AIR - Earnings call transcript Q2 2025

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Operator

Hello, and thank you for standing by. Welcome to AAR Corp. Q2 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Denise Pacioni.

You may begin.

Unknown Executive

welcome Fiscal and Quarter XXXX everyone, Call. Earnings afternoon, to Year AAR's Second Good by Chairman, John Executive today joined We're Holmes, Sean Chief Officer; President Gillen, Financial Officer. and Chief and

that forward-looking cause I'd statements and to the call begin, materially involve include as Litigation risks Private statements actual uncertainties differ in forward-looking made from XXXX. Reform we Before Act may remind you of results during the to like statements. the the Securities could defined that comments These forward-looking

no statements anticipated earnings provide these of section circumstances on obligation reflect future performance. May be the Accordingly, year report unanticipated information no are or to future fiscal discussed Factors the to forward-looking ended annual providing In assumes XX, updates or These guarantee are XXXX. uncertainties on Certain call in today. discussed the risks will for Form of Risk non-GAAP release events. the and the company's the financial company XX-K statements, company's and the

A this CEO, measures At is Chairman, over and reconciliation in AAR's most comparable Holmes. like release. forth earnings measures GAAP non-GAAP to the company's I turn of the set would President to call the John time, to these

John Holmes

earnings pleased our to quarter you, welcome, top QX. and with Thank everyone, line to strong record fiscal call. year quarter second another XXXX I'm report results for

the last year. quarter XX% same sales quarter from million $XXX Second improved of

same in record adjusted last share for earnings than XX% also the EPS. period Our setting of per second adjusted $X.XX year, higher a quarter were

and demand for government for engine our aircraft and strong clearly double-digit businesses, demonstrate growth sales results, aftermarket the services. included both which These our commercial

by are acquisition-related more continues margins remainder for year the and improving realizing services of past company value performance and focusing quarter AAR the We are excited on growing of scaling aftermarket very we synergies. efficiencies diligently offering, drive the our portfolio beyond. even while XXXX through throughout fiscal optimization, and to delivered proud this

aging increasing to government continue market. the we from these and fleet consumer aftermarket to benefit In and addition aviation due to of the from demand levels travel elevated strong efforts, a end air

demand This through to slowing calendar and expect it strong we is year continue not XXXX. down,

we mentioned, Moreover, quarterly core from segments segment by and entirely due contributed in quarter. year, remains was to our both largest million, growth, strong XX% XX% increase and last it the to saw to sales grew demand organic X% this year-over-year. Parts up we growth. parts, used All accelerated and an our X XX% which last Supply new sales for delivered sales $XXX business As quarter of this of over organic. sales

Repair posted also a over increased government customers customers Our the increased & of year the last as growth quarter. our last the commercial hangers. the and sales in Integrated and Engineering product XX%. strong Overall, to segment consolidated XX% support from same continued sales grew contribution quarter quarter at XX% demand result Solutions to

top While the same last from bottom improvement results. demonstrated also our period in year, we line line growth accelerated

quarter of quarter increased year. second year XX.X% XX.X% EBITDA XX% last Adjusted million was the by $XX.X last in higher year. EBITDA from to this margin from same the of

our parts including dimension of aftermarket X.X% detail. more sales for business last has segments core be engine contributing -- our Part this to Supply margin to maintenance our earlier, as dynamics or discuss This and operating largest year XX% company. adjusted now segment Our X engine demand that parts XX% aftermarket X.X% nearly from our will engine I of in I strong sales of increased mentioned components continues accessories. our benefited are -- engine year. greatly from the to components segment, strong XX% sales

$XXX higher last sequentially. year quarter and improved to of sales were compared quarter XX% same XX% second Our million the

year. million, was its stellar Adjusted XX% for higher continued Within Second Supply $XX.X distribution or EBITDA than Supply, the performance. quarter million $XX.X year. period last was operating Parts same than income last same quarter Parts higher XX% the

model As in TransDigm like that discussed with distribution previously, multiyear independent the allows Whippany, us focus win the announced to company and our agreement quarter. we our on a contract new business exclusive

this We the are win and excited have opportunities about new more many pipeline. in

Our growth also PPAR to whole returned ] asset by driven this USM and business quarter, [ sales.

