On this page of StockholderLetter.com we present the latest annual shareholder letter from AAR CORP — ticker symbol AIR. Reading current and past AIR letters to shareholders can bring important insights into the investment thesis.

 •  8/5/2025 Letter Continued (Full PDF)
 •  8/8/2023 AIR Stockholder Letter
 •  8/6/2024 AIR Stockholder Letter
 •  More "Aerospace & Defense" Category Stockholder Letters
 •  AIR Benford's Law Stock Score = 96

AIR Shareholder/Stockholder Letter Transcript:

70 years of Doing It Right
2025 Annual Report


Dear fellow shareholders,
Fiscal Year 2025 marked our 70-year anniversary. It was a
great year for our Company. We broke records, optimized
our services portfolio to position the Company for future
growth, and responded to the industry   s increased demand
for aftermarket services. Our achievements highlighted our
entrepreneurial spirit and ability to continue to evolve to
meet the ever-changing needs of our industry.
Our 70th anniversary
Founded in 1955 with an astute understanding of the
aviation industry   s emerging needs, AAR     known as
Allen Aircraft Radio at the time     sought to transform
the aftermarket. With this deftness and vision, throughout
our history, we have innovated, strategically evolved
our offerings, and prioritized safety and service. Today,
we remain committed to these foundational tenets and
continue to place our valued customers, team members,
shareholders, communities, and the industry as a whole
at the center of our activities. We proudly celebrate
GAAP diluted earnings per share of $0.35, compared to
70 years of Doing It Right   .
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Our investments
of our new parts Distribution activities contributed to
Disciplined allocation of our capital was central to AAR   s
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growth in FY2025 and is the basis for our future strategy.
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areas drove unprecedented revenue, adjusted EBITDA, and
aviation maintenance and engineering software company.
adjusted EPS, taking the Company well above our pre-
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pandemic highs.
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$2.3 billion to $2.8 billion. Our adjusted operating margin
many new business wins with some of the largest airlines and
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70 years of Doing It Right  
1967
Expanded
internationally,
opening facility
in Amsterdam
1955
Incorporated as
Allen Aircraft Radio
by Ira A. Eichner
1955
1960
1965
1962
Established FAA
repair station for
avionics and
instruments
1971
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Airframe MRO
business
1970
1969
Renamed
AAR CORP.
1975
1980
Listed on NYSE
using ticker AIR
1980
1982
Expanded into APAC with
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1985
1981
Acquired Brooks & Perkins Inc.,
an air cargo container and
handling system specialist
1990

since the acquisition. We are pleased with this outstanding
Employer and Spouse Employer designations for our
success and are positioning the company to achieve
comprehensive, impactful initiatives supporting current
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members of the military, veterans, and their families.
This year, we substantially completed the integration of
AAR   s positive Company culture translates to successful
AAR   s FY2024 Product Support acquisition, realizing
outcomes for our operations and customers. This is seen in
synergies and delivering strong performance. Our
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John M. Holmes
Chairman, President and
our recognition from Newsweek as one of America   s Most
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Responsible Companies 2025, from The145.com as the
capabilities, expanded global footprint, and higher margin
overall Top Shop for Best Total Solutions Provider Repair,
offerings brought through the acquisition.
and from NATO Support and Procurement Agency, which
ranked AAR   s Component Services     Amsterdam facility as
AAR made considerable adjustments to optimize our
portfolio, focusing on our core segments and highest margin
the No. 1 Best Source of Repair.
offerings. With this emphasis, we also continue to strengthen
Our future
our existing businesses through further investments. Digital
For the past seven decades, AAR has optimized our parts
technologies are transforming our Company and industry
and services portfolio to meet the needs of the aviation
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industry. As we look to the year ahead, we are focused on
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creating value through our differentiated offerings, organic
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growth through market share gains and capacity expansions,
continue to make progress toward additional maintenance
and investing in strategic M&A. We remain focused on
capacity through the construction of two Airframe MRO
delivering unmatched support for our customers, superior
facility expansions.
returns for our shareholders, and meaningful opportunities
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Our impact
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in the decades ahead.
Best Team in Aviation: AAR   s 6,000 global team members.
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We endeavor to foster a positive Company culture that
in AAR.
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Our success was validated in March 2025, when AAR earned
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team member feedback. Team AAR ranked our regard for
their safety as the Company   s most salient attribute and
reported a widespread feeling of pride in our shared
John M. Holmes
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accomplishments. AAR also earned repeat Military Friendly   
1996
David P. Storch became
the second CEO in the
Company   s history
1995
2000
1997
Expanded into
new parts
distribution
2011
Acquired Airinmar   , an
international component
repair and warranty
management provider
2005
2001
Successfully navigated
the commercial aviation
downturn following
9/11 attacks
2010
2018
John M. Holmes
became the
Company's third CEO
2015
2017
Added Canada to Airframe
MRO facility footprint
Department of State awarded
Worldwide Aviation Support
Services (WASS) contract
2020
Set standard for
UCHGV[ CU   TUV 
independent
third-party MRO
with SMS accepted
by FAA
2020
2023
Acquired TraxSM,
a leading aviation
maintenance and
engineering
software company
2025
Celebrated
70 years of
Doing It Right  
2025
2024
Acquired
Triumph Group   s
Product Support
business

Financial highlights
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(dollars in millions except per share data)
2025
For the year ended May 31
2024
2023
2022
2021
Operating performance
$ 2,780.5
Net sales
Operating income
Diluted earnings per share from continuing operations
2,318.9
$ 1,990.5
1,820.0
$ 1,652.3
185.2

