StandardAero Raises Outlook as Margins Reach Record
Adjusted EBITDA climbed 12.3% to $229.9 million as engine growth programs turned profitable.
StandardAero (SARO), the aerospace engine-services company, expanded its second-quarter adjusted EBITDA margin to a record 14.4% even as revenue growth slowed.
The quarter marked a profitability inflection after the LEAP and CFM56 DFW growth programs reached profitability. Those programs had weighed on consolidated and Engine Services margins in the first quarter, when the company posted faster sales growth but a 130-basis-point margin contraction.
Revenue rose 4.6% from a year earlier to $1.600 billion, compared with growth of 13.3% in the first quarter and 13.5% in the fourth quarter of 2024. Adjusted diluted earnings increased 24% to $0.40 a share, while net income rose 43.7% to $97.3 million.
Engine Services revenue increased 4.0% to $1.405 billion, partly reflecting the elimination of low-to-no-margin pass-through revenue. The segment's adjusted EBITDA rose 14.4% to $204.2 million, lifting its margin 130 basis points to 14.5%.
Underlying market growth also moderated. Commercial Aerospace and Business Aviation revenue each grew about 6%, while Military and Helicopter revenue declined 2.6% on lower military sales and input delays. Component Repair Services revenue rose 9.2% to $194.6 million, though negative mix pushed its adjusted EBITDA margin down 270 basis points to 26.3%.
StandardAero raised its full-year outlook for a second consecutive quarter. It now expects revenue of $6.375 billion to $6.500 billion, adjusted EBITDA of $885 million to $910 million and adjusted diluted earnings of $1.50 to $1.57 a share. The company forecasts adjusted free cash flow of $270 million to $300 million under a new measure that excludes intangible-asset purchases; quarterly free cash flow turned positive at $50.2 million as supply-chain initiatives began taking effect. StandardAero also broadened its adjusted earnings definition to exclude noncash amortization of all intangible assets, affecting comparisons under the revised measure.
The company completed its acquisition of Unified Turbines, adding Component Repair Services capabilities, and disclosed an expanded license agreement with a key original-equipment-manufacturer partner covering multiple platforms. First-half share repurchases reached $100.1 million, up from the $60.1 million reported for the first quarter.