Cuộc họp công bố kết quả kinh doanh quý 3/2026 của StandardAero (SARO): Nâng định hướng khi biên EBITDA mở rộng

StandardAero (NYSE: SARO) báo cáo lợi nhuận và biên lợi nhuận quý 3 tăng nhờ năng suất được cải thiện, đồng thời các chương trình LEAP và CFM56 DFW tiếp tục phát huy hiệu quả theo đường cong kinh nghiệm. Ban lãnh đạo đã nâng dự báo doanh thu, EBITDA điều chỉnh và EPS điều chỉnh cho cả năm 2026, đồng thời duy trì triển vọng dòng tiền tự do.

Những điểm nhấn chính

• Doanh thu quý 3/2026 tăng 4% so với cùng kỳ năm trước lên 1,56 tỷ USD, với mức tăng trưởng được ghi nhận ở cả hai mảng hoạt động.
• EBITDA điều chỉnh tăng 15% lên 225 triệu USD. Biên EBITDA điều chỉnh mở rộng 130 điểm cơ bản lên 14,4%.
• EPS pha loãng điều chỉnh tăng 30% lên 0,39 USD, trong khi lợi nhuận ròng tăng 36% lên 93 triệu USD.
• EBITDA điều chỉnh của mảng Dịch vụ Động cơ tăng 24% lên 205 triệu USD, với biên lợi nhuận mở rộng 250 điểm cơ bản lên 15%.
• Ban lãnh đạo đã nâng dự báo doanh thu cả năm lên 6,525 tỷ – 6,645 tỷ USD và dự báo EBITDA điều chỉnh lên 905 triệu – 920 triệu USD.
• Hội đồng quản trị đã nâng hạn mức ủy quyền mua lại cổ phiếu lên 1,01 tỷ USD và khởi động chương trình mua lại cổ phiếu nhanh trị giá 350 triệu USD.

Dữ liệu tài chính chính

Kết quả kinh doanh và hoạt động

Dịch vụ Động cơ

Doanh thu mảng Dịch vụ Động cơ tăng 3,5% so với cùng kỳ năm trước. EBITDA điều chỉnh của mảng tăng 24% lên 205 triệu USD, trong khi biên lợi nhuận mở rộng 250 điểm cơ bản lên 15%.

Ban lãnh đạo cho biết sự cải thiện này đến từ năng suất cao hơn, tiến độ tích cực của các chương trình LEAP và CFM56 DFW, việc tăng cường sử dụng vật liệu tái sử dụng còn tốt (USM), cùng việc loại bỏ doanh thu từ vật tư chuyển tiếp có biên lợi nhuận thấp hoặc không có biên lợi nhuận.

Doanh thu Hàng không Thương mại tăng trưởng ở mức một chữ số cao sau khi loại trừ phần sụt giảm doanh thu chuyển tiếp. Doanh thu Hàng không Thương gia tăng 7,4% nhờ trợ lực từ các nền tảng động cơ cỡ vừa và siêu vừa, bao gồm HTF7000. Doanh thu mảng Quân sự và trực thăng tăng 7,2%.

Công ty cho biết các chương trình LEAP và CFM56 DFW đã bắt đầu có lãi từ đầu năm 2026. StandardAero vẫn đang đi đúng hướng để đạt mục tiêu của ban lãnh đạo là hơn 1 tỷ USD doanh thu hàng năm từ LEAP vào cuối thập kỷ này. Ban lãnh đạo nhận định doanh thu hàng năm của LEAP có thể tăng lên vài tỷ USD khi thị trường hậu mãi bước vào giai đoạn trưởng thành trong thập niên 2030.

Dịch vụ Sửa chữa Linh kiện

Doanh thu mảng Dịch vụ Sửa chữa Linh kiện tăng 7,3% lên 189 triệu USD. EBITDA điều chỉnh đạt khoảng 49 triệu USD, với biên lợi nhuận đạt 25,8%.

Nhu cầu sửa chữa thương mại vẫn duy trì mạnh mẽ trên các nền tảng CFM56, GTF, V2500 và CF34, cũng như mảng kinh doanh tuabin khí cải tiến từ động cơ máy bay. Tuy nhiên, khả năng sinh lời của mảng này bị ảnh hưởng bởi cơ cấu sản phẩm không thuận lợi, nguồn cung đầu vào bị chậm trễ ở các chương trình quân sự và chi phí phát sinh tồn đọng từ việc mở rộng công suất lao động.

Ban lãnh đạo xác định mảng sửa chữa linh kiện là một ưu tiên chiến lược. Các sáng kiến dự kiến bao gồm việc phát triển thêm năng lực sửa chữa, tăng tỷ lệ tự đảm nhận sửa chữa nội bộ và điều chuyển công việc trong toàn mạng lưới của StandardAero nhằm nâng cao năng suất xử lý và rút ngắn thời gian hoàn thành.

Dòng tiền và Phân bổ vốn

Dòng tiền tự do điều chỉnh đã cải thiện so với quý trước lên khoảng 100 triệu USD. Ban lãnh đạo cho biết nguyên nhân đến từ lợi nhuận cao hơn, công tác hoạch định vật tư hiệu quả và các sáng kiến chuỗi cung ứng trên toàn công ty.

Tính từ đầu năm đến nay, StandardAero đã mua lại 160 triệu USD cổ phiếu, bao gồm 50 triệu USD trong quý 3. Sau khi hoàn tất chương trình mua lại cổ phiếu nhanh trị giá 350 triệu USD, hạn mức ủy quyền dự kiến sẽ còn lại khoảng 500 triệu USD.

Ban lãnh đạo kỳ vọng đòn bẩy ròng vào cuối năm sẽ duy trì dưới mức 2,7x sau các động thái này, nằm trong biên độ mục tiêu dài hạn từ 2x–3x của công ty.