combined an strong continued growth whole in the availability USM. further seeing of are in We in will with drive increase assets demand market, which

aftermarket. engine XX% the supply our to engine aftermarket is of of CFMXX engine-related. business. our An to to core mentioned, has As been parts are sales provide material always this partnership the our Serving example FTAI with

Additionally, exclusive such Chromalloy to PMA recently we type. the ] engine CFX-XXCX sell [ their with opportunities, see for engine-related continue as announced the growth to distribution agreement parts

further the agreement bring expands and demonstrates to and engine this part suppliers both offering we value our customers. Securing

same income now operating million last & XXX% quarter Adjusted million, same higher same quarter while XX% year, to Turning second year. by Repair the Engineering. our year. sales grew of quarter was the the XXX% from last $XXX to adjusted $XX.X last up grew million, from $XX.X from period EBITDA

well integration to completed our and fiscal continues rate expect we QX synergy on track are is and Repair we run on inside which & to realize at is previously communicated. FY The 'XX, in support integration the expected of when drive to Engineering $XX realization. synergies is schedule, to perform growth product cost the The be acquisition be million segment. The

While on announced engineering we also the Air Asia are growing for Pacific with evidenced are region. France integrating aircraft joint in support by recently maintenance venture it the business, and next-generation the as we

increase services our existing demand to see improvements On improve the underlying we that for continue of throughput at maintenance side efficiency facilities. implementing heavy Engineering, focused Repair and to process & our on and are continue strong

Oklahoma City of company. in Our achieve revenue 'XX or the ramp are $XX FY to expansions up once and take Miami annual quarters million and capacity in more in X hangar completed for process incremental X will to the

second million, in slightly due the from year. X% quarter quarter quarter million, within EBITDA million $X.X to from X% Turning the the the same quarter shift same last the now $XX.X Integrated by from Adjusted operating year. same up certain Adjusted Sales for was to year for was lower of quarter lower mix last programs. Solutions last Solutions. $XXX income were Integrated

Going as improve growth wins to new activity our contract to their opportunities our we of business program wins government and expect recent convert pipeline forward, mature.

An the example of recent U.S. a government business award work for the win fleet. Navy's overhaul from PA to new engine is the DoD related

do working government expect While FY initially single-digit finalize millions later in with we the are a level to to significant in quarter the contributions the our requirements, more be 'XX. demand still we per low to ramping

the efficiency Commission its through be Additionally, the whether goals, we realize are [ new incredibly DOGE well positioned that or help otherwise. ] administration to

our help capabilities our offerings of while performance. the Our forward We to Department improving costs maintaining government State Defense, customers and continuing Department agencies. U.S. to to other or reduce look demonstrate

touch that Before to we the before made X turning the announcements I'd Sean, right holidays. call briefly on like over to

is to and investigation, to First, After have Commission with relates DOJ on that a previously resolve certain announced that we This Corrupt disclosed self-reporting December amount long has last signed potential and violations XX, significant settled, and Africa. AAR dealt I'm settlement cooperating way the non-prosecution several our in over Foreign in agreement a reached and made and and government our pleased the now proud Nepal $XX.X matter, into with has we company with and the South improvements Securities years. the multiyear XXXX we our the to This this are Act. of this the been the and a with the entered is resolution in with SEC. and have process, of reached with XXXX XXXX and million. resolution transactions Exchange we Justice Department to the The of associated issue Practices total program investments compliance

our was that could million. higher to heavy XX, approach made significant even even between we driving an support, higher-margin on sell December activities. announced allows a resources opportunities to Landing we part on supply an for for our into more to product and focus Overhaul see strategic agreement aftermarket maintenance Telesis synergies. business integrated so we that revenue us allocate we This greater $XX to It also entered put Separately, growth, Gear GA where definitive decision

quarter our close appreciate it the to first close, We gear all landing We calendar upon and expect earnings. XXXX transaction be and and margins work accretive the to hard immediately of will in the I'll now from future. in we and more it team turn detail. gear landing them dedication wish to to the much success and discuss Sean Telesis results over GA in QX our

