Q4 2024 Loar Holdings Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. The Loar Holdings Incorporated call will begin momentarily. We thank you for your patience and ask that you please continue to hold. Our conference will begin momentarily.

Ladies and gentlemen, thank you for standing by the lure holdings incorporated call will begin momentarily. We thank you for your patience and ask that you. Please continue to hold our conference will begin momentarily.

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Speaker: and Jane Ames.

Operator: [music] Greetings and welcome to the Loar Holdings Incorporated fourth quarter and full year 2024 results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded.

Greetings and welcome to the <unk> Holdings incorporated fourth quarter and full year 2024 results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this call.

Is being recorded.

Ian Mckillop: I would now like to turn the conference over to your host, Mr. Ian McKillop, Director of Investor Relations for Loar Holdings. Thank you. You may begin.

Speaker Change: I would now like to turn the conference over to your host Mr. Ian Mckillop director of Investor Relations for Lore Holdings. Thank you you may begin.

Ian Mckillop: Thank you Melissa and good morning, everyone welcome to as Melissa mentioned, the lower holdings fourth quarter and full year 2024 earnings conference call presenting on the call. This morning are Lewis Chief Executive Officer, and Executive Chairman Derksen, Charles Executive Co Chairman, Brett Milgrom, Treasurer, and Chief Financial Officer, Glenda Alessandra as well as myself Ian.

Ian Mckillop: Thank you, Melissa, and good morning, everyone. Welcome to, as Melissa mentioned, the Loar Holdings fourth quarter and full year 2024 earnings conference call. Presenting on the call this morning are Loar's chief executive officer and executive co-chairman, Dirkson Charles, executive co-chairman, Brett Milgrim, treasurer and chief financial officer, Glenn D'Alessandro, as well as myself, Ian McKillop, the director of Investor Relations.

Ian Mckillop: The director of Investor Relations. Please visit our website at Loar group Dot Com <unk> com to obtain a slide deck and call replay information before we begin we at Lord would like to remind you that statements made during this call which are not historical in fact are forward looking statements for further information about important factors that could cause actual results to differ materially from those.

Ian Mckillop: Please visit our website at loargroup.com to obtain a slide deck and call replay information. Before we begin, we at Loar would like to remind you that statements made during this call, which are not historical, in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to our latest filings with the SEC available through the Investor Relations section of our website or at sec.gov. We'd like to also advise you that during the course of the call, we'll be referring to adjusted EBITDA, adjusted EBITDA margin, and adjusted earnings per share, each of which is a non-GAAP financial measure.

Ian Mckillop: As expressed or implied in the forward looking statements. Please refer to our latest filings with the SEC available through the Investor Relations section of our website or at SEC Gov. We'd like to also advise you that during the course of the call we will be referring to adjusted EBITDA adjusted EBITDA margin and adjusted earnings per share each of which is a non.

Ian Mckillop: GAAP financial measure please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations to begin today I will now turn the call over to Jackson.

Ian Mckillop: Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations.

Dirkson Charles: To begin today, I will now turn the call over to Dirkson. Good morning. I'm Dirkson, Founder, CEO, and Co-Chairman of Loar, and as always, to respect your time, we will keep our remarks as brief as possible.

Jackson: Thanks Ian.

Speaker Change: Good morning, I'm dark since founding CEO and co chairman of law.

Speaker Change: And it's always to respect your time, we will keep our remarks as brief as possible. So.

Dirkson Charles: So let us start by reminding you who we are. Lots of family and companies with a very, very simple approach to creating shareholder value. First, we believe that by providing our business units with an entrepreneurial and collaborative environment to advance their brands, we will generate above market growth. Since our inception in 2012, through the end of calendar year 2024, we have grown sales and adjusted EBITDA at a compound annual growth rate of 37% and 45% respectively. We execute a loan for balance. We identified pain points within the aerospace industry and looked to solve those problems through organically launching new products, which we believe over the long term will create one to three percentage points of top line.

Speaker Change: Let us start by reminding you who we are.

Speaker Change: Lots of family of companies when it very very simple approach to creating shareholder value.

Speaker Change: First we believe that providing our business units for the entrepreneurial and collaborative environment to advance the brands, we will generate above market growth rates since our inception in 2012 through the end of calendar year 'twenty 'twenty four we have grown sales and adjusted EBITDA on a compound annual growth rate of 30%.

Speaker Change: When does that and 45% respectively.

Speaker Change: We execute alone for valuation we.

Speaker Change: <unk> pain points within the aerospace industry.

Speaker Change: Look to solve those problems through organically launching new products.

Speaker Change: We believe over the long term will create one to three percentage points of topline.

Dirkson Charles: growth annually. We focus on optimizing the way we manufacture, go-to-market, and manage our companies to enhance productivity. Each year, we'll identify initiatives that will allow us to continually improve margins of our performance, but we focus on one or two major initiatives each year that will improve margins. In addition, across our portfolio of companies, we'll achieve more price than our cost of inflation each year. The result is a continuous improvement in margins year over year, with on occasion a temporary dilution as a result of acquiring a business with diluted margins or incurring costs as a result of being a public company.

Speaker Change: Growth annually.

Speaker Change: We focus on optimizing the way, we manufacture go to market and manage our companies to enhance productivity.

Speaker Change: Each year with identified initiatives that would allow us to continually improve margins.

Speaker Change: Our performance with a focus on one or two major initiatives each year that will improve margins.

Speaker Change: In addition across our portfolio of companies will achieve more price than our cost of inflation. Each year. The result is a continuous improvement in margins year over year with an occasion in temporary dilution as a result of acquiring a business with dilutive margins or incurring costs.

Speaker Change: As a result of being a public company.

Dirkson Charles: all of which we have experienced over the last five years. But regardless of these temporary headwinds, we continue to improve our margin. By the time we end calendar year 2025, we will have improved margins by 660 basis points. in five years. This level of margin improvement, we expect to continue for the foreseeable future as we execute on our value drive.

All of which we have experienced over the last five years, but regardless of these temporary headwinds we continue to improve our margins.

Speaker Change: By the time, we end calendar 2025 will that be will that improve margins by 660 basis points in five years.

Speaker Change: This level of margin improvement, we expect to continue for the foreseeable future as we execute on our value drivers.

Dirkson Charles: Most importantly, we are committed to developing and improving the talent of all of our employees. because our success is solely a result of their dedication and commitment. This is the value driver that we've doubled down on most recently. We've hired a chief talent officer whose primary purpose is to ensure that we recruit the best athletes and develop our current mates to ensure that we are more than ready for the outside gains that we see over the next few years.

Speaker Change: Most importantly, we are committed to developing and improving the talent all of our employees because our success is solely a result, Dan dedication and commitment.

