Summary of StandardAero Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $1.6 billion, up 4.6% year-over-year.

Adjusted EBITDA: $230 million, a 12.3% increase year-over-year, with a record margin of 14.4% (up 100 basis points).

Net Income: $97 million, representing a 43.7% growth year-over-year.

Adjusted EPS: $0.40, up 24% year-over-year.

Free Cash Flow: Positive inflow of $50 million.

Net Debt to Adjusted EBITDA: 2.6x, improved from 3.0x a year ago.

2Strategic Updates and Business Highlights

Commercial Aerospace: Revenue grew 6% year-over-year; strong demand persists despite high jet fuel prices.

Business Aviation: Revenue also increased by 6%, driven by high activity in midsize and super-midsize platforms.

Military and Helicopter Revenue: Declined 3% due to input delays, but long-term demand outlook remains positive.

LEAP and CFM56 Programs: Achieved profitability; LEAP expected to reach $1 billion in annual revenue by the end of the decade.

License Expansion: Secured a $180 million agreement expected to generate $25 million in incremental annual adjusted EBITDA.

Acquisition: Completed the acquisition of Unified Turbines, enhancing repair capabilities.

3Forward Guidance and Outlook

Revenue Guidance: Increased by $50 million to a range of $6.375 billion to $6.5 billion for 2026.

Adjusted EBITDA Guidance: Raised to a range of $885 million to $910 million.

Adjusted EPS Guidance: Increased to $1.50 to $1.57.

Adjusted Free Cash Flow Guidance: Maintained at $270 million to $300 million.

4Bad News, Challenges, or Points of Concern

Military Segment Delays: Revenue declined due to input delays on select military platforms, though confidence remains for growth in the second half of the year.

Component Repair Services Margin Pressure: Margins decreased due to labor inefficiencies and work migration, although expected to normalize in the second half.

Supply Chain Concerns: While no immediate deterioration was noted, the company continues to navigate a challenging supply chain environment, particularly regarding constrained parts.

5Notable Q&A Insights

Supply Chain Management: Management indicated that they have adjusted their guidance without relying on supply chain improvements, suggesting resilience in their operations.

Military Growth Confidence: There is strong confidence in military growth driven by increased flight hours and operational tempo, particularly for specific platforms.

License Agreement Details: The new license agreement is primarily about expanding capabilities rather than renewing existing contracts, indicating a strategic growth focus.

Future CapEx: Long-term CapEx expectations are stable, with maintenance CapEx around 1% of revenue, and no significant increases anticipated unless new major platforms are introduced. Overall, StandardAero reported solid financial performance in Q2 2026, with strategic initiatives progressing well, although challenges remain in certain segments and supply chain dynamics. The company is optimistic about future growth and has raised its guidance for the year.