StandardAero, Inc.

World's largest independent pure-play aerospace engine aftermarket provider with above-average returns and solid free cash flow, tempered by leverage and a material weakness.

Strengths

• Strong returns: ROA 4.2% (76th pct) and ROE 10.4% (62nd pct) with operating margin in 69th pct
• Durable franchise with exclusive/semi-exclusive OEM authorizations, 100+ year track record, recurring regulated aftermarket demand
• Healthy FCF of $234M (76th pct) and interest coverage 3.2x

Risks

• Substantial indebtedness (debt/equity 0.82, 74th pct) and Carlyle control overhang
• Disclosed material weakness in internal control over financial reporting
• Customer concentration and thin gross margin (14.8%, 13th pct)

Notable findings

• Exec changeRecent 8-K item 5.02 8-K ↗
• Material weakness• our ability to remediate effectively the material weaknesses identified in our internal control over financial reporting; • our ability to respond to changes in GAAP; • our or our third-party