8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 14, 2024

AAR CORP.

(Exact name of registrant as specified in its charter)

Delaware	1-6263	36-2334820
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One AAR Place 1100 N. Wood Dale Road Wood Dale, Illinois	60191
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (630) 227-2000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	AIR	New York Stock Exchange
		Chicago Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule  405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Explanatory Note

AAR CORP. (the “Company”) is supplementing certain disclosures in connection with the financings related to the Company’s previously disclosed acquisition (the “Acquisition”) of the Product Support Business (the “Triumph Group Product Support Business”) of Triumph Group, Inc., a Delaware corporation (“Triumph Group”), pursuant to a definitive Securities Asset Purchase Agreement (the “Transactions”).

Item 8.01. Other Events.

Information Related to the Transactions

Supplementary Risk Factors

Certain information with respect to material risks related to the Transactions, which supplements the risk factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023, under the section titled “Risk Factors” in Part I, Item 1A, is attached as Exhibit 99.1 hereto and incorporated by reference herein.

Operational Information

Certain information with respect to the Company’s operations is attached as Exhibit 99.2 hereto and incorporated by reference herein.

Financial Statements

Certain (i) audited combined financial statements of the Triumph Group Product Support Business, (ii) unaudited combined financial statements of the Triumph Group Product Support Business and (iii) unaudited pro forma condensed combined financial statements of the Company giving effect to the Transactions, each as described in Item 9.01 of this Current Report on Form 8-K, are attached as Exhibits 99.3, 99.4 and 99.5 hereto, respectively, and incorporated by reference herein.

The consent of Ernst & Young LLP, consenting to the incorporation by reference in certain of the Company’s registration statements of its report forming part of Exhibit 99.3 hereto, is attached as Exhibit 23.1 hereto and incorporated by reference herein.

Non-GAAP Financial Measures

Certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in connection with the Transactions are attached as Exhibit 99.6 to this Form 8-K. The information included in Exhibit 99.6 presents financial results for (i) the Company with respect to Adjusted EBITDA, Adjusted Revenue, Adjusted EBITDA Margin, Adjusted Operating Income and Adjusted Operating Margin, and (ii) the Triumph Group Product Support Business with respect to Adjusted EBITDA, Adjusted Operating Income and Adjusted Operating Margin, which are “non-GAAP financial measures” as defined in Regulation G of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Company believes these non-GAAP financial measures are relevant and useful for investors as they illustrate the Company’s and the Triumph Group Product Support Business’s actual operating performance unaffected by the impact of certain items. When reviewed in conjunction with the Company’s and the Triumph Group Product Support Business’s GAAP results and the accompanying reconciliations, the Company believes these non-GAAP financial measures provide additional information that is useful to gain an understanding of the factors and trends affecting the Company’s and the Triumph Group Product Support Business’s business and provide a means by which to compare its operating performance against that of other companies in the industries in which it competes. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Pursuant to the requirements of Regulation G of the Exchange Act, the Company provided tables in Exhibit 99.6 hereto that reconcile the above-mentioned non-GAAP financial measures to the most directly comparable GAAP financial measures.

HSR Act

The consummation of the Acquisition is conditioned upon, among other things, the expiration or termination of any waiting periods applicable to the Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The Company and Triumph each filed a Notification and Report Form pursuant to the HSR Act with respect to the Acquisition with the U.S. Federal Trade Commission (the “FTC”) and the U.S. Department of Justice. The 30-day waiting period imposed by the HSR Act in connection with the Acquisition expired at 11:59 p.m. on February 8, 2024, without action by the FTC.

Russian Bankruptcy Litigation

During calendar years 2016 and 2017, certain of the subsidiaries of the Company purchased four engines from VIM-AVIA Airlines, LLC (“VIM-AVIA”), a company organized in Russia. Subsequent to the purchase of the engines, VIM-AVIA declared bankruptcy in Russian courts, and shortly thereafter the receiver of the VIM-AVIA bankruptcy estate and one of the major creditors of VIM-AVIA filed a claw-back action in the Arbitration Court of the Russian Republic of Tartarstan (the “Russian Trial Court”) against the Company’s subsidiaries alleging that the contracts entered into with VIM-AVIA in the 2016-2017 timeframe are invalid. The clawback action alleged that the Company’s subsidiaries owe the VIM-AVIA bankruptcy estate approximately $13 million, the alleged fair market value of the four engines at the time of sale. In March 2023, the Russian Trial Court awarded a $1.8 million judgment against the Company relating to one engine, and dismissed all the other claims against the Company relating to the three remaining engines. The Company recognized a corresponding charge of $1.8 million in the third quarter of fiscal 2023. The Company thereafter appealed the $1.8 million judgment entered against it by the Russian Trial Court. The receiver and the creditor thereafter appealed to the Russian Trial Court’s judgment dismissing their claims relating to the remaining three engines.

On September 26, 2023, the Russian Eleventh Arbitration Court of Appeal (the “Russian Appellate Court”) issued an order (i) affirming the Russian Trial Court's adverse judgment against the Company relating to one of the four engines; (ii) reversing the Russian Trial Court's dismissal of the claims relating to the remaining three engines; and (iii) awarding a judgment against the Company in the total amount of $13.0 million. During the first quarter of fiscal 2024, the Company recognized a charge for $11.2 million representing the judgment against the Company for the remaining three engines.

On October 25, 2023, the Company petitioned the Russian Court of Cassation for leave to obtain the Russian Court of Cassation's appellate review of the Russian Appellate Court's order of September 26, 2023. On November 13, 2023, the Russian Court of Cassation granted the Company's petition. On January 31, 2024, the Russian Court of Cassation announced its decision reversing the Russian Appellate Court's order of September 26, 2023, vacating in its entirety the judgment that had been entered by the Russian Appellate Court, and remanding the clawback action to the Russian Appellate Court for further proceedings.

The Company has strongly disputed and will continue to strongly dispute all claims asserted in the clawback action. The Company believes that the judgment announced on September 26, 2023 by the Russian Appellate Court - which was reversed and vacated by the Russian Court of Cassation on January 31, 2024 - was a result of, among other things, a hostile business and legal environment for foreign companies in Russia, which has been caused by developments in the Russia/Ukraine conflict, including the imposition of a range of sanctions and export controls on Russian entities and individuals by the U.S. and its North Atlantic Treaty Organization allies. Should an adverse judgment be entered against the Company in further proceedings before the Russian courts, the Company's ability to satisfy such judgment, in whole or in part, or to otherwise settle the receiver's claims may be restricted by the Company's obligation to comply with U.S. trade restrictions likely applicable to undisclosed creditors of the VIM-AVIA bankruptcy estate. Although there can be no assurances, the Company also believes it would have strong defenses to any attempt that may be made to recognize and enforce outside of Russia any adverse judgment that may be entered against it in further proceedings before the Russian courts. As the Company previously disclosed in its Quarterly Report on Form 10-Q for the quarter ended November 30, 2023, as of November 30, 2023, the Company’s Condensed Consolidated Balance Sheet included a total liability for the matter

of $13.0 million classified as long-term in Other liabilities. The Russian Court of Cassation’s reversal of the Russian Appellate Court’s order described above had no effect on the Company’s prior reserve analysis.

Press Release

On February 14, 2024, the Company issued a press release announcing the commencement of a proposed private financing in connection with the Transactions. The text of the press release is attached as Exhibit 99.7 hereto and incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of business to be acquired.

The combined financial statements of the Triumph Group Product Support Business as of and for the year ended March 31, 2023, attached as Exhibit 99.3 hereto and incorporated by reference herein, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon, which is incorporated by reference herein.

The unaudited combined financial statements of the Triumph Group Product Support Business as of December 31, 2023 and for the nine months ended December 31, 2023 are attached as Exhibit 99.4 hereto and incorporated by reference herein.

(b) Pro forma financial information.

The Company’s unaudited pro forma condensed combined statements of income (loss) for the six months ended November 30, 2023, the unaudited pro forma condensed combined statements of income for the twelve months ended November 30, 2023 and the year ended May 31, 2023, and the unaudited pro forma condensed combined balance sheet as of November 30, 2023, each with related notes thereto, are attached as Exhibit 99.5 hereto and incorporated by reference herein.

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of Ernst & Young LLP
99.1	Certain material risks related to the Transactions
99.2	Certain operational information
99.3	Audited combined financial statements of the Triumph Group Product Support Business as of and for the year ended March 31, 2023 and the report of Ernst & Young LLP, independent auditors
99.4	Unaudited combined financial statements of the Triumph Group Product Support Business as of December 31, 2023 and for the nine months ended December 31, 2023
99.5	Unaudited pro forma condensed combined statements of income for the six and twelve months ended November 30, 2023 and the year ended May 31, 2023 of the Company, and unaudited pro forma condensed combined balance sheet as of November 30, 2023 of the Company
99.6	Certain non-GAAP financial measures
99.7	Press release
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

No Offer or Solicitation

This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

This Current Report on Form 8-K contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, which reflect the Company’s expectations about future conditions. Forward-looking statements may also be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. These forward-looking statements are based on beliefs of the Company, as well as assumptions and estimates based on information currently available to the Company and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Such risks and uncertainties include, but are not limited to: (1) risks associated with the Company’s ability to consummate the Acquisition and the timing of the closing of the Acquisition (including the failure to satisfy the closing conditions or obtained required approvals); (2) risks related to the Company’s ability to obtain the financings contemplated by the Transactions on favorable terms, or at all; (3) the effect of the announcement of the Acquisition on the Company’s operating results and business generally, including the amount of costs, fees and expenses related to the acquisition; (4) the Company’s ability to successfully integrate the Triumph Group Product Support Business into its operations; (5) the Company’s ability to realize the anticipated benefits of the Acquisition as rapidly or to the extent anticipated; (6) the risk that the Company’s stock price may decline significantly if the Transactions are not consummated; (7) the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Transactions and instituted against the Company and others; (8) limitations on the Company’s ability to access the capital markets or to draw down funds under loan agreements; (9) other factors that could affect the Company’s business, such as, without limitation, factors that adversely affect the commercial aviation industry, a reduction in the level of sales to the branches, agencies and departments of the U.S. government and their contractors, and non-compliance with laws and regulations relating to the Company’s business; and (10) other risks related to the consummation of the Transactions.

For a discussion of these and other risks and uncertainties, refer to “Risk Factors” in the Company’s most recent Annual Report on Form 10-K, its most recent Quarterly Report on Form 10-Q and its subsequent filings and quarterly reports. 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. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AAR CORP.
Date: February 14, 2024	/s/ Jessica A. Garascia
	Jessica A. Garascia
	Senior Vice President, General Counsel, Chief Administrative Officer and Secretary

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statement No. 333-273312 on Form S-3 and Registration Statement Nos. 333-274705, 333-214445, 333-191915, 333-219376, and 333-249400 on Form S-8 of AAR CORP. of our report dated February 7, 2024, relating to the combined financial statements of Triumph Group, Inc. Product Support Businesses as of and for the year ended March 31, 2023 appearing in this Current Report on Form 8-K of AAR CORP.

/s/ Ernst & Young LLP

Philadelphia, Pa

February 14, 2024

EX-99.1

Exhibit 99.1

Risks Related to the Triumph Group Product Support Business Acquisition

We expect to incur material expenses and indebtedness related to the Triumph Group Product Support Business Acquisition.

As of November 30, 2023, after giving effect to (i) the acquisition (the “Triumph Group Product Support Business Acquisition”) of Triumph Group, Inc.’s Product Support Business (the “Triumph Group Product Support Business”), (ii) the anticipated amendment of our Credit Agreement (the “Amended Credit Agreement”), (iii) the contemplated permanent debt financing, (iv) the expected borrowings under the amended unsecured revolving credit facility under the Amended Credit Agreement (the “Amended Revolving Credit Facility”), and (v) the application of the net proceeds from the contemplated permanent debt financing and such borrowings under the Amended Revolving Credit Facility to fund the consideration for the Triumph Group Product Support Business Acquisition (collectively, the “Transactions”), we would have had:

· $527.8 million drawn under the Amended Revolving Credit Facility and $256.2 million of availability under the Amended Revolving Credit Facility (which includes $11.0 million of outstanding letters of credit issued under our unsecured revolving credit facility as of that date); and

· $500.0 million from the contemplated permanent debt financing.

We may also increase the base borrowing capacity under the Amended Revolving Credit Facility above $795.0 million, depending on additional lending commitments we may receive between February 14, 2024 and the closing date of the contemplated permanent debt financing, and include an incremental facility that, subject to customary conditions, could provide for additional borrowing capacity under the Amended Revolving Credit Facility of up to $300.0 million. We expect to incur material expenses and indebtedness in connection with completing the Triumph Group Product Support Business Acquisition and integrating the business and operations of the Triumph Group Product Support Business. While we have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.

In addition, we intend to finance the consideration for the Triumph Group Product Support Business Acquisition through a combination of debt financings, including, without limitation, the proceeds from the contemplated permanent debt financing and additional borrowings under our Amended Revolving Credit Facility, which will increase our debt service obligations and the risk of downgrade of our credit ratings by credit rating agencies, which could make it more difficult for us to secure additional debt financing in the future.

We may not realize the anticipated benefits from the pending Triumph Group Product Support Business Acquisition.

The Triumph Group Product Support Business Acquisition involves integrating the Triumph Group Product Support Business with our company, both of which currently operate independent of each other. While we and the Triumph Group Product Support Business will continue to operate independently until the completion of the Triumph Group Product Support Business Acquisition, the success of the Triumph Group Product Support Business Acquisition will depend, in part, on our ability to realize the anticipated benefits from successfully combining our business and the Triumph Group Product Support Business after closing. We plan on devoting substantial management attention and resources to integrating our and Triumph Group Product Support Business’s business practices so that we can fully realize the anticipated benefits of the Triumph Group Product Support Business Acquisition. Nonetheless, the business and assets acquired may not be successful or continue to grow at the same rate as when operated independently or may require greater resources and investments than originally anticipated. The Triumph Group Product Support Business Acquisition could also result in the assumption of unknown or contingent liabilities, and, because the Triumph Group Product Support Business operates in the same sector that we do, the Triumph Group Product Support Business Acquisition could also exacerbate a number of risks that currently apply to us by increasing our exposure to sector-specific trends.

