AIR 10-K & 10-Q changes, risk factors and insider trading

Our sales to commercial customers, including major airlines and related OEM suppliers, were $1,976.1$2,384.1 million (71.1%72.1% of consolidated sales) in fiscal 2025.2026. As a provider of products and services to the commercial aviation industry, we are greatly affected by the overall economic conditions and other trends that affect our customers in that industry, including any decrease in outsourcing by aircraft operators or projected market growth that may not materialize or be sustainable. The commercial aviation industry is historically cyclical and has been negatively affected in the past, and could be negatively affected in future periods, by geopolitical events, ongoing conflicts and wars (including the ongoing Russia-Ukraine conflict and Middle East conflicts), trade wars, the imposition or increase in tariffs or retaliatory countermeasures or changes in trade policies, terrorism, weather-related events, natural disasters, pandemics, disruption to fuel and oil production and supply shortages, high fuel and oil prices, other supply chain disruptions, labor issues and strikes (such as the union work stoppage at Boeing), environmental concerns (including climate change), lack of capital, cost inflation, high interest rates, and weak economic conditions.conditions, among other things.

A reduction in the operating fleet or flight activity of aircraft both in the U.S. and abroad in the past has resulted in, and may again result in, reduced demand for parts support and maintenance activities for the type of aircraft affected, which decreases our operating income. A deteriorating airline environment may also result in our inability to fully collect outstanding accounts receivable, which we experienced during the height of the pandemic in 2020 and 2021.

In addition, anrecent increaseincreases in energy costs and the price of fuel to the airlines couldresulting resultfrom conflicts in the Middle East have been placing additional pressure on the operating costs of airlines, whowhich compriseare our largest customers. The market for jet fuel is inherently volatile and is subject to, among other things, changes in government policy on jet fuel production, fluctuations in the global supply of crude oil, disruptions in oil production or delivery caused by hostility in oil-producing areas, or potential legislation or strategic initiatives to address climate change by reducing greenhouse gas emissions, creating carbon taxes, or implementing or otherwise participating in cap and trade programs. Airlines are sometimes unable to pass on increases in fuel prices to customers by increasing fares due to the competitive nature of the airline industry, and this compounds the pressure on operating costs, and in turn, the airlines’ ability to do business with us.

In addition, our business depends on maintaining a sufficient supply of various products to meet our customers’ demands. If we were to lose a key supplier, or were unable to obtain the same levels of deliveries from these suppliers and were unable to supplement those purchases with products obtained from other suppliers, it could have a material adverse effect on our business. Additionally, our key suppliers could also increase the pricing of their products, which would negatively affect our operating results if we were not able to pass these price increases through to our customers. The supply chains for our business could also be disrupted by natural disasters, extreme weather events, pandemics, or other public health threats, governmental actions, and legislative or regulatory changes. For example, during the pandemic, our results of operationoperations were materially and adversely impacted due to a steep decline in the numbersnumber of aircraft flying.

The effect of the current U.S. federal administration’s decisions on trade licensing, such as the denial of or inaction regarding export license applications, could have a material impact on the Company, particularly our distribution and government services businesses. For example, there have been two instances in the current U.S. federal administration where license applications have been placed on hold by the U.S. Department of Commerce.Commerce (the “DoC”). In addition, in May 2025, the Secretary of Commercethe DoC initiated an investigation to determine the effects on the national security of imports of commercial aircraft and jet engines, and parts for commercial aircraft and jet engines under Section 232 of the Trade Expansion Act of 1962, as amended. The outcome of this investigation is uncertain, but it could have a material impact on the Company.

Our business, financial condition, results of operations, and growth rates have been and may continue to be adversely affected by these and other events that impact the aviation industry, including those mentioned elsewhere in this reportAnnual Report on Form 10-K and the following:

In today’s climate of heightened media scrutiny, any regulatory penalties or safety incidents can escalate quickly, causing irreparable harm not just to the Company, but potentially affecting individuals within the organization as well. Maintaining rigorous compliance and safety standards is paramount to mitigate these risks and maintainingmaintain the continued trust and confidence of our stakeholders, clients, and regulatory bodies. If we fail to maintain such standards, our reputation, business, financial results, financial condition and stock price may be adversely affected.

