Q2 2025 Loar Holdings Inc Earnings Call

Speaker #3: Greetings, welcome to Loar Holdings Inc.'s second quarter 2025 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Operator: Greetings. Welcome to Loar Holdings Inc.'s second quarter 2025 results conference call. At this time, all participants are in a listen-only mode. The 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. Please note this conference is being recorded. I will now turn the conference over to Ian McKillop, Director of Investor Relations. Thank you. You may begin.

Speaker #3: If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Ian McKillop, Director of Investor Relations, thank you, you may begin.

Speaker #4: Thank you, Daryl. Good morning and welcome to the Loar Holdings Q2 2025 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: Thank you, Darryl. Good morning and welcome to the Loar Holdings Q2 2025 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. Please visit our website at loargroup.com to obtain a slide deck and call replay information. Before we begin, we would like to remind you that statements made during this call, which are not historical in fact, are forward-looking statements.

Speaker #4: Please visit our website at loargroup.com to obtain a slide deck and call replay information. Before we begin, we'd like to remind you that statements made during this call, which are not historical in fact, are forward-looking statements.

Speaker #4: 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 the company's latest filings with the SEC, available through the Investor Relations section of our website or at sec.gov.

Ian Mckillop: 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 the company's latest filings with the SEC available through the Investor Relations section of our website or at sec.gov. We would also like to 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-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 reconciliation. To begin today, I will now turn the call over to Dirkson.

Speaker #4: We'd also like to 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.

Speaker #4: Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliation. To begin today, I will now turn the call over to Dirkson.

Speaker #5: Thanks, Ian. So, I have a confession to make. But before I tell you what that is, let me share one last school day moment we had during our IPO roadshow.

Dirkson Charles: Thanks, Ian. I have a confession to make. But before I tell you what that is, let me share one last school day moment we had during an IPO roadshow regarding giving guidance. We call it the Heather Rule. Look, everyone we met during the roadshow told us, when you give guidance, ensure that you will achieve it. Do not be overly aggressive, be clear, keep it simple. All good advice. One person we met, Heather, gave us the same advice, but there was something about how she said it that in the elevator ride after the meeting, we drew straws to see who would deliver the message if ever we were not meeting or exceeding what we guided to. Heather, your message resonated. And for the record, Ian drew the short straw. Fortunately for Ian, we once again are delivering great news.

Speaker #5: Regarding giving guidance. We call it the Heather Rule. so look, everyone we met during the roadshow told us, "When you give guidance, ensure that you will achieve it." Do not be overly aggressive, be clear, keep it simple, all good advice.

Speaker #5: One person we met, Heather, gave us the same advice, but there was something about how she said it that, in the elevator ride after the meeting, we drew straws to see who would deliver the message if we ever were not meeting or exceeding what we guided to.

Speaker #5: Heather, your message resonated. And for the record, Ian drew the short straw. Fortunately for Ian, we once again are delivering great news. We have exceeded every performance metric that we measure, demonstrating the strength of the aerospace component cash compounded that we are building.

Dirkson Charles: We have exceeded every performance metric that we measure that demonstrates the strength of the aerospace component cash compounder that we are building, including record sales, adjusted EBITDA, adjusted EBITDA margins, and tremendous growth across all our market sectors. So, hi, Heather. Now for the confession. We usually start our earnings call two minutes late because most of you call in late. For the record, it has gotten worse. So here is my confession. I am stalling to make sure that when we start, I have most folks on the line, especially since the number of callers has more than tripled since our last call. Let us get started. We are good. I am Dirkson Charles, founder, CEO, and Co-Chairman of Loar Holdings Inc. As always, we keep our remarks brief. So let us start by reminding you who we are. Loar Holdings Inc.

Speaker #5: Including record sales, adjusted EBITDA, adjusted EBITDA margins, and tremendous growth across all our market sectors. So, hi Heather. Now, now for the confession. We usually start our earnings call two minutes late because most of you call in late.

Speaker #5: For the record, it has gotten worse. So here's my confession: I'm stalling. To make sure that when we start, I have most folks on the line, especially since the number of callers has more than tripled since our last call.

