Loar Holdings Inc. 10-Q Summary: Q2 2026
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. Loar Holdings Inc. is a specialized manufacturer of niche aerospace and defense components, serving commercial, business jet, general aviation, and defense end markets. The company operates as a large accelerated filer and reports its results in a single segment.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $171.6 million | $123.1 million | $327.7 million | $237.8 million |
| Gross Profit | $91.2 million (53.2%) | $66.2 million (53.8%) | $170.4 million (52.0%) | $125.9 million (52.9%) |
| Operating Income | $41.9 million (24.5%) | $27.3 million (22.2%) | $75.4 million (23.0%) | $53.5 million (22.5%) |
| Net Income | $16.7 million | $16.7 million | $27.9 million | $32.0 million |
| Adjusted EBITDA | $69.4 million (40.5%) | $47.1 million (38.3%) | $132.7 million (40.5%) | $90.3 million (38.0%) |
| Cash from Operations (YTD) | $61.2 million (2026) vs $52.2 million (2025) | |||
| Total Debt (Net) | $949.3 million (as of June 30, 2026) | |||
| Cash & Equivalents | $122.4 million (as of June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 39.4% in Q2 and 37.8% YTD compared to 2025. This growth was driven by organic sales increases (12.3% in Q2) and significant contributions from recent acquisitions (Harper Engineering, LMB Fans & Motors, and Beadlight).
- Acquisition Impact: The company acquired Harper Engineering for $249.8 million in January 2026 and LMB Fans & Motors for $474.8 million in December 2025. These deals significantly increased intangible assets and goodwill, leading to higher amortization expenses.
- Interest Expense: Interest expense surged to $20.0 million in Q2 (from $6.5 million in Q2 2025) and $38.7 million YTD (from $12.9 million in 2025) due to debt incurred to finance the LMB and Harper acquisitions.
- Net Income: While Q2 net income remained flat at $16.7 million, YTD net income decreased to $27.9 million from $32.0 million in 2025. This decline is attributed to higher interest costs, increased amortization, and a $4.9 million inventory step-up charge related to acquisitions.
- Balance Sheet: Total assets grew to $2.33 billion from $2.03 billion, primarily due to acquisitions. Long-term debt increased to $942.6 million from $711.3 million.
Guidance, Outlook, and Risks
- Outlook: Management anticipates net sales growth for the remainder of 2026 driven by organic growth (conversion of backlog) and strategic acquisitions. They plan to continue an aggressive acquisition strategy while maintaining financial flexibility.
- Liquidity: The company has $122.4 million in cash and $85.0 million in available borrowing capacity ($35 million delayed draw term loans and $50 million revolving credit). Management believes this is sufficient for the next 12 months.
- Risks: Key risks include heavy reliance on the aerospace and defense industry, dependence on certain major customers, and the challenges of integrating acquired operations. Inflationary pressures and supply chain disruptions are monitored but have not materially impacted results to date.
- Contingencies: There is a contingent consideration liability of up to $55.0 million related to the Harper Engineering acquisition, dependent on financial targets achieved between 2026 and 2031. A $1.3 million adjustment to this liability was recorded in Q2 2026.
Investor Verification Checklist
- Verify the sustainability of the 12.3% organic sales growth rate amidst potential defense sector volatility.
- Monitor the impact of the $962.9 million debt load on future interest coverage ratios and cash flow.
- Assess the integration progress and synergy realization from the Harper Engineering and LMB Fans & Motors acquisitions.
- Review the $4.9 million inventory step-up charge to understand its effect on future cost of sales margins.
- Confirm the status of the $55.0 million contingent consideration payout for Harper Engineering.