StandardAero (NYSE: SARO) grows Q1 2026 profit and boosts share buybacks
StandardAero, Inc. reported solid first-quarter 2026 results, with revenue rising to $1.63 billion from $1.44 billion a year earlier. Net income increased to $79.9 million, and diluted EPS improved to $0.24 from $0.19, reflecting stronger performance across Engine Services and Component Repair Services.
Operating income grew to $143.1 million, while interest expense fell to $38.2 million as the company benefited from its 2024 Term Loan Facilities. Operating cash flow was a use of $119.6 million, driven by higher receivables and contract assets. StandardAero ended the quarter with $89.2 million of cash, $2.24 billion of long-term debt, and $736.0 million of available revolving credit capacity.
The company continued to expand its aftermarket footprint, generating $1.45 billion of Engine Services revenue and $179.7 million from Component Repair Services. It reported $460.9 million of remaining performance obligations and increased investment in new engine programs. StandardAero also executed $60.1 million of share repurchases under a $450.0 million authorization and repurchased 1.64 million shares from a GIC affiliate in a related private transaction. Carlyle and GIC held approximately 25.5% and 5.8% of outstanding common stock, respectively.
Positive
- Strong top- and bottom-line growth: Q1 2026 revenue rose to $1.63 billion from $1.44 billion and net income increased to $79.9 million from $62.9 million, with diluted EPS improving to $0.24 from $0.19.
- Lower interest burden and solid liquidity: Interest expense declined to $38.2 million, while the company maintained $89.2 million in cash and $736.0 million of available revolving credit capacity.
- Visible future work and active capital returns: Remaining performance obligations totaled $460.9 million, and the company repurchased $60.1 million of stock under a $450.0 million authorization, including a targeted buyback from a GIC affiliate.
Negative
- None.
Insights
Q1 2026 shows healthy growth, active de-levered balance sheet, and stepped-up capital returns.
StandardAero delivered Q1 2026 revenue of $1.63 billion versus $1.44 billion in 2025, with net income rising to $79.9 million. Both Engine Services and Component Repair Services contributed, supported by broad growth across commercial, military, and business aviation end markets.
Leverage remains meaningful but manageable, with total long-term debt of about $2.24 billion against $2.69 billion of stockholders’ equity. Interest expense declined to $38.2 million, reflecting the 2024 Term Loan Facilities structure and lower average borrowing costs. Liquidity is solid, including $89.2 million of cash and $736.0 million of available revolver capacity.
Cash from operations was negative $119.6 million, driven by higher accounts receivable and contract assets as volumes increased. Management continued investing in growth programs and transformation projects while repurchasing $60.1 million of stock and buying back shares from a GIC affiliate. The sizable $460.9 million remaining performance obligations support future revenue visibility, though timing depends on customer maintenance needs.
Key Figures
Key Terms
2024 Term Loan Facilities financial
2024 Revolving Credit Facility financial
remaining performance obligations financial
Segment Adjusted EBITDA financial
Pillar Two Rules regulatory
contingent consideration liability financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _____________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 1, 2026, the registrant had
TABLE OF CONTENTS
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GLOSSARY |
1 |
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FORWARD-LOOKING STATEMENTS |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (unaudited) |
4 |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
28 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
37 |
Item 4. |
Controls and Procedures |
38 |
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PART II |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
42 |
Item 1A. |
Risk Factors |
42 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
42 |
Item 3. |
Defaults Upon Senior Securities |
42 |
Item 4. |
Mine Safety Disclosures |
43 |
Item 5. |
Other information |
43 |
Item 6. |
Exhibits |
44 |
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Signatures |
45 |
GLOSSARY
Unless the context otherwise requires or we otherwise state, references in this Quarterly Report on Form 10-Q (“Quarterly Report”) to:
1
Certain monetary amounts, percentages and other figures included in this Quarterly Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables and charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy, and plans and objectives of management for future operations, including, among others, the anticipated impact of tariffs and trade policy developments, anticipated supply chain conditions and their effect on working capital, engine throughput, and our ability to provide timely aftermarket support, expected growth, future capital expenditures, and debt service obligations are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.
The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We believe that these factors include risks related to conditions that affect the commercial and business aviation industries; decreases in budget, spending or outsourcing by our military end-users; risks from any supply chain disruptions or loss of key suppliers; increased costs of labor, equipment, raw materials, freight and utilities due to inflation; future outbreaks of infectious diseases; risks related to competition in the market in which we participate; loss of an OEM authorization or license; risks related to a significant portion of our revenue being derived from a small number of customers; our ability to remediate effectively the material weaknesses identified in our internal control over financial reporting; our ability to respond to changes in GAAP; our or our third-party partners' failure to protect confidential information; data security incidents or disruptions to our IT systems and capabilities; our ability to comply with laws relating to the handling of personal information; changes to, and the impact of, U.S. tariff and import/export regulations; failure to maintain our regulatory approvals; risks relating to our operations outside of North America; failure to comply with government procurement laws and regulations; any work stoppage, hiring, retention or succession issues with our senior management team and employees; any strains on our resources due to the requirements of being a public company; risks related to our substantial indebtedness; risks related to the ownership of our common stock, including the fact that Carlyle owns a significant amount of our voting power; and other factors set forth under “Risk Factors” elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.
3
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025 |
5 |
Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2026 and 2025 |
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Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2026 and 2025 |
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Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2026 and 2025 |
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Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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4
STANDARDAERO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share figures)
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March 31, |
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December 31, |
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2026 |
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2025 |
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ASSETS |
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Current assets: |
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Cash |
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$ |
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$ |
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Accounts receivable (less allowance for expected credit losses of $ |
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Contract assets, net |
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Inventories |
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Prepaid expenses and other current assets |
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Income tax receivable |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right of use asset, net |
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Customer relationships, net |
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Other intangible assets, net |
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Goodwill |
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Other assets |
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Deferred income tax assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Accrued employee costs |
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Operating lease liabilities, current |
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Due to related parties |
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— |
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Contract liabilities |
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Income taxes payable, current |
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Long-term debt, current portion |
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Total current liabilities |
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Long-term debt |
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Operating lease liabilities, non-current |
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Deferred income tax liabilities |
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Income taxes payable, non-current |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Stockholders' equity |
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Common stock ($ |
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Preferred stock ($ |
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— |
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— |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Treasury stock (at cost, |
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( |
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— |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
STANDARDAERO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share figures)
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Three Months Ended March 31, |
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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Cost of revenue |
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Selling, general and administrative expense |
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Amortization of intangible assets |
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Operating income |
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Interest expense |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted-average shares of common stock outstanding |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
6
STANDARDAERO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(In thousands)
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Three Months Ended March 31, |
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2026 |
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2025 |
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Net income |
$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Unrealized loss on cash flow hedge, net of income tax benefit of $ |
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( |
) |
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( |
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Cash flow hedge loss reclassified to the statement of operations, net of income tax benefit of $ |
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Total other comprehensive loss |
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( |
) |
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( |
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Comprehensive income |
$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
7
STANDARDAERO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
(In thousands, except share figures)
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Common Stock |
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Treasury Stock |
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Number of Shares |
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Par Value |
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Additional Paid-in Capital |
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Accumulated Deficit |
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Accumulated Other Comprehensive Income (Loss) |
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Number of Shares |
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Cost |
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Total Shareholders' Equity |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
— |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Forfeiture of restricted stock awards |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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( |
) |
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( |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Share based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance as of March 31, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Common Stock |
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Treasury Stock |
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Number of Shares |
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Par Value |
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Additional Paid-in Capital |
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Accumulated Deficit |
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Accumulated Other Comprehensive Income (Loss) |
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Number of Shares |
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Cost |
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Total Shareholders' Equity |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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— |
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$ |
— |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Share based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance as of March 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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— |
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$ |
— |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
8
STANDARDAERO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
|
Three Months Ended March 31, |
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2026 |
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2025 |
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Operating activities |
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Net income |
$ |
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$ |
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Adjustments to reconcile net loss from operations to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of deferred finance charges and discounts |
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Amortization of interest cap premiums |
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Payment of interest rate cap premiums |
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( |
) |
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( |
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Stock compensation expense |
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Loss (gain) from disposals, net |
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( |
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— |
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Non-cash lease expense |
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Deferred income taxes |
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( |
) |
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( |
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Foreign exchange gain (loss), net |
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Changes in operating assets and liabilities, net of effect of acquisitions: |
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Accounts receivable, net |
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( |
) |
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( |
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Contract assets, net |
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( |
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( |
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Inventories, net |
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( |
) |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable, accrued expenses and other current liabilities |
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Contract liabilities |
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( |
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Due to/from related parties |
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( |
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( |
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Income taxes payable and receivable |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
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( |
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Investing activities |
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Purchase of property, plant and equipment |
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( |
) |
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( |
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Payments for purchase of intangible assets |
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— |
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( |
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Proceeds from disposal of property, plant and equipment |
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Net cash used in investing activities |
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( |
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( |
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Financing activities |
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Proceeds from long-term debt |
|
|
|
|
|
||
Repayment of long-term debt |
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
( |
) |
|
|
— |
|
Repayments of long-term agreements |
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash |
|
( |
) |
|
|
( |
) |
Net increase (decrease) in cash |
|
( |
) |
|
|
|
|
Cash at beginning of the period |
|
|
|
|
|
||
Cash at end of the period |
$ |
|
|
$ |
|
||
Supplemental cash flow information: |
|
|
|
|
|
||
Supplemental disclosure of non-cash investing activities: |
|
|
|
|
|
||
Acquisition of property, plant and equipment, liability incurred, but not paid |
$ |
|
|
$ |
|
||
Acquisition of intangible assets, liability incurred but not paid |
|
|
|
|
— |
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
9
STANDARDAERO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1: NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Business
StandardAero, Inc. (the “Company”) was incorporated on September 5, 2018, in the state of Delaware and is an independent provider of aftermarket services for fixed and rotary wing aircraft gas turbine engines and auxiliary power units (“APUs”) to the commercial, business and military aircraft markets. The Company also provides aftermarket and upgrade services for business aviation and helicopter airframes and avionics, providing customers within those markets with comprehensive value-added solutions.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of StandardAero, Inc. (formerly Dynasty Parent Co., Inc.) and its subsidiaries.
