to the global defense and military aftermarket. Subsequent to the end of the first fiscal quarter, awarded indefinite-delivery/indefinite-quantity contract with the Defense Logistics Agency Troop Support for up to $85 million to provide specialized shipping and storage containers, shelters, and accessories.

AIR in the first quarter of FY 26 has reported the adjusted earnings per share of $1.08, beating the analysts’ estimates for the adjusted earnings per share of $1. The company had reported the adjusted revenue growth of 12 percent to $740 million in the first quarter of FY 26, beating the analysts’ estimates for revenue of $691.54 million. Sales to commercial customers increased 11%, or $50.4 million, primarily due to double digit growth across both aftermarket parts trading and new parts Distribution within the Company’s Parts Supply segment. Sales to government customers increased 15% over the same period last year, primarily due to increased order volume for new parts Distribution activities. Adjusted operating margin increased to 9.7% in the current year quarter from 9.1% in the prior year quarter.