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]

Company Overview - StandardAero Inc. (NYSE:SARO) specializes in aerospace engine aftermarket services for both fixed and rotary wing aircraft on a global scale [4] - The company operates through two segments: Engine Services and Component Repair Services [4] Expansion Details - On August 28, StandardAero celebrated the grand opening of a major expansion at its business aviation maintenance, repair, and overhaul (MRO) facility located at Augusta Regional Airport in Georgia [1] - The expansion represents a 60% increase in size, adding 80,500 square feet to the existing campus, bringing the total facility size to 210,000 square feet [1][2] Capacity and Job Creation - The expansion is expected to enhance the company's capacity to serve business aviation operators in North America and beyond, while creating approximately 100 new technically skilled jobs in the region [2] - New features of the facility include additional hangar and engine shop space, advanced avionics capabilities, and improved customer amenities [2] Operational Timeline - Airframe maintenance services are already being conducted in the new hangar, while the new engine shop is anticipated to be fully operational in the first half of 2026 [3] - StandardAero is actively hiring to support its expanded operations, currently employing around 175 people at the Augusta facility and approximately 7,700 worldwide [3]

Group 1 - The aerospace industry ecosystem is broader than commonly understood, encompassing more than just the commercial sector [1] - The public perception of the aerospace industry may not fully capture its complexity and various components [1]

Summary of StandardAero FY Conference Call Company Overview - **Company**: StandardAero (NYSE: SARO) - **Industry**: Aerospace and Defense - **Key Executives**: Russell Ford (CEO), Dan Satterfield (CFO) Core Insights and Arguments 1. **Ecosystem Understanding**: StandardAero operates across various subsectors of the aerospace industry, including commercial, military, and private aviation, which is not well understood by the investment community [5][6] 2. **MRO Demand**: The demand for Maintenance, Repair, and Overhaul (MRO) services is unprecedented across all segments, driven by increased flying activity post-COVID and an aging fleet [7][13] 3. **Investment in Capacity**: StandardAero has invested in capacity ahead of expected increases in demand, positioning itself to handle the growing MRO needs effectively [14][15] 4. **Long-term Contracts**: The company is seeing airlines approaching them earlier for long-term contracts, indicating strong demand and stability in revenue [17][19] 5. **Component Repair Services (CRS)**: The CRS segment has shown strong organic growth of 25% with margins improving by 360 basis points, highlighting its importance in the overall business strategy [28][30] 6. **Fragmented Market**: The component repair market is highly fragmented, providing opportunities for acquisitions to enhance capabilities and capacity [30][31] 7. **Technological Advancements**: StandardAero is focusing on developing new repair processes, particularly in thermal coatings and composite parts, to stay ahead in the competitive landscape [32][33] 8. **Growth Potential**: The CRS business has grown significantly, from $100 million to a projected $700 million, indicating strong future growth potential [38][47] 9. **LEAP Engine Maintenance**: The LEAP engine is still new, and StandardAero is developing maintenance offerings based on early experiences, which will evolve as more data becomes available [51][52] 10. **Market Position**: StandardAero holds a strong market position with a significant share in various platforms, including CFM56 and turboprop engines, which are driving revenue growth [54][55] Additional Important Insights 1. **Supply Chain Constraints**: The aerospace industry faces ongoing supply chain constraints, particularly for specialized materials used in engine components, which could impact growth [64][65] 2. **Strategic Focus**: The company is focused on managing source-controlled parts and ensuring that its capacity and labor situation remain stable, with no current concerns in these areas [68] 3. **Capital Deployment**: Post-IPO, StandardAero has improved its cash flow by reducing its interest burden, allowing for continued investment in growth opportunities [69][70] This summary encapsulates the key points discussed during the StandardAero FY Conference Call, highlighting the company's strategic positioning, growth potential, and the dynamics of the aerospace industry.

Company Overview - StandardAero is a leading provider of engine aerospace aftermarket services with a pure-play focus on the aero engine aftermarket [3] - 80% of StandardAero's revenue comes from platforms that hold either the 1 or 2 market position, providing strong market visibility [3] - 77% of the company's revenue is derived from customers with long-term agreements, enhancing revenue predictability [3] Business Segments - The company is organized into two main segments: Engine Repair and Overhaul (MRO) and Component Repair Services, which create synergies through partnerships with OEMs and airlines [4] - The engine aftermarket represents the largest portion of the aerospace aftermarket, valued at $111 billion, with engines accounting for 48% of this market [5] Market Characteristics - The engine aftermarket is characterized as the highest growing and most profitable segment within the aerospace aftermarket, with significant regulatory oversight and high barriers to entry [5]

