StandardAero, Inc.

Previous wording

Manufacturer specifications, government regulations and military maintenance regimens generally require that aircraft and engines undergo aftermarket servicing at regular intervals or upon the occurrence of certain events during the serviceable life of each asset. As a result, the aggregate volume of services required for any particular engine platform is a function of four factors: (i) the number of aircraft and engines in operation (the “installed base”), (ii) the age of the installed base, (iii) the reliability of the installed based and (iv) the utilization rate of the installed base.

Current wording

Manufacturer specifications, government regulations and military maintenance regimens generally require that aircraft and engines undergo aftermarket servicing at regular intervals or upon the occurrence of certain events during the serviceable life of each asset. As a result, the aggregate volume of services required for any particular engine platform is a function of four factors: (i) the number of aircraft and engines in operation (the “installed base”), (ii) the age of the installed base, (iii) the reliability of the installed base and (iv) the utilization rate of the installed base.

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 our 2024 Form 10-K. In addition, the Company continues to closely monitor the implementation of tariffs, which has the potential to disrupt global trade and existing supply chains and impose additional costs on our business. While negotiations regarding tariffs are ongoing, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers require us to increase prices for our products or services, this could lead to decreased demand for our products and services, which would negatively impact our results of operations, cash flows, and financial condition. While tariff levels and related trade actions remain fluid, we expect to pass associated cost increases through to customers where possible, though timing delays may impact margins. However, factors such as the Company’s operations and supply chains, which are primarily located in regions where our products are sold, along with the applicability of the United States-Mexico-Canada Agreement, help reduce our exposure to trade disruptions, but there can be no assurance that these factors, or our pricing actions, will be effective mitigants given the uncertain environment. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business and Industry—United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business” in our 2024 Form 10-K.

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 our 2025 Form 10-K. In addition, the Company continues to closely monitor the implementation of tariffs, which has the potential to disrupt global trade and existing supply chains and impose additional costs on our business. While negotiations regarding tariffs are ongoing, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers require us to increase prices for our products or services, this could lead to decreased demand for our products and services, which would negatively impact our results of operations, cash flows, and financial condition. While tariff levels and related trade actions remain fluid, we expect to pass associated cost increases through to customers where possible, though timing delays may impact margins. However, factors such as the Company’s operations and supply chains, which are primarily located in regions where our products are sold, along with the applicability of the United States-Mexico-Canada Agreement, help reduce our exposure to trade disruptions, but there can be no assurance that these factors, or our pricing actions, will be effective mitigants given the uncertain environment. Most recently, in February 2026, the U.S. Supreme Court ruled that the use of IEEPA to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs that had been in effect since April 2025. While the ruling struck down the IEEPA based tariffs, it does not prevent the administration from imposing tariffs using other legal authorities, and the administration has indicated its intention to pursue alternative statutory mechanisms to reinstate or impose new tariffs. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business and Industry—Unite…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In May 2025, the Selling Stockholders completed a public offering of an aggregate of 34,500,000 shares of Common Stock (including full exercise by the underwriters of their option to purchase up to an additional 4,500,000 shares) at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company. As of September 30, 2025, Carlyle and GIC own approximately 45.6% and 10.3% of our outstanding Common Stock, respectively.

Current wording

In May 2025, the Selling Stockholders completed a public offering of an aggregate of 34,500,000 shares of Common Stock (including the full exercise by the underwriters of their option to purchase up to an additional 4,500,000 shares) at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company.

Previous wording

The following table presents a reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA Margin, respectively:

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 three months ended March 31, 2026 and 2025:

Previous wording

Interest expense. Interest expense decreased $35.3 million or 44.2% from $79.9 million for the three months ended September 30, 2024 to $44.6 million for the three months ended September 30, 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 three months ended September 30, 2025 of 6.8% compared to 9.0% for the three months ended September 30, 2024. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.

Current wording

Interest expense. Interest expense decreased $5.6 million, or 12.9%, from $43.8 million for the three months ended March 31, 2025 to $38.2 million for the three months ended March 31, 2026. This decrease in interest expense was largely driven by a weighted average interest rate of borrowings for the three months ended March 31, 2026 of 6.2% compared to 7.1% for the three months ended March 31, 2025. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.