March 2025 Secondary Offering
In March 2025, two of the Company’s stockholders (the “Selling Stockholders”), affiliates of The Carlyle Group Inc. (“Carlyle”) and GIC Private Limited (“GIC”), completed a public offering of an aggregate of
May 2025 Secondary Offering
In May 2025, the Selling Stockholders completed a public offering of an aggregate of
January 2026 Secondary Offering and Share Repurchase from GIC Stockholder
On January 29, 2026, the Selling Stockholders completed a public offering of an aggregate of
On January 29, 2026, the Company completed the repurchase of
As of March 31, 2026, Carlyle and GIC own approximately
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements - Not Yet Adopted
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The standard is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impacts of adopting this guidance on the Company's Consolidated Financial Statements and disclosures.
10
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update establishes authoritative guidance on the accounting for government grants received by business entities. The standard is effective for our annual and interim reporting periods beginning in 2029, with early adoption permitted. The standard may be applied using a modified prospective, modified retrospective or full retrospective transition approach. The Company is currently evaluating the impacts of this guidance on the Company's Consolidated Financial Statements and disclosures.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements that better aligns the hedge accounting model with risk management activities. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company's Consolidated Financial Statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This amendment modernizes the accounting guidance of how software is developed by eliminating project stages from capitalization criteria. The standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. The standard allows for prospective, modified, or retrospective transition. Early adoption is permitted. The Company is currently evaluating the impacts of this guidance on the Company's Consolidated Financial Statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosures of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses. The standard is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company's Consolidated Financial Statements and disclosures.
Other new pronouncements issued but not effective until after March 31, 2026 are not expected to have a material impact on our results of operations, financial condition, or liquidity.
NOTE 3: REVENUE RECOGNITION
Disaggregated revenue
The following table summarizes total revenue by the Company’s segments:
|
|
Three months ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Revenue: |
|
|
|
|
|
|
||
Engine Services |
|
$ |
|
|
$ |
|
||
Component Repair Services |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
The following table presents revenues from customers that contributed to more than 10% of revenues:
|
|
Three months ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Customer A |
|
|
% |
|
|
% |
||
11
The following table presents revenues from external customers by end market:
|
|
Three months ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Commercial Aerospace |
|
$ |
|
|
$ |
|
||
Military & Helicopter |
|
|
|
|
|
|
||
Business Aviation |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Contract assets and liabilities
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing or reimbursable costs related to a specific contract. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in the Company’s contracts.
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(in thousands) |
|
|||||
|
|
|
|
|||||
Contract assets |
|
|
|
|
$ |
|
||
Less: allowance for credit loss |
|
|
( |
) |
|
|
( |
) |
Contract assets, net |
|
|
|
|
$ |
|
||
Contract liabilities |
|
|
|
|
$ |
|
||
Changes in contract assets and contract liabilities primarily result from the timing difference between the Company’s performance of services and payments from customers. The Company recognized revenue that was included in the beginning of period contract liability balance of approximately $
Remaining performance obligations
As of March 31, 2026, the Company had approximately $
Rental Engine Revenue
Revenue from rental engines was $
12
NOTE 4: EARNINGS PER SHARE
The following table summarizes the computation of basic and diluted net income per share attributable to the stockholders:
|
Three months ended March 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
|
(in thousands, except per share amounts) |
|
|||||
Numerator for earnings per share: |
|
|
|
|
|
||
Net income |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Denominator for earnings per share: |
|
|
|
|
|
||
Weighted average shares of common stock - basic |
|
|
|
|
|
||
Dilutive effect of stock options and restricted stock awards |
|
|
|
|
|
||
Weighted average shares - diluted |
|
|
|
|
|
||
|
|
|
|
|
|
||
Earnings per share: |
|
|
|
|
|
||
Basic earnings per share |
$ |
|
|
$ |
|
||
Diluted earnings per share |
$ |
|
|
$ |
|
||
The Company has
NOTE 5: INVENTORIES
Inventories consist of the following:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(in thousands) |
|
|||||
Raw materials |
|
$ |
|
|
$ |
|
||
Finished goods |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
||
Inventory balances were net of reserves for slow moving, excess or obsolete engine and aircraft parts inventory of $
NOTE 6: GOODWILL
The changes in the carrying amount of goodwill for the periods ended March 31, 2026 and 2025, are as follows:
|
|
Segment |
|
|||||||||
|
|
Engine Services |
|
|
Component Repair Services |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Balance, December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments |
|
|
— |
|
|
|
— |
|
|
|
|
|
Balance, March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
13
|
|
Segment |
|
|||||||||
|
|
Engine Services |
|
|
Component Repair Services |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Balance, December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Post-closing adjustment |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Goodwill, March 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Goodwill Impairment Testing
The Company reviews goodwill at least annually for potential impairment, as of October 1, and more frequently, if events or changes in circumstances suggest that an impairment may exist. The Company performed its annual goodwill impairment testing as of October 1, 2025, and determined that no adjustments to the carrying value of goodwill were necessary as it was more likely than not that the fair values of the Company’s reporting units are above their carrying values and that
NOTE 7: LONG-TERM DEBT
Long-term debt consists of the following:
|
|
As of March 31, |
|
|
As of December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
2024 Term Loan Facilities |
|
$ |
|
|
$ |
|
||
2024 Revolving Credit Facility |
|
|
— |
|
|
|
— |
|
Finance leases |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Current portion |
|
|
( |
) |
|
|
( |
) |
Unamortized discounts |
|
|
( |
) |
|
|
( |
) |
Unamortized deferred finance charges |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
$ |
|
|
$ |
|
||
On October 31, 2024, the Company entered into the Credit Agreement providing for (i) the 2024 Term Loan Facilities due
2024 Term Loan Facilities
The Credit Agreement provided for (i) a senior secured U.S. Dollar term loan B facility, incurred by the U.S. Borrower in an aggregate principal amount of $
14
2024 Revolving Credit Facility
The Credit Agreement provided for a senior secured multicurrency revolving credit facility available to the Company in an aggregate principal amount of up to $
The Company’s weighted average interest rate of borrowings under its senior credit agreements was
Certain of these agreements contain non-financial covenants that limit both the Company’s ability to raise additional financings in the future and the Company’s ability to pay dividends subject to select amounts and incurrence ratios.
As of March 31, 2026, the amounts of the long-term debt payable for the years ending on December 31 are as follows:
|
|
Finance Leases |
|
|
Debt |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
2026 (excluding the three months ended March 31, 2026) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2027 |
|
|
|
|
|
|
|
|
|
|||
2028 |
|
|
|
|
|
|
|
|
|
|||
2029 |
|
|
|
|
|
|
|
|
|
|||
2030 |
|
|
|
|
|
|
|
|
|
|||
Thereafter |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Amount representing interest |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Unamortized discounts |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unamortized deferred finance charges |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total long-term debt payable |
|
$ |
|
|
$ |
|
|
$ |
|
|||
NOTE 8: LEASES
Lease costs consist of the following:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(in thousands) |
|
||||||
Finance lease expense |
|
|
|
|
|
|
||
Amortization |
|
$ |
|
|
$ |
|
||
Interest expense |
|
|
|
|
|
|
||
Operating lease expense |
|
|
|
|
|
|
||
Short term lease expense |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
15
The impact of leasing on the Consolidated Balance Sheets consists of the following:
|
|
Classification on the |
|
|
|
|||||
|
|
Consolidated Balance Sheets |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
|
|
|
|
(in thousands) |
|
|||||
Assets |
|
|
|
|
|
|
|
|
||
Finance lease assets |
|
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
Operating lease assets |
|
Operating lease right of use asset, net |
|
|
|
|
|
|
||
Total lease assets |
|
|
|
$ |
|
|
$ |
|
||
Current liabilities |
|
|
|
|
|
|
|
|
||
Finance lease liabilities |
|
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
Operating lease liabilities |
|
Operating lease liabilities |
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
|
|
|
||
Finance lease liabilities |
|
Long-term debt |
|
|
|
|
|
|
||
Operating lease liabilities |
|
Long-term operating lease liabilities |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
Supplemental cash flow information related to leases consisted of the following:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Cash paid for amounts included in measurement of liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
Right of use assets obtained in exchange for lease liabilities: |
|
|
|
|
|
|
||
Operating lease right of use asset |
|
|
|
|
|
|
||
Future minimum operating lease payments consist of the following for the twelve months ending December 31:
|
|
Operating |
|
|
|
|
(in thousands) |
|
|
2026 (excluding the three months ended March 31, 2026) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total future minimum payments |
|
|
|
|
Less imputed interest |
|
|
|
|
Present value of minimum payments |
|
$ |
|
|
Weighted average remaining lease term and borrowing rate consisted of the following:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Operating |
|
|
Finance |
|
|
Operating |
|
|
Finance |
|
||||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average borrowing rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
16
Lessor Arrangements
The net carrying amount of equipment leased to others, included in property, plant and equipment, under operating leases as of March 31, 2026 and December 31, 2025 was approximately $
NOTE 9: INCOME TAXES
The Company’s effective tax rate for the three months ended March 31, 2026 was
The Company’s effective tax rate for the three months ended March 31, 2025 was
The Company did not record any significant changes in its unrecognized tax benefits or total interest and penalties for tax years remaining open to examination during the three months ended March 31, 2026 and 2025. Currently, there are not any ongoing audits or examinations with any tax jurisdictions.
