• Revenue: $1.4 billion in Q4 2024, 22% growth year-over-year; full-year 2024 revenue growth of 15% to $4.6 billion.
• Adjusted EBITDA: $186.2 million in Q4 2024, 37% growth year-over-year; full-year 2024 adjusted EBITDA of $691 million, 23% growth.
• Net Income: Net loss of $14.1 million in Q4 2024; full-year net income of $11 million, impacted by nonrecurring costs.
• Free Cash Flow: $57.1 million in Q4 2024; negative $45 million for full-year 2024, affected by one-time expenses.
• Adjusted EBITDA Margin: Expanded by 90 basis points year-over-year.
• Commercial Aerospace Market Growth: 25% growth in 2024, 33% growth in Q4.
• Engine Services Revenue: $4.6 billion in 2024, 15% growth year-over-year.
• Component Repair Services Revenue: $592 million in 2024, 15% growth year-over-year.
• 2025 Revenue Guidance: Projected between $5.8 billion and $5.95 billion.
• 2025 Adjusted EBITDA Guidance: Between $770 million and $790 million.
• Interest Savings: Over $130 million annually due to debt refinancing.

• Warning! GuruFocus has detected 5 Warning Signs with SARO.

Release Date: March 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• StandardAero Inc (NYSE:SARO) achieved a record year in 2024 with a 23% increase in adjusted EBITDA and a 37% growth in Q4.
• The company successfully industrialized over 260 LEAP component repairs, positioning itself as a key player in the LEAP engine MRO business.
• StandardAero Inc (NYSE:SARO) signed agreements with nine customers for LEAP services, representing future revenue of over $1 billion.
• The company completed its IPO in early October, reducing leverage and improving its credit ratings, resulting in over $130 million of annual interest savings.
• StandardAero Inc (NYSE:SARO) expanded its capacity with new facilities in Dallas-Fort Worth and Augusta, Georgia, enhancing its ability to capture market share.

Negative Points

• The company faced challenges with supply chain issues and parts availability, impacting operations.
• There were nonrecurring costs related to refinancing, IPO, and acquisitions, leading to a net loss in Q4.
• Free cash flow was negative for the full year 2024, burdened by IPO-related expenses and platform investments.
• Margins in the Engine Services segment are expected to be impacted by initially low margins on the LEAP and CFM56 programs as production ramps up.
• The military and helicopter end market revenue declined by 3% due to lower inductions on the Rolls-Royce AE1107 engine.

Q & A Highlights

Q: Can you discuss the factors driving strong growth in the commercial aerospace sector, particularly regarding LEAP, CFM56, and CF34 agreements? A: Russell Ford, CEO, explained that growth is driven by strong performance in CF34 and turboprop segments, with CFM56 expected to be the largest revenue growth platform in 2025. LEAP is still in early stages but shows promising growth potential. The commercial sector benefits from robust demand for CRS component repair work, and business aviation sees increasing volumes on flagship products like HTF7000.

Q: How does StandardAero's business typically respond to volatility in airline operations, such as capacity cuts or consumer confidence issues? A: Russell Ford, CEO, noted that maintenance work is based on past flight hours, so there's a delayed effect from changes in airline operations. The company remains confident in its 2025 plans, with 77% of business under long-term contracts providing visibility and stability.

Q: What is the outlook for LEAP service contracts, and how is the $1 billion revenue opportunity expected to grow? A: Russell Ford, CEO, highlighted a strong pipeline for LEAP, with maintenance requirements coming in earlier and airlines locking in long-term contracts. The company is well-positioned globally, with a CBSA license enabling compelling RFPs worldwide, and expects continued growth in LEAP service contracts.

Q: Can you provide insights into the margin dilution from the LEAP and CFM56 ramp-up and whether 2025 is the peak headwind year? A: Daniel Satterfield, CFO, explained that LEAP will continue to have industrialization losses, impacting cash flow but not EBITDA. CFM56 will have higher margins than LEAP in 2025, but both programs will contribute to margin dilution due to their low single-digit margins. Excluding these, Engine Services shows margin growth.

Q: What is the strategy for M&A in 2025, particularly in the CRS segment, and how competitive is the market? A: Alex Trapp, Chief Strategy Officer, stated that CRS acquisitions are a focus due to their accretive nature. The company is actively exploring opportunities, both organic and through formal processes, with a disciplined approach to strategic fit and return on investment. M&A remains a key part of their value creation strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.