Previous wording

Income tax expense. Income tax expense was $70.9 million for the nine months ended September 30, 2025, as compared to $38.1 million for the nine months ended September 30, 2024. This was an increase of $32.8 million, or 86.1%. This increase in tax expense was due primarily to the increase in the year to date pretax income which was $269.6 million at September 30, 2025 compared to $63.1 million at September 30, 2024, which is an increase of $206.5 million. The tax expense, and corresponding effective tax rates for the nine months ended September 30, 2025 and 2024, were higher than the statutory rate of 21.0% 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. Further, for the nine months ended September 30, 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.

Current wording

Income tax expense. Income tax expense was $25.0 million for the three months ended March 31, 2026, as compared to $22.2 million for the three months ended March 31, 2025, an increase of $2.8 million, or 12.7%. This increase in tax expense is primarily due to an increase in year-to-date pretax income. Year-to-date income before taxes for the period ending March 31, 2026 increased to $104.9 million as compared to $85.1 million for the three months ended March 31, 2025. The tax expense, and corresponding estimated effective tax rate for the three months ended March 31, 2026 and 2025, were higher than the statutory rate of 21.0% primarily due to non-deductible expenses and state taxes. Additionally, for the three months ended March 31, 2025, the effective rate was higher than the statutory rate due to the Global Intangible Low-tax Income (“GILTI”) provision. Effective January 1, 2026, the One Big Beautiful Bill Act (the “OBBBA”) eliminates the requirements to allocate interest expense against Net CFC Tested Income ("NCTI", formerly GILTI). As a result, we are utilizing foreign tax credits to offset NCTI.

Previous wording

Includes unamortized discounts of $20.0 million and $22.5 million as of September 30, 2025 and December 31, 2024, respectively, and unamortized deferred finance charges of $14.0 million and $15.7 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

Includes unamortized discounts of $18.3 million and $19.2 million as of March 31, 2026 and December 31, 2025, respectively, and unamortized deferred finance charges of $12.8 million and $13.4 million as of March 31, 2026 and December 31, 2025, 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 September 30, 2025, we had $722.8 million of available liquidity, consisting of $97.5 million cash on hand and, $625.3 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 Note 8, “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.

Current wording

Our principal historical cash requirements have been to fund working capital, capital expenditures and acquisitions and to service our indebtedness. As of March 31, 2026, we had $825.2 million of available liquidity, consisting of $89.2 million cash on hand and, $736.0 million available under the 2024 Revolving Credit Facility. Based on our current operations, we believe that our current sources of liquidity, including cash on hand and the 2024 Revolving Credit Facility, are adequate to meet our cash requirements for the next twelve months and for the foreseeable future. See Note 7, “Long-Term Debt” for further discussion of the Credit Agreement and Senior Secured Credit Facilities. However, our ability to make scheduled payments of principal and interest, refinance our debt, comply with the financial covenants under our debt agreements and fund our other liquidity requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Any future acquisitions, joint ventures or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.

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 $2,233.1 million, maturing on October 31, 2031.

Current wording

The 2024 Term Loan Facilities under the Credit Agreement, under which we had outstanding indebtedness in an aggregate principal amount of $2,221.9 million, maturing on October 31, 2031.

Previous wording

The $750.0 million New 2024 Revolving Credit Facility under the New Credit Agreement, under which we had outstanding indebtedness of $110.0 million.

Current wording

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

Previous wording

$19.7 million in finance leases and other debt.

Current wording

$19.1 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 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.

Current wording

The 2024 Revolving Credit Facility is subject to a springing financial covenant, which requires us to maintain a maximum consolidated first lien net leverage ratio that is tested quarterly, at the end of any fiscal quarter, when more than 40% of the 2024 Revolving Credit Facility (excluding, among other things, all letters of credit incurred under the 2024 Revolving Credit Facility (whether or not cash collateralized) and adjusted cash and cash equivalents of the Borrowers and their restricted subsidiaries) is utilized on such date.

