AAR CORP
For the period ended Nov 30, 2025. Filed Jan 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 30, 2025 · Filed Jan 7, 2026
AIR$109.21+4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-08-31; filed 2025-09-23.
0001104659-25-092589
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-11-30; filed 2026-01-07.
0001104659-26-001420
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 110 current paragraphs.
50 unchanged; 22 reworded; 35 added; 9 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 9 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
On September 25, 2025, we acquired the outstanding shares of American Distributors Holding Co., LLC (“ADI”), including ADI American Distributors, LLC and other of ADI’s subsidiaries, for a purchase price of $137.7 million subject to customary post-closing adjustments for cash, working capital, and indebtedness. ADI is a leading distributor of electronic components and assemblies to OEMs across the aerospace and defense industry. The purchase price was paid at closing except for $4.5 million which was placed on deposit with an escrow agent to secure potential indemnification obligations and fund post-closing adjustments for working capital and indebtedness.
Current report
On November 3, 2025, we acquired the outstanding shares of HAECO Americas, LLC and its subsidiary HAECO Airframe Services, LLC (together, “HAECO Americas”) from HAECO USA, Inc. for a purchase purchase price of $76.5 million subject to customary post-closing adjustments for cash, working capital, and indebtedness. HAECO Americas provides heavy aircraft maintenance, repair, and overhaul (“MRO”) and modification services across its hangars located in Greensboro, North Carolina and Lake City, Florida.
Current report
On December 17, 2025, we entered into an agreement to acquire the outstanding equity of Aircraft Reconfig Technologies (“ART”), a leading aircraft interiors engineering company for $35 million subject to customary post-closing adjustments for cash, working capital, and indebtedness. The acquisition is expected to close in the fourth quarter of fiscal 2026, subject to customary closing conditions, including receipt of certain regulatory approvals.
Current report
Three- and Six-Month Periods Ended November 30, 2025 and 2024
Current report
Gross profit on sales to commercial customers increased $12.3 million, or 12.6%, over the prior year quarter primarily due to strong demand and volume growth in our new parts Distribution activities, including from our recent ADI acquisition. The gross profit margin on sales to commercial customers decreased slightly to 19.4% from 19.6% primarily due to the mix of products and services.
Current report
Selling, general and administrative expenses decreased $44.4 million, or 33.4%, from the prior year quarter primarily due to the settlement and related costs of $59.2 million in the second quarter of fiscal 2025. In addition, acquisition, amortization, and integration expenses increased $6.5 million over the prior year quarter reflecting the ADI and HAECO Americas acquisitions.
Current report
Our effective income tax rate for continuing operations was 28.1% for the second quarter of fiscal 2026 compared to 36.0% in the prior year quarter. Our income tax expense was $8.1 million in the second quarter of fiscal 2025 while our loss before income taxes was $(22.5) million. The majority of the FCPA settlement charge was nondeductible for income tax purposes resulting in no income tax benefit.
Current report
Six-Month Periods Ended November 30, 2025 and 2024
Current report
Consolidated sales for the six-month period ended November 30, 2025 increased $187.1 million, or 13.9%, over the prior year period primarily due to an increase in sales to commercial customers. Consolidated sales to commercial customers increased $116.6 million, or 12.0%, over the prior year period primarily due to strong demand and volume growth in our new parts Distribution activities, including from our recent ADI acquisition which contributed sales of $19.3 million. Our consolidated sales to government customers increased $70.5 million, or 18.8%, primarily due to volume growth in our Parts Supply segment from our new parts Distribution activities.
Current report
In addition, our Mobility business received a stop-work order from our U.S. Government customer on the Next Generation Pallet contract as the program was terminated for convenience by the customer in the first quarter of fiscal 2025. In conjunction with the termination, we recognized sales of $9.5 million reflecting the estimated recovery on our incurred costs in the six-month period ended November 30, 2024.
Current report
Consolidated gross profit for the six-month period ended November 30, 2025 increased $44.8 million, or 18.2%, over the prior year period. Gross profit on sales to government customers increased $35.8 million, or 64.9%, primarily attributable to volume growth in our Parts Supply segment from our new parts Distribution activities. The gross profit margin on sales to government customers increased to 20.4% from 14.7% in the prior year period primarily due to the mix of services across our programs activities, including our recently awarded contracts.
