StandardAero Announces Third Quarter 2024 Earnings

Growth Driven By Solid Execution & Strength Across End Markets

StandardAero (NYSE: SARO) announced results today for its third quarter ended September 30, 2024 (“Third Quarter 2024”).

Third Quarter 2024 Highlights

Revenue increased 13.2% year-over-year to $1,244.6 million
Net Income was $16.4 million; Net Income Margin was 1.3%
Adjusted EBITDA increased 26.0% year-over-year to $168.4 million
Adjusted EBITDA Margin was 13.5%, an increase of 137 basis points compared to the prior year’s quarter
Capital expenditures were $25.3 million, reflecting continued investment in growth initiatives including the LEAP-1A/-1B program and the CFM56 Center of Excellence greenfield facility in Dallas
Acquired Aero Turbine Inc. (“ATI”) to expand component repair capabilities and add complementary military platforms

Post-Quarter Highlights

Completed $1.7 billion initial public offering (“IPO”), with $1.2 billion net primary proceeds used to pay down debt and significantly de-lever the business
Refinanced capital structure with new term loan and revolving credit facility that increase liquidity, extend maturities, and are expected to result in over $130 million in annual interest savings compared to pre-IPO levels

“We are very pleased to report strong results following our recent initial public offering. Our quarterly performance reflects strong growth from higher volumes and solid execution, particularly within the commercial aerospace and business aviation markets where we continue to see robust demand,” said Russell Ford, StandardAero’s Chairman and Chief Executive Officer. “Furthermore, following our successful IPO, we significantly delevered the balance sheet, providing increased financial flexibility as we pursue our strategic initiatives. With a clear leadership position in the aerospace engine aftermarket, strong team, and a winning strategy to create value for our stakeholders, we are confident in our ability to continue to grow and execute in the years to come.”

Third Quarter 2024 Consolidated Results

StandardAero reported Third Quarter 2024 revenue of $1,244.6 million, an increase of 13.2% compared to $1,099.4 million in the prior year period. The increase was driven by both the Engine Services and Component Repair Services segments, with particular strength in the commercial aerospace and business aviation end markets, which increased 20% and 15%, respectively, compared to the prior year period. This growth was partially offset by a 3% decline in the military and helicopter end market, primarily attributable to the temporary grounding of the US Navy’s V-22 Osprey fleet earlier this year, which has since returned to service.

Net income was $16.4 million for the Third Quarter 2024, as compared to net loss of $17.9 million for the prior year period. Net income for the quarter remained impacted by the Company’s higher leverage and interest expense associated with its pre-IPO capital structure, as well as expenses associated with the Company’s IPO, the acquisition of ATI during the quarter, and other non-recurring activities. Net income margin was 1.3%, an increase of 3.0 percentage points compared to (1.6)% for the prior year period.

Adjusted EBITDA increased 26.0% to $168.4 million for the Third Quarter 2024, as compared to $133.7 million for the prior year period. The increase reflects revenue growth in both segments and continued margin expansion from operating leverage, positive mix, and pricing and cost initiatives. Adjusted EBITDA margin expanded 137 basis points to 13.5%, as compared to 12.2% for the prior year period.

Capital expenditures were $25.3 million, or 2.0% of revenue, for the Third Quarter 2024, as compared to $13.9 million for the prior year period. The increase reflects continued investments in growth initiatives, including the LEAP-1A/-1B program and the new CFM56 Center of Excellence greenfield facility in Dallas, Texas, which collectively accounted for $14.8 million of capital expenditures during the quarter.

Third Quarter 2024 Segment Results

Engine Services Segment

Engine Services segment revenue increased $124.9 million, or 12.9%, to $1,090.3 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Revenue generated from our commercial aerospace end market increased 20%, primarily driven by higher engine maintenance demand. Revenue generated from our business aviation end market increased 15%, primarily attributable to the demand on the platforms that we service. These increases were partially offset by a decrease in our military and helicopter end market of 7% primarily attributable to the temporary grounding of the US Navy’s V-22 Osprey fleet.

Engine Services Segment Adjusted EBITDA increased $24.9 million, or 20%, to $147.4 for the three months ended September 30, 2024, from $122.5 million for the three months ended September 30, 2023. The increase in Segment Adjusted EBITDA was primarily driven by increases in revenue and positive mix benefit from higher margin work scopes on the engines that we serviced.