Dự báo của Ban lãnh đạo

Xét theo thị trường người dùng cuối, ban lãnh đạo dự báo tăng trưởng chuẩn hóa của mảng Hàng không Thương mại sẽ ở mức từ hai chữ số thấp đến khoảng 15% sau khi loại trừ doanh thu vật tư chuyển tiếp đã bị cắt giảm. Hàng không Thương gia dự kiến sẽ tăng trưởng ở mức từ một chữ số cao đến hai chữ số thấp, trong khi mảng Quân sự và Trực thăng dự kiến tăng trưởng ở mức hai chữ số thấp.

Rủi ro và các điểm cần theo dõi

• Khả năng cung ứng vật tư vẫn bị hạn chế trên các chương trình động cơ, dù ban lãnh đạo cho biết nguồn cung cho chương trình LEAP có phần khả quan hơn so với các chương trình khác.
• Nguồn cung vật tư USM mang tính thời điểm. Công ty không cho rằng đóng góp tích cực từ USM trong quý 3 sẽ lặp lại ở mức tương tự trong quý 4.
• Doanh thu từ LEAP và CFM56 DFW cao hơn có thể làm pha loãng biên lợi nhuận của mảng Dịch vụ Động cơ khi các chương trình này tiếp tục mở rộng quy mô.
• Hoạt động sửa chữa linh kiện quân sự tiếp tục bị ảnh hưởng do nguồn cung động cơ và vật tư đầu vào bị chậm trễ. Ban lãnh đạo liên hệ áp lực này với sự thay đổi trong chi tiêu quốc phòng giữa bối cảnh xung đột ở Trung Đông, đặc biệt là đối với các nền tảng huấn luyện.
• Những hạn chế trong chuỗi cung ứng tiếp tục ảnh hưởng đến vốn lưu động và thời gian hoàn thành dịch vụ.
• Việc loại bỏ doanh thu từ vật tư chuyển tiếp đang làm giảm mức tăng trưởng doanh thu được báo cáo. Ban lãnh đạo hiện dự kiến mức giảm doanh thu cả năm sẽ gần mức 300 triệu USD, so với ước tính trước đó là 350 triệu – 400 triệu USD.

Điểm nhấn phiên hỏi đáp với chuyên gia phân tích

Nhu cầu hậu mãi và đơn hàng tồn đọng: Ban lãnh đạo cho biết chưa nhận thấy tác động kinh tế vĩ mô đáng kể nào đối với lượng đơn đặt hàng, kế hoạch đưa động cơ vào bảo dưỡng hay hành vi của khách hàng. Khả năng dự báo nhu cầu kéo dài đến đầu năm 2028 và phần lớn doanh thu năm 2027 đã được cam kết. StandardAero hiện đang báo giá các suất vào xưởng bảo dưỡng của LEAP kéo dài đến giữa thập niên 2030.

Nâng dự báo doanh thu: Triển vọng cao hơn của mảng Dịch vụ Động cơ chủ yếu phản ánh sự tăng trưởng thương mại ở các chương trình LEAP, CFM56, CF34 và động cơ phản lực cánh quạt. Ban lãnh đạo cho biết mức tăng này dự kiến sẽ đi kèm với biên lợi nhuận gia tăng.

Vốn lưu động: Tài sản hợp đồng và các khoản phải thu tăng lên trước chu kỳ giao hàng và thu tiền dự kiến trong quý 4 của công ty. Hàng tồn kho giảm trong quý 3 sau những thay đổi trong phương thức đặt hàng vật tư.

Các chương trình quân sự: Sự suy yếu tập trung ở hoạt động sửa chữa linh kiện liên quan đến huấn luyện. Ban lãnh đạo cho biết các nền tảng vận tải cánh bằng vẫn duy trì tích cực và giữ nguyên triển vọng tăng trưởng cả năm ở mức hai chữ số thấp cho toàn bộ thị trường người dùng cuối Quân sự và Trực thăng.

Triển vọng CFM56: Ban lãnh đạo cho biết khoảng hai phần ba số động cơ đang vận hành vẫn chưa trải qua lần vào xưởng bảo dưỡng thứ hai. Công ty ghi nhận nhu cầu của khách hàng vẫn tiếp tục duy trì và công suất bảo dưỡng còn hạn chế, đồng thời hiện chưa chịu tác động từ tỷ lệ ngừng hoạt động đội bay được thảo luận trong cuộc gọi.

Toàn văn cuộc gọi báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to StandardAero's Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Rama Bondada, Senior Vice of Strategic Finance and Investor Relations. Please proceed.

R. Bondada

Thank you. Good afternoon, everyone. Welcome to StandardAero's Third Quarter 2026 Earnings Call. I'm joined today by Russell Ford, our Executive Chairman; Paul McElhinney, our Chief Executive Officer; and Dan Satterfield, our Chief Financial Officer.

Alongside today's call, you can find our earnings release as well as the accompanying presentation on our website at ir.standardaero.com. An audio replay of this call will also be made available, which you can access on our website or by phone. The phone number for the audio replay is included in the press release announcing this call.

Before we begin, as always, I would like to remind everyone that today's earnings release and statements made during this call include forward-looking statements under federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission, including in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025. We assume no 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.

Additionally, during today's call, we will discuss certain non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted free cash flow and net debt to adjusted EBITDA leverage ratio. In definition and reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings release and in the appendix to the earnings slide presentation on our website at ir.standardaero.com.

Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures.

And with that out of the way, I would now like to turn the call over to Russ. Russ?

Russell Ford

Thank you, Rama, and thank you to everyone for joining our call today. As you know, this is my final earnings call following my tenure of StandardAero, CEO and I'm especially pleased to be joined today by Paul McElhinney, who assumed the role of CEO in October. Paul will be sharing his perspectives on the business and our strategic priorities later in today's call.