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 Quarterly Report in that it represents Adjusted EBITDA as further adjusted for certain additional items as defined in the New Credit Agreement. The table below highlights the differences between Adjusted EBITDA presented in this Quarterly Report and Consolidated EBITDA presented to our creditors:

Current wording

The Credit Agreement contains certain financial reporting covenants that require us to present periodic financial metrics to our lenders. One such financial reporting metric is Consolidated EBITDA as defined in the Credit Agreement. The definition of Consolidated EBITDA utilized for these debt reporting covenants differs from the definition of Adjusted EBITDA presented in this Quarterly Report in that it represents Adjusted EBITDA as further adjusted for certain additional items, as set forth in the Credit Agreement. The table below highlights the differences between Adjusted EBITDA presented in this Quarterly Report and Consolidated EBITDA presented to our creditors:

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 Credit Agreement could result in an event of default under the Credit Agreement and permit the senior lenders to accelerate the maturity of our indebtedness. Such an acceleration of our indebtedness would have a material adverse effect on our liquidity, including our ability to make payments on our other indebtedness and our ability to operate our business.

Previous wording

As of September 30, 2025, we were in compliance with the covenants in the New Credit Agreement.

Current wording

As of March 31, 2026, we were in compliance with the covenants in the Credit Agreement.

Previous wording

The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and March 31, 2025:

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $32.0 million. The factors affecting our operating cash flows during the period included net income of $25.0 million and non-cash charges of $145.2 million, offset by a $202.3 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $140.0 million in depreciation and amortization, $10.0 million in amortization of deferred finance charges and discounts, $3.6 million loss on debt extinguishment and $1.4 million in non-cash lease expense, partially offset by $9.2 million decrease in deferred income taxes.

Current wording

Net cash used in operating activities for the three months ended March 31, 2026 was $119.6 million. The factors affecting our operating cash flows during the period included net income of $79.9 million and non-cash charges of $49.5 million, partially offset by a $249.0 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $46.5 million in depreciation and amortization and $3.5 million in stock compensation expense. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 of $91.1 million primarily consisted of $66.7 million of purchases of property, plant and equipment, rental engines and $30.0 million in payment during the current period of our licensing agreement acquired during the year ended December 2024, partially offset by $4.3 million of proceeds from disposal of property, plant and equipment.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 of $14.2 million primarily consisted of $15.6 million of purchases of property, plant and equipment, rental engines partially offset by $1.4 million of proceeds from disposal of property, plant and equipment.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2025 was $6.3 million. The factors affecting our operating cash flows during the period included net income of $198.8 million and non-cash charges of $162.9 million, partially offset by a $367.9 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $145.3 million in depreciation and amortization, $10.0 million in stock compensation expense and $4.9 million in amortization of deferred finance charges and discounts, and $0.6 million of foreign exchange gain, partially offset by a $0.8 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.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was $24.0 million. The factors affecting our operating cash flows during the period included net income of $62.9 million and non-cash charges of $47.1 million, partially offset by a $134.0 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $48.7 million in depreciation and amortization, $2.0 million in stock compensation expense, partially offset by a $5.8 million decrease in deferred income taxes. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2024 of $184.1 million primarily due to cash of $114.1 million paid for the acquisition of Aero Turbine on August 23, 2024, $70.4 million of purchases of property, plant and equipment and rental engines.

Current wording

Net cash used in investing activities for the three months ended March 31, 2025 of $40.1 million consisted of $25.3 million of purchases of property, plant and equipment, rental engines and $15.0 million in payment of our licensing agreement acquired during the year ended December 31, 2024.

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2025 of $90.9 million was primarily attributable to the proceeds from long-term debt of $545.0 million, offset by $452.6 million in repayments of long-term debt.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2025 of $102.4 million was primarily attributable to the proceeds from long-term debt of $195.0 million offset by $91.0 million in repayment of long-term debt and $1.6 million in repayments of long-term agreements.

Previous wording

We describe our critical accounting estimates used in the preparation of our consolidated financial statements in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates,” in our 2024 Form 10-K. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:

Current wording

We describe our critical accounting estimates used in the preparation of our consolidated financial statements in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates," in our 2025 Form 10-K. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment: