Loar Holdings Inc. (LOAR) Business Profile

What it does

Loar Holdings designs, manufactures and sells specialized components for aircraft and defense systems. Its products include auto throttles, seat belts, lap-belt airbags, brake discs, sensors, latches, lighting, fans and ice-protection equipment. These parts serve applications in aircraft interiors, exteriors and engines.

The company sells into commercial aerospace, business jet and general aviation, and defense. Its customers include aircraft manufacturers, their suppliers and government agencies. Some parts go into newly built aircraft or systems; others are sold for maintenance, repair or replacement after an aircraft enters service. Loar also provides repair and overhaul services.

Many of its components must be certified before they can be installed. Loar develops and owns intellectual property used in its products, and it also acquires businesses with proprietary designs and processes. The company says its products support nearly every major aircraft platform in use today.

Loar was founded in 2012. Dirkson Charles is its chief executive officer and co-chairman. The company operates through brands with local leaders, supported by executives responsible for multiple brands. It had approximately 1,700 employees as of December 31, 2025.

How it makes money

Loar earns revenue by selling components for original equipment manufacturers, or OEMs, and for the aftermarket. OEM sales supply parts used in new aircraft and systems. Aftermarket sales provide parts and services for aircraft already in operation, including periodic replacements and maintenance.

Loar estimates that approximately 55% of 2025 net sales came from aftermarket products. It says that once its components are qualified on an aircraft platform, it is likely to remain the provider of aftermarket parts and services for that platform and its derivatives. Loar says aftermarket sales have historically carried higher margins than sales to OEM customers. Aircraft platforms it serves can remain in use for up to 50 years.

Approximately 89% of 2025 net sales came from proprietary products. Loar seeks to price its products based on their value to customers, pointing to their customized designs, quality and small cost relative to an aircraft. It says the time and expense of qualifying a replacement can discourage customers from changing suppliers.

Commercial aerospace is Loar’s largest end market. It also sells into business jet and general aviation, defense and non-aviation applications. Demand for new aircraft supports OEM sales, while aircraft usage and maintenance requirements support aftermarket sales. Defense revenue includes products for new systems and for the sustainment and modernization of existing fleets.

Net sales were $496.3 million for the year ended December 31, 2025. Net organic sales increased 16% in Q3 2026 compared with the prior-year quarter.

Customers and how it sells

Loar serves aircraft manufacturers and aerospace and defense suppliers, including Tier 1 and Tier 2 suppliers. Its products are used across commercial aircraft, business jets, general aviation and defense platforms. It also supplies defense-related equipment and services to U.S. government agencies and sells directly to the government of Germany.

No customer accounted for more than 12% of 2025 net sales; the top five customers accounted for 32%. No aircraft platform represented more than 7% of sales, and the top six platforms represented less than 22%. Loar’s top two platforms were the Airbus 320 family and the Boeing 737 family.

By end market, commercial aerospace generated $221.9 million in FY2025 revenue. Defense generated $122.6 million and other applications generated $27.7 million. Loar serves these markets through both production and aftermarket channels.

Loar describes its business model as global, and its components are subject to certification by aviation authorities in the United States, Europe, the United Kingdom and China, among other jurisdictions. Sales to U.S. government agencies accounted for approximately 2% of net sales in 2025.

Suppliers and costs

Loar buys raw materials and manufactured component parts from various suppliers for its manufacturing operations. It says most are generally available from multiple sources, but it keeps limited quantities on hand and depends on the availability of essential materials. Certification requirements can make changing a supplier, material or component lengthy and expensive.

Its operations use precision engineering and manufacturing to produce aerospace parts. Loar says it does not constantly need new equipment, helping it keep capital expenditure levels low. Its brands have local operating leaders, while executives responsible for multiple brands support operational initiatives and coordinate with corporate management.

For the year ended December 31, 2025, selling, general and administrative expenses were $143.6 million. Gross profit as a percentage of net sales was 52.7%. Loar attributed the lower cost of sales as a share of revenue principally to fixed overhead supporting higher production and sales levels.

