AAR (NYSE:AIR) shares dropped more than 16% today, as the company delivered better-than-expected earnings for the third quarter but fell short on revenue and reported a net loss due to a one-time charge.

The company posted adjusted EPS of $0.99, narrowly surpassing analyst expectations of $0.98. However, revenue came in at $678 million, missing the $698.97 million consensus, despite a 20% year-over-year increase driven by strength in aftermarket services.

Parts Supply sales grew 12%, while the Repair & Engineering segment surged over 53%, fueled by contributions from the Product Support acquisition and increased throughput at the company’s Airframe MRO facilities.

AAR also reduced its net leverage ratio from 3.58x to 3.06x over the past year and anticipates further balance sheet strengthening.

Despite the revenue miss and one-off hit to earnings, management emphasized a positive outlook, expecting ongoing sales momentum and additional margin expansion as strategic initiatives take hold.