Table of Contents
ROC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________, ____ to _______________, ____
Commission File Number: 001-42030
Loar Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware
82-2665180
(State or other jurisdiction of
incorporation or organization)
(I.R.S. EmployerIdentification No.)
20 New King Street
White Plains, New York
10604
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (914) 909-1311
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
LOAR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 30, 2026, the registrant had 93,690,471 shares of common stock, $0.01 par value per share, outstanding.
Page
PART I.
FINANCIAL INFORMATION
3
Item 1.
Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2026 and 2025
4
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2026 and 2025
5
Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2026 and 2025
6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025
7
Notes to Unaudited Condensed Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
25
Item 4.
Controls and Procedures
PART II.
OTHER INFORMATION
26
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
27
SIGNATURES
28
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited, in thousands except share amounts)
September 30, 2026
December 31, 2025
Assets
Current assets:
Cash and cash equivalents
$
159,321
84,827
Accounts receivable, net
107,287
88,026
Inventories
128,633
109,036
Other current assets
14,690
11,123
Income taxes receivable
7,082
5,486
Total current assets
417,013
298,498
Property, plant and equipment, net
89,657
82,536
Finance lease assets
1,686
1,894
Operating lease assets
11,989
6,229
Other long-term assets
31,335
25,935
Intangible assets, net
722,204
606,406
Goodwill
1,079,835
1,008,377
Total assets
2,353,719
2,029,875
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
25,687
18,606
Current portion of long-term debt, net
6,736
4,362
Current portion of finance lease liabilities
317
279
Current portion of operating lease liabilities
1,362
818
Income taxes payable
2,226
3,022
Accrued expenses and other current liabilities
41,178
36,419
Total current liabilities
77,506
63,506
Deferred income taxes
78,524
68,377
Long-term debt, net
941,850
711,338
Finance lease liabilities
2,650
2,891
Operating lease liabilities
10,968
5,605
Other long-term liabilities
20,650
3,405
Total liabilities
1,132,148
855,122
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, and no shares issued or outstanding
—
Common stock, $0.01 par value, 485,000,000 shares authorized; 93,690,471 and 93,622,471 issued and outstanding at September 30, 2026 and December 31, 2025, respectively
937
936
Additional paid-in capital
1,140,615
1,125,015
Retained earnings
99,055
51,586
Accumulated other comprehensive loss
(19,036
)
(2,784
Total stockholders' equity
1,221,571
1,174,753
Total liabilities and stockholders' equity
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Income
(Unaudited, in thousands except per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
Net sales
176,170
126,751
503,837
364,533
Cost of sales
80,763
59,973
237,987
171,850
Gross profit
95,407
66,778
265,850
192,683
Selling, general and administrative expenses
47,858
35,758
138,865
105,758
Transaction expenses
780
1,846
3,580
4,290
Other expense, net
589
154
1,856
Operating income
46,180
29,020
121,549
82,481
Interest expense, net
20,012
6,012
58,736
18,952
Income before income taxes
26,168
23,008
62,813
63,529
Income tax provision (benefit)
6,584
(4,598
15,344
3,894
Net income
19,584
27,606
47,469
59,635
Earnings per share:
Basic
0.21
0.29
0.51
0.64
Diluted
0.20
0.50
0.62
Weighted average common shares outstanding:
93,688
93,622
93,653
93,588
95,769
95,875
95,647
95,912
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, in thousands)
Cumulative translation adjustments
(2,013
(21
(16,252
(420
Comprehensive income
17,571
27,585
31,217
59,215
Condensed Consolidated Statements of Equity
Common Stock
Accumulated
Shares
Amount
AdditionalPaid-inCapital
RetainedEarnings
OtherComprehensiveLoss
TotalEquity
Balance, January 1, 2026
11,143
Stock-based compensation
4,392
Exercise of stock options
56
(10,436
Balance, March 31, 2026
93,624
1,129,463
62,729
(13,220
1,179,908
16,742
4,581
60
1
1,965
1,966
(3,803
Balance, June 30, 2026
93,684
1,136,009
79,471
(17,023
1,199,394
4,427
179
Balance, September 30, 2026
93,690
Retained
Earnings(AccumulatedDeficit)
Balance, January 1, 2025
93,556
1,108,225
(20,560
(96
1,088,505
15,316
3,089
(256
Balance, March 31, 2025
1,111,314
(5,244
(352
1,106,654
16,713
3,650
66
1,859
(143
Balance, June 30, 2025
1,116,823
11,469
(495
1,128,733
3,878
Balance, September 30, 2025
1,120,701
39,075
(516
1,160,196
Condensed Consolidated Statements of Cash Flows
Operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
10,006
8,874
Amortization of intangible and other long-term assets
48,849
29,060
Amortization of debt issuance costs
2,930
670
Recognition of inventory step-up
4,916
45
13,400
10,617
5,903
(2,753
Non-cash lease expense
930
451
Adjustment to contingent consideration liability
2,050
Changes in assets and liabilities, net of acquisitions:
Accounts receivable
(14,106
(13,276
(13,393
(9,559
Other assets
(9,657
(6,443
7,646
4,430
(1,875
(752
1,842
1,278
(775
Net cash provided by operating activities
106,135
81,857
Investing activities
Capital expenditures
(12,484
(7,493
Payment for acquisitions, net of cash acquired
(249,841
(32,813
Net cash used in investing activities
(262,325
(40,306
Financing activities
Net proceeds from issuance of common stock
2,201
Proceeds from issuance of long-term debt
240,000
1,500
Payments of long-term debt
(5,138
Financing costs
(4,800
Payments of finance lease liabilities
(202
(173
Net cash provided by financing activities
232,061
3,186
Effect of translation adjustments on cash and cash equivalents
(1,377
152
Net increase in cash, cash equivalents and restricted cash
74,494
44,889
Cash, cash equivalents and restricted cash, beginning of period
54,066
Cash, cash equivalents and restricted cash, end of period
98,955
Supplemental information
Interest paid during the period, net of capitalized amounts
57,871
19,399
Income taxes paid during the period, net
10,629
7,676
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
As used in this Quarterly Report on Form 10-Q, unless expressly stated otherwise or the context otherwise requires, the terms “Loar,” the “Company,” “we,” “us” and “our” refer to Loar Holdings Inc. and its subsidiaries, collectively.