Sean Gillen

sales Thanks, in XX% the John. new setting $XXX grew quarterly record. company million, Total sales a to quarter

business sales product the from accelerated core which quarter's the X%. from increase additional acquired came product from distribution sales of support prior growth the organic quarter rate of during segments commercial our quarter X was recently This increased compared XX% from for the growth led growth sales. the to XX% support business, Excluding impact XX% in last Commercial and all sales by quarter. organic

operating XX% primarily EBITDA up also while XX.X% New improved margin increased quarter the Government last Adjusted same XX%. for X.X% total quarter, profit in sales quarter increased order to XX% from sales, parts made Total remaining to adjusted government made the from sales commercial sales X.X%. up for XX.X%. distribution. Compared volume the year, due margin to the of to increased

was of and Product margin business Our support interest the $XX.X the reflecting from expense our performance. Support helped improve contribution on efficiencies us Net recently financing airframe quarter product significantly the focus maintenance acquisition. has acquired for million,

expense interest with to these levels. net remain expect consistent We QX

We margin benefit EPS shares, by to reflecting tax $X.XX to the count With adjusted rate was also growth the expect segment. expansion. to XX.X QX that, share in quarter be approximately and increased from detailed I'll million diluted turn Average our effective our the XX%. results of $X.XX, diluted

growth than due decreased whole operating XX.X% by commercial along quarter, adjusted decreased distribution to government sales in at margins businesses, grew year. sales adjusted uptick increase Supply parts Supply XX% volume the XX.X% last Part XX.X% drove both in period margin Part from EBITDA an XX.X% demand driven distribution. and for which margin in was to to USM. new An growth both the to with million, asset same in lower and in $XXX from

the basis, Repair XX% efficiency product and X%. from by & continue XX.X%, & drive margins component to from repair adjusted Demand X.X% heavy X.X% to capabilities, On in hangers. increased the -- Engineering these our maintenance adjusted quarter, the increased strong increased an and margin Engineering increased EBITDA to look gains remains million. XX% and to support EBITDA to organic continued from business and in driven increased $XXX X.X% in for activities. we operating sales Repair growth

to online they of in segment [ realization continued FY expect synergies, initiatives the in our Going we rollout forward, support capacity further expansions once the paperless of margin come and product drive expansion from hanger 'XX. ] the

and X.X%, Integrated driven increased million, growth and decreased commercial Integrated in margin in $XXX slightly by X.X% quarter. respectively, to adjusted operating X% Solutions margin sales adjusted activities. the to EBITDA Solutions

Turning to from X.XXx in consolidated cash during reduced growth, cash. debt the quarter. to in our Cash with EBITDA $XX activities quarter. operating million was along generated the leverage This flow generation, net X.Xx

Product we was Support Xx towards When it leverage acquisition in net to the X.Xx, we in years. last March time back closed said and we leverage the X year, of be expect at net

on target expect of continue track delever we balance are as into this that year the to to We for and achieve to next.

impact announcements. address the Next, financial I'd the to recent like X of

the with and FCPA in payment the been quarter today. was of flows. our third made $XX.X in the reflected First, results be will settlement the we settlement QX are of fiscal resolution, amount discussing recognized cash million The has

for cash funds that on hand used were of revolving from credit and combination The payment. our facility

applicable gear landing expenses this payment cash Second, by in XXXX, to the business, of in closing the will close results. calendar receive in year the a at regards quarter we fees of $XX we the February, of and to overhaul first transaction less and anticipate QX our million end

press stated will transaction earnings closes, and release in to As immediately the when benefit the the accretive margins. be

expect pretax with to which in the noncash of $XX million, loss our decision our divest conjunction approximately to we results. QX business, will be a In recognize

between less. anticipate we forward, our the non-GAAP results significantly of magnitude be GAAP results adjusted adjustments our Going to and our

fully are and integration-related and costs wind the few retention acquisition contingent as the consideration, related our integration Over down recognized. next costs will quarters,

anticipate gear of the associated quarter. non-GAAP of overhaul $X also At composites and that that our largely businesses amortization our by be we per down ongoing million we divestitures, exit to time, intangible XXXX. adjustments For asset comprised landing would wind acquisition approximately mid-fiscal with will our would expect costs

With that, John. over to turn back I'll call the

John Holmes

this very I'm quarter results continued second Sean. with you, fiscal since Thank our the beginning Great. of and momentum pleased year. the

