Financial Performance - Net sales increased by 26.9% to $123123 thousand in Q2 2025 compared to $97015 thousand in Q2 2024, with organic growth of 11.3%[42] - Gross profit increased by 39.3% in Q2 2025 due to a positive mix of higher margin products, value-based pricing, and optimized productivity[42] - Adjusted EBITDA increased by 34.5% to $47118 thousand in Q2 2025 compared to $35031 thousand in Q2 2024, with an Adjusted EBITDA Margin of 38.3% versus 36.1%[42] - Net income increased from $7641 thousand in Q2 2024 to $16713 thousand in Q2 2025[42] - The company expects to deliver 1%-3% of revenue growth annually through new product introductions[19] Portfolio and Market - In 2024, Commercial end market accounted for 42% of revenue, Defense 24%, Non-Aviation 7%, and Business Jet & General Aviation 27%[24] - Aftermarket accounted for 55% of 2024 revenue, while OEM accounted for 45%[24] - The A320 Family and 737 Family platforms represent 7% and 6% of annual sales respectively[36] - YTD Q2 2025, total sales increased by 11% compared to YTD Q2 2024, with Commercial up 13% and Defense up 24%[40] Outlook - The revised full year 2025 outlook projects net sales between $486 million and $494 million, and adjusted EBITDA between $184 million and $187 million[52] - The revised full year 2025 outlook projects adjusted EBITDA Margin of approximately 38.0%[52]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides Loar Holdings Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Loar Holdings Inc.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section presents the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Total Assets | $1,498,223 | $1,450,618 | | Total Liabilities | $369,490 | $362,113 | | Total Equity | $1,128,733 | $1,088,505 | | Cash and cash equivalents | $103,342 | $54,066 | | Accounts receivable, net | $71,945 | $63,834 | | Inventories | $99,883 | $92,639 | | Retained earnings (accumulated deficit) | $11,469 | $(20,560) | [Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section details the company's condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $123,123 | $97,015 | $237,782 | $188,859 | | Cost of sales | $56,924 | $49,489 | $111,877 | $96,900 | | Gross profit | $66,199 | $47,526 | $125,905 | $91,959 | | Operating income | $27,317 | $22,188 | $53,461 | $43,545 | | Interest expense, net | $6,481 | $10,636 | $12,940 | $28,370 | | Income before income taxes | $20,836 | $9,907 | $40,521 | $13,530 | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Basic EPS | $0.18 | $0.09 | $0.34 | $0.11 | | Diluted EPS | $0.17 | $0.09 | $0.33 | $0.11 | [Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section presents the company's condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Cumulative translation adjustments, net of tax | $(143) | $36 | $(399) | $204 | | Comprehensive income | $16,570 | $7,677 | $31,630 | $10,094 | [Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section outlines the company's condensed consolidated statements of equity for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Equity (in thousands) | Metric | Balance, Jan 1, 2025 | Net Income (Q1) | Stock-based Comp (Q1) | CTA (Q1) | Balance, Mar 31, 2025 | Net Income (Q2) | Stock-based Comp (Q2) | Exercise of Stock Options | CTA (Q2) | Balance, Jun 30, 2025 | | :--------------------------------- | :------------------- | :-------------- | :-------------------- | :------- | :-------------------- | :-------------- | :-------------------- | :------------------------ | :------- | :-------------------- | | Common Stock Amount | $936 | — | — | — | $936 | — | — | — | — | $936 | | Additional Paid-in Capital | $1,108,225 | — | $3,089 | — | $1,111,314 | — | $3,650 | $1,859 | — | $1,116,823 | | Retained Earnings (Accumulated Deficit) | $(20,560) | $15,316 | — | — | $(5,244) | $16,713 | — | — | — | $11,469 | | Accumulated Other Comprehensive Loss | $(96) | — | — | $(256) | $(352) | — | — | — | $(143) | $(495) | | Total Equity | $1,088,505 | $15,316 | $3,089 | $(256) | $1,106,654 | $16,713 | $3,650 | $1,859 | $(143) | $1,128,733 | - The company underwent a Corporate Conversion from a Delaware limited liability company to a Delaware corporation on April 16, 2024, in preparation for its public offering[26](index=26&type=chunk) - The company completed its initial public offering (IPO) on April 29, 2024, selling **12.6 million shares** of common stock and receiving approximately **$325.4 million** in net proceeds[27](index=27&type=chunk) - A follow-on offering on December 12, 2024, issued **3,852,500 shares** of common stock, generating approximately **$311.6 million** in net proceeds[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section provides the company's condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $52,163 | $17,895 | | Net cash used in investing activities | $(4,718) | $(3,841) | | Net cash provided by financing activities | $1,749 | $37,616 | | Net increase in cash and cash equivalents | $49,276 | $51,714 | | Cash and cash equivalents, end of period | $103,342 | $73,203 | | Interest paid during the period, net | $13,056 | $28,035 | | Income taxes paid during the period, net | $7,061 | $5,596 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, explaining accounting policies and significant financial events [Note 1. Organization](index=9&type=section&id=Note%201.%20Organization) This note details the company's corporate conversion, initial public offering, and follow-on offering activities - Loar Holdings Inc. converted from a Delaware limited liability company to a Delaware corporation on April 16, 2024, in preparation for its IPO[26](index=26&type=chunk) - The company completed its IPO on April 29, 2024, selling **12.6 million shares** of common stock and receiving approximately **$325.4 million** in net proceeds[27](index=27&type=chunk) - A follow-on offering on December 12, 2024, issued **3,852,500 shares** of common stock, generating approximately **$311.6 million** in net proceeds[28](index=28&type=chunk) - During the three months ended June 30, 2025, the company paid **$0.9 million** in fees related to a secondary offering by existing shareholders, from which it received no proceeds[29](index=29&type=chunk) [Note 2. Basis of Presentation](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation) This note describes the basis of financial statement presentation, including unaudited status, GAAP conformity, and recent accounting pronouncements - The financial information is unaudited and reflects all adjustments necessary for a fair presentation, prepared in conformity with U.S. GAAP[31](index=31&type=chunk) - Reclassifications were made to the prior year's condensed consolidated statement of cash flows to conform with the current year's presentation, with no changes to results of operations, financial position, or cash flows[32](index=32&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) effective for annual periods beginning after December 15, 2024, requiring enhanced income tax disclosures; the company is evaluating its impact[33](index=33&type=chunk)[34](index=34&type=chunk) - The FASB issued ASU 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026, requiring disaggregated income statement expense information; the company is evaluating its impact[35](index=35&type=chunk) [Note 3. Acquisition](index=10&type=section&id=Note%203.