Loar Holdings Inc. (LOAR) Earnings & Analysis

Latest quarter

Loar reported Q2 FY2026 revenue of $171.6 million, above the $160.8 million consensus. Adjusted earnings per share were $0.38, compared with the $0.31 consensus. Diluted earnings per share were $0.18, up from $0.17 a year earlier.

Revenue rose 39.4% from $123.1 million a year earlier. Loar’s filing attributed the organic sales increase primarily to commercial original-equipment and aftermarket sales and non-aerospace products, partly offset by lower defense sales. The company said higher aircraft production and deliveries supported commercial original-equipment sales, while increased air travel helped aftermarket sales. Acquired businesses contributed $33.3 million in quarterly sales.

Loar reported a gross margin of 53.2%, down from 53.8% a year earlier. CFO Glenn D’Alessandro attributed the decrease primarily to amortization of acquired intangible assets. The filing said quarterly net income remained $16.7 million, as higher interest and amortization expenses affected results. Free cash flow rose to $27.4 million from $20.9 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Dirkson Charles said an improved supply chain had unlocked demand for Loar’s commercial original-equipment parts. CFO Glenn D’Alessandro said commercial original-equipment sales rose 28% year over year on a pro forma basis, as higher sales across aircraft platforms and an improving production environment supported the business. He said aftermarket sales rose 12%, driven primarily by increased air travel.

D’Alessandro said pro forma defense sales rose 8%, but would continue to fluctuate with customer ordering patterns. He attributed the increase in adjusted EBITDA margin to operating leverage and execution of the company’s initiatives.

Charles said Loar had converted approximately 25% of its new-business pipeline into wins while continuing to pursue the remaining opportunities. Investor relations director Ian McKillop said initial orders provided visibility to approximately $200 million of cumulative organic revenue over the next five years. He put the pipeline at approximately $750 million of potential revenue over that period.

Asked about the pipeline, Charles said engineers had been assigned to projects where Loar believed it had a better chance of winning. He said new-business wins were handled purchase order by purchase order rather than under long-term agreements.

When asked about risks to guidance, Charles said keeping up with demand was on his mind. He said Loar needed further investment in fans and motors, restraints and brakes because demand had exceeded its expectations. Asked about aftermarket ordering, he said some customers were ordering fewer parts at a time; he expected them to order later at a higher price.

Charles also said he could not predict the timing of acquisitions, although Loar’s aim remained to complete one or two each year.

Guidance

Loar raised its FY2026 net sales outlook to $665 million–$675 million from $645 million–$655 million, and adjusted EBITDA to $265 million–$270 million from $257 million–$262 million. The company raised expected net income to $56 million–$60 million from $53 million–$57 million and GAAP diluted EPS to $0.57–$0.62 from $0.54–$0.59. It also raised adjusted EPS guidance to $1.32–$1.36 from $1.26–$1.30.

Charles expects capital expenditure of approximately $20 million, compared with around $19 million previously. He now expects high-double-digit commercial original-equipment sales growth on a pro forma basis, versus the earlier low-double-digit outlook.