In Q3 2026, Loar said higher amortization of acquired intangible assets from LMB and Harper Engineering partly offset gross margin improvement. It also said acquisitions can initially have margins below its target before integration synergies are realized.

Competitive position

Loar competes in a fragmented market for aerospace and defense components. Competitors differ by product and application, ranging from divisions of large public corporations to small private companies. Loar competes on engineering, capabilities, capacity and responsiveness to customers. No direct competitor is named in the supplied company material.

Loar relies on patents, trademarks, trade secrets and proprietary knowledge, as well as relationships with aircraft manufacturers and their suppliers. Its products must meet regulatory and customer requirements, and qualification can involve multiple tests and take years. Loar says customers have little incentive to repeat the process after a part is qualified, particularly when that part represents a small portion of an aircraft’s total cost.

Our reading: Qualification is a meaningful barrier because replacing an established component can require time and investment from both the supplier and the customer. Proprietary designs add protection, although their strength varies by product and intellectual property right.

Loar says it is often the only supplier of its proprietary products in the aftermarket. It also says its customer relationships help it identify new product and cross-selling opportunities.

Our reading: Installed positions and customer relationships can support repeat aftermarket business, but competition still occurs separately across the company’s many product categories.

Growth opportunities

Loar pursues growth through new products, new business with existing and prospective customers, value-based pricing, operational improvements and acquisitions. It looks for aerospace and defense component businesses with proprietary products or processes, aftermarket potential and customer relationships. Loar retains acquired brands to preserve those relationships and support cross-selling.

The company completed the acquisition of LMB in December 2025 and acquired Harper Engineering for $250 million in cash on January 21, 2026. Harper makes mechanically engineered devices for aircraft interiors. Loar says it has completed 20 strategic acquisitions since 2012, including Harper, and has integrated 18 of them.

For the year ended December 31, 2025, net sales increased 23.2%. Net organic sales increased 12.7%, driven primarily by higher commercial aftermarket, commercial OEM and defense sales. Loar also recorded net acquisition sales from businesses acquired in 2024 and 2025.

In Q3 2026, commercial OEM sales were up 20% compared with the prior-year quarter. Loar attributed the increase in part to an improved supply chain, demand for power parts and shipments from new business wins. It expects to invest in capacity for seat belt restraints, fans and motors, carbon brakes and C-track fittings.

For 2027, Loar expects sales between $745 million and $755 million and adjusted EBITDA between $312 million and $317 million. That outlook assumes no additional acquisitions.

Structural risks

• Industry cycles: Loar focuses almost exclusively on aerospace and defense. Sales to aircraft manufacturers are cyclical, and a downturn in their production can adversely affect Loar. The company also expects defense sales to remain uneven from quarter to quarter.

• Acquisitions and integration: Loar’s strategy depends in part on finding acquisitions on satisfactory terms and integrating them effectively. Acquired businesses can begin below the company’s target adjusted EBITDA margin before integration synergies are realized.

• Materials and certification: Supply disruptions and inflation can raise the cost of materials or impair production. Even where alternatives exist, FAA and customer certification requirements can delay replacement of a supplier, raw material or component.

• Debt and interest: Loar has variable-rate indebtedness, which can increase interest costs when rates rise. Debt service and borrowing restrictions can limit cash available for acquisitions, capital expenditure and other needs. There was $726.4 million outstanding under its credit agreement at December 31, 2025.

• Government and regulatory exposure: The U.S. government can terminate contracts, reduce their value or suspend Loar from new contracts. Its products and operations also face aviation certification, trade and environmental requirements; violations or environmental liabilities could result in costs.

Bottom line

Our reading

Loar combines proprietary aerospace components with a substantial aftermarket business, where qualification requirements and installed positions can support repeat sales [item1]. Its growth also depends on new business and acquisitions, while aircraft production cycles, integration and variable-rate debt remain material exposures [item1, item1a, item7].