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]

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]