What drove StandardAero's gross profit surge in 2024?

StandardAero's gross profit surge in 2024 was driven by several key factors:

1. **Revenue Growth**: The company experienced significant revenue growth, with a 14.8% increase in full-year 2024 revenue, reaching $5.2372 billion. This growth was fueled by strong performances in both the Engine Services and Component Repair Services segments, which grew by 21.3% and 25.3%, respectively.
2. **Market Expansion**: The commercial aerospace market grew by 33% in Q4, and business aviation increased by 11%. This favorable market conditions contributed to the increase in demand for StandardAero's services.
3. **Strategic Initiatives**: StandardAero's strategic expansions and the completion of engine test cell correlations highlighted operational improvements. These initiatives likely led to increased efficiency and productivity, which in turn boosted gross profits.
4. **IPO and Debt Refinancing**: The company's successful $1.7 billion IPO and the refinancing of its capital structure allowed it to reduce debt and save over $130 million in annual interest compared to pre-IPO levels. This financial restructuring likely improved gross margins by reducing interest expenses.
5. **Segment Performance**: The Engine Services segment, which is a significant contributor to revenue, reported strong performance, with revenues exceeding expectations. This segment's growth was driven by aftermarket demand for commercial aerospace engines, which outpaced supply.

In summary, StandardAero's gross profit surge in 2024 was driven by revenue growth, favorable market conditions, strategic initiatives, IPO and debt refinancing, and strong segment performance, particularly in the Engine Services segment.