So let me begin on Slide 3 with an overview of our third quarter performance. StandardAero delivered another strong quarter with continued revenue growth across all 3 major end markets, 30% year-over-year adjusted EPS growth, 15% adjusted EBITDA growth and 130 basis points adjusted EBITDA margin expansion to 14.4%, underscoring the resilience of our diversified portfolio and the progress of our operational initiatives.

We intentionally built StandardAero with the breadth and resilience to sustained double-digit earnings growth over time. Even when individual end markets or engine platforms experience periods of slower growth. This balanced portfolio allows us to navigate different market cycles while capturing growth opportunities across the enterprise.

Looking at our end markets. Commercial Aerospace revenue grew at a high single-digit rate year-over-year, excluding the impact of lower pass-through materials revenue. Demand across the commercial aerospace engine aftermarket remains robust with visibility into our customer demand and revenue forecast now extending into 2028.

Aircraft utilization remains strong, industry MRO capacity continues to be constrained and the growing maintenance requirements of the global fleet are supporting sustained demand for our services. Our growing backlog and sustained bookings momentum provide meaningful visibility and reinforce our confidence in the long-term outlook.

Business Aviation grew 7.4% year-over-year supported by demand across the midsized and super midsized engine platforms we serve. We continue to benefit from the strategic investments we've made to expand our capabilities and capacity, particularly on the HTF7000 platform.

Military and helicopter revenue increased 7.2% year-over-year supported by continued demand across our military engine portfolio and the ongoing ramp of previously awarded programs. As we've discussed in prior quarters, increasing defense spending, higher operational tempo and a growing focus on aircraft readiness and sustainment are creating attractive long-term opportunities for StandardAero. While the timing of certain military engine and component inputs have created near-term challenges, particularly within our Component Repair Services segment, we remain confident in the attractive long-term growth opportunity in this end market.

Stepping back from the quarter, I'm particularly pleased with the progress we've made on the strategic investments that we've discussed with you over the past several years. Our LEAP and CFM56 DFW programs reached profitability earlier this year, and we continue to move down the learning curve as these programs scale. Our CF34 and business aviation investments are supporting growth and margin expansion, and our Component Repair Services business continues to expand its repair capabilities across the broader enterprise. These strategic investments were made with a long-term view, and we're beginning to see the benefits in our operating performance. I believe we are still in the early stages of realizing their full potential.

As I reflect on my time leading StandardAero, what I am most proud of is not just what we have accomplished, but the people and the culture that have made it possible. We built a company with a process-oriented culture where we hold ourselves accountable, honor our commitments and take tremendous pride in serving our customers. That culture has been the foundation of our success enabling us to consistently execute our strategy of building leading positions on attractive engine platforms, investing ahead of demand continuously improving our operations, deploying capital with discipline and creating long-term shareholder value.

I firmly believe that our people and culture are among StandardAero's greatest competitive advantages and will remain central to our success for many years to come. I've worked closely with Paul for more than 7 years, and I have tremendous confidence in his ability to lead StandardAero through its next phase of growth. He brings deep engine MRO experience an exceptional understanding of our business and industry and a shared commitment to the values, disciplined execution and customer relationships that have defined the 115-year history of StandardAero.

Paul also brings a fresh perspective and new ideas on how we can build upon the strong foundation already in place. I believe the opportunities ahead of StandardAero are significant. Our markets remain attractive. Our investments are delivering results, and our strategy continues to provide a clear path to sustained double-digit earnings growth and long-term shareholder value creation. I cannot think of a better leader than Paul to guide StandardAero through this next chapter.

I want to express my sincere gratitude to our employees around the world for their dedication and commitment to our customers for the trust they place in us and to our shareholders, for their continued support. It's been an extraordinary privilege to lead this company, and I cannot be more proud of what our team has accomplished together. With that, it's my great pleasure to turn the call over to Paul McElhinney, our new Chief Executive Officer, who will walk you through our strategic priorities and outlook. Paul?

Paul McElhinney

Thank you, Russ, for those kind words and more importantly, for your extraordinary leadership and everything you have done for StandardAero. Having worked closely with Russ and the team I've had the opportunity to see firsthand the culture, customer relationships and operating capabilities that make this company so special.

I've spent more than 30 years in the aerospace and industrial aftermarket. About half of that time in the aviation finance and leasing space and half on the industrial side, including leading GE Aerospace's global aftermarket business and also leading GE Vernova's global aftermarket business. That experience gives me strong conviction in StandardAero's differentiated position, a purposefully diversified portfolio, combined with compelling long-term opportunities across all of its major end markets. Having served on the Board for more than 7 years, I have been closely involved in the company's strategic direction. In many ways, I believe we are only beginning to capture the earnings potential of those investments and decisions.

I believe strongly in the strategy that Russ and the team have established. My focus is on building upon that foundation, accelerating execution and converting the significant opportunities ahead of us into sustained earnings growth, cash generation and long-term shareholder value.

Turning to Slide 4. Our first strategic priority is LEAP, which is an engine program that I have personally been involved with for well over a decade as part of my earlier GE career. I believe LEAP represents 1 of the most compelling long-term growth opportunities in the aerospace aftermarket. LEAP and the opportunity it represents for StandardAero were among the key reasons I was excited to take on the CEO role.

StandardAero's premier MRO authorization, its investments in capacity and technical capabilities and its strong customer relationships have established what I believe is a highly attractive competitive position in the LEAP aftermarket. Importantly, we believe this growth opportunity is still in its early stages.

As Russ alluded to, we reached profitability on the program earlier this year. And our focus now is on continuing to improve productivity, expand our Component Repair Capabilities and increase margins as volumes scale. We remain on track towards our objective of exceeding $1 billion in annual LEAP revenue by the end of this decade, with an opportunity to grow the several billion dollars as the aftermarket matures into the 2030s.

