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]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported revenue of $1.53 billion, a 13.5% increase from $1.35 billion in Q2 2024, with 11.5% of this growth being organic [19][20] - Adjusted EBITDA rose to $205 million, reflecting a 20% increase year-over-year, with adjusted EBITDA margins expanding by 80 basis points to 13.4% [20][29] - Net income increased significantly to $68 million from $5 million in the prior year, driven by higher sales and expanding margins [20] Business Line Data and Key Metrics Changes - Engine Services revenue increased by $139 million to $1.35 billion, representing 11.5% growth, driven by strong aftermarket activity and production ramp-up in commercial aerospace [21] - Component Repair Services revenue grew by 31% year-over-year to $178 million, with adjusted EBITDA increasing by 50% and margins expanding to a record 29% [23][24] Market Data and Key Metrics Changes - Commercial aerospace sales grew 14% year-over-year, with strong demand for engine aftermarket services [7] - Business aviation sales increased by 9%, driven by demand for midsize and super midsize business jets [8] - Military sales grew by 12%, supported by the AeroTurbine acquisition and growth in specific military programs [8] Company Strategy and Development Direction - The company is focused on expanding its LEAP program, enhancing CFM56 and CF34 capacity, and improving component repair services [10][17] - The company aims to maintain a disciplined approach to capital allocation, combining organic investments with strategic M&A opportunities [17][18] - The expansion of the Augusta facility is expected to add 60% capacity and create approximately 100 new jobs [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the company's ability to navigate supply chain challenges [31] - The company is increasing its 2025 revenue guidance to between $5.875 billion and $6.025 billion, reflecting continued strong demand across core end markets [28][30] - Adjusted EBITDA guidance has also been raised to a range of $790 million to $810 million, driven by better-than-expected margins [28] Other Important Information - The company expects free cash flow for 2025 to be in the range of $155 million to $175 million, with a strong cash conversion cycle anticipated in the second half of the year [25][30] - The company’s leverage improved to 2.99 times net debt to EBITDA, down from 5.4 times in 2024 [27] Q&A Session Summary Question: Thoughts on revenue cadence in Engine Services - Management confirmed that revenue growth expectations remain strong, particularly for the CF34 program, and expressed confidence in the second half guidance [38] Question: Margin dilution from new programs - Management indicated that margin expansion would have been greater without the ramp programs, but losses are narrowing significantly [41] Question: Growth dynamics for LEAP, CFM56, and CF34 - Management explained that LEAP is being carefully ramped up for precision, while CF34 is expected to see increased work due to aging engines [46][49] Question: Engine exchange program details - Management clarified that the engine exchange program involves a one-time investment and is designed to be self-funding over time [59][112] Question: Cash flow expectations for the second half - Management expects strong free cash flow driven by the unwinding of working capital and improved collections [100][102]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported revenue of $1.53 billion, a 13.5% increase from $1.35 billion in Q2 2024, with 11.5% of this growth being organic [18] - Adjusted EBITDA rose to $205 million, reflecting a 20% growth compared to $170 million in the prior year, with adjusted EBITDA margins expanding by 80 basis points to 13.4% [19][28] - Net income increased significantly to $68 million from $5 million year-over-year, driven by higher sales and expanding margins [19] Business Line Data and Key Metrics Changes - Engine Services revenue increased by $139 million to $1.35 billion, representing an 11.5% growth, driven by strong aftermarket activity and production ramp-up on growth programs [20] - Component Repair Services revenue grew by 31% year-over-year to $178 million, with adjusted EBITDA growing 50% and achieving a record margin of 29% [22] Market Data and Key Metrics Changes - Commercial aerospace sales grew by 14% year-over-year, with strong demand for CF34, LEAP, CFM56, and turboprop platforms [6] - Business aviation sales increased by 9%, while military sales grew by 12% due to contributions from the AeroTurbine acquisition [7] Company Strategy and Development Direction - The company is focused on expanding its LEAP program, enhancing CFM56 and CF34 capacity, and improving capabilities in component repair services [9] - The company aims to maintain a disciplined approach to capital allocation, combining organic investments with strategic M&A opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the ability to navigate supply chain challenges, with expectations for continued revenue growth and margin expansion [30][27] - The company has increased its 2025 revenue guidance to between $5.875 