%20Acquisition) This note provides details on the acquisition of Applied Avionics, LLC, including purchase price allocation and pro forma sales impact - On August 26, 2024, the company acquired **100%** of Applied Avionics, LLC (AAI) for **$383.5 million** in cash[36](index=36&type=chunk) AAI Purchase Price Allocation (in thousands) | Asset/Liability | Amount | | :---------------------- | :------- | | Current assets | $7,169 | | Property, plant and equipment | $6,996 | | Intangible assets | $152,100 | | Goodwill | $219,301 | | Deferred income taxes | $2,026 | | Current liabilities | $(4,043) | | **Net assets acquired** | **$383,549** | - Goodwill is primarily attributable to the assembled workforce, expected synergies, and management's industry operating expertise, and is deductible for tax purposes[38](index=38&type=chunk) - Pro forma net sales for the three and six months ended June 30, 2024, including AAI, would have been **$108.7 million** and **$210.7 million**, respectively[39](index=39&type=chunk) [Note 4. Revenue Recognition](index=11&type=section&id=Note%204.%20Revenue%20Recognition) This note outlines the company's revenue recognition policies, including timing, warranty treatment, and sales by end market - Revenue is recognized when control of the promised good or service is transferred to the customer, generally upon shipment of goods[42](index=42&type=chunk)[43](index=43&type=chunk) - Products are covered by a standard assurance warranty (**25 days to two years**), and warranties are accounted for under ASC 460, not as a separate performance obligation[44](index=44&type=chunk) Net Sales by End Market (in thousands) | End Market | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Aerospace | $54,276 | $41,193 | $102,743 | $82,535 | | Business Jet and General Aviation | $30,162 | $27,163 | $61,020 | $52,777 | | Defense | $31,471 | $20,877 | $60,253 | $37,512 | | Non-Aerospace | $7,214 | $7,782 | $13,766 | $16,035 | | **Total Net Sales** | **$123,123** | **$97,015** | **$237,782** | **$188,859** | Contract Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Contract liabilities, current | $3,879 | $4,159 | | Contract liabilities, long-term | — | — | | **Total** | **$3,879** | **$4,159** | [Note 5. Inventories](index=12&type=section&id=Note%205.%20Inventories) This note provides a breakdown of the company's inventories by category as of June 30, 2025, and December 31, 2024 Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $35,672 | $39,162 | | Work-in-process | $38,294 | $29,797 | | Finished goods | $25,917 | $23,680 | | **Total** | **$99,883** | **$92,639** | [Note 6. Property, Plant and Equipment](index=12&type=section&id=Note%206.%20Property%2C%20Plant%20and%20Equipment) This note details the company's property, plant, and equipment, including land, buildings, machinery, and accumulated depreciation Property, Plant and Equipment (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Land | $15,794 | $15,411 | | Buildings and improvements | $35,906 | $35,504 | | Machinery, equipment, furniture and fixtures | $90,422 | $86,297 | | Less: accumulated depreciation and amortization | $(66,456) | $(60,607) | | **Total** | **$75,666** | **$76,605** | [Note 7. Accrued Expenses and Other Current Liabilities](index=12&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note presents a breakdown of accrued expenses and other current liabilities as of June 30, 2025, and December 31, 2024 Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Compensation and related benefits | $12,258 | $14,162 | | Contract liabilities | $3,879 | $4,159 | | Other | $10,448 | $8,580 | | **Total** | **$26,585** | **$26,901** | [Note 8. Long-Term Debt](index=12&type=section&id=Note%208.%20Long-Term%20Debt) This note details the company's long-term debt, including term loans, debt issuance costs, and amendments to the Credit Agreement Long-Term Debt (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Term loans | $281,366 | $281,366 | | Less: unamortized debt issuance costs | $(3,697) | $(4,073) | | **Total net debt** | **$277,669** | **$277,293** | - The Credit Agreement was amended on May 10, 2024, to extend the maturity date to **May 10, 2030**, and reduce the applicable margin by **2.0 to 2.5 percentage points**[56](index=56&type=chunk) - On August 26, 2024, an incremental term loan of **$360 million** was made available under the Credit Agreement to finance the AAI acquisition[57](index=57&type=chunk) - As of June 30, 2025, **$281.4 million** was outstanding under the Credit Agreement, with **$100.0 million** in delayed draw term loan commitments and **$50.0 million** in revolving line of credit available[62](index=62&type=chunk) [Note 9. Fair Value of Financial Instruments](index=14&type=section&id=Note%209.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value of the company's financial instruments, noting their carrying amounts approximate fair value - The carrying amounts of the company's financial instruments (cash, receivables, payables, leases, and debt) approximate fair value due to their short-term nature or market-aligned interest rates[64](index=64&type=chunk) [Note 10. Commitments and Contingencies](index=14&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, pending acquisitions, and related financing commitments - The company is involved in various lawsuits and claims, but management believes the ultimate liability will not have a material impact on the condensed consolidated financial statements[65](index=65&type=chunk) - On March 7, 2025, the company entered into a purchase agreement to acquire **100%** of LMB Fans & Motors (LMB) for **€365 million** plus estimated net debt of **€44.3 million**, expected to close in Q3 2025[66](index=66&type=chunk) - The LMB acquisition will be financed through additional borrowings under the existing Credit Agreement (an incremental **€400.0 million** loan facility) and cash on hand[67](index=67&type=chunk) [Note 11. Net Income per Common Share](index=14&type=section&id=Note%2011.%20Net%20Income%20per%20Common%20Share) This note provides the calculation of basic and diluted net income per common share for the reported periods Net Income per Common Share (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Weighted-average common shares outstanding - basic | 93,586 | 87,534 | 93,571 | 87,534 | | Weighted average common shares outstanding—diluted | 96,113 | 89,242 | 95,933 | 89,242 | | Net income per common shares—basic | $0.18 | $0.09 | $0.34 | $0.11 | | Net income per common shares—diluted | $0.17 | $0.09 | $0.33 | $0.11 | [Note 12. Income Taxes](index=14&type=section&id=Note%2012.%20Income%20Taxes) This note details the effective income tax rates and the factors influencing changes for the reported periods Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | 19.8% | 22.9% | | Six months ended June 30 | 21.0% | 26.9% | - The decrease in the 2025 effective tax rate for both periods was primarily due to the discrete impact of excess tax benefits associated with share-based payments[69](index=69&type=chunk)[70](index=70&type=chunk) - For the six months, the decrease was also attributed to a reduction in the valuation allowance against the company's deferred tax asset for its disallowed interest carryforward[70](index=70&type=chunk) [Note 13. Subsequent Events](index=15&type=section&id=Note%2013.