Current report
Gross profit on sales to commercial customers increased $9.0 million, or 4.7%, over the prior year quarter primarily due to strong demand and volume growth in our new parts Distribution activities, including from our recent ADI acquisition. The gross profit margin on sales to commercial customers decreased slightly to 18.3% from 19.6% primarily due to the mix of products and services.
Current report
Selling, General, and Administrative Expenses
Current report
Interest Expense
Current report
Interest expense for the six-month period ended November 30, 2025 decreased $0.2 million reflecting the impact of both lower interest rates and lower average borrowings. Our average borrowing rate was 6.02% for the six-month period ended November 30, 2025 compared to 6.80% in the prior year period.
Current report
Income Taxes
Current report
Our effective income tax rate for continuing operations was 27.4% for the six-month period ended November 30, 2025. In the prior year period, our income tax expense was $15.0 million while our income before income taxes was $2.4 million. The majority of the FCPA settlement charge was nondeductible for income tax purposes resulting in no income tax benefit.
Current report
Sales in the Parts Supply segment increased $79.9 million, or 29.2%, over the prior year quarter primarily due to a $77.9 million increase in sales in our new parts Distribution activities from increased demand and growth from new and expanded distribution agreements. The ADI acquisition contributed sales of $28.0 million during the second quarter of fiscal 2026.
Current report
Operating income in the Parts Supply segment increased $9.3 million, or 29.4%, over the prior year quarter, primarily due to the volume growth in our new parts Distribution activities. Operating margin increased slightly to 11.6% from 11.5% in the prior year quarter, primarily due to the mix of products sold within the segment, including the profitability of the recent ADI acquisition.
Current report
Operating income in the Repair & Engineering segment decreased $0.1 million, or 0.4%, from the prior year quarter with the operating margin decreasing to 9.3% from 10.0%. These decreases were primarily due to lower profitability of the recent HAECO Americas acquisition.
Current report
Sales in the Expeditionary Services segment increased $1.2 million, or 5.9%, over the prior year period primarily due to volume growth across the containers and shelters product lines.
Current report
Operating income in the Expeditionary Services segment increased $0.2 million, or 9.1%, over the prior year quarter and the operating margin increased to 11.2% from 10.9%. These increases were primarily attributable to the mix of products sold.
Current report
Six-Month Periods Ended November 30, 2025 and 2024
Current report
Parts Supply Segment
Current report
Sales in the Parts Supply segment for the six-month period ended November 30, 2025 increased $148.0 million, or 28.3%, over the prior year period primarily due to a $113.4 million increase in sales in our new parts Distribution activities from increased demand and growth from new and expanded distribution agreements. The ADI acquisition contributed sales of $28.0 million during the six-month period ended November 30, 2025. Whole asset sales in our aftermarket parts trading activities increased $19.0 million over the prior year period.
Current report
Operating income in the Parts Supply segment increased $20.1 million, or 32.6%, over the prior year period primarily due to improved profitability from the increased sales volume within our new parts distribution activities.
Current report
Repair & Engineering Segment
Current report
Sales in the Repair & Engineering segment for the six-month period ended November 30, 2025 increased $12.7 million, or 2.8%, over the prior year period primarily due to growth for our component repair services of $24.5 million and our Airframe MRO services of $23.0 million. The HAECO Americas acquisition contributed sales of $19.4 million in the current period which was more than offset by the divestiture of our LGO business in the fourth quarter of fiscal 2025. The LGO business contributed sales of $39.6 million in the prior year period.
Current report
Operating income in the Repair & Engineering segment decreased $0.8 million, or 1.8%, from the prior year period and the operating margin decreased to 9.4% from 9.8%. These decreases were primarily attributable to the mix of products and services sold across the segment.
Current report
Integrated Solutions Segment
Current report
Sales in the Integrated Solutions segment for the six-month period ended November 30, 2025 increased $28.5 million, or 8.6%, over the prior year period primarily due to higher government program activity.