billion and $6.025 billion, reflecting strong performance in Engine Services [27] Other Important Information - The company expects free cash flow for 2025 to be in the range of $155 million to $175 million, with a significant cash flow expected in the second half of the year [24] - The company’s leverage improved to 2.99 times net debt to EBITDA, down from 5.4 times in 2024 [26] Q&A Session Summary Question: Thoughts on revenue cadence in Engine Services - Management confirmed that revenue growth expectations remain strong, particularly for the CF34 program, and expressed confidence in the second half guidance [35][36] Question: Margin dilution from new programs - Management indicated that while margins expanded by 80 basis points, they would have been higher without the ramp programs, and profitability is expected to improve as revenue increases [38][39] Question: Growth dynamics for LEAP, CFM56, and CF34 - Management explained that LEAP is being carefully ramped up for precision, while CF34 is expected to see increased work due to aging engines coming due for major overhauls [45][46] Question: Engine exchange program details - Management clarified that the engine exchange program involves a one-time investment for an exchange engine, which is then overhauled and reused, maintaining an asset-light structure [47][56] Question: M&A pipeline and organic growth opportunities - Management stated that the M&A pipeline remains robust, with a focus on disciplined capital deployment, while also highlighting strong organic growth opportunities [86][89]

Financial Performance Highlights - Q2 2025 revenue reached $1,529 million, a 13.5% year-over-year increase compared to $1,347 million in Q2 2024[15] - Adjusted EBITDA for Q2 2025 was $205 million, representing a 20.1% year-over-year increase from $170 million in Q2 2024[15] - Adjusted EBITDA margin improved to 13.4% in Q2 2025, an increase of 80 bps year-over-year[15] - For the first half of 2025, revenue totaled $2,965 million, a 14.8% increase compared to $2,583 million in the first half of 2024[18] - First half 2025 Adjusted EBITDA reached $403 million, a 19.9% increase year-over-year from $336 million[18] Segment Performance - Engine Services revenue for Q2 2025 was $1,351 million, up 11.5% year-over-year from $1,211 million in Q2 2024[34] - Engine Services Adjusted EBITDA for Q2 2025 was $179 million, a 16.2% increase year-over-year from $154 million[34] - Component Repair Services revenue for Q2 2025 was $178 million, a 31.3% increase year-over-year from $136 million in Q2 2024[39] - Component Repair Services Adjusted EBITDA for Q2 2025 was $52 million, a 49.6% increase year-over-year from $35 million[39] Updated Guidance - The company raised its full-year 2025 revenue guidance to $5,875 - $6,025 million, representing a 12% to 15% year-over-year increase[21] - Full-year 2025 Adjusted EBITDA guidance was raised to $790 - $810 million, with an approximate 13.4% margin[21]

[Financial Highlights & CEO Commentary](index=1&type=section&id=Financial%20Highlights%20%26%20CEO%20Commentary) StandardAero achieved strong Q2 2025 results with double-digit revenue growth, improved net income and Adjusted EBITDA margins, and raised full-year targets Q2 2025 Financial Performance | Metric | Q2 2025 | YoY Change | | :--- | :--- | :--- | | Revenue | $1,528.9 million | +13.5% | | Net Income | $67.7 million | +$62.3 million | | Net Income Margin | 4.4% | +400 bps | | Adjusted EBITDA | $204.6 million | +20.1% | | Adjusted EBITDA Margin | 13.4% | +80 bps | - The CEO attributed the strong results to solid execution, a robust commercial aerospace aftermarket, and significant milestones in the LEAP engine program, which now has bookings exceeding **$1.5 billion**[3](index=3&type=chunk)[8](index=8&type=chunk) [Second Quarter 2025 Performance Analysis](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Analysis) Q2 2025 performance saw broad growth across segments and markets, with net income surging due to higher operating income and reduced interest expenses, improving the leverage ratio [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) Consolidated revenue grew **13.5% to $1.53 billion**, with net income surging to **$67.7 million** due to improved operating income and lower interest expense, while Adjusted EBITDA margin expanded and leverage improved - Revenue growth was strong across all end markets: **commercial aerospace (+13.7%)**, **business aviation (+8.9%)**, and **military/helicopter (+11.7%)**, with the latter boosted by the ATI acquisition[4](index=4&type=chunk) Consolidated Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $1,528.9 M | $1,347.2 M | | Net Income | $67.7 M | $5.4 M | | Adjusted EBITDA | $204.6 M | $170.4 M | | Net Debt | $2,262.5 M | $3,266.0 M | | Net Debt to Adj. EBITDA | 3.0x | 5.4x | [Segment Performance](index=1&type=section&id=Segment%20Performance) Both Engine Services and Component Repair Services segments achieved strong revenue growth and margin expansion, with Component Repair notably boosted by the ATI acquisition and **31.3%** revenue growth Engine Services Segment Performance | Engine Services Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $1,350.7 