Component Repair Services Segment

Component Repair Services segment revenue increased $20.4 million, or 15.2%, to $154.3 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Revenue generated from our commercial aerospace end market increased 13%, primarily driven by the increases in engine maintenance and higher component usage. Revenue generated in our military and helicopter and other end markets increased 19%, primarily attributable to increased demand for component repairs as well as the acquisition of ATI.

Component Repair Services Segment Adjusted EBITDA increased $7.1 million, or 21%, to $40.8 for the three months ended September 30, 2024, from $33.7 million for the three months ended September 30, 2023. The increase is primarily due to increased revenue and improved productivity.

Year-to-Date Results

Revenue for the nine months ended September 30, 2024, was $3,827.5 million, an increase of 12.4% compared to $3,405.5 million in the prior year period. The increase was driven by both the Engine Services and Component Repair Services segments. The commercial aerospace and business aviation end markets increased 21% and 7%, respectively, compared to the prior year period, which were partially offset by a decrease in the military and helicopter end market of 2%, primarily attributable to the temporary grounding of the US Navy’s V-22 Osprey fleet, partially offset by the acquisition of ATI.

Net income was $25.0 million for the nine months ended September 30, 2024, as compared to net loss of $30.5 million for the prior year period. Net income for the year-to-date period was impacted by the Company’s higher leverage and interest expense associated with its pre-IPO capital structure, as well as expenses associated with the Company’s IPO, the acquisition of ATI during the quarter, and other non-recurring activities. Net income margin was 0.7%, an increase of 1.5 percentage points compared to (0.9)% for the prior year period.

Adjusted EBITDA for the nine months ended September 30, 2024, was $504.4 million, an increase of 18.6% as compared to $425.4 million for the prior year period. The increase reflects strong revenue growth in both segments and continued margin expansion from operating leverage, positive mix, pricing and cost initiatives. Adjusted EBITDA margin expanded 69 basis points to 13.2%, as compared to 12.5% for the prior year period.

Acquisition Activities

On August 23, 2024, StandardAero announced the acquisition of Aero Turbine, Inc. (“ATI”), a provider of engine component repair and other value-added engine aftermarket services for U.S. and international customers, for a total purchase price of up to $141.0 million, consisting of $120.0 million of upfront purchase price and up to $21.0 million of contingent consideration payable based on the achievement of certain earnings targets through year-end 2026. The acquisition was funded with borrowings under the Company’s ABL Credit Facility, which was repaid on September 6, 2024, with incremental borrowings from the 2024 Term Loan B-1 Facility and the 2024 Term Loan B-2 Facility.

“We are very excited to acquire a highly reputable and differentiated business in Aero Turbine,” said Russell Ford. “ATI brings coveted component repair capabilities and military Source Approval Request expertise, an attractive and complementary suite of military engine platform positions and customer relationships, and compelling synergy opportunities. We look forward to continuing to deliver the highest level of service performance to ATI’s customer base while collaborating to accelerate growth at both businesses.”

ATI will be reported as part of StandardAero’s Component Repair Services segment and is expected to contribute $25 million of Adjusted EBITDA in 2025.

IPO and Capital Structure Update

On October 2, 2024, the Company completed its IPO of common stock at a public offering price of $24.00 per share. The offering included 69 million shares of common stock, of which the Company issued and sold 53.25 million shares and the selling stockholders sold 15.75 million shares. The IPO generated net proceeds to the Company of approximately $1,202.8 million after deducting underwriting discounts and commissions of approximately $67.1 million and estimated offering expenses of approximately $8.1 million, which were used to repay all of StandardAero’s $475.5 million of outstanding 10.0% Senior Notes, plus accrued interest, and repay $726.1 million of StandardAero’s outstanding 2024 Term Loan Facilities, plus accrued interest.

Additionally, on October 31, 2024, the Company refinanced its remaining debt, entering into a new credit agreement providing for $2,250.0 million of new term loan facilities due October 31, 2031, bearing interest at Term SOFR + 2.25% and a new $750.0 million 2024 revolving credit facility due October 31, 2029, bearing interest at Term SOFR + 2.00%. The applicable margins on the new facilities are subject to adjustment based on the Consolidated First Lien Net Leverage Ratio (as defined in the new credit agreement) as of the preceding fiscal quarter end. The Company used the proceeds raised from the new term loan facilities and the new revolving credit facility, net of fees, to repay in full and terminate its existing debt facilities.