Our sales to branches, agencies and departments of the U.S. government and theirits contractors were $787.8 million (23.8% of consolidated sales) in fiscal 2026 compared to $687.6 million (24.7% of consolidated sales) in fiscal 2025 compared to $576.1 million (24.8% of consolidated sales) in fiscal 2024 (See Note 1715 of Notes to Consolidated Financial Statements). The majority of our U.S. government sales is for products and services supporting DoDDoW aircraft sustainment, mobility systems, and the DoS flight operations and are,is, therefore, subject to changes in defense and other governmental agency funding and spending. Our contracts with the U.S. government and theirits contractors are typically agreements to provide products and services at a fixed price or in some cases, under cost reimbursable terms. These contracts typically have a base term of one year, and frequently are subject to extension for one or more additional periods of one year at the option of the government customer.

Sales to agencies of the U.S. government and theirits contractors are subject to a number of factors, including the level of troop and personnel deployment worldwide, competitive bidding, U.S. government funding, diplomatic priorities, requirements generated by world events, and budgetary constraints. For example, in conjunction with the U.S. exit from Afghanistan in fiscal 2022, we concluded our activities in Afghanistan under our DoS and DoDDoW contracts. U.S. government programs are subject to annual congressional budget authorization and appropriation processes. In recent years, U.S. government appropriations have been affected by larger U.S. government budgetary issues, sequestration, and related legislation, including the statutory limit on the amount of permissible federal debt. These issues could negatively affect the timely collection of our U.S. government invoices.

In addition, there continues to be uncertainty with respect to program-level appropriations for the DoS, DoD,DoW, and other government agencies in the overall budgetary framework described above. For example, the prioritization of development programs could come at the expense of the sustainment of existing platforms. While we would expect to compete and be well-positioned as the incumbent on existing programs, we may not be successful and, even if we are successful, the replacement programs may be funded at lower levels or result in lower margins. Uncertainty remains regarding how defense budgets in the current fiscal year and beyond will affect these programs.

In addition, budgets for U.S. government programs could be negatively impacted by possible policy changes on defense spending, spending priorities outside defense, the reduction in military presence overseasoverseas, andthe general pressure to reduce DoDDoW and DoS spending.spending, and the ability of the U.S. government to enact relevant legislation such as the authorization and appropriations bills during government shutdowns. For example, in April 2025, the White House’s Office of Management and Budget proposed to reduce the DoS’s budget by nearly 50%, resulting in the closing of a number of overseas diplomatic missions,missions and reducingthe reduction of diplomatic staff, which has negatively impacted the available funding for our DoS contracts by $70 million in annual revenue for those contracts. Additional reductions in DoDDoW or DoS budgets and spending could result in further reductions in the amount of our products and services furnished to the U.S. government. In addition, staff reductions and other operational disruptions in the government agencies could result in payment delays, the inability to obtain export authorizations, impair our ability to perform work on existing contracts, negatively impact future orders, cause other disruptions or delays or otherwise impact our operations.

We expect the U.S. government to continue to emphasize cost-cutting and other efficiency initiatives in its procurement processes. If we have difficulty adjusting to these changing acquisition priorities and/or fail to meet affordability targets set by the DoD,DoW, DoS, or their direct customers, our revenues and market share could be further impacted.

We sell certain of our products and services to our commercial, government, and defense customers under firm contracts providing for fixed unit prices, regardless of costs incurred by us. Several factors may cause the costs we incur in fulfilling these contracts to vary substantially from our estimates, and we generally bear the majority of risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on these contracts. The cost of providing products or services may be adversely affected by increases in the cost of labor, materials, fuel, overhead, and other unknown variants,variables, including manufacturing and other operational inefficiencies and differences between assumptions used by us to price a contract and actual results. Increased costs may result in cost overruns and losses on such contracts, which could adversely affect our results of operations and financial condition. This risk is greater in periods of high inflation.

The success of our RepairRepair, &Engineering, Engineeringand businessSoftware segment is dependent upon our ability to manage our operational footprint.

We currently perform airframeAirframe repairMRO and engineeringComponent MRO activities at several of our leased and owned airframe maintenance facilities. Our maintenance facilities could become unavailable either temporarily or permanently due to our inability to extend our leases on commercially reasonable terms, labor disruptions at any of our facilities, or other circumstances that may be beyond our control, such as geopolitical developments or logistical complications arising from catastrophic and weather-related events. For leased facilities, timely renewal of leases, and risk mitigation from the sale of leased facilities, is required to avoid any business interruption. There is risk associated with negotiating extensions of leases with terms that are, in the long-term, amenable to us. We must also manage any permitting delays that may arise in connection with the expansion of our facility in Miami, Florida and any other issues that may arise in connection with the construction processprocess. forIn bothaddition, theas Miami,we Floridahave andacquired Oklahomanew City,sites, Oklahomawe facilityare expansions.undergoing site consolidation. Our inability to effectively execute our site consolidation strategy may have a material adverse impact on our results of operations.

