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]

is a part as well up as you see, some 8.7%. >> Meanwhile, the Paris Air Show, the world's largest aerospace industry exhibition event, takes place this week. Our Phil LeBeau joins us this morning from Paris with the CEO of engine maintenance company Standard Aero.Morning, Phil. >> Good morning. Carl.Russ Ford, CEO of Standard Aero. I think some people are watching this right now and they say, I know a little bit about standard aero, but I don't know a whole lot. Explain to people why that engine maintenance ...

Summary of Standard Aero Conference Call Company Overview - **Company**: Standard Aero - **Industry**: Aerospace Maintenance, Repair, and Overhaul (MRO) - **Position**: Largest independent manufacturer of maintenance, repair, and overhaul for jet engines, operating in over 50 countries with a high degree of contracted work [5][6] Core Business Segments - **Primary Segment**: Engine services overhaul, covering commercial aerospace, military aircraft, helicopters, and private jets [5][6] - **Secondary Segment**: Proprietary component repair for engine components, which has grown from $100 million to over $500 million in revenue [26][29] Market Dynamics - **Market Size**: The aircraft engine aftermarket is over $100 billion annually, with approximately half attributed to engine maintenance [7] - **Growth Drivers**: - Aging global fleet of aircraft, leading to increased demand for maintenance [9] - Rising airline flight demand outpacing new aircraft deliveries [10][11] - **Ecosystem**: The aerospace ecosystem includes OEMs, operators, and maintenance providers, with Standard Aero positioned as a critical bridge between OEMs and operators [12][14] Competitive Advantages - **Market Position**: Holds number one or two market share across multiple engine platforms [5][6] - **Regulatory Compliance**: The engine segment is highly regulated, creating high barriers to entry [8][9] - **Test Cells**: Significant investment in engine test cells, which are crucial for safety and operational efficiency, with costs ranging from $40 million to $60 million each [22][24] - **Labor Efficiency**: High labor margins due to a skilled workforce and continuous improvement initiatives [46][48] Financial Performance - **Recent Growth**: Achieved 16% revenue growth and 20% EBITDA growth in the last quarter [30] - **Long-term Growth**: Consistent growth rates over the past decade, with expectations for continued expansion through new engine platforms and acquisitions [31][32] Future Outlook - **Investment in New Programs**: Over $100 million invested in the LEAP engine program, expected to be the largest commercial airplane engine program by the mid-2030s [33] - **Component Repair Growth**: Anticipated growth in component repair due to new engine repairs and acquisitions [43][44] - **Market Expansion**: Opportunities identified in underrepresented regions like Asia and South America, with plans to enter these markets through strong local partnerships [55][57] Risks and Challenges - **Tariff Impacts**: Ongoing review of contracts to mitigate tariff exposure, with a focus on maintaining pricing power [73][74] - **Labor Market**: The need to attract and retain skilled labor in a competitive aerospace industry [50][52] Conclusion Standard Aero is well-positioned in the aerospace MRO industry, benefiting from a strong market position, significant growth opportunities, and a robust operational framework. The company is focused on leveraging its competitive advantages to sustain growth while navigating potential risks associated with tariffs and labor market dynamics.