AAR Corp.

What drives the forecast

• July 21 issuer guidance calls for 21–23% ex-Legacy Commercial Programs sales growth, implying approximately $827 million excluding legacy at midpoint; the model forecasts $828 million ex-legacy and $56 million of legacy sales.
• August 25 HEICO posted 14% quarterly organic revenue growth, supporting aviation aftermarket demand; AAR's previous quarter saw 13% adjusted organic growth and 19% new-parts distribution organic growth.
• September 21 preview flagged narrower used serviceable material spreads, HAECO integration margin drag and slowing distribution growth; model uses 18.64% gross margin and $91 million SG&A rather than extrapolating peak Q4 margins.
• AAR beat supplied normalized EPS consensus in each of the last six quarters, but guidance omitted EPS; forecast normalized EPS is only about 5% above the September 24 consensus, with 67% beat probability.
• Forecast $44.215 million GAAP profit plus $14 million acquisition/integration/amortization adjustment less $3.36 million associated tax produces $54.855 million adjusted income on 40.15 million diluted shares.