Principles of Consolidation
The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes for the year ended December 31, 2025 included in Loar Holdings Inc.'s Annual Report on Form 10-K filed on March 2, 2026. As disclosed therein, the Company’s annual consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (GAAP). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC). The December 31, 2025 condensed consolidated balance sheet was derived from Loar Holdings Inc.’s audited financial statements for the year then ended. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year.
Reclassifications
A reclassification has been made to the prior year's condensed consolidated statement of cash flows to conform with the current year'spresentation. This reclassification has resulted in no changes to the Company's condensed consolidated results of operations, financialposition or total cash flows.
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires disaggregated information about certain income statement costs and expenses for public entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories within the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities. The ASU establishes guidance on the recognition, measurement, presentation and disclosure of a government grant received by a business entity. The guidance is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
2. Acquisitions
Harper Engineering Company
On January 21, 2026, the Company acquired Harper Engineering Company (Harper Engineering) for $249.8 million in cash. The Company recorded an additional $15.3 million in purchase consideration that may be paid to the sellers if Harper Engineering achieves certain financial targets for the years 2026 to 2031. The maximum payout to the seller related to achieving these financial targets is $55.0 million. Based on management's revaluation of the estimated contingent consideration liability the Company recorded an increase in contingent consideration of $0.7 million and $2.0 million during the three and nine months ended September 30, 2026, respectively. These amounts were recorded as other expense on the condensed consolidated statements of income. The additional purchase consideration totaling $17.3 million is recorded in other long-term liabilities on the accompanying condensed consolidated balance sheets. Founded in 1968, Harper Engineering is a leading manufacturer of mechanically engineered devices for aircraft interiors and holds a proprietary portfolio of latching and securing mechanisms used across multiple leading commercial aerospace platforms.
The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. The following table
summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):
Assets acquired:
Current assets
13,933
Property, plant and equipment
2,920
1,021
Intangible assets
153,500
97,784
Total assets acquired
269,158
Liabilities assumed:
Current liabilities
3,689
378
Contingent consideration liability
15,250
Total liabilities assumed
19,317
Net assets acquired
249,841
Inventory, which is included in current assets in the table above, was recorded at its estimated fair value, which represented an amount equivalent to estimated selling price less fulfillment costs and a normative selling profit. The increase in fair value of inventory from the acquisition was approximately $0.4 million, which was recognized in cost of sales during the nine months ended September 30, 2026.
Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing companies, combined with the industry operating expertise of management. These are among the factors that contributed to a purchase price that resulted in the recognition of goodwill. Goodwill is deductible for tax purposes.
LMB Fans & Motors
On December 23, 2025, the Company acquired 100% of the issued and outstanding equity interests and paid the outstanding debt of LMB Fans & Motors (LMB) for $474.8 million in cash and $0.9 million of deferred purchase obligation. Founded over 60 years ago, LMB is a global specialty player in the design and production of tailor-made high-performance fans and motors. Leveraging its many decades of expertise and proprietary designs, LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines.
The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with ASC 805. The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):
18,831
4,137
211,542
284,808
519,318
8,894
Long-term liabilities
1,351
34,310
44,555
474,763
The initial accounting has been adjusted, including the measurement of the acquired tangible and intangible assets and liabilities, as well as the associated income tax considerations. The adjustments include a decrease to goodwill of $19.7 million, an increase to intangible assets of $18.7 million, an increase to deferred income taxes of $6.7 million, an increase to property, plant and equipment of $3.3 million, a decrease of $3.3 million in current liabilities, and an increase of $1.2 million in current assets. Any further adjustments during the one-year measurement period from the acquisition date are not expected to be material to the consolidated financial statements.
Inventory, which is included in current assets in the table above, was recorded at its estimated fair value, which represented an amount equivalent to estimated selling price less fulfillment costs and a normative selling profit. The increase in fair value of inventory from the acquisition was approximately $4.5 million, which was recognized in cost of sales during the nine months ended September 30, 2026.
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Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing companies, combined with the industry operating expertise of management. These are among the factors that contributed to a purchase price that resulted in the recognition of goodwill. Goodwill is not deductible for tax purposes.
The results of operations of the acquired entities are included in the Company’s consolidated financial statements for the period subsequent to the completion of the acquisitions.
Pro forma financial information (Unaudited)
The pro forma information below gives effect to the LMB acquisition as if it had been completed on January 1, 2024, and the Harper Engineering acquisition as if it had been completed on January 1, 2025.
