AAR Announces Agreement to Acquire Triumph Group’s Product Support Business

AAR CORP, a leading provider of aviation services to commercial and government operators, MROs, and OEMs, has announced its agreement to purchase the Product Support business of Triumph Group for $725 million in cash. Triumph Product Support is a leading global provider of specialized maintenance, repair, and overhaul capabilities for critical aircraft components in the commercial and defense markets.

The acquisition is expected to obtain the following:

• Meaningfully scales AAR’s repair capabilities and is highly complementary to existing portfolio
• Significantly accretive to margins and expands customer base and global footprint
• Expected run-rate cost synergies of $10 million
• Expected to be accretive to revenue growth and Adjusted EPS in the first full fiscal year
• Strong combined free cash flow expected to enable deleveraging

AAR expects to receive estimated tax benefits with a present value of approximately $80 million. Including the estimated tax benefits, the effective purchase price multiple is expected to be 11.7x FY2024 EBITDA and 9.9x including estimated run-rate synergies of $10 million.

Triumph Product Support provides MRO services for structural components, engine and airframe accessories, interior refurbishment, and wheels and brakes. The company also designs proprietary designated engineering representative (DER) repairs and Parts Manufacturer Approval (PMA) parts. It services both the commercial and military aftermarkets across five primary locations with a highly skilled workforce of over 700 employees. The business is projected to generate approximately $280 million of revenue and $55 million of EBITDA, representing an EBITDA margin of 20%, in its fiscal year ending March 31, 2024.

John M. Holmes, Chairman, President and CEO of AAR CORP, said, “We are very excited to announce the execution of an agreement with Triumph to acquire its Product Support business. Triumph Product Support has built an excellent reputation for high quality and differentiated repair offerings. This highly strategic acquisition will deepen and broaden our customer relationships globally and expand our footprint. Furthermore, the addition of this high-margin business is expected to further increase our operating margin and is expected to be accretive to our earnings. We look forward to welcoming Product Support’s talented team to AAR.”

The transaction is anticipated to close in the first quarter of the 2024 calendar year, subjected to customary closing conditions, including receipt of certain regulatory approvals.