Loar Holdings Inc.(LOAR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION 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) 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 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 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 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 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] - 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] - 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] Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 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 This section provides detailed notes to the unaudited condensed consolidated financial statements, explaining accounting policies and significant financial events Note 1. Organization 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] - 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] - 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] - 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] Note 2. Basis of Presentation 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] - 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] - 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][34] - 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] Note 3. Acquisition 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] 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] - 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] Note 4. Revenue Recognition 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][43] - 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] 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 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 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 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 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] - On August 26, 2024, an incremental term loan of $360 million was made available under the Credit Agreement to finance the AAI acquisition[57] - 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] Note 9. Fair Value of Financial Instruments 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] Note 10. Commitments and Contingencies 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] - 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] - 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] Note 11. Net Income per Common Share 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 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][70] - 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] Note 13. Subsequent Events 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] - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately £25 million ($33 million) using cash on hand[72] - On August 1, 2025, the Credit Agreement was amended to reduce the applicable interest margin by 0.5%[73] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - The company primarily serves commercial, business jet and general aviation, and defense end markets, which have long historical track records of consistent growth[80] - 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] Recent Developments 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] - 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] - 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] - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately £25 million ($33 million) using cash on hand[86] 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] - The company plans to continue its commitment to develop new products and services, further market penetration, and pursue an aggressive acquisition strategy[89] - 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] Results of Operations 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 This section compares the company's financial performance for the three months ended June 30, 2025, against the same period in 2024 Net Sales 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] - 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] - Net acquisition sales from AAI contributed $15.1 million, representing 15.6% of the total net sales increase[96] Gross Profit and Cost of Sales 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] - 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] - 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] Selling, General and Administrative Expenses 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][99] - 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] Transaction Expenses 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] Operating Income 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] Interest Expense 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] Income Tax Provision 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] Net Income 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] Six months ended June 30, 2025 compared with six months ended June 30, 2024 This section compares the company's financial performance for the six months ended June 30, 2025, against the same period in 2024 Net Sales 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] - 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] - Net acquisition sales from AAI contributed $27.7 million, representing 14.7% of the total net sales increase[108] Gross Profit and Cost of Sales 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] - 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] - 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] Selling, General and Administrative Expenses 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][111] - 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] Transaction Expenses 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] Operating Income 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] Interest Expense 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] Income Tax Provision 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] Net Income 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] Liquidity and Capital Resources 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] - 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] Operating Activities 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] Investing Activities 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] Financing Activities 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] - In the prior year, net cash provided by financing activities was $37.6 million, principally from IPO proceeds offset by debt repayments[121] Credit Agreement 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] - A $360 million incremental term loan was made available on August 26, 2024, to finance the AAI acquisition[127] - 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][128] - 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] Other Obligations and Commitments 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] Off-Balance Sheet Arrangements 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] Critical Accounting Estimates 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] - 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] Non-GAAP Financial Measures 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] - 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][138] 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 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] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - No material changes in the company's internal control over financial reporting occurred during the three months ended June 30, 2025[142] - 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] PART II. OTHER INFORMATION This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings to report for the company - No legal proceedings were reported[146] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is marked as not applicable for the current report - This item is not applicable[148] Item 3. Defaults Upon Senior Securities This item is marked as not applicable for the current report - This item is not applicable[149] Item 4. Mine Safety Disclosures This item is marked as not applicable for the current report - This item is not applicable[150] Item 5. Other Information 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] Item 6. Exhibits 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] SIGNATURES This section contains the official signatures for the Form 10-Q, certifying its submission on behalf of Loar Holdings Inc SIGNATURES 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]