M | $1,211.5 M | | Adjusted EBITDA | $178.5 M | $153.7 M | | Adjusted EBITDA Margin | 13.2% | 12.7% | Component Repair Services Segment Performance | Component Repair Services Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $178.3 M | $135.7 M | | Adjusted EBITDA | $51.6 M | $34.5 M | | Adjusted EBITDA Margin | 29.0% | 25.4% | - The Component Repair Services segment's revenue growth included a **$27.3 million** contribution from the ATI acquisition[10](index=10&type=chunk) [Full Year 2025 Guidance](index=2&type=section&id=Full%20Year%202025%20Guidance) StandardAero raised its full-year 2025 guidance, projecting higher revenue and Adjusted EBITDA with improved segment margins, driven by strong first-half performance and sustained market demand FY 2025 Financial Guidance | FY 2025 Guidance | Updated | Prior | | :--- | :--- | :--- | | Revenue | $5,875 - $6,025 M | $5,825 - $5,975 M | | Adjusted EBITDA | $790 - $810 M | $775 - $795 M | | Engine Services Margin | 13.3% | ~13% | | Comp. Repair Services Margin | 28.3% | ~27% | | Free Cash Flow | $155 - $175 M | Unchanged | End Market Revenue Growth Assumptions | End Market Revenue Growth Assumptions | | | :--- | :--- | | Commercial Aerospace | Mid-Teens Growth | | Military & Helicopter | High Single Digit Growth | | Business Aviation | High Single Digit Growth | - The company expects compounding benefits in the coming years from its growth initiatives, including key platform programs and capacity expansion, which are anticipated to drive revenue growth, margin expansion, and attractive free cash flow[12](index=12&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents StandardAero's unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Statements of Cash Flows [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$6.48 billion** as of June 30, 2025, with total stockholders' equity growing to **$2.51 billion** due to increased paid-in capital and reduced accumulated deficit Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 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 | | Long-Term Debt | $2,295,131 | $2,207,977 | | Total Liabilities | $3,969,428 | $3,840,197 | | Total Stockholders' Equity | $2,513,283 | $2,373,404 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net income significantly increased to **$67.7 million**, driven by **13.5%** revenue growth and reduced interest expense, resulting in diluted EPS of **$0.20** Condensed Consolidated Statements of Operations (in thousands) | Income Statement (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $1,528,943 | $1,347,198 | | Operating Income | $135,570 | $105,077 | | Interest Expense | $43,835 | $78,051 | | Net Income | $67,713 | $5,404 | | Diluted EPS | $0.20 | $0.02 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was **$21.1 million**, with **$72.4 million** used in investing and **$81.7 million** provided by financing, ending with **$91.5 million** in cash Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | 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 | | Cash at end of the period | $91,513 | $60,274 | [Supplemental Financial Information & Reconciliations](index=10&type=section&id=Supplemental%20Financial%20Information%20%26%20Reconciliations) This section details financial breakdowns by segment and reconciles GAAP measures to non-GAAP metrics such as Adjusted EBITDA, Net Debt, and Free Cash Flow [Segment Financial Details](index=10&type=section&id=Segment%20Financial%20Details) In Q2 2025, Engine Services generated **$1.35 billion** revenue and **$178.5 million** Adjusted EBITDA, while Component Repair Services achieved **$178.3 million** revenue and **$51.6 million** Adjusted EBITDA, with both segments showing growth Q2 2025 Segment Results (in thousands) | Q2 2025 Segment Results (in thousands) | Revenue | Segment Adjusted EBITDA | Margin | | :--- | :--- | :--- | :--- | | Engine Services | $1,350,677 | $178,509 | 13.2% | | Component Repair Services | $178,266 | $51,640 | 29.0% | [Reconciliation of Non-GAAP Measures](index=12&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The company provides reconciliations for key non-GAAP metrics, including Adjusted EBITDA, Net Debt, and Free Cash Flow, for Q2 2025 and as of June 30, 2025 Reconciliation: Net Income to Adjusted EBITDA (Q2 2025, in thousands) | Reconciliation: Net Income to Adjusted EBITDA (Q2 2025, in thousands) | | | :--- | :--- | | Net income | $67,713 | | Income tax expense | $24,022 | | Depreciation and amortization | $48,547 | | Interest expense | $43,835 | | Other adjustments | $20,520 | | **Adjusted EBITDA** | **$204,637** | Reconciliation: Debt to Net Debt (June 30, 2025, in millions) | Reconciliation: Debt to Net Debt (June 30, 2025, in millions) | | | :--- | :--- | | Total Debt | $2,354.0 | | Less: Cash | $91.5 | | **Net Debt** | **$2,262.5** | Reconciliation: Cash Flow to Free Cash Flow (Q2 2025, in millions) | Reconciliation: Cash Flow to Free Cash Flow (Q2 2025, in millions) | | | :--- | :--- | | Cash Flow from Operations | $2.9 | | Total Capital Expenditures | $(33.7) | | **Free Cash Flow** | **$(30.8)** | [Important Disclosures](index=4&type=section&id=Important%20Disclosures) This section provides