The quarter beat on earnings but missed on sales. Adjusted diluted EPS was $0.40 versus a published consensus near $0.32, while revenue was $1.600 billion versus expectations around $1.63 billion. The result is therefore a quality-of-earnings beat driven by profitability rather than top-line outperformance. (Second Quarter 2026 Highlights; Consolidated Results)
| Metric | Q2 2026 | Q2 2025 / expectation | Read |
|---|---|---|---|
| Revenue | $1,599.7 million | $1,528.9 million / ~$1.63 billion consensus | +4.6% year over year; below expectation (Consolidated Results) |
| Adjusted diluted EPS | $0.40 | $0.32 / ~$0.32 consensus | +24% year over year; above expectation (Financial Highlights; Adjusted EPS reconciliation) |
| Adjusted EBITDA | $229.9 million | $204.6 million | +12.3%; margin rose to 14.4% from 13.4% (Adjusted EBITDA reconciliation) |
| Free cash flow | $50.2 million | $(30.7) million | Improved sharply year over year (Cash Flow reconciliation) |
| FY26 revenue guidance | $6.375–$6.500 billion | Prior: $6.325–$6.450 billion | Raised (Full Year 2026 Guidance) |
| FY26 adjusted EBITDA guidance | $885–$910 million | Prior: $875–$905 million | Raised (Full Year 2026 Guidance) |
| FY26 adjusted diluted EPS guidance | $1.50–$1.57 | Prior: $1.40–$1.50 | Raised (Full Year 2026 Guidance) |
Margin expansion is the main reason the filing lands better than the revenue line. Engine Services EBITDA rose 14.4% and its margin expanded 130 basis points to 14.5%, helped by productivity, pricing, mix, and removal of low-margin pass-through revenue. That improvement more than offset the weaker growth profile: consolidated revenue rose only 4.6%, partly because the company eliminated $300–$400 million of pass-through sales. (Engine Services Segment; Adjusted EBITDA reconciliation)
Component Repair Services supplies the key blemish. Revenue grew 9.2%, but segment EBITDA fell 0.9% and margin compressed 270 basis points to 26.3% because of unfavorable mix and lower military-platform activity tied to input delays. This keeps the quarter from being a clean, broad-based beat: the larger Engine Services business carried the earnings result, while the smaller but higher-margin component business deteriorated. (Component Repair Services Segment)
The guidance increase strengthens the read, though cash-flow progress is not yet fully established. Compared with the prior-quarter outlook, revenue, EBITDA, and adjusted EPS ranges all moved higher; the $270–$300 million cash-flow range was retained but relabeled as adjusted free cash flow, excluding intangible-asset purchases. Q2 free cash flow was positive at $50.2 million, but first-half operating cash flow remained negative at $47.2 million and first-half free cash flow was negative $83.5 million because of working-capital investment. The net message is moderately positive: earnings execution and forward guidance improved beyond expectations, but revenue momentum, component margins, and cash conversion remain incomplete. (Full Year 2026 Guidance; Cash Flow statement)
Read the original 8-K on SEC EDGAR ↗