Core Insights - Gabelli Funds, LLC is hosting the annual Aerospace & Defense Symposium on September 4, 2025, at The Harvard Club in New York City, focusing on strong demand outlook and high barriers to entry in the Aerospace and Defense industry [1] - The symposium will feature top executives from over ten companies, discussing themes such as defense spending, aftermarket opportunities, and M&A potential [1] Agenda Highlights - The event will start at 7:30 AM with a welcome and introduction by the Gabelli Funds Team [2] - Notable companies participating include Astronics Corporation, Textron Inc., Moog Inc., HEICO Corporation, and Elbit Systems Ltd., among others, with scheduled presentations throughout the day [2][3] - The agenda includes one-on-one meetings with management, providing attendees with networking opportunities [1]

Group 1 - StandardAero (NYSE: SARO) is a pure-play provider of aircraft engine MRO services in the aerospace and defense industry [1] - The stock price of StandardAero has declined by 10.6% since the analyst's last evaluation [1] - The Aerospace Forum aims to discover investment opportunities in the aerospace, defense, and airline industry, providing data-informed analysis [1] Group 2 - The analyst has a "Buy" rating on StandardAero despite the recent stock price decline [1] - The investing group offers direct access to data analytics monitors, enhancing investment research capabilities [1]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements for StandardAero, Inc. show significant year-over-year growth in revenue and net income for the three and six months ended June 30, 2025. Total assets increased to **$6.48 billion** from **$6.21 billion** at year-end 2024, driven by higher contract assets and inventories. Total liabilities also rose, primarily due to increased long-term debt. Stockholders' equity grew to **$2.51 billion**. The statements reflect the impact of recent debt refinancing, acquisitions, and stock-based compensation following the company's IPO Condensed Consolidated Statements of Operations Highlights (unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,528,943 | $1,347,198 | $2,964,531 | $2,582,921 | | **Operating Income** | $135,570 | $105,077 | $264,493 | $210,584 | | **Net Income** | $67,713 | $5,404 | $130,656 | $8,591 | | **Diluted EPS** | $0.20 | $0.02 | $0.39 | $0.03 | Condensed Consolidated Balance Sheet Highlights (unaudited) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $2,769,014 | $2,485,134 | | **Total Assets** | $6,482,711 | $6,213,601 | | **Total Current Liabilities** | $1,285,227 | $1,273,544 | | **Total Liabilities** | $3,969,428 | $3,840,197 | | **Total Stockholders' Equity** | $2,513,283 | $2,373,404 | Condensed Consolidated Statements of Cash Flows Highlights (unaudited) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(21,103) | $(18,154) | | **Net cash used in investing activities** | $(72,371) | $(44,776) | | **Net cash provided by financing activities** | $81,714 | $65,912 | | **Net (decrease) increase in cash** | $(11,068) | $2,292 | [Note 3: Revenue Recognition](index=14&type=section&id=NOTE%203%3A%20REVENUE%20RECOGNITION) Revenue is disaggregated into two segments: Engine Services and Component Repair Services. For the six months ended June 30, 2025, Engine Services generated **$2.62 billion** and Component Repair Services generated **$345.5 million**. Commercial Aerospace is the largest end market, contributing **$1.75 billion** in revenue. A single customer, Customer A, accounted for **15.9%** of total revenue during this period. Contract assets grew to **$1.07 billion**, and remaining performance obligations stood at approximately **$366.8 million** as of June 30, 2025 Revenue by Segment (Six Months Ended June 30) | Segment | 2025 Revenue (in thousands) | 2024 Revenue (in thousands) | | :--- | :--- | :--- | | Engine Services | $2,618,990 | $2,308,853 | | Component Repair Services | $345,541 | $274,068 | | **Total Revenue** | **$2,964,531** | **$2,582,921** | - A single customer, Customer A, represented **15.9% of revenues** for the six months ended June 30, 2025, a decrease from 22.5% in the same period of 2024[43](index=43&type=chunk) - As of June 30, 2025, the company had approximately **$366.8 million of remaining performance obligations**, primarily related to multi-year engine utilization contracts[45](index=45&type=chunk) [Note 5: Acquisitions](index=16&type=section&id=NOTE%205%3A%20ACQUISITIONS) On August 23, 2024, the Company acquired 100% of Aero Turbine, Inc. for a purchase price of approximately **$130.7 million**. This price includes an initial cash payment and up to **$21.0 million** in contingent consideration based on future gross profit targets. The acquisition added **$75.0 million** in customer relationships and **$51.8 million** in goodwill to the Component Repair Services segment. The purchase price allocation is provisional and subject to adjustments - The company acquired Aero Turbine, Inc. on August 23, 2024, for a purchase price of approximately **$130.7 million**, including contingent consideration[49](index=49&type=chunk) - The acquisition resulted in the recognition of **$75.0 million in customer relationships** and **$51.8 million in goodwill**, which is attributed to Aero Turbine's workforce and market position[50](index=50&type=chunk) [Note 8: Long-Term Debt](index=18&type=section&id=NOTE%208%3A%20LONG-TERM%20DEBT) As of June 30, 2025, total long-term debt, including the current portion, was **$2.35 