StandardAero, Inc.

Greetings and welcome to the Standard Arrow second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad, and we ask that you please ask one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn it over to Rama Bandana, Vice President, Investor Relations.

Rama, please go ahead. Thank you. Good afternoon, everyone. Welcome to Standard Aero's second quarter 2025 earnings call. I'm joined today by Russell Ford, our Chairman and Chief Executive Officer, Dan Satterfield, our Chief Financial Officer, and Alex Trapp, our Chief Strategy Officer. Alongside today's call, you can find our earnings release as well as the accompanying presentation on our website at ir.standardaero.com. An audio replay of this call will also be made available, which you can access on our website or by phone. The phone number for the audio replay is included in the press release announcing this call. Before we begin, as always, I would like to remind everyone that statements made during this call include forward-looking statements under federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earning release and in our filings with the Securities and Exchange Commission, including in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2024. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, during today's call, we will discuss certain non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin, free cash flow, net debt to adjusted EBITDA leverage ratio, and organic revenue growth. A definition and reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings release and in the appendix to the earnings slide presentation on our website. Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures. With that out of the way, I'd like to now turn the call over to our Chairman and CEO, Russell Ford. Russ, over to you.

Thank you, Rama, and thanks to everyone for joining our earnings call today. Let's begin on slide three. For the second quarter, we again delivered robust results, increasing revenue 13.5% and adjusted EBITDA increased by 20% compared to the prior year period. Our performance was underpinned by robust demand across our key end markets, as well as disciplined operational execution within both of our segments, engine services and component repair services. We continue to expand our margins while also advancing our ramp in new growth platforms, which are a near-term headwind to margins. Our diversified portfolio spans more than 40 engine platforms across all major OEMs and end markets, including commercial aerospace, business aviation, military, and helicopters. This breadth not only provides multiple avenues for growth, but also creates built-in resilience across market cycles. Now, looking more closely at our end markets, our commercial aerospace sales grew 14% year-over-year, driven by CF34, LEAP, CFM56, and our turboprop platforms. Our backlog of MRO work here remains strong, with demand for engine aftermarket services outpacing MRO supply globally. We expect this favorable supply-demand environment to continue for the foreseeable future. Our business aviation sales increased 9% versus Q2 last year. Solid demand for engine platforms that power midsize and super midsize business jets drove strong revenue growth this quarter. Our military sales grew 12% year over year due to the contribution from our aeroturbine acquisition, which closed in August of 2024, as well as from growth on our AE1107 and J85 programs that more than offset some lighter work scopes on other military platforms that we service. Moving on to adjusted EBITDA. Margins continue to expand in Q2, increasing 80 basis points year over year to 13.4%. This improvement was driven by strong sales growth, favorable mix, pricing, and productivity initiatives within both of our segments. Additionally, our higher margin component repair services segment delivered a record margin this quarter and continues to represent a greater share of our overall business consistent with our strategic direction. Turning to slide four, as a result of our continuing top line growth, expanding margin performance, and robust in-market demand in the quarter, we are again increasing our 2025 guidance with a continued outlook for double-digit revenue performance and adjusted EBITDA margin expansion year over year in both of our segments. Now, relative to our operational and commercial highlights in the second quarter, we remain focused on executing across our strategic priority areas, which we think will drive long-term value for our shareholders. These initiatives include accelerating the ramp-up of our LEAP program, expanding our CFM56 and CF34 capacity, and enhancing our capabilities in component repair services. Let me begin by providing more detail on our progress on the LEAP program. In the second quarter, we completed our first LEAP shop visits and began deliveries from our facility in San Antonio. Leap sales tripled sequentially, and while volumes are still modest, the momentum has been exceptional. We remain in the early stages of this program's ramp, with continuing acceleration expected through the second half of 2025. Our technicians and leadership team are focused on completing final industrialization steps this year delivering our first performance restoration shop visit, or PRSV, in the second half and continuing to scale. Demand for LEAP MRO services continues to grow, with our pipeline and win rate strengthening each quarter. Standard Aero's total LEAP bookings now exceed $1.5 billion, up from $1 billion we mentioned at the end of last year, supported by strong wins year-to-date. We continue to expect LEAP revenues to reach $1 billion annually by the end of the decade. Turning to CF34 and CFM56, we continue to capitalize on the organic investments we've made in these platforms. On CF34, we again achieved robust year-over-year growth following the expansion of our GE relationship at the end of 2024. Given our growing market position, we expect the CF-34 platform to drive growth well into the next decade. On CFM-56, recall that we are one of the only independent MRO businesses in the world that is adding meaningful overhaul capacity. This engine platform currently has the largest installed base in the history of commercial aviation, and we are well positioned to keep gaining shares. We continue to make progress on the industrialization of our CFM 56 Dallas Fort Worth facility and are simultaneously winning sales campaigns to build out our backlog with a diverse top tier customer base. In the second quarter, we inducted our first PRSV full performance restoration shop visit at the facility. In addition to our PRSV capabilities, we have continued to grow our menu of service offerings for this platform, from quick-turn events to green time and lease assets, and now into engine exchanges while staying consistent with our strategy of offering OEM-aligned solutions. These service offerings, which are synergistic across our enterprise, have been a cornerstone of many of our mature program offerings on other platforms, and we're pleased to be able to support the CFN-56 in the same way while also maintaining our asset-light structure. Moving on to another area of organic investment, we are approaching the grand opening of our newly expanded business aviation facility in Augusta, Georgia. This expansion, which we announced in April of 2024, adds 60% capacity to this facility and is on track to come online in the third quarter of 2025. This is very timely given that we hit a new record in HTF 7000 sales in Q2. The expansion in Augusta will increase our HCF 7,000 capacity, and the facility performs the complete suite of MRO work scopes. In addition, the expanded footprint will be capable of performing airframe services on large cabin business jets. We are the exclusive, independent, heavy overhaul provider on the HTF 7000, and with this additional capacity, coupled with growing demand, we see this platform as an important element of our continued growth in business aviation. This expansion came about in close collaboration with the Augusta Regional Airport, the Augusta Economic Development Authority, and the state of Georgia. It's expected to generate about 100 new jobs for the area. Turning to growth initiatives for our component repair services segment, we continue expanding our portfolio of OEM authorized LEAP repairs. This is expected to drive increased third-party sales and greater insourcing of addressable repairs from our engine services business as we strengthen integration between our two segments. Now pivoting to capital allocation. We think we're exceptionally well positioned to deliver strong returns through a multi-pronged approach, combining organic investments and platforms where we hold strong market positions, strategic M&A, additional platforms, and additional repair capability. With respect to organic investments, you just heard about our expansion initiatives with CFM56, CF34, and HTS7000. There are more opportunities such as these in the near and medium term that will allow us to continue this pattern of disciplined organic investments that we expect will generate a high return on invested capital for our shareholders. On the M&A front, we're staying close to the market. We have a growing pipeline of targets and ample balance sheet capacity. we will remain disciplined and focused on allocating capital to areas where we see strong strategic and synergistic alignment, such as Eric Turbin. That now concludes my comments, and I'll ask Dan Satterfield, our CFO, to walk through our financial results and outlook with additional detail. Dan?