Had the acquisitions of LMB and Harper Engineering occurred on those dates, net sales on a pro forma basis for the three and nine months ended September 30, 2025 would have been $150.6 million and $436.8 million, respectively. Additionally, income before income taxes on a pro forma basis would have been $13.2 million and $31.6 million, for the three and nine months ended September 30, 2025, respectively. Pro forma net sales and pretax income for the nine months ended September 30, 2026 are not materially different from actual results and accordingly, have not been provided. The underlying pro forma information for the three and nine months ended September 30, 2025 includes $6.7 million and $20.2 million, respectively, of amortization of acquired intangible assets resulting from the preliminary purchase price allocation. Interest expense has been adjusted as though the debt incurred to finance the LMB acquisition had been outstanding at January 1, 2024 and the debt incurred to finance the Harper Engineering acquisition had been outstanding at January 1, 2025. The pro forma interest expense adjustments for the three and nine months ended September 30, 2025 are $14.2 million, and $42.6 million, respectively.
The pro forma information does not include the effects of any synergies, cost reduction initiatives or anticipated integration costs related to the acquisitions.
3. Revenue Recognition
All revenue recognized in the condensed consolidated statements of income is considered to be revenue from contracts with customers.
Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services when control of the promised good or service is transferred to the customer. Substantially all of the Company’s revenue from contracts with customers is recognized at a point in time, which is generally upon shipment of goods to the customer.
The Company sells specialty aerospace components based on a customer purchase order, which generally includes a fixed price per unit. The Company satisfies the single performance obligation generally upon shipment of the goods, as this is when contractual control transfers to the customer and recognizes revenue at that point in time. Total revenues do not include taxes, such as sales tax or value-added tax, which are assessed by governmental authorities and collected by the Company.
Products are covered by a standard assurance warranty, generally extended for a period of 25 days to two years depending on the customer, which promises that delivered products conform to contract specifications. The Company does not offer refunds or accept returns, unless related to a defect or warranty related matter. The Company does not sell extended warranties and does not provide warranties outside of fixing defects that existed at the time of sale. As such, warranties are accounted for under ASC 460, Guarantees and not as a separate performance obligation.
Customers generally have payment terms between 30 and 90 days from the satisfaction of the performance obligations. As a practical expedient, the Company does not adjust the amount of consideration for a financing component, as the period between the transfer of goods or services and the customer’s payment is, at contract inception, expected to be one year or less.
10
Net sales by end market were as follows (in thousands):
Commercial Net Sales
Commercial aerospace OEM
37,864
20,659
106,545
56,163
Commercial aerospace aftermarket
48,412
38,169
138,183
105,408
Total commercial aerospace
86,276
58,828
244,728
161,571
Business jet & general aviation OEM
19,900
19,859
59,837
57,177
Business jet & general aviation aftermarket
14,277
12,738
38,442
36,440
Total business jet & general aviation
34,177
32,597
98,279
93,617
Total commercial OEM
57,764
40,518
166,382
113,340
Total commercial aftermarket
62,689
50,907
176,625
141,848
Total commercial
120,453
91,425
343,007
255,188
Defense Net Sales
Total defense OEM
28,276
13,752
78,289
39,810
Total defense aftermarket
17,252
15,032
52,921
49,227
Total defense
45,528
28,784
131,210
89,037
Other Net Sales
Total other OEM
4,907
3,315
14,676
8,836
Total other aftermarket
5,282
3,227
14,944
11,472
Total other
10,189
6,542
29,620
20,308
Net Sales
Contract Liabilities
Contract liabilities, or deferred revenue, represent payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on established terms. The Company's contract liabilities consisted of the following (in thousands):
Contract liabilities, current (1)
8,542
4,227
Contract liabilities, long-term
Total contract liabilities
(1) Included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.
During the three and nine months ended September 30, 2026, the Company recognized revenue of approximately $0.1 million and $3.6 million, respectively, that was included in the contract liability balance at December 31, 2025. The Company had no material contract assets at September 30, 2026 and December 31, 2025.
4. Inventories
Inventories consisted of the following (in thousands):
Raw materials
48,868
45,286
Work-in-process
54,838
36,111
Finished goods
24,927
27,639
Total
11
5. Property, Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
Land
16,315
16,299
Buildings and improvements
42,713
39,295
Machinery, equipment, furniture and fixtures
112,075
102,843
171,103
158,437
Less: accumulated depreciation and amortization
(81,446
(75,901
There were no sales of property, plant and equipment during the nine months ended September 30, 2026 and 2025.
6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
Compensation and related benefits
19,330
18,446
Customer advances
Professional fees
2,579
3,905
Other
10,727
9,841
7. Long-Term Debt
The Company’s debt consisted of the following (in thousands):
Term loans
961,229
726,366
Total debt
962,729
727,866
Less: unamortized debt issuance costs
(14,143
(12,166
Total debt, net
948,586
715,700
Less: current portion
(6,736
(4,362
The Company’s long-term debt at September 30, 2026 consisted principally of borrowings under its Nineteenth Amendment to Credit Agreement, dated as of December 23, 2025, as amended from time to time (Credit Agreement) and West Virginia Economic Development Authority notes. The Credit Agreement is secured by substantially all of the assets of the Company.
On August 1, 2025, the Credit Agreement was amended to reduce the applicable margin by 0.5%. At the Company's election, interest on loans will accrue at the SOFR rate plus the applicable margin of 4.25% or at the base rate plus the applicable margin of 3.25% as long as the Company maintains a leverage ratio of less than 5.5 to 1.
On November 25, 2025, the Credit Agreement was amended to increase the Delayed Draw Term Loans commitment by an aggregate principal amount of $175 million for a total Delayed Draw Term Loans commitment in an aggregate principal amount equal to $275 million. In addition, the availability period of the Delayed Draw Term Loans commitment was extended to September 30, 2026.
