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What were the key takeaways from Loar's earnings call?

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- **Record Q3 2025 Performance**: 15% YoY organic sales growth, 38.7% adjusted EBITDA margin (up 190bps), and $420M GAAP net income.
- **2026 Outlook**: $540M-$550M net sales, 39% EBITDA margin, 25% effective tax rate, and 125%+ cash flow conversion.
- **Strategic Drivers**: New product pipeline ($600M+), data-driven manufacturing, and 3%+ annual growth from 20+ new products.
- **Risk Management**: Conservative production rate assumptions (Boeing -15%, Airbus -20%), but 10%+ aftermarket resilience despite OEM destocking.
- **Shareholder Value**: 37% CAGR in sales (2012-2024), 47% EBITDA CAGR, and 100%+ operating cash flow growth.

**【Management Opening Remarks】**
- CEO Dirk Charles highlighted a 15% year-over-year (YoY) increase in organic sales, driven by strong commercial aftermarket and OEM demand.
- CFO Glenn D’Alessandro reported record Q3 2025 adjusted EBITDA margins of 38.7%, up 190 basis points YoY, due to operating leverage and strategic initiatives.
- 2026 outlook includes net sales of $540-$550 million, with low double-digit growth in commercial aerospace and defense, despite cautious production rate assumptions (Boeing 737 MAX: 38/month, Airbus A320: 54/month), reflecting supply chain conservatism.

**【CEO Strategic Commentary】**
- Emphasized long-term compound annual growth rates (CAGR) of 18%-15% in organic sales (2022-2024), targeting double-digit organic growth through new product development (e.g., cockpit door barriers, PMA brake systems).
- Highlighted $600 million pipeline of new customer opportunities, with 3%+ annual growth from new products like water purification systems and de-icing technologies.
- Stressing margin improvement through data-driven manufacturing and ERP enhancements, aiming for 39%+ EBITDA margins in 2026.

**【CFO Financial Highlights】**
- Q3 2025 GAAP net income: $420 million, Non-GAAP EPS: $1.08 (vs. $0.95 prior guidance), driven by cost control ($1 million+ savings in Sarbanes-Oxley compliance).
- Operating cash flow minus capex expected to exceed 125% of net income in 2026, with $17 million in non-cash stock comp.
- 2026 capital expenditures: $17 million, effective tax rate: 25%, depreciation/amortization: $15 million.

**【Q&A Key Themes】**
- **Defense Market Deceleration**: 2026 growth expected at 5% (vs. 16% in 2025), attributed to normalized ground vehicle bookings.
- **New Product Growth**: 3%+ contribution from PMA brake certifications and cockpit door exclusivity on Airbus narrow-bodies.
- **Aftermarket Resilience**: 10%+ growth driven by aging fleets and air travel recovery, despite concerns about OEM production rates.
- **Acquisition Integration**: BeeLite (seat belt restraints) already generating $1 million+ in synergies with Schwartz Aerospace, with 40%+ pipeline for additional certifications.


Loar Holdings Inc. (LOAR) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

LOAR

LOAR fundamentals

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