%20Subsequent%20Events) This note describes significant events occurring after the balance sheet date, including new legislation and acquisitions - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, making permanent key elements of the Tax Cuts and Jobs Act, which will require evaluation of deferred tax balances[71](index=71&type=chunk) - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately **£25 million** (**$33 million**) using cash on hand[72](index=72&type=chunk) - On August 1, 2025, the Credit Agreement was amended to reduce the applicable interest margin by **0.5%**[73](index=73&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, strategic developments, and future outlook for the periods ended June 30, 2025 [Overview](index=16&type=section&id=Overview) This section provides an overview of Loar Holdings Inc.'s business, focusing on its niche aerospace and defense components and competitive strengths - Loar Holdings Inc. specializes in the design, manufacture, and sale of niche aerospace and defense components, focusing on mission-critical, highly engineered solutions with high intellectual property content[77](index=77&type=chunk) - The company's products support nearly every major aircraft platform and include a diverse range of applications such as auto throttles, seat belts, water purification systems, and brake discs[78](index=78&type=chunk) - The company primarily serves commercial, business jet and general aviation, and defense end markets, which have long historical track records of consistent growth[80](index=80&type=chunk) - Key competitive strengths include a portfolio of mission-critical components, IP-driven proprietary products, focus on higher-margin aftermarket content, diversified revenue streams, and a disciplined acquisition strategy[81](index=81&type=chunk) [Recent Developments](index=17&type=section&id=Recent%20Developments) This section highlights recent strategic developments, including acquisitions, financing activities, and new tax legislation impacting the company - The company entered into a purchase agreement to acquire LMB Fans & Motors for **€365 million** plus net debt, with the transaction expected to close in Q3 2025[82](index=82&type=chunk) - The LMB acquisition will be financed through additional borrowings under the existing Credit Agreement (an incremental **€400.0 million** loan facility) and cash on hand[83](index=83&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making permanent key tax provisions, which will require evaluation of deferred tax balances[85](index=85&type=chunk) - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately **£25 million** (**$33 million**) using cash on hand[86](index=86&type=chunk) [Outlook](index=18&type=section&id=Outlook) This section outlines the company's future expectations for net sales growth, product development, market penetration, and acquisition strategy - Net sales growth for the remainder of 2025 is anticipated to be driven by organic growth, particularly the conversion of high levels of backlog, and the impact from strategic acquisitions[89](index=89&type=chunk) - The company plans to continue its commitment to develop new products and services, further market penetration, and pursue an aggressive acquisition strategy[89](index=89&type=chunk) - Continued inflationary pressures and supply chain disruptions have not materially affected year-to-date results and are not expected to materially affect the outlook[89](index=89&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year Operating Data Summary (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Sales | $123,123 | $97,015 | $237,782 | $188,859 | | Gross Profit | $66,199 | $47,526 | $125,905 | $91,959 | | Operating Income | $27,317 | $22,188 | $53,461 | $43,545 | | Net Income | $16,713 | $7,641 | $32,029 | $9,890 | | Net Income Margin | 13.6% | 7.9% | 13.5% | 5.2% | | Adjusted EBITDA | $47,118 | $35,031 | $90,251 | $68,062 | | Adjusted EBITDA Margin | 38.3% | 36.1% | 38.0% | 36.0% | [Three months ended June 30, 2025 compared with three months ended June 30, 2024](index=18&type=section&id=Three%20months%20ended%20June%2030%2C%202025%20compared%20with%20three%20months%20ended%20June%2030%2C%202024) This section compares the company's financial performance for the three months ended June 30, 2025, against the same period in 2024 [Net Sales](index=18&type=section&id=Net%20Sales%20(3M)) This section analyzes the drivers of net sales growth for the three months ended June 30, 2025, including organic and acquisition contributions - Net sales for the three months ended June 30, 2025, increased by **$26.1 million**, or **26.9%**, to **$123.1 million**[91](index=91&type=chunk) - Net organic sales increased by **$11.0 million** (**11.3%**) to **$108.0 million**, driven by increases in OEM total commercial sales, aftermarket total commercial sales, and defense sales[95](index=95&type=chunk) - Net acquisition sales from AAI contributed **$15.1 million**, representing **15.6%** of the total net sales increase[96](index=96&type=chunk) [Gross Profit and Cost of Sales](index=19&type=section&id=Gross%20Profit%20and%20Cost%20of%20Sales%20(3M)) This section examines changes in cost of sales and gross profit, highlighting factors influencing the gross profit percentage for the three months - Cost of sales increased by **$7.4 million** (**15.0%**) to **$56.9 million**, primarily due to increased sales[97](index=97&type=chunk) - Cost of sales as a percentage of net sales decreased by **4.8%** to **46.2%**, driven by operating leverage, strategic value drivers, and favorable sales mix[97](index=97&type=chunk) - Gross profit increased by **$18.7 million** (**39.3%**) to **$66.2 million**, with the gross profit percentage improving to **53.8%** from **49.0%**[97](index=97&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20(3M)) This section details the increase in selling, general, and administrative expenses, attributing it to public company costs and amortization - Selling, general and administrative expenses increased by **$9.6 million** to **$36.9 million**, or **30.0%** as a percentage of net sales[98](index=98&type=chunk)[99](index=99&type=chunk) - The increase was primarily due to additional costs associated with being a public company (SOX compliance), amortization of intangible assets, and research and development expenses, partially offset by lower stock-based compensation[99](index=99&type=chunk) [Transaction Expenses](index=20&type=section&id=Transaction%20Expenses%20(3M)) This section reports the increase in transaction expenses, including costs related to a secondary offering - Transaction expenses increased to **$2.0 million** from **$0.9 million**, including approximately **$0.9 million** related to a secondary offering[100](index=100&type=chunk) [Operating Income](index=20&type=section&id=Operating%20Income%20(3M)) This section analyzes the change in operating income