129.2
133.9

106.9
85.2
0.35
1.29
2.52
2.16
1.30
Financial position
Working capital
Total assets
Total debt
Stockholders    equity
955.9
922.7
746.4
659.0
600.2
2,844.6
2,770.0
1,833.1
1,573.9
1,539.7
997.0
997.0
272.0
100.0
135.2
1,211.6
1,189.8
1,099.1
1,034.5
974.4
Adjusted operating income
(in millions - unaudited)
For the year ended May 31
Operating income

2025
2024
185.2
$ 129.2
FCPA settlement and investigation costs
65.3
10.5
Acquisition, integration, and amortization expenses
26.8
36.7
0.2
4.8
Russian bankruptcy court judgment (reversal)
(11.1)
11.2
Gain related to sale of joint venture
(2.1)
Contract termination/restructuring costs and loss provisions, net
Government COVID-related subsidy liability
Severance costs
Adjusted operating income


0.8


0.5
265.1
$ 192.9
Adjusted diluted earnings per share
(unaudited)
For the year ended May 31
Diluted earnings per share
2025

2024

0.74
Acquisition, integration, and amortization expenses
Pension settlement charges
FCPA settlement and investigation costs
Russian bankruptcy court judgment (reversal)
Contract termination cost
Losses related to sale and exit of business/joint venture, net
Severance charges
Government COVID-related subsidy liability
Tax effect on adjustments (a)
Adjusted diluted earnings per share
0.35

1.21

0.76
1.84
0.29
(0.31)
0.32

0.14
1.97
0.07

0.01
0.02

(0.70)
(0.76)
3.91

Calculation uses estimated statutory tax rates on non-GAAP adjustments except for the impact of the non-deductible
portion of the FCPA settlement charge and the tax effect of the pension settlement charge, which includes income taxes
previously recognized in accumulated other comprehensive loss.
1.29
3.33

Adjusted EBITDA
Net debt
(in millions - unaudited)
(in millions - unaudited)
For the year ended May 31
Net income
2025
$ 12.5
Income tax expense
26.4
Other expense, net
0.3
Interest expense, net
73.6
Depreciation and amortization
55.2
Acquisition and integration expenses
Russian bankruptcy court judgment (reversal)
FCPA settlement and investigation costs
10.8
(11.1)
65.3
Contract termination cost
Losses related to sale and exit of business/joint venture
0.2
70.3
Government COVID-related liability
Stock-based compensation
Adjusted EBITDA
0.8
19.9
2025
May 31
Total debt
$ 977.0
Less: Cash and cash equivalents
(96.5)
Net debt
$ 880.5
Net debt to adjusted EBITDA
(in millions - unaudited)
2025
May 31
Adjusted EBITDA for the year ended
$ 324.2
Net debt at year end
880.5
Net debt to adjusted EBITDA
2.72
$ 324.2
Adjusted operating income, adjusted diluted earnings per share, adjusted EBITDA, net
    Legal judgments related to or impacted by the Russia / Ukraine conflict.
debt, and net debt to pro forma adjusted EBITDA are    non-GAAP financial measures   
    Contract termination / restructuring costs comprised of gains and losses that are
as defined in Regulation G of the Securities Exchange Act of 1934, as amended (the
recognized at the time of modifying, terminating, or restructuring certain customer
   Exchange Act   ). We believe these non-GAAP financial measures are relevant and useful
and vendor contracts, including the impact from the U.S. government exercising their
for investors as they illustrate our core operating performance and leverage unaffected
termination for convenience in the first quarter of Fiscal Year 2025 for our Mobility
by the impact of certain items that management does not believe are indicative of our
ongoing and core operating activities. When reviewed in conjunction with our GAAP
Systems business   s new-generation pallet contract.
    Losses related to our exit from our Indian joint venture, our Landing Gear Overhaul
results and the accompanying reconciliations, we believe these non-GAAP financial
business, and our Composites manufacturing business, including legal fees for the
measures provide additional information that is useful to gain an understanding of the
performance guarantee associated with the Composites    A220 aircraft contract.
factors and trends affecting our business and provide a means by which to compare our
operating performance and leverage against that of other companies in the industries we
Adjusted EBITDA is net income before interest income (expense), other income
compete. These non-GAAP measures should be considered as a supplement to, and not
(expense), income taxes, depreciation and amortization, stock-based compensation,
as a substitute for, or superior to, the corresponding measures calculated in accordance
and items of an unusual nature including but not limited to business divestitures
with GAAP. Our non-GAAP financial measures reflect adjustments for certain items
and acquisitions, FCPA investigation, settlement and remediation compliance costs,
including, but not limited to, the following:
acquisition, integration, and amortization expenses from recent acquisition activity,
    Costs associated with U.S. Foreign Corrupt Practices Act (   FCPA   ) matters that we selfreported to the U.S. Department of Justice and other agencies, including investigation
pension settlement charges, certain legal judgments, and significant customer
contract terminations.
costs and settlement charges.
    Expenses associated with recent acquisition activity, including professional fees for
legal, due diligence, and other acquisition activities, bridge financing fees, intangible
asset amortization, integration costs, and compensation expense related to contingent
consideration and retention agreements.
    Pension settlement charges associated with the settlement and termination of our
frozen defined benefit pension plan.
A AR 2025 ANNUAL REPORT
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 8/5/2025 Letter Continued (Full PDF)