Potential logistical complications resulting from circumstances beyond our control may include, but are not limited to, power loss, telecommunication and information systems failures, or other internal or external system or service failures, accidents or incidents arising from acts of war, terrorism, cyber-attacks,cyberattacks, weather, global climate change, earthquakes, hurricanes, fires, floods, tornadoes or other natural disasters or pandemics, including public health crises.

The success of our RepairRepair, &Engineering, Engineeringand Software business segment is dependent upon continued outsourcing by the airlines.

Revenues at our airframeAirframe maintenanceMRO and Component MRO facilities fluctuate based on demand for maintenance and repairs, which, in turn, is driven by the number of aircraft operating and the extent of outsourcing of maintenance and repair activities by airlines. In addition, certain airlines operate certain new fleet types and/or newer generation aircraft and we may not have contractual arrangements to service these aircraft nor technicians trained and certified to perform the required airframe maintenance, repair, and overhaulMRO activities on such aircraft. If either the number of aircraft operating or the level of outsourcing of maintenance activities for the aircraft models for which we are authorized to service declines, we may not be able to execute our operational and financial plans at our airframe maintenance and component repair facilities, which could adversely affect our results of operations and financial condition.

Our business has historically been dependent on educated and skilled aviation mechanics because of the complex nature of many of our products and services. We face competition for management and qualified technical personnel from other companies and organizations. Furthermore, we have a collective bargaining agreement covering approximately 200170 employees in our ExpeditionaryGovernment ServicesSolutions segment (approximately 4%2% of our total workforce).

The markets for our products and services to our commercial, government, and defense customers are highly competitive, and we face competition from a number of sources, both domestic and international. Our competitors include aircraft manufacturers, aircraft component and parts manufacturers, airline and aircraft service companies, other companies providing maintenance, repair and overhaulMRO services, and other aircraft spare parts distributors and redistributors. Market competition for opportunities to acquire aviation assets includes traditional transportation companies, commercial and investment banks, as well as a growing number of non - traditional participants, such as hedge funds, private equity funds and other private investors. Some of our competitors have substantially greater financial and other resources than we have, and others may price their products and services below our selling prices. Some of our OEM competitors have greater name recognition than us or our subsidiaries, as well as complementary lines of business and financial, marketing and other resources that we do not have. In addition, some of our competitors, including OEMs, aircraft maintenance providers, leasing companies and U.S. FAA certificated repair facilities, may attempt to bundle their services and product offerings in the supply industry for customers, thereby significantly increasing industry competition. We compete with major commercial airlines, many of which operate their own maintenance, repair and overhaulMRO operations. Our smaller competitors may be able to offer more attractive pricing as a result of lower labor costs or other factors. These competitive markets also create pressure on our ability to retain and fill skilled labor needs. We believe that our ability to compete depends on superior customer service and support, on-time delivery, sufficient inventory availability, competitive pricing, and effective quality assurance programs.

Our government customers, including the DoDDoW and DoS, may turn to commercial contractors, rather than traditional defense contractors, for certain work, or may utilize set asides such as small business, women-owned, or minority-owned contractors or determine to source work internally rather than use us. We are also impacted by bid protests from unsuccessful bidders on new program awards and task orders. Bid protests could result in significant expense for us, contract modifications, or the award decision being overturned and loss of the contract award. Even where a bid protest does not result in the loss of an award, the resolution can extend the time until the contract activity can begin, and delay earnings.

We market our products and services globally, with approximately 34.2%34.3% of our consolidated sales in fiscal 20252026 derived from sales to foreign customers (See Note 1715 of Notes to Consolidated Financial Statements). In addition, we maintain offices and facilities in several foreign countries. In connection with our acquisition of the Product Support business from Triumph Group, we acquired an entity and operating facility in Thailand. We expect that sales to foreign customers will continue to account for a significant portion of our revenues in the foreseeable future. We also make capital investments in and enter into joint ventures with foreign entities from time to time. Consequently, we are subject to a variety of risks that are specific to international operations and investments, including the following:

Our acquisition strategy is affected by, and poses a number of challenges and risks as a result of certain factors, including the availability of suitable acquisition candidates, incurrence of expenses, availability of capital, the cost of capital, compliance with debt covenants, consummation of acquisitions on satisfactory terms, obtaining applicable domestic and/or foreign governmental approvals such as antitrust and foreign investment related authorizations, difficulties in integrating the operations and personnel, the effects of amortization of any acquired intangible and right-of-use leased assets, the effects of potential impairments of any acquired intangible assets and/or goodwill, and the potential loss of key employees of the acquired business. For example, we recognized impairment losses for a portion of the goodwill related to the acquisition of the Product Support business in conjunction with the allocation of goodwill in the RepairRepair, &Engineering, Engineeringand Software reporting unit upon the decision to divest the Landing Gear Overhaul (“LGO”) business. We also expect to impair the goodwill included in our Legacy Commercial Programs segment as its operations are wound down over the next three to four years.

