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- **Revenue Growth**: Q3 revenue up 20% YoY to $1.5 billion, with EBITDA +16% YoY. 
- **LEAP Program Expansion**: Targeting $1 billion annual LEAP revenue, with 60+ engine inductions in 2025. 
- **Supply Chain Management**: Q4 engine shipments expected to unwind $108 million working capital increase. 
- **Contract Adjustments**: $300-400 million material pass-through revenue reduction in 2026, improving margins. 
- **Strategic Investments**: Winnipeg and Augusta facility expansions to capture CF34, CFM56, and HTF7000 growth.

**【CEO Summary Section】**
- Q3 revenue reached $1.5 billion, up 20% YoY, with adjusted EBITDA of $196 million (+16% YoY). 
- Commercial aerospace growth driven by LEAP program (near-doubling QoQ), business aviation revenue up 28% YoY, and military/helicopter segment +21% YoY. 
- LEAP program targeting $1 billion annual revenue by early 2030s, with 60+ engine inductions expected in 2025. 
- Winnipeg facility expansion for CF34 and CFM56 programs, and Augusta facility ramp-up supporting HTF7000 program growth.

**【CFO Financial Commentary】**
- Free cash flow use of $4 million Q3, with guidance raised to $170-190 million for 2025. 
- Material pass-through revenue reduction of $300-400 million in 2026, improving margins. 
- Net debt to EBITDA leverage improved to 2.9x, with ample liquidity for M&A.

**【Q&A Highlights】**
- Supply chain constraints on forgings/castings impacting contract assets, but Q4 visibility for engine shipments. 
- CRS segment EBITDA growth of 32% YoY, driven by military and land/marine demand. 
- Contract renegotiations to eliminate low-margin material pass-through, enhancing cash flow efficiency.


StandardAero, Inc. (SARO) Q3 2025 Earnings Call Transcript

- **Revenue Growth Accelerates**: Q2 2025 revenue up 13.5% YoY to $1.53 billion, driven by LEAP (sales tripled), CF34 (10-year growth outlook), and CFM56 (new facility ramping). CRS segment delivered record 29% margins.
- **Margin Expansion Despite Headwinds**: Adjusted EBITDA up 20% to $205 million, with 80 basis points margin expansion. Core segments offset dilution from new programs.
- **Strategic Initiatives Paying Off**: LEAP backlog exceeds $1.5 billion, CFM56 exchange program launched with minimal capital, Augusta expansion on track. Free cash flow guidance maintained at $155-175 million.
- **Updated Guidance**: 2025 revenue $5.875-6.025 billion (13.5% growth), EBITDA $790-810 million. Engine Services margins to expand 30 basis points, CRS margins to 28.3%.

**【CEO Summary Section】**
- Q2 2025 revenue grew 13.5% YoY to $1.53 billion, driven by 11.5% organic growth across engine services and component repair services. Adjusted EBITDA rose 20% to $205 million, with margins expanding 80 basis points to 13.4%.
- Key growth platforms include LEAP (sales tripled sequentially, $1.5 billion backlog), CF34 (10-year growth outlook due to engine age), and CFM56 (new Dallas-Fort Worth facility ramping up). Component repair services (CRS) delivered record 29% margins, supported by the Aero Turbine acquisition.
- Margins were offset by dilutive new programs, but core segments (business aviation, military) outperformed expectations. The Augusta, GA business aviation expansion is on track to add 100 jobs and boost HTF7000 capacity.

**【CFO Financial Commentary】**
- Free cash flow used $31 million in Q2 due to working capital build for LEAP and CFM56 ramps. Guidance for 2025 free cash flow remains $155-175 million, with second-half improvement expected from receivables timing.
- Net debt to EBITDA improved to 2.99x, down from 3.14x at year-end 2024. Target long-term leverage of 2-3x, with ample capacity for M&A.
- Updated 2025 guidance: revenue $5.875-6.025 billion (13.5% YoY growth), adjusted EBITDA $790-810 million. Engine Services margins expected to expand 30 basis points to 13.3%, CRS margins to 28.3%.

