Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.4 billion, a 16% increase from $1.2 billion in Q1 2024, with 14.4% being organic growth [19] - Adjusted EBITDA rose to $198 million, up 20% from $166 million in the prior year [19] - Adjusted EBITDA margin improved to 13.8%, a 40 basis point increase compared to Q1 2024 [20] Business Line Data and Key Metrics Changes - Engine Services revenue increased by $171 million to $1.3 billion, representing 16% growth, driven by strong demand in the commercial aftermarket [21] - Component Repair Services revenue grew by 21% to $167 million, supported by the ATI acquisition, contributing $22 million [22] - Adjusted EBITDA for Component Repair Services grew 32%, with a margin expansion of 240 basis points to 28% [22] Market Data and Key Metrics Changes - Commercial aerospace grew 18% year over year, driven by strong demand across major platforms [9] - Business Aviation Group increased 13% compared to Q1 last year [10] - Military business grew 10%, aided by the AeroTurbine acquisition and growth in the J85 program [10] Company Strategy and Development Direction - The company is focused on ramping up the LEAP program and has secured additional regulatory approvals to support a broader set of airlines globally [14] - Continued investment in CFN56 and CF34 platforms, with a record quarter on the CF34 platform [15] - The company is actively pursuing M&A opportunities, with a growing pipeline of targets [17] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the strong demand in the engine aftermarket and is increasing revenue and adjusted EBITDA guidance for 2025 [18] - The estimated net impact of tariffs for 2025 is projected to be around $15 million, which has been incorporated into the updated guidance [13] - The company is well-positioned to navigate macroeconomic uncertainties and trade environment challenges [12] Other Important Information - Free cash flow was a use of $64 million in Q1, which was expected due to working capital seasonality [23] - The company’s leverage improved to 3.09 times, down from 5.7 times at the end of Q1 2024 [24] - The company exited a non-core hydraulics business to focus on higher-margin product lines [71][72] Q&A Session Summary Question: Confidence in CF34 platform growth despite U.S. Airlines' slower capacity - Management noted that maintenance activity has not seen a pullback, as engine MRO is typically the last area airlines cut back on during weak demand [33] Question: M&A environment and opportunities - Management expressed confidence in pursuing M&A opportunities, stating that the environment has become more robust with attractive targets available [36] Question: Growth drivers in Engine Services - Management highlighted military and CF34 as key drivers, with expectations for LEAP and CFM56 to contribute significantly in the future [39] Question: Margin headwinds from LEAP and CFM56 - Management confirmed that while there are margin headwinds due to initial lower margins on LEAP and CFM56, both programs are expected to be accretive long-term [48] Question: Update on ATI acquisition - The integration of ATI is progressing well, with strong revenue and margins, and it is enhancing the existing J85 program work [75][76] Question: Supply chain for LEAP parts - Management reported no significant supply chain issues for LEAP parts, as they are still in the early stages of industrialization [81] Question: Revenue seasonality - Management indicated a typical trend of revenue building from Q1 to Q2 and further into the second half of the year, supported by a diverse platform portfolio [100] Question: Repair capabilities and market potential - Management emphasized the ongoing development of repair capabilities in close coordination with OEMs, indicating a strong runway for growth in the component repair business [88]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.4 billion, a 16% increase from $1.2 billion in Q1 2024, with 14.4% being organic growth [18] - Adjusted EBITDA rose to $198 million, up 20% from $166 million in the prior year [18] - Adjusted EBITDA margin improved to 13.8%, a 40 basis point increase year-over-year [19] - Net income surged to $63 million compared to $3 million in the prior period, driven by increased earnings and reduced interest expenses [19] - Free cash flow was a use of $64 million, reflecting typical seasonality and investments, but improved by $38 million year-over-year [22] Business Line Data and Key Metrics Changes - Engine Services revenue increased by $171 million to $1.3 billion, representing 16% growth, driven by strong demand in the commercial aftermarket [20] - Component Repair Services revenue grew 21% to $167 million, supported by the ATI acquisition, contributing $22 million [21] - Engine Services adjusted EBITDA grew 16%, while Component Repair Services adjusted EBITDA increased by 32%, with margins expanding to 28% [21] Market Data and Key Metrics Changes - Commercial aerospace grew 18% year-over-year, with strong demand across major platforms [7] - Business Aviation Group increased 13% year-over-year, driven by demand for midsize and large cabin business aircraft [9] - Military business grew 10%, aided by the AeroTurbine acquisition and growth in the J85 program [9] Company Strategy and Development Direction - The company is focused on ramping up the LEAP program, having secured additional regulatory approvals and completed its first LEAP shop visit [13][14] - Continued investment in CFN56 and CF34 platforms, with record performance noted in the CF34 platform [14] - Expansion of engine component repair capabilities is a priority, with significant progress made in developing new LEAP repairs [15] - The company is actively pursuing M&A opportunities, with a growing pipeline of targets and a disciplined approach to capital allocation [16] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the commercial aftermarket, citing strong long-term demand visibility despite short-term volatility in passenger traffic [7][12] - The company raised its sales and earnings guidance for 2025, now expecting revenue between $5.825 