In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of
On July 4, 2025 the One Big Beautiful Bill Act (the “OBBBA”), which includes a broad range of U.S. tax reform provisions, was signed into law by the President of the United States. The OBBBA includes significant provisions, such as (i) the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, (ii) modifications to the international tax framework, and (iii) the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Effective January 1, 2026, the OBBBA eliminates the requirement to allocate interest expense against Net CFC Tested Income (“NCTI”, formerly GILTI). As a result, the Company is utilizing foreign tax credits to offset NCTI.
NOTE 10: COMMITMENTS AND CONTINGENCIES
Commitments
The Company has future contractual commitments of $
Contingent liabilities
The Company is involved, from time to time, in legal actions and claims arising in the ordinary course of business. Although predicting the outcome of legal actions and claims is difficult, based on current knowledge and consultation with legal counsel, the Company does not expect the outcome of these matters, either individually or in aggregate, to have a material adverse effect on the Company’s consolidated financial position.
From time to time, the Company enters into contracts that contain liquidated damage provisions, which provide for the payment of damages to the Company’s customers in the event of non-compliance with certain contractually-specified terms and conditions. The Company evaluates its exposure to these provisions on a contract-by-contract basis, and records provisions for such contractual provisions when it has been determined that a loss is probable and estimable. As of March 31, 2026 and December 31, 2025, the provision is nominal.
The Company has facilities that are located on land that has been used for industrial purposes for an extended period of time. The Company has not been named as a defendant in any environmental suit. Management believes that the Company is currently in substantial compliance with environmental laws. The Company incurs capital and operating costs relating to environmental compliance on an ongoing basis. The Company does not believe it will be required under existing environmental laws to expend amounts that would have a material adverse effect on its financial position or results of operations as a whole.
17
NOTE 11: GUARANTEES
The Company issues letters of credit, performance bonds, bid bonds or guarantees in the ordinary course of business. These instruments are generally issued in conjunction with contracts or other business requirements. The total of these instruments outstanding was approximately $
NOTE 12: RELATED PARTY TRANSACTIONS
In connection with the Acquisition, on April 4, 2019, Dynasty Acquisition entered into a consulting services agreement (the “Carlyle Services Agreement”) with Carlyle Investment Management L.L.C. (“CIM”), pursuant to which Dynasty Acquisition paid CIM a one-time fee of approximately $
In connection with the Acquisition, on April 4, 2019, Dynasty Acquisition entered into a consulting service agreement, which was amended and restated in connection with the IPO on October 3, 2024 (the “Amended and Restated Beamer Services Agreement”) with Beamer Investment Inc., an affiliate of GIC, pursuant to which Dynasty Acquisition paid Beamer Investment Inc. a one-time fee of approximately $
CFGI, a portfolio company of a fund affiliated with Carlyle, provides the Company with accounting advisory and consulting services. For the three months ended March 31, 2026, the Company recognized $
NOTE 13: EMPLOYEE BENEFIT PLANS
Defined contribution pension plans
The Company has several defined contribution plans covering substantially all of its employees. Costs for the defined contribution plans were $
Defined benefit pension plans
The Company maintains defined benefit plans for certain employees in the United Kingdom and France.
In the United Kingdom, the Company maintains
18
“Scheme”). The other defined benefit scheme is the Vector Aerospace 1998 Pension Plan (the “Plan”). The Scheme and Plan are generally closed for new members, who participate in a separate defined contribution plan.
In France, the defined benefit plan is a government-mandated defined obligation that provides employees with retirement indemnities in the form of lump sums on the basis of the length of service and employee compensation levels. The plan is unfunded and benefits are paid when amounts become due, commencing when participants retire. Actuarial gains and losses of the year for long service awards are immediately recognized in the Consolidated Statements of Operations.
Costs for the defined benefit plans were $
NOTE 14: STOCK BASED COMPENSATION
Following its IPO, the Company has made awards under its 2024 Incentive Award Plan (the “2024 Plan”), which have generally consisted of nonqualified stock options and restricted stock units (“RSUs”). Additionally, certain employees and directors have received restricted stock awards (“RSAs”), which were made in respect of pre-IPO equity awards originally granted to them under the Dynasty Parent Holdings, L.P. and Dynasty Parent Co., Inc. 2019 Long-Term Incentive Plan.
Stock Options
Stock options granted under the 2024 Plan generally vest in three equal annual installments, subject to the participant’s continued employment with the Company, and expire ten years from the date of grant. The Company uses a Black-Scholes pricing model to estimate the grant-date fair value of the stock options awarded. The Black-Scholes pricing model requires assumptions regarding the expected volatility of the Company’s shares of Common Stock, the risk-free interest rate, the expected term of the stock option award and the Company’s dividend yield.
Term. The Company began being publicly traded on October 2, 2024, and as such does not have sufficient historical data to estimate the expected term of the stock option awards. In the absence of sufficient historical data, where the options are considered “plain vanilla,” the SEC’s Staff Accounting Bulletin No. 110 (“SAB 110”) provides guidance for a simplified method of estimating the expected term until more empirical data becomes available. This method calculates the expected term as the average of the weighted vesting term and the contractual term of the options. As such, the Company utilized the SEC's simplified method to calculate the expected term for the options which resulted in a term of
Expected Dividends. The Company does not pay dividends and is not expected to pay dividends in the near term. As such, the Company elected to use a dividend yield of
Risk-Free Rate. The Company used the U.S. Treasury Securities yield corresponding to the expected term, of
Expected Volatility. The Company began being publicly traded on October 2, 2024, followed by additional secondary offerings in March 2025 and May 2025, thus the Company has limited trading data to calculate meaningful volatility. As such, the Company relied solely on peer group volatility, calculated at
Stock Options:
The following is a summary of the activity for stock option awards:
|
|
Stock Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (years) |
|
Aggregate Intrinsic Value (in thousands) |
|
|||
Outstanding at December 31, 2025 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
||
Outstanding at March 31, 2026 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Options Exercisable at March 31, 2026 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
19
Restricted Stock Units (“RSUs”):
The RSUs granted in 2025 under the 2024 Plan generally vest in three equal annual installments, subject to the participant’s continued employment with the Company. The fair value of RSUs granted is estimated using the closing price of the Company’s stock on the grant date.
The following is a summary of the activity for RSUs:
|
|
Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
||
Nonvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested at March 31, 2026 |
|
|
|
|
$ |
|
||
Restricted Stock Awards (“RSAs”):
The following is a summary of the activity for RSAs:
|
|
Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
||
Nonvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
— |
|
|
|
— |
|
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested at March 31, 2026 |
|
|
|
|
$ |
|
||
Stock Based Compensation Expense:
The Company recorded $
NOTE 15: FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value into the following hierarchy are determined as follows:
Level 1 - |
Unadjusted quoted prices in active markets for identical assets or liabilities. |
Level 2 - |
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. |
Level 3 - |
Unobservable inputs for the asset or liability. |
For cash and cash equivalents, accounts receivable, income taxes receivable and accounts payable, the fair value approximates the carrying value due to the short maturity periods of these financial instruments. For long-term borrowings, the fair value is measured using Level 2 market values.
The interest rate swaps, interest rate caps and foreign exchange contracts are carried at fair value in the Consolidated Balance Sheets. The fair value measurement is classified within Level 2 of the fair value hierarchy, as the inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity. The fair value of the interest rate agreements is estimated using industry standard valuation models using market-based observable inputs.
20
The Company’s term loan borrowing, which is SOFR-based, approximates fair value at March 31, 2026. The inputs used to measure the fair value of the Company’s debt instrument are classified as Level 2 within the fair value hierarchy.
Valuation of Contingent Consideration Liability
The fair value of earnout consideration was estimated based on applying a Monte Carlo simulation method to forecast achievement of the gross profit targets. This method involves many possible value outcomes which are evaluated to establish an estimated value. Key inputs in the valuation include volatility and discount rates. Due to the significant unobservable inputs used in the valuations, these liabilities are categorized within Level 3 of the fair value hierarchy.