The interest rate of the new term loan facilities reflects a 1.25% reduction from our previous interest rate and the interest rate of the new revolving credit facility reflects a 1.50% reduction from our previous interest rate, in each case, prior to our IPO. Combined, the IPO and the refinancing transactions result in a significantly de-leveraged capital structure and improved cash flow profile, with annual interest savings of greater than $130 million as compared to pre-IPO levels under current interest rates.

Conference Call and Webcast Information

StandardAero management will host a conference call today, November 13, 2024, at 5:00 PM ET, to discuss its results in more detail. The conference call will be broadcast live via webcast, and the webcast and accompanying slide presentation can be accessed by visiting the Events section on StandardAero’s investor relations website at https://ir.standardaero.com/news-events/events. The conference call may also be accessed by dialing (877) 407-9762 or (201) 689-8538 for telephone access to the live call. Please click here for international toll-free access numbers.

For those unable to listen to the live conference call, a replay will be available after the call through the archived webcast in the Events section of the StandardAero’s investor relations website or by dialing (877) 660-6853 or (201) 612-7415. The access code for the replay is 13749758. The replay will be available until 11:59 PM ET on November 27, 2024.

About StandardAero

StandardAero is a leading independent pure-play provider of aerospace engine aftermarket services for fixed and rotary wing aircraft, serving the commercial, military and business aviation end markets. StandardAero provides a comprehensive suite of critical, value-added aftermarket solutions, including engine maintenance, repair and overhaul, engine component repair, on-wing and field service support, asset management and engineering solutions. StandardAero is majority owned by global investment firm Carlyle (Nasdaq: CG).

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). In some cases, you can identify forward-looking statements by the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foreseeable,” “future,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” or “would” and/or the negative of these terms, or other comparable terminology intended to identify statements about the future. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies, the industry in which we operate and other information that is not historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this presentation, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. Factors that could cause actual results to differ materially from those forward-looking statements included in this press release include, among others: factors that adversely affect the commercial and business aviation industries, including U.S. and global macroeconomic conditions, geopolitical events, financial market disruptions, credit markets, the airline environment and increases in energy costs; decreases in budget, spending or outsourcing by our military end-users; future outbreaks and infectious diseases; supply chain disruptions or loss of key suppliers for our aftermarket services operations; competitive conditions in the markets we serve; damage to our reputation or the reputation of other parties in the aerospace industry; our reliance on a small number of customers for a significant portion of our revenue; reliance on certain customers for a significant portion of our revenue; the loss of an original equipment manufacturers authorization or license could negatively impact our ability to service an engine platform and damage our competitive advantage; lack of volume commitments with many of our customers; failure to offset any declining revenue from engine platforms that are mature or for which the installed base is flat or declining; unexpected cost variations or lead times under our fixed price contracts; physical condition of our facilities; capital and operational risks from implementing new or expanded platforms; integration and other risks related to any future acquisitions, joint ventures, business combinations and inorganic investments; our ability to remediate effectively the material weaknesses identified in our internal control over financial reporting; continued availability of financing on terms acceptable to us; our ability to protect our information technology infrastructure and other capabilities from cyber-attacks and other business disruptions; compliance with laws relating to handling information about individuals; failure to protect or enforce our rights in our technology, brands or intellectual property; the ability to obtain and maintain our regulatory approvals; foreign exchange rates, market and monetary fluctuations and other risks related to our operations outside of North America; compliance with environmental, health and safety laws and regulations; our efforts to reduce greenhouse gas emissions and to address environmental, social and governance matters; ongoing or future litigation, regulatory proceedings or liability claims; our ability to attract or retain qualified senior management and employees; labor shortages or increased labor costs; failing to comply with the requirements and costs of being a public company; our indebtedness and any future indebtedness, including the restrictions and covenants in our debt agreements; our success at managing the risks of the foregoing, and the other factors described in our final prospectus for our initial public offering, dated October 1, 2024, and our other filings with the SEC.