Potential difficulties we may encounter following closing include the following:

· the inability to successfully combine our business and the Triumph Group Product Support Business in a manner that permits us to realize the anticipated benefits of the Triumph Group Product Support Business Acquisition in the time frame currently anticipated, or at all;

· the failure to integrate internal systems, programs and controls, or decisions by our management to apply different accounting policies, assumptions or judgments to the Triumph Group Product Support Business’s operational results than the Triumph Group Product Support Business applied in the past;

· loss of sales and other commercial relationships;

· the complexities associated with managing our company with the integration of the Triumph Group Product Support Business;

· the additional complexities of combining the Triumph Group Product Support Business with our company and its culture, strategies and customer base;

· the failure to retain key employees of either of the two companies that may be difficult to replace;

· the disruption of each company’s ongoing businesses or inconsistencies in services, standards, controls, procedures and policies;

· potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Triumph Group Product Support Business Acquisition; and

· performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention caused by completing the Triumph Group Product Support Business Acquisition and integrating our and the Triumph Group Product Support Business’s operations.

Based on our preliminary purchase accounting estimates, a significant portion of the purchase price for the Triumph Group Product Support Business Acquisition would be allocated to goodwill and intangible assets ($350.9 million and $209.7 million, respectively, assumed in our pro forma balance sheet as of November 30, 2023). We must test goodwill for possible impairment on at least an annual basis and must evaluate amortizable intangible assets for impairment if there are indicators of a possible impairment. If the Triumph Group Product Support Business Acquisition does not yield expected returns, we may be required to record impairment losses, which could materially adversely affect our reported results.

Any of these risks could adversely affect our ability to maintain relationships with customers, vendors, employees and other commercial relationships or adversely affect our or the Triumph Group Product Support Business’s future operational results. As a result, the anticipated benefits of the Triumph Group Product Support Business Acquisition may not be realized at all or may take longer to realize or cost more than expected, which could adversely affect our business, financial condition, results of operations and growth prospects. In addition, changes in laws and regulations could adversely impact our business, financial condition, results of operations and growth prospects after the Triumph Group Product Support Business Acquisition.

The pending Triumph Group Product Support Business Acquisition may not be completed on the terms or timeline that the parties anticipate or at all.

The possible timing and likelihood of the completion of the Triumph Group Product Support Business Acquisition are uncertain. Neither we nor the Sellers can provide assurance that the conditions to completing the Triumph Group Product Support Business Acquisition will be satisfied or waived (including any conditions imposed on us by antitrust or other regulatory entities), and, accordingly, that the Triumph Group Product Support Business Acquisition will be completed on the terms or timeline that the parties anticipate, or at all. If any condition to the Triumph Group Product Support Business Acquisition is not satisfied, it could delay or prevent the Triumph Group Product Support Business Acquisition from occurring, which could negatively impact our business, financial condition, results of operations and growth prospects.

The pendency of the Triumph Group Product Support Business Acquisition could adversely affect our or the Triumph Group Product Support Business’s businesses and operations.

In connection with the pending Triumph Group Product Support Business Acquisition, some customers, vendors or other parties with commercial relationships with each of us and the Triumph Group Product Support Business may delay or defer decisions, which could adversely affect the revenues, earnings, cash flows and expenses of us and the Triumph Group Product Support Business, regardless of whether the Triumph Group Product Support Business Acquisition is completed. In addition, due to operating covenants in the Purchase Agreement, the Triumph Group Product Support Business may be unable (without our prior written consent), during the pendency of the Triumph Group Product Support Business Acquisition, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions outside the ordinary course, even if such actions would prove beneficial. The failure of successfully completing the Triumph Group Product Support Business Acquisition may adversely impact our business, financial condition, results of operations and growth prospects.

The obligations and liabilities of the Triumph Group Product Support Business, some of which may be unanticipated or unknown, may be greater than we have anticipated which may diminish the anticipated value of our company.

The obligations and liabilities of the Triumph Group Product Support Business, some of which may not have been disclosed to us or may not be reflected or reserved for in the Triumph Group Product Support Business’ historical financial statements, may be greater than we have anticipated. The obligations and liabilities of the Triumph Group Product Support Business could have a material adverse effect on our business or the anticipated value of the combined business, financial condition or results of operations.

The unaudited pro forma financial information included as an exhibit to our Current Report on Form 8-K filed on February 14, 2024 may not accurately reflect our financial position or results of operations following the completion of the Transactions.

The unaudited pro forma financial information included as an exhibit to our Current Report on Form 8-K filed on February 14, 2024 is presented for illustrative purposes only, includes various estimates that are subject to material change and may not be an indication of what our financial position or results of operations would have been if the Transactions are not completed on the dates indicated. The unaudited pro forma financial information has been derived from our audited and unaudited historical financial statements, along with those of the Triumph Group Product Support Business, and certain adjustments and assumptions have been made regarding the combined businesses after giving effect to the Transactions. The assets and liabilities of the Triumph Group Product Support Business have been measured at fair value based on various preliminary estimates using assumptions that management believes are reasonable utilizing information currently available. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the pro forma financial information and the final accounting for the Transactions will occur and could have a material impact on the pro forma financial information and the combined business’s financial position and future results of operations. In addition, the assumptions used in preparing the pro forma financial information may not

prove to be accurate, and other factors may affect our financial condition or results of operations following the Transactions.

EX-99.2

Exhibit 99.2

The Transactions

Triumph Group Product Support Business Acquisition

The Purchase Agreement

On December 21, 2023, we agreed to acquire the Product Support business (the “Triumph Group Product Support Business”) of Triumph Group, Inc., a Delaware corporation (“Triumph Group”), a supplier of aerospace services, structures, systems and support, pursuant to a definitive Securities and Asset Purchase Agreement (the “Purchase Agreement”) by and among the Company, Triumph Group; Triumph Aftermarket Services Group, LLC, a Delaware limited liability company; Triumph Group Acquisition Corp., a Delaware corporation; Triumph Group Acquisition Holdings, Inc., a Delaware corporation; and The Triumph Group Operations, Inc., a Delaware corporation (the “Wellington Seller” and, collectively with Triumph Group, Triumph Aftermarket Services Group, LLC, Triumph Group Acquisition Corp. and Triumph Group Acquisition Holdings, Inc., the “Sellers”).

The Purchase Agreement provides that, subject to the terms and conditions set forth therein, we will acquire the Triumph Group Product Support Business by acquiring (a) all outstanding shares of capital stock of Triumph Airborne Structures, LLC, Triumph Accessory Services – Grand Prairie, Inc. and Triumph Aviation Services Asia Ltd. from the applicable Sellers and (b) the Transferred Assets (as defined in the Purchase Agreement) and Assumed Liabilities (as defined in the Purchase Agreement) from the Wellington Seller (collectively, the “Triumph Group Product Support Business Acquisition”) for an aggregate purchase price of $725.0 million, subject to customary adjustments set forth in the Purchase Agreement.

The consummation of the Triumph Group Product Support Business Acquisition is subject to customary closing conditions, including, without limitation, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which occurred on February 8, 2024 without action by the FTC. We cannot assure you that the Triumph Group Product Support Business Acquisition will be completed on the terms or timeline anticipated, or at all.

Sources and Uses

We expect to fund the consideration for the Triumph Group Product Support Business Acquisition with a combination of permanent debt financings, including, without limitation, borrowings under our Amended Revolving Credit Facility. We have also secured a $750.0 million debt financing commitment (the “Debt Financing Commitment”) from Wells Fargo Bank, National Association, Bank of America, N.A., Canadian Imperial Bank of Commerce, New York Branch, CIBC Bank USA, PNC Bank, National Association and Truist Bank, subject to customary closing conditions. The aggregate net cash proceeds from any permanent debt financing will reduce the lenders’ funding commitments under the Debt Financing Commitment.

Amended Revolving Credit Facility

Substantially concurrently with the consummation of the Triumph Group Product Support Business Acquisition, we expect to amend the credit agreement we previously entered into on December 14, 2022 (the “Credit Agreement Amendment”) to, among other things, (i) increase the aggregate lending commitments under the unsecured revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”) to at least $795.0 million depending on additional lending commitments we may receive between the date hereof and the closing date of any permanent debt financing, with an incremental facility that, subject to customary conditions, could provide for additional borrowing capacity of up to $300.0 million (the “Revolving Credit Facility Increase”), (ii) expressly permit the Triumph Group Product Support Business Acquisition and the permanent debt financing, (iii) increase the maximum leverage ratio permitted under the financial covenants, and (iv) include an additional pricing level that will increase the interest rate margins to 250 basis points (in the case of secured overnight financing rate loans) and 150 basis points (in the case of Base Rate loans) if our leverage ratio exceeds 3.75:1.00. The Revolving Credit Facility, as amended by the Credit Agreement Amendment, is referred to as the Amended Revolving Credit Facility.

The Triumph Group Product Support Business Acquisition and the Credit Agreement Amendment, together with any permanent debt financing, including the expected borrowings under the Amended Revolving Credit Facility and the use of the permanent debt financing and such borrowings to fund the consideration for the Triumph Group Product Support Business Acquisition are collectively referred to as the “Transactions.”

Our Company

We are a leading independent provider of solutions to the global aviation aftermarket. We offer a broad line of products and services to commercial and defense aerospace customers. We operate globally in over 20 countries through four business segments: Parts Supply, Repair & Engineering, Integrated Solutions and Expeditionary Services. For the twelve months ended November 30, 2023, we generated sales and Adjusted EBITDA of $2.2 billion and $210.6 million, respectively.

We were founded in 1951, are based in Wood Dale, Illinois and have approximately 5,000 dedicated employees.

Our Business Segments

Parts Supply ($818 million in historical revenue in FY2023):

Our Parts Supply business primarily consists of sales of used serviceable aircraft engine and airframe material (“USM”) and aftermarket distribution of new, original equipment manufacturer (“OEM”)-supplied replacement parts. We have established formal distribution relationships with OEM suppliers of aircraft components, which are utilized by aircraft operators and aircraft repair and maintenance operations. We are a leading independent distributor of factory new aircraft parts for the aftermarket. As we continue to shift our business toward digital solutions, we have developed the online PAARTS^sm Store, which facilitates the electronic fulfillment of orders when customers choose this channel.

USM is an important category of the aviation aftermarket in which parts removed from engines or airframes can be refurbished to be utilized as replacement parts in the aftermarket. These materials undergo rigorous inspection and certification or repair to ensure airworthiness and reliability. We utilize a network of third-party repair facilities to perform this work. USM parts often represent a cost-effective and more timely solution for operators when compared to sourcing new parts.

We take an active role in sourcing USM inventory by monitoring the market for opportunities to acquire used aircraft and engines. After acquisition, we manage the process of disassembly, repair and inspection of the various parts or discreet components that can be sold to customers. Our extensive network of industry relationships and presence in the market positions us with operators, lessors and other trading companies to source opportunities. Additionally, our global reach and long-standing customer relationships position us to meet market demand for these products. We also leverage other AAR business lines, in particular Integrated Solutions and Repair & Engineering, to improve our digital intelligence, technical capabilities, cross selling ability and end-to-end digital order fulfillment.

Our distribution business of new OEM-supplied replacement parts supplies components 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. Our global scale, independence and sales capability across both commercial and government end-markets is a competitive differentiator. We utilize data-driven intelligence and our connectivity to the AAR ecosystem to enhance our ability to deliver the right products through a highly technical salesforce. We have invested meaningfully in e-commerce capabilities to integrate digitally with our customers for data interchange and ease of digital quoting.

Repair & Engineering ($533 million in historical revenue in FY2023):

We provide major airframe inspection, maintenance, repair and overhaul, painting services, line maintenance, airframe modifications, structural repairs, avionics service and installation, exterior and interior refurbishment and engineering services and support for many types of commercial and military aircraft. We also repair and overhaul various aircraft components, landing gear, wheels and brakes for commercial and military aircraft.

We operate six airframe maintenance facilities, two component repair facilities and one landing gear overhaul facility. Our U.S. airframe maintenance facilities are in Indianapolis, Indiana; Oklahoma City, Oklahoma; Miami, Florida; and Rockford, Illinois, and our Canadian airframe maintenance facilities are in Trois Rivières, Quebec and Winsor, Ontario. Our component repair facilities are in Garden City, New York and Amsterdam, The Netherlands. Our landing gear overhaul facility is in Miami, Florida. We recently announced the expected expansions of both our Miami and Oklahoma facilities to meet growing customer demand.

Our Repair & Engineering business primarily supports narrow-body Airbus, Boeing and Embraer regional aircraft for customers, as well as U.S. government defense agencies.

A key growth area for AAR is our Repair & Engineering business, which includes the development of Parts Manufacturer Approval (“PMA”) parts for aftermarket applications. PMA is a designation under Federal Aviation Administration (“FAA”) regulations that permits the design of approved parts for specific aircraft components that can be provided by non-OEM sources at cost-efficient and sometimes improved availability.

Once acquired, the Triumph Group Product Support Business will be integrated into our Repair & Engineering business.

Integrated Solutions ($547 million in historical revenue in FY2023):

Our Integrated Solutions business primarily consists of our fleet management and operations of customer-owned aircraft, customized performance-based supply chain logistics programs in support of the U.S. Department of Defense (“DoD”) and foreign governments, flight hour component inventory and repair programs for commercial airlines and integrated software solutions, including Trax USA Corp. (“Trax”).

Government Supply Chain & Third Party Logistics. We provide some or all of the following functions: material planning, sourcing, logistics, information and program management and parts and component repair and overhaul.

Government Contractor Logistics Support. We provide fleet management and operations of customer-owned aircraft for the U.S. Department of State (“DoS”) under the INL/A WASS contract. We are the prime contractor on this ten-year performance-based contract which began in fiscal 2018. Our services under the contract include operating and maintaining the global DoS fleet of fixed- and rotary-wing aircraft.

Government Performance Based Logistics. We also provide customized performance-based supply chain logistics programs in support of the DoD and foreign governments. The types of services provided under these programs include some or all of the following functions: material planning, sourcing, logistics, information and program management, airframe maintenance and maintenance planning and component repair and overhaul.

Commercial Power-by-the-Hour Component Support. We provide customized flight hour component inventory and repair programs, warranty claim management and outsourcing programs for airframe parts and components in support of our airline and government customers’ maintenance activities.

Trax Aviation Software. Through our recent acquisition of Trax, we operate what was the first fully cloud-based electronic enterprise resource platform for the MRO industry (“eMRO”). We also offer a full suite of “paperless” mobility apps that are in process of automating MRO workflows with artificial intelligence. Through Trax, we are a leading provider of maintenance software for airlines, other aircraft operators and MROs with over 130 customers that have an average tenure of over 10 years. These software products increase

maintenance efficiency, improve asset utilization and streamline the information flow among interested parties during the maintenance process. The software also seamlessly creates the required regulatory system of record required by airline and lessor customers.

Expeditionary Services ($92 million in historical revenue in FY2023):

Our Expeditionary Services business primarily consists of products and services supporting the movement of equipment and personnel by the U.S. and foreign governments and non-governmental organizations.