Regarding X.X%. QX the the sales operating fiscal we the year specifically, to XX% of to X.X% of expect growth year-over-year balance and range of and XX% margin for adjusted in

aviation fiscal next the demand commercial environment overall we macro to year, of very into and see strong. year for ahead fiscal services. look I for As our balance expect into our remains to strong The continue

drive levels continue have we significant to multiple addition, to In growth.

more bookings distribution, available to and come strong USM in have new we ramping in up seeing We and growth assets are activity. contracts our fuel

hanger & global our contribute year, Repair incremental the to business. expansions product sales recently the will in Engineering, growth In drive and growth across are X the to fiscal next acquired expected team support

Finally, of tracks. offerings, government including new strong in pipeline Integrated and we a across commercial Solutions, have our opportunities

Turning to profitability.

towards We to continue objectives. executing tremendous make our progress on long-term

incredibly I'm progress made. have the proud we of

Our adjusted up acquisition. improvement. X here today, support The the realizing X.X% from operating expansion areas: our will pre-COVID first product from continued from is recent come margins X.X% primarily synergies we are to margin expect and from from

through ] million Further, margin expansion. we volume mentioned of in As run product to of support as additional we [ fiscal we year. synergy QX $XX the more I expect earlier, the site, drive anticipate next achieve rate

Second next network. hanger The also operating increased new not online will meet drive structure to as demand. existing fiscal coming growth margins improve leverage our the in the cost but heavy year only capacity maintenance is we

driven digital that in in several initiatives expect by several improved over years. hangers, invested last have the Additionally, the we efficiencies we

will Supply The growth benefit come drive from Parts mix our as we third in segment.

continue wins. pipeline and strong distribution significant OEM opportunity recent our of evidenced contracts We as to see by in

added new than we due these contract note customers. value margin mature, additional It As focus that to models the to agreements to higher we earn that business for distribution margins us the and both expect distribution is our suppliers provide expansion. to allows traditional important distribution exclusive

generating Finally, as on focused continuing Sean we our leverage. said, and to cash remain reduce

up over our shareholders customers of thank with your And it turning our it I we'll dedicated that, Before for to to employees, the interest questions, like operator questions. and team for open would and our AAR. continued of for support

Operator

[Operator Instructions]

with the Melius comes question of first Research. from Mikus line Our Scott

Scott Mikus

CFX you parts those with PMAs new VXXXX? and for Chromalloy Are CFMXX those PMA engine, you the [indiscernible] engines? prevent for let parts mentioned for VXXXX agreement there the John, also distribute could that restrictions distribution distributing the some any so, with deal some PMA the those FTAI. of Chromalloy and there parts on on out Chromalloy from that and the sort be to is for you worked And if FTAI would CFMXX

John Holmes

obviously, long-term of the say portfolio relationship has. venture I always there is partners, with and very to we're of with a are What number together. we've Chromalloy. the joint of There appreciate FTAI X other that that question. would the Chromalloy business I discussions us grow with PMA a aware And we're having both got a for ways them are and the as of now looking existing

Scott Mikus

low-cost of a the the There's and the Okay. broader question the on another And of some lot market commercial questions of just then aftermarket. long-term viability the carriers regarding U.S. in

size the your to ULCCs? So just of could wondering if you revenue some exposure

John Holmes

question. Great Yes.

skewed the heavily are We carriers. towards larger

cetera. Our customers Delta United Airlines, largest et American, are Airlines,

lower carriers, the of small North in part America. some our business And with it's cost business so while do very do we a

Scott Mikus

question X if Sean, for it. growth you to do for And numbers happen have organic Okay. Sean. have then you it, the and commercial quick Got government.

Sean Gillen

I have -- don't handy. can into the TPS came you is activity. I and terms the back most growth No, it of in of commercial that that from inorganic mean

we organic half, but each disclose those that, we by of something activities. . Second don't growth did to close

Operator

line Capital with the from next Our RBC comes of Instructions] Markets. question [Operator Ken Herbert

Kenneth Herbert

in the quarter you moving fiscal specifically John, How Is help that? sideways? growth in bit that is it back terms of in And maybe talk your into that you're a Can side? seeing you And the how quantify sort can half? much where half second about the mentioned that -- whole provide the into USM asset of of little on that of we should sort the upside year accelerating? second think about portfolio.