Current report
Expeditionary Services Segment
Current report
Sales in the Expeditionary Services segment for the six-month period ended November 30, 2025 decreased $2.1 million, or 4.6%, from the prior year period primarily due to the sales recognized in conjunction with the termination of our Next Generation Pallet contract in the prior year period.
Current report
Common Stock Offering
Current report
During the second quarter of fiscal 2026, we sold 3,450,000 shares of our common stock at $83.00 per share in a registered underwritten offering. After deducting underwriting fees and other offering expenses, we received $273.9 million in net proceeds.
Removed paragraphs (9)
Previous report
Gross profit on sales to commercial customers decreased $3.3 million, or 3.6%, from the prior year quarter with the gross profit margin decreased to 17.1% from 19.6%. These decreases are primarily due to lower profitability in our power-by-the-hour programs activities.
Previous report
Our effective income tax rate for continuing operations was 26.8% for the first quarter of fiscal 2026 compared to 27.7% in the prior year quarter. The decrease in the effective tax rate was primarily attributable to higher tax benefits from stock compensation in fiscal 2026.
Previous report
Sales in the Parts Supply segment increased $68.1 million, or 27.3%, over the prior year quarter primarily due to double-digit increases in both our new parts Distribution activities which increased 23.9% and in our USM activities which increased 32.1%. Whole asset sales in our aftermarket parts trading activities increased $27.8 million in the first quarter of fiscal 2026 over the prior year quarter.
Previous report
Operating income in the Parts Supply segment increased $10.8 million, or 35.9%, over the prior year quarter, primarily due to volume growth in our new parts Distribution activities.
Previous report
Operating income in the Repair & Engineering segment decreased $0.7 million, or 3.3%, from the prior year quarter primarily due to lower profitability in our Component Services activities. Operating margin decreased to 9.5% from 9.7% in the prior year quarter, reflecting the lower profitability in our Component Services activities.
Previous report
Sales in the Expeditionary Services segment decreased $3.3 million, or 12.9%, from the prior year period. During the first quarter of fiscal 2025, our Next Generation Pallet contract was terminated for convenience by our U.S. Government customer and we recognized sales of $9.5 million in that period reflecting our estimated recovery on our incurred costs. This sales decrease from the prior year period was partially offset by sales growth across multiple product lines including pallets, containers, and shelters.
Previous report
Customer Matters
Previous report
During fiscal 2024, we experienced delayed collections from one of our significant regional airline customers and issued the customer a Notice of Payment and Other Defaults during the second quarter of fiscal 2024 to request payment and reserve our rights under our agreements. In the fourth quarter of fiscal 2024, we terminated a power-by-the-hour (“PBH”) program with this customer which resulted in a net termination charge of $4.8 million. The charge included a reduction in contract assets and revenue of $7.8 million and the establishment of repair reserves of $2.5 million partially offset by a $5.5 million gain recognized from the customer’s obligation to purchase the rotable assets we utilized to perform the PBH services. In conjunction with the termination for default, the customer is obligated to purchase the rotable assets and we sold the assets to the customer in the fourth quarter of fiscal 2025 for $18.7 million.
Previous report
We expect full payment from the customer of all amounts due under the terminated agreement and all other agreements and do not believe a reserve for credit loss is warranted. Our Condensed Consolidated Balance Sheet as of August 31, 2025 included accounts receivable of $33.5 million, including $9.0 million past due, and contract assets of $3.2 million related to this customer.
Reworded paragraphs (22)
Previous wording
We also distribute new OEM-supplied replacement parts to aircraft operators, airlines, government customers and other MRO companies across the world. Our parts are supplied to narrow-body, wide-body and regional aircraft. In most cases, we enter exclusive relationships with OEM manufacturers for a given market where we are the only provider of that supplier’s product category. We provide global scale, independence, and highly technical sales capabilities across both commercial and government end-markets.
Current wording
We distribute new OEM-supplied replacement parts to aircraft operators, airlines, government customers and other MRO companies across the world. Our parts are supplied to narrow-body, wide-body and regional aircraft. In most cases, we enter exclusive relationships with OEM manufacturers for a given market where we are the only provider of that supplier’s product category. We provide global scale, independence, and highly technical sales capabilities across both commercial and government end-markets.
Previous wording
Consolidated sales for the first quarter of fiscal 2026 increased $77.9 million, or 11.8%, over the prior year quarter primarily due to an increase in sales to commercial customers. Consolidated sales to commercial customers increased $50.4 million, or 10.7%, over the prior year quarter primarily due to strong demand and volume growth in our Parts Supply segment from both our new parts Distribution and USM. Our consolidated sales to government customers increased $27.5 million, or 14.6%, primarily due to volume growth in our Parts Supply segment from new parts Distribution activities.
Current wording
Consolidated sales for the second quarter of fiscal 2026 increased $109.2 million, or 15.9%, over the prior year quarter primarily due to an increase in sales to commercial customers. Consolidated sales to commercial customers increased $66.2 million, or 13.2%, over the prior year quarter primarily due to strong demand and volume growth in our new parts Distribution activities, including from our recent ADI acquisition which contributed sales of $19.3 million. Our consolidated sales to government customers increased $43.0 million, or 23.1%, primarily due to volume growth in our Parts Supply segment from our new parts Distribution activities.
Previous wording
Consolidated cost of sales increased $61.4 million, or 11.3%, over the prior year quarter which was largely in line with the consolidated sales increase of 11.8% discussed above.
Current wording
Consolidated cost of sales increased $80.9 million, or 14.5%, over the prior year quarter which was largely in line with the consolidated sales increase of 15.9% discussed above.
Previous wording
Consolidated gross profit for the first quarter of fiscal 2026 increased $16.5 million, or 14.1%, over the prior year quarter. Gross profit on sales to government customers increased $19.8 million, or 81.1%, with the gross profit margin increased to 20.4% from 12.9% in the prior year quarter. These increases across government customers are primarily attributable to strong demand and volume growth for our new parts Distribution activities.
Current wording
Consolidated gross profit for the second quarter of fiscal 2026 increased $28.3 million, or 22.0%, over the prior year quarter. Gross profit on sales to government customers increased $16.0 million, or 51.9%, primarily attributable to growth from recently awarded contracts across our programs activities. The gross profit margin on sales to government customers increased to 20.4% from 16.6% in the prior year quarter primarily due to the mix of services across our programs activities, including our recently awarded contracts.
Previous wording
As a percent of sales, selling, general and administrative expenses decreased to 9.6% from 11.5% in the prior year primarily due to settlement of the FCPA matters.
Current wording
As a percent of sales, selling, general and administrative expenses decreased to 11.2% from 19.4% in the prior year primarily due to settlement of the FCPA matters.
Previous wording
Interest expense remained consistent at $18.8 million in the first quarter of fiscal 2026 compared to the prior year quarter reflecting the impact of lower interest rates offset by higher average borrowings used to fund inventory and other investments in the business. Our average borrowing rate on our Revolving Credit Facility was 6.14% in the first quarter of fiscal 2026 compared to 6.80% in the prior year quarter.
Current wording
Interest expense decreased $0.2 million in the second quarter of fiscal 2026 compared to the prior year quarter reflecting the impact of both lower interest rates and lower average borrowings. Our average borrowing rate on our Revolving Credit Facility was 5.91% in the second quarter of fiscal 2026 compared to 6.81% in the prior year quarter.
Previous wording
Selling, general and administrative expenses decreased $4.7 million, or 6.2%, from the prior year quarter primarily due to the FCPA matters which were settled in the second quarter of fiscal 2025.
Current wording
Selling, general and administrative expenses decreased $49.1 million, or 23.5%, from the prior year period primarily due to the FCPA matters that were settled in the second quarter of fiscal 2025.
Previous wording
Sales in the Repair & Engineering segment decreased $3.0 million, or 1.4%, from the prior year quarter primarily due to the divestiture of our LGO business in the fourth quarter of fiscal 2025. The LGO business contributed sales of $19.2 million in the first quarter of fiscal 2025. In addition, sales increased $13.2 million at our airframe maintenance facilities in the first quarter of fiscal 2026 over the prior year quarter.