and its percentage of net sales for the three months ended June 30, 2025 - Operating income increased to **$27.3 million**, or **22.2%** as a percentage of net sales, from **$22.2 million** (**22.9%**) in the prior year[101](index=101&type=chunk) [Interest Expense](index=20&type=section&id=Interest%20Expense%20(3M)) This section details the decrease in interest expense, primarily due to debt repayment and lower interest rates - Interest expense decreased by **$4.2 million** (**39.1%**) to **$6.5 million**, primarily due to debt repayment from IPO proceeds and lower interest rates[102](index=102&type=chunk) [Income Tax Provision](index=20&type=section&id=Income%20Tax%20Provision%20(3M)) This section reports the increase in income tax provision, driven by higher earnings for the three months - The income tax provision increased to **$4.1 million** from **$2.3 million**, driven by higher earnings[103](index=103&type=chunk) [Net Income](index=20&type=section&id=Net%20Income%20(3M)) This section highlights the increase in net income and its margin for the three months ended June 30, 2025 - Net income increased to **$16.7 million**, or **13.6%** as a percentage of net sales, from **$7.6 million** (**7.9%**) in the prior year[104](index=104&type=chunk) [Six months ended June 30, 2025 compared with six months ended June 30, 2024](index=21&type=section&id=Six%20months%20ended%20June%2030%2C%202025%20compared%20with%20six%20months%20ended%20June%2030%2C%202024) This section compares the company's financial performance for the six months ended June 30, 2025, against the same period in 2024 [Net Sales](index=21&type=section&id=Net%20Sales%20(6M)) This section analyzes the drivers of net sales growth for the six months ended June 30, 2025, including organic and acquisition contributions - Net sales for the six months ended June 30, 2025, increased by **$48.9 million**, or **25.9%**, to **$237.8 million**[105](index=105&type=chunk) - Net organic sales increased by **$21.2 million** (**11.2%**) to **$210.1 million**, driven by aftermarket total commercial sales, defense sales, and OEM total commercial sales[107](index=107&type=chunk) - Net acquisition sales from AAI contributed **$27.7 million**, representing **14.7%** of the total net sales increase[108](index=108&type=chunk) [Gross Profit and Cost of Sales](index=21&type=section&id=Gross%20Profit%20and%20Cost%20of%20Sales%20(6M)) This section examines changes in cost of sales and gross profit, highlighting factors influencing the gross profit percentage for the six months - Cost of sales increased by **$15.0 million** (**15.5%**) to **$111.9 million**, primarily due to increased sales[109](index=109&type=chunk) - Cost of sales as a percentage of net sales decreased by **4.2%** to **47.1%**, driven by operating leverage, strategic value drivers, and favorable sales mix[109](index=109&type=chunk) - Gross profit increased by **$33.9 million** (**36.9%**) to **$125.9 million**, with the gross profit percentage improving to **52.9%** from **48.7%**[109](index=109&type=chunk) [Selling, General and Administrative Expenses](index=21&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20(6M)) This section details the increase in selling, general, and administrative expenses, attributing it to public company costs and amortization - Selling, general and administrative expenses increased by **$19.8 million** to **$70.0 million**, or **29.4%** as a percentage of net sales[110](index=110&type=chunk)[111](index=111&type=chunk) - The increase was due to additional costs associated with being a public company (SOX compliance), amortization of intangible assets, stock-based compensation, and research and development expenses[111](index=111&type=chunk) [Transaction Expenses](index=22&type=section&id=Transaction%20Expenses%20(6M)) This section reports the increase in transaction expenses, including costs related to a secondary offering - Transaction expenses increased to **$2.4 million** from **$1.1 million**, including approximately **$0.9 million** related to a secondary offering[112](index=112&type=chunk) [Operating Income](index=22&type=section&id=Operating%20Income%20(6M)) This section analyzes the change in operating income and its percentage of net sales for the six months ended June 30, 2025 - Operating income increased to **$53.5 million**, or **22.5%** as a percentage of net sales, from **$43.5 million** (**23.0%**) in the prior year[113](index=113&type=chunk) [Interest Expense](index=22&type=section&id=Interest%20Expense%20(6M)) This section details the decrease in interest expense, primarily due to debt repayment and lower interest rates - Interest expense decreased by **$15.4 million** (**54.4%**) to **$12.9 million**, primarily due to debt repayment from IPO proceeds and lower interest rates[114](index=114&type=chunk) [Income Tax Provision](index=22&type=section&id=Income%20Tax%20Provision%20(6M)) This section reports the increase in income tax provision, driven by higher earnings for the six months - The income tax provision increased to **$8.5 million** from **$3.6 million**, driven by higher earnings[115](index=115&type=chunk) [Net Income](index=22&type=section&id=Net%20Income%20(6M)) This section highlights the increase in net income and its margin for the six months ended June 30, 2025 - Net income increased to **$32.0 million**, or **13.5%** as a percentage of net sales, from **$9.9 million** (**5.2%**) in the prior year[116](index=116&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, capital resources, and cash flow activities from operations, investing, and financing Capitalization Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $103,342 | $54,066 | | Total debt | $280,960 | $280,695 | | Stockholders' equity | $1,128,733 | $1,088,505 | | Total capitalization (debt plus equity) | $1,409,693 | $1,369,200 | | Total debt to total capitalization | 20% | 21% | - As of June 30, 2025, the company had availability of **$100 million** in delayed draw term loan commitments and a **$50 million** revolving line of credit[118](index=118&type=chunk) - Management believes that net cash provided by operating activities and available borrowings will be sufficient to fund cash requirements for at least the next twelve months[118](index=118&type=chunk) [Operating Activities](index=23&type=section&id=Operating%20Activities%20(Cash%20Flow)) This section analyzes net cash provided by operating activities, driven by net income and non-cash operating items - Net cash provided by operating activities increased by **$34.3 million** to **$52.2 million** for the six months ended June 30, 2025, driven by higher net income and increased non-cash operating items[119](index=119&type=chunk) [Investing Activities](index=23&type=section&id=Investing%20Activities%20(Cash%20Flow)) This section details net cash used in investing activities, primarily related to capital expenditures - Net cash used in investing activities was **$4.7 million** for the six months ended June 30, 2025, primarily related to capital expenditures[120](index=120&type=chunk) [Financing Activities](index=23&type=section&id=Financing%20Activities%20(Cash%20Flow)) This section discusses net cash provided by financing