Speaker Change: This is the value driver that we doubled down on most recently.

Speaker Change: We've hired a chief talent officer, whose primary purpose is to ensure that we recruit the best athletes and develop our current needs to ensure that we are more than ready pretty outsized gains that we see over the next few years.

Dirkson Charles: Again, to all my mates, a big thank you for your commitment and hard work.

Speaker Change: Again to all my makes a big thank you for your commitment and hard work.

Brett Milgrim: With that said, I will now turn it over to Brett to walk you through the key characteristics of our portfolio. Thanks, Dirkson. Good morning, everyone.

Speaker Change: With that said I will now turn it over to Brett to walk you through the key characteristics of our portfolio right.

Brett Milgrom: Thanks Derek.

Brett Milgrom: Good morning, everyone on slide six entitled our portfolio, you will see an updated look at.

Brett Milgrim: On slide six, entitled Our Portfolio, you will see an updated look at how our business has been constructed. As we've said previously, our business is focused on proprietary content across all parts of the aerospace and defense industry. As such, it's worth repeating something I've said in the past, which is that we are relatively agnostic to the end markets, customers, and application of the parts, so long as we maintain a broad, balanced, and diverse platform across all the segments. However, what we are very disciplined about is that our platform fits and maintains the business model we like, which is highlighted in those six criteria at the bottom of the page.

Brett Milgrom: How our business has been constructed.

Brett Milgrom: As we've said previously our business is focused on proprietary content across all parts of the aerospace and defense industry as such it's worth repeating something I've said in the past, which is that we are relatively agnostic to the end markets customers and application of the parts.

Brett Milgrom: So long as we maintain a broad and balanced and diverse platform across all the segments. However, what we are very disciplined about is that our platform fits and maintains the business model, we like which is highlighted in those six criteria at the bottom of the page.

Brett Milgrim: With all that in mind, given we're the one-year anniversary of our IPO, it's probably worth reminding people where we were about a year ago. If you look at the end market pie chart, we are still balanced across our three primary end markets in commercial, business jet, and general aviation, and defense. Defense has grown a little bit faster than some of the other markets, such that a year ago it was about 19%, 20% of our business. Today it's about 24%, of which 3% is only directed DOD, which is still about the same as it was. But of note in this segment, or in this chart, the non-aviation piece of the business, which I think we told people would shrink over time as we continue to do acquisitions that are exclusively A&B focused, has dropped from 12% a year ago to about 7% today.

Brett Milgrom: With all that in mind, given we're approaching the one year anniversary of our IPO, it's probably worth reminding people, where we were about a year ago. If you look at the end market Pie chart, we are still balanced across our three primary end markets and commercial business.

Brett Milgrom: But in general aviation and defense.

Brett Milgrom: Defense has grown a little bit faster than some of the other markets such that a year ago. It was about 20% 19, 20% of our business today, it's about 24% of which 3%.

Brett Milgrom: It is only direct to D O D, which is still about the same as it was but of note in this segment.

Brett Milgrom: Or in this in this chart.

Brett Milgrom: The non aviation piece of the business, which I think we told people would shrink over time as we continue to do acquisitions that are exclusively ANZ focused has dropped from 12% a year ago to about 7% today.

Brett Milgrim: On the aftermarket side, our aftermarket business continues to grow very nicely such that a year ago it represented about 52% of our overall sales. Today it's about 55% and we expect that to continue in the future.

Brett Milgrom: On the aftermarket side of our aftermarket business continues to grow very nicely. So I just had a year ago. It represented about 52% of our overall sales today its about 55% and we can we expect that continue and it should continue in the future.

Brett Milgrim: I'm flipping the page. Our disciplined approach to acquisitions with the criteria listed here applies to all the deals that we've done, but particularly our most recent one, L&B Fans and Motors, which we announced several weeks ago. As a reminder, L&B is a business headquartered in France. It's a deal that currently is under French regulatory review, which we expect to be completed hopefully by the beginning of the third quarter. We have a signed purchase agreement, and we're very much looking forward to getting started with that business as, again, it fits precisely the types of acquisitions that we like.

Brett Milgrom:

Brett Milgrom: Flipping to page.

Brett Milgrom: Our disciplined approach to acquisitions with the criteria listed here.

Brett Milgrom: Applies to all the deals that we've done, but particularly our most recent one L. M D fans and motors, which we announced several weeks ago. As a reminder, L. M. B is the business headquartered in France.

Brett Milgrom: It's a deal that currently is under French regulatory review.

Brett Milgrom: <unk>, which we expect to be.

Brett Milgrom: Be completed hopefully by the beginning of the third quarter, we have a signed purchase agreement and we're very much looking forward to getting started with that business is again. It fits precisely are the types of acquisitions that we like everything from proprietary content and a 100% of what they do is their I D.

Brett Milgrim: Everything from proprietary content, 100% of what they do is their IP. Virtually all L&B's business is A&B focused, so it's right down the middle there. L&B's products frequently get updated, replaced, or in some cases even repaired, so there is meaningful aftermarket to the business. And clearly, the fan market is a niche market where L&B is a very, very strong market position. L&B has been around for many decades.

Brett Milgrom: Virtually all Lmb's businesses A&D focused so it's right down the middle there.

Brett Milgrom: These products frequently get updated replaced or in some cases, even repair so there was meaningful aftermarket to the business.

Brett Milgrom: And clearly the San market is a niche market where L. M. B is a very very strong market position L. M. D has been around for many decades. It is decades worth of strong customer relationships, where their customized products and applications have created enormous opportunities for growth.

Ian Mckillop: It has decades' worth of strong customer relationships where their customized products and applications have created enormous opportunities for growth and very good financial performance, which we expect to continue well into the future and fits very well into our portfolio of products, which I'll let Ian describe to you on the next slide.

Brett Milgrom: And very good financial performance, which we expect to continue well into the future and fits very well into our portfolio of products, which I'll, let Ian described to you on the next slide.

Ian Mckillop: Yeah. Thank you Brett.

Ian Mckillop: Yeah, thank you, Brett. One thing I wanted to highlight here is that last year, we closed the acquisition of Applied Avionics, and the Loar family now goes to market with an average of more than 20,000 unique parts on an annual basis. Our customers have come to depend on our highly proprietary products, the quality we deliver, on-time performance, and engineering capabilities to ensure they're able to maximize their production and aircraft operations.

Speaker Change: One thing I wanted to highlight here is that last year, we closed the acquisition of applied avionics and the lower family now goes to market with an average of more than 20000 unique parts on an annual basis, our customers have come to depend on our highly proprietary products. The quality, we deliver on time performance and engineering.

Speaker Change: Capabilities to ensure they are able to maximize their production and aircraft operations as Brett mentioned, our business model is highly diverse nowhere is this more visible than our product offering we're no more than one no product makes up more than approximately 3% of our net sales, whether it's sensors or switches water purification systems deicing.

Ian Mckillop: As Brett mentioned, our business model is highly diverse. Nowhere is this more visible than our product offering, where no product makes up more than approximately 3% of our net sales. Whether it's sensors or switches, water purification systems, de-icing technologies, human interface devices, ceiling solutions, autothrottle systems, or one of our many other products, we continue to believe that we have the capabilities to serve our customers in a way that is unique to Loar.

Speaker Change: Oh jeez human interface devices sealing solutions auto throttle systems, one of our many other products. We continue to believe that we have the capabilities to serve our customers in a way that is unique to lure I'll now pass the call over to Glenn to walk through end market and financial results. Thank you Lee.

Glenn D'Alessandro: I'll now pass the call over to Glenn to walk through end market and financial results. Thank you. Good morning, everyone.

Glenn: Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro forma basis with each of our businesses were owned as of the first day of the earliest period presented.

Glenn D'Alessandro: Let me start by discussing sales by our end market. This comparison will be on a pro forma basis as if each of our businesses were owned as of the first day of the earliest period. This market discussion includes the recent acquisition of applied avionics in the third quarter of 2021. We achieved record sales during calendar year 24. In total, our sales increased 15% as compared to the prior year. Our Q4-24 sales were also a record, also increasing 15% versus the prior year. These increases were driven by strong performances in defense, commercial OEM, and commercial aftermath.

Glenn: It's market discussion includes the recent acquisition of applied avionics in the third quarter of 2024.

Glenn: We achieved record sales grow in calendar year 'twenty four.

Glenn: In total our sales increased 15% as compared to the prior year. Our Q4 'twenty four sales were also a record also increasing 15% versus the prior year quarter. These.

Glenn: These increases were driven by strong performances in defense commercial OEM and commercial aftermarket.

Glenn D'Alessandro: Our commercial aftermarket sales saw an increase of 15% in calendar year 23-24 versus 23-24. This is primarily driven by the continuing strength and demand for commercial land. We continue to see strong commercial aftermark book. Our commercial aftermarket sales remain strong in Q4 with a 12% increase as compared to the prior year quarter. Our total commercial OEM sales increased by 16% in Q4-24 as compared to the prior year period. This increase was driven primarily by higher sales across a significant portion of the platforms we supply, including wide-body or narrow-body aircraft and general aviation aircraft, as we continue to see an improving environment for commercial OEMs. The increase of 39% in our defense sales was primarily due to strong demand across multiple platforms and an increase in market share as a result of new product launches.

Glenn: Our commercial aftermarket sales saw an increase of 15% in calendar year 'twenty three 'twenty four versus 23.

Glenn: This is primarily driven by the continuing strength in demand for commercial air travel.

Glenn: Continue to see strong commercial aftermarket bookings.

Glenn: Our commercial aftermarket sales remained strong in Q4 with a 12% increase as compared to the prior year quarter.

Glenn: Our total commercial OEM sales increased by 16% in Q4 24 as compared to the prior year period.

Glenn: This increase was driven primarily by higher sales across a significant portion of the platforms, we supply including wide body and narrow body aircrafts.

Glenn: General Aviation aircraft as we continue to see an improving environment our commercial Oems.

Glenn: The increase of 39% and our defense sales was primarily due to strong demand across multiple platforms and an increase in market share as a result of new product launches defense sales will continue to be lumpy given the nature of the ordering patterns of our end customers for our products.

Glenn D'Alessandro: Defense sales will continue to be lumpy given the nature of the ordering patterns of our end customers for our products.

Glenn: Let me recap our financial highlights for the fourth quarter of 'twenty four.

Glenn D'Alessandro: Let me recap our financial highlights for the fourth quarter of 24. our net organic sales increased 14.9% over the prior period. Our gross profit margin for Q4-24 increased by 250 basis points as compared to the prior year period. This increase was primarily due to the execution of our strategic value drivers as well as operating leverage. Our margins were slightly diluted in Q4-24 as a result of the higher mix of defendants.

Glenn: Our net organic sales increased 14, 9% over the prior period.

Glenn: Most profit margin for Q4, 24 increased by 250 basis points as compared to the prior year period.

Glenn: This increase was primarily due to the execution of our strategic value drivers as well as operating leverage.

Glenn: Margins were slightly diluted in Q4 24, as a result of the higher mix of defense sales.

Glenn: We also continued to see some dilutive effects related to the move of one of our manufacturing facilities, which should be behind us at the end of the first quarter of 'twenty five.

Glenn D'Alessandro: We also continue to see some dilutive effects related to the move of one of our manufacturing facilities, which should be behind us at the end of the first quarter of 2025. Our increase in net income of $4 million in Q4-24 versus the prior period. is primarily due to higher operating income and lower income tax. Adjusted EBIT dollars up $11 million in Q4'24 versus the prior period. Adjusted EBITDA margins remain strong at 36.4% due to the execution of our strategic value drivers and operating leverage.

Glenn: Our increase in net income of $4 million in Q4 24 versus the prior year period.

Glenn: <unk> is primarily due to higher operating income and lower income taxes.

Glenn: Adjusted EBITDA was up $11 million in Q4 24 versus the prior year period.

Glenn: Adjusted EBITDA margins remained strong at 36, 4% due to the execution of our strategic value drivers and operating leverage this was partially offset by a higher mix of defense sales and the continued build out of our infrastructure to support our reporting governance and control needs as a newly public company.

Glenn D'Alessandro: This was partially offset by a higher mix of defense sales and the continued build out of our infrastructure to support our reporting, governance, and control needs as a newly public company.

Glenn: Yeah.

Glenn: Okay.

Glenn: Let me recap the financial highlights for the full year 'twenty four.

Glenn D'Alessandro: Let me recap our financial highlights for the full year of 24. Our net organic sales increased 15% over the prior Our gross profit margin for the full year, 24, was 49.4%. As we continue to execute our productivity and pricing initiatives, our net income increased $27 million in Calendars. This was driven by higher operating income and lower income.

Glenn: Our net organic sales increased 15% over the prior period.

Glenn: Our gross profit margin for the full year 24 was 49, 4% as we continue to execute productivity and pricing initiatives.

Glenn: Our net income increased $27 million in calendar year 'twenty. Four this was driven by higher operating income and lower interest.

Glenn D'Alessandro: Howard Justin Evita was a record $146 million in calendar year 24, which is up $34 million versus $24 million.

Glenn: Our adjusted EBITDA was a record $146 million in calendar year, 'twenty, four which is up $34 million versus 23.