billion and $5.975 billion and adjusted EBITDA between $775 million and $795 million [25] - Management acknowledges geopolitical and macroeconomic uncertainties but emphasizes a solid foundation for growth [26] Other Important Information - The estimated net impact of tariffs for 2025 is projected to be around $15 million, which has been incorporated into the updated guidance [12][25] - The company is managing tariff impacts through various mitigation actions, including contractual mechanisms and pricing opportunities [11] Q&A Session Summary Question: Confidence in CF34 platform growth amidst U.S. airlines' slower capacity - Management expressed confidence in maintenance activity remaining stable despite airlines' comments on passenger traffic volatility, as engine MRO is typically nondiscretionary [31] Question: M&A environment and opportunities - Management indicated that they remain active in pursuing M&A opportunities, with a robust environment and attractive targets available [34] Question: Growth drivers in Engine Services - Management highlighted military and CF34 as key growth drivers, with expectations for LEAP and CFM56 to contribute significantly in the future [36][60] Question: Margin expectations for the remainder of the year - Management noted that margin headwinds are primarily from LEAP and CFM56 growth, but they expect both programs to be accretive long-term [43] Question: Update on ATI acquisition - The integration of ATI is progressing well, with strong revenue contributions and operational synergies being realized [68] Question: Supply chain for LEAP parts - Management reported no significant supply chain issues for LEAP parts, as they are in the final industrialization phase [74] Question: Repair capabilities and market opportunities - Management emphasized a methodical approach to developing repair capabilities in close coordination with OEMs, with ongoing opportunities for expansion [80][83]

Q1 2025 Financial Performance - Sales increased by 1.7% to $4.306 billion, with a 3.3% increase on a daily basis[23] - Diluted EPS increased by 2.5% to $9.86[23] - Gross profit margin increased by 30 bps to 39.7%[23] - Operating margin decreased by 20 bps to 15.6%[23] Segment Performance - High-Touch Solutions N A sales decreased by 0.2% to $3.397 billion, but increased 1.3% on a daily basis[28] - Endless Assortment sales increased by 10.3% to $828 million, with a 15.3% increase on a daily, constant currency basis[36] - Zoro's daily sales grew by 18.4%[36] Full Year 2025 Guidance - The company reaffirmed its full-year sales guidance of $17.6 billion to $18.1 billion, representing a 2.7% to 5.2% increase[51] - The company expects daily, constant currency sales growth of 4.0% to 6.5%[51] - The company expects diluted EPS of $39.00 to $41.50, representing flat to 6.5% growth[51]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 23% for the year and 37% in Q4, reflecting strong growth and favorable mix [9][30] - Revenue for 2024 grew by 15%, with Q4 revenue growth at 22% [28][39] - Adjusted EBITDA margin expanded by 90 basis points year-over-year [30][56] Business Line Data and Key Metrics Changes - Engine Services revenue increased by 15% to $4.6 billion, driven by a 26% growth in the commercial aerospace end market [43] - Component Repair Services revenue grew by 15% to $592 million, with a 17% increase in the commercial aero end market [45] - Adjusted EBITDA for Engine Services grew by 18%, while Component Repair Services saw a 23% increase in adjusted EBITDA [44][46] Market Data and Key Metrics Changes - The commercial aerospace market exhibited 25% growth in 2024 and 33% growth in Q4 [9][28] - Business aviation revenue grew by 8%, particularly strong in the HTF7000 program [29] - Military and helicopter end market revenue declined slightly by 3% due to temporary grounding of the V-22 Osprey [29][43] Company Strategy and Development Direction - The company invested over $100 million in major program initiatives to position for accelerated growth [10][11] - Focus on the LEAP program, with significant progress in industrialization and customer agreements [17][34] - Expansion of capacity in CFM56 and CF34 platforms to leverage strong demand [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand across end markets, particularly in commercial aerospace [9][60] - The outlook for 2025 includes projected revenue between $5.8 billion and $5.95 billion, with continued strong demand [32][54] - Management noted that maintenance work is less affected by immediate changes in flight operations, providing stability [76] Other Important Information - The company completed its IPO in October 2024, refinancing its debt and significantly reducing leverage [26][51] - Free cash flow for Q4 improved to $57.1 million, while full-year free cash flow was negative $45 million due to one-time costs [41][46] - The company is targeting long-term net leverage between 2 and 3 times to maintain flexibility for investments [52] Q&A Session Summary Question: Growth in commercial aero and contributing factors - Management noted strong growth in CF34 and turboprop segments, with CFM56 expected to be a major revenue driver in 2025 [67][68] Question: Impact of airline capacity cuts on maintenance trends - Management indicated a delayed effect on maintenance work due to flight hours already accrued, maintaining confidence in future plans [76][77] Question: Progress on LEAP service contracts and revenue opportunities - Management highlighted a strong pipeline for LEAP contracts, with airlines locking in long-term maintenance agreements [88][90] Question: Margin dilution from LEAP and CFM56 ramp-up - Management acknowledged industrialization losses for LEAP but expected significant growth in 2025 with reduced dilution [100][101] Question: M&A strategy and integration timeline - Management expressed enthusiasm for CRS acquisitions, with integration timelines varying based on deal size and complexity [109][114] Question: Impact of tariffs on business - Management confirmed ongoing monitoring of tariff proposals, with historical exemptions expected to continue [118]