We design, manufacture, and repair transportation pallets and a wide variety of containers and shelters used in support of military and humanitarian tactical deployment activities. The containers and shelters are used in numerous mission requirements, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment and sleeping quarters. Shelters include both stationary and vehicle-mounted applications. We also provide engineering, design and system integration services for specialized command and control systems.

Acquisitions

Triumph Group Product Support Business

On December 21, 2023, we entered into a definitive agreement with Triumph Group to acquire its Product Support business for $725 million in cash. The Triumph Group Product Support Business is a leading global provider of specialized maintenance, repair and overhaul capabilities for critical aircraft components in the commercial and defense markets. The Triumph Group Product Support Business provides MRO services for structural components, engine and airframe accessories, interior refurbishment, and wheels and brakes. Additionally, the Triumph Group Product Support Business designs proprietary designated engineering representative (“DER”) repairs and PMA parts.

The Triumph Group Product Support Business services both the commercial and military aftermarkets across five primary locations with a highly skilled workforce of over 700 employees. For the twelve months ended December 31, 2023, the Triumph Group Product Support Business generated approximately $266.5 million of net sales and $49.9 million of Adjusted EBITDA, representing an Adjusted EBITDA margin of 18.7%. For the fiscal year ended March 31, 2023, the Triumph Group Product Support Business’s sales by end market were as follows:

This acquisition will meaningfully scale our proprietary repair capabilities and will be highly complementary with our existing portfolio. The Triumph Product Support Business will offer benefits of integrating existing AAR parts, trading and integrated solutions volumes with newly acquired facilities and proprietary capabilities—including approximately 10,000 part numbers, approximately 6,000 proprietary DER repair capabilities, 90 aircraft type, plus variants and engines, and 36 Air Transport Association chapters. Its Thailand facility will enable us to significantly expand and enhance our operations and capabilities in the Asia-Pacific region, a strategic long-term growth market.

Trax

On March 20, 2023, we acquired Trax, a leading independent provider of aircraft MRO and fleet management software for $120 million plus contingent consideration of up to $20 million based on Trax’s adjusted revenue in calendar years 2023 and 2024. Founded in 1999, and headquartered in Miami with approximately 100 employees, Trax offers critical software applications to a diverse global customer base of airlines, MROs and government aircraft operators supporting approximately 5,000 aircraft.

Trax’s comprehensive solutions support the entire spectrum of maintenance activities and create the system of record required by airlines, MROs and government aircraft operators. Trax’s eMRO product is a web-based enterprise MRO software solution for managing aircraft maintenance and fleet management, including materials planning and purchasing, engineering, scheduling, regulatory compliance, work orders and personnel. Its eMobility products provide a suite of mobile applications, including task cards, digital manuals, electronic log books, fleet status and warehouse management.

Competitive Strengths

Leading global independent provider of aftermarket aviation services across commercial and government end-markets. Our position as an independent global service provider is a differentiator. Many of our competitors are part of a larger OEM or airline operator. This independence results in a larger total set of opportunities and allows us to be better aligned with our suppliers and customers by focusing solely on serving their needs in the aviation aftermarket. Furthermore, this independence positions us well to address key industry challenges with solutions such as marketplaces for parts procurement, predictive maintenance and the introduction of new PMA parts.

Strong focus on safety and quality. We recognize that as a participant in the global aviation industry our commitment to safety and quality are critical. Our corporate values start with “Quality First. Safety Always,” which help establish a culture that is focused on safety and quality. Our Safety Management System program received official recognition by the FAA, making it the first independent third-party MRO organization to implement this system. This program ensures that our operations maintain their position on the cutting-edge of aviation safety.

Deep technical knowledge and long-standing customer relationships. Our deep technical aircraft and engine knowledge spans the services we provide to the aviation aftermarket. In Parts Supply, our USM capabilities are underpinned by the ability to assess, inspect, and manage the repair of different aircraft and engine parts. In Repair & Engineering and Integrated Solutions, our repair and supply chain management offering require significant technical capability and sophisticated solutions. These differentiated capabilities help drive our long-standing customer relationships. Additionally, many of our customers utilize our services across our businesses.

Unique portfolio of high-quality solutions with lower cost to the customer. Many of our products and services are lower cost solutions than the alternative available to our customers. The USM we provide is often sold at a discount to the new, OEM alternative, which results in savings to our customers. Our heavy maintenance repair work is more efficient and results in a lower cost than airlines can achieve conducting this work internally. Additionally, we provide commercial best practice solutions to the government end-market, which frequently results in reduced turnaround times and reduced cost to our government customers. Across these lower cost solutions, we strive to maintain the highest level of quality.

Integrated, connected business model drives cross-divisional opportunities, improved market access and data intelligence to better serve our customers. Our three aviation-focused businesses: Parts Supply, Repair & Engineering and Integrated Solutions are each able to leverage the others to deliver additional opportunities while enhancing the value proposition for our customers. This connected business model allows us to operate more efficiently, improve our market intelligence and cross-sell our services. For example, our Integrated Solutions business leverages the full spectrum of AAR capabilities by combining the parts business with repair solutions under long-term contracts, positioning us as the one-stop shop solution for customers. Additionally, data and market intelligence we have access to allows us to create digital solutions for the global aviation aftermarket.

Our Business Strategy

Grow USM volumes through strategic supply sources and extensive base of customer demand. We use our unique global commercial sales force to identify high-demand materials, which we price using extensive technical aircraft and engine expertise and a deep understanding of end-market demand. We have certain proprietary sources of material, and we expect to add additional such sources going forward. We design repair procedures and manage a network of suppliers to disassemble and overhaul the material we have acquired, and then use our global commercial sales force to market the resulting USM. In recent years, we have observed aircraft operators and lessors that had previously bought exclusively new parts seek USM to reduce costs and improve availability in a supply chain-constrained environment. In particular, we expect the U.S. Government and aircraft operators in Asia to increase their USM adoption going forward, and we expect to continue to be a

leader in meeting global demand through our material sourcing capability, technical expertise and reputation for quality, reliability and safe products.

Develop additional distribution opportunities to aircraft component manufacturers and our entry into the business aircraft and electronics markets. We distribute aircraft components primarily on an exclusive basis into the aerospace aftermarket using a senior, globally deployed, technically astute sales force that actively markets the products we distribute as superior alternatives to competing products. This approach has driven increased sales for our OEM partners relative to catalog-based distributors and OEMs’ internal aftermarket sales efforts, resulting in additional demand for our distribution offering. We expect to continue to use this model to drive strong performance and as the basis for additional distribution lines from both existing and new OEM relationships. In addition, we expect our entries into the business aviation end-market and electronics product line to drive further growth opportunities.

Expand digital capabilities across our integrated aftermarket platform to drive volumes, reduce costs and increase differentiated offerings. Our business is complex and data-intensive, which creates opportunity for solutions to improve throughput and facilitate better decision-making. Our vision for our Trax software platform is to enable an aircraft parts ecosystem that can foresee replacement needs, facilitate part readiness and allow seamless fulfillment. We are expanding the capability of our PAARTS^sm Store eCommerce platform to capture additional market demand, provide dynamic market-driven pricing, and produce a more seamless customer experience. In our airframe maintenance hangars, we are leading the transition from paper to digital records, utilizing drone-based inspection techniques to improve turnaround times, and expanding the use of wearables technology to leverage fewer highly experienced technicians across more facilities.

Develop additional proprietary PMA parts and DER repairs for internal and external consumption based on our unique insights into the MRO marketplace. Our pending acquisition of the Triumph Group Product Support Business from Triumph Group brings significant additional PMA development capability and a large DER portfolio that we intend to combine with our own existing initiatives. Our scale and associated insight into parts and repair demand and costs uniquely position us to be able to identify new PMA and DER candidates, which we plan to use to drive additional high margin sales globally. Specifically, our assessment of opportunities to develop PMA parts is driven by knowledge obtained from serving thousands of aircraft in our facilities. We intend to balance the opportunity for proprietary PMA development against the important OEM relationships that we manage in our parts distribution business.

Meet demand for aircraft heavy maintenance and component repair. We plan to scale our component repair capabilities with the acquisition of Triumph Group Product Support. Additionally, we plan to expand our airframe maintenance facilities in both Miami and Oklahoma City to support demand for our services by long-term customer commitments. In both cases, we will be able to leverage existing cost structure across greater volumes to drive higher incremental margins and access relatively deep local labor pools. In addition, we have partnered with local government to fund some or all of both expansions.

Grow government business by leveraging our efficient, commercial best-practices approach to supporting aircraft and our government prime contracting capabilities. We plan to grow our government Parts Supply business by continuing to add additional new parts distribution lines supporting government customers including the Defense Logistics Agency and foreign governments, and by offering USM to the U.S. Government in conjunction with the recently enacted legislation directing the DoD to acquire and use USM for all commercial derivative aircraft and engines. In addition, we will seek to grow our portfolio of government Integrated Solutions programs, utilizing our expertise supporting commercial derivative aircraft and meeting the customer’s demand for commercial-best-practices approaches to supporting their aircraft fleets. Finally, we plan to leverage the advanced component repair capability of the Triumph Group Product Support Business, which does not currently sell directly to government customers, in conjunction with our prime contracting capabilities, to drive additional component repair work for government customers.

EX-99.3

Exhibit 99.3

Triumph Group, Inc.

Product Support Businesses

Combined Financial Statements

As of March 31, 2023 and For the Fiscal Year Ended March 31, 2023

1 

Triumph Group, Inc. Product Support Businesses

Index

As of March 31, 2023 and for the fiscal year ended March 31, 2023

	Page(s)
Report of Independent Certified Public Accountants	3
Combined Financial Statements
Balance Sheet	5
Statement of Operations	6
Statement of Net Parent Investment	7
Statement of Cash Flows	8
Notes to Financial Statements	9-18

2 

Report of Independent Auditors

To the Stockholders and Board of Directors of Triumph Group, Inc.

Opinion

We have audited the combined financial statements of Triumph Group, Inc. Product Support Businesses (the Company), which comprise the combined balance sheet as of March 31, 2023, and the related combined statement of operations, net parent investment, and cash flows for the year then ended, and the related notes (collectively referred to as the “combined financial statements”).

In our opinion, the accompanying combined financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

· Exercise professional judgment and maintain professional skepticism throughout the audit.

· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

· Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

· Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

3 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

February 7, 2024

4 

Triumph Group, Inc. Product Support Businesses

Combined Balance Sheet

As of March 31, 2023

(Dollars in thousands)

		March 31,
		2023
ASSETS
Current assets:
Cash and cash equivalents	$	17,161
Trade and other receivables, less allowance for credit losses of $3,130		42,034
Contract assets		15,442
Inventory, net		79,593
Prepaid expenses and other current assets		3,515
Total current assets		157,745
Property and equipment, net		28,178
Deferred tax asset		5,412
Other, net		2,488
Total assets	$	193,823
LIABILITIES AND NET PARENT INVESTMENT
Current liabilities:
Accounts payable		26,193
Contract liabilities		387
Finance lease obligations		63
Accrued expenses		15,437
Total current liabilities		42,080
Noncurrent finance lease obligations		96
Other noncurrent liabilities		412
Total non-current liabilities		508
Net parent investment		151,235
Total liabilities and net parent investment	$	193,823

The accompanying notes are an integral part of these combined financial statements.

5 

Triumph Group, Inc. Product Support Businesses

Combined Statement of Operations

For the year ended March 31, 2023

(Dollars in thousands)

		Year ended March 31,
		2023
Net sales	$	248,745
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)		186,038
Selling, general and administrative		30,425
Depreciation		3,322
		219,785
Operating income		28,960
Other expense, net		6,344
Income before income taxes		22,616
Income tax expense		5,625
Equity method investment losses, net of tax		310
Net income	$	16,681

The accompanying notes are an integral part of these combined financial statements.

6 

Triumph Group, Inc. Product Support Businesses

Combined Statement of Net Parent Investment

For the year ended March 31, 2023

(Dollars in thousands)

		Parent's Net Investment
Balance at March 31, 2022	$	139,236
Comprehensive income
Net income		16,681
Net transfers to Parent		(4,682)
Balance at March 31, 2023	$	151,235

The accompanying notes are an integral part of these combined financial statements.

7 

Triumph Group, Inc. Product Support Businesses

Combined Statement of Cash Flows

For the year ended March 31, 2023

(Dollars in thousands)

		Year ended March 31,
		2023
Operating Activities
Net income	$	16,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,322
Provision for credit losses		280
Provision for deferred income taxes		190
Changes in other assets and liabilities:
Trade and other receivables		(3,356)
Contract assets		(5,296)
Inventories		(481)
Prepaid expenses and other current assets		(760)
Accounts payable, accrued expenses, and contract liabilities		3,113
Deferred tax assets		140
Other, net		1,054
Net cash provided by operating activities		14,887
Investing Activities
Capital expenditures		(2,950)
Investment in joint venture		(272)
Net cash used in investing activities		(3,222)
Financing Activities
Finance lease obligations		(130)
Net transfers to parent		(4,682)
Net cash used in financing activities		(4,812)
Net change in cash and cash equivalents		6,853
Cash and cash equivalents at beginning of period		10,308
Cash and cash equivalents at end of period	$	17,161

The accompanying notes are an integral part of these combined financial statements.

8 

Triumph Group, Inc. Product Support Businesses

Notes to Combined Financial Statements

As of March 31, 2023 and For the Year Ended March 31, 2023

($ in 000's)

1. BACKGROUND AND BASIS OF PRESENTATION

Description of the Business

These combined financial statements comprise the Product Support business (“TPS” or the “Company”) of Triumph Group, Inc. (“TGI” or “Parent”). TPS provides maintenance, repair and overhaul (“MRO”) services for the global commercial, regional, and military operators of aircraft components. Specifically, TPS provides MRO services to structural components, engine and airframe accessories, interior refurbishment and wheels and brakes. The Company operates three plants in the United States, Texas, Arkansas, and Kansas, and one plant in Thailand.

These combined financial statements reflect the results of operations, financial position, and cash flows of TPS described in more detail below. Unless otherwise indicated, reference in these notes to the combined financial statements (“Combined Financial Statements”) to “we”, “us,” and “our” refer to TPS and its combined operations. References to the Combined Financial Statements refer to the information included herein with respect to the historical results of operations, financial position, and cash flows of TPS.

Basis of Presentation

These Combined Financial Statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). Historically, TPS did not operate as an independent standalone company. The combined financial statements have been derived from Parent’s historical accounting records and are presented on a carve-out basis, as if the operations had been conducted independently from Parent. All revenues and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included as a component of the financial statements. The financial statements also include allocations of certain selling, general and administrative expenses from Parent’s corporate office to the Company. The allocations have been determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Parent. Related party allocations are discussed further in Note 10.