John Holmes

that we growth we specifically by accelerated assets are quarter are we many terms and Let it see, But in now quarter, we did more absolutely of than seeing opportunities a -- in can say USM for we're available not in the is breaking growth We're to out seeing second that what that the sale. of through seeing we and from But growth and quarter USM. first those to more fiscal a a into are having again, we because more we're assets hard would growth in fueled expect as conversations ago. the It's it. speaking, available year quarter, the this generally we're trend quarter seeing capture . assets. call as more to long balance able

Kenneth Herbert

and How that Are of engines? maybe these of sense engines How pressure -- on to starting peaked? for legacy instance, pricing market's get VXX like Like, example, talking you seeing pricing you legacy assets? of are the on are in on what are that terms pricing? is a CFMXX continuing see some you to for you upward some

John Holmes

I'd seen, course, that able at not say say pricing we're that very, the the the pricing, very assets that but in pay still spreads. for prices of command very, very I still strong the preserve the would they to strong. are are rate equally accelerating And strong. we to values had market we they're our

Kenneth Herbert

last Okay. half, real a the saw in sequential Great. year, second first fiscal Supply uptick in Part half margins business. you 'XX, And in

-- into about we specific half And half, know sort Parts I think that first do half, the we we similar give of Supply? wouldn't strengthening see guidance margins? segment. directionally, of back maybe about in you margins in there But don't how sort think the any is cadence second there segment by reason is As

John Holmes

the of the second year our margin versus me, have but we the of don't expansion in front year of the year. do I expect half margins half last first specifically in

there. QX expansion related expect to on specifically, so the we've agreements also, available further you margins, we QX expect In that's now we top growth would signed And in ramp-up, Supply would after win said, of expand been USM, would typically other, that distribution on expansion we new assets as Parts us, in effect distribution the of And see you've that each we got win as to So -- USM. stacking business. expect know, but more margin compounding across as in that a driven QX. seeing and into then company, top we're we we

predict more such business. of a profile is because to margin difficult transactional USM The it's

largely And upward available. Parts with would assets we become see we'd so by speaking, driven as distribution. Supply, the they to trend, dealing But see -- you're expect generally an

Operator

the from Securities. comes question next with Our of Truist Ciarmoli line Michael

Michael Ciarmoli

on you that Nice I just Supply Parts year-over-year. the heard the maybe margins think results. to John, I margins, stay EBITDA down

you for mix think maybe Is I sequentially. customer there out there Any the called any asset either reason distribution just for down or was with change margins assets, commercial or government whole even whole truly related. by everything underlying but concern?

John Holmes

It's for reason largely concern. asset. the No whole driven by

we that's us last sales assets whole what margin those at that nature a this sales a assets. year, into that asset whole And So simply lower had asset available on had become get and We to that based cost business of the were were margin. the whole higher year. to

wouldn't focus I on of any trend. sort that So as

I year. have whereas that is pipeline balance at assets in closed to available available us the in this we to go see to of assets of stronger us the year, were of find and we that come ] to this quarter, fiscal really assets as [ note were a We much all quarter first think struggled the throughout thing whole the sell. to important pleased to had we

Michael Ciarmoli

that change? What driving think Airbus Boeing that are you on what's Just struggling topic. that's still do driving great that? a is mean, -- obviously, I [indiscernible], yes, and point

John Holmes

to production Yes, this wouldn't exactly. increased that related rates, is cetera. et say I

we've it's our to very, competition market. again, able getting of job believe that's ahead there on good got of out we're the and And talented a the a find situational. doing And assets assets hands outmaneuvering I them. think, team very I in sourcing

a I to So increased as would this trend out production not characterize related the of OEM.

that a would with line the are just become seeing larger lower-cost really right loosening now. lessors to we're going due I in ground a front playing the good carriers sure make slight to that as characterize and some think situational you the But on if of I And maybe we're a things things lead again, that those available. portfolios. of

