What Management Said
Read the full Q3 2026 transcript ↗These risks and uncertainties are discussed in the company's earnings release in the Risk Factors section of the company's annual report on Form 10-K for the fiscal year ended May 31, 2025. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are set forth in the company's earnings release and slides. Our focused business model is driving growth that is delivering durable results in both commercial and government end markets, as evidenced by our third quarter performance. We saw growth across each of our parts repair and software platform activities in the quarter.
Total sales increase included 14% organic adjusted sales growth, led by 36% organic growth in our new parts distribution activities. In parts supply, ADI is performing above expectations and we continue to drive outsized growth in our new parts distribution activities. Also, our Trax software platform continues to gain momentum by growing its base of recurring revenue with new and existing customers. Finally, we are carefully managing our balance sheet to preserve strategic flexibility as we maintain our disciplined approach to capital allocation.
We ended the third quarter with net leverage within our target range, supported by our strong operating cash flow in the period. As many of our customers have said publicly, fundamental demand for air travel remains strong, with bookings at record levels even since the start of the conflict. It was programs like these that helped drive 19% increase in government sales this quarter and contributed to the strength of our results. We achieved 36% organic growth in new parts distribution, driven by our two-way exclusive distribution model.
- Broad-based 25% sales growth; new parts distribution +36% organic with government distribution +55% organic
- ADI outperformed expectations for a second straight quarter and was margin-accretive
- HAECO Americas integration ahead of schedule; Oklahoma City hangar expansion completed with inductions in early March
- Trax had a record quarter; Delta deployment reached 2,000 users, expected to exceed 6,000 in coming months
- Expeditionary services won a $450M multi-year government pallet contract; component MRO won expanded scopes from major U.S. and international carriers
- Dylan Wolin rejoined as CFO (Sarah Flanagan thanked for interim service)
- Government/defense tailwind from U.S. military readiness (C-17, P-8, C-40, F-16, C-130); investor day announced for May 12
- Repair & Engineering margins declined (EBITDA margin -190bps to 11.0%, operating margin -150bps to 9.6%) as HAECO was rightsized and Indianapolis work transitioned - management called this the low point
- Middle East / Iran conflict being monitored; some customers making modest capacity adjustments, though no meaningful impact to maintenance schedules or parts demand expected
- USM asset supply remained constrained
Guidance Changes
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Performance Breakdown
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Earnings Call Themes & Trends
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Q&A Summary
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