As part of Parent, the Company’s domestic entities are dependent upon Parent for all of its working capital and financing requirements as Parent uses a centralized approach to cash management and financing of its domestic operations. Financial transactions relating to the Company are accounted for through the Parent investment account of the Company. Accordingly, none of Parent’s domestic cash, cash equivalents or debt have been assigned to the Company in these financial statements. Cash within the combined financial statements represent cash on hand at the Company’s international entity.

Net Parent investment represents Parent’s interest in the recorded net assets of the Company. Transactions with Parent are reflected in the accompanying Combined Statement of Net Parent Investment as net transfers to Parent and in the accompanying Combined Balance Sheet within Net parent investment.

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Actual results could differ from those estimates.

9 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Combination

The Combined Financial Statements include certain assets and liabilities that have historically been held at the Parent level but are specifically identifiable or otherwise attributable to TPS. Net Parent Investment within the Combined Financial Statements include certain intercompany transactions between the Company and the Parent. Expenses related to corporate allocations from the Parent to the Company are considered to be effectively settled for cash in the Combined Financial Statements at the time the transaction is recorded. In addition, transactions between the Company and the Parent’s other businesses have been classified as related party, rather than intercompany, in the Combined Financial Statements. Refer to Note 10 for further discussion.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value.

For domestic entities, cash is centrally managed by the corporate entity and the individual entities are funded through intercompany arrangements in order to meet their individual cash requirements. Transfers of cash to and from the Parent’s cash management system are reflected as a component of Net Parent Investment in the combined statements of financial position. The international entity cash is not centrally managed by the corporate entity and manages their own bank accounts.

Accordingly, the cash and cash equivalents held by the corporate entity for domestic entities were not attributed to TPS for any of the periods presented, as legal ownership remained with the Parent for each period presented, whereas the cash held internationally is reflected in the combined balance sheet.

Trade Receivables, net

Trade receivables are recorded net of an allowance for expected credit losses. Trade receivables include amounts billed and currently due from customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company pools receivables that share underlying risk characteristics and records the allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific collectability matters when they arise. The Company writes off balances against the allowance for expected credit losses when collectability is deemed remote. The Company's trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the customer base. For the fiscal year ended March 31, 2023, credit loss expense and write-offs were not significant.

Revenue Recognition and Contract Balances

The Company's revenue is principally from contracts with customers to provide maintenance, repair, and overhaul services on a variety of aircraft structures and components. The majority of the Company’s contracts are purchase orders that are received from customers and may be subject to the terms and conditions of long-term pricing agreements that establish general terms and conditions and may define specific requirements. The Company generally enters into agreements directly with its customers and is the principal in all current contracts.

The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the

10 

termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.

Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of the manufacturing, overhaul, and repair services and the delivery of spare parts. The majority of the Company’s contracts contain a single performance obligation.

The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions pertaining to volume-based rebates and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. Consideration paid or payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery.

The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.

Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair and maintenance activities are recognized over the contractual period or as services are rendered. Contracts with performance obligations satisfied over time are recognized using an input method. The Company recognizes revenue over time as it performs on these contracts because the customer simultaneously receives and consumes the benefit of the Company’s maintenance, repair, and overhaul services that are being performed on a customer-owned asset.

With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. Cost estimates are largely based on historical performance trends and the level of effort to repair or overhaul aircraft components and structures.

The Company believes that the accounting estimates and assumptions made by management are

11 

appropriate.

Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred.

Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition contract assets and liabilities. Refer to Note 3 for further discussion.

Contingencies

Contingences are existing conditions, situations or circumstances involving uncertainty as to possible gain or loss that will ultimately be resolved when future events occur or fail to occur. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory investigations and proceedings, product quality, and gains or losses resulting from other events and developments. Liabilities for loss contingencies are accrued in the amount of its best estimate for the ultimate loss when a loss is considered probable of having been incurred and is reasonably estimable. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or the amount of a loss will exceed the recorded provision. The Company regularly reviews contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. Contingencies that might result in gains are generally not accrued until the contingencies are resolved and the gain is realized or realizable.

Disputes with suppliers or customers could arise regarding unique contractual requirements, quality, costs or impacts to production schedules. If the Company is unable to successfully and equitably resolve such claims and assertions, its business, financial condition, results of operations, customer relationships and related transactions could be materially adversely affected.

In the ordinary course of business, the Company may be involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, based on the facts currently available, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations to the combined financial statements.

Income Taxes

The income tax provision in the combined statement of operations has been calculated as if the Company filed separate tax returns and was operating as a stand-alone business for the period presented. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the separation. The Company’s operations have historically been included in the Parent's U.S. jurisdictions to the extent consolidated returns are required in a given jurisdiction. The Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized. Because portions of the

12 

Company’s operations are included in the Parent's tax returns, payments to certain tax authorities are made by the Parent, and not by the Company. The Company does not maintain taxes payable to/from the Parent and the balances are deemed to settle the annual current tax payable balances immediately with the legal tax-paying entities in the respective jurisdictions. These settlements are reflected as changes in the Parent's net investment.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the combined financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits in these stand-alone business financial statements.

3. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time. Additionally, the Company disaggregates revenue based on the end market where products and services are transferred to the customer.

The following table shows disaggregated net sales satisfied over time and at a point in time for the fiscal year ended March 31, 2023:

		Year Ended March 31,
		2023
Product Support
Satisfied over time	$	220,067
Satisfied at a point in time		28,678
Revenue from contracts with customers	$	248,745

The following table shows net sales by disaggregated end markets for the year ended March 31, 2023.

		Year Ended March 31,
		2023
Product Support
Commercial	$	200,468
Military		48,277
Revenue from contracts with customers	$	248,745

Contract Assets and Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of

13 

prior experience, current economic conditions and management’s expectations of future economic conditions, and specific matters when they arise. Contract assets are presented net of this reserve on the accompanying combined balance sheet. For the fiscal year ended March 31, 2023, credit loss expense and write-offs related to contract assets were not significant.

Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances:

		March 31, 2023
Contract assets	$	15,442
Contract liabilities		(387)
Net contract asset	$	15,055

The change in contract assets and liabilities were not significant in the year ended March 31, 2023.

Performance Obligations

As of March 31, 2023, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below.

		Total		Less than 1 year		1-2 years		3 or more years
Unsatisfied Performance Obligations	$	18,459	$	18,412	$	47	$	-

4. INVENTORIES

The Company records inventories at the lower of cost (average-cost or specific-identification method) or market. The Company expenses general and administrative costs related to products and services provided essentially under commercial terms and conditions as incurred. The Company determines the costs of inventories sold by the average cost method.

The components of inventories, net of reserves, are as follows:

		March 31,
		2023
Raw materials	$	17,915
Work-in-process, including manufactured and purchased components		41,522
Rotable assets		20,156
Total inventories	$	79,593

5. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Buildings and improvements are depreciated over a

14 

period of 15 to 40 years, and machinery and equipment are depreciated over a period of 7 to 15 years (except for furniture, fixtures and computer equipment, which are depreciated over a period of 3 to 10 years).

Net property and equipment is:

		March 31,
		2023
Land	$	2,724
Construction-in-process		2,254
Buildings and improvements		27,577
Machinery and equipment		69,312
		101,867
Less: accumulated depreciation		73,689
	$	28,178

6. ACCRUED EXPENSES

Accrued expenses consist of the following items:

		March 31,
		2023
Accrued compensation and benefits	$	8,135
Accrued warranties		1,024
Accrued income tax		950
Operating lease liabilities		186
Accrued royalty rebate		4,337
All other		805
Total accrued expenses	$	15,437

7. EMPLOYEE BENEFIT PLANS

Parent sponsors a defined contribution 401(k) plan for the Company’s employees, under which salaried and certain hourly employees may defer a portion of their compensation. Eligible participants may contribute to the plan up to the allowable amount as determined by the plan of their regular compensation before taxes. The Company generally matches contributions at a rate of 75% of the first 6% of compensation contributed by the participant. All contributions and Company matched contributions are invested at the direction of the employee in one or more investment options offered under the plan. Company matching contributions vest immediately and aggregated to $1,100 for the fiscal year ended March 31, 2023.

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8. INCOME TAXES

The components of income before income taxes are as follows:

	Year ended March 31, 2023
Foreign	$	5,411
Domestic		17,205
	$	22,616

The components of income tax expense are as follows:

	Year ended March 31, 2023
Current:
Federal	$	3,391
State		377
Foreign		1,667
		5,435
Deferred:
Federal		166
State		24
		190
	$	5,625

A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:

	Year ended March 31, 2023
Statutory federal income tax rate		21%
State and local income taxes, net of federal tax benefit		1.3
Miscellaneous permanent items and nondeductible accruals		0.5
Research and development tax credit		(0.4)
Impact of foreign operations (including tax holiday, return to provision adjustments)		2.3
Other (including FIN 48)		0.2
Effective income tax rate		24.9%

The components of deferred tax assets and liabilities are as follows:

		March 31, 2023
Deferred tax assets:
Inventory	$	5,513
Accruals and reserves		353
Lease right-of-use assets		73
Research and development		227
Goodwill and other intangible assets		1,153
Deferred tax assets		7,319

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Deferred tax liabilities:
Revenue Recognition	$	433
Property and equipment		1,389
Lease liabilities		71
Prepaid expenses and other		14
Deferred tax liabilities		1,907
Net deferred tax asset		5,412

The Company follows ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, disclosure and transition. For purposes of these financial statements, the company has performed calculations utilizing the separate return methodology. Under this methodology, the included companies are treated as a collection of legal entities subject to filing a consolidated United States Federal tax return and state returns on a separate, sub-consolidated, or consolidated basis depending on the applicable rules in each jurisdiction. The company’s Thai entity is treated as filing its own Thai tax return.

The effective income tax rate for the fiscal year ended March 31, 2023, was 24.9%.

The Company has been granted income tax holiday as an incentive to attract foreign investment by the Government of Thailand. The tax holidays continue to expire in various years through 2026. The Company does not have any other tax holidays in the jurisdictions in which it operates. The income tax benefit attributable to the tax status of our subsidiaries in Thailand was approximately $204 in fiscal 2023.

The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year.

As of March 31, 2023, the total amount of unrecognized tax benefits are not significant. The Company anticipates that total unrecognized tax benefits may be reduced by zero in the next 12 months. The Company is generally no longer subject to U.S. federal, state, or local income tax examinations, or foreign income tax examinations by tax authorities, for fiscal years ended before March 31, 2013.

As of March 31, 2023, the Company is not subject to any income tax examinations. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. There are no material interest and penalties accrued as of the year ended March 31, 2023.

9. CUSTOMER CONCENTRATION

Trade and other receivables from The Boeing Company ("Boeing") represented approximately 11% of total trade and other receivables as of March 31, 2023. The Company had no other significant concentrations of credit risk. Sales to Boeing for fiscal 2023 were $36,789 of net sales or approximately 15% of net sales.

10. RELATED PARTY TRANSACTIONS AND NET PARENT INVESTMENT

Related Party Transactions

The accompanying Combined Financial Statements are prepared on a stand-alone basis and are derived from Parent’s consolidated financial statements and accounting records. As such, transactions between the Company and the Parent have been classified as related-party transactions. All related party transactions between the Company and Parent have been included in these Combined Financial Statements. For certain transactions where there is not a history of cash settling the transactions between the Company and the Parent the related party balances are included in Net Parent Investment on the combined balance sheet. Additionally, the Company has

17 

amounts due from related parties in the amount of $27. This amount is recorded within Prepaid expenses and other current assets within the combined balance sheet.

 
In addition, the Company recorded royalty expense of $5,868 for the fiscal year ended March 31, 2023, which is reflected within the Combined Financial Statements. This expense relates to the rights of the Company to use the Parent logo. The Company does not have a history of cash settling these balances, as such the related party balances are included in Net Parent Investment on the combined balance sheet. The Company enters into arrangements through the ordinary course of business with the Parent and subsidiaries of the Parent. Total related party purchases made by the Company under these arrangements were $491 for the fiscal year ended March 31, 2023.

Corporate Allocations and Net Parent Investment

The combined statement of operations includes allocations for certain support functions that are incurred on a centralized basis by the Parent and subsequently recorded at the business entity level, such as departmental charges related to legal, executives, human resources, IT services, finance, tax, operations management, product compliance, etc. These expenses are incremental to certain support function costs directly attributable to the Company including for IT services, legal and compliance, finance and accounting, human resources, supply chain and procurement and commercial and business development, and have been allocated to the Company primarily based on a proportional basis of net sales or headcount. Management considers the allocation methodologies used by Parent to be reasonable and to appropriately reflect the related expenses attributable to the Company for purposes of the carve-out financial statements; however, the expenses reflected in these financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had operated as a separate entity. In addition, the expenses reflected in the financial statements may not be indicative of expenses the Company will incur in the future. During the fiscal year ended March 31, 2023, these incremental selling, general and administrative expenses and cost of sales allocations were $10,944 and $1,447, respectively.

TGI grants various employee benefits to its employees, including those of the Company, which primarily include restricted stock units. Compensation expense associated with these benefits was $352 thousand for the fiscal year ended March 31, 2023, which were included primarily in selling, general, and administrative expense of the Combined Financial Statements. These costs are charged directly to the Company based on the specific employees receiving awards.

Cash Management

The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the combined statements of financial position as Net Parent Investment.

Related Party Sales

Intercompany sales between TPS and other TGI subsidiaries were $126 for the fiscal year ended March 31, 2023.

11. SUBSEQUENT EVENTS

On December 21, 2023, Parent entered into a sales and purchase agreement with AAR Corp to purchase the Company for $725,000.

These combined financial statements were derived from the consolidated financial statements of Parent. The Company has evaluated all events or transactions that occurred through February 7, 2024, the date these Combined Financial Statements were available for issuance, for purposes of disclosure of unrecognized subsequent events.

18 

EX-99.4

Exhibit 99.4

Triumph Group, Inc.

Product Support Businesses

(Unaudited) Combined Financial Statements

As of December 31, 2023 and For the Nine Months Ended December 31, 2023

1 

Triumph Group, Inc.

