Quarterly Earnings Discourse for Loar (LOAR) in Q2 of 2025

Quarterly Earnings Discourse for Loar (LOAR) in Q2 of 2025

Loar Holdings Achieves Record Quarterly Financials, Pending Regulatory Approval for LMB Fans and Motors Acquisition

Loar Holdings, a leading player in the aerospace and defense industry, has reported record quarterly financial results for Q2 2025. The company has seen strong momentum across all market segments, with no signs of demand weakness or material impact from tariffs.

However, one significant development that has not been included in Loar Holdings' current financial guidance is the pending acquisition of LMB Fans and Motors. This acquisition, expected to be a strategic move to diversify Loar Holdings' industrial offerings, is still awaiting regulatory approval, with a likely decision in September 2025.

In Q2 2025, defense sales grew 19% compared to the same period in 2024, attributed to strong demand and new product launches. Sales reached $123 million, up 13% year-over-year on a pro forma basis. The gross profit margin for Q2 2025 increased by 480 basis points as compared to the prior year period.

Commercial aftermarket revenue increased 13% in Q2 2025 versus Q2 2024, while commercial OEM sales rose 14%. The company's new product pipeline totals more than $500 million in sales potential over the next five years.

Loar Holdings' business model is focused on participating in the annuity stream of various platforms in the aerospace and defense industry, with a focus on both new production and aftermarket life cycles. The company's portfolio consists of more than 20,000 unique parts, with no single product making up more than 3% of annual net revenue.

Beadlight, a recent acquisition, is a UK-based business that makes lighting products for premium seat applications, particularly in the commercial OE and aftermarket business segments. Beadlight's contribution is projected as "mid-single-digit millions" in revenue for the full year of 2025, with slightly above breakeven EBITDA margin. Management expects significant accretion from Beadlight in 2026 and beyond.

Loar Holdings' stock price dropped 2.82% on the news of the Beadlight acquisition. However, the company remains confident about its future, with updated guidance for 2025 including the impact of five months of ownership of Beadlight.

In terms of financials, Loar Holdings expects adjusted EBITDA to be between $184 million to $187 million for calendar year 2025. Net sales are raised to $486 million to $494 million for the same period. The updated guidance also includes an increased adjusted EPS of $0.83 to $0.88.

Loar Holdings delivered net income of $9 million in Q2 2025 compared to Q2 2024, driven by higher operating income and lower interest expense. The company's updated guidance for net income is now $65 million to $70 million for calendar year 2025.

The company's updated guidance for revenue, adjusted EBITDA, and adjusted EPS for CY2025 reflects the impact of Beadlight and the ongoing strong performance in the defense sector. Loar Holdings anticipates monthly ship set demand for Airbus A320 at year-end CY2025 to be 53 per month, with 33 per month for Boeing 737 MAX family exiting calendar year 2025.

In summary, Loar Holdings has achieved record quarterly financial results, with strong momentum across all market segments and no signs of demand weakness or material impact from tariffs. The pending LMB Fans and Motors acquisition is expected to diversify Loar Holdings' industrial offerings, but is not yet included in the current financial guidance.

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