The Company determined the initial value for the contingent consideration liability of $
The following table represents the significant inputs used in calculating the fair value of the contingent consideration liability on the issuance date, as of March 31, 2026 and December 31, 2025:
Longest midpoint term |
|
|
|
|
Gross profit discount rate |
|
|
% |
|
Risk-free rate |
|
|
% |
|
Gross profit volatility |
|
|
% |
|
Payment discount rate |
|
|
% |
The contingent consideration measured at fair value using unobservable inputs decreased from the initial measurement of $
The following table summarizes the carrying amounts and fair values of financial instruments:
|
|
|
|
|
As of March 31, 2026 |
|
|
As of December 31, 2025 |
|
||||||||||
|
Balance Sheet Classification |
|
Level |
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
|
|
|
|
|
(in thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
Prepaid expenses and other current assets |
|
2 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate caps |
Accrued expenses and other current liabilities |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
Accrued expenses and other current liabilities |
|
2 |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Contingent consideration - current |
Accrued expenses and other current liabilities |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration - non-current |
Other non-current liabilities |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
21
The gains (losses) on the Company’s derivative instruments were as follows:
|
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
Statement of Operations Classification |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
(in thousands) |
|
|||||
Amount of (loss) gain recognized in net income: |
|
|
|
|
|
|
|
|
||
Interest rate swaps |
|
Interest expense |
|
$ |
|
|
$ |
|
||
Interest rate caps |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
Foreign exchange contracts |
|
Selling, general and administrative expense |
|
|
|
|
|
|
||
Total loss recognized in net income |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
||
|
|
Statement of Comprehensive Income Classification |
|
|
|
|
|
|
||
Amount of (loss) gain recognized in other comprehensive income (loss): |
|
|
|
|
|
|
|
|
||
Interest rate swaps |
|
Cash flow hedge loss |
|
$ |
|
|
$ |
( |
) |
|
Interest rate caps |
|
Cash flow hedge gain (loss) |
|
|
|
|
|
( |
) |
|
Foreign exchange contracts |
|
Cash flow hedge loss |
|
|
( |
) |
|
|
|
|
Total loss recognized in other comprehensive income |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 16: DERIVATIVES AND HEDGING
The Company is exposed to, among other things, the impact of changes in interest rates and foreign currency exchanges rates in the normal course of business. The Company’s objective in risk management is to utilize interest rate derivatives to add stability to interest expense and manage its exposure to interest rate movements and utilize foreign exchange rate derivatives to add stability to foreign exchange expense and manage its exposure to exchange rate movements. To accomplish this objective, the Company primarily uses (i) interest-rate swaps and interest-rate caps as part of its interest rate risk management strategy and (ii) foreign currency forward contracts to protect against the foreign currency exchange rate risk inherent on forecasted transactions.
The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks and does not enter into such transactions for trading purposes.
Interest-rate swap and interest-rate cap agreements
Interest-rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest-rate caps designated as cash flow hedges involve payment of a fixed premium to a counterparty in exchange for the company receiving a SOFR cap over the life of the agreement without exchange of the underlying notional amount.
During the three months ended March 31, 2026 and 2025, such derivatives were used to hedge the variable cash flows associated with its long-term debt agreements.
The tables below summarize the key terms of the interest-rate swap and interest-rate cap agreements:
Interest-rate swap agreements:
Aggregate |
|
|
Effective Date |
|
Maturity Date |
|
Interest - Rate |
|
(In thousands) |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
||||
22
Interest-rate cap agreements:
Aggregate |
|
|
Effective Date |
|
Maturity Date |
|
Interest - Rate |
|
(In thousands) |
|
|
|
|
|
|
|
|
$ |
|
(1) |
|
|
||||
$ |
|
|
|
|
||||
For the interest-rate swaps, differences between the hedged interest rate and the fixed rate are recorded as interest expense in the Consolidated Statements of Operations in the same period that the related interest is recorded for the Company’s long-term debt agreements.
For the interest-rate caps, monthly premiums and differences received between the hedged interest rate and the interest rate cap are recorded to interest expense in the Consolidated Statements of Operations in the same period that the related interest is recorded for the Company’s long-term debt agreements.
Foreign currency forward exchange contracts
The Company has operations in Canada, as well as other countries outside of North America, and consequently the Consolidated Balance Sheets can be affected by movements in exchange rates for limited balances denominated in foreign currency. Currency exposures can also arise from certain revenue and purchase transactions denominated in foreign currencies, primarily payroll costs which are in local currencies.
The Company enters into short-term foreign exchange contracts throughout the year designated as a cash flow hedge to manage the exposure to changes in the exchange rate on its Canadian and United Kingdom payroll costs, requiring the Company to buy a notional amount of Canadian dollars and British Pounds Sterling. The contracts require the Company to buy a notional amount of the foreign currency at a set rate weekly from a reference date to maturity date, or until a maximum value is reached.
On October 21, 2025, the Company entered into a GBP foreign currency contract at a notional value of USD $
On April 7, 2025, the Company entered into a foreign currency contract at a notional value of GBP
The amounts shown in the table below represent the gross amounts of recognized assets and liabilities, the amounts offset in the Consolidated Balance Sheets and the net amounts of assets and liabilities presented therein:
|
|
As of March 31, 2026 |
|
|
As of December 31, 2025 |
|
||||||||||
|
|
Asset |
|
|
Liability |
|
|
Asset |
|
|
Liability |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest-rate cap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net derivatives as classified in the consolidated balance sheets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
23
NOTE 17: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) includes all non-stockholder changes in equity. The changes in accumulated other comprehensive income (loss) by component is as follows:
|
|
Interest- |
|
|
Foreign |
|
|
Foreign |
|
|
Employee |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Balance, December 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss before Reclassifications, net of income tax |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Amounts reclassified from accumulated other comprehensive income |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
||
Net other comprehensive loss |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Balance, March 31, 2026 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Interest- |
|
|
Foreign |
|
|
Foreign |
|
|
Employee |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Balance, December 31, 2024 |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss before Reclassifications, net of income tax |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net other comprehensive loss |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, March 31, 2025 |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 18: SEGMENT INFORMATION
The Company’s chief operating decision making officer (“CODM”) is the Company’s Chief Executive Officer. Consistent with how the Company evaluates its performance and the way the Company is organized internally; the Company reports its activities in
The Company defines Segment Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization directly attributable to each operating segment and adjusted for certain non-cash items that the Company may record each period, as well as items not recurring in the ordinary course of business such as acquisition costs, integration and severance costs, refinance fees, business transformation costs and other discrete expenses, when applicable. Expense information is provided to and reviewed by the CODM on a consolidated basis to evaluate cost efficiency and company level performance.
The Company’s Engine Services segment provides a full suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military & helicopter, and business aviation end markets. Revenue in the Engine Services segment is primarily derived from the repair and overhaul of a wide variety of gas turbine engines and auxiliary power units that power fixed and rotary wing aircraft. The Company also provides complementary maintenance, repair, upgrade and other related services for airframes and avionics systems in the business aviation and helicopter end markets. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
24
The Company’s Component Repair Services segment provides engine component and accessory repairs to the Commercial Aerospace, Military & Helicopter, and Other, including land and marine, and oil and gas end markets. Revenue in the Component Repair Services segment is derived from the engine piece part and accessory repairs that the Company performs, repair development engineering and other related services, and some engine new part manufacturing. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
The Company’s segment disclosure includes intersegment revenues, which primarily consist of subcontract services between segments. The revenue and corresponding cost of revenue are eliminated upon consolidation. The elimination of such intersegment transactions is included within intersegment revenue in the table below. The revenue is eliminated with the segment receiving the subcontract services. The segment providing services retains revenue while the segment receiving the services records the elimination.
The Company does not report total assets by segment for internal or external reporting purposes as the Company’s CODM does not assess performance, make strategic decisions or allocate resources based on assets.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see 2025 Form 10-K, Part II, Item 8, Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies).
Selected financial information for each segment is as follows:
|
|
Three months ended March 31, 2026 |
|
|||||||||
|
|
Engine |
|
|
Component |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
— |
|
|
Total segment revenue |
|
|
|
|
|
|
|
|
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Corporate (2) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Business transformation costs (LEAP and CFM) (3) |
|
|
|
|
|
|
|
|
|
|||
Non-cash stock compensation expense |
|
|
|
|
|
|
|
|
|
|||
Integration costs and severance (4) |
|
|
|
|
|
|
|
|
|
|||
Other (5) |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
25
|
|
Three months ended March 31, 2025 |
|
|||||||||
|
|
Engine |
|
|
Component |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
— |
|
|
Total segment revenue |
|
|
|
|
|
|
|
|
|
|||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Corporate (2) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Business transformation costs (LEAP and CFM) (3) |
|
|
|
|
|
|
|
|
|
|||
Stock compensation (4) |
|
|
|
|
|
|
|
|
|
|||
Integration costs and severance (5) |
|
|
|
|
|
|
|
|
|
|||
Other (6) |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
The following table presents revenues from external customers by geographic area based on location of the customer:
|
|
Three months ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
United States |
|
$ |
|
|
$ |
|
||
United Kingdom |
|
|
|
|
|
|
||
Canada |
|
|
|
|
|
|
||
Rest of Europe (1) |
|
|
|
|
|
|
||
Asia (1) |
|
|
|
|
|
|
||
Rest of the world (1) |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
26
NOTE 19: SHARE REPURCHASE PROGRAM
On December 9, 2025, the Board of Directors of the Company approved a stock repurchase program, effective immediately. The stock repurchase program authorizes the Company to repurchase up to $
Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases will be structured to occur within the pricing and volume requirements of Rule 10b-18. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. This program does not obligate the Company to acquire any particular amount of Common Stock and the program may be extended, modified, suspended or discontinued at any time at the Company’s discretion.
