StandardAero (SARO -1.78%), a major provider of aircraft engine maintenance, repair, and overhaul services, reported results for Q2 2025 on August 13, 2025. The company posted GAAP revenue of $1,528.9 million, surpassing analyst expectations of $1,495.3 million (GAAP). Net income (GAAP) reached $67.7 million, a significant improvement over the $5.4 million (GAAP) reported in Q2 2024. The quarter featured double-digit revenue growth, expanding margins, and robust improvement in profitability. Overall, the period marked strong operational execution across the business with momentum in both of its primary segments and end-markets, leading management to raise guidance for FY2025.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.20 | $0.21 | $0.02 | 900% |
| Revenue (GAAP) | $1,528.9 million | $1,495.3 million | $1,347.2 million | 13.5% |
| Adjusted EBITDA | $204.6 million | $170.4 million | 20.1% | |
| Net Income | $67.7 million | $5.4 million | 1,154.6% | |
| Free Cash Flow | $(30.8 million) | $38.6 million | (-180%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Business Focus
StandardAero specializes in aircraft engine maintenance, repair, and overhaul—commonly called “MRO” in the aerospace sector. It has built its business around long-term agreements and certifications with original equipment manufacturers (OEMs), enabling it to perform complex work on many engine platforms used by airlines, military operators, and business aviation fleets.
The company’s recent strategy has centered on expanding its scope through winning new OEM engine programs (such as LEAP, CFM56, and CF34 platforms), building capacity for high-demand services, and integrating technology and new repair methods. Its key success factors are maintaining its authorizations with manufacturers, growing its portfolio of service contracts, and managing risks tied to customer concentration and supply chain dependencies.
Highlights of the Quarter: Operations and Financials
Segment performance was broad-based. Engine Services—the largest business unit—delivered double-digit revenue growth, climbing to $1,350.7 million, an 11.5% increase from the prior year (GAAP). The segment saw a 16.2% rise in adjusted EBITDA, while Engine Services Segment Adjusted EBITDA margins improved from 12.7% to 13.2%. Growth was propelled by sustained demand in the commercial aerospace aftermarket, ramping activity on LEAP and CFM56 engine platforms, and solid business aviation numbers. New work from the LEAP engine program and growth in other key programs offset lower initial margin on new contracts, which management expects will improve over time as technicians build experience.
The Component Repair Services segment posted even faster year-over-year growth, up 31.3% to $178.3 million in GAAP revenue. The acquisition of Aero Turbine, Inc. (ATI) contributed $27.3 million to the Component Repair Services segment’s total. Adjusted EBITDA in the Component Repair Services segment grew 49.6%, boosted by a 360 basis point rise in Segment Adjusted EBITDA margin to 29.0%. This performance reflected a favorable mix of higher-margin work, pricing and productivity actions, and synergies from integrating ATI.
Across StandardAero’s end markets, commercial aerospace revenue grew 13.7% year-over-year, benefiting from robust aftermarket demand and strong uptake for high-profile engine platforms. Business aviation revenue rose 8.9% year-over-year, while military and helicopter results improved 11.7%, aided by the ATI acquisition. These gains show ongoing demand across the company’s diversified platform base.
Net income benefited from a $30.5 million increase in operating profit and a significant $34.2 million drop in interest expense, reflecting lower debt levels after the company’s initial public offering (IPO) and efforts to reduce leverage. Net debt was $2,262.5 million as of quarter end, cutting the net debt-to-adjusted EBITDA ratio to 3.0x from 5.4x a year ago (non-GAAP).
One notable headwind was negative free cash flow of $30.8 million, down from a positive $38.6 million in Q2 2024. Management cited heavy capital spending and working capital outflows—common during periods of expansion and new platform ramp-ups—as the primary causes.
Strategic and Operational Developments
StandardAero’s expansion into the LEAP engine program remained a central theme. During the quarter, the company secured new international repair authorizations, delivered its first LEAP engine, and boosted its LEAP backlog to more than $1.5 billion as of quarter end. Management highlighted “multiple new agreements signed during the quarter,” as well as additional regulatory approvals in key markets such as India and the Middle East.
The company continued to navigate known risks around customer concentration. Its top four OEM customers accounted for approximately 41% of revenue in FY2024, 43% in FY2023, and 45% in FY2022, highlighting a persistent vulnerability. Recent contract wins and an “our win rate is above 80%” suggest some progress in broadening its customer base, though this remains a structural risk.
On the supply chain side, industry-wide component shortages have created challenges for many aerospace businesses. The company is coordinating closely with OEMs to prioritize the flow of critical materials and developing new repair authorizations to help relieve bottlenecks—particularly around LEAP and CFM56 engines. Management noted that no major disruptions are flagged yet.
In addition to organic growth, acquisitions continued to play a role. The ATI acquisition added incremental revenue and drove margin improvement in Component Repair Services. The integration process was described as “on track,” with ATI operations now covering work on the J85 military jet engine family. Management also indicated a sustained appetite for further mergers and acquisitions, citing a healthy pipeline of potential targets.
Looking Ahead
Management raised its FY2025 financial outlook following strong first-half performance. New guidance now calls for revenue between $5.875 billion and $6.025 billion for FY2025, up from $5.825–$5.975 billion. Adjusted EBITDA is now projected at $790 million to $810 million, up from $775–$795 million previously, for FY2025 (non-GAAP). Segment targets were also increased: Engine Services segment revenue is now expected to reach $5.16–$5.29 billion for FY2025, with a segment adjusted EBITDA margin of 13.3%. Component Repair Services is projected at $715–$735 million with margins of 28.3% for FY2025.
Management expects commercial aerospace to deliver “mid-teens growth” in FY2025, while military & helicopter and business aviation should see “high single-digit growth” in FY2025 Free cash flow (non-GAAP) is forecast at $155–$175 million for FY2025, including approximately $90 million designated for growth investments. Tariff-related costs are currently estimated at $10–$15 million for FY2025, representing a slight improvement compared to earlier projections. Given the raised outlook for FY2025 and ongoing investments in new platforms, investors will be watching for continued ramp-up in LEAP engine activity, execution on capital projects, and improvement in free cash flow conversion as key indicators for the remainder of the year.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
