Financial Data and Key Metrics Changes - The company reported revenue of $1.5 billion for Q3 2025, representing a 20% year-over-year growth [5][16] - Adjusted EBITDA increased to $196 million, reflecting a 16% year-over-year growth, with an adjusted EBITDA margin of 13.1% [5][16] - Net income was $68 million, an increase of $52 million compared to the prior year, driven by higher operating income and reduced interest expenses [16] Business Line Data and Key Metrics Changes - Commercial aerospace revenue grew 18% year-over-year, with significant contributions from LEAP, CF-34, CFM56, and Turboprop engine platforms [6][7] - Business aviation revenue increased by 28% year-over-year, supported by growth in mid and super-mid-sized aircraft [6] - Military and helicopter revenue rose 21% year-over-year, driven by AE 1107 engine volumes and ongoing strength in C-130 transport aircraft programs [7] Market Data and Key Metrics Changes - The MRO supply-demand environment remains tight globally, with a strong backlog of MRO work [6] - The company anticipates continued favorable dynamics in the MRO market for the foreseeable future [6] Company Strategy and Development Direction - The company is focused on ramping growth platforms efficiently, driving productivity, and expanding component repair services [14] - Strategic priorities include investing in organic growth and potential acquisitions to capitalize on long-term opportunities [14] - The company is raising its 2025 guidance across all key metrics, reflecting confidence in continued operational performance [13][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's performance, which is ahead of IPO targets, and highlighted a positive market backdrop [27] - The company expects cash flow to improve significantly in Q4 due to the resolution of supply chain issues [17][63] - Management noted that the supply chain is improving, particularly regarding constrained parts, which has been a core issue throughout the year [46][63] Other Important Information - The company plans to expand its MRO facility in Winnipeg, Canada, to capture growth in the CF-34 program [11] - The company has made progress in renegotiating long-term contracts to eliminate low-margin material pass-through revenue, which is expected to improve working capital efficiency [22][23] Q&A Session Summary Question: What is the target for LEAP revenues? - Management confirmed that the target for LEAP revenues remains at a billion dollars annually in the next few years [30] Question: What are the specific parts causing supply chain choke points? - Management identified constrained parts, primarily forgings and castings, as the main issues affecting cash flow and shipment timelines [34] Question: How will the adjustments to long-term contracts impact revenue and cash flow? - Most of the revenue reduction from contract adjustments will occur in 2026, with a significant cash flow benefit expected in 2027 [38][56] Question: What is the backlog for the LEAP business? - The backlog for the LEAP business was reported to be over a billion dollars, with a 5% growth this quarter [39] Question: How is the company addressing supply chain issues? - Management indicated that they are making changes to the procurement process to ensure better access to constrained parts [63] Question: What is the outlook for business aviation? - The company is optimistic about the business aviation market, with increasing flight hours and strong demand for the HTF 7000 engine [84]

As a result of these factors, we cannot assure you that the forward-looking statements in this presentation will prove to be accurate. You should understand that it is not possible to predict or identify all such factors. We operate in a competitive and rapidly changing environment. New factors emerge from time to time, and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations. Furthermore, if our forward-looking statements prove to be ...