activities, including stock option exercises and IPO proceeds - Net cash provided by financing activities was **$1.7 million** for the six months ended June 30, 2025, primarily from stock option exercises[121](index=121&type=chunk) - In the prior year, net cash provided by financing activities was **$37.6 million**, principally from IPO proceeds offset by debt repayments[121](index=121&type=chunk) [Credit Agreement](index=23&type=section&id=Credit%20Agreement%20(Liquidity)) This section outlines the terms and amendments of the Credit Agreement, including maturity, interest margins, and loan commitments - The Credit Agreement was amended on May 10, 2024, to extend the maturity date to **May 10, 2030**, and reduce the applicable interest margin[125](index=125&type=chunk) - A **$360 million** incremental term loan was made available on August 26, 2024, to finance the AAI acquisition[127](index=127&type=chunk) - Significant debt repayments were made in 2024: **$284.6 million** using IPO proceeds in May and **$330.0 million** using follow-on offering proceeds in December[124](index=124&type=chunk)[128](index=128&type=chunk) - As of June 30, 2025, **$281.4 million** was outstanding under the Credit Agreement, with **$100.0 million** in delayed draw term loan commitments and **$50.0 million** in revolving line of credit available[129](index=129&type=chunk) [Other Obligations and Commitments](index=24&type=section&id=Other%20Obligations%20and%20Commitments%20(Liquidity)) This section addresses other obligations and commitments, noting no material changes except for a pending acquisition - No material changes to other obligations and commitments occurred during the six months ended June 30, 2025, other than the pending LMB acquisition[130](index=130&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements%20(Liquidity)) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial condition - As of June 30, 2025, the company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, or cash flows[131](index=131&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) This section refers to the company's critical accounting policies and estimates, emphasizing management's judgment and potential for different results - A complete discussion of the company's most critical accounting policies and estimates is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the year ended December 31, 2024[133](index=133&type=chunk) - Management's judgment is required in the selection and application of certain accounting policies and methods, and the sensitivity of financial statements to these estimates could create materially different results under different conditions[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=24&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures like EBITDA and Adjusted EBITDA, including their limitations and reconciliation - The company presents EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin as non-GAAP measures to evaluate operating performance, assess management, and evaluate acquisitions[134](index=134&type=chunk) - These non-GAAP measures have limitations, as they do not reflect significant interest expense, cash requirements for asset replacement, integration costs, amortization expense, or tax payments[135](index=135&type=chunk)[138](index=138&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Interest expense, net | $6,481 | $10,636 | $12,940 | $28,370 | | Refinancing costs | — | $1,645 | — | $1,645 | | Income tax provision | $4,123 | $2,266 | $8,492 | $3,640 | | Depreciation | $3,050 | $2,730 | $5,948 | $5,408 | | Amortization | $9,637 | $7,039 | $19,197 | $14,304 | | **EBITDA** | **$40,004** | **$31,957** | **$78,606** | **$63,257** | | Other income, net | — | $(2,867) | — | $(2,867) | | Transaction expenses | $1,984 | $929 | $2,444 | $1,105 | | Stock-based compensation | $3,650 | $4,387 | $6,739 | $4,474 | | Acquisition and facility integration costs | $1,480 | $625 | $2,462 | $2,093 | | **Adjusted EBITDA** | **$47,118** | **$35,031** | **$90,251** | **$68,062** | | Net sales | $123,123 | $97,015 | $237,782 | $188,859 | | Adjusted EBITDA Margin | 38.3% | 36.1% | 38.0% | 36.0% | [JOBS Act Election](index=26&type=section&id=JOBS%20Act%20Election) This section discusses the company's election as an 'emerging growth company' under the JOBS Act and its implications for accounting standard compliance - As an "emerging growth company" under the JOBS Act, the company has elected to use the extended transition period for complying with new or revised accounting standards[139](index=139&type=chunk) - This election may result in the company's financial statements not being comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the company's market risks have not materially changed for the six months ended June 30, 2025, and refers to the more comprehensive disclosure in its Annual Report on Form 10-K for the year ended December 31, 2024 - The company's market risks have not materially changed for the six months ended June 30, 2025, and are described more fully in the Annual Report on Form 10-K for the year ended December 31, 2024[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the company's compliance with SEC rules regarding internal controls, noting that no material changes to internal control over financial reporting occurred during the three months ended June 30, 2025. The first Section 404 assessment will be for the fiscal year ending December 31, 2025 - The company is required to comply with Section 302 of the Sarbanes-Oxley Act following its initial public offering on April 29, 2024[141](index=141&type=chunk) - No material changes in the company's internal control over financial reporting occurred during the three months ended June 30, 2025[142](index=142&type=chunk) - The first assessment of the effectiveness of internal control over financial reporting under Section 404 will be for the fiscal year ending December 31, 2025[141](index=141&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report for the company - No legal proceedings were reported[146](index=146&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the comprehensive list of risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - Readers should refer to the risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as not applicable for the current report - This item is not applicable[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable for the current report - This item is not applicable[149](index=149&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable for the current report - This item is not applicable[150](index=150&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or executive officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the three months ended June 30, 2025 - No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the three months ended June 30, 2025[151](index=151&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, various agreements, and certifications required by the Securities Exchange Act - The report includes exhibits such as the Certificate of Incorporation, By-laws, Waiver to Registration Rights Agreement, Amended and Restated 2024 Equity Incentive Plan, Amended and Restated Commitment Letter, Seventeenth Amendment to Credit Agreement, and various certifications[152](index=152&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q, certifying its submission on behalf of Loar Holdings Inc [SIGNATURES](index=29&type=section&id=SIGNATURES_Details) This section provides the details of the official certification and signing of the Form 10-Q by the company's authorized officer - The report was signed by Glenn D'Alessandro, Treasurer and Chief Financial Officer of Loar Holdings Inc., on August 13, 2025[158](index=158&type=chunk)