Our next priority is productivity and operational execution. Over the past several years, StandardAero has made significant investments in its facilities, capabilities and workforce to support the next phase of growth. As those investments mature, we see a substantial opportunity to drive higher throughput, improve turnaround times and realize greater operating leverage across the business.

The completion of our Winnipeg facility expansion marks another important milestone in supporting the continued growth of our CF34 business. Equally important is our continued emphasis on operational excellence and continuous improvement across our facilities. We have leading positions on attractive engine platforms. Our focus now is on leveraging those positions and investments to drive sustained productivity gains, margin expansion and stronger cash flow.

Our next priority is component repair services, where I see significant opportunity to expand our capabilities increased, repair content and drive attractive long-term growth. CRS is a strategically important business for StandardAero, not only because of its attractive economics, but also because of the value it brings to our customers and our broader engine services operations. By developing new repair capabilities and increasing internal repair capture, we can lower material costs, improve turnaround times and deliver more cost-effective solutions to our customers. We will continue investing in new repair development across both the engine platforms we service and the broader aerospace market.

The acquisition of Unified Turbines is a good example of this strategy in action, adding differentiated technical capabilities with meaningful opportunities for both revenue and cost synergies over time. I have strong conviction in the long-term growth and margin opportunity in our repair business because of the tangible value it delivers to customers and the broader StandardAero network.

Our final priority is disciplined capital deployment, which will be an important area of focus for me as the CEO. StandardAero has a strong track record of generating attractive returns through organic investments, strategic acquisitions and expanding our capabilities on the engine platforms we serve. We see meaningful opportunities to continue to deploy capital in these areas, particularly through strategic M&A that strengthens our competitive position and enhances our long-term earnings power.

At the same time, we believe share repurchases represent an attractive use of capital when our stock is trading at a meaningful discount to our assessment of intrinsic value. Today, we are announcing an increase to our share repurchase authorization, taking it to over $1 billion. In conjunction, we are also announcing a $350 million accelerated share repurchase. We have already repurchased $160 million year-to-date, and after completing our ASR, we will have $500 million remaining on the authorization. This decision reflects our confidence in StandardAero's long-term outlook, the cash-generating ability of our business and our belief that repurchasing shares at current levels represents a compelling opportunity to create value for shareholders.

Our approach is not to favor 1 form of capital deployment over another. It is to allocate capital where we believe we can generate the greatest long-term return for shareholders while maintaining appropriate balance sheet and financial flexibility. Based on our current assumptions, we expect to end the year at net leverage below 2.7x after these actions, thus preserving meaningful flexibility to pursue additional attractive opportunities.

Ultimately, our objective is straightforward to translate StandardAero's attractive growth opportunities and increasing cash generation into sustained long-term per share value creation.

Finally, turning to our outlook. I'm pleased that we are once again raising our full year 2026 guidance. We now expect revenue growth of approximately 9% year-over-year versus our previous guide of 6%. Adjusted EBITDA growth of 13% versus 11% and adjusted EPS growth of 26% versus our previous guide of 23%. We are reiterating our adjusted free cash flow guidance, which represents a 36% growth year-over-year.

Our improved outlook reflects the strength of underlying aftermarket demands, the progress we are making on our growth programs and continued productivity improvements across the business. Stepping back, I want to reinforce that StandardAero's long-term investment thesis remains firmly intact. We operate in attractive, structurally growing markets. We have leading positions on critical engine platforms, differentiated repair capabilities and a diversified portfolio that provides resilience across market cycles.

Our opportunity is to continue converting those advantages into sustained double-digit earnings growth, improving free cash flow generation and delivering attractive returns on invested capital. The strategy has proven. The opportunities ahead are significant, and my focus is on execution and delivering consistent long-term value creation for our shareholders.

With that, I'll turn the call over to Dan to walk you through our financial results and guidance in greater detail. Dan?

Daniel Satterfield

Thank you, Paul. I'll begin on Slide 5 with a brief overview of our third quarter financial results, focusing on the key drivers of performance across our segments, cash flow and balance sheet.

For the third quarter, StandardAero generated revenue of $1.56 billion, an increase of 4% year-over-year with continued growth across both operating segments. Adjusted EBITDA increased 15% to $225 million with margins expanding 130 basis points year-over-year to 14.4%. Our continued earnings growth reflects improving productivity across the business, particularly in Engine Services, increased availability and utilization of used serviceable material or USM; and continued progress down the learning curve on our LEAP and CFM56 DFW growth programs.

In addition, the elimination of low to no-margin pass-through revenue continues to benefit our reported margin profile, yet creates a temporary reduction in top line growth as anticipated.

Net income increased 36% to $93 million, while adjusted diluted EPS grew 30% to $0.39, reflecting stronger operating earnings and the benefit of share repurchases.

Turning to Engine Services on Slide 6. The segment delivered another strong quarter with revenue increasing 3.5% year-over-year and segment adjusted EBITDA increasing a robust 24% to $205 million. Margins expanded 250 basis points year-over-year to 15%, reflecting several factors. First, continued productivity improvements across our engine programs and across all 3 end markets. Second, LEAP and CFM56 DFW, both of which reached profitability earlier this year, and continue to progress down the learning curve. Third, increased availability and utilization of USM across several commercial platforms, which has supported better material economics and operating performance, and fourth, the continued elimination of low to no-margin pass-through material revenue from restructured customer contracts.

Taken together, these factors are driving meaningful improvements in the underlying profitability of Engine Services, and we remain encouraged by the progress we are making.

Moving to Component Repair Services on Slide 7. Revenue increased 7.3% year-over-year to $189 million, supported by continued strength in commercial aerospace repairs, particularly on the CFM56, GTF and V2500 and CF34 platforms as well as growth in our Aero derivative business.

Segment adjusted EBITDA was approximately $49 million with margins of 25.8%, reflecting unfavorable mix and the timing of certain military programs. In particular, we continued to experience delays in material inputs and repair activity on select military platforms, especially training-related programs. We also experienced some residual costs associated with the ramp of new labor capacity that dragged over from the last quarter.