Current wording
Sales in the Repair & Engineering segment increased $15.7 million, or 6.9%, over the prior year quarter primarily due to growth within our Airframe MRO services of $29.3 million. The HAECO Americas acquisition contributed sales of $19.4 million which was more than offset by the divestiture of our LGO business in the fourth quarter of fiscal 2025. The LGO business contributed sales of $20.4 million in the second quarter of fiscal 2025.
Previous wording
Sales in the Integrated Solutions segment increased $16.1 million, or 9.5%, over the prior year quarter primarily due to higher government program activity.
Current wording
Sales in the Integrated Solutions segment increased $12.4 million, or 7.6%, over the prior year quarter primarily due to higher government program activity.
Previous wording
Operating income in the Integrated Solutions segment increased $2.0 million, or 26.0%, over the prior year quarter and the operating margin increased to 5.2% from 4.6%. These increases were primarily attributable to our government programs activity and its sales growth as well as higher profitability from the mix of products and services.
Current wording
Operating income in the Integrated Solutions segment increased $7.4 million, or 113.8%, over the prior year quarter and the operating margin increased to 7.9% from 4.0%. These increases were primarily attributable to our government programs activity and its sales growth as well as higher profitability from the mix of products and services.
Previous wording
Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. In the first quarter of fiscal 2026, we recognized no cumulative catch-up adjustments compared to favorable cumulative catch-up adjustments of $2.4 million in the prior year quarter. These adjustments primarily relate to our long-term, power-by-the-hour programs where we provide component inventory management and repair services.
Current wording
Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. In the six-month period ended November 30, 2024, we recognized favorable cumulative catch-up adjustments of $2.4 million compared to no cumulative catch-up adjustments in the current year period. These adjustments relate to our long-term, power-by-the-hour programs where we provide component inventory management and repair services to commercial customers.
Previous wording
Operating income in the Expeditionary Services segment increased $4.7 million, or 276.5%, over the prior year quarter primarily due to the prior year impact of the termination of the Next Generation Pallet contract. In conjunction with the termination, we expensed equipment and inventory of $12.7 million and recognized a contract asset of $9.5 million reflecting the estimated recovery on our incurred costs. Operating margin increased to 13.5% from (6.7)% in the prior year quarter, primarily due to the prior year contract termination.
Current wording
Operating income in the Expeditionary Services segment increased $4.9 million, or 980.0%, over the prior year period primarily due to the impact of termination of the Next Generation Pallet contract. In conjunction with the termination in the six-month period ended November 30, 2024, we expensed equipment and inventory of $12.7 million and recognized a contract asset of $9.5 million reflecting the estimated recovery on our incurred costs. Operating margin increased to 12.4% from 1.1% in the prior year period primarily due to the contract termination.
Previous wording
At August 31, 2025, our liquidity and capital resources included working capital of $1,028.4 million inclusive of cash of $80.0 million. We expect that our cash on hand, coupled with future cash flows from operations and other available sources of liquidity discussed below, will provide ample liquidity to enable us to meet our cash requirements for at least the next 12 months and foreseeable future thereafter.
Current wording
At November 30, 2025, our liquidity and capital resources included working capital of $1,096.1 million inclusive of cash of $75.6 million. We expect that our cash on hand, coupled with future cash flows from operations and other available sources of liquidity discussed below, will provide ample liquidity to enable us to meet our cash requirements for at least the next 12 months and foreseeable future thereafter.
Previous wording
At August 31, 2025, borrowings outstanding under the Amended Revolving Credit Facility were $330.0 million and there were approximately $9.1 million of outstanding letters of credit, which reduced the availability under this facility to $485.9 million. There are no other terms or covenants limiting the availability of the Amended Revolving Credit Facility. As of August 31, 2025, we also had other financing arrangements that did not limit availability on our Amended Revolving Credit Facility, including foreign lines of credit of $10.0 million.