Financial Data and Key Metrics Changes - In Q1 2025, total sales increased to $150 million, representing a 12% increase compared to the prior year period [18] - Net organic sales rose by 11.1% over the prior period [20] - Gross profit margin for Q1 2025 increased by 370 basis points compared to the prior year [20] - Adjusted EBITDA was up $10 million in Q1 2025 versus Q1 2024, with adjusted EBIT margins at 37.6% [21][25] Business Line Data and Key Metrics Changes - Commercial aftermarket sales increased by 13% in Q1 2025 versus Q1 2024 and were up 15% sequentially from Q4 2024 [19] - Total commercial OEM sales increased by 8% in Q1 2025 compared to the prior year period [19] - Defense sales saw a 30% increase, driven by strong demand across multiple platforms and new product launches [20] Market Data and Key Metrics Changes - The company expects commercial OEM markets to grow in high single digits and commercial aftermarket to grow in double digits for 2025 [24] - Defense end markets are projected to grow in high double digits, between 17% to 20% [24] Company Strategy and Development Direction - The company aims to achieve above-market growth rates by providing an entrepreneurial and collaborative environment for its business units [7] - Focus on launching new products, which is expected to contribute 1% to 3% of organic top-line growth annually [15] - Continuous improvement in margins is a priority, with a commitment to developing employee talent [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of demand across all end markets, with record bookings reported [24] - The company does not foresee any significant impact from the current tariff environment on its results [24] - The outlook for 2025 includes net sales between $482 million and $490 million, with adjusted EBITDA between $182 million and $185 million [25] Other Important Information - The company plans to close the acquisition of L and B Fans and Motors in Q3 2025, which is not included in the updated guidance [26] Q&A Session Summary Question: Are you seeing any incremental pushback on pricing from airlines in your commercial aftermarket channel? - Management indicated no pushback on pricing and noted they are actually receiving more price this year than last year [34] Question: What drove the robust growth in defense sales, and what is expected for the remainder of the year? - Management acknowledged that defense sales are typically lumpy and guided conservatively for the rest of the year, emphasizing the need to monitor the situation [47] Question: What are the key priorities for the company currently? - Management highlighted a focus on the pipeline of opportunities and talent development to support growth [56] Question: How is the company responding to potential changes in procurement regulations? - Management stated they would assess any changes once finalized but emphasized their current successful model in the defense market [66]

Financial Performance - For the quarter ended March 2025, Loar Holdings Inc. reported revenue of $114.66 million, reflecting a year-over-year increase of 24.9% [1] - The earnings per share (EPS) for the quarter was $0.20, a significant rise from $0.02 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $112.49 million by 1.93% [1] - The EPS also surpassed the consensus estimate of $0.16, resulting in a surprise of 25.00% [1] Key Metrics - Loar Holdings Inc. shares have returned +13.6% over the past month, outperforming the Zacks S&P 500 composite's +9.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3] Sales Breakdown - Total OEM Net Sales were reported at $50.08 million, slightly below the average estimate of $50.87 million [4] - Total Net Sales from Other sources were $6.55 million, compared to the average estimate of $8.05 million [4] - OEM Net Sales in Commercial Aerospace were $16.06 million, below the average estimate of $19.48 million [4] - OEM Net Sales in Business Jet and General Aviation reached $19.42 million, exceeding the average estimate of $17.42 million [4] - Total Commercial OEM Net Sales were $35.49 million, slightly below the average estimate of $36.89 million [4] - Defense OEM Net Sales were $11.73 million, surpassing the average estimate of $9.87 million [4] - Aftermarket Net Sales in Commercial Aerospace were $32.40 million, slightly below the average estimate of $33.09 million [4] - Aftermarket Net Sales in Business Jet and General Aviation were $11.44 million, exceeding the average estimate of $10.55 million [4] - Total Aftermarket Net Sales in Commercial were $43.84 million, slightly above the average estimate of $43.65 million [4] - Aftermarket Net Sales in Defense were $17.06 million, significantly above the average estimate of $12.80 million [4]

Financial Data and Key Metrics Changes - In Q1 2025, total sales increased to $150 million, representing a 12% increase compared to the prior year period [15] - Net organic sales increased by 11.1% over the prior period [17] - Gross profit margin for Q1 2025 increased by 370 basis points compared to the prior year period [17] - Adjusted EBITDA was up $10 million in Q1 2025 versus Q1 2024, with adjusted EBIT margins at 37.6% [18][22] Business Line Data and Key Metrics Changes - Commercial aftermarket sales increased by 13% in Q1 2025 versus Q1 2024 and were up 15% sequentially from Q4 2024 [16] - Total commercial OEM sales increased by 8% in Q1 2025 compared to the prior year period [16] - Defense sales increased by 30% due to strong demand across multiple platforms and an increase in market share from new product launches [17] Market Data and Key Metrics Changes - The company expects commercial OEM to grow in high single digits and commercial aftermarket to grow in double digits for 2025 [20] - Defense end markets are expected to grow in high double digits, between 17% to 20% [20] Company Strategy and Development Direction - The company aims to achieve above-market growth rates by providing an entrepreneurial and collaborative environment for its business units [6] - Focus on launching new products to drive organic top-line growth of 1% to 3% annually [13] - Continuous improvement in margins through strategic initiatives and price increases above inflation [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of demand across all end markets, with no degradation observed [20] - The company is ahead of its plan on value pricing and productivity initiatives, expecting to meet or exceed guidance for 2025 [20] - Management noted that the current tariff environment has had an insignificant impact on results [22] Other Important Information - The company plans to close the acquisition of L and B Fans and Motors in Q3 2025, which is not included in the current guidance [22] - Capital expenditures for the year are expected to be approximately $14 million, with an effective tax rate of around 30% [22] Q&A Session Summary Question: Are you seeing any incremental pushback on pricing from airlines in your commercial aftermarket channel? - Management noted no pushback on pricing and indicated they are actually receiving more price this year than last year [28][30] Question: What drove the robust growth in defense sales, and what is expected for the remainder of the year? - Management indicated that defense sales are typically lumpy and the strong Q1 growth is not necessarily indicative of the entire year [41] Question: Can you discuss the impact of potential procurement reforms on your business? - Management stated they would assess any changes once finalized but emphasized their current efficiency in working with government procurement [60]