Despite these timing-related headwinds, our Commercial Component Repair business continues to grow supported by strong demand and an expanding portfolio of repair capabilities. We remain confident in the long-term growth and earnings potential of CRS, although the timing of a recovery in military-related activity remains a factor we are closely monitoring.

Turning to free cash flow on Slide 8. We generated approximately $100 million of adjusted free cash flow in the third quarter compared with $50 million in the second quarter. This improvement was supported by higher earnings and continued progress on working capital management, including the benefits of our company-wide supply chain initiatives and improved material planning.

Net working capital represented a use of approximately $37 million during the quarter, while capital expenditures were approximately $30 million. We continue to focus on improving working capital efficiency as our growth programs scale particularly by reducing turnaround times, optimizing inventory levels and improving the timing of material purchases.

We remain on track to deliver our full year adjusted free cash flow guidance of $270 million to $300 million, supported by improving operating earnings and our continued working capital initiatives even as supply chain constraints persist.

Turning to our balance sheet on Slide 9. We ended the third quarter with net debt to adjusted EBITDA of 2.66x and compared to 2.9x in the third quarter last year. As Paul discussed, the Board has increased the share repurchase authorization to $1.01 billion, of which year-to-date, we have purchased $160 million of shares, including $50 million in the third quarter. This leaves $850 million under the authorization.

In addition to the authorization increase, we are entering a $350 million ASR. We will have $500 million left on the authorization after completing the ASR.

Based on our guidance, we expect to end the year well within our long-term target range of 2 to 3x, which leaves us with substantial flexibility to fund organic growth investments and M&A while practicing disciplined capital deployment.

Finally, turning to Slide 10. We are raising full year revenue guidance by $148 million at the midpoint to a range of $6.525 billion to $6.645 billion with this increase reflected in our updated revenue guidance for the Engine Services segment. This implies an 8.6% year-over-year growth at the midpoint.

We are also raising our adjusted EBITDA guidance to a range of $905 million to $920 million or 13% year-over-year growth at the midpoint. As a result, we are raising our adjusted EPS guidance to a range of $1.57 to $1.62. This increase which implies 26% year-over-year growth is supported by higher earnings and a lower tax rate and share count.

We are reiterating our adjusted free cash flow guidance of $270 million to $300 million. From an end market perspective, we continue to expect commercial aerospace growth in the low double digit to mid-teens range once the pass-through material revenue that was eliminated is normalized. We expect Business Aviation growth in the high single-digit to low double-digit range and military and helicopters growth in the low double-digit range. This quarter is another strong demonstration of the resilience and earnings power of the StandardAero business model.

We have deliberately built a diversified portfolio across engine platforms, end markets and customers, each with distinct growth drivers and complementary operating cycles. Ultimately, what sets StandardAero apart is our ability to consistently compound earnings and free cash flow over the long term. We believe that sustained enterprise-wide performance rather than short-term fluctuations in any single platform or end market is the true measure of our earnings power and long-term shareholder value creation.

With that, I'll turn it back over to Paul.

Paul McElhinney

Thank you, Dan. Before we open the call for questions, I want to leave you with a few final thoughts. As I mentioned earlier, I'm incredibly excited about the opportunity ahead for StandardAero. We have an exceptional portfolio of engine platforms, strong customer relationships and the team with the technical expertise and operational capabilities to capitalize on the long-term growth in the aftermarket.

I also want to express my sincere appreciation to our talented team of more than 8,000 employees around the world whose dedication, expertise and unwavering commitment to our customers are the foundation of our success. We've made significant investments over the past several years, and we are now beginning to realize their benefits.

My focus will be on continuing to execute against our strategy, accelerating growth where we see the greatest opportunities and translating those investments into sustained earnings growth, strong cash generation and attractive returns for our shareholders.

I also want to take 1 final opportunity to recognize Russ. On behalf of our employees, our leadership team and our Board, thank you for your extraordinary leadership, your friendship and everything you've done for this company. I am personally grateful for your trust and support, and I look forward to continuing to work closely with you.

Finally, to our shareholders and the broader investment community. I look forward to meeting many of you personally over the coming months, hearing your perspectives and sharing more about our vision for StandardAero's future. Thank you all again for joining us today. And with that, operator, we will now open it up for questions.

Operator

[Operator Instructions] Our first question comes from the line of Ken Herbert with RBC Capital Markets.

Phần hỏi đáp

Kenneth Herbert

Let me congratulate Russ and Paul on the transition and congratulations Russ and good luck on retirement. First, maybe if I could, just to -- just -- obviously, you're not talking about 2027 in detail yet. But how do we think about visibility in Engine Services, in particular, just with the increasing concern around what could be slower demand for engine maintenance activity as a result of lower capacity growth or higher fuel prices. Just can you talk at all about what you're seeing in terms of backlogs across the MRO shops? And if you've seen any signals yet that we could see any softening of demand in the next year?

Daniel Satterfield

Yes. So listen, as we've said last quarter, we've seen 0 impact from the macro on our business. No meaningful changes observed in bookings. And as a matter of fact, backlog has increased since the complex began. And it's true in the comments we made on the call, we've got clear visibility all the way through early 2028, and revenue is spoken for in large part for 2027. Why is that? There's scheduled engine maintenance. We've got customer deposits on hand. We have, as you know, often, the flight cycle, hour reporting on these engines, we know when they're coming in. And again, our long-term arrangements stretch out many years.

So that's providing the visibility. And we would not call a macro event impact on the business at this time.

Paul McElhinney

And Ken, I'll just add a couple of comments. First of all, thanks for the welcome. I've spent a lot of time even in this first 4 weeks, I've spent a lot of time talking to customers and our OEM partners. Really, nobody is seeing any impact on demand, just like Dan had said. So our visibility is actually quite good through the 2028. And so no change in customer behavior no impact on inductions and planned inductions. So nothing that we are seeing or hearing that would change anything.

Kenneth Herbert

Okay. That's great. And if I could, just on supply chain and material availability has been a major headwind as you think about the revenue growth and turnaround times. What are you seeing on material availability or material flow as it relates to the LEAP or the CFM56? And are you seeing improvements there that might also be sort of a tailwind as we think about confidence in the next year?

Daniel Satterfield

Yes, Ken, thanks. Listen, first of all, LEAP had a great quarter. A lot of our profitability growth is coming from both LEAP and CFM56 and Dallas having fantastic quarters just as we called it, right? Last quarter, they hit profitability. Now they're ramping up, and so we're really proud of that.

Material availability for LEAP and any of all of our programs continues to be constrained. If I had to call it, probably LEAP might be in a little bit better shape than the other programs. Now of course, there's no USM available on LEAP where CFM56 can take advantage of that, although those are constrained as well.

The supply chain environment, we're saying, listen, it's kind of the way it's been all year. But LEAP is probably benefiting from a little bit of better availability than other programs.

Operator

Our next question comes from the line of Myles Walton with Wolfe Research.

Myles Walton

Best wishes Russ, and welcome, Paul. You raised the Engine Services rev guide by about $170 million, about $50 million of that, I guess, is the low-margin pass-through. What was the bigger source of the uplift aside from the pass-through? And then just looking at it sequentially, it does look like a pretty steep ramp sequentially. Is there a lot that has to happen in terms of USM availability remaining really high or other aspects?

Daniel Satterfield

Myles, it's Dan. And thanks for the call out. I think you're referring to the earnings growth you said, rev. Earnings growth is fantastic, right? 15%, 250 basis points, sorry, 24% on Engine Services, 250 basis points. So that came kind of equally LEAP and CFM56, like I said earlier on Ken's comments, that, together with the pass-through impact is about a little bit less than half of the total 250 basis point improvement. Those 2 programs coming down the learning curve and achieving on their milestones.

The rest of it is kind of split equally between the USM opportunity and general productivity. Now on USM is the following. So I wouldn't say that USM is generally better, more available market wise. We had some great opportunities in Q3 that we took advantage of. We have a dedicated team out there sourcing USM. And at some of our better platforms, they did a really great job on USM.

So those were really great lifts for the company. We'll continue to take advantage of USM as it's opportunistically available, and we'll continue to see the LEAP and CFM Dallas programs become more profitable.

Myles Walton

Dan, I was actually asking about revenue. So I think in the full year guidance of revenue, you did raise ES revenue by $170 million. And I think the pass-through was lower by about $50 million. So there's $120 million of business revenue raised there. Could you just tell us what was that higher outlook coming from?

Daniel Satterfield

Yes. It's the -- on the commercial side, we're seeing fantastic growth primarily on LEAP and CFM56. CF34 is having a fantastic year as well and the turboprop programs. All of those are leading to that. The material pass-through number we're taking down just a little bit, but that really is not impacting the revenue guide at the revenue guide is coming up, and it's coming up with incremental margins.

Operator

Our next question comes from the line of David Strauss with Wells Fargo.

David Strauss

Congrats to both. Dan, I just wanted to ask about the some of the moving pieces on working capital year-to-date and what to expect in the fourth quarter, specifically looking at the big increase in receivables year-to-date and then I think inventory has been a source, but contract assets have been a drag. If you could just walk through those and what to expect in the fourth quarter?

Daniel Satterfield

No, great question. Thank you. First of all, we're really proud of the $99 million, $100 million of free cash flow in the quarter, up from $50 million in Q2. Within the working capital build of only $37 million inventories come down, right? It came down big in Q1. We kind of held it flat in Q2. In Q3, it's a nice decrease. That is a direct result of the effort we're putting into material ordering practices.

Contract assets did increase. But this is becoming clear that this is our cycle a big increase before the big shipment unwind in Q4, just like we've achieved last quarter -- sorry, last Q4. Where Q1 is a build. Q2 is kind of a decline. Q3 is a big build right prior to the Q4 big shipment period. So this is a sort of expected increase in contract assets along with build accounts receivable. Those are up as well.

Also following kind of a similar pattern where Q1 goes up. Q2 is a big collections quarter. Q4 climbs and then Q4 is a big collections quarter, all on the way to the cash flow guide that we've given you midpoint $285 million.

So nothing really unusual here, except we're reaping the benefits of our sales and operation planning, discipline and material practice -- material ordering practices.

David Strauss

Okay. And on the license agreement, you've talked about the EBITDA contribution over the next couple of years. What can we expect from a revenue standpoint, how much that's going to add in revenue?

Daniel Satterfield

Yes. We haven't called that. What we have called on the license expansion. By the way, we're super excited about that. Those are new variants of engines that we already serve. It's about $25 million next year, it's going to be going to a total of about $30 million of earnings kind of on normal ES margins, so you can reverse engineer the revenue figure.

Operator

Our next question comes from the line of Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu

Congrats again, Russ, and congratulations, Paul as well. Maybe just to follow up on just the Q4 margins implied for Engine Services. I guess, how do we think about the implied margins of about 14% versus the 15% in Q3 despite sales accelerating to low teens. Can you walk us through some of the puts and takes on the relatively high sales growth versus the margin disconnect there and what you're assuming for the material pass-through.

Paul McElhinney

Sheila. Good question. It's primarily the USM opportunity that we took advantage of here in Q3. I'd like to say that USM is going to be sort of an increasing entitlement that we have on a very consistent basis. Unfortunately, as you know, it's not like that. So we had a great opportunity on USM in Q3 that I'm not going to call for Q4 being looked at.

And then we're also having an increase of the ramp program, right? So LEAP and DFW, CFM56 DFW, as you know, are dilutive. There'll be higher revenues of those in Q4 as those programs ramp, and so that will provide some dilution as well.

