StandardAero, Inc.

Previous wording

The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2024 and 2023. A discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2023 and 2022 can be found in the section entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus on Form 424(b)(3) filed with the SEC on October 2, 2024.

Current wording

The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2025 and 2024. For a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2024 and 2023 refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K filed with the SEC on March 12, 2025.

Previous wording

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 GDP 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.

Current wording

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.

Previous wording

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 addition, the implementation of tariffs 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. 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.”

Current wording

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 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 United States 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 trad…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On October 2, 2024, the Company completed its initial public offering (“IPO”) of ordinary shares at a price of $24.00 per share. The offering included 69,000,000 registered ordinary shares, of which, the Company issued and sold 53,250,000 ordinary shares and the selling existing stockholders sold 15,750,000 ordinary shares, including 9,000,000 ordinary shares issued pursuant to the full exercise of the Underwriters' option to purchase additional shares from the selling existing stockholders. The ordinary shares sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1 (the “IPO Registration Statement”), which was declared effective by the SEC on October 1, 2024. The IPO generated net proceeds from the primary issuance of shares of $1,202.8 million after deducting underwriting discounts and commissions of approximately $67.1 million and estimated offering expenses of $8.1 million.

Current wording

On October 2, 2024, the Company completed its initial public offering (“IPO”) of ordinary shares at a price to the public of $24.00 per share (“Common Stock”). The offering included 69,000,000 shares of Common Stock, of which, the Company issued and sold 53,250,000 shares and the selling stockholders sold 15,750,000 shares, including 9,000,000 shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares from the selling stockholders. The shares of Common Stock sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1, which was declared effective by the SEC on October 1, 2024. The IPO generated net proceeds from the primary issuance of shares of $1,202.8 million after deducting underwriting discounts and commissions of approximately $67.1 million and estimated offering expenses of $8.1 million.

Previous wording

To continue to grow our business, we are continually acquiring and investing in companies that share our common goal of providing the market with aftermarket services across multiple engine platforms. During the years ended December 31, 2024, and December 31, 2023, we acquired the following entities:

Current wording

To continue to grow our business, we are continually acquiring and investing in companies that share our common goal of providing the market with aftermarket services across multiple engine platforms.

Previous wording

On August 23, 2024, we acquired Aero Turbine, Inc. ("Aero Turbine"), a provider of engine component repair and other value-added engine aftermarket services for U.S. and international customers for an estimated purchase price of approximately $132.0 million, comprising an initial cash purchase price of $116.8 million and $15.2 million representing the estimated fair value of additional consideration contingently payable based upon the achievement of gross profit in excess of certain gross profit targets for the period from January 1, 2024, to December 31, 2026, subject to post-closing adjustments. The maximum contingent consideration payable from the Company to the seller is $21.0 million. The acquisition was funded with borrowings under the ABL Credit Facility, which was repaid on September 6, 2024 with incremental borrowings from the Prior 2024 Term Loan B-1 Facility and the Prior 2024 Term Loan B-2 Facility.

Current wording

On August 23, 2024, we acquired Aero Turbine, Inc. (“Aero Turbine”), a provider of engine component repair and other value-added engine aftermarket services for U.S. and international customers for an estimated purchase price of approximately $132.0 million, comprising an initial cash purchase price of $116.8 million and $15.2 million representing the estimated fair value of additional consideration contingently payable based upon the achievement of gross profit in excess of certain gross profit targets for the period from January 1, 2024, to December 31, 2026, subject to post-closing adjustments. The maximum contingent consideration payable from the Company to the seller is $21.0 million. The acquisition was funded with borrowings under the Prior ABL Credit Facility, which was repaid on

Previous wording

We have incurred, and expect to continue to incur, certain non-recurring professional fees and other expenses as part of our transition to a public company. 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 our initial public offering will 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.”

Current wording

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.”

Previous wording

We define Adjusted EBITDA as net income (loss) 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 non-recurring items 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.

Current wording

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.