Financial Performance - Loar Holdings Inc. reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, and showing a significant increase from $0.02 per share a year ago, representing an earnings surprise of 25% [1] - The company achieved revenues of $114.66 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.93% and up from $91.84 million year-over-year [2] - Over the last four quarters, Loar Holdings has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - Loar Holdings Inc. shares have increased approximately 34.6% since the beginning of the year, contrasting with a decline of -0.6% in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $118.55 million, and for the current fiscal year, it is $0.72 on revenues of $485.92 million [7] - The outlook for the Aerospace - Defense Equipment industry, where Loar Holdings operates, is favorable, ranking in the top 8% of over 250 Zacks industries, suggesting potential for outperformance [8]

Financial Performance - Net sales for Q1 2025 increased by $22.8 million, or 24.8%, reaching $114.7 million compared to $91.8 million in Q1 2024[84] - Net organic sales rose by $10.2 million, or 11.1%, to $102.0 million, driven by a 32.6% increase in defense sales and a 12.3% increase in aftermarket total commercial sales[86] - Gross profit for Q1 2025 was $59.7 million, a 34.4% increase from $44.4 million in Q1 2024, with a gross profit margin of 52.1%[89] - Operating income for Q1 2025 was $26.1 million, representing 22.8% of net sales, compared to $21.4 million, or 23.3% of net sales, in Q1 2024[83] - Net income for Q1 2025 was $15.3 million, or 13.4% of net sales, significantly up from $2.2 million, or 2.4% of net sales, in Q1 2024[83] - Adjusted EBITDA for Q1 2025 reached $43,133,000, up from $33,030,000 in Q1 2024, reflecting a year-over-year increase of 30.6%[118] - The net income margin improved to 13.4% in Q1 2025, compared to 2.4% in Q1 2024[118] - Adjusted EBITDA margin increased to 37.6% in Q1 2025, up from 36.0% in Q1 2024[118] Expenses and Costs - Cost of sales for Q1 2025 was $54.9 million, representing 47.9% of net sales, down from 51.6% in the same period last year[89] - Selling, general and administrative expenses increased by $10.2 million to $33.1 million, representing 28.9% of net sales for Q1 2025, up from 24.9% in Q1 2024[90] - Research and development expenses rose by $887,000, or 43.7%, to $2.9 million, representing 2.6% of net sales in Q1 2025[90] - Interest expense decreased by $11.3 million, or 63.6%, to $6.5 million in Q1 2025, attributed to the repayment of $284.6 million in debt[95] - Stock-based compensation increased significantly to $3,089,000 in Q1 2025 from $87,000 in Q1 2024[118] - Transaction expenses for Q1 2025 were $0.5 million, up from $0.2 million in Q1 2024[93] Cash Flow and Debt - Net cash provided by operating activities increased by $17.5 million to $28.4 million in Q1 2025, driven by a $13.1 million increase in net income[99] - Total debt as of March 31, 2025, was $280.8 million, with a total debt to total capitalization ratio of 20%[98] - Cash and cash equivalents increased to $80.5 million as of March 31, 2025, compared to $54.1 million at the end of 2024[98] - The company has $100 million available in delayed draw term loan commitments and a $50 million revolving line of credit as of March 31, 2025[98] Strategic Plans and Acquisitions - The company plans to finance the acquisition of LMB for €365 million plus net debt through additional borrowings and cash on hand[79] - The acquisition of LMB is expected to close in Q3 2025, pending regulatory approvals[79] - The company anticipates continued net sales growth driven by organic growth and strategic acquisitions, despite inflationary pressures and supply chain disruptions[81] - Net acquisition sales for Q1 2025 were $12.6 million, contributing 13.7% to the total net sales increase compared to Q1 2024[88] Market and Regulatory Environment - The company remains an "emerging growth company" under the JOBS Act, allowing it to delay adopting new accounting standards[120] - Market risks have not materially changed for the three months ended March 31, 2025, as detailed in the Annual Report[121]

Financial Performance - Net sales for Q1 2025 reached $114.7 million, an increase of $22.8 million or 24.8% compared to the prior year's quarter[3] - Net income for the quarter increased to $15.3 million, up $13.1 million from $2.2 million in the comparable quarter a year ago[4] - Adjusted EBITDA for the quarter was $43.1 million, reflecting a 30.6% increase or $10.1 million compared to the prior year's quarter[5] - Adjusted EBITDA margin improved to 37.6%, compared to 36.0% in the first quarter of the prior year[5] - Gross profit for Q1 2025 was $59,706,000, up 34% from $44,433,000 in Q1 2024[22] - Net income for Q1 2025 was $15,316,000, compared to $2,249,000 in Q1 2024, representing a significant increase[22] - Adjusted EBITDA for Q1 2025 was $43,133,000, a 30.5% increase from $33,030,000 in Q1 2024[24] - Net income margin improved to 13.4% in Q1 2025 from 2.4% in Q1 2024[24] - The company reported a net income margin of 13.4% for the quarter, significantly improved from 2.4% in the prior year's quarter[6] Cash Flow and Assets - Operating cash flow for Q1 2025 was $28.4 million, highlighting strong cash generation capabilities[8] - Cash and cash equivalents at the end of Q1 2025 were $80,498,000, up from $28,152,000 at the end of Q1 2024[23] - Operating cash flow for Q1 2025 was $28,360,000, significantly higher than $10,813,000 in Q1 2024[23] - Total assets as of March 31, 2025, were $1,478.8 million, an increase from $1,450.6 million at the end of 2024[21] Outlook and Guidance - The company revised its full-year 2025 outlook, expecting net sales between $482 million and $490 million, up from previous guidance of $480 million to $488 million[11] - Adjusted earnings per share for the full year are expected to be between $0.71 and $0.76, up from the previous range of $0.70 to $0.75[11] - The company anticipates continued strong demand, with commercial and defense market growth projected in high single to double digits[11] Segment Performance - Total sales in the Commercial Aerospace segment for Q1 2025 were $79,325,000, compared to $66,956,000 in Q1 2024, reflecting a growth of 18.4%[26] Earnings Per Share - The company reported a diluted earnings per share of $0.16 for Q1 2025, consistent with the previous year[27] - Adjusted earnings per share for Q1 2025 increased to $0.20, compared to the previous year[27]