Sheila Kahyaoglu

Got it. That's super helpful. And then maybe if you could just talk about what's going on with military. I feel like this is the second quarter in a row where military is coming a little bit lighter. I guess how do we think about what's driving some of that slowness within the military training platforms and how you're thinking about the pickup in Q4 and into '27?

Daniel Satterfield

Yes. So the military, in particular, on the component repair side, the inputs have fallen significantly. And we are seeing that this is an impact of the Middle Eastern conflict. And we're calling it really not a shift in funding but a shift in outlays, right? So as engines remain in theater, for longer and for operational readiness of the conflict maintenance, in particular, on some of the training platforms that make up a large part of component repair military platforms are suffering. Not forever, as you know, the engine maintenance is not discretionary. It will come back. Although I don't think this is going to be something -- and I'm not going to call how long the conflict is going to last. But as long as it does, we're going to see some shift between outlays between programs.

Now you're not seeing that as much on the total military end market, and that has to do with the Q2 announced new business that we're receiving on NATO platforms unrelated to the Component Repair business.

Operator

Our next question comes from the line of Seth Seifman with JPMorgan.

Seth Seifman

can you hear me? Sorry. Yes, Russ congrats, and it's been a pleasure. Paul, congrats as well. I wanted to ask just starting off on sales from Component Repair into Engine Services, as Engine Services has grown, we haven't really seen growth in the internal sales. When would you expect that to pick up? And what does the trajectory of that look like in the coming years?

Daniel Satterfield

Yes. Thanks. So that's the in-sourcing effort that we've talked about. That continues, right? So as you know, when we launched this in-sourcing activity, the lower-hanging fruits we've taken advantage of. Now there's additional work to do. And there was a business, a discrete business piece that we lost that is going to impact that in-sourcing impact. But we're continuing to proceed on it. And in Q3 it was up 1% versus the prior year.

Russell Ford

And Seth, we talked about it last quarter, it was the "near contract." We're setting the parts for the part repair side of it, but we no longer run that contract on the ES side. So that's parts that are now reported as external sales. So that affects the in-sourcing number.

Seth Seifman

Okay. Okay. Excellent. And then maybe as a follow-up, Paul, when you talk about making it a priority to be the leader in LEAP MRO over the next few decades. What does it take to be that leader. Is there do you have kind of the capacity for that? Is that something that will require more capacity over time? Is there something about the customers that you've gathered thus far or see potential to gather in the future? What's going to sort of differentiate StandardAero and allow you to have that leadership position.

Paul McElhinney

Thanks, Seth. Yes. So interestingly, as I said in the comments earlier, I've spent probably 15 years in my career on the other side of the table in LEAP. So LEAP was 1 of the big program launches that we had when I was running the aftermarket. So I was heavily involved in designing the aftermarket strategy for LEAP from a GE perspective and a Safran perspective.

So honestly, it's 1 of the real reasons I thought about taking the job as CEO. This is my opinion, this will become the most successful commercial engine in history. It's already proving that in orders. We've made significant investments to prepare for LEAP volume. We're well on our way and tracking closely to what we've told you and others for some time, which is we turned profitable this year. We see a very clear site to $1 billion of revenue by 2030.

The pipeline is quite strong. A lot of demand, constrained supply, constrained capacity. So I'm very confident, firstly, about the overall LEAP volumes that are coming for the industry. And then inside that Seth, I would say I'm particularly confident about the positioning of StandardAero and what we can do as a partner to CFM and what we can do for our customers, and that's proving itself every day as we win additional contracts.

Operator

Our next question comes from the line of Ronald Epstein with Bank of America.

Unknown Analyst

This is Andrew Steinhart, on for Ron. And congrats, Russ, on your retirement and Paul on the transition. I wanted to ask if you guys could quantify the impact of the pass-through eliminations on commercial revenue in Q3. What would underlying growth be excluding the pass-through eliminations?

And for the full year, if you could ballpark commercial end market growth accounting for those eliminations, that would be helpful, too.

Daniel Satterfield

That's right. Yes. So commercial was what, 1.3% growth, excluding that it's high single digits, that you'll see that on the page. And then the -- for the full year commercial growth, we're calling high teens ex material takeout.

Unknown Analyst

Could you quantify it with the takeout?

Daniel Satterfield

It's right. So we think -- we called the material take out for the full year, we were saying $350 million to $400 million. It's now going to be closer to $300 million. As you recall, in Q1, it was a minimal impact. And then Q2 was significant and Q3 and Q4 are going to be right in line with expectations. So we kind of lost our quarter, and we're seeing the full material takeout impact instead of $350 million to $400 million would be closer to $300 million for the full year.

Unknown Analyst

Got you. Okay. And -- just on CRS margins, can you talk about how the work migration efforts have progressed since last quarter?

Daniel Satterfield

Yes. There's a great opportunity there that between that we launched between our -- some of our back shops and the Cincinnati site, where capability and on that repair was already in place. So that continues to occur. And there are even more opportunities out in the future that we're going to take advantage of across our -- we have 50 sites in total at StandardAero. Most of the MRO sites have what are called back shops that do component repair for the engines in the shop, right, for a quick turnaround. When these back shops have additional capability and capacity, that's an opportunity for the overloaded CRS sites to offload, and we're taking full advantage of that.

Paul McElhinney

And Andrew, this is Paul. Just a couple of comments. Firstly, CRS is a very strategic part of the business. I've spent a lot of my career running repair businesses in the aftermarket. So quite apart from the fact that they are financially very attractive for the company. Their impact on customers is very important and very impactful to their turnaround times, lowering the cost of maintenance. So it's a key part of our offering to our customers.