Product Support Businesses

Index

As of December 31, 2023 and for the nine months ended December 31, 2023

	Page(s)
Unaudited Combined Financial Statements
Balance Sheet	3
Statement of Operations	4
Statement of Net Parent Investment	5
Statement of Cash Flows	6
Notes to Financial Statements	7-13

2 

Triumph Group, Inc. Product Support Businesses

Unaudited Combined Balance Sheet

As of December 31, 2023

(Dollars in thousands)

		December 31,
		2023
ASSETS
Current assets:
Cash and cash equivalents	$	21,851
Trade and other receivables, less allowance for credit losses of $3,011		43,826
Contract assets		17,648
Inventory, net		86,873
Prepaid expenses and other current assets		2,900
Total current assets		173,098
Property and equipment, net		26,161
Deferred tax asset		4,862
Other, net		4,537
Total assets	$	208,658
LIABILITIES AND NET PARENT INVESTMENT
Current liabilities:
Accounts payable		22,534
Contract liabilities		104
Finance lease obligations		141
Accrued expenses		14,216
Total current liabilities		36,995
Noncurrent finance lease obligations		193
Other noncurrent liabilities		1,140
Total non-current liabilities		1,333
Net parent investment		170,330
Total liabilities and net parent investment	$	208,658

The accompanying notes are an integral part of these combined financial statements.

3 

Triumph Group, Inc. Product Support Businesses

Unaudited Combined Statement of Operations

For the nine months ended December 31, 2023

(Dollars in thousands)

		Nine months ended December 31,
		2023
Net sales	$	198,097
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)		149,144
Selling, general and administrative		25,243
Depreciation		3,625
		178,012
Operating income		20,085
Other expense, net		5,198
Income before income taxes		14,887
Income tax expense		2,799
Equity method investment losses, net of tax		175
Net income	$	11,913

The accompanying notes are an integral part of these combined financial statements.

4 

Triumph Group, Inc. Product Support Businesses

Unaudited Combined Statement of Net Parent Investment

For the nine months ended December 31, 2023

(Dollars in thousands)

		Parent's Net Investment
Balance at March 31, 2023	$	151,235
Comprehensive income
Net income		11,913
Net transfer from Parent		7,182
Balance at December 31, 2023	$	170,330

The accompanying notes are an integral part of these combined financial statements.

5 

Triumph Group, Inc. Product Support Businesses

Unaudited Combined Statement of Cash Flows

For the nine months ended December 31, 2023

(Dollars in thousands)

		Nine months ended December 31,
		2023
Operating Activities
Net income	$	11,913
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,625
Provision for credit losses		116
Provision for deferred income taxes		549
Changes in other assets and liabilities:
Trade and other receivables		(1,908)
Contract assets		(2,206)
Inventories		(7,281)
Prepaid expenses and other current assets		614
Accounts payable, accrued expenses, and contract liabilities		(5,161)
Other, net		315
Net cash provided by operating activities		576
Investing Activities
Capital expenditures		(1,352)
Investment in joint venture		(1,658)
Net cash used in investing activities		(3,010)
Financing Activities
Finance lease obligations		(58)
Net transfers from parent		7,182
Net cash provided by financing activities		7,124
Net change in cash and cash equivalents		4,690
Cash and cash equivalents at beginning of period		17,161
Cash and cash equivalents at end of period	$	21,851

The accompanying notes are an integral part of these combined financial statements.

6 

Triumph Group, Inc. Product Support Businesses

Notes to Combined Financial Statements (Unaudited)

As of December 31, 2023 and For the Nine months ended December 31, 2023

($ in 000's)

1. BACKGROUND AND BASIS OF PRESENTATION

Description of the Business

These combined financial statements comprise the Product Support business (“TPS” or the “Company”) of Triumph Group, Inc. (“TGI” or “Parent”). TPS provides maintenance, repair and overhaul (“MRO”) services for the global commercial, regional, and military operators of aircraft components. Specifically, TPS provides MRO services to structural components, engine and airframe accessories, interior refurbishment and wheels and brakes. The Company operates three plants in the United States, Texas, Arkansas, and Kansas, and one plant in Thailand.

These combined financial statements reflect the results of operations, financial position, and cash flows of TPS described in more detail below. Unless otherwise indicated, reference in these notes to the combined financial statements (“Combined Financial Statements”) to “we”, “us,” and “our” refer to TPS and its combined operations. References to the Combined Financial Statements refer to the information included herein with respect to the historical results of operations, financial position, and cash flows of TPS.

Basis of Presentation

These Combined Financial Statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). Historically, TPS did not operate as an independent standalone company. The combined financial statements have been derived from Parent’s historical accounting records and are presented on a carve-out basis, as if the operations had been conducted independently from Parent. All revenues and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included as a component of the financial statements. The financial statements also include allocations of certain selling, general and administrative expenses from Parent’s corporate office to the Company. The allocations have been determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Parent. Related party allocations are discussed further in Note 6.

As part of Parent, the Company’s domestic entities are dependent upon Parent for all of its working capital and financing requirements as Parent uses a centralized approach to cash management and financing of its domestic operations. Financial transactions relating to the Company are accounted for through the Parent investment account of the Company. Accordingly, none of Parent’s domestic cash, cash equivalents or debt have been assigned to the Company in these financial statements. Cash within the combined financial statements represent cash on hand at the Company’s international entity.

Net Parent investment represents Parent’s interest in the recorded net assets of the Company. Transactions with Parent are reflected in the accompanying Combined Statement of Net Parent Investment as net transfers to Parent and in the accompanying Combined Balance Sheet within Net parent investment.

7 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Actual results could differ from those estimates.

Principles of Combination

The Combined Financial Statements include certain assets and liabilities that have historically been held at the Parent level but are specifically identifiable or otherwise attributable to TPS.  Net Parent Investment within the Combined Financial Statements include certain intercompany transactions between the Company and the Parent.  Expenses related to corporate allocations from the Parent to the Company are considered to be effectively settled for cash in the Combined Financial Statements at the time the transaction is recorded.  In addition, transactions between the Company and the Parent’s other businesses have been classified as related party, rather than intercompany, in the Combined Financial Statements.  Refer to Note 6 for further discussion.

Revenue Recognition and Contract Balances

The Company's revenue is principally from contracts with customers to provide maintenance, repair, and overhaul services on a variety of aircraft structures and components. The majority of the Company’s contracts are purchase orders that are received from customers and may be subject to the terms and conditions of long-term pricing agreements that establish general terms and conditions and may define specific requirements. The Company generally enters into agreements directly with its customers and is the principal in all current contracts.

The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.

Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of the manufacturing, overhaul, and repair services and the delivery of spare parts. The majority of the Company’s contracts contain a single performance obligation.

The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions pertaining to volume-based rebates and other receipts or payments to customers. The Company identifies and

8 

estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. Consideration paid or payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery.

The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.

Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair and maintenance activities are recognized over the contractual period or as services are rendered. Contracts with performance obligations satisfied over time are recognized using an input method. The Company recognizes revenue over time as it performs on these contracts because the customer simultaneously receives and consumes the benefit of the Company’s maintenance, repair, and overhaul services that are being performed on a customer-owned asset.

With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. Cost estimates are largely based on historical performance trends and the level of effort to repair or overhaul aircraft components and structures.

The Company believes that the accounting estimates and assumptions made by management are appropriate.

Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred.

Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition contract assets and liabilities. Refer to Note 3 for further discussion.

Concentration of Credit Risk

Trade and other receivables from The Boeing Company ("Boeing") represented approximately 16% of total trade and other receivables as of December 31, 2023. The Company had no other significant concentrations of credit risk. Sales to Boeing for the nine month period ended December 31, 2023 were $31,366 of net sales or approximately 16% of net sales.

Contingencies

Contingences are existing conditions, situations or circumstances involving uncertainty as to possible gain or loss that will ultimately be resolved when future events occur or fail to occur. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory

9 

investigations and proceedings, product quality, and gains or losses resulting from other events and developments. Liabilities for loss contingencies are accrued in the amount of its best estimate for the ultimate loss when a loss is considered probable of having been incurred and is reasonably estimable. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or the amount of a loss will exceed the recorded provision. The Company regularly reviews contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. Contingencies that might result in gains are generally not accrued until the contingencies are resolved and the gain is realized or realizable.

Disputes with suppliers or customers could arise regarding unique contractual requirements, quality, costs or impacts to production schedules. If the Company is unable to successfully and equitably resolve such claims and assertions, its business, financial condition, results of operations, customer relationships and related transactions could be materially adversely affected.

In the ordinary course of business, the Company may be involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, based on the facts currently available, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations to the combined financial statements.

3. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time. Additionally, the Company disaggregates revenue based on the end market where products and services are transferred to the customer.

The following table shows disaggregated net sales satisfied over time and at a point in time for the nine months ended December 31, 2023:

		Nine months ended December 31,
		2023
Product Support
Satisfied over time	$	168,165
Satisfied at a point in time		29,932
Revenue from contracts with customers	$	198,097

The following table shows net sales by disaggregated end markets for the nine months ended December 31, 2023.

10 

		Nine months ended December 31,
		2023
Product Support
Commercial	$	164,725
Military		33,372
Revenue from contracts with customers	$	198,097

Contract Assets and Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific matters when they arise. Contract assets are presented net of this reserve on the accompanying combined balance sheet. For the nine months ended December 31, 2023, credit loss expense and write-offs related to contract assets were not significant.

Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances:

		December 31, 2023
Contract assets	$	17,648
Contract liabilities		(104)
Net contract asset	$	17,544

The change in contract assets and liabilities were not significant in the nine months ended December 31, 2023.

Performance Obligations

As of December 31, 2023, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below.

		Total		Less than 1 year		1-2 years		3 or more years
Unsatisfied Performance Obligations	$	20,550	$	19,711	$	839	$	-

11 

4. INVENTORIES

The Company records inventories at the lower of cost (average-cost or specific-identification method) or market. The Company expenses general and administrative costs related to products and services provided essentially under commercial terms and conditions as incurred. The Company determines the costs of inventories sold by the average cost method.

The components of inventories, net of reserves, are as follows:

		December 31,
		2023
Raw materials	$	18,471
Work-in-process, including manufactured and purchased components		48,899
Rotable assets		19,503
Total inventories	$	86,873

5. ACCRUED EXPENSES

Accrued expenses consist of the following items:

		December 31,
		2023
Accrued compensation and benefits	$	5,687
Accrued warranties		995
Accrued income tax		514
Operating lease liabilities		208
Accrued royalty rebate		4,780
All other		2,032
Total accrued expenses	$	14,216

6. RELATED PARTY TRANSACTIONS AND NET PARENT INVESTMENT

Related Party Transactions

The accompanying Combined Financial Statements are prepared on a stand-alone basis and are derived from Parent’s consolidated financial statements and accounting records. As such, transactions between the Company and the Parent have been classified as related-party transactions. All related party transactions between the Company and Parent have been included in these Combined Financial Statements. For certain transactions where there is not a history of cash settling the transactions between the Company and the Parent the related party balances are included in Net Parent Investment on the combined balance sheet. Additionally, the Company has amounts due from and due to related parties in the amount of $17 and $71, respectively. These amounts are recorded within Prepaid expenses and other current assets and Accrued expenses within the combined balance sheet.

In addition, the Company recorded royalty expense of $4,753 for the nine month period ended December 31, 2023, which is reflected within the Combined Financial Statements. This expense relates to the rights of the Company to use the Parent logo. The Company does not have a history of cash settling these balances, as such the related party balances are included in Net Parent

12 

Investment on the combined balance sheet. The Company enters into arrangements through the ordinary course of business with the Parent and subsidiaries of the Parent. Total related party purchases made by the Company under these arrangements $900 for the nine month period ended December 31, 2023.

Corporate Allocations and Net Parent Investment

The combined statement of operations includes allocations for certain support functions that are incurred on a centralized basis by the Parent and subsequently recorded at the business entity level, such as departmental charges related to legal, executives, human resources, IT services, finance, tax, operations management, product compliance, etc. These expenses are incremental to certain support function costs directly attributable to the Company including for IT services, legal and compliance, finance and accounting, human resources, supply chain and procurement and commercial and business development, and have been allocated to the Company primarily based on a proportional basis of net sales or headcount. Management considers the allocation methodologies used by Parent to be reasonable and to appropriately reflect the related expenses attributable to the Company for purposes of the carve-out financial statements; however, the expenses reflected in these financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had operated as a separate entity. In addition, the expenses reflected in the financial statements may not be indicative of expenses the Company will incur in the future. During the nine month period ended December 31, 2023, these incremental selling, general and administrative expenses and cost of sales allocations were $9,434 and $1,898, respectively.

TGI grants various employee benefits to its employees, including those of the Company, which primarily include restricted stock units. Compensation expense associated with these benefits was $344 for the nine month period ended December 31, 2023, which were included primarily in selling, general, and administrative expense of the Combined Financial Statements. These costs are charged directly to the Company based on the specific employees receiving awards.

Cash Management

The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the combined statements of financial position as Net Parent Investment.

Related Party Sales

Intercompany sales between TPS and other TGI subsidiaries were $187 for the nine month period ended December 31, 2023.

7. SUBSEQUENT EVENTS

On December 21, 2023, Parent entered into a sales and purchase agreement with AAR Corp to purchase the Company for $725,000.

These combined financial statements were derived from the consolidated financial statements of Parent. The Company has evaluated all events or transactions that occurred through February 7, 2024, the date these Combined Financial Statements were available for issuance, for purposes of disclosure of unrecognized subsequent events.

13 

EX-99.5

Exhibit 99.5

AAR CORP. AND SUBSIDIARIES 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On December 21, 2023, AAR CORP. (the “Company”, “AAR”) entered into a Securities and Asset Purchase Agreement (the “Purchase Agreement”) with Triumph Group (“Seller”) to acquire Seller’s Product Support business (the “Product Support Business”). The Product Support Business is a leading global provider of specialized MRO capabilities for critical aircraft components in the commercial and defense markets, providing MRO services for structural components, engine and airframe accessories, interior refurbishment and wheels and brakes. The Product Support Business also designs proprietary designated engineering representative repairs and parts manufacturer approval parts.

Under the terms of the agreement and subject to closing conditions, AAR CORP. will acquire the Product Support Business for $725 million in cash, which is expected to be funded with cash on hand and debt financing. The acquisition is expected to close in the first quarter of the 2024 calendar year, subject to customary closing conditions, including regulatory approvals.

Unless otherwise specified or required by the context, references in this report to “we,” “our,” “us,” “AAR,” and the “Company” refer to AAR CORP., a Delaware corporation, and its consolidated subsidiaries, and references to the “transaction” refer to the acquisition of the Product Support Business and the debt financing. Throughout this report, the accompanying unaudited pro forma condensed combined financial statements, associated adjustments, and related financial information are referred to as the “pro forma balance sheet,” the “pro forma statement(s) of income (loss),” and the “notes to the pro forma financial statements,” collectively, the “pro forma financial statements.” The pro forma financial statements are condensed and unaudited, and also combined, except where such information by its presentation or context applies only to AAR.

The accompanying pro forma financial statements are based on AAR’s historical consolidated financial statements and the Product Support Business’s historical combined financial statements as adjusted to give effect to the transaction. The pro forma statements of income (loss) for the six and twelve months ended November 30, 2023 and the year ended May 31, 2023 give effect to the transaction as if it had occurred on June 1, 2022. The pro forma balance sheet as of November 30, 2023 gives effect to the transaction as if it had occurred on that day.