Glenn D'Alessandro: Our free cash flow conversion was over 200% for calendar year. This is defined as cash flow from operations, which equals $55 million, less capital expenditures of $9 million, divided by net income of $22 million.

Glenn: Our free cash flow conversion was over 200% for calendar year 'twenty four.

Glenn: This is defined as cash flow from operations, which equals 55 million less capital expenditures of 9 million divided by net income of $22 million.

Glenn: This slide shows was organic growth drivers.

Glenn D'Alessandro: This slide shows Loar's Organic Growth Drivers. First. Secular Growth in the Aerospace Industry. Second, winning new profitable business. Third, value-based pricing, and fourth, new product introduction. With the accumulation of these drivers, we consistently see mid-teen organic growth, which is shown on this chart.

Glenn: First secondly growth in the aerospace industry.

Glenn: Second winning new profitable business.

Glenn: Third value based pricing and for new product introductions.

Glenn: With the accumulation of these drivers we consistently see mid teen organic growth, which is shown on this chart.

Derksen: Let me turn the current call back over to derksen to share our outlook for 'twenty five.

Dirkson Charles: Let me turn the call back over to Dirkson to share our Outlook for 25. We are excited to share our most recent view for calendar year 25. This view is in excess of what we told you last month as we have made great, great strides executing on our value drivers in the first quarter of 25. Primarily, we are ahead of our plan on our value pricing and productivity initiatives. In addition, we have seen no degradation in demand in any of our end markets. In fact, the challenge we see this year is keeping up with demand.

Exactly.

Speaker Change: We are excited to share our most recent view for calendar 'twenty five.

Speaker Change: This view is in excess of what we told you last month as we have made great great strides executing on our value drivers in the first quarter of 'twenty five.

Speaker Change: Primarily we are ahead of our plan on our value pricing and productivity initiatives. In addition, we have seen no degradation in demand in any of our end markets. In fact, the challenge. We see this year is keeping up with demand. This strong level of demand, we see continuing into the foreseeable future.

Dirkson Charles: This strong level of demand we see continuing into the foreseeable future, driven by airlines extending the life of older aircraft, a trend that should continue into early 2030, as the demand for aircraft will outstrip supply, even in the event whereby both Airbus and Boeing reach their monthly production goal. Secondly, the continuing geopolitical uncertainty in the world. I mean, who would have ever thought that the European nations would increase their investment in their military at rates that are being discussed today?

Speaker Change: Driven by Eli.

Speaker Change: Airlines extending the life of all the aircrafts a trend that should continue into early 'twenty 30, as the demand for aircraft will outstrip supply even in the event, whereby both Airbus and Boeing reaching a monthly production goals.

Speaker Change: Secondly, the continuing geopolitical uncertainty in the world I mean.

Speaker Change: Who would have ever thought that the European nations would increase their investment in the military at rates that are being discussed today.

Dirkson Charles: In addition, the capacity constraints in the supply base created by the strong demand across our end markets, the loss of capabilities throughout the industry resulting from experienced and talented folks leaving in the aftermath of COVID and the reluctance of some in the supply base to invest given the cash challenges they have endured because of the stops and starts of production for the large OEMs. When all combined, this gives us a tremendous amount of opportunity to leverage our increasing capabilities across the group to drive above industry average organic growth.

Speaker Change: In addition, the capacity constraints in the supply base created by strong demand across our end markets the loss of capabilities throughout the industry, resulting from experienced and talented folks, leaving in the aftermath of Covid and the reluctance of some in the supply base to invest.

Speaker Change: Given the cash challenges they have and do it because of the stops and starts of production from the large Oems.

Speaker Change: When all combined this gives us a tremendous amount of opportunity to leverage our increasing capabilities across the group to drive above industry average organic growth.

Dirkson Charles: With that said, for calendar year 2025, we expect in a performant basis, assuming we own all of our business units since the beginning of 2024, that our end markets will be up as follows. Commercial OEM and aftermarket will be up high single digits for 2024, while our defense and markets will be up high double digits. Think 17 to 20 percent.

Speaker Change: With that said.

Speaker Change: For calendar year 2025, we expect in a pro forma basis, assuming we owned all of our business units since the beginning of 2024.

Speaker Change: That all end markets will be up as follows.

Speaker Change: She'll OEM and aftermarket will be up high single digits for 2024.

Speaker Change: While our defense end markets will be up high double digits think 17% to 20%.

Dirkson Charles: These market assumptions, along with our continued execution of our value drivers, will allow us to meet or exceed the following for calendar year 2021. Net sales between $480 to $488 million, up from $470 to $480 million. adjusted EBITDA between $180 million and $184 million up from $176 million to $180 million. with adjusted EBITDA margins of approximately 37 and a half. which, by the way, is a 120 basis point improvement over 2024. Net income between $58 and $63 million Adjusted EPS between $0.70 and $0.75 per share In addition, CapEx of approximately $14 million, full-year interest expense of approximately $28 million.

Speaker Change: These market assumptions, along with our continued execution of our value drivers will allow us to meet or exceed the following for calendar year 2025.

Speaker Change: Net sales between 480 to 488 million up from $470 million to $480 million.

Adjusted EBITDA between 180, and 184 million up from $176 million to $180 million.

Speaker Change: With adjusted EBITDA margins of approximately 37, 5%.

Speaker Change: Which by the way is 120 basis point improvement over 2024.

Speaker Change: Net income between 15 and $63 million adjusted EPS between <unk>, 70, and 75 cents per share.

Speaker Change: In addition, capex up 40, approximately $14 million full year interest expense of approximately $28 million.

Dirkson Charles: Our effective tax rate will be approximately 30%, with depreciation and amortization of approximately $51 million. non-cash stock-based compensation, approximately $15 million, with a fully diluted share count of approximately $97 million.

Speaker Change: Effective tax rate will be approximately 30% with depreciation and amortization of approximately $51 million.

Speaker Change: Noncash stock based compensation approximately $15 million.

Speaker Change: A fully diluted share count of approximately 97 million shares.

Speaker Change: Please note that all of the amounts I've just outlined for you relating to calendar 'twenty 'twenty five.

Dirkson Charles: Please note that all of the amounts I've just outlined for you relating to calendar 2025 performance does not, does not include any benefit from our most recently announced pending addition to our family of companies, LMB Fans and Motors. As stated earlier, we expect to close the acquisition of L&B in the third quarter of calendar year 2025.

Speaker Change: <unk> does not does not include any benefit from.

Speaker Change: Most recently announced pending addition to our family of companies.

Speaker Change: <unk> facet motives.

Speaker Change: As stated earlier, we expect to close the acquisition of <unk> in the third quarter of calendar year 2025.

Speaker Change: Okay.