**【Q&A Highlights】**
- **LEAP Program Momentum**: Q2 sales tripled sequentially, with bookings exceeding $1.5 billion. Margins expected to turn positive late 2025/early 2026 as industrialization costs decline.
- **CFM56 Exchange Program**: Low-investment engine exchange strategy (single-digit million upfront cost) leverages existing MRO capacity, offering customers faster turn times and lower costs. Self-funding model with no inventory pool.
- **Working Capital Outlook**: $108 million Q2 working capital build (half for LEAP) expected to unwind in H2 as constrained parts resolve. Free cash flow guidance of $260 million for second half reflects seasonal collections strength.
- **M&A Pipeline**: Robust pipeline with focus on strategic fits (e.g., Aero Turbine). Organic investments (e.g., CF34, LEAP) prioritized alongside disciplined M&A.
- **Tariff Impact**: $10-15 million annualized impact on margins, partially offset by pricing and productivity gains.

StandardAero, Inc. (SARO) Q2 2025 Earnings Call Transcript

- **Revenue Growth**: 16% YoY to $1.4B, driven by CF34 (18% YoY) and business aviation (13% YoY).
- **Margin Expansion**: Adjusted EBITDA margin up 40bps to 13.8%, with CRS margins at 28%.
- **Strategic Wins**: 6 new LEAP contracts (150+ shop visits), $1B+ LEAP backlog, and record CF34 quarter.
- **Tariff Mitigation**: $15M net impact factored into guidance, with 90%+ work in USMCA-compliant facilities.
- **Free Cash Flow**: $64M use in Q1 (vs. $102M YoY improvement), with $90M allocated to LEAP/CFM56 growth.
- **Guidance Update**: Revenue up 3.5%, EBITDA up 8.5% YoY, reflecting strong demand and margin resilience.

**【CEO Summary Section】**
- **Q1 2025 Financial Highlights**: Revenue grew 16% YoY to $1.4 billion, with adjusted EBITDA up 20% to $198 million. Commercial aerospace, business aviation, and military segments all contributed to strong growth.
- **Segment Performance**: 
  - **Commercial Aerospace**: 18% YoY growth driven by CF34 regional jet platform and turboprop engine demand.
  - **Business Aviation**: 13% YoY growth on midsize to large cabin aircraft engines.
  - **Military**: 10% YoY growth, including contributions from the Aero Turbine acquisition.
- **Tariff Mitigation**: Estimated $15 million net impact for 2025, with strategies like contractual cost pass-through and USMCA compliance.
- **Strategic Initiatives**: 
  - LEAP program progress with 6 new customer awards (150+ shop visits) and first CTAMS delivery.
  - CFM56 expansion in Dallas with record CF34 quarter.
  - Component repair margin expansion (28% in Q1) and M&A pipeline activity.

**【CFO Financial Commentary】**
- **Financial Metrics**: 
  - Free cash flow use of $64 million (vs. $102 million YoY improvement).
  - Leverage ratio improved to 3.09x, targeting 2x-3x long-term.
- **Major Platform Investments**: $90 million allocated for LEAP and CFM56 industrialization, with $36 million spent in Q1.
- **Guidance Update**: 
  - Revenue: $5.825B-$5.975B (up from prior $5.6B-$5.8B).
  - Adjusted EBITDA: $775M-$795M (up from $725M-$750M).
- **Margin Dynamics**: Engine Services margins flat due to LEAP/CFM56 ramp costs, but CRS margins expanded 240bps to 28%.

**【Q&A Key Highlights】**
- **CF34 Resilience**: Airlines prioritize engine MRO over discretionary upgrades, supporting 16% YoY growth.
- **LEAP Progress**: First CTAMS delivery in Q1, with PRSV expected in H2. Backlog exceeds $1B.
- **M&A Strategy**: $15M hydraulics business exited to focus on high-margin repairs. ATI acquisition integration on track with $22M Q1 contribution.
- **Tariff Impact**: $15M net impact factored into guidance, with mitigation strategies reducing exposure.
- **CFM56 Expansion**: Dallas site ramp driving long-term accretion despite near-term margin dilution.
- **Component Repair Growth**: 21% YoY revenue with 32% EBITDA growth, fueled by repair approvals and OE partnerships.

StandardAero (SARO)-12 May 25-2025 Q1 Earnings call transcript

- **Call Logistics**: Key executives present; materials available online.
- **Regulatory Reminder**: Forward-looking statements subject to risks.

**【Management Opening Remarks】**
- The call was hosted by Alex Trapp, Chief Strategy Officer, with Russell Ford (CEO), Kim Ernzen (COO), and Dan Satterfield (CFO) in attendance.
- Participants were directed to the company website (ir.standardaero.com) for the earnings release, presentation, and audio replay details.
- A standard disclaimer was provided regarding forward-looking statements and associated risks.

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