Loar Holdings Inc.(US:LOAR)2025-08-13 15:32Financial Data and Key Metrics Changes - The company achieved record sales of $123 million in Q2 2025, representing a 13% increase compared to the prior year [25] - Net organic sales increased by 11.3% over the prior period [27] - Adjusted EBITDA rose by $12 million in Q2 2025 versus Q2 2024, with adjusted EBITDA margins reaching a record 38.3% [29][30] - Gross profit margin for Q2 2025 increased by 480 basis points compared to the prior year [27] Business Line Data and Key Metrics Changes - Commercial aftermarket sales increased by 13% in Q2 2025 compared to Q2 2024, driven by strong demand for commercial air travel [25] - Commercial OEM sales rose by 14% in Q2 2025, attributed to higher sales across various platforms [25] - Defense sales increased by 19%, primarily due to strong demand and market share growth from new product launches [26] Market Data and Key Metrics Changes - The company expects low double-digit growth in the commercial aftermarket and high double-digit growth in defense sales for 2025 [33] - The demand for narrow-body aircraft remains high, with A320 and 737 platforms being the largest contributors to net sales [21] Company Strategy and Development Direction - The company aims to achieve organic sales growth of double-digit percentages over the long term, with a focus on launching new products to address pain points in the aerospace industry [10] - The recent acquisition of Beadlight is expected to enhance the company's product offerings and market presence, particularly in premium seat applications [19][20] - The company emphasizes a collaborative environment across its business units to foster innovation and growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting or exceeding sales and EBITDA targets for 2025, citing strong execution of value drivers and no degradation in demand across end markets [32] - The company anticipates some choppiness in growth rates due to inventory management and supply chain challenges in the OE commercial product segment [33] - Management remains optimistic about the regulatory approval process for the L and B acquisition, expecting it to close in Q3 2025 [40] Other Important Information - The company reported a cash flow conversion percentage of 148% year-to-date, with expectations to exceed 125% for the full year [14] - The company plans to maintain a capital expenditure of approximately $14 million, representing around 23% of sales [34] Q&A Session Summary Question: Guidance on the contribution of the new acquisition and future transactions - Management is optimistic about the regulatory approval for L and B, expecting to hear back in September [40] - Beadlight is projected to contribute mid-single-digit millions in sales with slightly above breakeven EBITDA margins [41] Question: Insights on commercial aftermarket growth and exposure to engines - Engines account for roughly 7% of overall revenue and grew in line with commercial aftermarket growth rates [45] Question: Timing of new business opportunities in the pipeline - New product introductions in 2025 are expected to be closer to the lower end of the 1% to 3% growth guide due to certification delays [50] Question: Potential headwinds from airline efficiency on aftermarket sales - Management has not seen changes in demand dynamics for the commercial aftermarket, indicating consistent demand [54] Question: Valuation concerns regarding Beadlight acquisition - Management believes the valuation will appear attractive in hindsight, focusing on future potential rather than past revenue [62]