StandardAero (SARO) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 13.2% year-over-year to $1,245 million, driven by strong commercial aerospace and business aviation demand, while military and helicopter markets declined due to the US Navy V-22 Osprey grounding.

• Net income was $16.4 million, reversing a net loss of $17.9 million in the prior year quarter, with net income margin improving to 1.3%.

• Adjusted EBITDA rose 26% year-over-year to $168.4 million, with margin expanding 137 basis points to 13.5%.

• Completed IPO in October 2024, raising $1.2 billion in net proceeds, used to deleverage and refinance debt, resulting in significant interest savings and credit rating upgrades.

• Acquired Aero Turbine (ATI) in August for up to $141 million, expanding component repair and military platform capabilities, expected to contribute $25 million Adjusted EBITDA in 2025.

Financial highlights

• Q3 2024 revenue: $1,245 million (+13% YoY); YTD revenue: $3,828 million (+12% YoY).

• Q3 2024 Adjusted EBITDA: $168.4 million (13.5% margin), up from $133.6 million (12.2%) in Q3 2023.

• Q3 2024 net income: $16.4 million (EPS $0.06); YTD net income: $25 million (EPS $0.09).

• CapEx was $25.3 million in Q3 and $70.4 million YTD, focused on LEAP and CFM56 programs.

• Q3 operating income was $98.0 million, up from $74.8 million year-over-year.

Outlook and guidance

• Sequential improvement expected in Q4 for revenue, Adjusted EBITDA, and operating cash flow.

• ATI acquisition expected to contribute $25 million of Adjusted EBITDA in 2025.

• Management confident in continued double-digit earnings growth and compounding shareholder returns, with annual guidance to be provided with Q4 results.