IPO and Acquisitions - The Company completed its initial public offering (IPO) on October 2, 2024, at a price of $24.00 per share, generating net proceeds of $1,202.8 million after deducting underwriting discounts and commissions of approximately $67.1 million and estimated offering expenses of $8.1 million[155]. - The Company acquired Aero Turbine, Inc. for an estimated purchase price of approximately $132.0 million, funded through borrowings under the Prior ABL Credit Facility[159]. Revenue and Income - Revenue increased by $253.3 million, or 20.4%, to $1,497.962 million for the three months ended September 30, 2025, compared to $1,244.627 million for the same period in 2024[178]. - Net income for the three months ended September 30, 2025, was $68.120 million, a significant increase of $51.684 million or 314.5% from $16.436 million in the prior year[178]. - Revenue increased by $634.9 million, or 16.6%, to $4,462.5 million for the nine months ended September 30, 2025, compared to $3,827.5 million for the same period in 2024[186]. - Net income surged to $198.8 million for the nine months ended September 30, 2025, a significant increase of $173.7 million or 694.2% compared to $25.0 million in 2024[186]. Segment Performance - The Engine Services segment primarily derives revenue from the repair and overhaul of gas turbine engines and auxiliary power units, serving commercial aerospace, military, and business aviation markets[149]. - The Component Repair Services segment generates revenue from engine piece part and accessory repairs, with a focus on commercial aerospace and military markets[150]. - The military and helicopter end market revenue increased by 21.1% compared to the prior year, aided by the acquisition of Aero Turbine on August 23, 2024[178]. - Engine Services segment revenue increased by $542.0 million, or 15.9%, to $3,941.2 million for the nine months ended September 30, 2025, supported by strong commercial aerospace growth[201]. - Component Repair Services segment revenue rose by $92.9 million, or 21.7%, to $521.3 million for the nine months ended September 30, 2025, aided by the Aero Turbine acquisition[203]. Expenses and Costs - Cost of revenue increased by $216.4 million, or 20.4%, to $1,274.803 million for the three months ended September 30, 2025, driven by higher material and direct labor expenses[179]. - Selling, general and administrative (SG&A) expenses were $60.944 million for the three months ended September 30, 2025, down from $62.895 million in the prior year, representing 4.1% of revenue[180]. - Selling, general and administrative expenses increased by $29.7 million, or 17.3%, to $201.4 million for the nine months ended September 30, 2025, primarily due to stock compensation and personnel costs[188]. - Cost of revenue rose by $510.1 million, or 15.6%, to $3,785.4 million for the nine months ended September 30, 2025, driven by higher material and labor expenses[187]. Financial Metrics - Adjusted EBITDA is defined as net income before interest, taxes, depreciation, and amortization, adjusted for non-cash items and non-recurring expenses, providing a clearer view of operational performance[164]. - Adjusted EBITDA for the three months ended September 30, 2025, was $195.560 million, compared to $168.417 million for the same period in 2024, reflecting a margin of 13.1%[178]. - Component Repair Services Segment Adjusted EBITDA increased by $41.9 million, or 37.7%, to $153.0 million for the nine months ended September 30, 2025, with an adjusted EBITDA margin of 29.3%[204]. Tax and Interest - Income tax expense increased to $24.656 million for the three months ended September 30, 2025, compared to $0.211 million in the same period in 2024, reflecting a significant increase due to higher pretax income[185]. - Income tax expense rose by $32.8 million, or 86.1%, to $70.9 million for the nine months ended September 30, 2025, reflecting increased pretax income[194]. - Interest expense decreased by $35.3 million, or 44.2%, to $44.566 million for the three months ended September 30, 2025, due to the repayment of prior debt obligations[183]. - Interest expense decreased by $103.3 million, or 43.9%, to $132.2 million for the nine months ended September 30, 2025, due to debt repayment and refinancing[191]. Cash Flow and Liquidity - The company reported net cash used in operating activities of $6.3 million for the nine months ended September 30, 2025, compared to $32.0 million for the same period in 2024[210]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $91.1 million, primarily due to $66.7 million in purchases of property and equipment[213]. - Net cash provided by financing activities for the nine months ended September 30, 2025, was $90.9 million, mainly from long-term debt proceeds of $545.0 million[214]. - The company had $722.8 million of available liquidity as of September 30, 2025, consisting of cash and a revolving credit facility[205]. - As of September 30, 2025, the company had cash of $97.5 million and net working capital of $1.6 billion, an increase from $1.2 billion as of December 31, 2024[205]. Debt and Compliance - Total debt as of September 30, 2025, was $2.36 billion, up from $2.27 billion as of December 31, 2024[206]. - The New 2024 Term Loan Facilities had an outstanding principal amount of $2.23 billion, maturing on October 31, 2031[206]. - The company was in compliance with the covenants in the New Credit Agreement as of September 30, 2025[209]. Currency and Interest Rates - Approximately $34.8 million, or 2.3%, of revenue for the three months ended September 30, 2025, was attributable to non-U.S. Dollar currencies[226]. - The company entered into an interest rate swap contract for a notional amount of $400.0 million, providing an effective fixed SOFR rate of 3.71%[224]. - The New 2024 Term Loan Facilities have a SOFR based rate with a margin of 2.00% to 2.25%[227]. - The New 2024 Revolving Credit Facility for Euro loans has a EURIBOR based rate with a margin of 1.50% to 2.00%[227]. - The New 2024 Revolving Credit Facility for Canadian Dollar loans has a CORRA based rate with a margin of 1.50% to 2.00%[227]. - The New 2024 Revolving Credit Facility for Pounds Sterling loans has a SONIA based rate with a margin of 1.50% to 2.00%[227]. - The New 2024 Term Loan Facilities for U.S. Dollar loans have a base rate margin of 1.00% to 1.25%[227]. - The New 2024 Revolving Credit Facility for U.S. Dollar loans has a base rate margin of 0.50% to 1.00%[227].

