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    LOAR
    Earnings call· Jun 2026(Q2 FY26)

    Loar Holdings Q2 FY26 earnings call LOAR

    Aug 6, 2026 Source

    Executive summary

    Loar Holdings Q2 FY26 — Record Performance Driven by Strong End Markets and Organic Growth

    Loar Holdings delivered a record-breaking Q2 FY26, achieving new highs in sales, adjusted EBITDA, and margins for the sixth consecutive quarter, driven by robust growth across all end markets. The company successfully converted a significant portion of its new business pipeline into secured organic revenue, leading to an upward revision of its full-year adjusted EBITDA guidance. Management emphasized a disciplined approach to M&A and a focus on proprietary products to sustain long-term, consistent performance.

    Highlights

    6

    • Achieved record sales, adjusted EBITDA, and adjusted EBITDA margins in Q2 FY26.

    • Marked the sixth consecutive quarter of sequential adjusted EBITDA records.

    • Year-to-date sales and adjusted EBITDA grew approximately 38% and 47% respectively.

    • Commercial OE growth was up 28% YoY in Q2 FY26, with commercial aftermarket up 12% YoY.

    • Secured $200 million of cumulative organic revenue potential from the new business pipeline over the next 5 years.

    • Free cash flow conversion was 1.9x net income year-to-date.

    Concerns

    3

    • Defense sales are expected to be choppy quarter-to-quarter despite an 8% YoY increase in Q2 FY26.

    • Gross profit margin decreased by 60 basis points YoY due to higher noncash amortization of acquired intangible assets.

    • Net income was flat YoY, offset by higher interest expense and noncash amortization.

    Guidance & targets

    12
    CategoryTargetConfidence
    Adjusted EBITDA
    $265M-$270M
    high materiality
    High
    Adjusted EBITDA Margin
    approximately 40%
    medium materiality
    High
    Net Sales
    $665M-$675M
    high materiality
    High
    GAAP Net Income
    $56M-$60M
    medium materiality
    Medium
    Adjusted EPS
    $1.32-$1.36
    high materiality
    High
    Capital Expenditures
    approximately $20M
    medium materiality
    Medium
    Commercial OE Sales Growth
    high double-digit percentage
    medium materiality
    High
    Commercial Aftermarket Sales Growth
    low double-digit percentage
    medium materiality
    High
    Defense Sales Growth
    mid-single-digit percentage
    medium materiality
    High
    M&A Cadence
    1 or 2 acquisitions each year
    medium materiality
    High
    Organic Growth Contribution from New Business
    closer to 3% than 1%
    high materiality
    High
    Aftermarket Growth
    stronger growth
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Total Sales
    Record sales achieved in Q2 FY26, driven by strong performance across all end markets.
    		$172M17%——
    Net Organic Sales
    Increased over the prior year quarter.
    		—12%——
    Commercial OEM
    Driven by higher sales across a significant portion of platforms and improved production environment. Platforms with greatest sales increase were Boeing 787, A320 family, and 737 family.
    		—28%——
    Commercial Aftermarket
    Primarily driven by continued secular increases in air travel. This is consistent with long-term projections.
    		—12%——
    Defense
    Sales improved over last year's Q2. Expected to be choppy quarter-to-quarter due to ordering patterns, but increased demand is anticipated due to geopolitical uncertainty.
    		—8%——

    Operational metrics

    20
    Sales growth
    38%YoY
    YTD FY26

    Growth in the first two quarters of 2026.

    Adjusted EBITDA growth
    47%YoY
    YTD FY26

    Growth in the first two quarters of 2026.

    Adjusted EBITDA margin
    40.5%up 220 bps YoY
    Q2 FY26

    Compared to 38.3% in Q2 FY25. This is the 16th consecutive quarter of sequential growth in adjusted EBITDA.

    Adjusted EBITDA margin increase
    910 bps
    2020-2026

    Achieved through operating leverage, winning new profitable business, productivity initiatives, and value-based pricing.

    Free cash flow conversion
    1.9x
    YTD FY26

    Close to 200% of reported net income.

    New business pipeline (total potential)
    $750Mup $50M from May
    next 5 years

    Represents revenue potential from organic opportunities.

    New business pipeline (secured organic revenue)
    $200M
    cumulative over next 5 years

    Initial orders captured, providing visibility to this amount. Management is 99.9999% sure of achieving this, unless a black swan event occurs. These are PO-to-PO, not LTAs, but for certified, sole-source products.

    Engineering costs
    $30M-$40M
    annually

    Allocated to projects with the best chance of winning, a switch made 4-5 years ago.

    Inventory levels (supply chain)
    3-5 monthsdown from 5-7 months
    Q2 FY26

    Refers to inventory held by customers to support production, indicating destocking risk is behind them.

    Commercial aftermarket growth
    19%YoY
    FY25

    Prior year growth, which the current year is 'lapping'.

    Commercial aftermarket growth
    13%YoY
    FY26

    Dirkson Charles mentioned '12%, 13% growth' for the current year, while Glenn D'Alessandro stated 12% precisely.

    Acquisitions since going public
    4
    last 2 years

    Includes Harper Engineering, LMB Fans & Motors, and Beadlight.

    Capital invested in M&A
    $1.1B
    last 2 years

    Total capital invested in M&A since going public.

    Gross profit margin decrease
    60 bpsYoY
    Q2 FY26

    Primarily due to higher noncash amortization of acquired intangible assets related to LMB and Harper Engineering. Excluding this, margins would have been higher by 100 bps.