On December 23, 2025, the Credit Agreement was amended to make available to the Company an incremental term loan in an aggregate principal amount equal to $445 million for purposes of (i) paying a portion of the consideration for the LMB acquisition, (ii) financing the payment of LMB debt, (iii) paying fees and expenses incurred in connection with the foregoing, and (iv) otherwise funding working capital and general corporate purposes.
On January 21, 2026, the Company drew down $240 million of the available Delayed Draw Term Loans commitment to fund a portion of the Harper Engineering acquisition.
The Credit Agreement requires the maintenance of a quarterly leverage ratio. There are also certain non-financial covenants in place limiting us from, among other things, incurring other indebtedness, creating any liens on our properties, entering into merger or
12
consolidation transactions, disposing of all or substantially all of our assets and payment of certain dividends and distributions. The Company was in compliance with all financial and non-financial covenants of the Credit Agreement as of September 30, 2026.
The Credit Agreement requires mandatory prepayments of the principal amount if there is excess cash flow, as defined, during a calendar year.
The Credit Agreement permits voluntary principal prepayments, in whole or in part, with no premium for any prepayments made. Any voluntary loan prepayments are applied to reduce future scheduled installments of principal in the order specified by the Company, or if the Company does not specify, the prepayment is applied to reduce the scheduled installments of principal in direct order of maturity.
At September 30, 2026, there was $961.2 million outstanding under the Credit Agreement, and there was $50.0 million available under the revolving line of credit.
8. Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, finance leases and debt. The carrying amounts of all financial instruments reported on the condensed consolidated balance sheets at September 30, 2026 and December 31, 2025 are considered to approximate fair value either due to the relatively short period of time between the origination of these financial instruments and their expected realization, or the interest rates associated with the debt obligations approximate current market rates.
9. Commitments and Contingencies
There are various lawsuits and claims pending against the Company incidental to its business. Although the final results of such suits and proceedings cannot be predicted with certainty, in the opinion of management, the ultimate liability, if any, will not have a material impact on the condensed consolidated financial statements.
10. Earnings per Share
Earnings per share was computed as follows (in thousands, except per share amounts):
Denominator for basic and diluted earnings per share:
Weighted-average common shares outstanding - basic
Effect of dilutive common shares
2,081
2,253
1,994
2,324
Weighted-average common shares outstanding—diluted
Earnings per share—basic
Earnings per share—diluted
11. Income Taxes
At the end of each quarter, the Company makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods.
During the three months ended September 30, 2026 and 2025 effective income tax rate was 25.2% and (20.0)%, respectively. The 2026 effective income tax rate increased when compared to 2025, primarily due to the impact from enactment of the One Big Beautiful Bill Act ("OBBBA") which resulted in a one-time tax benefit during the three months ended September 30, 2025.
During the nine months ended September 30, 2026 and 2025 the effective income tax rate was 24.4% and 6.1%, respectively. The 2026 effective income tax rate increased when compared to 2025, primarily due to the impact from enactment of the OBBBA which resulted in a one-time tax benefit during the nine months ended September 30, 2025.
The Company's effective income tax rate for the nine months ended September 30, 2026 was higher than the federal statutory tax rate of 21% primarily due to the geographical mix of projected profits and non-deductible expenses. These impacts were partially offset by foreign-derived deduction eligible income and research and development tax credits.
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12. Segment Reporting
The Company reports the results of its continuing operations in one reportable segment. The Company's Chief Operating Decision Maker (CODM), our Chief Executive Officer, monitors net income, net sales, and Adjusted EBITDA to evaluate performance and make operating decisions. The measures of segment profit or loss are consolidated net income and Adjusted EBITDA. EBITDA means earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA, adjusted for other items within a relevant period which are not reflective of the segment's operating performance in the period.
The CODM reviews consolidated net income together with the underlying revenues, costs and expenses reflected in the Condensed Consolidated Statements of Income. Because the Company has a single reportable segment, the significant segment expenses and other segment items are the same as those reported in the consolidated financial statements as they relate to net income.
The following table provides a reconciliation of the Company's segment Adjusted EBITDA to net income for the three and nine months ended September 30, 2026 and 2025 (in thousands):
Significant segment expenses:
Adjusted cost of sales (1)
73,536
55,058
212,261
157,814
Adjusted selling, general and administrative expenses (2)
27,265
19,641
74,423
57,895
Adjusted research and development costs (3)
3,424
2,943
12,540
9,464
Adjusted EBITDA
71,945
49,109
204,613
139,360
Recognition of inventory step-up (4)
(45
(4,916
Other expense, net (5)
(589
(154
(1,856
Transaction expenses (6)
(780
(1,846
(3,580
(4,290
Stock-based compensation (7)
(4,427
(3,878
(13,400
(10,617
Acquisition and facility integration costs (8)
(457
(3,839
Depreciation and amortization
(19,969
(12,789
(58,855
(37,934
(20,012
(6,012
(58,736
(18,952
Income tax (provision) benefit
(6,584
4,598
(15,344
(3,894
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our condensed consolidated financial statements including the related notes thereto, included elsewhere in this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q contains both historical information and “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and 27A of the Securities Act of 1933, as amended. All statements other than statements of historical fact included that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements with words like “believe,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate” or “continue” and other words and terms of similar meaning. These forward-looking statements may be contained throughout this Quarterly Report on Form 10-Q. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to, among other things, our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Many factors mentioned in our discussion in this Quarterly Report on Form 10-Q, including the risks outlined under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A, “Risk Factors,” of our most recent Annual Report on Form 10-K, will be important in determining future results. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those described under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A, “Risk Factors,” of our most recent Annual Report on Form 10-K. Since our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking statements will occur or, if any of them does occur, what impact they will have on our business, results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to update these forward-looking statements, or the risk factors contained in this Quarterly Report on Form 10-Q, to reflect new information, future events or otherwise, except as may be required under federal securities laws.
Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Report on Form 10-Q include but are not limited to: the almost exclusive focus of our business on the aerospace and defense industry; our heavy reliance on certain customers for a significant portion of our sales; the fact that we have in the past consummated acquisitions and our intention to continue to pursue acquisitions, and that our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations; and other factors. Refer to Part II, Item 1A included in this Quarterly Report on Form 10-Q and to Part I, Item 1A of our most recent Annual Report on Form 10-K for additional information regarding the foregoing factors that may affect our business.
Overview
We specialize in the design, manufacture, and sale of niche aerospace and defense components that are essential for today’s aircraft and aerospace and defense systems. We focus on mission-critical, highly engineered solutions with high intellectual property content. Furthermore, our products have significant aftermarket exposure, which has historically generated predictable and recurring revenue.
The products we manufacture cover a diverse range of applications supporting nearly every major aircraft platform in use today and include auto throttles, lap-belt airbags, two- and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, interior securing devices, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions and motion and actuation devices, customized edge-lighted panels and knobs and annunciators for incandescent and LED illuminated pushbutton switches, high-performance fans and cooling devices, lighting, Human-Machine Interface products, and bespoke lighting systems, among others.
We primarily serve three core end markets: commercial, business jet and general aviation, and defense, which have long historical track records of consistent growth. We also serve a diversified customer base within these end markets where we maintain long-standing customer relationships. We believe that the demanding, extensive and costly qualification process for new entrants, coupled
with our history of consistently delivering exceptional solutions for our customers, has provided us with leading market positions and created significant barriers to entry for potential competitors. By utilizing differentiated design, engineering, and manufacturing capabilities, along with a highly targeted acquisition strategy, we have sought to create long-term, sustainable value with a consistent, global business model.
As a specialized supplier in the aerospace and defense component industry, we believe we are well positioned to deliver innovative, mission-critical solutions to a wide array of aerospace and defense customers. Our key competitive strengths support our ability to offer differentiated solutions to our customers. We have a portfolio of mission-critical, niche aerospace and defense components that we believe hold leading market positions. We have intellectual property-driven proprietary products and expertise in an industry with high barriers to entry. We are strategically focused on higher-margin aftermarket content. We have highly diversified revenue streams, and our diversification stretches across end-markets, customers, platforms, and product category or application. We have an established business model with a lean, entrepreneurial structure. We have a disciplined and strategic approach to acquisitions with a history of successful integration. We have a track record of strong growth, margins and cash flow generation.
Recent Developments
On January 21, 2026, the Company acquired Harper Engineering for $249.8 million in cash. Founded in 1968, Harper Engineering is aleading manufacturer of mechanically engineered devices for aircraft interiors and holds a proprietary portfolio of latching and securing mechanisms used across multiple leading commercial aerospace platforms.
The acquisition was financed through the drawdown of $240 million of Delayed Draw Term Loans available under the Company'sexisting Credit Agreement and cash on hand. The Delayed Draw Term Loans will mature on the same date, will amortize, and will bear the same interest rate as the existing term loans outstanding under the Credit Agreement.
Outlook
As we look to the rest of 2026 and into 2027, we anticipate net sales growth to be driven by organic growth, in particular the conversion of high levels of backlog of our existing products, and the impact from strategic acquisitions. Backlog primarily consists of firm orders for products that have not yet shipped. Continued inflationary pressures and supply chain disruptions may lead to higher material and labor costs although these pressures and disruptions have not had a material effect on our year-to-date results of operations or capital resources, and we do not expect them to materially affect our outlook or business goals. So far in 2026, we have continued and plan to continue our commitment to develop new products and services, penetrate markets further, and pursue an aggressive acquisition strategy while seeking to maintain our financial strength and flexibility.
Results of Operations
The following table sets forth, for the three and nine months ended September 30, 2026 and 2025, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (in thousands unless otherwise indicated):
Dollars
% of Net Sales
100.0
%
45.8
47.3
47.2
47.1
54.2
52.7
52.8
52.9
27.2
28.2
27.6
29.0
0.4
1.5
0.6
1.2
0.3
0.1
26.3
22.9
24.2
22.6
11.4
4.7
11.7
5.2
14.9
18.2
12.5
17.4
3.7
(3.6
)%
3.0
1.1
11.2
21.8
9.5
16.3
Other Data:
EBITDA (1)
66,149
41,809
180,404
120,415
Adjusted EBITDA (1)
Net income margin
Adjusted EBITDA Margin (1)
40.8
38.7
40.6
38.2
16
Financial and Operational Highlights
Three months ended September 30, 2026 compared with three months ended September 30, 2025
Net sales for the three months ended September 30, 2026 increased $49.4 million, or 39.0%, to $176.2 million as compared to $126.8 million for the three months ended September 30, 2025.
Net organic sales represent net sales from our existing businesses for comparable periods and exclude net sales from acquisitions. We include net sales from new acquisitions in net organic sales from the 13th-month after the acquisition on a comparative basis with the prior period. Net acquisition sales for the three months ended September 30, 2026 represent net sales from acquisitions that were completed in 2025 and 2026 for which there are no comparable net sales during the prior year. We believe this measure provides an understanding of underlying sales trends as it provides net sales comparisons on a consistent basis. We do not believe our net sales are subject to significant seasonal variations. See Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements for further information on the Company’s acquisition activities.
