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    SARO
    Earnings call· Dec 2025(Q4 FY25)

    StandardAero Q4 FY25 earnings call SARO

    Feb 25, 2026 Source

    Executive summary

    StandardAero Q4 FY25 — Record Year with Strong Growth and Margin Expansion

    StandardAero delivered a record Q4 and full-year 2025, driven by robust demand across all end markets and strategic investments. The company achieved significant revenue and adjusted EBITDA growth, alongside strong free cash flow generation and margin expansion, despite ongoing supply chain constraints and the initial dilutive impact of new program ramps. Management is focused on achieving profitability for key growth programs in H1 2026 and leveraging expanded capabilities for continued double-digit earnings growth.

    Highlights

    5

    • Full-year 2025 revenue increased 16% year-over-year, with adjusted EBITDA up 17%.

    • Generated meaningful free cash flow of $209 million in FY25, including over $300 million in the second half.

    • Inducted 60 LEAP engines in 2025, a substantial ramp from 10 in 2024, with H2 2025 LEAP revenues approximately 2.5x H1.

    • Leverage ratio improved to 2.4x by year-end 2025, down from 3.1x.

    • In-source component repair revenue increased by 15% in 2025.

    Concerns

    4

    • A small fire at the Phoenix CRS facility in early December shut down the facility for nearly all of December, impacting Q4 revenue and margins.

    • Military business growth was affected by the longest U.S. government shutdown in Q4 2025.

    • Supply chain continues to be characterized by part availability delays, impacting throughput.

    • LEAP and CFM56 DFW growth programs were initially dilutive to margins in 2025, though losses narrowed by over 60%.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $6.275 billion - $6.425 billion
    high materiality
    High
    Full-year 2026 Engine Services Revenue
    $5.5 billion - $5.625 billion
    medium materiality
    High
    Full-year 2026 Component Repair Services Revenue
    $775 million - $800 million
    medium materiality
    High
    Full-year 2026 Total Company Adjusted EBITDA
    $870 million - $905 million
    high materiality
    High
    Full-year 2026 Engine Services Adjusted EBITDA
    $755 million - $780 million
    medium materiality
    High
    Full-year 2026 Component Repair Services Adjusted EBITDA
    $220 million - $230 million
    medium materiality
    High
    Full-year 2026 Adjusted EPS
    $1.35 - $1.45
    high materiality
    High
    Full-year 2026 Free Cash Flow
    $270 million - $300 million
    high materiality
    High
    LEAP and CFM56 DFW programs profitability
    Reach profitability
    medium materiality
    High
    Winnipeg CF34 facility expansion completion
    Complete
    low materiality
    High
    Full-year 2026 Capital Expenditures
    $100 million - $110 million
    medium materiality
    High
    Free Cash Flow Conversion Rate
    80% to 100%
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Engine Services
    Growth driven by CF34, HTF7000, turboprop platforms, LEAP, and CFM56. Operating leverage and productivity offset initially dilutive LEAP and CFM56 DFW programs.
    Adjusted EBITDA growth: 15.7%Q4 Adjusted EBITDA margins: 13.4% (up 60 basis points year-over-year)
    		$5.35 billion15.3%—Flat year-over-year
    Component Repair Services (CRS)
    Strong demand for Aero derivative solutions, growth in military helicopter and other end markets, including ATI acquisition. Q4 performance impacted by a small fire at Phoenix facility and U.S. government shutdown.
    Adjusted EBITDA growth: 31%Margins: high 20s (from mid-20s previously)
    		$709 million19.6%—Increased 250 basis points year-over-year

    Operational metrics

    19
    Free cash flow conversion on net income
    75%
    FY25

    Expected to expand to 80% to 100% in 2026 and beyond.

    Net debt to adjusted EBITDA leverage ratio
    2.4xDown from 3.1x
    End of 2025

    Now well within the target leverage ratio range of 2x to 3x.

    Share repurchase program authorization
    $450 million
    December 2025

    Authorized in December 2025, providing capital allocation flexibility.

