StandardAero Q3 Earnings Call Highlights

Key Points

• StandardAero raised its 2026 outlook after Q3 revenue grew 4% to $1.56 billion and adjusted EPS rose 30% to $0.39. It now expects revenue of $6.525 billion–$6.645 billion and adjusted EPS of $1.57–$1.62.
• The company announced a $350 million accelerated share repurchase and increased its buyback authorization to $1.01 billion. Management expects year-end net leverage below 2.7 times.
• Engine services drove earnings growth, with segment adjusted EBITDA up 24%, while LEAP demand remains strong and shop-visit slots are quoted into the mid-2030s. Material constraints persist, and the ramp-up of LEAP and CFM56 work is expected to weigh on fourth-quarter engine-services margins.

StandardAero NYSE: SARO raised its full-year 2026 earnings and revenue guidance after reporting third-quarter profit growth, and announced a $350 million accelerated share repurchase as new CEO Paul McElhinney outlined his priorities for the aircraft engine maintenance company.

Revenue rose 4% from a year earlier to $1.56 billion, while net income increased 36% to $93 million. Adjusted earnings per share climbed 30% to $0.39, and adjusted EBITDA rose 15% to $225 million. Adjusted EBITDA margin expanded 130 basis points to 14.4%.

McElhinney, who became CEO in October, said his focus would be on executing the company’s existing strategy, improving productivity and converting investments into earnings and cash flow growth. Executive Chairman Russell Ford said the call was his last following his tenure as CEO.

Higher guidance and share repurchases

StandardAero raised its full-year revenue forecast to $6.525 billion to $6.645 billion, an increase of $148 million at the midpoint. The new midpoint implies 8.6% growth from 2025, compared with the company’s previous forecast of approximately 6%.

The company also increased its adjusted EBITDA guidance to $905 million to $920 million, implying 13% growth at the midpoint, up from its prior forecast of 11%. Adjusted earnings per share are now expected to be $1.57 to $1.62, representing approximately 26% growth, compared with the previous expectation of 23%.

StandardAero maintained its adjusted free cash flow forecast of $270 million to $300 million. CFO Dan Satterfield said the earnings-per-share outlook benefited from higher earnings, a lower tax rate and a reduced share count.

The board increased the share repurchase authorization to $1.01 billion. The company had purchased $160 million of shares year to date, including $50 million in the third quarter. After the planned accelerated repurchase, it expects to have $500 million remaining under the authorization.

McElhinney said the company expects to end the year with net leverage below 2.7 times after the repurchase actions. It ended the third quarter at 2.66 times net debt to adjusted EBITDA, down from 2.9 times a year earlier.

Engine services drives earnings growth

Engine services revenue increased 3.5% in the quarter, while segment adjusted EBITDA climbed 24% to $205 million. Its adjusted EBITDA margin rose 250 basis points to 15%.

Satterfield attributed the improvement to productivity gains, progress on the LEAP and CFM56 programs at Dallas-Fort Worth, greater use of used serviceable material and the elimination of low- or no-margin pass-through material revenue from restructured customer contracts. The LEAP and Dallas-Fort Worth CFM56 programs reached profitability earlier this year.

In response to an analyst’s question about the higher revenue outlook, Satterfield cited commercial growth led primarily by LEAP and CFM56, along with CF34 and turboprop programs. He said the full-year reduction in pass-through material revenue is now expected to be closer to $300 million, compared with an earlier estimate of $350 million to $400 million.

Satterfield cautioned that the company’s favorable access to used serviceable material in the third quarter was opportunistic and should not necessarily be assumed to recur in the fourth quarter. He also said rising revenue from LEAP and the Dallas-Fort Worth CFM56 program would dilute fourth-quarter engine services margins as those programs ramp.

LEAP demand and supply constraints

McElhinney identified LEAP as a central growth priority and reiterated the company’s objective of exceeding $1 billion in annual LEAP revenue by the end of the decade. He said the program could generate several billion dollars in annual revenue as the aftermarket matures into the 2030s.

StandardAero is quoting LEAP shop-visit slots into the mid-2030s, McElhinney said. He added that the company plans to continue investing in repair development and customer offerings intended to reduce maintenance costs.

Executives said they had not seen a meaningful change in commercial demand or bookings. Satterfield said backlog had increased since the conflict began and that much of 2027 revenue was already spoken for, with visibility into early 2028. McElhinney said discussions with customers and original equipment manufacturer partners had not revealed an impact on demand or planned engine inductions.

Material availability remains constrained across programs, Satterfield said, although LEAP may be in somewhat better shape than others. He noted that used serviceable material is not available for LEAP, while CFM56 can use it despite supply constraints.

Military timing weighs on component repairs

Component repair services revenue rose 7.3% to $189 million, supported by commercial aerospace repairs and the aeroderivative business. Segment adjusted EBITDA was approximately $49 million, with a 25.8% margin.

Satterfield said unfavorable mix, delays in military program inputs and residual costs from ramping labor capacity weighed on the segment. He linked reduced military repair inputs, particularly for training-related programs, to changes in spending outlays associated with the Middle Eastern conflict.

He said the company had better visibility into recovering the labor-related costs than into the timing of a military recovery. McElhinney said commercial component repair demand remained strong and that he would focus on improving throughput and turnaround times.

Adjusted free cash flow improved to approximately $100 million in the third quarter from $50 million in the second quarter. Satterfield credited higher earnings and working-capital initiatives, while noting that supply chain constraints persist.

About StandardAero (NYSE:SARO)

StandardAero is an aerospace maintenance, repair and overhaul (MRO) company that provides services for commercial and business aviation, military and government operators, and helicopter customers. The company supports aircraft throughout their operating life, helping customers maintain, repair, upgrade and return aircraft and components to service.

Its services include engine maintenance, repair and overhaul; airframe maintenance; avionics and electrical work; component and accessory repair; engineering; and aircraft modifications.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.