Current wording
At November 30, 2025, borrowings outstanding under the Amended Revolving Credit Facility were $260.0 million and there were approximately $10.0 million of outstanding letters of credit, which reduced the availability under this facility to $555.0 million. There are no other terms or covenants limiting the availability of the Amended Revolving Credit Facility. As of November 30, 2025, we also had other financing arrangements that did not limit availability on our Amended Revolving Credit Facility, including foreign lines of credit of $9.8 million.
Previous wording
We have no retained interests in the sold receivables, other than limited recourse obligations in certain circumstances, and only perform collection and administrative functions for the Purchaser. We account for these receivable transfers as sales under Accounting Standards Codification 860,Transfers and Servicing, and de-recognize the sold receivables from our Condensed Consolidated Balance Sheet. At August 31, 2025, we have utilized $21.0 million which reduced the availability under the Purchase Agreement to $129.0 million.
Current wording
We have no retained interests in the sold receivables, other than limited recourse obligations in certain circumstances, and only perform collection and administrative functions for the Purchaser. We account for these receivable transfers as sales under Accounting Standards Codification 860,Transfers and Servicing, and de-recognize the sold receivables from our Condensed Consolidated Balance Sheet. At November 30, 2025, we have utilized $20.5 million which reduced the availability under the Purchase Agreement to $129.5 million.
Previous wording
On December 16, 2021, our Board of Directors authorized a renewal of our stock repurchase program, under which we may repurchase up to $150 million of our common stock with no expiration date. No repurchases were made during the three-month period ended August 31, 2025. Since inception of the renewal authorization, we have repurchased 2.4 million shares for an aggregate purchase price of $107.5 million. The timing and amount of repurchases are subject to prevailing market conditions and other considerations, including our liquidity and acquisition and other investment opportunities.
Current wording
On December 16, 2021, our Board of Directors authorized a renewal of our stock repurchase program, under which we may repurchase up to $150 million of our common stock with no expiration date. No repurchases were made during the six-month period ended November 30, 2025. Since inception of the renewal authorization, we have repurchased 2.4 million shares for an aggregate purchase price of $107.5 million. The timing and amount of repurchases are subject to prevailing market conditions and other considerations, including our liquidity and acquisition and other investment opportunities.
Previous wording
Net cash used in operating activities was $44.9 million in the first quarter of fiscal 2026 compared to $18.6 million in the prior year quarter. The increase in cash used in operating activities over the prior year of $26.3 million was primarily attributable to working capital changes, including increased inventory investments in both new parts and used serviceable material in the current year.
Current wording
Net cash used in operating activities was $31.3 million in the six-month period ended November 30, 2025 compared to cash provided of $3.4 million in the prior year period. The increase in the cash used in operating activities from the prior year of $34.7 million was primarily attributable to working capital changes, including the timing of vendor payments.
Previous wording
Net cash used in investing activities was $23.8 million during the first quarter of fiscal 2026 compared to $5.3 million in the prior year period. The increase in cash used in investing activities over the prior year of $18.5 million was primarily related to the acquisition of the Aerostrat business in the first quarter of fiscal 2026.
Current wording
Net cash used in investing activities was $237.1 million in the six-month period ended November 30, 2025 compared to $13.2 million in the prior year period. The increase in cash used in investing activities from the prior year of $223.9 million was primarily related to ADI and HAECO Americas acquisitions in the second quarter of fiscal 2026.
Previous wording
Net cash provided by financing activities was $51.1 million during the first quarter of fiscal 2026 compared to cash used of $9.1 million in the prior year quarter. The increase in cash provided by financing activities over the prior year of $60.2 million was primarily related to net proceeds from incremental borrowings in the current year to finance the Aerostrat acquisition as well as inventory and other investments in the business.
Current wording
Net cash provided by financing activities was $255.4 million in the six-month period ended November 30, 2025 compared to cash used of $3.8 million in the prior year period. The increase in cash provided by financing activities over the prior year of $259.2 million was primarily related to the common stock offering we completed in the second quarter of fiscal 2026.
Previous wording
We make a number of significant estimates, assumptions and judgments in the preparation of our financial statements. SeeManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended May 31, 2025 for a discussion of our critical accounting policies. There have been no significant changes to the application of our critical accounting policies during the first quarter of fiscal 2026.