Speaker #5: So, let's get started. We're good? I'm Dirkson, founder, CEO, and co-chairman of Loar. As always, we keep our remarks brief, so let's start by reminding you who we are.

Speaker #5: Loar is a family of 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 rates.

Dirkson Charles: is a family of 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 rates. 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. Over the long term, we expect to increase sales organically at double-digit percentages with the last three years, 2022, 2023, and 2024, achieving organic sales growth of 18%, 14%, and 15% respectively, with adjusted EBITDA growing at a faster rate. We execute along four value streams.

Speaker #5: 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.

Speaker #5: Over the long term, we expect to increase sales organically at double-digit percentages, with the last three years, 2022, 2023, and 2024, achieving organic sales growth of 18%, 14%, and 15%, respectively.

Speaker #5: With adjusted EBITDA growing at a faster rate, we execute along four value streams. We identify pain points within the aerospace industry and look 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 growth annually.

Dirkson Charles: We identify pain points within the aerospace industry and look to solve those problems through organically launching new products, which we believe over the long term will create 1 to 3 percentage points of top-line growth annually. We track the pipeline of new product introductions monthly. It represents a list of opportunities across our portfolio companies that are derived from listening to our customers to identify their pain points to determine how we can help. It is created from the sharing of ideas, best practices, and customer synergies across the group through the high degree of collaboration that we foster across our business units. This list currently represents over $500 million of sales over the next five years. Let's do some simple math. Let's assume that the opportunity is equal weighted by year.

Speaker #5: We track the pipeline of new product introductions monthly. It represents a list of opportunities across our portfolio of companies that are derived from listening to our customers, identifying their pain points, and determining how we can help.

Speaker #5: It is created from the sharing of ideas, best practices, and customer synergies across the group, through the high degree of collaboration that we foster across our business units.

Speaker #5: This list currently represents over $500 million of sales over the next five years. So, let's do some simple math. Let's assume that the opportunities are equally weighted by year.

Speaker #5: So, in other words, we have a pipeline of $100 million of new product launches in calendar year 2026. All we need to do to be successful is deliver $5 million to $15 million of such opportunities to achieve our 1% to 3% annual growth rate.

Dirkson Charles: In other words, we have a pipeline of $100 million of new product launches in calendar year 2026. All we need to do to be successful is deliver $5 million to $15 million of such opportunities to achieve our 1% to 3% annual growth rate. Here's the beauty of the list, though. It is a living, breathing entity that grows each year. We also 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 our performance with a 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.

Speaker #5: Here's the beauty of the list though. It is a living, breathing entity that grows each year. Look, we also focus on optimizing the way we manufacture, go to market, and manage our companies to enhance productivity.

Speaker #5: Each year, we'll identify initiatives that will allow us to continually improve our performance, with a focus on one or two major initiatives each year that will improve margins.

Speaker #5: 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.

Dirkson Charles: 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, all of which we have experienced over the years. Regardless of these temporary headwinds, we continue to improve our margins. Most importantly, we're committed to developing and improving the talent of our employees because our success is solely a result of their dedication and commitment. Again, as always, to all my mates, a big thank you for your commitment and hard work. Before I turn the call over to Brett Milgrim, I wanted to highlight one metric that we measure relative to the quality of the cash flow that we generate. It is our cash flow conversion percentage.

Speaker #5: All of which we have experienced over the years, but regardless of these temporary headwinds, we continue to improve our margins. Most importantly, we are committed to developing and improving the talent of our employees, because our success is solely a result of their dedication and commitment.

Speaker #5: So again, as always, to all my mates, a big thank you for your commitment and hard work. Before I turn the call over to Brett, I wanted to highlight one metric that we measure relative to the quality of the cash flow that we generate.

Speaker #5: It is our cash flow conversion percentage. As shown on slide six, in the first two quarters of 2025, the total of our cash flow from operations minus capital expenditures when divided by net income was $175% and $125% respectively.