Share Repurchase from GIC Stockholder
On January 29, 2026, the Company completed the repurchase of
During the three months ended March 31, 2026, the Company repurchased $
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in this Quarterly Report and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2025, included in our 2025 Form 10-K. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties you should review about our business. Our future results and financial condition may differ materially from those we currently anticipate. You should review the “Cautionary Note Regarding Forward-Looking Statements” section of this Quarterly Report and the “Risk Factors” section of our 2025 Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “we,” “us,” and “our” refer to StandardAero, Inc. and its subsidiaries.
Overview
We believe that we are the world’s largest independent, pure-play provider of aerospace engine aftermarket services for fixed and rotary wing aircraft, serving the commercial, military and business aviation end markets. We provide a comprehensive suite of critical, value-added aftermarket solutions, including scheduled and unscheduled engine maintenance, repair and overhaul, engine component repair, on-wing and field service support, asset management and engineering solutions. We serve a crucial role in the engine aftermarket value chain, connecting engine OEMs with aircraft operators through our aftermarket services, maintaining longstanding relationships with both. We command a leading reputation that is based upon our strong track record of safety, reliability and operational performance built over our more than 100 years of successful operations in the aerospace aftermarket.
Operating Segments
We manage our business in line with our service offerings with two reportable segments: Engine Services and Component Repair Services.
Our Engine Services segment provides a full suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military and helicopter, and business aviation end markets. Revenue in the Engine Services segment is primarily derived from the repair and overhaul of a wide variety of gas turbine engines and auxiliary power units that power fixed and rotary wing aircraft. We also provide complementary maintenance, repair, upgrade and other related services for airframes and avionics systems in the business aviation and helicopter end markets. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
Our Component Repair Services segment provides engine component and accessory repairs to commercial aerospace, military and other end markets. Revenue in the Component Repair Services segment is derived from the engine piece part and accessory repairs that we perform, repair development engineering and other related services, and some engine new part manufacturing. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
Key Factors and Trends Affecting Our Business
Manufacturer specifications, government regulations and military maintenance regimens generally require that aircraft and engines undergo aftermarket servicing at regular intervals or upon the occurrence of certain events during the serviceable life of each asset. As a result, the aggregate volume of services required for any particular engine platform is a function of four factors: (i) the number of aircraft and engines in operation (the “installed base”), (ii) the age of the installed base, (iii) the reliability of the installed base and (iv) the utilization rate of the installed base.
The number of aircraft in operation and the utilization of those aircraft are generally tied to global air travel over the long-term, which has historically grown in excess of gross domestic product driven by secular tailwinds such as globalization, rising middle class population and wealth, increasing demand for leisure travel, growth in corporate earnings and e-commerce and technological advancements in aviation. The age and utilization of the existing installed base have increased as supply chain issues and regulatory constraints delay the delivery of new aircraft. Engine aftermarket services demand is also expected to further increase through the remainder of the decade due to upcoming shop visits resulting from a large number of engines delivered in the 2010s continuing to age and entering prime maintenance periods. In the military and helicopter end market, ongoing geopolitical tensions continue to drive significant defense investment. In the business aviation end market, this strong fleet growth is expected to drive a continued increase in demand for business jet engine maintenance services.
28
While the recent supply chain disruptions across our end markets are causing older aircraft and engines to remain in service longer and increasing their maintenance demand, our business also depends on maintaining a sufficient supply of parts, components and raw materials to meet the requirements of our customers. In recent years, we have experienced supply chain delays that impacted the availability of parts and ultimately engine throughput across all of our end markets. Any disruption to our supply chain and business operations, or to our suppliers’ supply chains and business operations, could have adverse effects on our ability to provide aftermarket support to our customers timely and efficiently and may increase our working capital as we wait for parts for the engines we service. Any such disruptions could adversely affect our business, results of operations and financial condition. See “Part I. Item 1A. Risk Factors—Risks Related to Our Business and Industry—We depend on certain component parts and material suppliers for our engine repair and overhaul operations, and any supply chain disruptions or loss of key suppliers could adversely affect our business, results of operations and financial condition” in our 2025 Form 10-K. In addition, the Company continues to closely monitor the implementation of tariffs, which has the potential to disrupt global trade and existing supply chains and impose additional costs on our business. While negotiations regarding tariffs are ongoing, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers require us to increase prices for our products or services, this could lead to decreased demand for our products and services, which would negatively impact our results of operations, cash flows, and financial condition. While tariff levels and related trade actions remain fluid, we expect to pass associated cost increases through to customers where possible, though timing delays may impact margins. However, factors such as the Company’s operations and supply chains, which are primarily located in regions where our products are sold, along with the applicability of the United States-Mexico-Canada Agreement, help reduce our exposure to trade disruptions, but there can be no assurance that these factors, or our pricing actions, will be effective mitigants given the uncertain environment. Most recently, in February 2026, the U.S. Supreme Court ruled that the use of IEEPA to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs that had been in effect since April 2025. While the ruling struck down the IEEPA based tariffs, it does not prevent the administration from imposing tariffs using other legal authorities, and the administration has indicated its intention to pursue alternative statutory mechanisms to reinstate or impose new tariffs. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business and Industry—United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business” in our 2025 Form 10-K.
Key Factors Affecting the Comparability of Our Results of Operations
Our results have been affected by, and may in the future be affected by, the following factors, which must be understood in order to assess the comparability of our period-to-period financial performance and condition.
Recent Developments
March 2025 Secondary Offering
In March 2025, two of the Company’s stockholders (the “Selling Stockholders”), affiliates of The Carlyle Group Inc. (“Carlyle”) and GIC Private Limited (“GIC”), completed a public offering of an aggregate of 36,000,000 shares of Common Stock at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company.
May 2025 Secondary Offering
In May 2025, the Selling Stockholders completed a public offering of an aggregate of 34,500,000 shares of Common Stock (including the full exercise by the underwriters of their option to purchase up to an additional 4,500,000 shares) at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company.
January 2026 Secondary Offering and Share Repurchase
On January 29, 2026, the Selling Stockholders completed a public offering of an aggregate of 57,500,000 shares of Common Stock (including the full exercise by the underwriters of their option to purchase up to an additional 7,500,000 shares) at a price to the public of $31.00 per share (the “January 2026 Offering”).
On January 29, 2026, the Company completed the repurchase of 1,637,465 shares of Common Stock from a selling stockholder affiliated with GIC (the “GIC Stockholder”) in a private transaction at a price of $30.54 per share (the “Share Repurchase”). The Share Repurchase was made pursuant to the Company’s existing stock repurchase program approved by its board of directors in December 2025 and pursuant to a stock purchase agreement, dated January 20, 2026, with the GIC Stockholder. The Share Repurchase was conditioned upon the completion of the January 2026 Offering and closed concurrently with such offering. The repurchased shares of Common Stock are no longer outstanding.
29
As of March 31, 2026, Carlyle and GIC own approximately 25.5% and 5.8% of the Company’s outstanding Common Stock, respectively.
Public Company Expenses
We have incurred, and expect to continue to incur, certain professional fees and other expenses as part of our transition to a public company not recurring in the ordinary course of business. As a public company, we are implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies, for which we expect to incur additional recurring expenses. In particular, our accounting, legal and personnel-related expenses and directors’ and officers’ insurance costs have increased as we establish more comprehensive compliance and governance functions, establish, maintain and review internal control over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and distribute periodic reports in accordance with SEC rules. Our financial statements following the IPO have reflected and will continue to reflect the impact of these expenses. See “Part I. Item 1A. Risk Factors—Risks Related to Management and Employees—The requirements of being a public company may strain our resources, increase our costs, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members” in our 2025 Form 10-K.
Key Performance Indicators and Non-GAAP Financial Measures
We use certain non-GAAP key performance indicators to evaluate our business operations, including Adjusted EBITDA and Adjusted EBITDA Margin.
The non-GAAP financial measures presented in this Quarterly Report are supplemental measures of our performance that we believe help investors understand our financial condition and operating results and assess our future prospects. We believe that presenting these non-GAAP financial measures, in addition to the corresponding GAAP financial measures, are important supplemental measures that exclude non-cash or other items that may not be indicative of or are unrelated to our core operating results and the overall health of our company. We believe that these non-GAAP financial measures provide investors greater transparency to the information used by management for its operational decision-making and allow investors to see our results “through the eyes of management.” We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance. When read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as one basis for financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry.
Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net income before interest expense, income tax expense, depreciation and amortization, further adjusted for certain non-cash items that we may record each period, as well as items not recurring in the ordinary course of business such as acquisition costs, integration and severance costs, refinancing fees, business transformation costs and other discrete expenses, when applicable. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important metrics for management and investors as they remove the impact of items that we do not believe are indicative of our core operating results or the overall health of our company and allows for consistent comparison of our operating results over time and relative to our peers.