Net Organic Sales
Net organic sales for the three months ended September 30, 2026 increased $20.1 million or 15.8%, to $146.8 million as compared to $126.8 million for the three months ended September 30, 2025. The increase in net organic sales was primarily related to increases in OEM total commercial sales ($7.6 million, an increase of 18.7%), aftermarket total commercial sales ($5.1 million, an increase of 10.0%), sales of non-aerospace products ($3.6 million, an increase of 54.3%), and defense sales ($3.9 million, an increase of 13.4%). The increase in OEM commercial sales is driven by the increased production rates and deliveries for both narrow-body and wide-body aircraft. The increase in aftermarket total commercial sales was attributable to increased utilization of the aged commercial aircraft fleet. The increase in sales of non-aerospace products was primarily driven by higher demand for industrial gas-turbine components. The increase in defense sales was primarily attributable to the variability of revenue distribution for defense-related products, which can vary significantly from period to period and higher demand from global military conflicts.
Net Acquisition Sales
Net acquisition sales of $29.3 million for the three months ended September 30, 2026 are made up of LMB which was acquired on December 23, 2025, and Harper Engineering which was acquired on January 21, 2026. This represents 23.2% of the increase in total net sales for the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Gross Profit and Cost of Sales
Cost of sales for the three months ended September 30, 2026 increased $20.8 million, or 34.7%, to $80.8 million compared to $60.0 million for the three months ended September 30, 2025. Cost of sales and the related percentage of net sales for the three months ended September 30, 2026 and 2025 were as follows (in thousands except for percentages):
Change
% Change
Cost of sales - excluding costs below
76,703
57,732
18,971
32.9
% of net sales
43.5
45.6
4,060
1,254
2,806
223.8
2.3
1.0
Acquisition and facility integration costs
942
(942
NM (1)
0.7
Total cost of sales
20,790
34.7
Gross profit (Net sales less Total cost of sales)
28,629
42.9
Gross profit percentage (Gross profit / Net sales)
(1) NM - not meaningful.
17
Cost of sales for the three months ended September 30, 2026 decreased 1.5% as a percentage of net sales to 45.8% from 47.3% in the comparable period last year. This decrease is primarily attributable to the leveraging of costs and lower acquisition and facility integration costs, partially offset by higher amortization expense for intangible and other long-term assets.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $12.1 million to $47.9 million, or 27.2% as a percentage of net sales, for the three months ended September 30, 2026 from $35.8 million, or 28.2% as a percentage of net sales, for the three months ended September 30, 2025. Selling, general and administrative expenses and the related percentage of net sales for the three months ended September 30, 2026 and 2025 were as follows (amounts in thousands except for percentages):
Selling, general and administrative expenses - excluding costs below
27,406
19,893
7,513
37.8
15.6
15.7
Amortization of intangible assets
12,529
8,609
3,920
45.5
7.1
6.8
Stock-based compensation expense
4,185
307
7.9
2.4
3.1
435
(435
-100.0
Research and development expenses
3,738
795
27.0
2.1
Total selling, general and administrative expenses
12,100
33.8
Selling, general and administrative expenses decreased by 1.0% as a percentage of net sales for the three months ended September 30, 2026 when compared to the same period in 2025. This is primarily driven by a decrease in stock-based compensation expense, acquisition and facility and integration costs, and research and development expenses as a percentage of sales, partially offset by an increase in amortization of intangible assets as a percentage sales.
Transaction Expenses
Transaction expenses for the three months ended September 30, 2026 and 2025 were $0.8 million and $1.8 million, respectively. Transaction costs can fluctuate depending on the size and number of acquisitions in each year.
Other Expense, net
Other expense, net for the three months ended September 30, 2026, of $0.6 million is primarily related to an increase in the estimated contingent purchase price for the Harper Engineering acquisition.
Operating Income
Operating income for the three months ended September 30, 2026, was $46.2 million, or 26.3% as a percentage of net sales, compared to $29.0 million, or 22.9% as a percentage of net sales for the three months ended September 30, 2025. The increase in operating income is due to the factors discussed above.
Interest Expense
Interest expense for the three months ended September 30, 2026 increased $14.0 million, to $20.0 million compared to $6.0 million for the three months ended September 30, 2025. This increase is attributable to interest on borrowings associated with the acquisitions of LMB in December 2025 and Harper Engineering in January 2026.
Income Tax Provision
The income tax provision for the three months ended September 30, 2026 was $6.6 million compared to an income tax benefit of $4.6 million for the three months ended September 30, 2025. This increase was primarily due to the impact from enactment of the OBBBA which resulted in a one-time tax benefit during the three months ended September 30, 2025.
18
Net Income
Net income for the three months ended September 30, 2026 was $19.6 million, or 11.2% as a percentage of net sales, compared to net income for the three months ended September 30, 2025 of $27.6 million, or 21.8% as a percentage of net sales. The results for the three months ended September 30, 2026 were negatively impacted by higher interest expense and higher amortization of intangible and other long-term assets.
Nine months ended September 30, 2026 compared with nine months ended September 30, 2025
Net sales for the nine months ended September 30, 2026 increased $139.3 million, or 38.2%, to $503.8 million as compared to $364.5 million for the nine months ended September 30, 2025.
Net organic sales represent net sales from our existing businesses for comparable periods and exclude net sales from acquisitions. We include net sales from new acquisitions in net organic sales from the 13th-month after the acquisition on a comparative basis with the prior period. Net acquisition sales for the nine months ended September 30, 2026 represent net sales from acquisitions that were completed in 2025 and 2026 for which there are no comparable net sales during the prior year. We believe this measure provides an understanding of underlying sales trends as it provides net sales comparisons on a consistent basis. We do not believe our net sales are subject to significant seasonal variations. See Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements for further information on the Company’s acquisition activities.