As a result of these factors, we cannot assure you that the forward-looking statements in this press release will prove to be accurate. You should understand that it is not possible to predict or identify all such factors. We operate in a competitive and rapidly changing environment. New factors emerge from time to time, and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives, plans or cost savings in any specified time frame or at all. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. We caution you not to place undue reliance on these forward-looking statements. All forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. Forward-looking statements speak only as of the date of this press release. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Non-GAAP Financial Measures

This press release includes “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), including Adjusted EBITDA and Adjusted EBITDA Margin. We use these non-GAAP financial measures to evaluate our business operations,

The non-GAAP financial measures presented in this press release 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 of our non-GAAP financial measures to the corresponding GAAP measures included in this press release and should not rely on any single financial measure to evaluate our business.

We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, further adjusted for certain non-cash items that we may record each period, as well as non-recurring items such as acquisition costs, integration and severance costs, refinance 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.

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share figures)

September 30, 2024

December 31, 2023

ASSETS

Current assets:

Cash

51,265

57,982

Accounts receivable (less allowance for expected credit losses of $14,024 and $14,779, respectively)

621,298

518,334

Contract assets, net

821,083

810,413

Inventories

778,447

698,797

Prepaid expenses and other current assets

44,161

39,126

Advance to related parties

—

138

Income tax receivable

42,253

10,980

Total current assets

2,358,507

2,135,770

Property, plant and equipment, net

552,031

522,169

Operating lease right of use asset, net

179,697

168,513

Customer relationships, net

1,025,986

1,010,747

Other intangible assets, net

252,274

284,979

Goodwill

1,685,923

1,632,496

Deferred income tax assets

4,728

Total assets

6,059,146

5,759,402

LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities:

Accounts payable

552,615

468,625

Accrued expenses and other current liabilities

115,375

115,999

Accrued employee costs

76,145

76,121

Operating lease liabilities, current

18,752

17,040

Contract liabilities

322,318

355,651

Income taxes payable, current

3,108

9,337

Long-term debt, current portion

30,609

26,676

Total current liabilities

1,118,922

1,069,449

Long-term debt

3,391,411

3,172,108

Operating lease liabilities, non-current

170,356

159,482

Deferred income tax liabilities

185,823

182,303

Income taxes payable, non-current

—

3,108

Other non-current liabilities

28,772

26,240

Total liabilities

4,895,284

4,612,690

Commitments and contingencies (Note 10)

Stockholder’s equity

Common stock ($0.01 par value, 3,500,000,000 voting shares authorized; 281,211,630 shares issued and outstanding; 70,000,000 non-voting shares authorized, convertible to voting shares immediately prior to an underwritten public offering of common stock)

2,812

Additional paid-in capital

2,725,157

Accumulated deficit

(1,549,268

)

(1,574,295

)

Accumulated other comprehensive (loss) income

(14,839

)

(6,962

)

Total stockholder’s equity

1,163,862

1,146,712

Total liabilities and stockholder’s equity

6,059,146

5,759,402

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share figures)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Revenue

1,244,627

1,099,441

3,827,548

3,405,513

Cost of revenue

1,058,396

948,040

3,275,300

2,928,226

Selling, general and administrative expense

62,895

53,020

171,744

148,221

Amortization of intangible assets

23,965

23,613

70,550

70,068

Acquisition costs

1,323

1,514

Operating income

98,048

74,759

308,631

257,484

Interest expense

79,898

79,188

235,496

230,515

Refinancing costs

1,503

19,921

6,441

19,921

Loss on debt extinguishment

—

6,182

3,577

6,182

Other income

—

(3,509

)

Income (loss) before income taxes

16,647

(30,532

)

63,117

4,375

Income tax expense (benefit)

211

(12,599

)

38,090

34,877

Net income (loss)

16,436

(17,933

)

25,027

(30,502

)

Net income (loss) per share attributable to the shareholder, basic and diluted

0.06

(0.06

)

0.09

(0.11

)

Weighted-average common shares outstanding

281,211,630

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

Nine Months Ended September 30,

2024

2023

Operating activities:

Net income (loss)

25,027

(30,502

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

140,021

147,801

Amortization of deferred finance charges and discounts

9,989

11,811

Amortization of loss on derivative instruments

(304

)