Dirkson Charles: As we say amen to our first year as a public company, let me just thank our public partners for their support, and more importantly, your open communication this past. which has allowed us to treat every day like a school day. There's nothing, nothing more exciting than building our aerospace and defense cash compounder that we call Loar.

Speaker Change: As we say Amen.

Speaker Change: Our first year as a public company.

Speaker Change: Let me just thank our public partners for their support and more importantly, you'll open communication this past year.

Speaker Change: Which has allowed us to treat every day like a school there.

Speaker Change: There is nothing nothing more exciting than building, our aerospace and defense cash compound that we call law.

Dirkson Charles: We're extremely excited about the future and look forward to future calls.

Speaker Change: We are extremely excited about the future.

Speaker Change: And look forward to future calls.

Operator: So with that, Michelle, let's open up the line for questions. Thank you.

Speaker Change: So with that Michelle let's open up the line for questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.

Operator: If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question... You may press star 2 if you'd like to remove your question from the...

Speaker Change: You May press star two if you'd like to remove your question from Mccann for participants using speaker equipment. It may be necessary to pick up your handset before pressing the car the starches.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Speaker Change: Our first question comes from the line of Sheila <unk> with Jefferies. Please proceed with your question.

Sheila Kahyaoglu: Our first question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question. Hey, good morning, guys. And thank you for the time. Dirkson, since you're treating every day as a school day, we expect, and we know we'll get all A pluses from you.

Sheila <unk>: Hi, Good morning, guys and thank you for the time.

Speaker Change: Jackson Nowadays since you're trading every day every school day, we expect and we know that I'll parse that standalone. So.

Dirkson Charles: So maybe the first question, you alluded to your aftermarket, or all your segments being quite strong, but let's focus on the aftermarket perhaps. As you think about your guidance, what's embedded into your guidance, whether it's price and volume and what you already have booked in your backlog, if you could talk a little bit about that, please. I think Glenn mentioned this earlier, we are seeing strong bookings, so backlog is fairly strong. Now, with that said, in the aftermarket, the lead times for most of our parts are shorter than some of our defense end markets. So think one month, two months, three months in some cases, but the backlog looks really, really strong.

Sheila <unk>: Maybe the first question you alluded to your aftermarket are all your segments being quite strong, but let's focus on the aftermarket perhaps.

Sheila <unk>: And as you think about your guidance, what's embedded into your guidance, whether it's price and volume and what you already have booked in your backlog if you could talk a little bit about that.

Sheila <unk>: Yeah.

Sheila <unk>: Sure.

Sheila <unk>: In terms I think Glen mentioned this earlier, we are seeing strong bookings right. So.

Sheila <unk>: Backlog is fairly strong now with that said in the aftermarket the lead times for most of our parts are shorter than some of our.

Sheila <unk>: Defense end markets. So think one month two months three months.

Sheila <unk>: Some cases, but the backlog looks really really strong.

Sheila <unk>: What we do every quarter Sheila is we have conversations with our customers updating what they believe is a forecast for the next 12 months and that has also led us to be very very comfortable about what we see going forward.

Dirkson Charles: What we do every quarter, Sheila, is we have conversations with our customers, updating what they believe is a forecast for the next 12 months. And that has also led us to be very, very comfortable about what we see going forward. As I said earlier, I think our challenge this year is going to be really keeping up with demand. There's pockets of demand for certain parts that we make, where I see we will need to have to increase our capacity to meet the demand going forward. And we're investing along those lines. And what our expectations are for the year is baked into the guidance.

Sheila <unk>: As I said earlier I think our our our challenge this year is going to be really keeping up with the math there is pockets of demand for certain parts that we make.

Sheila <unk>: I see we will need to have to increase our capacity to meet the demand going forward.

Sheila <unk>: We are investing along those lines and what.

Sheila <unk>: What our expectations are for the year is baked into the guidance, so very very strong aftermarket.

Dirkson Charles: So very, very strong aftermarket.

Sheila <unk>: Okay.

Dirkson Charles: Okay, and then maybe if I could ask on profitability, you have about 130 basis points of margin expansion in 2025. Our assumptions say, you know, 120 bps of that perhaps comes from applied, given the strong profitability there. How do we think about the defense mix? How dilutive is it? And just any other contributors to the margin mix. Yeah, so applied aviation is accretive. I think when we acquired the business, we shared with everyone that their EBITDA margins was approximately 50%. God bless. at the time we acquired them was around $40 million of revenues, so think of it as 10% of our overall revenues.

Sheila <unk>: And then maybe if I could ask on profitability.

Sheila <unk>: You have about 130 basis points of margin expansion in 2025.

Sheila <unk>: Our assumptions.

Doug: 120 bed, so that perhaps comes from applied given the strong profitability. There how do we think about the defense next hi, Doug.

Sheila <unk>: That does that and just any other.

Sheila <unk>: With regards to the margin mix.

Sheila <unk>: Yeah.

Sheila <unk>: So applied aviation is accretive I think when we acquired the business, we shared with everyone that their EBITDA margins of approximately 50%.

Sheila <unk>: God bless.

Sheila <unk>:

Sheila <unk>: They at the time, we acquired them was around $40 million of revenue so think of it as <unk>.

Sheila <unk>: 10% of our overall revenues, so accretive but not by a 100 basis points in total for the overall group.

Dirkson Charles: So accretive, but not by 100 basis points in total for the overall group, but it is accretive. I would answer your question this way, Sheila, to lead you in the right direction. When we give guidance, we give it understanding that we want to meet or exceed the 120 basis point increase that we see for this year. We are highly confident of achieving it, is the way I would answer your question. We know for a fact, we've gotten more price than cost. We know we're getting operating leverage that's going to drop through and improve margins. And there's a number of initiatives that we've been working on that we actually see light at the end of the tunnel that's going to improve margins going forward also.

Sheila <unk>: It is it is accretive.

Speaker Change: We see I guess I would answer your question this way Sheila to lead you in the right direction.

Speaker Change: When we gave guidance we gave at understanding that we want to meet or exceed.

Speaker Change: The 120 basis point increase that we see for this year.

Speaker Change: We are highly confident of achieving it this way I would answer your question because.

Speaker Change: We know for a fact, we've gotten more price and cost inflation.

Speaker Change: We know we're getting operating leverage is going to drop.

Speaker Change: Drop through and improve and improve margins and there's a number of initiatives that we've been working on that we actually see light at the end of the tunnel.

Speaker Change: That's going to improve margins going forward also so.

Dirkson Charles: You should see a true reflection of where we believe margins will be going forward in the second half. But very, very comfortable with the hundred and four spaces point improvement.

Speaker Change: You should see.

Speaker Change: I truly reflection of where we believe margins will.

Speaker Change: We will be going forward in the second half of this year.