Previous wording

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

Current wording

The following table presents a reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA Margin, respectively for the years ended December 31, 2025 and 2024:

Previous wording

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 other non-comparable events to measure operating performance as these events arise outside of our ordinary course of continuing operations. See Note 17, "Related Party Transactions" to our consolidated financial statements included elsewhere in this report for descriptions of the consulting services agreements with Carlyle Investment Management L.L.C. and Beamer Investment Inc.

Current wording

Represents other costs not recurring in the ordinary course of business including professional fees related to business transformation and 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 other non-comparable events to measure operating performance as these events arise outside of the Company’s ordinary course of continuing operations. See Note 17, "Related Party Transactions" to the Company’s condensed consolidated financial statements included elsewhere in this Annual Report on Form 10-K for descriptions of the consulting services agreements with Carlyle Investment Management L.L.C. and Beamer Investment Inc.

Previous wording

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, business aviation, land and marine and other markets with engine piece part repair and accessory repair.

Current wording

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.

Previous wording

Acquisition costs primarily consist of professional service fees and other third-party costs incurred as part of the transaction process. Acquisition costs do not include any cost associated with the issuance of debt as these are capitalized and amortized over the term of the debt.

Current wording

Acquisition costs primarily consist of professional service fees and other third-party costs incurred as part of the transaction process. Acquisition costs do not include any costs associated with the issuance of debt as these are capitalized and amortized over the term of the debt.

Previous wording

Refinancing costs primarily consists of costs incurred for the amendments to the Prior Credit Agreement in March and September 2024 and August 2023, and costs incurred for the New Credit Agreement in October 2024.

Current wording

Refinancing costs primarily consists of costs incurred for the amendments to the Prior Credit Agreement in March 2024 and September 2024, and costs incurred for the New Credit Agreement in October 2024.

Previous wording

Loss on debt extinguishments primarily consists of the write-off of unamortized charges related to the extinguished portions of the Prior 2023 and Prior 2024 Term Loan Facilities, the Prior ABL Credit Facility and the redemption of the Prior Senior Notes.

Current wording

Loss on debt extinguishments primarily consists of the write-off of unamortized charges related to the extinguished portions of the Prior 2023 and Prior 2024 Term Loan Facilities, the Prior ABL Credit Facility and the redeemed portions of the Prior Senior Notes.

Previous wording

Our provision for income tax expense (benefit) 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.

Current wording

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.

Previous wording

Cost of revenue. Cost of revenue increased $555.0 million, or 14.1%, to $4,483.0 million for the year ended December 31, 2024 from $3,928.0 million for the year ended December 31, 2023. This increase was driven by a growth in volumes, which drove higher material and direct labor expenses, as well as increased other overhead costs directly related to the performance of aftermarket services.

Current wording

Cost of revenue. Cost of revenue increased $682.0 million, or 15.2%, to $5,165.1 million for the year ended December 31, 2025 from $4,483.0 million for the year ended December 31, 2024. This increase was driven by a growth in volumes, which drove corresponding higher material and direct labor expenses, as well as increased other overhead costs directly related to the performance of aftermarket services, in addition to the cost of revenue attributable to the acquisition of Aero Turbine on August 23, 2024.

Previous wording

Amortization of intangible assets. Amortization of intangible assets was $95.4 million and $93.7 million for the years ended December 31, 2024 and 2023, respectively. The increase is primarily driven by the intangible assets allocated to customer relationships resulting from the Aero Turbine acquisition on August 23, 2024.

Current wording

Amortization of intangible assets. Amortization of intangible assets was $98.7 million and $95.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $3.2 million, or 3.4%, was primarily driven by the intangible assets allocated to customer relationships resulting from the Aero Turbine acquisition on August 23, 2024. During the year ended December 31, 2024, the cost base of customer relationships increased due to the Aero Turbine acquisition; however, this had minimal impact on total amortization expense due to the timing of the transaction.

Previous wording

Acquisition costs. Acquisition costs of $1.4 million for the year ended December 31, 2024 were incurred primarily due to the acquisition of Aero Turbine on August 23, 2024. Acquisition costs of $1.5 million for the year ended December 31, 2023 were incurred primarily due to the acquisition of Western Jet Aviation on February 2, 2023.