(1,095

)

Amortization of interest cap premiums

7,078

4,384

Payment of interest rate cap premiums

(7,044

)

(4,203

)

Loss on amended ABL agreement

—

164

Loss on debt extinguishment

3,577

6,182

(Gain) loss from disposals, net

(17

)

222

Non-cash lease expense

1,376

1,186

Deferred income taxes

(9,248

)

(13,815

)

Foreign exchange (gain) loss

(207

)

2,085

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net

(98,898

)

36,954

Contract assets, net

1,749

(200,490

)

Inventories

(69,437

)

44,642

Prepaid expenses and other current assets

(10,041

)

23,158

Accounts payable, accrued expenses, and other current liabilities

54,271

(72,163

)

Contract liabilities

(34,538

)

(18,016

)

Due to/from related parties

138

(276

)

Income taxes payable and receivable

(45,511

)

(33,889

)

Net cash used in operating activities

(32,019

)

(95,860

)

Investing activities:

Acquisitions, net of cash

(114,074

)

(31,311

)

Capital expenditures

(70,422

)

(35,367

)

Purchase of intangible assets

(214

)

(30,180

)

Proceeds from disposals

571

3,146

Net cash used in investing activities

(184,139

)

(93,712

)

Financing activities:

Proceeds from issuance of long-term debt

765,000

1,479,568

Repayment of long-term debt

(555,032

)

(1,331,728

)

Payment of deferred financing charges

(391

)

(2,892

)

Repayments of long-term agreements

(466

)

(1,696

)

Net cash provided by financing activities

209,111

143,252

Effect of exchange rate changes on cash

330

(2,519

)

Net decrease in cash

(6,717

)

(48,839

)

Cash at the beginning of the period

57,982

120,065

Cash at the end of the period

51,265

71,226

Supplemental disclosure of non-cash investing activities:

Acquisition of property, plant and equipment, liability incurred but not paid

—

390

Contingent consideration for acquisition of ATI

15,150

—

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

SEGMENT RECONCILIATIONS

(unaudited)

(In thousands)

Selected financial information for each segment is as follows:

Three months ended September 30, 2024

Engine Services

Component Repair Services

Total Segments

(In thousands)

Revenue from external customers

1,109,804

134,823

1,244,627

Intersegment revenue

19,503

19,511

1,109,812

154,326

1,264,138

Elimination of intersegment revenue

(19,503

)

(19,511

)

Total segment revenue

1,090,309

154,318

1,244,627

Segment Adjusted EBITDA

147,414

40,758

188,172

Less unallocated amounts:

Corporate (1)

19,756

Depreciation and amortization

47,147

Integration costs and severance

308

Acquisition costs

1,323

Business transformation costs (LEAP and CFM) (2)

10,535

Interest expense

79,898

Loss on debt extinguishment and refinancing costs

1,503

Other (3)

11,055

Tax

211

Net income

16,436

____________________

(1)

Corporate primarily consists of costs related to executive and staff functions, including Information Technology, Human Resources, Legal, Finance, Marketing, Corporate Supply Chain and Corporate Engineering Services finance, which benefit the enterprise as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies, and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. The Corporate function also includes expenses associated with the Company's debt.

(2)

Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of our CFM56 capabilities into Dallas, Texas.

(3)

Represents other non-recurring costs including quarterly management fees payable to Carlyle Investment Management L.L.C. and Beamer Investment Inc. under consulting services agreements, representation and warranty insurance costs associated with acquisitions, and costs for professional services incurred as a result of our IPO readiness that are the result of other, non-comparable events to measure operating performance as these events arise outside of our ordinary course of continuing operations.

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

SEGMENT RECONCILIATIONS

(unaudited)

(In thousands)

Selected financial information for each segment is as follows:

Nine months ended September 30, 2024

Engine Services

Component Repair Services

Total Segments

(In thousands)

Revenue from external customers

3,448,181

379,367

3,827,548

Intersegment revenue

222

49,241

49,463

3,448,403

428,608

3,877,011

Elimination of intersegment revenue

(49,241

)

(222

)

(49,463

)

Total segment revenue

3,399,162

428,386

3,827,548

Segment Adjusted EBITDA

451,095

111,069

562,164

Less unallocated amounts:

Corporate (1)

57,797

Depreciation and amortization

140,021

Integration costs and severance

925

Acquisition costs

1,323

Business transformation costs (LEAP and CFM) (2)

33,626

Interest expense

235,496

Loss on debt extinguishment and refinancing costs

10,019

Other (3)

19,840

Tax

38,090

Net income

25,027

____________________

(1)

(2)

Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of our CFM56 capabilities into Dallas, Texas.