In addition, acquisitions often require substantial management resources and have the potential to divert our attention from our existing business. Our growth to date has placed, and could continue to place, significant demands on our administrative, operational and financial resources. For any businesses we acquire, we may not be able to execute our operational, financial, or integration plans for the acquired businesses, which could adversely affect our results of operations and financial condition. In addition, we may not be able to manage our growth successfully, which could have a material adverse effect on our overall business, financial condition and results of operations.

We periodically divest or seek to divest certain businessesbusinesses, investments and investments,assets, including those that are no longer a part of our ongoing strategic plan, such as the recent divestiture of our LGO business in the fourth quarter of fiscal 2025, which adversely affected our fiscal 2025 results of operations and financial condition. Any future decisions to divest or discontinue assets, businesses, products or services may again result in asset impairments, including those related to goodwill and other intangible assets, and losses upon disposition, both of which could have adverse effects on our results of operations and financial condition. In addition, sometimes we encounter difficulty in finding buyers or executing alternative exit strategies at acceptable prices and terms in a timely manner. Some prospective buyers may have difficulty obtaining financing. Divestitures require a significant investment of time and resources, and may disrupt our business and distract management from other responsibilities. In addition, divestitures tend to involve the retention of certain current or future liabilities in order to induce a buyer to complete a divestiture or otherwise result in continued financial involvement in the divested business, including through indemnification or other arrangements, for a period of time following the transaction, which adversely affects our financial results. We may not be successful in managing these or any other significant risks that we may encounter in divesting or discontinuing assets, businesses, products or services, which could have a material adverse effect on our business, results of operations and financial condition.

We make a number of assumptions when determining the recoverability of rotable components, engines, and other assets that we sell, lease, make available for lease,sell or keep to support our long-term programs.lease. These assumptions include historical sales trends, current and expected usage trends, replacement values, current and expected sales and lease rates, residual values, future demand, and future cash flows. Reductions in demand for these assets or declining market values, as well as differences between actual results and the assumptions utilized by us when determining the recoverability of our aircraft, engines, and other assets, could result in impairment charges in future periods, which would adversely affect our results of operations and financial condition. We also face risk in collecting from customers on the sales of parts.

We have faced and expect to continue to face cyber securitycybersecurity threats. Such threats are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to our sensitive information (including that of our customers, suppliers, subcontractors and joint venture partners), business e-mail compromises, ransomware attacks, and other electronic security incidents, including at our customers, suppliers, subcontractors, and joint venture partners, that could lead to disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data. We have employees working remotely at times, which heightens the risk of these potential vulnerabilities. ToIn addition, as we increase the extentuse of artificial intelligence tools into our operations, the risk of unauthorized access to our data and of making errors or erroneous decisions based on our reliance on such tools will increase. Further, as artificial intelligence capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities and produce advanced cybersecurity attacks, and vulnerabilities may be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers.

We also rely on third parties to host certain enterprise systems and thatto manage and host our data and that of our customers. Our ability to monitor such third parties’ security measures and the full impact of the systemic risk is limited. If our systems, data, or any third-party service that we use is unavailable to us for any reason, our customers may experience service interruptions, which could significantly impact our operations, reputation, business, and financial results. Lack of access to our data and that of our clients, or failure of our systems or those of our third-party service providers, may result in interruptions in our service, all of which may cause a loss in customers, refunds of product fees, and/or material harm to our reputation and operating results.

A theft, loss, fraudulent use or misuse of customer, stockholder, employee or our proprietary data by cybercrime or otherwise, noncompliance with our contractual or other legal obligations regarding such data or a violation of our privacy and security policies with respect to such data could adversely impact our reputation and could result in costs, fines, litigation or regulatory action against us. Security incidents that may lead to breaches can create system disruptions and shutdowns that could result in disruptions to our operations. We cannot be certain that advances in criminal capabilities, nation-state actors, new vulnerabilities or other developments will not compromise or breach the security solutions protecting our information technology, networks and systems. A systems or network failure or cyber‐attack on our information systems technology or those of our partners, customers, vendors, or suppliers could adversely affect our ability to process orders, maintain proper levels of inventory, collect accounts receivable and pay expenses; all of which could have an adverse effect on our results of operations, financial condition and cash flows. Such serious harm can involve, among other things, misuse of our assets, business disruptions, loss of data, unauthorized access to trade secrets and confidential business information, unauthorized access to personal information, damage to customer relationships, legal claims or proceedings, reporting errors, processing inefficiencies, negative media attention, reputational harm, loss of sales, remediation and increased insurance costs, and interference with regulatory compliance. We expect to continue to experience some of these types of cybersecurity threats and incidents, which could be material in the future.