Dirkson Charles: As shown on slide six, in the first two quarters of 2025, the total of our cash flow from operations minus capital expenditures, when divided by net income, was 175% and 125% respectively. Year to date, our conversion percentage was 148%. While there is no real seasonality in our business when it comes to cash flow, we do pay our bonuses and make our first installments to the IRS related to our annual income tax payment requirements in the second calendar quarter. As we said last quarter, we expect our cash flow conversion percentage to be greater than 125% for calendar year 2025. Look at this chart. Think of this guide as a Heather moment. I will now turn it over to Brett Milgrim to walk you through the key characteristics of our portfolio and discuss our most recent addition to our family of companies.

Speaker #5: Year to date, our conversion percentage was 148%. While there's no real seasonality in our business when it comes to cash flow, we do pay our bonuses and make our first installments to the IRS related to our annual income tax payment, requirements in the second calendar quarter.

Speaker #5: As we said last quarter, we expect our cash flow conversion percentage to be greater than $125% for calendar year '25. Look at this chart.

Speaker #5: Think of this guide as a Heather moment. I will now turn it over to Brett to walk you through the key characteristics of our portfolio, and discuss our most recent addition to our family of companies.

Speaker #5: Thanks, Dirkson. I think this is a slide most of you have seen before. It's basically a graphical representation of how our business has been constructed.

Brett Milgrim: Thanks, Dirkson. I think this is a slide most of you have seen before. It is basically a graphical representation of how our business has been constructed. As you know, we have constructed Loar Holdings Inc. on two basic tenets. First, we want to be a balanced company that participates in the annuity stream that any platform can provide, starting from initial production all the way through the aftermarket lifecycle of the aircraft flying. Whether that is a commercial aircraft, a business jet, a general aviation aircraft, or something in the military, we just want to participate in that annuity, both in the new production side or the commercial OEM piece of the business and the aftermarket piece of the business for its lifecycle. Second, we do that around a business model that looks like this.

Speaker #5: As you know, we construct, we have constructed Loar, on two basic tenets. First, we want to be a balanced company that participates in the annuity stream that any platform can provide starting from initial production all the way through the aftermarket lifecycle, of the aircraft flying.

Speaker #5: And whether that's a commercial aircraft, a business jet, a general aviation aircraft, or something in the military, we just want to participate in that annuity, both in the new production side, or the OEM piece of the business, and the aftermarket piece of the business for its lifecycle.

Speaker #5: Second, we do that around a business model that looks like this. It starts with being solely focused on the aerospace and defense industry, and is centered around proprietary products.

Brett Milgrim: It starts with being solely focused on the aerospace and defense industry and is centered around proprietary products. Those products oftentimes participate in niche markets that have significant commercial aftermarket exposure that provide us cross-selling opportunities that we could bring to all our customers so we can bring a suite of products to solve our customers' pain points. All these characteristics meet our most recent acquisition, which we are very excited about, called Beadlight. Beadlight is a business located in the United Kingdom that is a relatively new business making lighting products for premium seat applications, particularly in the commercial, commercial only, and aftermarket business segments.

Speaker #5: Those products oftentimes participate in niche markets, that have significant aftermarket exposure, that provides us cross-selling opportunities, that we can bring to all our customers so we can bring a suite of products to solve our customers' pain points.

Speaker #5: All of these these characteristics meet our most recent acquisition, which we're very excited about, called Beadlight. Beadlight is a business located in the UK.

Speaker #5: That is a relatively new business, making lighting products for premium seat applications, particularly in the commercial OE and aftermarket business segments. The business has had a lot of growth recently.

Brett Milgrim: The business has had a lot of growth recently, starting from anew, where they have been able to recently win some new programs, gain some market share, and start a path of real cash flow generation that we will talk about in a little bit, where we think the growth over the next several years is going to be very, very significant.

Speaker #5: Starting from annue, where they've been able to recently win some new programs, gain some market share, and start a path of real cash flow generation that we'll talk about in a little bit.

Speaker #5: Where we think the growth over the next several years is going to be very, very significant.

Speaker #4: So if we we move on to our products, as we've shared with you in previous calls, this graphic represents the many products that we go to market with.