Michael Ciarmoli

it. last set one, margins. Got just us And Got R&E it. Can maybe the maybe Sean. level you

us presumably, it's maybe that it there moves margins. by modeling you're enough landing you And -- help. gear. to of the don't calibrate to does actually targets for you you so, but or February for the the revenue out So money-losing of material X- kind in terms know going Can put what just I it's rid if and to of needle get that X-year for margins, then

Sean Gillen

achieving is of come in mentioned, from terms be associated the that part $XX getting the would X- R&E. piece the That's will here. the the of which going number, And completion John synergies as that X-year in margin kind I And support of hanger to acquisition, from of as QX that the complete targets will X with the our that come John other really primary and to be to as Yes. of expansion, say when it's said, what realized. the expansion. in product happen of year million things. the realization will fiscal will next then from

we'd out. near the a come with of And in deal kind next In performance, won't maybe of would mentioned, move coming the bigger of out the more until the consistent so next expect here, those as note I you slight think both gear pretty fiscal landing year term landing that closes. gear I for results margin. are improvement,

likely QX, results will out it QX in fiscal results. be our for of then the and the So

Operator

comes next with Our question Louie Dipalma Instructions] William of line Blair. [Operator from the

Louie Dipalma

quarter's growth a to My congrats we there? in of say have the worst seems the AAR USM supply is behind would have and John, recent USM question, your [ after declines. us commentary that team. hit inflection corner an Denise and ], the you turned on with about this better terms joining

John Holmes

I early. Again, think it's

point more if where expect come will a USM. opportunity have back still see we for growth that been you it's a for us you'll for loosening, period the to at We But demand supply talking in some provide quarter. some of I this we this point and -- been market to that saw a high material, enter start terms quarter of So definitely time will, great the extremely on will would and about accelerate of that we've you supply. to

fiscal We are this it of seeing year. for the balance

to business. nature it's signs just certainly, in very of tell. tough That's be we that are But the we that, elevated Beyond very will meet very, demand. more environment early have that an where supply the encouraging

Louie Dipalma

lines, And which there so along be distribution at you forecast both clicking to right? would for the same those a and time, period in of time both are USM

John Holmes

the that Well, -- this and In we partners, clicked different your they assured have because the been out more new that at has Because as right? as business the should it's is and distribution, than the definitely product, much that's time well commercial same up. lines larger. government forecastable existing both cases, and OEM the of backlog in of on lines and supply quarter. nature a much say been of very the many you USM, we've it's signing backlog for I and distribution . growing,

new you dynamics. can see years, run But different the saw in going we couple that and business much, of was results. -- back there, come much with very distribution to to where good through been availability, strong it a quarter different So again, continue, and strong the on asset we a absolutely the to a this USM, compounding contracts And sign. demand all last continue just thanks that tremendous has of we to for expect and again the

Louie Dipalma

new how the they distribution agreements question And Chromalloy, in Great. rate normalized I it as to signed and response scale November. your take TransDigm to think with you long should a those you distribution were as discussed to the first the in the company, agreements Whippany, but announced

there of will 'XX? contributions fiscal this is like in it Or like be So year? fiscal more

John Holmes

by That's this varies the run this full to question. and an immediate close expect of a case it Chromalloy to ramping end the starting rate contribution fiscal contract, the contract. year. And by quarter of we would answer is likely the great In

is on you out So distributors. ramp -- while parts to prior us. those or other another nice a And you're drain have expect shelf, over on we've side, distributor, period a I And that is have taking path. they in longer and distributors taking the Whippany that that one from over a and business taking along on often distribution relatively multi-quarter the a business, Whippany, distribution it been more and new a with reason ramp. sitting channel the to agreements takes distribution those so often still will then the to to typically for may share in fully and contributor FY ramp the our 'XX. be of may multiple inventory just would and are

Louie Dipalma

Right.

So Whippany was a takeaway?