The aviation industry is constantly undergoing development and change, and new products, equipment, and methods of repair and overhaul services are introduced on an ongoing basis. In order to keep pace with technological and other developments in our industry, we sometimes need to expend significant capital to develop information technology solutions, purchase new equipment, train our employees in the new methods of service, or implement new processes to increase both efficiency and capacity. Not all projects may be implemented as anticipated as a result of various factors, including ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, subcontractor performance, and our ability to accurately estimate costs and timing associated with such projects. In addition, we arehave exploringbegun implementing artificial intelligence strategies for our products and services, which may be costly or ineffective, introduce errors, cause loss of intellectual property, and raise complex regulatory compliance and other business and legal issues.issues, which could hinder our ability to continue to incorporate certain artificial intelligence capabilities into our operations and products such as our Airvoyant platform that was launched in April 2026. If projects do not achieve anticipated increases in efficiency or capacity, our returns on these capital expenditures may be lower than expected. Failure to react timely to industry trends and manage our offerings and innovation activities responsively could decrease the competitiveness of our services, harm our reputation, and negatively impact our ability to compete and attract top talent.

We do not own certain intellectual property and tooling that is important to our business.business, and we may be unable to protect the value of our intellectual property.

In our RepairRepair, &Engineering, Engineeringand Software segment, OEMs of equipment that we maintain for our customers include language in repair manuals relating to their equipment asserting broad claims of proprietary rights to the contents of the manuals used in our operations. Although we believe that our use of manufacture and repair manuals is lawful, there can be no assurance that OEMs will not try to enforce such claims, including through the possible use of legal proceedings, or that any such actions will be unsuccessful. Our business also depends on using certain intellectual property and tooling that we have the right to use pursuant to license grants under our contracts with OEM customers. These contracts contain restrictions on our use of intellectual property and tooling and may be terminated if we violate certain of these restrictions. Loss of a contract with an OEM customer and the related license rights to use an OEM’s intellectual property or tooling may adversely affect our business, results of operations and financial condition. Third parties in other areas of our business may also bring claims challenging the validity of our intellectual property rights or allege that we infringe their intellectual property rights, which could cause us to incur substantial costs and otherwise adversely affect our business and reputation.

Our ability to manage our business and to execute our business strategy is dependent, in part, on the continued availability of debt and equity capital. Access to the debt and equity capital markets may be limited by various factors, including the condition of overall credit markets, general economic factors, interest rates, state of the aviation industry, our financial performance, and credit ratings. Debt and equity capital may not continue to be available to us on favorable terms, or at all. Our inability to obtain financing on favorable terms could adversely affect our results of operations and financial condition.condition and our ability to execute our business strategies.

In addition, DoDDoW facility security clearance is required in order to be awarded and be able to perform on classified contracts for the DoDDoW and certain other agencies of the U.S. Government,government, which is a significant part of our business. We have obtained clearance at appropriate levels that require stringent qualifications, and we may be required to seek higher level clearances in the future. If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform our present classified contracts or be able to enter into new classified contracts, which could affect our ability to maintain current business and to compete for and capture new business.

The aviation industry is highly regulated by the FAA in the U.S. and equivalent regulatory agencies in other countries. Before we sell any of our products that are to be installed in an aircraft, such as engines, engine parts and components, and airframe and accessory parts and components, they must meet certain standards of airworthiness established by the FAA or the equivalent regulatory agencies in certain other countries. We operate repair stations that are licensed by the FAA and the equivalent regulatory agencies in certain other countries, and hold certificates to operate aircraft. Specific regulations vary from country to country; although regulatory requirements in other countries are generally satisfied by compliance with FAA requirements. New and more stringent governmental regulations may be adopted in the future that, if enacted, may have an adverse impact on us. If any of our material licenses, certificates, authorizations, or approvals were revoked or suspended by the FAA or equivalent regulatory agencies in other countries, our results of operations and financial condition may be adversely affected.