In the first 3 weeks here, I've spent time with our repair teams in both Dallas and Cincinnati, which are 2 of our larger repair locations. Demand is not an issue here. So commercial demand, very robust, I would say. The entire focus of the team is on internal execution increasing and improving throughput. You can expect me to be spending quite a bit of time with that team, and I look forward to sharing some of the results of the work we're doing here improving that as we go forward.

Operator

Our next question comes from the line of Kristine Liwag with Morgan Stanley.

Kristine Liwag

Congrats, Russ. We'll miss you on the earnings call, and welcome Paul. I guess, Paul, given your involvement in shaping the LEAP's aftermarket strategy in your prior role, how do you assess StandardAero's competitive position today? You must have seen good things for you to join the company? And are there any areas you want to invest in more or expand capabilities to be able to capture more market share or a greater share of the aftermarket economics as the platform matures.

Paul McElhinney

Thanks for the question, Kristine. So the investments we've -- the company has positioned itself extraordinarily well for LEAP. And you're right, LEAP is near and dear to my heart as an engine product. And it's exciting for me to now sit on this side of the table and be able to talk to customers about how we support them and their needs. We are quoting shop visit slots all the way out to the mid-2030s at this stage, really robust demand I like where StandardAero is competitively. We will continue to invest. You can expect us to continue to invest in repair development. You can continue to expect us to work on attractive commercial offerings for our customers that allow them to lower their maintenance costs over time.

But I feel really good about LEAP, and I feel good about what that will be candidly for StandardAero for 3 decades or more to come.

Kristine Liwag

Great. Super helpful. And if I could add a second question. On the 4Q CRS margins, implied for the quarter will be 27.5%, so sequential increase versus this quarter. So how do you -- how much visibility do you have into that recovery? And is that sequential margin expansion dependent on the return of the military programs you guys had previously discussed?

Daniel Satterfield

Yes. So thanks, Kristine. So the decline in margins that we called out had to do with some 2 things, really, the residual effects from the labor ramp. And don't forget, the commercial business at CRS is booming. A lot of strong volumes there, their volumes are being somewhat depressed because of the military issues that we mentioned before due to the outlay change as a result of the Middle Eastern conflict. What that has as an impact on the margin rates is that military business is a pretty good business, losing that has a negative mix impact.

And then we have some residual effects from the labor ramp on the commercial business, which is quite strong, that we're working through that we have a better line of sight to recovery than on the military side, which is dependent on the macro.

Operator

Our next question comes from the line of Gavin Parsons with UBS.

Gavin Parsons

Russ and Paul, congrats to you guys both. Paul, I guess sort of echoing Seth's question a little bit on CRS, which you brought up as a priority I've talked about. I mean -- it's a smaller growing business, but 1 that smaller business, but 1 that I would think would have more idiosyncratic growth opportunities. So I've been a little surprised that 1 has grown slower than ES for a couple of years now. So just any insights you can shed on that and how you might quantify the growth opportunity there over the medium term would be helpful.

Paul McElhinney

Thanks for the question, Gavin. So CRS is very strategic for me. A very important part of our customer tool set and the offerings that we can give them. I would say, right now, I see a lot of demand. I see good backlog, and frankly, I'll spend my time on working with the teams and accelerating some of the efficiency productivity throughput turnaround time activity that has already that's already going on in the company. We have a lot of capacity across the network.

Dan talked about the fact that we've been involved in this work transfer from Cincinnati to some of the other back shops. That's complicated work, frankly. It's not something that happens overnight, but it is something that I intend to continue to focus on. So I think you should expect to see CRS continue to be a big piece of the business in terms of strategic importance both to us and to our customers, and I intend to spend a fair amount of time with the team helping them get to where we need to be with the offerings.

Gavin Parsons

And then on the military side, I think you guys do have a lot of exposure to deployed assets, I'm thinking like C-130, V22, I mean any way to help us frame your exposure to those versus, say, the training platforms where the drag is today, rough order of magnitude?

Paul McElhinney

Yes. So we're really -- those are our fixed wing transport aircraft that we support, and they're in good shape. When we talk about the military issues, it is primarily related, in large part, to these training programs that are -- the demand is not going away. It will definitely come back. These are programs that the U.S. Air Force needs more pilots on. As far as the C-130 or the and the [indiscernible] or the 1107 programs, those are looking good. And that's why we're having still a strong military guide low double digits for the full year.

Operator

Our next question comes from the line of Andre Madrid with U.S. Bancorp.

Unknown Analyst

This is Ned Morgan on for Andre. Russ, congrats on a great tenure as CEO, and Paul, we look forward to working with you. As we start thinking about '27, I understand you're not going to provide any guidance today, but are you willing to rank the growth outlook across commercial business aviation and military?

Daniel Satterfield

Yes, the 2027 guide, we're going to give you better information on that out in February -- yes. It should be roughly about the same. I mean it's just the general growth of those end markets, right?

Unknown Analyst

Okay. And then another GE lowered a CFM56 outlook. Just curious on the puts and takes of that for you guys and what it means for you on the CFM56 platform.

Paul McElhinney

Yes. CFM56 a very strong platform for us. It's still actually quite early in the life cycle of that motor. So 2/3 of those engines have not even seen their second shop visit yet. So I think that you're going to see continued strength certainly in StandardAero on CFM56, a lot of customer demand for us, constrained capacity. But yes, as I look at that program, I see continued growth, and the retirement rate, which GE called to 1.5% to 2% of the fleet, and frankly, not having an impact on the demand that we're seeing for slots from our customers.

Daniel Satterfield

And Nick, keep in mind, the OEMs, when they refer to their shop visits, it's shop visits with 500 labor hours or more. So it doesn't include module swaps, exchanges, those type of things that we do quite a bit of.

Operator

And we have reached the end of the question-and-answer session. And I would like to turn the floor back to Paul McElhinney for closing remarks.

Paul McElhinney

Thanks very much, and thank you all for joining us and for your continued interest in our company, and we look forward to sharing more details with you on our next call.

Operator

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.