Current wording

Acquisition costs. Acquisition costs of $1.4 million for the year ended December 31, 2024 were incurred primarily due to the Aero Turbine acquisition on August 23, 2024. There have been no acquisitions during the year ended December 31, 2025.

Previous wording

Interest expense. Interest expense was $282.5 million and $309.6 million for the years ended December 31, 2024 and 2023, respectively. The decrease in interest expense is attributable to (i) the repayment of $200.0 million on the Prior Senior Notes in March 2024, (ii) the repayment of the remaining balance of the Prior Senior Notes concurrent with the IPO in October 2024, and (iii) the refinancing of the Prior 2023 Revolving Credit Facility and the Prior Term Loan facilities resulting in a weighted average interest rate of borrowings for the years ended December 31, 2024 and 2023 of 8.7% and 9.2%, respectively, as the underlying benchmark rates on our floating rate debt instruments continued to decline during 2024, which, along with the repayment of indebtedness with the proceeds of our IPO, drove the lower interest expense in the year. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.

Current wording

Interest expense. Interest expense decreased $108.3 million, or 38.3%, from $282.5 million for the year ended December 31, 2024 to $174.2 million for the year ended December 31, 2025. This decrease in interest expense was largely driven by (i) the repayment of the Prior Senior Notes in full on October 3, 2024 concurrent with the Company’s IPO, and (ii) entrance into the New Credit Agreement on October 31, 2024 providing for the New 2024 Term Loan Facilities and the New 2024 Revolving Credit Facility and the use of the proceeds to repay in full amounts outstanding under the Prior Credit Agreement and the Prior ABL Credit Agreement, terminating each of the debt facilities thereunder, and, resulting in a weighted average interest rate of borrowings for the year ended December 31, 2025 of 6.8% compared to 8.7% for the year ended December 31, 2024. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.

Previous wording

Refinancing costs. Refinancing costs of $23.7 million were incurred during the year ended December 31, 2024, of which $6.4 million were incurred for the amendments of the Prior Credit Agreement in March and September 2024, and $17.3 million were incurred for the New Credit Agreement in October 2024. Refinancing costs of $19.9 million associated with the amendment of the Prior Credit Agreement in August 2023 were incurred during the year ended December 31, 2023.

Current wording

Refinancing costs. Refinancing costs of $23.7 million associated with the modified portion of the Prior Credit Agreement amendments in March and September 2024 were incurred during the year ended December 31, 2024, with no similar charges incurred in the year ended December 31, 2025.

Previous wording

Loss on debt extinguishments. A $15.3 million loss on debt extinguishments was recorded during the year ended December 31, 2024, $8.6 million due to the redemption of the Prior Senior Notes, $4.3 million due to the extinguishment of the Prior 2023 and Prior 2024 Term Loan Facilities, $2.0 million due to the extinguishment of the Prior ABL Credit Facility and $0.4 million due to the extinguishment of the Prior 2023 Revolving Credit Facility. A $6.2 million loss on debt extinguishments was recorded during the year ended December 31, 2023, due to the write-off of unamortized deferred finance charges and debt discount related to the extinguished portion of the 2019 Term Loan Facilities and 2021 Term Loan Facility (both defined below) related to the refinancing activity.

Current wording

Loss on debt extinguishments. A $15.3 million loss on debt extinguishments was recorded during the year ended December 31, 2024 due to the write-off of unamortized deferred finance charges and debt discount related to the extinguished portion of the Prior 2023 Term Loan Facilities and redeemed portion of the Prior Senior Notes related to the refinancing activity, with no similar charges incurred in the year ended December 31, 2025.

Previous wording

Income tax expense. Income tax expense was $70.8 million for the year ended December 31, 2024, as compared to $40.2 million for the year ended December 31, 2023, an increase of $30.6 million. Of this increase, $22.2 million was driven by the increase in pre-tax income. In addition, $5.23 million related to an adjustment to our state deferred tax rate and $2.5 million related to non-deductible officer compensation. The tax expense and corresponding effective tax rate for 2024 and 2023 were high primarily due to the Global Intangible Low-taxed Income (GILTI) provision which was enacted in 2017 as part of the Tax Cuts and Jobs Act as well as the partial valuation allowance recorded against our interest expense carryforward deferred tax asset under Section 163(j) of the Internal Revenue Code.

Current wording

Income tax expense. Income tax expense was $99.4 million for the year ended December 31, 2025, as compared to $70.8 million for the year ended December 31, 2024. This was an increase of $28.7 million, or 40.5%. This increase in tax expense was due primarily to the increase in the pretax income which was $376.9 million at December 31, 2025 compared to $81.8 million at December 31, 2024, which is an increase of $295.1 million. The tax expense, and corresponding effective tax rates for the years ended December 31, 2025 and 2024, were higher than the statutory rate of 21.0% primarily due to State income taxes and the Global Intangible Low-taxed Income (“GILTI”) provision which was enacted in 2017 as part of the Tax Cuts and Jobs Act. Further, for the year ended December 31, 2024, the partial valuation allowance recorded against our interest expense carryforward deferred tax asset under Section 163(j) of the Internal Revenue Code also was a driver of the effective tax rate exceeding the statutory rate.

Previous wording

For a discussion of Segment Adjusted EBITDA, see Note 24, "Segment Information" to our consolidated financial statements included in this Annual Report.

Current wording

For a discussion of Segment Adjusted EBITDA, see Note 24, "Segment Information" to our condensed consolidated financial statements included in this Annual Report.

Previous wording

Component Repair Services Segment Adjusted EBITDA increased $29.4 million, or 23.5%, to $154.7 million for the year ended December 31, 2024. The increase was primarily driven by increases in revenue and the acquisition of Aero Turbine.

Current wording

Component Repair Services Segment Adjusted EBITDA increased $48.0 million, or 31.0%, to $202.7 million for the year ended December 31, 2025, from $154.7 million for the year ended December 31, 2024. Adjusted EBITDA margin of 28.6% compared to 26.1% in the prior year period, was driven by volume and price growth, favorable mix and margin expansion from the Aero Turbine acquisition.

Previous wording

Includes unamortized discounts of $22.5 million and $26.9 million as of December 31, 2024 and 2023, respectively, and unamortized deferred finance charges of $15.7 million and $33.6 million as of December 31, 2024 and 2023, respectively.

Current wording

Includes unamortized discounts of $19.2 million and $22.5 million as of December 31, 2025 and December 31, 2024, respectively, and unamortized deferred finance charges of $13.4 million and $15.7 million as of December 31, 2025 and December 31, 2024, respectively.

Previous wording

Our principal historical cash requirements have been to fund working capital, capital expenditures and acquisitions and to service our indebtedness. As of December 31, 2024, we had $837.7 million of available liquidity, consisting of $102.6 million cash on hand, $735.1 million available under the New 2024 Revolving Credit Facility. Based on our current operations, we believe that our current sources of liquidity, including cash on hand and the New 2024 Revolving Credit Facility, are adequate to meet our cash requirements for the foreseeable future. See “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—New Credit Agreement” for further discussion of the New Credit Agreement and New 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.

Current wording

Our principal historical cash requirements have been to fund working capital, capital expenditures and acquisitions and to service our indebtedness. As of December 31, 2025, we had $1,025.6 million of available liquidity, consisting of $289.7 million cash on hand and, $735.9 million available under the New 2024 Revolving Credit Facility. Based on our current operations, we believe that our current sources of liquidity, including cash on hand and the New 2024 Revolving Credit Facility, are adequate to meet our cash requirements for the next twelve months and for the foreseeable future. See Note 12, “Long-Term Debt” for further discussion of the New Credit Agreement and New 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.

Previous wording

The New 2024 Term Loan Facilities under the New Credit Agreement, under which we had outstanding indebtedness in an aggregate principal amount of $2,250.0 million, maturing on October 31, 2031.

Current wording

The New 2024 Term Loan Facilities under the New Credit Agreement, under which we had outstanding indebtedness in an aggregate principal amount of $2,227.5 million, maturing on October 31, 2031.

Previous wording

$750.0 million New 2024 Revolving Credit Facility under the New Credit Agreement, under which we had no outstanding borrowings, maturing on October 31, 2029.

Current wording

The $750.0 million New 2024 Revolving Credit Facility under the New Credit Agreement, under which we had no outstanding indebtedness.

Previous wording

$19.6 million in finance leases and other debt.

Current wording

$19.7 million in finance leases and other debt.

Previous wording

The New 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 New 2024 Revolving Credit Facility (excluding, among other things, all letters of credit incurred under the New 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. See “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—New Credit Agreement” for further discussion of the New Credit Agreement and New Senior Secured Credit Facilities.

Current wording

The New 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 New 2024 Revolving Credit Facility (excluding, among other things, all letters of credit incurred under the New 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. See our 2024 Form 10-K, “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—New Credit Agreement” for further discussion of the New Credit Agreement and New Senior Secured Credit Facilities.

Previous wording

The New 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 New Credit Agreement. The definition of Consolidated EBITDA utilized for these debt reporting covenants differs from the definition of Adjusted EBITDA presented in this Annual Report in that it represents Adjusted EBITDA as further adjusted for certain additional items including, among other things, certain start-up costs to give pro forma effect to acquisitions, including resulting synergies, and cost savings. The table below highlights the differences between Adjusted EBITDA presented in this Annual Report and Consolidated EBITDA presented to our creditors:

Current wording

The New 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 New Credit Agreement. The definition of Consolidated EBITDA utilized for these debt reporting covenants differs from the definition of Adjusted EBITDA presented in this Annual Report in that it represents Adjusted EBITDA as further adjusted for certain additional items, as set forth in the New Credit Agreement. The table below highlights the differences between Adjusted EBITDA presented in this Annual Report and Consolidated EBITDA presented to our creditors:

Previous wording

Compliance with these covenants is essential to our ability to continue to meet our liquidity needs, as a failure to comply under the New Credit Agreement could result in a default under the New 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.

Current wording

Compliance with these covenants is essential to our ability to continue to meet our liquidity needs, as a failure to comply under the New Credit Agreement could result in an event of default under the New 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.

Previous wording

Net cash provided by operating activities for the year ended December 31, 2023 was $67.9 million. The factors affecting our operating cash flows during 2023 were our net loss of $35.1 million and a net change in our operating assets and liabilities of $99.5 million, partially offset by non-cash charges of $202.4 million. The non-cash charges primarily consisted of $197.1 million in depreciation and amortization, $15.3 million in amortization of deferred finance charges and discounts, $6.2 million in the loss on debt extinguishment in connection with the amendment of the Prior Credit Agreement during 2023, and $3.2 million in foreign exchange loss, partially offset by $19.8 million in deferred income taxes.

Current wording

Net cash provided by operating activities for the year ended December 31, 2025 was $316.7 million. The factors affecting our operating cash flows during the period included net income of $277.4 million and non-cash charges of $201.8 million, partially offset by a $162.5 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $193.7 million in depreciation and amortization, $13.2 million in stock compensation expense and $6.5 million in amortization of deferred finance charges and discounts, partially offset by a $15.8 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.

Previous wording

Net cash used in investing activities for the year ended December 31, 2023 of $112.9 million was primarily due to investments made to stand up our LEAP-1A and LEAP-1B program, and consisted of $55.1 million of purchases of property, plant and equipment and rental engines, $30.2 million for the acquisition of intangible assets and $31.1 million for the acquisition of Western Jet on February 2, 2023. Net cash used for investment was offset by the proceeds from the disposal of property, plant and equipment and rental engines of $3.5 million.

Current wording

Net cash used in investing activities for the year ended December 31, 2025 of $106.4 million primarily consisted of $82.4 million of purchases of property, plant and equipment, rental engines and $30.4 million in payment during the current period of our licensing agreement acquired during the year ended December 2024, partially offset by $5.1 million of proceeds from disposal of property, plant and equipment.

Previous wording

Net cash used in investing activities for the year ended December 31, 2024 of $235.5 million was primarily due to investments made to stand up our LEAP-1A and LEAP-1B program, and consisted of $123.2 million of purchases of property, plant and equipment, rental engines and intangible assets, and $114.1 million for the acquisition of Aero Turbine on August 23, 2024.

Current wording

Net cash used in investing activities for the year ended December 31, 2024 of $235.5 million was primarily due to investments made to stand up our LEAP program, and consisted of $123.2 million of purchases of property, plant and equipment, rental engines and intangible assets, and $114.1 million for the acquisition of Aero Turbine on August 23, 2024.

Previous wording

Net cash provided by financing activities for the year ended December 31, 2024 of $203.8 million was primarily attributable to the proceeds from the IPO of $1,202.8 million combined with proceeds from the issuance of long-term debt of $3,247.0 million, of which $2,250.0 million was drawn on the New 2024 Term Loan Facilities, $400.0 million under the Prior 2024 Term Loan Facilities, $502.0 million on the Prior ABL Credit Facility and $95.0 million on the New 2024 Revolving Credit Facility. Proceeds from the IPO and the issuance of long-term debt were partially offset by the repayment of long-term debt of $4,235.5 million, primarily comprised of $2,962.0 million of payments on the Prior Term Loan Facilities, $675.5 on the Prior Senior Notes, $502.0 million on the Prior ABL Facility and $95.0 million on the New 2024 Revolving Credit Facility.

Current wording

Net cash provided by financing activities for the year ended December 31, 2024 of $203.8 million was primarily attributable to the proceeds from the IPO of $1,202.8 million combined with proceeds from the issuance of long-term debt of $3,247.0 million, of which $2,250.0 million was drawn on the New 2024 Term Loan Facilities, $400.0 million under the Prior 2024 Term Loan Facilities, $502.0 million on the Prior ABL Credit Facility and $95.0 million on the New 2024 Revolving Credit Facility. Proceeds from the IPO and the issuance of long-term debt were partially offset by the repayment of long-term debt of $4,235.5 million, primarily comprised of $2,962.0 million of payments on the Prior 2024 Term Loan Facilities, $675.5 on the Prior Senior Notes, $502.0 million on the Prior ABL Credit Facility and $95.0 million on the New 2024 Revolving Credit Facility.

Previous wording

Revenue is recognized on contracts with customers for arrangements in which services and pricing are fixed and/or determinable and are generally based on customer purchase orders. We recognize revenue for performance obligations within a customer contract when control of the associated product or service is transferred to the customer. We have three significant types of aftermarket services revenue contracts: fixed price contracts, time and materials contracts and engine utilization contracts. The performance obligation in a contract can include: (i) repair services and parts/modules embodied and (ii) engine rental revenue. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.

Current wording

Revenue is recognized on contracts with customers for arrangements in which services and pricing are fixed and/or determinable and are generally based on customer purchase orders. We recognize revenue for performance obligations within a customer contract as the services performed by us enhance customer-controlled assets. We have three significant types of aftermarket services revenue contracts: fixed price contracts, time and materials contracts and engine utilization contracts. The performance obligation in a contract can include: (i) repair services and parts/modules embodied and (ii) engine rental revenue. Most of the our arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.

Previous wording

To determine the revenue recognized at each period end for contracts in progress, we use a portfolio approach by applying an estimated margin by engine platform to the contract costs incurred. The estimated margin by engine platform is based on average historical margins on similar completed contracts. We apply judgment when determining the estimated margin by engine platform, which includes evaluating the appropriateness of using average historical margins by engine platform for completed contracts on similar contracts in progress. Revenue recognized related to open work orders had accumulated costs of $987.4 million, which resulted in $1,136.4 million of our total revenue for the year ended December 31, 2024. A 1% change in the estimated margin by engine platform for open work orders would have resulted in a $13.2 million change in revenue for the year ended December 31, 2024, which represents 0.3% of total revenue and 3.3% of operating income for the year ended December 31, 2024.