Speaker Change: But very very comfortable with the 100 plus basis point improvement.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Cristina <unk> with Morgan Stanley. Please proceed with your question.

Kristine Liwag: Our next question comes from the line of Kristine Liwag with Morgan Stanley. Hey, good morning, everyone. Morning. Kristine. Hey, Kristine. Welcome back. Thanks, you know, glad to be back. I'm happy to share pictures if they're wanted. So, um, I am biased. I do think she's the cutest baby.

Cristina: Hey, good morning, everyone.

Cristina: Good morning, Christine Christine welcome back.

Christine: Thanks, you know glad to be back I'm happy to share pictures. If there are wanted.

Cristina: So.

Cristina: Mid level picking up all of them.

Cristina: [laughter] I am biased I do think she's acute as babies, so but [laughter], we'll save that for after the call. So derksen you know in your prepared remarks. He said look new product launches, you're assuming wanted to 3% of annual growth and this has been part of your playbook in some time, but look for PMA parts you know once you get some.

Kristine Liwag: So, but we'll save that for after the call. So, um, Dirkson, you know, in your prepared remarks, you said, look, new product launches, you're assuming one to 3% of annual growth. And this has been part of your playbook in some time. But look, for PMA parts, you know, once you get something adopted, I would have expected that when you get a new part accepted and certified, that you could get a higher growth than that. So I was wondering, can you give us an update in terms of, you know, your PMA pipeline and how conservative this one to 3% You're leading the witness.

Cristina: <unk> adopted I would've expected that when you get a new part accepted and certified then you could get a higher growth than that so I was wondering can you give us an update in terms of you know your PMA pipeline and how conservative is this 1% to 3%.

Cristina: [laughter].

Cristina: Leading the witness how conservative is the one to three points.

Dirkson Charles: How conservative is the one to three points? Look, so the one to three points of improvement every year, we say that over a period of time. You are 100% correct that the way the PMA market, especially the strategic initiatives that we're focused on will work is you get qualified and you should get adopted into the market at a very rapid rate. So you should see a very big jump. Now, with that said, Glenn said earlier that our organic growth is mid-double digits. I don't think I've seen that from any of our other. colleagues in the space, if I can say it that way.

Cristina: So the one to three.

Cristina: The 1% to three points of improvement every year, we say that over a period of time you are 100% correct.

Cristina: The way the PMA market, especially the strategic initiatives that we're focused on will work is you get qualified and you should get adopted into the market at a very rapid rate. So you should see a very big job now with that said.

Cristina: Glen said earlier that the organic growth is mid double digits.

Speaker Change: I don't think I've seen that from any of our other.

Cristina: Colleagues in the space, but I can say that way.

Cristina: So there is some of that already baked that now with that said specifically.

Dirkson Charles: So there is some of that already baked in. Now, with that said, specifically, the key initiatives in PMA that we've been working on is actually still developing. We have made a tremendous amount of progress in terms of getting our parts qualified, but not certified yet. So we're going through a number of tests. On the break side of it, we're now through dynamometer testing for a number of the programs that we're looking to implement. So. I would say, Kristine, as we think about the latter part of this year going into early next year, we should start to see the adoption of some of those PMA initiatives that we've talked about.

The key initiatives and PMA that we've been working on is actually still developing we have made a tremendous amount of progress in terms of getting.

Cristina: Our parts are.

Cristina: Qualified but not certified yet so we've gone through a number of tests on the brake side of it we're now through dynamometer testing.

Cristina: For a number of the programs that we're looking to implement.

Cristina: So.

Speaker Change: I would say Kristine as we think about the latter part of this year going into early next year, we should start to see the adoption of some of those PMA initiatives that we've talked about.

Dirkson Charles: On the other big piece of the initiative, we have actually just entered into, I won't announce the customer, but entered into an agreement with a customer to Market and sell some of those products for us going forward and again You should start seeing the benefit of that in the second half of this year going into early next year. So stay tuned but I think the one to three points of improvement over a Intimated period to foreseeable future is a is a good goal for us Great, looking forward for those certification announcements because, I mean, presumably there'll be a big jump in revenue there, so looking forward to that, Dirkson and Glenn.

Cristina: On the other big piece of the initiatives we.

Cristina: Actually just entered into I won't announce the customer but entered into an agreement with a customer too.

Cristina: Market and sell some of those products for us going forward and again, you should start seeing the benefit of that in the second half of this year going into early next year, So stay tuned.

Cristina: But I think the one to three points of improvement over <unk>.

Cristina: Intimated previewed to the foreseeable future is a is a good golfer us.

Cristina: Great looking forward for those that certification announcements because I mean, presumably there'll be a big jump in revenue there. So looking forward to that derksen and Glenn.

Cristina: Yeah.

Cristina: Thank you.

Cristina: Yeah.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone.

Jason Gursky: Our next question comes from the line of Jason Gursky with... Please proceed with your questioning. Hey, good morning, everybody. Good morning. Good morning, Jason. Good morning.

Speaker Change: Our next question comes from the line of Jason Gursky with Citigroup. Please proceed with your question.

Jason Gursky: Hey, good morning, everybody.

Speaker Change: Good morning, Jason.

Dirkson Charles: Maybe we can start with just dynamics with your OE customer set. Let's talk a little bit about what you're seeing, ordering patterns, inventory levels in the channel, so to speak. You've got Boeing that is trying to lean out inventory, and we've been hearing that their restart after the strike. last fall hasn't been all that wholesome from an ordering perspective. So I'm just kind of curious, ordering back into the supply chain, I'm just kind of curious what you all are seeing at this point.

Speaker Change: Maybe let me start with <unk>.

Speaker Change: Yes.

Speaker Change: Dynamics.

Speaker Change: With your OE customer set and.

Speaker Change: Talk a little bit about what you are seeing ordering patterns inventory levels.

Speaker Change: The channel so to speak.

Speaker Change: <unk> got Boeing.

Speaker Change: Boeing that is trying to lean out inventory.

Speaker Change: And we've been hearing.

Speaker Change: Their restart after the strike.

Speaker Change: Last fall hasn't been all that wholesome from an ordering perspective, so I'm just kind of curious what ordering into this back into the supply chain I'm just kind of curious what you all.

Speaker Change: Are seeing at this point.

Speaker Change: Hum I'll give you a short answer and I'm really long.

Dirkson Charles: I'll give you a short answer and then a really long one. The short answer is... Thank you. So it depends on the product, right? We have parts that the orders, the level of orders for it is above what we thought it should. Leading us to believe there's less inventory in the supply chain than we would have, okay? We have parts where we're still seeing not the level of orders that we think there should be, so leading us to believe there's more inventory in the supply chain. So it's all over the map, Jason, in that regard.