Ian Mckillop: We move on to our products. As we shared with you in previous calls, this graphic represents the many products that we go to market with. The acquisition of Beadlight brings with it a suite of niche products and capabilities. You can find Beadlight's bespoke lighting and interior components across premium areas of the cabin and commercial airlines around the globe. As a reminder, at Loar Holdings Inc., we go to market with an average of more than 20,000 unique parts, of which no one product makes up more than 3% of our annual net sales. Our customers have come to depend on our high proprietary products, quality, on-time performance, and engineering capabilities to ensure that they are able to maximize their production and aircraft operations.

Speaker #4: The acquisition of Beadlight brings with it a suite of niche products and capabilities. You can find Beadlight's bespoke lighting and interior components across premium areas of the cabin and commercial airlines around the globe.

Speaker #4: And, as a reminder, at Loar, we go to market with an average of more than 20,000 unique parts, of which no one product makes up more than 3% of our annual net revenue.

Speaker #4: Our customers have come to depend on our high proprietary products, quality, on-time performance, and engineering capabilities to ensure that they are able to maximize their production and aircraft operations.

Speaker #4: If we move on to OEM build rates, as many of you know, narrow-body aircraft demand is at an all-time high, with Boeing and Airbus working to increase production to meet the market.

Ian Mckillop: If we move on to OEM build rates, as many of you know, narrow-body aircraft demand is at an all-time high, with Boeing and Airbus working to increase production to meet the market. The Airbus A320 and Boeing 737 platforms are also our two largest platforms by net sales at 7% and 6% respectively. As such, we wanted to provide an update with our present forecast for demand exiting 2025. Before I do, I remind you of something that we've said before. We make things for a living. This is our way of saying that over the long term, beyond 13-week quarters, demand will follow airframe build rates. However, quarter to quarter, week to week, and even day to day, every one of our 18 businesses is managing unique material, labor, inventory, and technological challenges that impact production. This is just the nature of being a manufacturing organization.

Speaker #4: The A320 and 737 platforms are also our two largest platforms by net sales, at 7% and 6% respectively. As such, we wanted to update and provide an update with our present forecast for demand exiting 2025.

Speaker #4: But before I do, I remind you of something that we've said before. We make things for a living. This is our way of saying that, over the long term, beyond 13-week quarters, demand will follow airframe build rates.

Speaker #4: However, quarter to quarter, week to week, and even day to day, every one of our 18 businesses is managing unique material, labor, inventory, and technological challenges that impact production.

Speaker #4: This is just the nature of being a manufacturing organization. To demonstrate the variability in monthly demand we see for our parts for the 737 and A320 family, original equipment, we've delivered anywhere from 10 ship sets to 60 ship sets of parts per month.

Ian Mckillop: To demonstrate the variability in monthly demand we see for our parts for the Boeing 737 and Airbus A320 family original equipment, we've delivered anywhere from 10 ship sets to 60 ship sets of parts per month. This has nothing to do with the overall demand, as more than three quarters of the backlog of 15,000 aircraft are for these two platforms. It's just because we make parts for a living. That said, we see the Airbus A320 ship sets demand exiting the year at 53 per month, while the Boeing 737 MAX family is at 33 per month. I'll now pass the call over to Glenn D'Alessandro.

Speaker #4: This has nothing to do with the overall demand, as more than three-quarters of the backlog of $15,000 aircraft are for these two platforms.

Speaker #4: It's just because we make parts for a living. That said, we see the Airbus A320 ship sets demand exiting the year at 53 per month, while the 737 MAX family is at 33 per month.

Speaker #4: I'll now pass the call over to Glenn.

Speaker #6: Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. 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 presented.

Dirkson Charles: Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro forma basis, as each of our businesses were owned as of the first day of the earliest period presented. This market discussion includes the acquisition of Applied Avionics in Q3 2024. We achieved record sales during Q2 2025. In total, our sales increased to $123 million, which is a 13% increase as compared to the prior year. This increase was driven by strong performances in commercial aftermarket, commercial OEM, and defense. Our commercial aftermarket sales saw an increase of 13% in Q2 2025 versus Q2 2024. This is primarily driven by the continued strength in demand for commercial air travel. We continue to see strong commercial aftermarket bookings. Our total commercial OEM sales increased by 14% in Q2 2025 as compared to the prior year period.