important disclosures, including safe harbor statements for forward-looking information and explanations of non-GAAP financial measures like Adjusted EBITDA [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) Forward-looking statements regarding future performance and financial targets are subject to significant risks and uncertainties, and actual results may differ materially - Forward-looking statements are intended to be covered by safe harbor provisions and involve known and unknown risks. The company does not undertake any obligation to update these statements[17](index=17&type=chunk)[21](index=21&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) StandardAero uses non-GAAP financial measures like Adjusted EBITDA, Net Debt to Adjusted EBITDA, and Free Cash Flow to provide greater transparency into core operating results and evaluate performance - The company uses non-GAAP measures to exclude items that may not be indicative of core operating results, allowing for better comparison over time and with peers. A reconciliation of these measures to their most comparable GAAP counterparts is provided[22](index=22&type=chunk)[23](index=23&type=chunk)[26](index=26&type=chunk)

Core Insights - Carlyle Group Inc reported a total market value of $5.03 billion for its Q2 2025 holdings, reflecting a 32% increase from the previous quarter's $3.80 billion [1][2] - The investment portfolio saw only one new purchase, one addition, two reductions, and four complete sell-offs, indicating a highly concentrated stock holding with the top ten holdings accounting for 99.72% of the total market value [1][2] Holdings Summary - The largest holding is StandardAero Inc, with approximately 152.67 million shares valued at about $4.83 billion, representing 95.06% of the portfolio, and showing a 13.64% increase in shares from the previous quarter [2][5] - Soleno Therapeutics Inc is the second-largest holding, with around 860,980 shares valued at approximately $72.08 million, maintaining its share count from the previous quarter [3][5] - Phathom Pharmaceuticals ranks third, holding about 3.5 million shares valued at approximately $33.53 million, also unchanged from the previous quarter [3][5] - Pony.ai, a Chinese autonomous driving company, is the fourth-largest holding with approximately 2.36 million shares valued at about $31.18 million, showing no change in share count [4][5] - Invitation Homes Inc, focusing on single-family rental properties, is the fifth-largest holding with around 477,500 shares valued at approximately $15.66 million, also unchanged [4][5] Trading Activity - The largest purchase in Q2 was StandardAero Inc, while the only new position established was in Crowdstrike Holdings Inc, with a market value of approximately $6.26 million [5][6] - Major sell-offs included WeRide Inc, SEACOR Marine Holdings Inc, Complete Solaria Inc, and Spruce Biosciences Inc, with WeRide and SEACOR Marine being completely sold out [6][7]

Group 1 - StandardAero (NYSE: SARO) is a pure-play provider of aircraft engine MRO services in the aerospace and defense industry [2] - Despite favorable long-term sector tailwinds, SARO stock has underperformed since coverage was initiated with a Buy rating in March [2] - The investing group, The Aerospace Forum, aims to discover investment opportunities in the aerospace, defense, and airline industry [2] Group 2 - The analyst provides context to developments in the aerospace industry, describing how they might affect investment theses [2] - The analysis is driven by data-informed insights, with direct access to data analytics monitors available through the investing group [2]

Core Insights - Carlyle Group Inc reported a total market value of $3.80 billion for Q1 2025, down from $4.15 billion in the previous quarter, representing an 8% decrease [1][2] - The firm made no new stock purchases, increased its position in one stock, reduced holdings in five stocks, and completely exited four stocks [1][2][5] - The top ten holdings accounted for 99.33% of the total market value [2] Holdings Summary - StandardAero remains the largest holding with approximately 134 million shares valued at about $3.6 billion, making up 92.44% of the portfolio, with a significant increase in shares by 1912.52% [3][4] - Soleno Therapeutics is the second largest holding with around 860,980 shares valued at approximately $61.4 million, representing 1.59% of the portfolio, showing a decrease of 37.41% in shares [3][4] - WeRide (文远知行) holds the third position with about 3.42 million shares valued at approximately $46.5 million, maintaining its share count from the previous quarter [3][4] - Phathom Pharmaceuticals and Pony.ai are the fourth and fifth largest holdings, with values of approximately $21.9 million and $20.8 million, respectively, both maintaining their share counts [3][4] Sell and Exit Activities - Carlyle Group completely exited positions in Ramaco Resources-A, Riley Exploration Permian, Robinhood, and Spyre Therapeutics during the first quarter [3][5] - The top sold stocks included Getty Images, Riley Exploration Permian, Robinhood, Spyre Therapeutics, and Ramaco Resources, with minimal changes in portfolio percentage [5][7]