    Adjusted net income growth
    $9Mup 35% YoY
    Q2 FY26

    Increase due to strong financial performance, partially offset by higher interest expense.

    Adjusted EBITDA growth
    $20MYoY
    Q2 FY26

    Increase over the prior year.

    Number of unique part numbers
    25,000
    current

    Breadth of Loar's product portfolio.

    Loar revenue (historical)
    $20M
    10 years ago

    Historical revenue for comparison to current performance.

    Loar revenue (current year, high end of guide)
    $675M
    FY26

    High end of the updated guidance range for calendar year 2026.

    Loar revenue (directional future)
    double this year's
    3 years from now

    Dirkson Charles stated he 'would not be surprised if we woke up 3 years from now and it's double that', indicating a directional aspiration rather than a firm target.

    Industry KPIs

    1
    MetricValueDetails
    Total company backlogRecord

    Orderbook & backlog

    1
    Boeing and Airbus backlog10-year plusQ2 FY26

    Deals & partnerships

    3
    Harper EngineeringNew member to the family, performing ahead of expectations.

    Acquired in Q1 FY26. Seeing increasing demand for their products, especially on the 787 where they are a sole source for a number of products.

    LMB Fans & MotorsPerforming ahead of expectations.

    Acquired in Q4 FY25.

    BeadlightFinding synergies across the group.

    Acquired in Q3 FY25.

    Risks & headwinds

    4
    Defense sales choppinessmoving forward

    quarter-to-quarter fluctuation

    Mitigation: Increased military funding across the globe is expected to drive increased demand, but ordering patterns remain lumpy.

    Higher noncash amortization of acquired intangible assetsQ2 FY26

    60 bps decrease in gross profit margin YoY

    Mitigation: Excluding this impact, gross profit margins would have been higher by 100 bps. This is a non-cash item related to LMB and Harper Engineering acquisitions.

    Higher interest expenseQ2 FY26

    Offset higher operating income, resulting in flat net income YoY

    Mitigation: Partially offset strong financial performance during the quarter.

    Keeping up with demandongoing

    Demand stronger than thought in Fans and Motors, and Brakes

    Mitigation: Need to invest in these areas to support demand and ensure preparedness to meet customer needs.

    What to watch in Q3 FY26

    5

    New business pipeline conversion

    next quarter and beyond
    Current$200M secured organic revenue over 5 years from $750M pipeline
    TargetContinued accretion of secured organic revenue from the pipeline, moving closer to 3% (or higher) organic growth contribution.

    Why it matters

    This is a key driver for future organic growth, expected to surpass secular growth and price, indicating the success of strategic investments.

    As we look forward, given the efforts and the relationships we've built with our customers going forward⏳, we believe new business will be the highest rank in terms of driving growth.

    Q&A highlights

    7

    Is the new product innovation and share expansion part of the growth engine inflecting, and what are the drivers?

    Dirkson confirmed an inflection point, citing progress in certifications, reallocation of $30M-$40M/year in engineering costs to high-probability projects, and wins in various product categories. He clarified that the company expects to win on items in the new business pipeline, not just track a 'win rate,' and that they haven't 'lost' the remaining pipeline opportunities.

    “We are at an inflection point. We have a number of certified platforms, engage with customers around those. We intend to continue to increase the certification success there over the next 6 to 9 months, and we'll continue to have what I would describe as even more wins as we move forward.”

    asked by John Godyn · answered by Dirkson Charles

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Discipline and Collaboration Driving Performance

    Loar's record-breaking Q2 FY26 performance is attributed to intentional collaboration across business units and strategic discipline in resource allocation. This approach enabled the company to convert approximately 25% of its new business pipeline into wins, demonstrating the effectiveness of its focused culture. Management emphasized that this success is a collective accomplishment of individual contributors.

    02

    Significant Progress in New Business Pipeline Conversion

    The company's organic pipeline now totals approximately $750 million of revenue potential over the next five years, an increase of $50 million since May. Loar has successfully secured initial orders, providing visibility to approximately $200 million of cumulative organic revenue over the next five years. This secured revenue is primarily through PO-to-PO agreements for certified, sole-source products, with management expressing 99.9999% confidence in achieving these estimates.

    03

    Disciplined M&A Strategy and Strong Acquisition Performance

    Loar maintains a consistent M&A cadence, aiming for one to two acquisitions annually, having completed four since going public and investing over $1.1 billion. Recent acquisitions, including Beadlight, LMB Fans & Motors, and Harper Engineering, are performing ahead of expectations. Harper Engineering, in particular, is anticipated to double its EBITDA faster than other acquired businesses, driven by strong demand for its products on platforms like the Boeing 787 and cross-selling synergies.

    04

    Diverse Product Portfolio and Long-Term Growth Outlook

    Loar's portfolio comprises over 25,000 unique part numbers, supported by an integrated platform combining engineering, design, qualification, and production expertise. This proprietary product approach, coupled with embedded customer relationships, is expected to drive consistent double-digit organic growth rates, increasing margins, and cash flow over the long term⏳. Management anticipates new business wins to become the primary driver of future growth, surpassing secular growth and price realization.

    05

    Focus on Cash Flow Generation and Operational Efficiency

    The company continues to prioritize cash flow generation, achieving an impressive 1.9x free cash flow conversion relative to net income year-to-date. Operational leverage, winning profitable new business, productivity initiatives, and value-based pricing have contributed to a 910 basis point increase in EBITDA margins from 2020 through 2026, even while absorbing public company expenses.

    AI-generated summary of the company’s earnings call. Not investment advice.