Net organic sales for the nine months ended September 30, 2026 increased $48.4 million or 13.2%, to $412.8 million as compared to $364.5 million for the nine months ended September 30, 2025. The increase in net organic sales was primarily related to increases in OEM total commercial sales ($25.0 million, an increase of 22.0%), aftermarket total commercial sales ($15.3 million, an increase of 10.8%), and sales of non-aerospace products ($9.0 million, an increase of 44.2%), partially offset by a decline in defense sales ($1.0 million, a decrease of 1.1%). The increase in OEM commercial sales is driven by the increased production rates and deliveries for both narrow-body and wide-body aircraft. The increase in aftermarket total commercial sales was attributable to increased utilization of the aged commercial aircraft fleet. The increase in sales of non-aerospace products was primarily driven by higher demand for industrial gas-turbine components. The decrease in defense sales was primarily attributable to the variability of revenue distribution for defense-related products, which can vary significantly from period to period.
Net acquisition sales of $91.0 million for the nine months ended September 30, 2026 are made up of Beadlight which was acquired on July 28, 2025, LMB which was acquired on December 23, 2025, and Harper Engineering which was acquired on January 21, 2026. This represents 25.0% of the increase in total net sales for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
19
Cost of sales for the nine months ended September 30, 2026 increased $66.1 million, or 38.5%, to $238.0 million compared to $171.9 million for the nine months ended September 30, 2025. Cost of sales and the related percentage of net sales for the nine months ended September 30, 2026 and 2025 were as follows (in thousands except for percentages):
221,264
165,801
55,463
33.5
43.9
11,807
3,593
8,214
228.6
2,411
(2,411
4,871
66,137
38.5
73,167
38.0
Cost of sales for the nine months ended September 30, 2026 increased 0.1% as a percentage of net sales to 47.2% from 47.1% in the comparable period last year. This increase is primarily attributable to higher amortization expense for intangible and other long-term assets and the recognition of inventory step-up, both of which are related to the LMB and Harper Engineering acquisitions, partially offset by our operating leverage, execution of our strategic value drivers and lower acquisition and facility integration costs.
Selling, general and administrative expenses increased by $33.1 million to $138.9 million, or 27.6% as a percentage of net sales, for the nine months ended September 30, 2026 from $105.8 million or 29.0% as a percentage of net sales, for the nine months ended September 30, 2025. Selling, general and administrative expenses and the related percentage of net sales for the nine months ended September 30, 2026 and 2025 were as follows (amounts in thousands except for percentages):
75,232
58,782
16,450
28.0
16.1
37,042
25,467
11,575
7.4
7.0
13,049
2,432
2.6
2.9
457
1,428
(971
-68.0
13,085
3,621
38.3
2.5
33,107
31.3
Selling, general and administrative expenses decreased by 1.4% as a percentage of net sales for the nine months ended September 30, 2026 when compared to the same period in 2025. This is primarily driven by the leveraging of fixed costs and decreases in acquisition and facility integration costs and stock-based compensation expense as a percentage of sales, partially offset by an increase in amortization of intangible assets as a percentage of sales.
20
Transaction expenses for the nine months ended September 30, 2026 and 2025 were $3.6 million and $4.3 million, respectively. Transaction costs can fluctuate depending on the size and number of acquisitions in each year.
Other expense, net for the nine months ended September 30, 2026 of $1.9 million is primarily related to an increase in the estimated contingent purchase price for the Harper Engineering acquisition.
Operating income for the nine months ended September 30, 2026, was $121.5 million, or 24.2% as a percentage of net sales, compared to $82.5 million, or 22.6% as a percentage of net sales for the nine months ended September 30, 2025. The increase in operating income is due to the factors discussed above.
Interest expense for the nine months ended September 30, 2026 increased $39.7 million, to $58.7 million compared to $19.0 million for the nine months ended September 30, 2025. This increase is attributable to interest on borrowings associated with the acquisitions of LMB in December 2025 and Harper Engineering in January 2026.
The income tax provision for the nine months ended September 30, 2026 was $15.3 million compared to $3.9 million for the nine months ended September 30, 2025. This is due to the impact from enactment of the OBBBA which resulted in a one-time tax benefit during the nine months ended September 30, 2025.
Net income for the nine months ended September 30, 2026 was $47.5 million, or 9.5% as a percentage of net sales, compared to net income for the nine months ended September 30, 2025 of $59.6 million, or 16.3% as a percentage of net sales. The results for the nine months ended September 30, 2026 were negatively impacted by higher interest expense, higher amortization of intangible and other long-term assets, and recognition of inventory step-up attributable to the acquisitions of LMB and Harper Engineering, and the impact of the enactment of OBBBA on the nine months ended September 30, 2025 results.
Liquidity and Capital Resources
The following table summarizes our capitalization as of September 30, 2026 and December 31, 2025 (in thousands, unless otherwise indicated):
Debt:
Credit Agreement debt (including current portion)
Finance lease liabilities (including current portion)
2,967
3,170
951,553
718,870
Stockholders' equity
Total capitalization (debt plus equity)
2,173,124
1,893,623
Total debt to total capitalization
44
38
Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs. We fund our investing activities primarily from cash provided by our operating and financing activities. As of September 30, 2026, we had availability of a $50 million revolving line of credit. Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our Credit Agreement will be sufficient to fund our cash requirements for at least the next twelve months. As we continue to expand our business, including by any acquisitions we may make, we may in the future require additional working capital for increased costs. See “Credit Agreement” (below) for additional detail regarding our financing activities.