Current wording

To determine the revenue recognized at each period end for contracts in progress, we use a portfolio approach by applying an estimated margin by engine platform to the contract costs incurred. The estimated margin by engine platform is based on average historical margins on similar completed contracts. We apply judgment when determining the estimated margin by engine platform, which includes evaluating the appropriateness of using average historical margins by engine platform for completed contracts on similar contracts in progress. Revenue recognized related to open work orders had accumulated costs of $1,366.4 million, which resulted in $1,537.4 million of our total revenue for the year ended December 31, 2025. A 1% change in the estimated margin by engine platform for open work orders would have resulted in a $17.5 million change in revenue for the year ended December 31, 2025, which represents 0.3% of total revenue and 3.2% of operating income for the year ended December 31, 2025.

Previous wording

Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable assets of businesses acquired and accounted for under the purchase method. Impairment testing of goodwill is performed annually and if there is indication that a triggering event has occurred, such as an operating loss or a significant adverse change in our business. We perform our annual impairment testing as of October 1st of each year. We have the option to first perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value is less than its carrying amount. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall reporting unit performance and events directly affecting a reporting unit. If we determine that it is not more likely than not that the carrying value is greater than the fair value, no additional test is required. However, if we conclude otherwise or elect not to perform the qualitative assessment then a quantitative impairment test is performed by comparing the fair value of the reporting unit with its carrying value, including goodwill. Projections used in impairment testing include the use of future cash flow and operating projections, which by their nature, are subjective. Inherent in management’s development of cash flow projections are assumptions and estimates, including those related to forecasted revenue growth rates, forecasted operating margins and the weighted average cost of capital. Estimating the fair value of individual reporting units also requires that management make assumptions and estimates regarding future plans and strategies and economic, geopolitical and regulatory conditions. If we determine that the carrying value exceeds the fair value, an impairment to goodwill is recognized equal to the excess and is limited to the total amount of goodwill allocated to the reporting unit, as a charge in the Consolidated Statements of Operations. We completed our annual impairment tests during the years ended December 31, 2024 and 2023, by performing a qualitative analysis and determined that no impairment had occurred.

Current wording

Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable assets of businesses acquired and accounted for under the purchase method. Impairment testing of goodwill is performed annually and if there is indication that a triggering event has occurred, such as an operating loss or a significant adverse change in our business. We perform our annual impairment testing as of October 1st of each year. We have the option to first perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value is less than its carrying amount. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall reporting unit performance and events directly affecting a reporting unit. If we determine that it is not more likely than not that the carrying value is greater than the fair value, no additional test is required. However, if we conclude otherwise or elect not to perform the qualitative assessment then a quantitative impairment test is performed by comparing the fair value of the reporting unit with its carrying value, including goodwill. Projections used in impairment testing include the use of future cash flow and operating projections, which by their nature, are subjective. Inherent in management’s development of cash flow projections are assumptions and estimates, including those related to forecasted revenue growth rates, forecasted operating margins and the weighted average cost of capital. Estimating the fair value of individual reporting units also requires that management make assumptions and estimates regarding future plans and strategies and economic, geopolitical and regulatory conditions. If we determine that the carrying value exceeds the fair value, an impairment to goodwill is recognized equal to the excess and is limited to the total amount of goodwill allocated to the reporting unit, as a charge in the Consolidated Statements of Operations. We completed our annual impairment tests during the years ended December 31, 2025 and 2024, by performing a quantitative analysis in 2025 and a qualitative analysis in 2024 and determined that no impairment had occurred.

Previous wording

We believe that our accruals for tax liabilities are adequate for all open audit years based on our assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense. Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, management considers all available evidence including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. As of December 31, 2024 and 2023, we had a valuation allowance of $117.7 million and $94.8 million, respectively, recorded against our interest expense carryforward deferred tax asset under Section 163(j) of the Code. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made.

Current wording

We believe that our accruals for tax liabilities are adequate for all open audit years based on our assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense. Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, management considers all available evidence including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. As of December 31, 2025 and 2024, we had a valuation allowance of $120.2 million and $117.7 million, respectively, recorded against our interest expense carryforward deferred tax asset under Section 163(j) of the Code. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made.