billion**. In October 2024, the company entered into a New Credit Agreement, establishing a **$2.25 billion Term Loan Facility** and a **$750 million Revolving Credit Facility**. Proceeds were used to repay all amounts under prior credit agreements. This refinancing lowered the company's weighted average interest rate to **6.4%** for the first six months of 2025, down from **9.2%** in the same period of 2024 Long-Term Debt Composition (as of June 30, 2025) | Facility | Amount (in thousands) | | :--- | :--- | | New 2024 Term Loan Facilities | $2,238,750 | | New 2024 Revolving Credit Facility | $95,000 | | Finance leases & Other | $20,227 | | **Total** | **$2,353,977** | - On October 31, 2024, the Company entered into a new credit agreement, refinancing its debt structure with new term loan and revolving credit facilities, and used the proceeds to repay prior facilities[57](index=57&type=chunk) - The weighted average interest rate on borrowings decreased to **6.4%** for the six months ended June 30, 2025, compared to **9.2%** for the same period in 2024, due to the refinancing[70](index=70&type=chunk) [Note 19: Segment Information](index=30&type=section&id=NOTE%2019%3A%20SEGMENT%20INFORMATION) The company operates in two segments: Engine Services and Component Repair Services. For the six months ended June 30, 2025, Engine Services revenue was **$2.62 billion** with a Segment Adjusted EBITDA of **$352.5 million (13.5% margin)**. Component Repair Services revenue was **$345.5 million** with a Segment Adjusted EBITDA of **$99.0 million (28.7% margin)**. Both segments showed year-over-year growth in revenue and profitability Segment Performance (Six Months Ended June 30, 2025) | Segment | Total Segment Revenue (in thousands) | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | | Engine Services | $2,618,990 | $352,518 | 13.5% | | Component Repair Services | $345,541 | $99,001 | 28.7% | Segment Performance (Six Months Ended June 30, 2024) | Segment | Total Segment Revenue (in thousands) | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | | Engine Services | $2,308,853 | $303,681 | 13.2% | | Component Repair Services | $274,068 | $70,310 | 25.7% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **14.8%** revenue growth for the first six months of 2025 to continued strength in commercial aerospace and business aviation, alongside contributions from the Aero Turbine acquisition. Adjusted EBITDA margin improved to **13.6%** from **13.0%** year-over-year, driven by favorable product mix, volume growth, and pricing. The company's liquidity remains strong with **$715.5 million** available as of June 30, 2025. Key operational factors include the aging aircraft fleet driving maintenance demand, offset by ongoing supply chain risks - Key business drivers include an aging installed base of aircraft requiring more maintenance, while supply chain disruptions pose a risk to parts availability and engine throughput[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Net Income** | $130,656 | $8,591 | | Income tax expense | $46,211 | $37,879 | | Depreciation and amortization | $97,223 | $92,876 | | Interest expense | $87,626 | $155,599 | | Other Adjustments | $41,148 | $41,005 | | **Adjusted EBITDA** | **$402,864** | **$335,950** | | **Adjusted EBITDA Margin** | 13.6% | 13.0% | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) For Q2 2025, revenue increased **13.5% to $1.53 billion**, and net income surged to **$67.7 million** from **$5.4 million** in Q2 2024. For H1 2025, revenue grew **14.8% to $2.96 billion**, with net income reaching **$130.7 million** compared to **$8.6 million** in H1 2024. The significant increase in profitability was primarily driven by higher revenue and a **43.7%** decrease in interest expense due to debt refinancing - Q2 2025 revenue grew **13.5% YoY**, driven by strength in commercial aerospace (**+13.7%**), business aviation (**+8.9%**), and military/helicopter (**+11.7%**) end markets[169](index=169&type=chunk) - Interest expense for H1 2025 decreased by **$68.0 million (43.7%)** compared to H1 2024, mainly due to the repayment of Prior Senior Notes and the new credit agreement[181](index=181&type=chunk) - SG&A expense for H1 2025 increased by **$31.6 million**, primarily due to higher personnel costs, professional fees related to being a public company, and stock compensation expense[179](index=179&type=chunk) [Segment Results](index=42&type=section&id=Segment%20Results) In Q2 2025, Engine Services revenue grew **11.5% to $1.35 billion**, with Segment Adjusted EBITDA up **16.2% to $178.5 million**. Component Repair Services revenue surged **31.3% to $178.3 million**, with Segment Adjusted EBITDA up **49.6% to $51.6 million**. The strong performance in Component Repair was significantly aided by the Aero Turbine acquisition, which contributed **$27.3 million** in revenue for the quarter - Engine Services Segment Adjusted EBITDA for H1 2025 increased **16.1% to $352.5 million**, driven by favorable product mix, volume growth, pricing, and improved productivity[192](index=192&type=chunk) - Component Repair Services segment revenue for H1 2025 grew **26.1%**, with the Aero Turbine acquisition contributing **$49.2 million** of this growth[193](index=193&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had total available liquidity of **$715.5 million**, consisting of **$91.5 million in cash** and **$639.0 million** available under its revolving credit facility. Total debt stood at **$2.32 billion**. Net cash