The short answer is we are seeing all of the above.

Speaker Change: So it depends on the product right, we have parts that are.

Speaker Change: The off the order is the level of orders for it is above what we thought it should be.

Speaker Change: Leading us to believe there's less inventory in the supply chain than we would have okay. We have parts, where we're still seeing not the level of orders that we think they should be so leading us to believe there is more inventory in the supply chain. So it's all over the map.

Jason Gursky: Jason in that regard.

Dirkson Charles: But when you add it, when you add it all up, keeping in mind how we build our original guide, right? build our original guy, now I'm taking it back to November of last year, where we were thinking that Boeing was not really going to get off to a strong footing until the latter part of the year. It's a lot stronger than we expected because Boeing is doing a lot better and folks are starting to believe that they'll actually get there. The way we see leaving the year from Boeing is about 30 aircraft a month in terms of narrow body.

Speaker Change: But when you've added when you add it all up.

Speaker Change: Keeping in mind, how we built our original guide right.

Speaker Change: Build our original Guy and I'm, taking you back to November of last year.

Speaker Change: Yeah, we were thinking that.

Speaker Change: Boeing was not what are you going to get off to a strong funding until the latter part of this year.

Speaker Change: So a lot stronger.

Speaker Change: Than we expected because Boeing is doing a lot better.

Speaker Change: And folks are starting to believe that they will actually get there.

Speaker Change: The way, we see leaving the year.

Speaker Change: From Boeing has about 30 aircraft demand.

Speaker Change: In terms of narrow body.

Speaker Change: With Airbus Airbus has been in line.

Dirkson Charles: With Airbus, Airbus has been in line, if not a little bit stronger than we were originally thinking in terms of ordering patterns. Our projections see us leaving the year with about 50 a month for Airbus. So, you know, you can compare that to Teal and what other folks are saying. I think we're slightly, a little bit conservative, but again, going to how we think about forecasting. We want to forecast where we'll meet our expectations. So it's choppy, Jason. It's a great question. We, depends on the part. Right.

Not a little bit stronger than we were originally thinking in terms of ordering patterns.

Speaker Change: All of our projections and see us, leaving the year with about 50, a month for Airbus.

Speaker Change: So you know.

Speaker Change: You can compare that to tail on what other folks are saying I think we're slightly a little bit conservative, but again going to how we think about forecasting we want to forecast where we'll.

Speaker Change: Meet or exceed.

Jason Gursky: So it's choppy, Jason that's a great question.

Speaker Change: Yeah, it depends on the partner.

Speaker Change: Right in that $30 50 that you just mentioned that'd be the rate that youre producing not necessarily what the oes are producing.

Dirkson Charles: And that 30 and 50 that you just mentioned, that'd be the rate that you're producing, not necessarily what the OEs are producing. Yeah, that would be their production. That's kind of where we're assuming they're going to be at at the exiting the year. And again, to Dirkson's point, it's probably a little conservative given their relative strength as they started the year. But that's kind of our current thing. Okay, got it.

Speaker Change: Yeah that would be their production, that's kind of where we're assuming they're going to be at at the exiting the year and again to <unk> point, it's probably a little conservative given their relative strength as they started the year, but that's kind of our current thinking.

Speaker Change: Okay got it Indian White, while we've got you engaged here.

Ian Mckillop: And Ian, while we've got you engaged here, why don't we shift really quickly, and Brett, too. I mean, everybody can chime in here, but I know Ian, you kind of helped execute on the M&A pipeline. What are you guys seeing at this point in the M&A pipeline? You've, you know, obviously been able to successfully get a couple of done here since going public.

Speaker Change: Really quickly and Brett I mean, everybody can chime in here, but I know you kind of execute on the M&A pipeline.

Speaker Change: What are you guys seeing at this point.

Speaker Change: The M&A pipe.

Speaker Change: Pipeline, you've obviously been.

Speaker Change: <unk> been able to successfully get a couple of them here.

Speaker Change: Since going public.

Ian Mckillop: What should we expect for the next 12 to 18 months from you all? I'd say more of the same, you know, the pipeline is good, I'd say the year really started out very active and working on a number of things, obviously we got LMB signed up, and we'll get that closed here in a few months, we'll see what the overall market choppiness is. what effect that may have on M&A generally speaking, but I'd say in our sector, aerospace and defense, given most people's relatively optimistic view of this year going into next year, which certainly we have and we've shown with our upward revision, I would expect that there are going to be lots of active sellers.

Speaker Change: What should we expect for the next 12 to 18 months from Europe.

Speaker Change: I'd say more of the same.

Speaker Change: You know the pipeline is good.

Speaker Change: I'd say the year really started out very active.

Speaker Change: I'm working on a number of things obviously, we got LMB signed up we'll get that closed here.

Speaker Change: And in a few months, we'll see what the overall market choppiness.

Speaker Change: Effect that may have on M&A generally speaking, but I'd say in our sector aerospace and defense given most people's relatively optimistic view of this year going into next year, which certainly we have and we've shown with our.

Speaker Change: Upward revision I would expect that there are going to be lots of active sellers. So.

Ian Mckillop: So as I've always said, hard to predict what's going to ultimately be executable. The pattern for us has been one to two deals a year. Certainly within the first year of being public, we've executed on two. So I think that's, you know, a pretty good pace to consider for the future.

Speaker Change: I've always said.

Speaker Change: Hard to predict.

Speaker Change: What's going to ultimately be executable the pattern for us has been one or two deals a year.

Speaker Change: Certainly within the first year of being public we've executed on to so I think that's you know a pretty good pace to consider for the future.

Speaker Change: Okay, and then maybe last for me.

Jason Gursky: Okay, and then maybe lastly from me, can we talk a little bit about tariffs? your input costs and maybe start with input costs and talk about any potential impact there and then how you might deal with higher input cost as a result of tariffs. And then with a completed product that you might be either, you know, shipping overseas or, you know, you've now got a French. company in your portfolio here, potentially in the next few months. You know, whether the tariffs that have come about. here recently impact the financial model for the acquisition that you just made.

Speaker Change: My we talk a little bit about tariffs.

Speaker Change: And.

Speaker Change: Your input costs, and maybe starting with input cost and talk about any potential impact there and then how you might deal with higher input cost as a result of tariffs and then with a completed product that you might be either shipping overseas or you've now got a French.

Speaker Change: Company in your portfolio here potentially in the next few months.

Whether the.

Speaker Change: The tariffs that have come about.

Speaker Change: Here recently impact the financial model for the acquisition that you just made thanks.

Speaker Change: So first thing you want me to take that on L. M D. R.