Speaker #6: This market discussion includes the acquisition of Applied Avionics in Q3 '24. We achieved record sales during Q2 '25; in total, our sales increased to $123 million, which is a 13% increase compared to the prior year.

Speaker #6: This increase was driven by strong performances in the commercial aftermarket, commercial OEM, and defense. Our commercial aftermarket sales saw an increase of 13% in Q2 2025 versus Q2 2024.

Speaker #6: This is primarily driven by the continued strength in demand for commercial air travel. We continue to see strong commercial aftermarket bookings. Our total commercial OEM sales increased by 14% in Q2 '25 as compared to the prior year period.

Speaker #6: This increase was driven by higher sales across a significant portion of the platforms we supply. The increase of 19% in our defense sales was primarily due to strong demand across multiple platforms and an increase in market share a result of new product launches.

Dirkson Charles: This increase was driven by higher sales across a significant portion of the platforms we supply. The increase of 19% 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. Defense sales continue to be lumpy given the nature of the ordering patterns of our end customers for our products. Let me recap our financial highlights for the second quarter of 2025. Our net organic sales increased 11.3% over the prior period. Our gross profit margin for Q2 2025 increased by 480 basis points as compared to the prior year period. This increase was primarily due to the execution of our strategic value drivers, operating leverage, as well as a favorable sales mix.

Speaker #6: Defense sales continue to be lumpy given the nature of the ordering patterns of our end customers for our products. Let me recap our financial highlights for the second quarter of '25.

Speaker #6: Our net organic sales increased 11.3% over the prior period. Our gross profit margin for Q2 '25 increased by 480 basis points as compared to the prior year period.

Speaker #6: This increase was primarily due to the execution of our strategic value drivers, operating leverage, as well as a favorable sales mix. Our increase in net income of $9 million in Q2 '25 versus Q2 '24 is primarily due to higher operating income and lower interest.

Dirkson Charles: Our increase in net income of $9 million in Q2 2025 versus Q2 2024 is primarily due to higher operating income and lower interest. Adjusted EBITDA was up $12 million in Q2 2025 versus Q2 2024. Adjusted EBITDA margins were a record 38.3% in Q2 2025 due to the execution of our strategic value drivers, operating leverage, and a favorable sales mix. This was partially offset by additional costs associated with being a public company, including Sarbanes-Oxley compliance and additional organizational costs to support our reporting, governance, and control needs. We do not see a material increase in these types of costs going forward. We believe the run rate of these costs is fully reflected in our Q2 2025 results. From 2020 through 2025, we will have increased our EBITDA margin by 710 basis points.

Speaker #6: Adjusted EBITDA was up $12 million in Q2 '25, versus Q2 '24. Adjusted EBITDA margins were a record 38.3% in Q2 '25 due to the execution of our strategic value drivers, operating leverage, and a favorable sales mix.

Speaker #6: This was partially offset by additional costs associated with being a public company, including Sarbanes-Oxley compliance and additional organizational costs to support our reporting, governance, and control needs.

Speaker #6: We did not see a material increase in these types of costs going forward. We believe the run rate of these costs is fully reflected in our Q2 '25 results.

Speaker #2: Okay.

Speaker #6: From From 2020 through '25, we will have increased our EBITDA margin by 710 basis points. We achieved this growth through the following: operating leverage, winning new profitable business, executing on productivity initiatives, and from value-based pricing.

Dirkson Charles: We achieved this growth through the following: operating leverage, winning new profitable business, executing on productivity initiatives, and from value-based pricing. In Q2 2025, our margins grew 220 basis points from Q2 2024 to a record 38.3%. This was achieved even with the negative impact of costs related to Sarbanes-Oxley compliance and additional organizational costs to support being a public company. Before I turn it back over to Dirkson Charles, I wanted to mention I had a different take on the Heather Rule. I am pretty sure she looked directly at me when she was sharing her advice. I am pretty sure that stare lasted for at least 30 minutes. Now I would like to turn it back to Dirkson Charles to share our outlook for 2025. We are excited to share our most recent view for calendar year 2025.