30
The following table presents a reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA Margin, respectively for the three months ended March 31, 2026 and 2025:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(in thousands, except percentages) |
|
||||||
Net income |
|
$ |
79,930 |
|
|
$ |
62,943 |
|
Income tax expense |
|
|
25,017 |
|
|
|
22,189 |
|
Depreciation and amortization |
|
|
46,461 |
|
|
|
48,676 |
|
Interest expense |
|
|
38,151 |
|
|
|
43,791 |
|
Business transformation costs (LEAP and CFM) (1) |
|
|
6,622 |
|
|
|
12,917 |
|
Non-cash stock compensation expense |
|
|
3,458 |
|
|
|
2,045 |
|
Integration costs and severance (2) |
|
|
341 |
|
|
|
1,380 |
|
Secondary offering costs |
|
|
1,350 |
|
|
|
— |
|
Other (3) |
|
|
1,826 |
|
|
|
4,286 |
|
Adjusted EBITDA |
|
$ |
203,156 |
|
|
$ |
198,227 |
|
Revenue |
|
$ |
1,626,857 |
|
|
$ |
1,435,588 |
|
Net income margin |
|
|
4.9 |
% |
|
|
4.4 |
% |
Adjusted EBITDA Margin |
|
|
12.5 |
% |
|
|
13.8 |
% |
Key Components of Results of Operations
The following discussion provides a brief description of certain items that appear in our consolidated financial statements and the general factors that impact these items.
Revenue
Revenue consists of gross sales principally resulting from the engine and component repair services that we perform for commercial, military and business aviation fixed wing and rotary wing aircraft engines, as well as aeroderivative engines for the land and marine and other markets. Within these end markets, our Engine Services segment primarily provides a variety of value-added services in support of the maintenance, repair, testing and recertification of aerospace and aeroderivative engines. Our Component Repair Services segment supports commercial aerospace, military aerospace, land and marine and other markets with engine piece part repair and accessory repair.
Cost of revenue
Cost of revenue primarily consists of direct costs required to provide our services. These costs include the cost of materials, direct labor for inspection and disassembly, assembly and repair, rental engines, subcontracted services and overhead costs directly related to the performance of aftermarket services. Overhead costs include the cost of our facilities, engineering, quality and production management, including indirect labor supporting production, depreciation of equipment and facilities and amortization of the costs associated with OEM authorizations and licenses. The cost of materials accounts for the largest portion of our cost of revenue.
31
Selling, general and administrative expense
Selling, general and administrative (“SG&A”) expense primarily consists of expenses related to the selling of our services to our customers and maintaining a global sales support network, including salaries of our direct sales force. General costs to support the administrative requirements of the business such as finance, accounting, information technology, human resources and general management are also included.
Amortization of intangible assets
Intangible assets are amortized over the estimated useful life for customer relationships, trademarks and technology and other assets.
Interest expense
Interest expense primarily consists of interest on our debt obligations, including the amortization of debt discount and deferred finance charges. Interest expense also includes the portion of the gain or loss on our interest-rate swap and interest-rate cap agreements that is reclassified into earnings.
Income tax expense
Our provision for income tax expense is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table sets forth our consolidated statements of operations data for the three months ended March 31, 2026 and 2025:
|
|
Three months ended March 31, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Revenue |
|
$ |
1,626,857 |
|
|
$ |
1,435,588 |
|
|
$ |
191,269 |
|
|
|
13.3 |
% |
Cost of revenue |
|
|
1,387,485 |
|
|
|
1,217,858 |
|
|
|
169,627 |
|
|
|
13.9 |
% |
Selling, general and administrative expense |
|
|
71,942 |
|
|
|
64,475 |
|
|
|
7,467 |
|
|
|
11.6 |
% |
Amortization of intangible assets |
|
|
24,332 |
|
|
|
24,332 |
|
|
|
— |
|
|
|
— |
% |
Operating income |
|
|
143,098 |
|
|
|
128,923 |
|
|
|
14,175 |
|
|
|
11.0 |
% |
Interest expense |
|
|
38,151 |
|
|
|
43,791 |
|
|
|
(5,640 |
) |
|
|
(12.9 |
)% |
Income before income taxes |
|
|
104,947 |
|
|
|
85,132 |
|
|
|
19,815 |
|
|
|
23.3 |
% |
Income tax expense |
|
|
25,017 |
|
|
|
22,189 |
|
|
|
2,828 |
|
|
|
12.7 |
% |
Net income |
|
$ |
79,930 |
|
|
$ |
62,943 |
|
|
$ |
16,987 |
|
|
|
27.0 |
% |
Revenue. Revenue increased $191.3 million, or 13.3%, to $1,626.9 million for the three months ended March 31, 2026 from $1,435.6 million for the three months ended March 31, 2025. The increase was driven by strong demand for our services and products across all three major end markets. The business aviation end market grew 19.6% compared to the prior year period, the commercial aerospace end market grew 11.4% compared to the prior year period, and the military and helicopter end market grew 10.3%, compared to the prior year period.
Cost of revenue. Cost of revenue increased $169.6 million, or 13.9%, to $1,387.5 million for the three months ended March 31, 2026 from $1,217.9 million for the three months ended March 31, 2025. This increase was primarily driven by higher material costs as a percentage of revenue, due to increased sales volume of lower margin platforms.
32
The following table sets forth our total cost of revenue for the three months ended March 31, 2026 and 2025:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Material |
|
$ |
1,029,605 |
|
|
$ |
865,230 |
|
Labor |
|
|
263,839 |
|
|
|
264,043 |
|
Other |
|
|
94,041 |
|
|
|
88,585 |
|
Total cost of revenue |
|
$ |
1,387,485 |
|
|
$ |
1,217,858 |
|
Selling, general and administrative expense. SG&A expense was $71.9 million and $64.5 million for the three months ended March 31, 2026 and 2025, respectively, and was 4.4% and 4.5% of revenue for the three months ended March 31, 2026 and 2025, respectively. The $7.5 million or 11.6% increase in SG&A expense was primarily due to increased personnel expenses related to bonuses and increased headcount.
Amortization of intangible assets. Amortization of intangible assets was $24.3 million and $24.3 million for the three months ended March 31, 2026 and 2025, respectively.
Interest expense. Interest expense decreased $5.6 million, or 12.9%, from $43.8 million for the three months ended March 31, 2025 to $38.2 million for the three months ended March 31, 2026. This decrease in interest expense was largely driven by a weighted average interest rate of borrowings for the three months ended March 31, 2026 of 6.2% compared to 7.1% for the three months ended March 31, 2025. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.
Income tax expense. Income tax expense was $25.0 million for the three months ended March 31, 2026, as compared to $22.2 million for the three months ended March 31, 2025, an increase of $2.8 million, or 12.7%. This increase in tax expense is primarily due to an increase in year-to-date pretax income. Year-to-date income before taxes for the period ending March 31, 2026 increased to $104.9 million as compared to $85.1 million for the three months ended March 31, 2025. The tax expense, and corresponding estimated effective tax rate for the three months ended March 31, 2026 and 2025, were higher than the statutory rate of 21.0% primarily due to non-deductible expenses and state taxes. Additionally, for the three months ended March 31, 2025, the effective rate was higher than the statutory rate due to the Global Intangible Low-tax Income (“GILTI”) provision. Effective January 1, 2026, the One Big Beautiful Bill Act (the “OBBBA”) eliminates the requirements to allocate interest expense against Net CFC Tested Income ("NCTI", formerly GILTI). As a result, we are utilizing foreign tax credits to offset NCTI.
Segment Results
The following table presents revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(in thousands, except percentages) |
|
||||||
Engine Services |
|
|
|
|
|
|
||
Segment Revenue |
|
$ |
1,447,144 |
|
|
$ |
1,268,313 |
|
Segment Adjusted EBITDA |
|
$ |
178,633 |
|
|
$ |
174,009 |
|
Segment Adjusted EBITDA Margin |
|
|
12.3 |
% |
|
|
13.7 |
% |
Component Repair Services |
|
|
|
|
|
|
||
Segment Revenue |
|
$ |
179,713 |
|
|
$ |
167,275 |
|
Segment Adjusted EBITDA |
|
$ |
52,401 |
|
|
$ |
47,361 |
|
Segment Adjusted EBITDA Margin |
|
|
29.2 |
% |
|
|
28.3 |
% |
For a discussion of Segment Adjusted EBITDA, see Note 18, "Segment Information" to our condensed consolidated financial statements included in this Quarterly Report.
Engine Services
Engine Services segment revenue increased $178.8 million, or 14.1%, to $1,447.1 million for the three months ended March 31, 2026, compared to $1,268.3 million for the three months ended March 31, 2025. The increase was driven primarily by a strong ramp in our growth platforms, including LEAP and CFM56, along with continued momentum on other key commercial, military, and business aviation platforms.
33
Engine Services Segment Adjusted EBITDA increased $4.6 million, or 2.7%, to $178.6 million for the three months ended March 31, 2026, from $174.0 million for the three months ended March 31, 2025.The increase was driven by volume and productivity gains, partially offset by the timing of engine shipments in the quarter. Segment Adjusted EBITDA Margin of 12.3% decreased compared to 13.7% in the prior year period driven by mix including the ramp in LEAP and CFM56 DFW, compared to the previous year's period.
