SARO — StandardAero, Inc.

Summary of StandardAero Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Revenue: $1.6 billion, up 13.5% year-over-year.
• Full Year 2025 Revenue: $6.1 billion, a 16% increase from 2024.
• Adjusted EBITDA: Q4 at $210 million (12.7% growth), full year at $808 million (17% growth).
• Net Income: Q4 at $79 million, a significant recovery from a net loss of $14 million in Q4 2024; full year net income reached $277 million.
• Free Cash Flow: Q4 generated $308 million; full year at $209 million, a turnaround from a cash outflow of $45 million in 2024.
• Leverage Ratio: Improved to 2.4x from 3.1x, providing capital flexibility.

2. Strategic Updates and Business Highlights

• LEAP Program: Inducted 60 LEAP engines in 2025 (up from 10 in 2024), with revenues in H2 2025 approximately 2.5x those in H1.
• Component Repair Services (CRS): Revenue increased by 19.6%, driven by strong demand and synergies from the ATI acquisition.
• Expansion Initiatives: Completed expansion of Augusta business aviation facility and announced expansion of CF34 facility in Winnipeg, expected to complete in H2 2026.
• Performance Excellence: Continued restructuring of customer contracts to eliminate low-margin pass-through revenues, projected to enhance margins.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected between $6.275 billion and $6.425 billion, reflecting low double-digit growth in commercial aerospace and high single-digit growth in business aviation and military sectors.
• Adjusted EBITDA Guidance: Forecasted at $870 million to $905 million, implying about 10% growth.
• Free Cash Flow Guidance: Anticipated cash generation of $270 million to $300 million, representing a 36% increase.
• Adjusted EPS Guidance: Expected between $1.35 and $1.45, indicating 18% growth from 2025.

4. Bad News, Challenges, or Points of Concern

• Supply Chain Issues: Ongoing part availability delays continue to impact operations, though improvements noted in depth of delays.
• CRS Facility Fire: A small fire at the Phoenix facility in December impacted revenue growth and margins in Q4.
• U.S. Government Shutdown: Affected military business growth in Q4, with lingering impacts expected in Q1 2026.
• LEAP and CFM56 Programs: These programs are expected to remain dilutive to margins until they reach profitability, which is anticipated in the latter half of 2026.

5. Notable Q&A Insights

• Customer Demand: Strong demand persists across all segments, with most slots for 2026 already filled, though some capacity remains for lighter work scopes.
• Labor Market: StandardAero has proactively addressed labor shortages through training programs and recruitment strategies, maintaining low attrition rates.
• Pricing Environment: The company is experiencing above-average acceptance of price increases due to ongoing supply constraints, with expectations for continued pricing power.
• Future Opportunities: Discussions are ongoing regarding potential new engine platforms and long-term agreements with airlines, though no specific deals were confirmed during the call.

Overall, StandardAero demonstrated strong financial performance in 2025, with strategic initiatives aimed at sustaining growth and improving margins, despite facing challenges related to supply chain and operational disruptions. The outlook for 2026 remains positive, with expectations for continued growth across key segments.