Speaker #6: In Q2 2025, our margins grew 220 basis points from Q2 2024 to a record 38.3%. This was achieved even with the negative impact of costs related to Sarbanes-Oxley's compliance and additional organizational costs to support being a public company.

Speaker #6: And before I turn it back over to Dirkson, I wanted to mention I had a different take on the Heather rule. I'm pretty sure she looked directly at me when she was sharing her advice.

Speaker #6: I'm pretty sure that stair lasted for at least 30 minutes. And now I'd like to turn it back to Dirkson Charles to share our outlook for 2025.

Speaker #5: Look, we are excited to share our most recent view for calendar year 2025. This view is an access of what we told you 13 weeks ago.

Dirkson Charles: This view is in excess of what we told you 13 weeks ago, and our confidence rests in the great strides we have made executing on our value drivers in the first half of 2025 and the strength of our proprietary portfolio. 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 and expect no meaningful impact to our results as a result of the current tariff environment. The one end market dynamic of note is what Ian McKillop discussed previously regarding the volatility we are seeing in the demand for OE commercial products. As the OEMs and Tier 1s manage the growth in OE production, they are going through the growing pains of managing inventory levels and supply chain choppiness.

Speaker #5: And our confidence rests in the great strides we have made executing on our value drivers in the first half of 2025 and the strength of our proprietary portfolio.

Speaker #5: 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, and expect no meaningful impact to our results as a result of the current tariff environment.

Speaker #5: The one end market dynamic of note is what Ian discussed previously regarding the volatility we are seeing in the demand for OE commercial product.

Speaker #5: As the OEMs in tier ones manage the growth in OE production, they're going through the growing pains of managing inventory levels, and supply chain choppiness.

Speaker #5: This will result in choppy growth rates over a 13-week period. Thus, in spite of the strong organic OE commercial growth we are experiencing this current quarter, we will hold our organic growth to this end market at high single digits for 2025.

Dirkson Charles: This will result in choppy growth rates over a 13-week period. Thus, in spite of the strong organic OE commercial growth we have experienced in the current quarter, we will hold our organic growth for this end market at high single digits for 2025. Again, think of it as a Heather moment. With regards to commercial aftermarket, we expect low double-digit growth, while our defense end market sales will be up high double digits. Again, think between 17% and 20%.

Speaker #5: Again, think of it as a Heather moment. With regards to commercial aftermarket, we expect low double-digit growth. While our defense end market sales will be up high double digits, again, think between 17 and 20%.

Speaker #5: 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.

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 2025: net sales between $486 million to $494 million, up from $482 million to $490 million; adjusted EBITDA between $184 million and $187 million, up from $182 million to $185 million; adjusted EBITDA margin of approximately 38%, which is a 170 basis point improvement over 2024; net income between $65 million and $70 million; adjusted EPS between $0.83 and $0.88, which is up 16% from our previous guidance. In addition, CAPEX of approximately $14 million, so around 2% to 3% of sales as we typically expect, a reduction of $2 million of full-year interest expense to $26 million, and our effective tax rate of 25%. The depreciation and amortization, non-cash stock-based comp, and our fully diluted share count all remain unchanged.

Speaker #5: Net sales between $486 to $494 million up from $482 to $490. Adjusted EBITDA between $184 and $187 million. Up from $182 to $185 million.

Speaker #5: Adjusted EBITDA margin of approximately 38%, which is $170 basis point improvement over 2024. Net income between $65 and $70 million. EPS between adjusted EPS between $83 and $88 cents.

Speaker #5: Which is up 16% from our previous guidance. And as always, in addition, our CapEx is approximately $14 million, which is around 2-3% of sales, as we typically expect.