The U.S. Department of Commerce (the “Commerce Department”)DoC and the U.S. Department of StateDoS regulate the export, re-export and re-transfer of U.S. controlled goods and technologies. We are subject to the Commerce Department’sDoC’s and the U.S. Department of State’sDoS’s regulations with respect to the lease and sale of aircraft, engines, engine parts and components, and airframes and accessory parts and components to foreign entities. The Commerce DepartmentDoC and the U.S. Department of StateDoS may, in certain cases, require us to obtain authorization for the export, re-export or re-transfer within foreign countries of certain items. The U.S. Department of Homeland Security, through the U.S. Customs and Border Protection, enforces regulations related to the import of aircraft, engines, engine parts and components, and airframe and accessory parts and components into the United States. We must expend resources to comply with these regulations and our failure to comply with these regulations may subject us to regulatory actions, which may adversely impact our financial condition or results of operations.

Federal, state, and local requirements relating to the discharge and emission of substances into the environment, the disposal of hazardous wastes,waste, the remediation and abatement of contaminants, and other activities affecting the environment have had and may continue to have an impact on our operations. Management cannot assess the possible effect of compliance with future environmental requirements or of future environmental claims for which we may not have adequate indemnification or insurance coverage. If we were required to pay the expenses related to any future environmental claims for which neither indemnification nor insurance coverage were available, these expenses could have an adverse impact on our results of operations and financial condition.

The following discussion and analysis of our financial condition and results of operations, and quantitative and qualitative disclosures about market risk should be read in conjunction with our consolidated financial statements and the related notes included in this Annual Report on Form 10-K. For a discussion of the comparison of fiscal 20242025 and 2023,2024, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended May 31, 20242025 (filed with the SEC on July 19,22, 20242025).

Management’s Discussion and Analysis of Financial Condition and Results of Operations containcontains 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. 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 the beliefs of management, as well as assumptions and estimates based on information available to us as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties, including those factors discussed under Item 1A, “Risk Factors,” that could cause actual results to differ materially from those anticipated. Should one or more of those risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. Those events and uncertainties are difficult or impossible to predict accurately and many are beyond our control. We assume 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.

We also distribute new OEM-supplied replacementOur parts are supplied for narrow-body, wide-body and regional aircraft to aircraft operators, airlines, government customers and other MRO companies across the world. Our parts are supplied to narrow-body, wide-body and regional aircraft. In most cases, we enter exclusive relationships with OEM manufacturers for a given market where we are the only provider of that supplier’s product category. We provide global scale, independence, and highly technical sales capabilities across both commercial and government end-markets.

Our Airframe MRO services are primarily comprised of major airframe inspection, maintenance, repair, and overhaul services,MRO, 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. Component ServicesMRO services are primarily comprised of MROrepair and overhaul services for structural components, engine and airframe accessories, and interior refurbishment.

OurThe IntegratedGovernment Solutions segment primarily consists of our fleet management and operations of customer-owned aircraft, customized performance-based supply chain logistics programs in support of the DoDDoW, the DoS and foreign governments, flight hour component inventorygovernments and repairour programsMobility Systems operations which provides products and services supporting the movement of equipment by the U.S. and foreign governments and non - governmental organizations. The Government Solutions segment accounted for commercialapproximately airlines15% andof integratedour softwaresales solutionsin includingfiscal Trax.2026.

Fleet management and operations of customer-owned aircraft isare performed 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. Supply chain logistics programs are primarily comprised of material planning, sourcing, logistics, information and program management and parts and component repair and overhaul.

TheMobility ExpeditionarySystems Servicesdesigns, segment primarily consists of productsmanufactures, and services supporting the movement of equipment and personnel by the U.S. and foreign governments and non-governmental organizations. We design, manufacture, and repairrepairs 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. WeMobility Systems also provideprovides engineering, design, and system integration services for specialized command and control systems.

Consolidated sales in fiscal 20252026 increased $461.6$527.5 million, or 19.9%,19.0%, over the prior year primarily due to an increase in sales to commercial customers. Consolidated sales to commercial customers increased $338.2$408.0 million, or 20.6%, over the prior year primarily due to the acquisition of the Product Support business in the fourth quarter of fiscal 2024 and strong demand and volume growth in our Partsnew Supplyparts segmentDistribution activities, including from our newrecent partsADI distributionacquisition, activities.which Our consolidatedcontributed sales toof government$82.2 customersmillion. increasedIn $123.4addition, million,our orrecent 18.1%,HAECO primarilyAmericas dueacquisition to increasedcontributed sales volumeof for$131.1 our new parts distribution activities and increased pallet demand in our Mobility business.million.