Current wording
We make a number of significant estimates, assumptions and judgments in the preparation of our financial statements. SeeManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended May 31, 2025 for a discussion of our critical accounting policies. There have been no significant changes to the application of our critical accounting policies during the second quarter of fiscal 2026.
Previous wording
These forward-looking statements are based on beliefs of our management, as well as assumptions and estimates based on information available to us as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors, including: (i) factors that adversely affect the commercial aviation industry; (ii) adverse events and negative publicity in the aviation industry; (iii) a reduction in sales to the U.S. government and its contractors; (iv) cost overruns and losses on fixed-price contracts; (v) nonperformance by subcontractors or suppliers; (vi) our ability to manage our operational footprint; (vii) a reduction in outsourcing of maintenance activity by airlines; (viii) a shortage of skilled personnel or work stoppages; (ix) competition from other companies; (x) financial, operational and legal risks arising as a result of operating internationally; (xi) inability to integrate acquisitions effectively and execute operational and financial plans related to the acquisitions; (xii) failure to realize the anticipated benefits of acquisitions; (xiii) circumstances associated with divestitures; (xiv) inability to recover costs due to fluctuations in market values for aviation products and equipment; (xv) cyber or other security threats or disruptions; (xvi) a need to make significant capital expenditures to keep pace with
Current wording
These forward-looking statements are based on beliefs of our management, as well as assumptions and estimates based on information available to us as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors, including: (i) factors that adversely affect the commercial aviation industry; (ii) adverse events and negative publicity in the aviation industry; (iii) a reduction in sales to the U.S. government and its contractors; (iv) cost overruns and losses on fixed-price contracts; (v) nonperformance
Previous wording
technological developments in our industry; (xvii) restrictions on use of intellectual property and tooling important to our business; (xviii) inability to fully execute our stock repurchase program and return capital to stockholders; (xix) limitations on our ability to access the debt and equity capital markets or to draw down funds under loan agreements; (xx) non-compliance with restrictive and financial covenants contained in our debt and loan agreements; (xxi) changes in or non-compliance with laws and regulations related to federal contractors, the aviation industry, international operations, safety, and environmental matters, and the costs of complying with such laws and regulations; and (xxii) exposure to product liability and property claims that may be in excess of our liability insurance coverage. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.
Current wording
by subcontractors or suppliers; (vi) our ability to manage our operational footprint; (vii) a reduction in outsourcing of maintenance activity by airlines; (viii) a shortage of skilled personnel or work stoppages; (ix) competition from other companies; (x) financial, operational and legal risks arising as a result of operating internationally; (xi) inability to integrate acquisitions effectively and execute operational and financial plans related to the acquisitions; (xii) failure to realize the anticipated benefits of acquisitions; (xiii) circumstances associated with divestitures; (xiv) inability to recover costs due to fluctuations in market values for aviation products and equipment; (xv) cyber or other security threats or disruptions; (xvi) a need to make significant capital expenditures to keep pace with technological developments in our industry; (xvii) restrictions on use of intellectual property and tooling important to our business; (xviii) inability to fully execute our stock repurchase program and return capital to stockholders; (xix) limitations on our ability to access the debt and equity capital markets or to draw down funds under loan agreements; (xx) non-compliance with restrictive and financial covenants contained in our debt and loan agreements; (xxi) changes in or non-compliance with laws and regulations related to federal contractors, the aviation industry, international operations, safety, and environmental matters, and the costs of complying with such laws and regulations; and (xxii) exposure to product liability and property claims that may be in excess of our liability insurance coverage. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Consolidated cost of sales increased $142.3 million, or 12.9%, over the prior year period which was largely in line with the consolidated sales increase of 13.9% discussed above.
Current report — wording carried from elsewhere
Three-Month Periods Ended November 30, 2025 and 2024
Current report — wording carried from elsewhere
Operating income in the Integrated Solutions segment increased $9.4 million, or 66.2%, over the prior year period and the operating margin increased to 6.5% from 4.3%. These increases were primarily attributable to our government programs activity and its sales growth as well as higher profitability from the mix of products and services.