Core Insights - StandardAero, Inc. (SARO) is expected to report a year-over-year increase in earnings and revenues for the quarter ended September 2025, with earnings per share (EPS) estimated at $0.20, reflecting a 233.3% increase, and revenues projected at $1.44 billion, a 15.4% increase from the previous year [1][3]. Earnings Expectations - The earnings report is scheduled for November 10, and if the results exceed expectations, the stock may rise; conversely, missing estimates could lead to a decline [2]. - The consensus EPS estimate has been revised 5.56% higher in the last 30 days, indicating a positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model suggests that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [8][12]. - The stock currently holds a Zacks Rank of 4 (Sell), further indicating challenges in predicting a positive earnings surprise [12][13]. Historical Performance - In the last reported quarter, StandardAero was expected to post earnings of $0.21 per share but delivered $0.20, resulting in a -4.76% surprise. Over the last four quarters, the company has only beaten consensus EPS estimates once [14][15]. Industry Context - In comparison, Redwire Corporation (RDW), another player in the Aerospace - Defense industry, is expected to report a loss of $0.12 per share, with revenues projected at $126.06 million, reflecting an 83.7% increase year-over-year. However, it also faces challenges with a Zacks Rank of 5 (Strong Sell) and has not beaten consensus EPS estimates in the last four quarters [19][20][21].

Core Points - StandardAero, Inc. will report its third quarter 2025 earnings results on November 10, 2025, after market close [1] - A conference call to discuss the results will take place at 5:00 PM ET on the same day [1] - The earnings release and presentation will be available on the investor relations website prior to the conference call [2] Company Overview - StandardAero is a leading independent provider of aerospace engine aftermarket services for both fixed- and rotary-wing aircraft, catering to commercial, military, and business aviation markets [4] - The company offers a comprehensive suite of aftermarket solutions, including engine maintenance, repair and overhaul, engine component repair, on-wing and field service support, asset management, and engineering solutions [4] - StandardAero is listed on the NYSE under the ticker symbol SARO [4]

Core Thesis - StandardAero, Inc. (SARO) presents a nuanced investment opportunity despite recent market underperformance, with strong revenue and EBITDA growth, and raised guidance [2][4] Financial Performance - As of October 8th, SARO's share was trading at $27.17, with trailing and forward P/E ratios of 67.62 and 23.81 respectively [1] - The company has experienced weak free cash flow conversion, which has contributed to its stock lagging behind [2] Growth Drivers - SARO benefits from long-term growth visibility, driven by high single-digit to low double-digit expansion in LEAP engine MRO demand, share gains in the mature CFM56 platform, and growth in its component repair business [3] - The company's margin profile is expected to outperform expectations due to efficiency improvements and a favorable mix from higher-margin LEAP work [3] Market Position and Outlook - SARO is positioned to benefit from both structural and cyclical growth in aerospace maintenance, supported by robust secular tailwinds and operational leverage [4] - As MRO visibility strengthens and secondary share overhang diminishes, SARO's stock has potential for rerating, making it a compelling long-term opportunity in the aerospace maintenance sector [4]