    LEAP component repairs developed
    More than 475
    As of Q4 2025

    Directly support turnaround time, customer value, and long-term economics as the fleet matures.

    In-source component repair revenue growth
    15%
    FY25

    Progress in capturing more high-value component repair work in-house.

    Low-margin pass-through revenue eliminated
    $300 million to $400 million
    FY26

    Result of restructuring customer contracts, expected to result in higher reported margins.

    Capital expenditures
    $90 million
    FY25

    Investment in growth platforms.

    Adjusted EPS
    $1.19
    FY25

    Used as baseline for 2026 guidance.

    Adjusted Net Income
    $398 million
    FY25

    Reported for the full year.

    Net Income
    $277 millionUp $266 million year-over-year
    FY25

    Primarily driven by growth in operating earnings, lower interest, and lower one-time costs.

    Net Income
    $79 millionvs net loss of $14 million in Q4 2024
    Q4 2025

    Improvement driven by operating earnings growth, lower interest, and lower one-time costs.

    Adjusted EBITDA
    $808 millionUp 17% year-over-year
    FY25

    Strong growth driven by continued end market strength, productivity gains, and pricing improvement.

    Adjusted EBITDA
    $210 millionUp 12.7% vs $186 million in Q4 2024
    Q4 2025

    Growth driven by continued end market strength, productivity gains, and pricing improvement.

    Revenue
    $5.9 billionUp 15.8% vs 2024
    FY25

    Organic growth was approximately 14.5%.

    Revenue
    $1.6 billionUp 13.5% vs $1.4 billion in Q4 2024
    Q4 2025

    All organic growth.

    Commercial aerospace revenue growth
    Nearly 18%Year-over-year
    FY25

    Driven by LEAP, CFM56, CF34, and turboprop MRO.

    Business aviation revenue growth
    12%Year-over-year
    FY25

    Driven by TFE731 and HTF7000 platforms.

    Military revenue growth
    9%Year-over-year
    FY25

    Despite government shutdown impact in Q4, healthy rebound in AE1107 platform and steady demand on military transport aircraft engines.

    LEAP and CFM56 DFW programs loss narrowing
    Over 60%
    FY25

    Losses declined in 2025, with programs expected to reach profitability in H1 2026.

    Industry KPIs

    3
    MetricValueDetails
    Program segment backlogMost planned slots already filled
    Unit deliveries by program60engines
    Production capacity expansionExpanded

    Orderbook & backlog

    2
    2026 planned slotsMost already filledQ4 2025

    Provides very good visibility for 2026.

    Long-term contracts pipelineExcellent pipeline lined upQ4 2025

    Supports future growth, especially for key engine platforms.

    Deals & partnerships

    2
    ATIAcquisition of Aero Turbine Inc.

    Acquisition completed in 2024, contributing to CRS segment performance in 2025.

    GEExpanded license relationship for CF34 engine

    Expanded license relationship from earlier in 2025, fortifying market-leading position on the CF34 engine.

    Capital programs

    2
    Augusta business aviation facility expansioncompleted

    Benefit: Additional MRO capacity and expanded hangar space to handle large cabin jets

    Completed during 2025, to help accelerate growth on the HTF7000 engine.

    Winnipeg CF34 facility expansionunderway

    Benefit: Support demand visibility and position StandardAero to continue to take share on the CF34 platform

    Announced late 2025, expected to be complete in the second half of 2026.

    Risks & headwinds

    4
    Supply chain constraintsOngoing through 2026 and likely longer

    On-time delivery dropped to 60% range (from 90% pre-COVID), depth of delay improving but still present.

    Mitigation: Generating incremental capacity through learning curve effects on new programs; actively managing supplier relationships.

    U.S. government shutdown impactQ4 2025, spillover into Q1 2026 for CRS segment

    Impacted military business growth in Q4 2025.

    Mitigation: Factored into full-year 2026 guidance; healthy rebound seen in AE1107 platform.

    Phoenix CRS facility fireQ4 2025, will take a few months in 2026 to reach previous activity levels.