Glenn D'Alessandro: Dirkson, you want me to take that on LMB or? Oh, sure. Since you're volunteering, go for it. Well, I think, Jason, for LMB, it's not going to have much of an effect. LMB's business primarily, the vast majority of it, serves the European defense market. So the good news there is we should have some pretty good tailwinds behind us for quite a while. So shipping, you know, to the US, as an example, is a very, very, very small portion of the business, such that, you know, any tariff isn't really going to have any kind of meaningful impact.

Speaker Change: Oh sure essentially voluntary and go over it [laughter] well I think Jason for L. M. B, it's not gonna have much of an effect lmb's business, primarily the vast majority of it.

Speaker Change: <unk> serves the European defense market. So the good news there is we should have some pretty good tailwind behind us for quite a while.

Speaker Change: So shipping you know to the U S. As an example is a very very very small portion of the business such that you know any tariff isn't really going to have any kind of meaningful impact.

Dirkson Charles: As it relates to the rest of our business, Dirkson, I'll let you kind of take that. Yeah, sure. So Jason, I'll say to you this way. Sometimes it's better to be lucky than good, if I could say it that way. So I'll tell you, and you'll appreciate why I say that in a second. I'll tell you about a call. As you know, we do our calls on Tuesday. We have our KPI calls where we talk to all the business units. And one of the things that our CFO, Glenn, goes through with the business unit is.

Dirksen: As it relates to the rest of our business Dirksen I'll, let you kind of take that.

Dirksen: Yes sure.

Speaker Change: So so Jason.

Speaker Change: I'll say to you this way, sometimes it's better to be lucky than good.

Speaker Change: If I could say it that way so.

Speaker Change: Tell you and you appreciate why I say that in a second.

Speaker Change: I'll tell you about our call as you know we do a pause on Tuesday, we have our API calls, where we talked to all the business units.

Speaker Change: And one of the things that are.

Speaker Change: Our CFO Glenn goes through with the business units.

Speaker Change: Is.

Speaker Change: You know, what's going on with inventory.

Dirkson Charles: You know, what's going on with inventories? And there was a call late last year where Glenn said to one of our presidents, what are you thinking? Why do you have so much inventory? Why have you ordered so much steel and aluminum? Why do we need that? And then Trump gets elected. And then we have that same KPI call this year, and our CFO says to that same individual, you are a genius ordering those parts in advance. So sometimes it takes a little bit of luck to be good. So yes, we have exposure to steel, we have exposure to aluminum.

Speaker Change: And there was a call late last year, where Glen sets one of our presidents what what are you thinking why do you have so much inventory why we audit so much steel and aluminum why do we need that.

Speaker Change: And then Trump gets elected.

Speaker Change: And then we have we have that same API call of this year and our CFO says so that same individual you a genius ordering those thoughts in advance.

Speaker Change: So sometimes it takes a little bit of luck.

Speaker Change: To be good.

Speaker Change: So yes, we have exposure to steel we have exposure to aluminum.

Dirkson Charles: We expect that if there's tariffs imposed, that our costs will go up. Now, with that said, what we make is proprietary, right? We will pass along any increase in costs. Like we said, our portfolio, overall portfolio will get more price than inflation. I throw tariffs into that. Some people say it's one time and all of that. Whatever it is, we will pass it along. The good news is that there's not going to be a lot of hit for us this year, given the extra inventory that the genius leaders at our business units have accumulated this year.

Speaker Change: We expect that if there is tariffs imposed that our costs will go up now with that said what.

What we make is proprietary right we.

Speaker Change: We'll pass along any increase in cost like we said our portfolio overall portfolio, we'll get more price than inflation I took tariffs into that.

Speaker Change: Some people say, it's at one time and all of that what.

Speaker Change: Whatever it is we will we will pass it along with the good news is that there is.

Speaker Change: Not going to be a lot of hit for us this year given the.

Speaker Change: Extra inventory that genius leaders at our business units have accumulated.

Speaker Change: This year.

Dirkson Charles: And in terms of sourcing parts from folks overseas. that we have to bring in. I will say this, we have in 99% of the cases a second source in the U.S., Czech, and we are working like everybody else on the planet in terms of positioning how we receive our product in such a way that we minimize any impact of tariffs going forward. So that's the long answer to don't see an impact, a material impact this year, and any impact that we see is baked into the guidance that we've shared, which again, we believe we will meet or exceed.

Speaker Change: And in terms of sourcing parts from folks are overseas.

Speaker Change: And we have to bring in.

Speaker Change: I will say this we have in 99% of the cases, a second source in the U S check.

Speaker Change: And we are working like everybody else on the planet.

Speaker Change: In terms of positioning how we receive our product in such a way that we minimize any impact of tariffs going forward. So that's the long answer to don't see an impact.

Speaker Change: The team will impact this year and any impact that we see is baked into the guidance that we've shared which again, we believe we will meet or exceed.

Speaker Change: So no major impact yet.

Jason Gursky: So no major impact yet, Jason. Okay, great.

Speaker Change: Jason.

Speaker Change: Okay, Great I appreciate the thoughts guys.

Operator: I appreciate the thoughts, guys. Thanks Jason. Thank you. Thank you ladies and gentlemen.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thanks, Jason. Thank you. Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Charles for any final comments.

Operator: That concludes our question and answer session.

Dirkson Charles: I'll turn the floor back to Mr. Charles for any final I once again would like to thank our mates for everything they do. I mean, you guys see the results. I was just reading one of your reports and you guys say that we beat and we raise, we beat and we raise. I like that drum beat. That's a good drum beat, but that has nothing to do with the four people that are talking here. I should say very little to do. It's all the other 1,500 that we're working with who are making this happen. So I want to thank them.

Speaker Change: I once again would like to thank our mates for everything they did do you guys see the results are.

Speaker Change: I was just reading one of your reports and you guys say that we will beat and raise beat and raise our I liked that drumbeat. That's a good that's a good jumpy, but that has nothing to do with the four people that are talking here I should say very little to do it's all the other 1500 that we're working with who are making this happen so I want to thanks.

Dirkson Charles: I also want to thank, once again, all of our public shareholders and the analysts. You guys have taught us a lot. And Sheila, yes, every day has been a school day for us and we're enjoying it and we hope to speak to you guys again, I guess now in about six weeks. So stay tuned.

Speaker Change: I also want to thank once again all of our public shareholders and the Al you guys have taught us a lot and Sheila yes, everyday hasnt been a school day for us and we're enjoying it and we hope to speak to you guys again, I guess now in about six weeks so stay tuned.

Operator: So thanks for joining the call. Thanks for taking the time. We'll talk soon. Thank you.

Speaker Change: Joining the call and thanks for taking the time, we'll talk soon thank you.

Speaker Change: Thank you. This concludes today's conference call. You may disconnect disconnect. Your lines at this time. Thank you for your participation.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.