21
Operating Activities
Net cash provided by operating activities in the nine months ended September 30, 2026 and 2025 is $106.1 million and $81.9 million, respectively. The $24.2 million increase was primarily driven by higher non-cash items included in net income partially offset by an increase in working capital.
Investing Activities
Net cash used in investing activities in the nine months ended September 30, 2026 of $262.3 million is principally attributable to the acquisition of Harper Engineering. Net cash used in investing activities in the nine months ended September 30, 2025 of $40.3 million is principally due to the acquisition of Beadlight in July 2025.
Financing Activities
Net cash provided by financing activities in the nine months ended September 30, 2026 of $232.1 million is principally related to borrowings under our Credit Agreement in connection with the acquisition of Harper Engineering. Net cash provided by financing activities in the nine months ended September 30, 2025 of $3.2 million is principally related to proceeds from the exercise of stock options and the $1.5 million loan obtained from the West Virginia Economic Development Authority in July 2025.
Credit Agreement
The Company’s long-term debt consists primarily of borrowings under its Credit Agreement.
On December 23, 2025, the Credit Agreement was amended to make available to the Company an incremental term loan in an aggregate principal amount equal to $445 million for purposes of (i) paying a portion of the consideration for the LMB acquisition, (ii) financing the payment of LMB debt, (iii) paying fees and expenses incurred in connection with the foregoing, and (iv) otherwise to fund working capital and general corporate purposes.
On January 21, 2026, the Company drew down $240 million of the available Delayed Draw Term Loans commitment in connection with the Harper Engineering acquisition.
We have future obligations under various contracts relating to debt and interest payments, finance and operating leases and our post-retirement benefit plan. During the nine months ended September 30, 2026, there were no material changes to these obligations, other than the contingent purchase consideration that may be paid to the sellers of Harper Engineering if certain financial targets for the years 2026 to 2031 are achieved, as discussed in Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements. For a description of our other obligations and commitments, see our consolidated financial statements reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Off-Balance Sheet Arrangements
As of September 30, 2026, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
Our condensed consolidated unaudited financial statements have been prepared in conformity with U.S. GAAP for interim financial statements and include the accounts of the Company and its subsidiaries. Often, management’s judgment is needed in the selection and application of certain accounting policies and methods. However, investors are cautioned that the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.
A complete and comprehensive discussion of our most critical accounting policies that require management to make judgments about matters that are inherently uncertain was included in Management’s Discussion and Analysis of Financial Condition and Results of
22
Operations– Critical Accounting Estimates disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 which was filed on March 2, 2026. Refer to Note 1, Basis of Presentation, of the Notes to Condensed Consolidated Financial Statements included herein for updates to disclosures of accounting standards recently adopted or required to be adopted in the future.
We present below certain financial information based on our EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin. References to “EBITDA” mean earnings before interest, taxes, depreciation and amortization, references to “Adjusted EBITDA” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and Adjusted EBITDA, and references to “Adjusted EBITDA Margin” refer to Adjusted EBITDA divided by net sales. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP. We present EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin because we believe they are useful indicators for evaluating operating performance. In addition, our management uses Adjusted EBITDA to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses Adjusted EBITDA of target companies to evaluate acquisitions.
Although we use EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin as measures to assess the performance of our business and for the other purposes set forth above, the use of non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:
Because of these limitations, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin should not be considered as measures of cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin in isolation and specifically by using other U.S. GAAP measures, such as net sales, operating profit, and net income, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin may not be comparable to the calculations of similarly titled measures reported by other companies.
23
The following table sets forth a reconciliation of net income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three and nine months ended September 30, 2026 and 2025 (in thousands unless otherwise indicated):
Adjustments:
3,380
2,926
Amortization
16,589
9,863
EBITDA
Recognition of inventory step-up (1)
Other expense, net (2)
Transaction expenses (3)
Stock-based compensation (4)
Acquisition and facility integration costs (5)
1,377
3,839
Adjusted EBITDA Margin
24
The Company's market risks are described more fully within Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025. These market risks have not materially changed for the three and nine months ended September 30, 2026.
As of September 30, 2026, the Company carried out an evaluation, under the supervision and with the participation of its management, including its President, Chief Executive Officer, and Executive Co-Chairman (Principal Executive Officer) and Treasurer and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the President, Chief Executive Officer, and Executive Co-Chairman and the Treasurer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Company's management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.
As permitted by the Securities and Exchange Commission, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition and management elected to exclude LMB and Harper Engineering from its evaluation of internal control over financial reporting as of September 30, 2026. See Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements for additional information.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
None.
In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Not applicable.
Securities Trading Plans of Directors or Executive Officers
(c) During the three months ended September 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated or modified a Rule 10b5-1 trading arrangement or any “non-Rule 10b5-1 trading agreement” (as defined in Item 408(c) of Regulation S-K).
Item 6. Exhibits
Exhibit
Number
Description
Certificate of Incorporation of Loar Holdings Inc. (incorporated by reference to Exhibit 3.1 to the Company's Amendment No. 1 to Registration Statement on Form S-1 filed on April 17, 2024).
3.2
By laws of Loar Holdings Inc. (incorporated by reference to Exhibit 3.2 to the Company's Amendment No. 1 to Registration Statement on Form S-1 filed on April 17, 2024).
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 5, 2026
By:
/s/ Glenn D'Alessandro
Glenn D’Alessandro
Treasurer and Chief Financial Officer
(principal financial and accounting officer)