Loar Holdings (LOAR) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales reached a record $97.0M, up 31.1% year-over-year, with organic growth of 17% and strong performance in defense, commercial aftermarket, and OEM segments.

• Net income surged to $7.6M from $0.6M in Q2 2023, aided by lower interest expense and higher operating income.

• Adjusted EBITDA increased 26.3% to $35.0M, with margin at 36.1%.

• Announced acquisition of Applied Avionics for $385M, aligning with portfolio strategy and expected to enhance proprietary and aftermarket-focused offerings.

• Completed IPO in April 2024, raising $325.7M in net proceeds and repaid $284.6M in debt.

Financial highlights

• Q2 2024 net sales: $97.0M (+31.1% YoY); organic sales up 17%; net income: $7.6M (7.9% margin); adjusted EBITDA: $35.0M (36.1% margin).

• Gross margin for Q2 2024 was 49.0%, slightly down from 50.6% in Q2 2023 due to higher defense sales and acquisition mix.

• Interest expense decreased 35.8% YoY in Q2 2024 due to debt repayment from IPO proceeds.

• Fully diluted share count for 2024 expected at ~91 million.

• Cash and cash equivalents at June 30, 2024: $73.2M.

Outlook and guidance

• 2024 net sales guidance raised to $374–$378M; adjusted EBITDA to $134–$136M; adjusted EBITDA margin ~36%.

• Net income forecasted at $28.4–$29.6M; adjusted EPS $0.44–$0.46; net income margin expected at ~8%.

• Capital expenditures projected at ~$11M; interest expense ~$42M; effective tax rate ~30%; D&A ~$40M; non-cash stock-based compensation ~$10M.

• Market assumptions: mid double-digit growth in OEM, aftermarket, and defense segments for 2024.

• Inflationary and supply chain pressures monitored but not expected to materially affect 2024 outlook.