(3)

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

SEGMENT RECONCILIATIONS

(unaudited)

(In thousands)

Selected financial information for each segment is as follows:

Three months ended September 30, 2023

Engine Services

Component Repair Services

Total Segments

(In thousands)

Revenue from external customers

976,896

122,545

1,099,441

Intersegment revenue

11,437

11,485

976,944

133,982

1,110,926

Elimination of intersegment revenue

(11,437

)

(48

)

(11,485

)

Total segment revenue

965,507

133,934

1,099,441

Segment Adjusted EBITDA

122,542

33,665

156,207

Less unallocated amounts:

Corporate (1)

22,542

Depreciation and amortization

49,307

Integration costs and severance

1,533

Acquisition costs

Business transformation costs (LEAP and CFM) (2)

3,630

Interest expense

79,188

Loss on debt extinguishment and refinancing costs

26,103

Other (3)

4,427

Tax

(12,599

)

Net loss

(17,933

)

____________________

(1)

(2)

Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of our CFM56 capabilities into Dallas, Texas.

(3)

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

SEGMENT RECONCILIATIONS

(unaudited)

(In thousands)

Selected financial information for each segment is as follows:

Nine months ended September 30, 2023

Engine Services

Component Repair Services

Total Segments

(In thousands)

Revenue from external customers

3,056,861

348,652

3,405,513

Intersegment revenue

168

33,975

34,143

3,057,029

382,627

3,439,656

Elimination of intersegment revenue

(33,975

)

(168

)

(34,143

)

Total segment revenue

3,023,054

382,459

3,405,513

Segment Adjusted EBITDA

391,824

92,489

484,313

Less unallocated amounts:

Corporate (1)

58,938

Depreciation and amortization

147,801

Integration costs and severance

2,561

Acquisition costs

1,514

Business transformation costs (LEAP and CFM) (2)

5,384

Interest expense

230,515

Loss on debt extinguishment and refinancing costs

26,103

Other (3)

7,122

Tax

34,877

Net loss

(30,502

)

____________________

(1)

(2)

Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of our CFM56 capabilities into Dallas, Texas.

(3)

STANDARDAERO, INC. (FORMERLY DYNASTY PARENT CO., INC.)

CONDENSED CONSOLIDATED NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION

(unaudited)

(In millions)

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin:

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

(in millions, except percentages)

Net income (loss)

16.4

(17.9

)

25.0

(30.5

)

Income tax expense (benefit)

0.2

(12.6

)

38.1

34.9

Interest expense

79.9

79.2

235.5

230.5

Depreciation and amortization

47.1

49.3

140.0

147.8

Loss on debt extinguishment and refinancing costs

1.5

26.1

10.0

26.1

Integration costs and severance (1)

0.3

1.5

0.9

2.6

Acquisition costs (2)

1.3

—

1.3

1.5

Business transformation costs (LEAP and CFM) (3)

10.6

3.6

33.7

5.4

Other (4)

11.1

4.4

19.9

7.1

Adjusted EBITDA

168.4

133.6

504.4

425.4

Revenue

1,244.6

1,099.5

3,827.5

3,405.5

Net income (loss) margin

1.3

(1.6

0.7

(0.5

Adjusted EBITDA Margin

13.5

12.2

13.2

12.5

____________________

(1)

Represents integration costs incurred, including any facility or platform consolidation associated with the integration of an acquisition that does not meet capitalization criteria and severance related to reduction in workforce or acquisitions. Examples of integration costs may include lease breakage or run-off fees, consulting costs, demolition costs or training costs.

(2)

Represents transaction costs incurred in connection with planned and completed acquisitions, including legal and professional fees, debt arrangement fees and other third-party costs.

(3)

Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of our CFM56 capabilities into Dallas, Texas.

(4)

Segment Results

The following table presents revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin:

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

(in millions, except percentages)

Engine Services