The transaction accounting adjustments consist of those necessary to account for the transaction in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The pro forma financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the transaction occurred on the dates indicated. The pro forma financial statements also may not be useful in predicting the future financial condition and results of operations of the combined company following the transaction. Actual financial condition and results of operations may differ significantly from the pro forma financial statement amounts reflected herein due to a variety of factors.

The assumed accounting for the transaction is based on provisional amounts and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities of the Product Support Business was based on preliminary estimates of fair value. The pro forma financial statement adjustments are based on available information as of the date of this filing and certain assumptions that the Company believes are reasonable under the circumstances. All pro forma financial statement adjustments and their underlying assumptions are described more fully in the notes to the pro forma financial information.

The accompanying pro forma financial statements were prepared in accordance with Article 11 of Securities Exchange Commission (“SEC”) Regulation S-X. The historical consolidated financial information within the pro forma financial statements has been adjusted to give effect to reclassification adjustments, financing adjustments and the transaction accounting adjustments. AAR has not had any material historical relationships with the Product Support Business. Accordingly, the pro forma financial statements do not reflect any elimination of activities between the parties. The pro forma financial statements do not give effect to any cost savings, operating synergies or revenue synergies that may result from the transaction, or the costs to achieve any such synergies.

1

AAR CORP. and Subsidiaries

Pro Forma Condensed Combined Statement of Income (Loss)

For the six months ended November 30, 2023

(in millions, except share and per share amounts)

			Product		Transaction
			Support		Accounting			Financing
	AAR		Business		Adjustments			Adjustments			Pro Forma
	(Historical)		(Reclassified) 1		(Note 4)			(Note 4)			Combined
Sales	$	1,095.1	$	135.1	$	-		$	-		$	1,230.2
Cost of sales	890.4		105.2		2.7		(b), (c)	-			998.3
Gross profit	204.7		29.9		(2.7)			-			231.9
Provision for credit losses	0.4		-		-			-			0.4
Selling, general and administrative expenses	140.4		16.1		27.7		(c), (f)	-			184.2
Earnings (Loss) from joint ventures	(0.3)		(0.1)		-			-			(0.4)
Operating income	63.6		13.7		(30.4)			-			46.9
Pension settlement charge	(26.7)		-		-			-			(26.7)
Losses related to sale and exit of business	(1.6)		-		-			-			(1.6)
Other expense, net	(0.1)		(3.3)		-			-			(3.4)
Interest expense, net	(11.0)		-		-			(31.6)		(e)	(42.6)
Income (Loss) from continuing operations before income taxes	24.2		10.4		(30.4)			(31.6)			(27.4)
Income tax expense (benefit)	1.0		1.8		(7.6)		(d)	(7.9)		(d)	(12.7)
Income (Loss) from continuing operations	$	23.2	$	8.6	$	(22.8)		$	(23.7)		$	(14.7)
Earnings (Loss) per share from continuing operations:
Basic	$	0.66									$	(0.42)
Diluted	0.65										(0.42)
Weighted average common shares outstanding:
Basic	34.9										34.9
Diluted	35.3										34.9

¹ Refer to Note 3, Reclassification Adjustments, for details of reclassification adjustments made to conform the Product Support  Business statement of income for the six months ended December 31, 2023 to the classification of AAR’s statement of income.

See accompanying Notes to unaudited pro forma condensed combined financial statements.

2

AAR CORP. and Subsidiaries

Pro Forma Condensed Combined Statement of Income

For the twelve months ended November 30, 2023

(in millions, except share and per share amounts)

			Product		Transaction
			Support		Accounting			Financing
	AAR		Business		Adjustments			Adjustments			Pro Forma
	(Historical)		(Reclassified) 1		(Note 4)			(Note 4)			Combined
Sales	$	2,169.5	$	266.5	$	-		$	-		$	2,436.0
Cost of sales	1,762.4		204.5		5.5		(b), (c)	-			1,972.4
Gross profit	407.1		62.0		(5.5)			-			463.6
Provision for credit losses	3.1		-		-			-			3.1
Selling, general and administrative expenses	267.9		32.9		35.8		(c), (f)	-			336.6
Loss from joint ventures	(2.2)		(0.1)		-			-			(2.3)
Operating income	133.9		29.0		(41.3)			-			121.6
Pension settlement charge	(26.7)		-		-			-			(26.7)
Losses related to sale and exit of business	(2.2)		-		-			-			(2.2)
Other expense, net	(1.6)		(6.3)		-			-			(7.9)
Interest expense, net	(19.2)		-		-			(57.7)		(e)	(76.9)
Income from continuing operations before income taxes	84.2		22.7		(41.3)			(57.7)			7.9
Income tax expense (benefit)	16.0		4.6		(10.3)		(d)	(14.5)		(d)	(4.2)
Income from continuing operations	$	68.2	$	18.1	$	(31.0)		$	(43.2)		$	12.1
Earnings per share from continuing operations:
Basic	$	0.66									$	0.33
Diluted	0.65										0.32
Weighted average common shares outstanding:
Basic	34.5										34.5
Diluted	34.9										34.9

¹ Refer to Note 3, Reclassification Adjustments, for details of reclassification adjustments made to conform the Product Support  Business statement of income for the twelve months ended December 31, 2023 to the classification of AAR’s statement of income.

See accompanying Notes to unaudited pro forma condensed combined financial statements.

3

AAR CORP. and Subsidiaries

Pro Forma Condensed Combined Statement of Income

For the year ended May 31, 2023

(in millions, except share and per share amounts)

			Product		Transaction
			Support		Accounting			Financing
	AAR		Business		Adjustments			Adjustments			Pro Forma
	(Historical)		(Reclassified) 1		(Note 4)			(Note 4)			Combined
Sales	$	1,990.5	$	248.7	$	-		$	-		$	2,239.2
Cost of sales	1,620.4		190.0		5.5		(b), (c)	-			1,815.9
Gross profit	370.1		58.7		(5.5)			-			423.3
Provision for credit losses	2.6		-		-			-			2.6
Selling, general and administrative expenses	230.4		30.4		35.8		(c), (f)	-			296.6
Loss from joint ventures	(3.2)		(0.3)		-			-			(3.5)
Operating income	133.9		28.0		(41.3)			-			120.6
Losses related to sale and exit of business	(0.7)		-		-			-			(0.7)
Other expense, net	(0.8)		(5.7)		-			-			(6.5)
Interest expense, net	(11.2)		-		-			(57.7)		(e)	(68.9)
Income from continuing operations before income taxes	121.2		22.3		(41.3)			(57.7)			44.5
Income tax expense (benefit)	31.4		5.6		(10.3)		(d)	(14.5)		(d)	12.2
Income from continuing operations	$	89.8	$	16.7	$	(31.0)		$	(43.2)		$	32.3
Earnings per share from continuing operations:
Basic	$	2.55									$	0.90
Diluted	2.52										0.89
Weighted average common shares outstanding:
Basic	34.7										34.7
Diluted	35.1										35.1

¹ Refer to Note 3, Reclassification Adjustments, for details of reclassification adjustments made to conform the Product Support Business statement of income for the year ended March 31, 2023 to the classification of AAR’s statement of income.

See accompanying Notes to unaudited pro forma condensed combined financial statements.

4

AAR CORP. and Subsidiaries

Pro Forma Condensed Combined Balance Sheet

As of November 30, 2023

(in millions)

(unaudited)

			Product		Transaction
			Support		Accounting			Financing
	AAR		Business		Adjustments			Adjustments			Pro Forma
	(Historical)		(Reclassified) 1		(Note 4)			(Note 4)			Combined
ASSETS
Cash and cash equivalents	$	65.1	$	21.9	$	(746.9)	(a)	$	715.0	(e)	$	55.1
Restricted cash	10.4		-		-			-			10.4
Accounts receivable, net	246.4		43.8		-			-			290.2
Contract assets	99.3		17.6		-			-			116.9
Inventories, net	645.9		67.4		-			-			713.3
Rotable assets and equipment on or
available for short-term lease	55.1		19.5		-			-			74.6
Other current assets	72.2		2.9		-			-			75.1
Total current assets	1,194.4		173.1		(746.9)			715.0			1,335.6
Property, plant and equipment, net	132.6		26.2		20.9		(a), (b)	-			179.7
Goodwill	176.0		-		350.9		(a)	-			526.9
Intangible assets, net	61.5		-		209.7		(a), (c)	-			271.2
Rotable assets supporting long-term programs	177.4		-		-			-			177.4
Operating lease right-of-use assets, net	90.4		-		-			-			90.4
Other non-current assets	133.3		9.4		(4.9)		(d)	-			137.8
	$	1,965.6	$	208.7	$	(170.3)		$	715.0		$	2,719.0
LIABILITIES AND EQUITY
Accounts payable	$	209.7	$	22.5	$	-		$	-		$	232.2
Accrued and other liabilities	170.4		14.5		19.5		(f)	-			204.4
Total current liabilities	380.1		37.0		19.5			-			436.6
Long-term debt	275.0		-		-			715.0		(e)	990.0
Operating lease liabilities	73.2		-		-			-			73.2
Other liabilities	81.8		1.4		-			-			83.2
Total liabilities	810.1		38.4		19.5			715.0			1,583.0
Equity:
Common stock	45.3		-		-			-			45.3
Capital surplus	485.7		170.3		(170.3)		(a)	-			485.7
Retained earnings	933.8		-		(19.5)		(f)	-			914.3
Treasury stock	(300.8)		-		-			-			(300.8)
Accumulated other comprehensive loss	(8.5)		-		-			-			(8.5)
Total equity	1,155.5		170.3		(189.8)			-			1,136.0
	$	1,965.6	$	208.7	$	(170.3)		$	715.0		$	2,719.0

¹ Refer to Note 3, Reclassification Adjustments, for details of reclassification adjustments made to conform to the classification of AAR’s balance sheet.

See accompanying Notes to unaudited pro forma condensed combined financial statements.

5

Note 1 – Basis of Presentation

In May 2020, the SEC adopted Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” (the “Final Rule”), which was effective on January 1, 2021. The pro forma financial statements and related notes are presented in accordance with the Final Rule. AAR has elected to present management’s adjustments in addition to transaction accounting adjustments in the pro forma financial statements. Transaction accounting adjustments are included in the preceding pro forma condensed combined financial information tables, while management’s adjustments are included only in note 5 within these notes to unaudited pro forma combined financial information

Adjustments included in the “transaction accounting adjustments” column in the pro forma financial statements depict the accounting for the transaction required by GAAP. Transaction accounting adjustments reflect the application of required accounting principles to the transaction, applying the effects of the transaction to AAR’s historical financial information. Certain of the Product Support Business’s historical amounts have been reclassified to conform to AAR’s financial statement presentation, as discussed further in Note 3.

The pro forma financial statements should be read in conjunction with (1) our unaudited consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q for the six months ended November 30, 2023 filed with the SEC on December 21 2023; (2) our audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K for the year ended May 31, 2023 as filed with the SEC on July 18, 2023; and (3) the Product Support Business’s historical audited combined financial statements as of and for the year ended March 31, 2023 and historical unaudited combined financial statements as of and for the nine months ended December 31, 2023 and accompanying notes, which are incorporated by reference as Exhibit 99.2 and Exhibit 99.4, respectively, to this Current Report on Form 8-K.

In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, the transaction will be accounted for using the acquisition method of accounting with AAR as the acquirer and the Product Support Business as the acquiree. Certain valuations and assessments, including valuations of property and equipment, identifiable intangible assets, assumed liabilities, and the associated income tax impacts are still in process. The estimated fair values used in the accompanying pro forma financial statements are preliminary and represent our current best estimate of fair value as of the date of filing but are subject to revision as valuations and assumptions are finalized. Changes in the fair values of the assets and liabilities between the preliminary estimates and final purchase accounting could have a material impact on the accompanying pro forma financial statements. In addition, the notes herein contain certain assumptions that could have a material impact on the accompanying pro forma financial statements.

Note 2 – Accounting Policies

We have performed a preliminary review of the Product Support Business’ accounting policies to determine whether any adjustments were necessary to ensure comparability in the unaudited pro forma condensed combined financial information. Currently, AAR is not aware of any material differences between the accounting policies of AAR and the Product Support Business that would continue to exist subsequent to the application of acquisition accounting other than certain reclassifications, described in Note 3, necessary to conform the Product Support Business’s historical financial statements to AAR’s accounting policies and financial statement presentation in the pro forma financial statements.

The accounting policies used in the preparation of the pro forma financial statements are those set out in AAR’s consolidated financial statements as of and for the year ended May 31, 2023. Following the closing of the transaction, we will finalize our review of the Product Support Business’s accounting policies, and we may identify differences that, when adjusted or reclassified, could have a material impact on the pro forma financial statements.

6

Note 3 –Reclassification Adjustments

Reclassification adjustments were made to conform the Product Support Business’s historical financial statements to AAR’s presentation within the pro forma financial statements which are included below.