Acquisition Strategy - The company entered into a purchase agreement to acquire LMB Fans & Motors, a global player in high-performance fans and motors, on March 7, 2025[30]. - The company has a disciplined acquisition strategy, having successfully integrated 17 acquisitions since 2012, targeting businesses with proprietary products and significant aftermarket potential[49]. - The company’s growth strategy includes a value-driven operating strategy and a disciplined acquisition strategy, focusing on aerospace and defense component businesses[53]. Market Performance - In 2024, the commercial aerospace market represented approximately 43% of net sales, driven by increased orders for next-generation aircraft and aftermarket requirements[33]. - The business jet and general aviation market accounted for approximately 27% of 2024 net sales, with strong demand due to new asset-light fleet models and increased accessibility to private aviation[36]. - The defense end market represented approximately 22% of 2024 net sales, benefiting from increased global defense spending amid geopolitical tensions[38]. - Aftermarket revenue accounted for 53% of 2024 net sales, supported by a growing installed base of aircraft and recurring maintenance requirements[46]. Financial Resilience - The company’s diversified revenue streams reduce dependence on any particular product or market sector, enhancing financial resilience[47]. - The total addressable market opportunity includes over 84,000 discrete aircraft across more than 250 platforms, indicating significant growth potential in the aftermarket[46]. - Sales to U.S. government agencies accounted for approximately 3% of net sales for the year ended December 31, 2024[57]. Operational Efficiency - The company is focused on driving operational efficiencies to improve cost structure and profitability, with a strategy to achieve price increases greater than inflation[56]. - The company expects to mitigate inflation impacts through manufacturing efficiencies and reevaluating pricing strategies[292]. Talent Management - The company has a strong emphasis on attracting and retaining talent, with approximately 1,500 employees and various training and development programs[69]. Regulatory Compliance - The company is subject to various governmental regulations, including those from the FAA and international aviation authorities, ensuring compliance with safety and operational standards[59]. Intellectual Property - The company has maintained 98 issued patents, with expiration dates ranging from April 2, 2025, to February 22, 2041, and has 35 pending or published patents[66]. Financial Position - The company had cash holdings of $54.1 million as of December 31, 2024, which are exposed to market risk due to fluctuations in interest rates[290]. - A 1.0% increase in average interest rates for the year ended December 31, 2024, would have resulted in an estimated $2.8 million increase in interest expense[289]. Currency Risk - The company is monitoring potential impacts from foreign currency fluctuations, with a 10% change in the U.S. dollar not expected to materially affect operating results for the year ended December 31, 2024[294]. Leadership Experience - The company’s leadership team has an average industry experience of over 25 years, contributing to a well-designed and diversified platform[51]. Industry Position - The company is well positioned in the aerospace and defense component industry, benefiting from long-term growth trends and strong customer relationships, with established positions on nearly every major aircraft platform[56].

Financial Data and Key Metrics Changes - Total sales increased by 15% compared to the prior year, achieving record sales in calendar year 2024 [26][32] - Adjusted EBITDA reached a record $146 million in calendar year 2024, up $34 million from 2023 [32] - Gross profit margin for the full year of 2024 was 34.4%, reflecting continued execution of productivity and pricing initiatives [32] Business Line Data and Key Metrics Changes - Commercial aftermarket sales increased by 15% in calendar year 2024, driven by strong demand for commercial air travel [26] - Defense sales grew by 39%, attributed to strong demand across multiple platforms and increased market share from new product launches [27] - The aftermarket business now represents approximately 55% of overall sales, up from 52% a year ago [18] Market Data and Key Metrics Changes - Defense segment has grown from about 20% of the business a year ago to approximately 24% today [17] - The non-aviation segment has decreased from 12% to about 7% as the company focuses on aerospace and defense [18] Company Strategy and Development Direction - The company aims to improve margins by 660 basis points by the end of calendar 2025 through strategic initiatives [12] - Focus on developing talent and enhancing productivity across all business units [13] - The company is committed to maintaining a diverse portfolio across various segments of the aerospace and defense industry [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting or exceeding guidance for calendar year 2025, with expectations for strong demand across all end markets [35] - The company anticipates commercial OEM and aftermarket to grow in high single digits, while defense markets are expected to grow in high double digits [37] - Management noted that geopolitical uncertainties and supply chain constraints present opportunities for growth [36] Other Important Information - The acquisition of LMB Fans and Motors is expected to close by the beginning of the third quarter of 2025, enhancing the company's portfolio [20][41] - Free cash flow conversion was over 200% for calendar year 2024, indicating strong operational efficiency [32] Q&A Session Summary Question: Insights on aftermarket guidance and backlog - Management indicated strong bookings and a robust backlog in the aftermarket, with lead times shorter than in defense markets [48] Question: Profitability and margin expansion contributors - Management confirmed that Applied Avionics is accretive and highlighted confidence in achieving margin improvements through pricing and operational leverage [52][54] Question: Update on PMA parts pipeline and growth expectations - Management acknowledged progress in getting parts qualified and anticipated adoption in the latter part of the year [62] Question: Dynamics of ordering patterns and inventory levels - Management noted variability in ordering patterns, with some parts seeing higher orders than expected, indicating less inventory in the supply chain [74] Question: M&A pipeline expectations - Management expressed optimism about the M&A pipeline, expecting to continue executing one to two deals per year [82] Question: Impact of tariffs and input costs - Management stated that tariffs are not expected to have a material impact this year, with strategies in place to pass on cost increases [92][94]