John Holmes

let that one confirm I that. Yes. believe me was. But

Louie Dipalma

spiking. long-term the XX-year in in to stocks leverage and different the of in appetite rates Got the M&A what is for so, your to regards rates interest the you. many Sean, due pressure the for your plans. market view were deleveraging interest and the increase with wondering, And stock in over And past we or month under rise they've been yield net recent

Sean Gillen

combination seen a we So on stay ours. deal at [ of from X.XX mentioned, look pretty to We've ] close significant X.X focus to today is yes, we'd deleveraging track as get to deleveraging and post towards terms Xx fixed rate And of net the close we're a of rising for. interest floating. have we in and years leverage the environment, X on of which track acquisition,

$XXX have the rate debt the put acquisition. of part on in We million bond fixed as we

revolver where is So rates the to exposure rising floating. no interest

be that's there, bit there's of so the exposure a pay little down we'd instrument And using debt. to but

portion of that the So capital stack delever. would as down we come

near deleveraging. the continue realizing synergies to we're aftermarket. M&A, on as here, term in for acquisitions relates expect . and play TPS, offense to it the clearly in to we relates As appetite it to integrating the do focused But

Operator

question from of next comes line Benchmark. Sullivan Our with the Josh

Joshua Sullivan

on the government conversation, into you efforts. this DOGE conversation of as is fit but PMA potentially the helping or can that in know expand made the just with part any conversation being [indiscernible] commentary you Can well. probably around efficiency And I

John Holmes

with used to aircraft. much, many were delivered certainly, familiar ultimately PMA areas the the first, still impact convert Marine and We just very used save we've that U.S. buying Force but been work are million XXXs and billions there's to bought example by broadly parts government aircraft aircraft would with is you us to government to is used say, and C-XXs it's would the I conversation. the since say, C-XX in the business for last has on But today, Airlines, for where effort alone. C-XX small that And be there. know, -- government would can approximately And from we C-XXs XXX when they factory part in . And of utilization achieve Air we I buy call We to new we dollars if the I objective that sold on Marines. the X military converted the same is we're focus, of parts government like the commercial for used the a to the Boeing. that use, that X was in aircraft convinced Delta and X be aircraft Yes. -- a operations part much able believe times the greater $XX in those to aircraft going of source the the a derivative and a X as answer government. Navy everyone said and would but savings more simply the have

great and how those approach efficient to look what And apply solutions will about. C-XX can them the government we talk hopeful like about commercial government so solutions we and that to we be of the those more they at the to the we've looking to commercial we examples got think offer when more like setting, are and

Joshua Sullivan

. one. to it keep I'll Great.

Operator

[Operator follow-up Ken Herbert from Capital have with We Instructions] Markets. line the of RBC a question

Kenneth Herbert

the Appreciate Okay. follow-up.

X quick Just questions.

maybe start you has it's how you. sounds at more as thinking And product you as for how into specifically and but like partners? obviously Is [ that of Or been great Unison are and limited sort just communicate with conflicts marketplace? a the that a ] managing that's you a all line great something PMA relationship concern? you some your potential do to OEM First, I'm of any in initially, it managing are

John Holmes

We ones, our or you of very We there those very, distribution other would parts parts as have OEM aircraft. And business. partners of OEMs there, know, are thousands conflict anything the out targeting. we relationships and afoul news big never would any good carefully. . any our run that small with The And that are thousands and don't the are part with. managing are of is, type those do we're of there on ones lots that

Kenneth Herbert

fourth you have free just shaped your quarter. very the is should Perfect. any on it for quarter mean, for you flow up? with year? maybe strong fourth as cash this color similar I the quarter. prior Sean. in on Okay. free a has year give look in thinking fiscal quarter? quarter nice And year full years trajectory cash And Typically, the outlook How the Can this

Sean Gillen

Yes.

in [ QX the trajectory should being either all the Obviously, this timing second of of the only the ] certainly year. FCPA landing but the of both I think thing and close different will half or been look fiscal pretty those have gear, in similar. payment the

As And EBITDA the look similar a it free to the to That's year piece. of that to it QX pretty of think will in out of deleveraging. will help year. the then another in should flow, the the think be I cash it growth close about terms and QX as we positive a last relates balance piece stronger cash and

Operator

this for gentlemen, remarks. call back time, I and would closing like Ladies to to over turn at management the

John Holmes

today, We Great. we you. about appreciate to talk and being very Thank results. forward back us Well, look thank quarter joining much. really all to next you you QX

Operator

this call. participation. gentlemen, and concludes Thank for your you today's Ladies conference

You disconnect. may now

AAR (AIR) 7 Jan 252025 Q2 Earnings call transcript