StandardAero, Inc. Q4 FY2025 earnings call

• 2025 was a record year with 16% revenue growth and 17% adjusted EBITDA growth. Generated $209 million free cash flow. - Strong progress on LEAP program with 60 LEAP engines inducted in 2025, revenues in second half two and a half times first half. - Completed expansion of Augusta business aviation facility. Fortified CF-34 engine position, expanding Winnipeg facility. - Restructured customer contracts to eliminate low-margin revenue. Captured more high-value component repair work in-house. - Ended 2025 with leverage ratio 2.4 times, authorized $450 million share repurchase program. - 2026 priorities: focus on LEAP execution, leveraging CFN56 and CF34 investments, accelerating component repair new repair development, continuous improvement, disciplined capital deployment.

Engine services revenue in 2025 increased to $5.35 billion, representing 15.3% growth. Adjusted EBITDA grew 15.7%. Component repair services (CRS) revenue in 2025 was $709 million, 19.6% growth. Adjusted EBITDA grew 31%. CRS had a small fire in Phoenix in early December and was impacted by U.S. government shutdown in military business.

• Forecast 2026 revenue $6.275 billion - $6.425 billion. - Engine services forecast revenue $5.5 billion - $5.625 billion, adjusted EBITDA $755 million - $780 million. - Component repair services guidance revenue $775 million - $800 million. - Total company adjusted EBITDA $870 million - $905 million. - Adjusted EPS $1.35 - $1.45. - Free cash flow $270 million - $300 million. - Q1 2026 CRS margins expected below normal due to government shutdown and Phoenix fire.

• Supply chain part availability delays. - U.S. government shutdown impacted military revenue in Q4. - Small fire at Phoenix CRS facility affected revenue and margins in Q4.

Q: Clarification on CRS margins in Q1.

A: Government shutdown and fire impact revenue and earnings, growth of those items.

Q: Thoughts on expanding European military exposure.

A: Bulk military work on transport aircraft, fighter MRO has lagged effect.

Q: Quality of customer conversations and slot filling.

A: Strong pipeline of long-term contracts, slots filled for 2026 with some open for lighter work scopes.

Q: Cash conversion and evolution.

A: Interest reduced, working capital improved, 75% free cash flow conversion in 2025, expecting 80-100% in future.

Q: Margins and pass-through.

A: Margins expanding, material takeout benefits, LEAP and CFM dilutive initially.

Q: Pricing environment.

A: Market accepting above average price increases, moderating from COVID height.

Q: Growth in error derivatives and long-term agreements.

A: Uptick in activity, long-term agreements take time to industrialize.

Q: Revenue growth assumptions and supply constraint.

A: Commercial throughput capacity greater than supply chain can support, supply chain still constraint but depth of delay improving.

Q: Labor front.

A: Low attrition rate, internal training programs like Standard Era University.

Q: New opportunities on platforms.

A: Ongoing discussions with OEMs across end markets.

Q: In-source repair capture.

A: Tied to repair development and acquisitions, increasing by 15% in 2025 with more potential.