Consolidated gross profit in fiscal 20252026 increased $85.4$94.3 million, or 19.3%,17.9%, over the prior year. Gross profit on sales to commercialgovernment customers increased $68.8$71.0 million, or 21.3%,52.2%, over the prior year primarily due to thestrong acquisitiondemand and volume growth across our new parts Distribution activities increasing gross profit by $22.3 million. In addition, volume growth and favorable mix of theproducts Productand Supportservices businessdrove improvement in thegross fourth quarterprofit of fiscal$19.3 2024.million in our government program activities. Gross profit margin on sales to commercialgovernment customers increased slightly to 19.8%22.4% from 19.7% in the prior year16.9% primarily due to the acquisitionmix of theproducts Productand Supportservices business as its margins are accretive toin our historicalgovernment margins.program activities.

Gross profit on sales to governmentcommercial customers increased $16.6$23.2 million, or 13.9%,5.9%, over the prior year primarily due to strong demand and volume growth acrossin our new parts distributionDistribution activities.activities, including from our recent ADI acquisition. Gross profit margin on sales to governmentcommercial customers decreased to 16.9%17.4% from 17.5%19.8% in the prior year primarily due to lowerthe marginsmix fromof inefficienciesproducts relatedand toservices, including the shutdownpre-integration, oflower ourmargin GardenHAECO City,Americas New York component services facility.operations.

Selling, general and administrative expenses increased $35.5$1.6 million, or 11.4%,0.5%, over the prior year primarily due to increasedthe fiscal 2026 acquisitions, including ADI and HAECO Americas. This increase was largely offset by FCPA investigation and settlement costs of $54.8 million related toin the previouslyprior disclosed FCPA investigation and settlement. This increase was partially offset by lower amortization and acquisition-related expenses of $18.2 million related to the Trax and Product Support business acquisitions.year.

As a percent of sales, selling, general and administrative expenses decreased to 12.5%10.6% from 13.5%12.5% in the prior year primarily due to the operating leverage from a full year ofthe sales derived from the Productfiscal Support2026 acquisition.acquisitions.

In fiscal 2025,2026, our effective income tax rate was 23.7% compared to 67.9% asin the majorityprior ofyear. This decrease is primarily attributable to the FCPA settlement charge of $55.6 million in fiscal 2025 that was nondeductible for income tax purposes resulting in no income tax benefit. In fiscal 2024, our effective income tax rate was 20.6% which reflected the recognition of a deferred tax benefit in conjunction with the pension settlement in the first quarter of fiscal 2024.

Sales in the Parts Supply segment in fiscal 20252026 increased $132.6$388.1 million, or 13.7%,35.3%, over the prior year period primarily due to a $129.9$295.4 million increase in sales in our new parts distributionDistribution activities from increased demand and growth from new and expanded distribution agreements. The ADI acquisition contributed sales of $115.3 million to the increase in new parts Distribution sales during fiscal 2026.

Operating income in the Parts Supply segment increased $47.0$29.4 million, or 42.8%,18.8%, over the prior year, primarily due to increased sales volumes across our new parts distributionDistribution activities. In addition, an $11.2 million Russian legal liability was de-recognized in fiscal 2025 as a result of the Russian Court’s ruling which reversed the previous judgment against us. We also recognized a gain of $6.5 million in fiscal 2025 as a result of an insurance recovery related to an aircraft which was on lease to a customer and was damaged beyond repair in Haiti. The aircraft was originally acquired in the third quarter of fiscal 2024 and was expected to be sold in fiscal 2025. The insured value for the aircraft approximated its fair value and the insurance proceeds were recognized within Cost of sales.

RepairRepair, &Engineering, Engineeringand Software Segment

Sales in the RepairRepair, &Engineering, Engineeringand Software segment in fiscal 20252026 increased $244.8$149.8 million, or 38.2%,16.1%, over the prior year primarily due to thegrowth within our Airframe MRO services of $170.7 million. The HAECO Americas acquisition of the Product Support business in the fourth quarter of fiscal 2024 which contributed incremental sales of $232.7$131.1 million in fiscal 2025.2026, Inwhich addition, sales increased $39.0 million at our Airframe MRO facilities. These increases werewas partially offset by lower sales volume of $8.6 million due to the saledivestiture of our LGO business in the fourth quarter of fiscal 2025. The LGO business contributed sales of $66.9 million in the prior year.

Operating income in the ExpeditionaryRepair, ServicesEngineering, and Software segment increased $6.6$0.6 million, or 188.6%,0.7%, over the prior year withwhile the operating margin increasingdecreased to 10.0%7.8% from 5.0% in the prior year.9.0%. These increaseschanges arewere primarily due to the highermix salesof volumesproducts forand pallets.services, including the pre-integration, lower margin HAECO Americas operations.