As of November 30, 2023

	Product						Product
	Support						Support
	Business			Reclassification			Business
	(Historical)			Adjustments			(Reclassified)
Cash and cash equivalents	$	21.9	$		-	$		21.9
Trade and other receivables		43.8			(43.8)			-
Accounts receivable, net		-			43.8			43.8
Contract assets		17.6			-			17.6
Inventories, net		86.9			(19.5)			67.4
Rotable assets and equipment on or available for short-term lease		-			19.5			19.5
Prepaid expenses and other current assets		2.9			(2.9)			-
Other current assets		-			2.9			2.9
Total current assets		173.1			-			173.1
Property and equipment, net		26.2			(26.2)			-
Property, plant and equipment, net		-			26.2			26.2
Deferred tax assets		4.9			(4.9)			-
Other, net		4.5			(4.5)			-
Other non-current assets		-			9.4			9.4
Total assets	$	208.7		$	-		$	208.7
Accounts payable		22.5			-			22.5
Contract liabilities		0.1			(0.1)			-
Finance lease obligations		0.2			(0.2)			-
Accrued expenses		14.2			(14.2)			-
Accrued and other liabilities		-			14.5			14.5
Total current liabilities		37.0			-			37.0
Noncurrent finance lease obligations		0.2			(0.2)			-
Other noncurrent liabilities		1.2			(1.2)			-
Other liabilities		-			1.4			1.4
Total non-current liabilities		1.4			-			1.4
Net parent investment		170.3			(170.3)			-
Capital surplus		-			170.3			170.3
Total liabilities and net parent investment		208.7			-			208.7

7

Year ended May 31, 2023

	Product				Product
	Support				Support
	Business		Reclassification		Business
	(Historical)		Adjustments		(Reclassified)
Net sales	$	248.7	$	(248.7)	$	-
Sales	-		248.7		248.7
Cost of sales	186.0		4.0		190.0
Gross profit	62.7		(4.0)		58.7
Selling, general and administrative	30.4		-		30.4
Depreciation	3.3		(3.3)		-
Loss from joint ventures	-		(0.3)		(0.3)
Operating income	29.0		(1.0)		28.0
Other expense, net	(6.4)		0.7		(5.7)
Income before taxes	22.6		(0.3)		22.3
Income tax expense	5.6		-		5.6
Equity method investment losses, net of tax	(0.3)		0.3		-
Income from continuing operations	$	16.7	$	-	$	16.7

Six months ended November 30, 2023

	Product				Product
	Support				Support
	Business		Reclassification		Business
	(Historical)		Adjustments		(Reclassified)
Net sales	$	135.1	$	(135.1)	$	-
Sales	-		135.1		135.1
Cost of sales	102.0		3.2		105.2
Gross profit	33.1		(3.2)		29.9
Selling, general and administrative	16.1		-		16.1
Depreciation	2.9		(2.9)		-
Loss from joint ventures	-		(0.1)		(0.1)
Operating income	14.1		(0.4)		13.7
Other expense, net	(3.6)		0.3		(3.3)
Income before taxes	10.5		(0.1)		10.4
Income tax expense	1.8		-		1.8
Equity method investment losses, net of tax	(0.1)		0.1		-
Income from continuing operations	$	8.6	$	-	$	8.6

8

Twelve months ended November 30, 2023

	Product				Product
	Support				Support
	Business		Reclassification		Business
	(Historical)		Adjustments		(Reclassified)
Net sales	$	266.5	$	(266.5)	$	-
Sales	-		266.5		266.5
Cost of sales	199.7		4.8		204.5
Gross profit	66.8		(4.8)		62.0
Selling, general and administrative	32.9		-		32.9
Depreciation	4.3		(4.3)		-
Loss from joint ventures	-		(0.1)		(0.1)
Operating income	29.6		(0.6)		29.0
Other expense, net	(6.8)		0.5		(6.3)
Income before taxes	22.8		(0.1)		22.7
Income tax expense	4.6		-		4.6
Equity method investment losses, net of tax	(0.1)		0.1		-
Income from continuing operations	$	18.1	$	-	$	18.1

Note 4 – Transaction Accounting Adjustments

(a) Purchase Price Consideration and Allocation

The transaction is on a cash-free, debt-free basis with a purchase price of $725.0 million subject to customary adjustments for cash, indebtedness and working capital. We have not estimated the potential impact for indebtedness or working capital in the pro forma financial statements.

The pro forma balance sheet at November 30, 2023 is adjusted for the preliminary estimates of fair value of the assets acquired and liabilities assumed as a result of the transaction. The preliminary purchase accounting was based on limited valuation procedures performed in order to identify value allocations of the acquisition consideration to assets acquired and liabilities assumed, including intangible assets and property and equipment. The preliminary estimates of fair value and estimated useful lives will likely differ from the final amount determined after completing a detailed valuation analysis. As a result, the financial estimates of fair value and estimated useful lives after completing such analysis may be materially different from the preliminary estimates presented herein.

The following table summarizes the preliminary fair value of the identifiable net assets acquired and liabilities assumed:

Cash and cash equivalents	$	21.9
Accounts receivable		43.8
Contract assets		17.6
Inventories		67.4
Rotable assets and equipment on or available for short-term lease		19.5
Property, plant and equipment		47.1
Goodwill		350.9
Intangible assets		209.7
Other assets		7.4
Accounts payable		(22.5)
Accrued and other liabilities		(15.9)
		746.9
Less: cash acquired		(21.9)
Estimated total acquisition consideration	$	725.0

9

Goodwill is expected to be tax deductible and is primarily attributable to the benefits we expect to derive from economies of scale across our combined repair capabilities, integrating our existing repair volumes within the Product Support business’s facilities and proprietary capabilities and intangible assets that do not qualify for separate recognition, such as the Product Support Business’s assembled workforce and facility footprint. The final purchase price allocation will be determined after the closing of the transaction and will be completed within the measurement period, which is up to one year from the closing date. The final valuation of assets acquired and liabilities assumed may be materially different than the estimated values assumed in the pro forma balance sheet at November 30, 2023.

(b) Property, plant and equipment, net

The pro forma financial statements reflect preliminary estimates of the fair values of property, plant and equipment acquired by AAR. The estimated fair values are based on available information as of the date of this filing.

We have estimated an increase of $20.9 million in the carrying value of Product Support Business plant, property and equipment to its estimated acquisition-date fair value which will be amortized using the straight-line method.

For the purpose of determining pro forma depreciation expense, the total estimated fair value of property and equipment was assumed to have a weighted-average useful life of approximately 15.6 years. The pro forma depreciation expense adjustments were $1.0 million, $2.0 million and $2.0 million for the six months ended November 30, 2023, twelve months ended November 30, 2023, and the year ended May 31, 2023, respectively.

(c) Intangible assets

The pro forma financial statements reflect preliminary estimates of the fair values of identifiable intangible assets acquired by AAR. The estimated fair values are based on available information as of the date of this filing.

The following table summarizes the estimated fair values of the identifiable intangible assets acquired and the estimated useful lives, which will be amortized using the straight-line method:

				Amortization Expense
				Six Months		Twelve Months
			Useful Life	Ended		Ended		Year Ended
	Fair Value		in Years	November 30, 2023		November 30, 2023		May 31, 2023
Customer relationships	$	157.3	10	$	7.9	$	15.7	$	15.7
Developed technology	52.4		15	1.7		3.5		3.5
	$	209.7		$	9.6	$	19.2	$	19.2

The weighted-average estimated useful life for acquired intangible assets is 11.3 years. Amortization expense for the customer relationship intangible asset is recognized within Selling, general and administrative expenses and amortization expense for the developed technology intangible asset is recognized within Cost of sales.

These preliminary estimates of fair value and estimated useful lives may differ once the purchase price allocation is finalized during the measurement period following the closing of the transaction. A 10% change in the fair value of intangible assets would increase or decrease amortization expense on the pro forma statements of income (loss) by approximately $0.8 million for the six months ended November 30, 2023 and $1.6 million for the twelve months ended November 30, 2023 and the year ended May 31, 2023.

10

(d) Taxes

Income tax expense (benefit) in the pro forma statements of income (loss) was recognized at 25% which is based on a blended statutory U.S. federal and state tax rate of the respective jurisdictions in which the combined entity operates. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the transaction.

We did not record transaction accounting adjustments related to deferred tax assets or liabilities from the preliminary purchase price allocation on the pro forma balance sheet at November 30, 2023 other than the elimination of the historical deferred tax asset recognized on the Product Support Business balance sheet. We estimated no deferred taxes would be recognized on any potential book to tax basis differences as a result of the expected deductibility on the fair value adjustments to plant, property and equipment, intangible assets, and other adjustments based on the structure of the transaction. As additional information is obtained during the purchase price allocation process, the recognition of deferred tax assets and/or liabilities could significantly impact goodwill or income tax expense following the acquisition date.

(e) Debt Financing

We have assumed an issuance of $500 million of fixed-rate senior notes with an estimated five-year term and a $125 million increase in our revolving credit facility as part of the financing for the transaction including an estimated draw of $230.8 million from the revolving credit facility. The pro forma balance sheet at November 30, 2023 is adjusted for $715.0 million of assumed proceeds from the debt financing, net of $15.8 million of estimated underwriting fees and other offering expenses. The final debt proceeds and related interest expense may be materially different from the estimated values assumed in the pro forma financial statements.

The pro forma statements of income (loss) include $31.6 million, $57.7 million, and $57.7 million of increases in interest expense for the six months ended November 30, 2023, twelve months ended November 30, 2023, and the year ended May 31, 2023, respectively, calculated using an assumed market rate of 7% for the new notes and no original issue discount. These increases are inclusive of amortization expense on the aforementioned estimated underwriting fees and other offering expenses. To the extent the notes are issued with an original issue discount, the amount of drawings on the revolving credit facility and/or the amount of cash on hand utilized to consummate the transaction will increase by a corresponding amount.

A 1/8% change in the interest rates would increase or decrease interest expense on the pro forma statements of income (loss) by approximately $0.5 million for the six months ended November 30, 2023 and $0.9 million for the twelve months ended November 30, 2023 and the year ended May 31, 2023. The interest rates assumed for the pro forma financial statements could be significantly different than actual interest rates on any new debt issued to finance the transaction based on market rates and other factors at that time.

(f) Transaction Costs, including Retention Agreements

We estimate $19.5 million of non-recurring legal advisory, financial advisory, and accounting costs will be incurred by AAR to complete the transaction. These transaction costs are included in Selling, general and administrative expenses on the pro forma statements of income (loss) for the six months ended November 30, 2023, twelve months ended November 30, 2023, and the year ended May 31, 2023 and in accrued and other liabilities on the pro forma balance sheet at November 30, 2023.

We have provided retention agreements to certain executives and employees of the Product Support Business. The pro forma expense adjustments were $0.3 million, $0.6 million and $0.6 million for the six months ended November 30, 2023, twelve months ended November 30, 2023, and the year ended May 31, 2023, respectively.

11

Note 5 – Management’s Adjustments

Management expects that, following completion of the transaction, the combined company would have realized certain costs savings as compared to the historical combined costs of AAR and the Product Support Business operating independently. The following table summarizes the estimated cost savings from the combined entities if those cost savings were included in pro forma income from continuing operations, net of tax, as of June 1, 2022:

The synergies and efficiencies from our facility repositioning actions are expected to be achieved within 18-24 months. The allocated Triumph corporate costs represent general and administrative costs unrelated to the Product Support Business which will no longer apply post-acquisition. The pro forma financial information reflects all management’s adjustments that are, in the opinion of management, necessary to a fair statement of the pro forma financial information presented.

	Six Months Ended		Twelve Months Ended		Year Ended
	November 30, 2023		November 30, 2023		May 31, 2023
Pro forma income (loss) from continuing operations	$	(14.7)	$	12.1	$	32.3
Management's adjustments:
Elimination of allocated Triumph corporate costs	6.8		14.7		12.4
Cost savings from facility repositioning actions	5.1		10.1		10.1
Pretax impact of management's adjustments	11.9		24.8		22.5
Impact of management's adjustments, net of tax	8.9		18.5		16.8
Pro forma income from continuing operations after management's adjustments	$	(5.8)	$	30.6	$	49.1
Pro forma earnings (loss) per share from continuing operations:
Basic	$	(0.42)	$	0.33	$	0.90
Diluted	$	(0.42)	$	0.32	$	0.89
Pro forma earnings (loss) per share from continuing operations after management's adjustments:
Basic	$	(0.17)	$	0.87	$	1.39
Diluted	$	(0.17)	$	0.86	$	1.37

12

EX-99.6

Exhibit 99.6

1 © 2024 AAR CORP. All rights reserved worldwide. Confidential and proprietary document. Non - GAAP Financial Measures This presentation includes financial results for (i) the Company with respect to adjusted EBITDA, adjusted revenue, adjusted EBI TDA margin, adjusted operating income and adjusted operating margin, and (ii) Triumph Group, Inc.’s Product Support Business with re spect to adjusted EBITDA, adjusted operating income and adjusted operating margin, which are “non - GAAP financial measures” as defined in Regulation G of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We believe these non - GAAP financial measur es are relevant and useful for investors as they illustrate our actual operating performance unaffected by the impact of certain it ems. When reviewed in conjunction with our and Triumph Group, Inc.'s Product Support business’s GAAP results and the accompanying reconciliations, we believe these non - GAAP financial measures provide additional information that is useful to gain an understan ding of the factors and trends affecting our and Triumph Group, Inc.'s Product Support Business’s and provide a means by which to com par e our operating performance against that of other companies in the industries we compete. These non - GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAA P. Adjusted EBITDA is income from continuing operations before interest income (expense), other income (expense), income taxes, depreciat ion and amortization, stock - based compensation and other items of an unusual nature including but not limited to business divestitures, workforce actions, subsidies and costs, impairment and exit charges, facility consolidation and repositioning costs, investigation and rem ediation compliance costs, significant income tax adjustments, gains on asset sales, purchase accounting and legal settlements, strate gic project costs and significant customer events such as early terminations, contract restructurings, forward loss provisions, bankruptc ies and credit charges. Adjusted operating income is adjusted EBITDA gross of depreciation and amortization and stock - based compensation. Adjus ted sales is sales before contract termination or restructuring and loss provision, net. Pursuant to the requirements of Regulati on G of the Exchange Act, we provide tables that reconcile the above - mentioned non - GAAP financial measures to the most directly comparable GAAP financial measures in the following slides.