Core Viewpoint - StandardAero has been selected by Mauritania Airlines to provide maintenance, repair, and overhaul (MRO) support for CFM56-7B and LEAP-1B engines, enhancing their existing partnership and supporting the airline's fleet of Boeing 737NG and 737 MAX 8 aircraft [1][2][3] Group 1: Company Overview - StandardAero is a leading independent provider of aerospace engine aftermarket services, including MRO and engine component repair, and is listed on NYSE under the ticker SARO [10] - The company has been an authorized MRO provider for the CFM56-7B engine since 2010 and has expanded its capabilities to include support from its Dallas/Fort Worth International Airport location [3][10] - StandardAero has industrialized over 350 component repairs for the LEAP-1A and LEAP-1B engines through its Component Repair Services team [6] Group 2: Partnership with Mauritania Airlines - Mauritania Airlines operates a fleet that includes Boeing 737-700, 737-800, 737 MAX 8, and Embraer E175 aircraft, serving 14 destinations across Africa and Europe [8] - The partnership with StandardAero extends to previous auxiliary power unit (APU) repair services provided for the airline's Embraer E175 fleet [2][3] - StandardAero's support is critical for smaller fleet operators like Mauritania Airlines, ensuring responsive and timely MRO services [3] Group 3: Industry Context - CFM International, a joint venture between GE Aerospace and Safran Aircraft Engines, is a leading supplier of commercial aircraft engines, with a focus on efficiency and reliability [9] - The LEAP and CFM56 engine families are widely used by over 600 operators globally, setting industry standards for cost of ownership and performance [9]

Group 1 - StandardAero, Inc. has appointed Michael L. Kaplan as Chief Legal Officer, effective October 6, 2025, succeeding Steve Sinquefield who is retiring after over 40 years in aviation [1][2] - Kaplan has over 25 years of legal and executive leadership experience, previously serving as Senior Counsel at Norton Rose Fulbright, and has a history with StandardAero in various legal roles [3] - The company is a leading provider of aerospace engine aftermarket services for both fixed and rotary wing aircraft, catering to commercial, business aviation, and military markets [3] Group 2 - Chairman and CEO Russell Ford expressed confidence in Kaplan's return, highlighting his legal and compliance expertise and the value he brings to support StandardAero's strategic growth plan [3]

Group 1: Fund Performance - Parnassus Mid Cap Growth Fund returned 13.29% (net of fees) in Q2 2025, underperforming the Russell Midcap Growth Index which returned 18.20% [1] - Stock selection in the Industrials and Information Technology sectors negatively impacted the fund's performance, while holdings in the Financials sector contributed positively [1] Group 2: StandardAero, Inc. Overview - StandardAero, Inc. (NYSE:SARO) is an aerospace engine aftermarket services provider, with a one-month return of -4.15% and a year-to-date gain of 4.36% as of September 24, 2025, when its stock closed at $25.84 per share and had a market capitalization of $8.643 billion [2] - The fund initiated a position in StandardAero due to its resilient business model, which provides strong recurring revenue from non-discretionary services [3] Group 3: Investment Sentiment - StandardAero, Inc. was held by 48 hedge fund portfolios at the end of Q2 2025, a slight decrease from 50 in the previous quarter [4] - While StandardAero is recognized for its potential, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Group 1 - B. Riley Securities analyst Mayank Mamtani initiated coverage on Theravance Biopharma, Inc. (TBPH) with a Buy rating and a price target of $28, while shares closed at $13.70 [3] - Leerink Partners analyst Faisal Khurshid initiated coverage on Protagonist Therapeutics, Inc. (PTGX) with an Outperform rating and a price target of $73, with shares closing at $59.68 [3] - Barclays analyst David Strauss initiated coverage on StandardAero, Inc. (SARO) with an Overweight rating and a price target of $32, while shares closed at $27.35 [3]