There have been no material changes in the risk factors disclosed under Part I, Item 1A “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.2026 with the exception of the addition of the following risk factors:

Our chiefChief operatingOperating decisionDecision making officerMaker (“CODM”) is our Chairman, President, and Chief Executive Officer and he evaluates performance on our operating segments using operating income as the primary profitability measure. Our operating segments are aligned principally around differences in products and services.services The Company has not aggregated operating segments for purposes of identifying reportable segments. Inter-segment salesand are recordedconsistent atwith fairhow valueour whichCODM resultsallocates inresources, intercompanyassesses profit on inter-segment sales that is eliminated in consolidation. Corporate selling, generalperformance, and administrativemakes expenses include centralized functions such as legal, finance, treasury and human resources with a portion of the costs allocated to our operating segments.decisions.

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. 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 discrete components that can be sold to customers.

Our Airframe MRO services are primarily comprised of major airframe inspection, maintenance, repair, and overhaul services,MRO, 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. Component ServicesMRO services are primarily comprised of MROrepair and overhaul services for structural components, engine and airframe accessories, and interior refurbishment.

We are currently expanding both our Miami and Oklahoma City airframe maintenance facilities toTo meet growing customer demand. In Miami,demand, we arerecently constructing a 114,000 square foot facility with three bays adjacent toexpanded our existingAirframe hangar. InMRO Oklahoma City,City weoperations have completedwith the construction of ana new 80,000 square foot facility with three bays and warehouse space adjacent to our existing hangar. TheThis facility inducted its first aircraft in early calendar 2026. We are also expanding our Miami expansionairframe maintenance operations with a 114,000 square foot facility with three bays adjacent to our existing hangar. The new Miami facility is expected to be completeoperational inbefore mid-to-latethe end of calendar 2026.

OurThe IntegratedGovernment Solutions segment primarily consists of our fleet management and operations of customer-owned aircraft, customized performance-based supply chain logistics programs in support of the DoDDoW, the DoS and foreign governments, flight hour component inventorygovernments and repairour programsMobility forSystems commercialoperations airlineswhich provides products and integratedservices softwaresupporting solutions,the includingmovement Trax.of equipment by the U.S. and foreign governments and non-governmental organizations.

Fleet management and operations of customer-owned aircraft isare performed for the 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. Supply chain logistics programs are primarily comprised of material planning, sourcing, logistics, information and program management and parts and component repair and overhaul.

TheMobility ExpeditionarySystems Servicesdesigns, segment primarily consists of productsmanufactures, and services supporting the movement of equipment and personnel by the U.S. and foreign governments and non-governmental organizations. We design, manufacture, and repairrepairs 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. WeMobility Systems also provideprovides engineering, design, and system integration services for specialized command and control systems.

Consolidated sales for the thirdfirst quarter of fiscal 20262027 increased $166.9$178.4 million, or 24.6%,24.1%, over the prior year quarter primarily due to an increase in sales to commercial customers. Consolidated sales to commercial customers increased $130.3$147.5 million, or 26.8%,28.2%, over the prior year quarter primarily due to strong demand and volume growth in our new parts Distribution activities, including from our recent ADI acquisition, which contributed sales of $26.3$35.3 million. In addition, our recent HAECO Americas acquisition contributed sales of $55.2$46.6 million. Our consolidated sales to government customers increased $30.9 million, or 14.3%, primarily due to volume growth in our Parts Supply segment from new parts Distribution activities, including from our recent ADI acquisition, which contributed sales of $8.4 million.

Consolidated gross profit for the thirdfirst quarter of fiscal 20262027 increased $23.0$42.6 million, or 17.5%,31.9%, over the prior year quarter. Gross profit on sales to governmentcommercial customers increased $19.7$33.8 million, or 54.6%,37.8%, primarily attributable to the volume growth in our new parts Distribution activities. The gross profit margin on sales to government customers increased to 24.3% from 18.7% inover the prior year quarter with the gross profit margin increased to 18.4% from 17.1%. These increases are primarily due to the mix of servicesproducts acrosssold and volume growth in our programsParts activities,Supply segment, including from our recentlyrecent awardedADI contracts.acquisition.

Interest expense decreased $1.0$2.2 million in the thirdfirst quarter of fiscal 20262027 compared to the prior year quarter reflecting the impact of both lower interest rates and lower average borrowings. Our average borrowing rate on our Amended Revolving Credit Facility was 5.51%5.34% in the thirdfirst quarter of fiscal 20262027 compared to 6.38%6.14% in the prior year quarter.