Component Repair Services
Component Repair Services segment revenue increased $12.4 million, or 7.4%, to $179.7 million for the three months ended March 31, 2026, compared to $167.3 million for the three months ended March 31, 2025. The increase was driven by continued robust demand on key commercial aerospace products, partially offset by softness in the military end market from the delayed effect of the U.S. Government shutdown in the previous quarter.
Component Repair Services Segment Adjusted EBITDA increased $5.0 million, or 10.6%, to $52.4 million for the three months ended March 31, 2026, from $47.4 million for the three months ended March 31, 2025. Segment Adjusted EBITDA Margin of 29.2% compared to 28.3% in the prior year period, driven by pricing, mix and improved productivity.
Liquidity and Capital Resources
The following table summarizes select financial data relevant to our liquidity and capital resources as of March 31, 2026 and December 31, 2025:
|
|
As of March 31, |
|
|
As of December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Cash |
|
$ |
89,173 |
|
|
$ |
289,717 |
|
Net working capital (total current assets less total current liabilities) |
|
|
1,620,966 |
|
|
|
1,580,122 |
|
Total debt (including current portion) (1) |
|
|
2,209,757 |
|
|
|
2,214,605 |
|
Total stockholders' equity |
|
|
2,689,724 |
|
|
|
2,667,311 |
|
Our principal historical cash requirements have been to fund working capital, capital expenditures and acquisitions and to service our indebtedness. As of March 31, 2026, we had $825.2 million of available liquidity, consisting of $89.2 million cash on hand and, $736.0 million available under the 2024 Revolving Credit Facility. Based on our current operations, we believe that our current sources of liquidity, including cash on hand and the 2024 Revolving Credit Facility, are adequate to meet our cash requirements for the next twelve months and for the foreseeable future. See Note 7, “Long-Term Debt” for further discussion of the Credit Agreement and Senior Secured Credit Facilities. However, our ability to make scheduled payments of principal and interest, refinance our debt, comply with the financial covenants under our debt agreements and fund our other liquidity requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Any future acquisitions, joint ventures or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.
As of March 31, 2026 and December 31, 2025, our debt outstanding consisted of the following:
|
|
As of March 31, |
|
|
As of December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
2024 Term Loan Facilities |
|
$ |
2,221,875 |
|
|
$ |
2,227,500 |
|
2024 Revolving Credit Facility |
|
|
— |
|
|
|
— |
|
Finance leases |
|
|
18,089 |
|
|
|
18,525 |
|
Other |
|
|
987 |
|
|
|
1,172 |
|
|
|
|
2,240,951 |
|
|
|
2,247,197 |
|
Less: Current portion |
|
|
(23,259 |
) |
|
|
(23,444 |
) |
Unamortized discounts |
|
|
(18,348 |
) |
|
|
(19,170 |
) |
Unamortized deferred finance charges |
|
|
(12,846 |
) |
|
|
(13,422 |
) |
Long-term debt |
|
$ |
2,186,498 |
|
|
$ |
2,191,161 |
|
34
As of March 31, 2026, we had the following debt agreements:
Credit Agreement Covenant Compliance
The 2024 Revolving Credit Facility is subject to a springing financial covenant, which requires us to maintain a maximum consolidated first lien net leverage ratio that is tested quarterly, at the end of any fiscal quarter, when more than 40% of the 2024 Revolving Credit Facility (excluding, among other things, all letters of credit incurred under the 2024 Revolving Credit Facility (whether or not cash collateralized) and adjusted cash and cash equivalents of the Borrowers and their restricted subsidiaries) is utilized on such date.
The Credit Agreement contains certain financial reporting covenants that require us to present periodic financial metrics to our lenders. One such financial reporting metric is Consolidated EBITDA as defined in the Credit Agreement. The definition of Consolidated EBITDA utilized for these debt reporting covenants differs from the definition of Adjusted EBITDA presented in this Quarterly Report in that it represents Adjusted EBITDA as further adjusted for certain additional items, as set forth in the Credit Agreement. The table below highlights the differences between Adjusted EBITDA presented in this Quarterly Report and Consolidated EBITDA presented to our creditors:
Increases from Adjusted EBITDA to Consolidated EBITDA |
|
Amount |
|
|
|
|
(in thousands) |
|
|
Three months ended March 31, 2026 |
|
$ |
1,069 |
|
Three months ended March 31, 2025 |
|
$ |
1,117 |
|
Compliance with these covenants is essential to our ability to continue to meet our liquidity needs, as a failure to comply under the Credit Agreement could result in an event of default under the Credit Agreement and permit the senior lenders to accelerate the maturity of our indebtedness. Such an acceleration of our indebtedness would have a material adverse effect on our liquidity, including our ability to make payments on our other indebtedness and our ability to operate our business.
As of March 31, 2026, we were in compliance with the covenants in the Credit Agreement.
Cash Flows
The following table summarizes our cash flows for the three months ended March 31, 2026 and March 31, 2025:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Consolidated statements of cash flows data: |
|
(in thousands) |
|
|||||
Net cash used in operating activities |
|
$ |
(119,555 |
) |
|
$ |
(23,986 |
) |
Net cash used in investing activities |
|
|
(14,184 |
) |
|
|
(40,070 |
) |
Net cash (used in) provided by financing activities |
|
|
(66,234 |
) |
|
|
102,434 |
|
Effect of exchange rate changes on cash |
|
|
(571 |
) |
|
|
(141 |
) |
Net (decrease) increase in cash |
|
|
(200,544 |
) |
|
|
38,237 |
|
Cash at beginning of period |
|
|
289,717 |
|
|
|
102,581 |
|
Cash at end of period |
|
$ |
89,173 |
|
|
$ |
140,818 |
|
Three Months Ended March 31, 2026
Net cash used in operating activities for the three months ended March 31, 2026 was $119.6 million. The factors affecting our operating cash flows during the period included net income of $79.9 million and non-cash charges of $49.5 million, partially offset by a $249.0 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $46.5 million in depreciation and amortization and $3.5 million in stock compensation expense. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.
Net cash used in investing activities for the three months ended March 31, 2026 of $14.2 million primarily consisted of $15.6 million of purchases of property, plant and equipment, rental engines partially offset by $1.4 million of proceeds from disposal of property, plant and equipment.
35
Net cash used in financing activities for the three months ended March 31, 2026 of $66.2 million was primarily attributable to $60.1 million in repurchases of the Company's common stock and $106.0 million in repayments of long-term debt, offset by proceeds from long-term debt of $100.0 million.
Three Months Ended March 31, 2025
Net cash used in operating activities for the three months ended March 31, 2025 was $24.0 million. The factors affecting our operating cash flows during the period included net income of $62.9 million and non-cash charges of $47.1 million, partially offset by a $134.0 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $48.7 million in depreciation and amortization, $2.0 million in stock compensation expense, partially offset by a $5.8 million decrease in deferred income taxes. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.
Net cash used in investing activities for the three months ended March 31, 2025 of $40.1 million consisted of $25.3 million of purchases of property, plant and equipment, rental engines and $15.0 million in payment of our licensing agreement acquired during the year ended December 31, 2024.
Net cash provided by financing activities for the three months ended March 31, 2025 of $102.4 million was primarily attributable to the proceeds from long-term debt of $195.0 million offset by $91.0 million in repayment of long-term debt and $1.6 million in repayments of long-term agreements.
Critical Accounting Estimates
Our financial statements are prepared in accordance with GAAP in the United States. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, revenue, expenses, and related disclosures during the period. We evaluate our significant estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ significantly from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, results of operations, financial condition, and cash flows will be affected.
Our accounting estimates discussed below are important to the presentation of our results of operations and financial condition and require the application of judgment by our management in determining the appropriate assumptions and estimates. These assumptions and estimates are based on our previous experience, trends in the industry, the terms of existing contracts and information available from other outside sources and factors. Adjustments to our financial statements are recorded when our actual experience differs from the expected experience underlying these assumptions. These adjustments could be material if our experience is significantly different from our assumptions and estimates. Below are those policies applied in preparing our financial statements that management believes are the most dependent on the application of estimates and assumptions.
We describe our critical accounting estimates used in the preparation of our consolidated financial statements in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates," in our 2025 Form 10-K. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements included elsewhere in this Quarterly Report for a description of recent accounting pronouncements, if any, including the expected dates of adoption and the anticipated impact on our consolidated financial statements.
36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The Credit Agreement is subject to interest rate risk. Borrowings under the Senior Secured Credit Facilities bear interest at a floating rate per annum which can be, at our option:
The applicable margin for the Senior Secured Credit Facilities is subject to adjustments based on the Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement) as of the preceding fiscal quarter end, with (x) one 25.0 basis point ratio-based step down, in the case of the 2024 Term Loan Facilities, and (y) two 25.0 basis point ratio-based step downs, in the case of the 2024 Revolving Credit Facility.