2 © 2024 AAR CORP. All rights reserved worldwide. Confidential and proprietary document. ($ in millions) LTM FY22 FY23 Q2 FY24 PF Q2 FY24 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Sales $1,820.0 $1,990.5 $2,169.5 $2,436.0 $455.1 $436.6 $452.2 $476.1 $446.3 $469.8 $521.1 $553.3 $549.7 $545.4 Contract termination/restructuring & loss provision, net (2.9) 0.1 - - 1.0 (2.5) (0.2) (1.2) 0.1 - - - - - Adjusted Sales $1,817.1 $1,990.6 $2,169.5 $2,436.0 $456.1 $434.1 $452.0 $474.9 $446.4 $469.8 $521.1 $553.3 $549.7 $545.4 Adjusted EBITDA $156.4 $189.8 $210.6 $270.1 $37.0 $37.0 $39.3 $43.1 $41.8 $44.8 $50.2 $53.0 $52.1 $55.3 Adjusted EBITDA Margin 8.6% 9.5% 9.7% 11.1% 8.1% 8.5% 8.7% 9.1% 9.4% 9.5% 9.6% 9.6% 9.5% 10.1% ($ in millions) LTM FY22 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 PF Q2 FY24 Net Income (loss) $78.7 $90.2 $11.5 $20.8 $22.5 $23.9 $22.7 $22.5 $21.8 $23.2 ($0.6) $23.8 $89.9 $91.6 $90.9 $90.2 $66.9 $68.2 $12.1 (Income) loss from discontinued operations (0.2) (0.4) (0.3) - 0.1 - (0.4) - - - - - (0.3) (0.3) (0.4) (0.4) - - - Income tax expense (benefit) 26.6 31.4 3.9 7.9 8.2 6.6 8.1 8.3 8.0 7.0 (6.9) 7.9 30.8 31.2 31.0 31.4 16.4 16.0 (4.2) Other (income) expense, net (2.2) 0.8 (0.7) (0.3) (1.1) (0.1) (0.2) (0.5) 0.3 1.2 - 0.1 (1.7) (1.9) (0.5) 0.8 1.0 1.6 7.9 Interest expense, net 2.3 11.2 0.7 0.4 0.6 0.6 1.0 2.0 3.5 4.7 5.4 5.6 2.6 4.2 7.1 11.2 15.6 19.2 76.9 Depreciation and intangible amortization 33.1 27.9 8.9 8.9 7.7 7.6 6.8 6.5 6.9 7.7 8.4 8.7 31.0 28.6 27.8 27.9 29.5 31.7 57.2 Investigation and remediation compliance costs 3.7 4.7 0.2 0.8 1.6 1.1 0.8 1.1 1.2 1.6 1.1 2.6 4.3 4.6 4.2 4.7 5.0 6.5 6.5 Pension settlement charge - - - - - - - - - - 26.7 - - - - - 26.7 26.7 26.7 Losses related to sale and exit of business 1.7 0.7 - 1.3 - 0.4 - 0.1 0.4 0.2 0.7 0.9 1.7 0.5 0.9 0.7 1.4 2.2 2.2 Russian bankruptcy court judgment - 1.8 - - - - - - 1.8 - 11.2 - - - 1.8 1.8 13.0 13.0 13.0 Asset impairment and exit charges 3.5 - 2.3 0.6 0.5 0.1 - - - - - - 1.2 0.6 0.1 - - - 1.4 Acquisition-related expenses - 6.2 - - - - - - 1.9 4.3 1.8 2.1 - - 1.9 6.2 8.0 10.1 30.2 Contract termination/restructuring & loss provision, net 0.9 2.0 6.7 (4.4) (1.1) (0.3) (0.3) 2.3 - - - - (6.1) 0.6 1.7 2.0 2.3 - - Facility consolidation and repositioning costs 0.2 - 0.1 0.1 - 0.0 - - - - - - 0.1 - - - - - - Severance and furlough costs 2.0 0.1 0.9 0.8 0.2 0.1 0.1 - - - - - 1.2 0.4 0.2 0.1 - - - Customer bankruptcy and credit charges 1.0 1.5 - 1.0 - 0.0 - (0.3) 1.8 - - - 1.0 (0.3) 1.5 1.5 1.5 1.8 1.8 Government workforce subsidies (4.9) (1.6) (0.3) (2.5) (1.0) (1.1) (0.7) - (0.9) - - - (5.3) (2.8) (2.7) (1.6) (0.9) (0.9) (0.9) Costs related to strategic projects 1.8 (0.2) - - - 1.8 (0.2) - - - - - 1.6 1.6 1.6 (0.2) - - - Stock-based compensation 8.2 13.5 3.1 1.6 1.1 2.4 4.1 2.8 3.5 3.1 4.3 3.6 9.2 10.4 12.8 13.5 13.7 14.5 14.5 Allocated Triumph corporate costs unrelated to the Product Support Business - - - - - - - - - - - - - - - - - - 14.7 Anticipated run-rate synergies - - - - - - - - - - - - - - - - - - 10.1 Adjusted EBITDA $156.4 $189.8 $37.0 $37.0 $39.3 $43.1 $41.8 $44.8 $50.2 $53.0 $52.1 $55.3 $161.2 $169.0 $179.9 $189.8 $200.1 $210.6 $270.1 AAR Reconciliation of GAAP to Non - GAAP Measures Adjusted EBITDA 1 Adjusted Sales and Adjusted EBITDA Margin 2 1 Adjusted EBITDA defined as Net Income + Loss From Discontinued Operations + Income Tax Expense + Other Expense, net + Interes t E xpense + Depreciation and Intangible Amortization + Investigation and Remediation Compliance Costs + Pension Settlement Charg e + Losses Related to Sale and Exit of Business + Russian Bankruptcy Court Judgment + Asset Impairment and Exit Charges + Acquisition - Related Expenses + Contract Termination/Restructuring & Loss Provision, net + Facility Consolidation and Repositioning Costs + Severance and F ur lough Costs + Customer Bankruptcy and Credit Charges + Government Workforce Subsidies + Costs related to Strategic Projects + Stock - Based Compensation + Allocated Triumph Corporate Costs Unrelated to the Product Support Business 2 Adjusted Sales defined as Sales before Contract Termination/Restructuring & Loss Provision, net; Adjusted EBITDA Margin defined as Adjusted EBITDA / Adjusted Sales

3 © 2024 AAR CORP. All rights reserved worldwide. Confidential and proprietary document. AAR Reconciliation of GAAP to Non - GAAP Measures (Cont’d) Adjusted Operating Income and Adjusted Operating Margin 1 ($ in millions) LTM FY22 FY23 PF Q2 FY24 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Operating income $106.9 $133.9 $162.9 $15.1 $30.1 $30.3 $31.4 $31.2 $32.4 $34.0 $36.3 $25.3 $38.3 Investigation and remediation costs 3.7 4.7 6.5 0.2 0.8 1.6 1.1 0.8 1.1 1.2 1.6 1.1 2.6 Acquisition and amortization costs - 7.0 12.9 - - - - - - 1.9 5.1 2.8 3.1 Customer bankruptcy and credit charges 1.0 1.5 1.8 - 1.0 - - - (0.3) 1.8 - - - Government subsidies (4.9) (1.6) (0.9) (0.3) (2.5) (1.0) (1.1) (0.7) - (0.9) - - - Facility consolidation and repositioning costs 0.2 - - 0.1 0.1 - - - - - - - - Russian bankruptcy court judgement - 1.8 13.0 - - - - - - 1.8 - 11.2 - Contract termination/restructuring & loss provision, net 0.9 2.0 - 6.7 (4.4) (1.1) (0.3) (0.3) 2.3 - - - - Asset impairment and exit charges 3.5 - 1.4 2.3 0.6 0.5 0.1 - - - - - - Severance and furlough costs 2.0 0.1 - 0.9 0.8 0.2 0.1 0.1 - - - - - Costs related to strategic projects 1.8 (0.2) - - - - 1.8 (0.2) - - - - - Allocated Triumph corporate costs unrelated to the Product Support Business - - 14.7 - - - - - - - - - - Anticipated run-rate synergies - - 10.1 - - - - - - - - - - Adjusted operating income $115.1 $149.2 $222.4 $25.0 $26.5 $30.5 $33.1 $30.9 $35.5 $39.8 $43.0 $40.4 $44.0 Adjusted operating margin 6.3% 7.5% 9.1% 5.5% 6.1% 6.7% 7.0% 6.9% 7.6% 7.6% 7.8% 7.3% 8.1% 1 Adjusted Operating Income defined as Operating Income + Investigation and Remediation Costs + Acquisition and Amortization Co sts + Customer Bankruptcy and Credit Charges – Government Subsidies + Facility Consolidation and Repositioning Costs + Russian Bankruptcy Court Judgement + Contract Termination/Restructuring & Loss Provision , net + Asset Impairment and Exit Charges + Severance and Furlough Costs + Costs Related to Strategic Projects + Allocated Triumph Corporate Costs Unrelated to the Product Support Business + Anticipated Run - Rate Synergies ; Adjusted Operating Margin defined as Adjusted Operating Income / Adjusted Sales

4 © 2024 AAR CORP. All rights reserved worldwide. Confidential and proprietary document. ($ in millions) LTM FY22 FY23 Q3'24 Operating income 29.1 28.0 29.6 Investigation and remediation costs - - - Acquisition and amortization costs - - - Customer bankruptcy and credit charges - - - Government subsidies - - - Facility consolidation and repositioning costs - - - Russian bankruptcy court judgement - - - Contract termination/restructuring & loss provision, net - - - Asset impairment and exit charges - 1.6 1.4 Severance and furlough costs - - - Costs related to strategic projects - - - Allocated Triumph corporate costs unrelated to the Product Support Business - 12.4 14.7 Intercompany royalty expense 4.9 - - Adjusted operating income $34.0 $42.0 $45.7 Adjusted operating margin 17.2% 16.9% 17.1% ($ in millions) LTM FY22 FY23 Q3'24 Net Income (loss) ($9.5) $16.7 $18.1 (Income) loss from discontinued operations - - - Income tax expense (benefit) 7.3 5.6 4.6 Other (income) expense, net 36.4 5.7 6.8 Interest expense, net (10.2) - - Depreciation and intangible amortization 4.1 3.3 4.3 Investigation and remediation compliance costs - - - Pension settlement charge - - - Losses related to sale and exit of business - - - Russian bankruptcy court judgment - - - Asset impairment and exit charges - 1.6 1.4 Acquisition-related expenses - - - Contract termination/restructuring & loss provision, net - - - Facility consolidation and repositioning costs - - - Severance and furlough costs - - - Customer bankruptcy and credit charges - - - Government workforce subsidies - - - Costs related to strategic projects - - - Stock-based compensation - - - Allocated Triumph corporate costs unrelated to the Product Support Business - 12.4 14.7 Intercompany royalty expense 4.9 - - Adjusted EBITDA $33.0 $45.3 $49.9 Triumph Reconciliation of GAAP to Non - GAAP Measures Adjusted EBITDA 1 Adjusted Operating Income and Adjusted Operating Margin 2 Note: FYE as of March 31 for Triumph Product Support business. LTM Q3’24 as of December 31, 2023. FY22 figures derived from Triumph Gr oup Inc. FY23 and LTM Q3’24 figures derived from financial audit | 1 Adjusted EBITDA defined as Net Income + Income Tax Expense + Other Expense, net + Interest expense, net + Depreciation and Intangible Amortization + Asset Impairment and Exit Charges + Allocat ed Triumph Corporate Costs Unrelated to the Product Support Business + Intercompany Royalty Expense 2 Adjusted Operating Income defined as Operating Income + Asset Impairment and Exit Charges + Allocated Triumph Corporate Costs Unrelated to the Product Support Business + Intercompany Royalty Expense ; Adjusted Operating Margin defined as Adjusted Operating Income / Adjusted Sales

EX-99.7

Exhibit 99.7

AAR announces update to financing of Triumph Product Support acquisition

· Announces proposed offering of $500 million of senior notes due 2029

· The acquisition will be financed with the proceeds from the proposed notes offering and use of the expanded revolver

Wood Dale, Illinois, February 14, 2024 – AAR CORP. (“AAR” or the “Company”) (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs and OEMs, announced today that AAR Escrow Issuer, LLC, a wholly owned, unrestricted subsidiary of the Company (the “Escrow Issuer”), intends to offer, subject to market conditions and other factors, $500 million aggregate principal amount of senior notes due 2029 (the “Notes”).

The Company intends to use the net proceeds of the proposed senior notes offering to fund a portion of the purchase price for its pending acquisition of Triumph Group’s (NYSE: TGI) Product Support business (the “Triumph Product Support Acquisition”).

Substantially concurrently with the consummation of the Triumph Product Support Acquisition, the Company intends to amend its revolving credit facility (the “Revolving Credit Facility”) to, among other things, increase the aggregate lending commitments thereunder from $620 million to at least $795 million. The Company intends to fund the balance of the acquisition consideration with cash on hand and borrowings under the Revolving Credit Facility, as amended.

If the proposed senior notes offering closes prior to the consummation of the Triumph Product Support Acquisition, (1) the gross proceeds from the offering will be deposited into an escrow account for the benefit of the holders of the Notes until the date on which certain escrow conditions are satisfied, including the closing of the Triumph Product Support Acquisition, and (2) the Notes will be subject to a special mandatory redemption at a price equal to 100% of the initial issue price of the Notes, plus accrued and unpaid interest, if any, from the issue date of the Notes, to, but excluding, the date of the special mandatory redemption. If the proposed senior notes offering closes substantially concurrently with the consummation of the Triumph Product Support Acquisition, the Notes will not be subject to the aforementioned procedures.

Prior to the consummation of the Triumph Product Support Acquisition, the Notes will be the sole obligation of the Escrow Issuer. Substantially concurrently with the consummation of the Triumph Product Support Acquisition, the Escrow Issuer will merge with and into the Company, with the Company continuing as the surviving entity. The Company will then assume the obligations of the Escrow Issuer under the Notes and the indenture governing the Notes, and the Notes will be fully and unconditionally guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Revolving Credit Facility.

The Notes and the related guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other

jurisdiction. The Notes and the related guarantees may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration or pursuant to an exemption from, or in a transaction not subject to, registration. The Notes and related guarantees will be offered and sold only to persons reasonably believed to be “qualified institutional buyers” in accordance with Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

This press release is neither an offer to sell, nor the solicitation of an offer to buy, the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.

About AAR

AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through four operating segments: Parts Supply, Repair & Engineering, Integrated Solutions and Expeditionary Services.

Forward-Looking Statements

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and which reflect management’s expectations about future conditions, including but not limited to the pending Triumph Product Support Acquisition. Forward-looking statements often address our expected future operating and financial performance and financial condition, or sustainability targets, goals, commitments and other business plans, and often may also be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or similar expressions and the negatives of those terms.

Factors that may cause actual results to differ materially from current expectations include, among others, risks associated with the Company’s ability to consummate the Triumph Product Support Acquisition and the timing of the Triumph Product Support Acquisition; risks and uncertainties related to general market conditions and the completion of the proposed senior notes offering on the anticipated terms, or at all, and the Company’s entry into the proposed amendment to the Revolving Credit Facility; the Company’s ability to successfully integrate the acquired business; the Company’s ability to realize the anticipated benefits and synergies of the Triumph Product Support Acquisition as rapidly or to the extent anticipated; risks related to the Company’s ability to obtain any contemplated financing on favorable terms, or at all; the amount of costs, fees and expenses related to the Triumph Product Support Acquisition; and other factors that could affect the Company’s business. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. For a discussion of these and other risks and uncertainties, refer to “Risk Factors” in the Company’s most

recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as well as the Company's other subsequent filings with the Securities and Exchange Commission. 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 and the anticipated benefits of the Triumph Product Support Acquisition may not be realized. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

Contact:

Dylan Wolin

Vice President, Strategic & Corporate Development and Treasurer

+1-630-227-2017

dylan.wolin@aarcorp.com

XML

Cover	Feb. 14, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 14, 2024
Entity File Number	1-6263
Entity Registrant Name	AAR CORP.
Entity Central Index Key	0000001750
Entity Tax Identification Number	36-2334820
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	One AAR Place
Entity Address, Address Line Two	1100 N. Wood Dale Road
Entity Address, City or Town	Wood Dale
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60191
City Area Code	630
Local Phone Number	227-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member] | NYSE CHICAGO, INC. [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	AIR
Security Exchange Name	CHX
Common Stock [Member] | NEW YORK STOCK EXCHANGE, INC. [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	AIR
Security Exchange Name	NYSE