used in operating activities was **$21.1 million** for the first six months of 2025, reflecting working capital investments to support business growth. The company was in compliance with all debt covenants - Total available liquidity as of June 30, 2025, was **$715.5 million**, comprising **$91.5 million in cash** and **$639.0 million** in revolving credit facility availability[195](index=195&type=chunk) - Net cash used in operating activities for H1 2025 was **$21.1 million**, primarily due to a **$251.3 million increase** in operating assets and liabilities (working capital) driven by business growth[204](index=204&type=chunk) - The company was in compliance with all covenants in the New Credit Agreement as of June 30, 2025[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate, inflation, and currency risks. Interest rate risk on its variable-rate debt is managed through interest rate swap and cap agreements. Inflation risk affects costs for labor and materials, which the company attempts to mitigate through price increases and operational efficiencies. Currency risk from foreign operations is managed through natural hedges and foreign exchange contracts - The company uses interest rate swaps and caps to manage exposure on its floating-rate debt. As of March 2023, it has a **$400 million swap** fixing SOFR at **3.71%** and a **$1.5 billion cap** on SOFR at **4.45%**[215](index=215&type=chunk) - To manage currency risk, the company entered into a foreign currency contract on April 7, 2025, with a notional value of **GBP 39.5 million** and **CAD 136.5 million**, maturing at year-end[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective at a reasonable assurance level. This is due to previously identified material weaknesses in internal control over financial reporting related to the control environment, risk assessment, monitoring, IT general controls, and the period-end financial reporting process. The company is in the process of implementing remediation efforts, including hiring additional personnel and improving control design and testing - Management concluded that disclosure controls and procedures were **not effective** as of June 30, 2025, due to existing material weaknesses in internal control over financial reporting[220](index=220&type=chunk) - Material weaknesses identified include deficiencies in the control environment, risk assessment, monitoring, written policies, management review processes, and IT general controls[221](index=221&type=chunk)[224](index=224&type=chunk) - Remediation efforts are underway, including hiring more accounting and IT staff, developing monitoring controls, and improving the design and testing of IT controls[223](index=223&type=chunk)[225](index=225&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business. Management does not expect the outcome of these matters to have a material adverse effect on the company's consolidated financial position - The company is involved in legal actions and claims in the ordinary course of business but does not expect them to have a material adverse effect on its financial position[228](index=228&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred to the risk factors disclosed in the 2024 Form 10-K[229](index=229&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or purchases of equity securities by the issuer during the period - There were no unregistered sales of equity securities or use of proceeds to report for the period[230](index=230&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[231](index=231&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[232](index=232&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20information) The company disclosed the adoption of Rule 10b5-1 trading plans by two executive officers, Alexander Trapp and Marc Drobny, on June 11, 2025. These plans cover the potential sale of up to **46,320** and **90,626 shares** of common stock, respectively, and are scheduled to expire on September 18, 2026 Executive Rule 10b5-1 Trading Plans Adopted | Name and Title | Date of Adoption | Expiration Date | Aggregate Number of Securities to be Sold | | :--- | :--- | :--- | :--- | | Alexander Trapp, Chief Strategy Officer | 6/11/2025 | 9/18/2026 | Up to 46,320 shares | | Marc Drobny, President, Engine Services | 6/11/2025 | 9/18/2026 | Up to 90,626 shares | [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and Inline XBRL documents

Core Insights - StandardAero, Inc. reported $1.53 billion in revenue for the quarter ended June 2025, showing no year-over-year change, with an EPS of $0.20 compared to $0 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $1.48 billion by 3.18%, while the EPS fell short of the consensus estimate of $0.21 by 4.76% [1] Revenue Performance - Component Repair Services generated $178.27 million in revenue, surpassing the average estimate of $176.5 million from three analysts [4] - Engine Services revenue was reported at $1.35 billion, exceeding the average estimate of $1.31 billion from three analysts [4] EBITDA Performance - Adjusted EBITDA for Component Repair Services was $51.64 million, compared to the estimated $47.38 million by three analysts [4] - Adjusted EBITDA for Engine Services reached $178.51 million, exceeding the average estimate of $171.07 million from three analysts [4] Stock Performance - StandardAero, Inc. shares have returned -5% over the past month, while the Zacks S&P 500 composite increased by 3.1% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]