• Sales Growth: Total sales increased 15% year-over-year.
• Commercial Aftermarket Sales: Increased 15% for the full year and 12% in Q4 compared to the prior year.
• Commercial OEM Sales: Increased 16% in Q4 compared to the prior year period.
• Defense Sales: Increased 39% due to strong demand and new product launches.
• Gross Profit Margin: Increased by 250 basis points in Q4 compared to the prior year period.
• Net Income: Increased by $4 million in Q4 and $27 million for the full year.
• Adjusted EBITDA: Increased by $11 million in Q4 and reached a record $146 million for the full year.
• Adjusted EBITDA Margin: 36.4% in Q4.
• Free Cash Flow Conversion: Over 200% for the full year.
• 2025 Outlook: Expected net sales between $480 million to $488 million, adjusted EBITDA between $180 million and $184 million, and net income between $58 million and $63 million.

• Warning! GuruFocus has detected 2 Warning Sign with LOAR.

Release Date: March 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Loar Holdings Inc (NYSE:LOAR) achieved record sales in 2024, with a 15% increase compared to the previous year.
• The company reported a significant increase in defense sales, up 39%, driven by strong demand and new product launches.
• Loar Holdings Inc (NYSE:LOAR) has successfully executed strategic value drivers, resulting in a 250 basis point increase in gross profit margin for Q4 2024.
• The company's aftermarket business continues to grow, now representing 55% of overall sales, up from 52% the previous year.
• Loar Holdings Inc (NYSE:LOAR) has a strong M&A pipeline, with successful acquisitions like Applied Avionics and the pending acquisition of LMB Fans and Motors, which fits their business model well.

Negative Points

• Margins were slightly diluted in Q4 2024 due to a higher mix of defense sales and costs related to moving a manufacturing facility.
• The company faces challenges in keeping up with demand, indicating potential capacity constraints.
• Loar Holdings Inc (NYSE:LOAR) is experiencing temporary margin dilution from acquiring businesses with dilutive margins and costs associated with being a public company.
• The aerospace industry faces capacity constraints and supply base challenges due to experienced talent leaving post-COVID.
• Tariffs and input costs, such as steel and aluminum, could impact financial performance, although the company plans to pass these costs onto customers.

Q & A Highlights

Q: Can you discuss the strength of your aftermarket segment and what's embedded in your guidance regarding price and volume? A: Dirkson Charles, CEO, explained that the aftermarket segment has strong bookings and backlog. The lead times are shorter, typically one to three months, and they have regular conversations with customers to update forecasts. The challenge this year is keeping up with demand, and they are investing to increase capacity to meet this demand.

Q: How should we think about the margin expansion in 2025, particularly with the defense mix? A: Dirkson Charles, CEO, noted that Applied Avionics is accretive, contributing to margin expansion. They are confident in achieving a 120 basis point increase in margins due to more pricing power than cost inflation and operating leverage. Several initiatives are expected to improve margins further in the second half of the year.

Q: Can you provide an update on your PMA pipeline and the expected growth from new product launches? A: Dirkson Charles, CEO, stated that the 1% to 3% annual growth from new product launches is a conservative estimate. They have made progress in qualifying parts but not yet certified. Significant adoption of PMA initiatives is expected in the latter part of this year and early next year.

Q: What are you seeing in terms of ordering patterns and inventory levels with your OE customers? A: Dirkson Charles, CEO, mentioned that it varies by product. Some parts have higher orders than expected, indicating less inventory, while others have lower orders. Overall, Boeing and Airbus are performing better than expected, with Boeing projected to reach 30 aircraft per month and Airbus 50 by year-end.

Q: How are tariffs and input costs affecting your business, especially with the acquisition of LMB Fans and Motors? A: Brett Milgrim, Executive Co-Chairman, noted that tariffs will have minimal impact on LMB as it primarily serves the European defense market. Dirkson Charles, CEO, added that they have sufficient inventory and second sourcing strategies to mitigate tariff impacts. Any cost increases will be passed along, and they do not foresee a material impact this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.