    Facility shut down for nearly all of December, impacting Q4 revenue and margins for CRS.

    Mitigation: Facility came back online in second half of January; impacts factored into full-year 2026 CRS guidance.

    Initial dilutive impact of new growth programsExpected to continue in early 2026, reaching profitability in H1 2026.

    LEAP and CFM56 DFW programs were initially dilutive to margins in 2025, though losses narrowed by over 60%.

    Mitigation: Focus on execution, improving throughput and productivity, expanding repair capabilities, and converting demand into long-term customer wins.

    What to watch in Q1 FY26

    5

    LEAP and CFM56 DFW programs profitability

    H1 2026
    CurrentLosses narrowed by over 60% in 2025
    TargetReach profitability

    Why it matters

    Achieving profitability in these key growth programs is crucial for overall margin expansion and validating the investment thesis.

    We continue to expect our growth platforms, namely LEAP and CFM56 DFW to reach profitability in the first half of this year.

    Q&A highlights

    6

    Clarification on whether Q1 2026 CRS margins are expected to be lower in growth or absolute terms due to the government shutdown and Phoenix fire.

    Management confirmed that both revenue and earnings growth, and potentially absolute margins, would be impacted in Q1 2026 due to the spillover effects of the government shutdown and the Phoenix facility fire, but these impacts are factored into the full-year guidance.

    “We're talking about the 2 impacts, the government shutdown and the fire are obviously going to impact both revenue and earnings. So we mean both. And as a result, that would also imply the growth of those items.”

    asked by Krista Friesen · answered by Daniel Satterfield

    2 min read6 chapters

    Detailed Narrative

    01

    2025 Performance Highlights

    StandardAero concluded its 114th year and first full year as a publicly traded company with record performance in 2025. The company achieved 16% year-over-year revenue growth and a 17% increase in adjusted EBITDA, driven by strong demand and high-quality execution. Free cash flow reached $209 million for the year, with over $300 million generated in the second half, demonstrating the asset-light business model and effective cash management.

    02

    LEAP Program Progress and Strategic Investments

    The LEAP program showed substantial ramp-up in 2025, with 60 engines inducted compared to 10 in 2024, and H2 revenues 2.5 times H1. StandardAero developed over 475 LEAP component repairs and delivered its first full overhaul, marking a significant milestone. The company also expanded its Augusta business aviation facility for large cabin jets and is expanding its Winnipeg CF34 facility, expected to be complete in H2 2026, to meet strong demand.

    03

    Operational Excellence and Margin Expansion

    Performance excellence initiatives included restructuring customer contracts to eliminate $300 million to $400 million of low-margin pass-through revenue, which will result in higher reported margins. In-source component repair revenue increased by 15%, contributing to better turn times and stronger margin mix. ATI acquisition synergies exceeded plans, boosting CRS segment margins into the high 20s from the mid-20s previously.

    04

    Market Demand and Pricing Environment

    Market demand remains robust across commercial aerospace (nearly 18% growth), business aviation (12% growth), and military (9% growth). The company noted that the market is still accepting above-average price increases due to persistent engine shortages and supply chain constraints, though pricing has moderated from its peak during COVID. StandardAero actively prices to the market, reflecting capacity constraints and strong customer demand.

    05

    Capital Allocation and Leverage Improvement

    The net debt to adjusted EBITDA leverage ratio improved significantly from 3.1x to 2.4x by year-end 2025, providing meaningful capital allocation flexibility. This allows for continued organic investments, strategic M&A, and opportunistic share repurchases, including a $450 million share repurchase program authorized in December. The company maintains a disciplined approach focused on strategic fit and return on investments.

    06

    Labor Strategy and Workforce Development

    StandardAero has proactively addressed potential labor constraints by implementing a multi-phased approach to technician recruitment and training. This includes leveraging advanced social media for recruiting, beefing up internship programs with universities, and establishing an internal university in San Antonio. The company benefits from a low attrition rate and high average employee tenure, minimizing the need for extensive external recruitment and training.

    AI-generated summary of the company’s earnings call. Not investment advice.