On March 15, 2023, we entered into an interest rate swap contract, effective March 31, 2023, for a notional amount for $400.0 million. The swap provides an effective fixed SOFR rate of 3.71%, maturing on December 31, 2025. Additionally, we entered into an interest rate cap contract to limit the exposure against the risk of rising interest rates. The interest rate cap contract, effective on March 31, 2023, provides a capped SOFR rate of 4.45% and matured on September 30, 2025. This interest rate cap contract began with a notional amount of $500.0 million, increased to $1,000.0 million on March 31, 2023, and to $1,500.0 million on March 28, 2024. On November 14, 2023, we entered into another interest rate cap contract, effective September 30, 2025, to continue to limit the exposure of the interest rates on our variable term loans to a capped SOFR rate of 5.00% on a notional amount of $1,500.0 million, maturing on December 31, 2026. Assuming that the Senior Secured Credit Facilities were fully drawn, the effect of a hypothetical one percentage point increase in interest rates would increase the annual interest costs under our Senior Secured Credit Facilities by approximately $30.0 million based on the amount of outstanding borrowings at March 31, 2026.
Inflation Risk
Inflation generally affects our costs of labor, equipment, raw materials, freight and utilities. We strive to offset these items by price increases, operating improvements and other cost-saving initiatives and through contractual provisions that allow us to pass along material and other cost increases to customers. In certain end markets, implementing price increases may be difficult and there is no assurance that we will be successful. From time to time, we may encounter difficulties in obtaining certain raw materials or components necessary for production due to supply chain constraints and logistical challenges, which may also negatively impact the pricing of materials and components sourced or used in our services.
Currency Risk
Our assets and liabilities in foreign currencies are translated at the period-end rate. Exchange differences arising from this translation are recorded in our consolidated statements of operations. In addition, currency exposures can arise from revenue and purchase transactions denominated in foreign currencies. Generally, transactional currency exposures are naturally hedged (i.e., revenue and expenses are approximately matched), but where appropriate, we use foreign exchange contracts. On April 7, 2025, we entered into a foreign currency contract at a notional value of GBP 39.5 million and CAD $136.5 million maturing on December 31, 2025. On October 21, 2025, we entered into a GBP foreign currency contract at a notional value of USD $46.8 million and a CAD foreign currency contract at a notional value of CAD $260.0 million maturing on December 29, 2026. Approximately $43.9 million, or 2.7%, and $35.0 million, or 2.4%, of revenue for the three months ended March 31, 2026 and 2025, respectively, was attributable to non-U.S. Dollar currencies. Gains or losses due to transactions in foreign currencies included in our consolidated statements of operations was a $0.4 million loss and a $0.3 million loss for the three months ended March 31, 2026 and 2025, respectively. A hypothetical 10% change in the relative value of the U.S. Dollar to other currencies during any of the periods presented would not have had a material effect on our consolidated financial statements.
37
ITEM 4. CONTROLS AND PROCEDURES
Limitations on Effectiveness of Disclosure Controls and Procedures
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level as a result of the material weaknesses in our internal control over financial reporting described below.
Notwithstanding the material weaknesses described below, management has concluded that the consolidated financial statements included in this Quarterly Report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with generally accepted accounting principles.
The following material weaknesses exist as of March 31, 2026:
Control environment and monitoring controls
We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of personnel with an appropriate level of internal controls and accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. Additionally, we did not design and maintain effective monitoring controls to verify the proper and consistent functioning of our internal controls.
These material weaknesses contributed to the following additional material weaknesses:
Period-end financial reporting and significant account balances
We did not design and maintain effective controls related to the period-end financial reporting process and significant account balances, including ensuring that there is adequate documented evidence of a sufficient level of management review over complex estimates and judgmental areas of accounting and financial reporting.
Information technology general controls
We did not design and maintain effective information technology ("IT") general controls over (i) program change management to ensure that program and data changes are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel; and (iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored.
Impact of Material Weaknesses
These material weaknesses resulted in immaterial corrections, as well as immaterial unrecorded errors to various accounts and disclosures in the Company's consolidated financial statements for the years ended December 31, 2025 and 2024 and condensed consolidated financial statements for the quarter ended March 31, 2025. Additionally, each of the material weaknesses could result in misstatements of substantially all of our account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
Remediation of Previously Reported Material Weaknesses
As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 12, 2025, we identified material weaknesses in internal control over financial reporting related to the risk assessment, information and communication components of the COSO Framework and related to establishing policies and procedures for financial reporting.
38
During 2025, we completed the following remediation efforts:
Risk assessment
We developed and implemented enhanced procedures to identify and analyze business changes that could significantly impact financial reporting, and to determine appropriate actions to mitigate new or evolving risks based on the COSO Framework.
Information and communication
We established formal protocols, regular meetings, and communication channels to ensure timely, accurate, and complete exchange of financial information. We also implemented tools to facilitate efficient flow of information required for accounting and financial reporting.
Policies and procedures
We enhanced existing policies and procedures and developed new policies and procedures related to accounting and financial reporting to assist the organization in appropriately recording transactions and preparing financial statements.
As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026, management completed its documentation, testing and evaluation of the updated internal controls and determined that, as of December 31, 2025, these controls have now operated for a sufficient period of time and management has concluded, through testing of the design and operating effectiveness of the controls, that the controls are operating effectively. As such, management concluded that the previously identified material weaknesses described above under “Remediation of Previously Reported Material Weaknesses” have been remediated as of December 31, 2025.
Remediation Plan for Material Weaknesses
Management is committed to implementing changes to our internal control over financial reporting to ensure that the control deficiencies that contributed to the material weaknesses are remediated. To address our material weaknesses, we are at various stages of designing and implementing the following measures designed to improve our internal control over financial reporting:
Control environment and monitoring controls
Personnel and Resources:
Segregation of Duties:
Monitoring controls:
39
Period-end financial reporting and significant account balances
Information technology general controls
We are improving the design and operation of IT general controls for IT systems that are relevant to the preparation of our financial statements. Specifically, we are designing and implementing:
User Access Controls:
IT Program Change Management:
Computer Operations:
Overall IT Control Environment:
40
We have begun implementation of our remediation plan and are making progress on several initiatives. While the material weaknesses have not been remediated as of March 31, 2026, management is devoting substantial resources to the ongoing remediation efforts. However, the remediation of these material weaknesses is a comprehensive undertaking that will require sustained effort and sufficient time for the new controls to be implemented and tested. While we are committed to completing remediation as soon as practicable, we cannot provide assurance regarding the timing of full remediation. We will continue to provide updates on our remediation progress in future filings.
As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address the material weaknesses or modify the remediation measures described above as we continue to evaluate and improve our internal control over financial reporting. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the remediation activities described above.
41
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are and may become involved in certain legal proceedings arising in the normal course of our business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and worker’s compensation claims. Consistent with GAAP, we have established reserves when the liability is probable, and the loss is capable of being reasonably estimated. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. For further discussion please see Note 10, “Commitments and Contingencies” to our consolidated financial statements included elsewhere in this Quarterly Report.
Item 1A. Risk Factors.
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed under “Part I, Item 1A. Risk Factors” in our 2025 Form 10-K. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report. There have been no material changes from the risk factors disclosed under the heading “Risk Factors” in our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
None.
Information regarding purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of our Common Stock during the three months ended March 31, 2026 is provided below:
|
Total Number of |
|
Average Price Paid |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) |
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in millions) |
|
||||
Period |
|
|
|
|
|
|
|
|
||||
January 1 – January 31, 2026 |
|
1,639,431 |
|
$ |
30.53 |
|
|
1,639,431 |
|
$ |
399.9 |
|
February 1 – February 28, 2026 |
|
— |
|
$ |
— |
|
|
— |
|
$ |
399.9 |
|
March 1 – March 31, 2026 |
|
369,184 |
|
$ |
27.09 |
|
|
2,008,615 |
|
$ |
389.9 |
|
Total |
|
2,008,615 |
|
|
|
|
|
|
|
|||
Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases will be structured to occur within the pricing and volume requirements of Rule 10b-18. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. This program does not obligate us to acquire any particular amount of Common Stock and the program may be extended, modified, suspended or discontinued at any time at our discretion.
Item 3. Defaults Upon Senior Securities.
None.
42
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
None.
During the three months ended March 31, 2026, no director or officer of the Company, as defined in Rule 16a-1(f),
43
Exhibit Index
|
Exhibit Number |
|
Description |
|
Form |
File No. |
Exhibit |
Filing Date |
|
3.1 |
|
Amended and Restated Certificate of Incorporation of StandardAero, Inc. |
|
8-K |
001-42298 |
3.1 |
10/3/2024 |
|
3.2 |
|
Amended and Restated Bylaws of StandardAero, Inc. |
|
8-K |
001-42298 |
3.2 |
10/3/2024 |
|
10.1 |
|
Stock Purchase Agreement, dated January 20, 2026, by and between the Company and the GIC Stockholder |
|
8-K |
001-42298 |
10.1 |
1/29/2026 |
|
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
32.1** |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
32.2** |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
101 |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with embedded Linkbase documents |
|
|
|
|
|
|
104 |
|
Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
|
|
|
|
|
* Filed herewith
** Furnished herewith
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
StandardAero, Inc. |
|
|
|
|
|
Date: May 7, 2026 |
|
By: |
/s/Russell Ford |
|
|
|
Russell Ford |
|
|
|
Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
|
|
|
|
Date: May 7, 2026 |
|
By: |
/s/ Daniel Satterfield |
|
|
|
Daniel Satterfield |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial Officer) |
45