Speaker #5: A reduction of $2 million of full year interest expense to $26 million. And our effective tax rate of 25%. Depreciation and amortization non-cash stock-based comp.

Speaker #5: And our fully diluted share count all remain unchanged. Now, with that said, our updated guidance does not include any benefit from our most recently announced pending addition to our family of companies, LMB Fans and Motors.

Dirkson Charles: Our updated guidance does not include any benefit from our most recently announced pending addition to our family of companies, LMB Fans and Motors. To be clear, our guide includes any impact we see today related to the current tariff environment, which has been mostly just noise. It also includes the benefit of five months of ownership of Beadlight. For the full year of 2025, we expect Beadlight to do mid-single-digit millions of sales with slightly above break-even EBITDA margins. What we are excited about is the contribution to our results in calendar year 2026 and beyond, given that Beadlight's current rich pipeline of opportunities and recent program wins have been significant.

Speaker #5: And to be clear, our guide includes any impact we see today related to the current tariff environment, which has been mostly just noise. It also includes the benefit of five months of ownership of Beadlight.

Speaker #5: For the full year of 2025, we expect, and again, for the full year of 2025, we expect Beadlight to do mid-single-digit millions of sales.

Speaker #5: With slightly above break-even EBITDA margins, what we are excited about is the contribution to our results in calendar year 2026 and beyond, given that Beadlight's current rich pipeline of opportunities and recent program wins have been significant.

Speaker #5: Once we make our Loar value drivers into Beadlight's DNA, we expect to see a tremendous increase in such opportunities, primarily due to the top-line synergy that is created with the customers that we will be able to introduce Beadlight to.

Dirkson Charles: Once we bake our Loar value drivers into Beadlight's DNA, we expect to see a tremendous increase in such opportunities, primarily due to the top-line synergy that is created with the customers that we will be able to introduce Beadlight to, especially the customers of our seatbelt restraint business. We expect Beadlight will be accretive to our results in 2026. With that, operator, let's open the line for questions.

Speaker #5: Especially the customers of Short, our seat belt restraint business. We expect Beadlight will be a credit to our results in 2026. With that, operator, let's open the line for questions.

Speaker #3: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would 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 may press star two if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for your first question. Our first questions come from the line of Sheila Kayalou with Jeffries. Please proceed with your questions.

Speaker #3: A confirmation total will indicate your line is in the question queue. You may press *2 if you would like to remove yourself from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star keys. One moment, please, for your first question.

Speaker #3: Our first questions come from the line of Sheila Kayaoulu with Jefferies. Please proceed with your questions.

Speaker #7: Good morning, guys, and thank you for the time. Dirkson, I also have a confession to make. I might change my name to Heather after this call, because she sounds like a pretty cool girl.

Sheila Kayalou: Good morning, guys, and thank you for the time. Dirkson, I also have a confession to make. I might change my name to Heather after this call because she sounds like a pretty cool girl. She is. Maybe if we could start off with your guidance or with the contribution of the new acquisition in the $5 million range. How do we think about where LMB Fans and Motors is in terms of that process still pending, and is it still expected to close in Q3? How do you think about potential for future transactions from here?

Speaker #7: Well, she is. But maybe if we could start off with your guidance, or with the contribution of the new acquisition and the $5 million range.

Speaker #7: You know, how do we think about where LMB is in terms of that process still pending, and is it still expected to close in Q3?

Speaker #7: And then how do you think about the potential for future transactions from here?

Speaker #5: Yeah, hi Sheila, this is Brett. Actually, I'll answer the LMB question. As it relates to LMB, we are still in, I'll call it, holding pattern with the regulators.

Brett Milgrim: Yeah. Hi, Sheila. This is Brett. I will answer the LMB question. As it relates to LMB Fans and Motors, we are still in, I will call, a holding pattern with the regulators. We are waiting for regulatory approval, which we are still optimistic about. We have had a lot of contact over the last several weeks with a number of the French authorities, answering some follow-up questions, having them speak to some of the management at LMB Fans and Motors. As you may remember, we overwhelmingly had approval by the work council there for the acquisition. The management seems excited about our upcoming ownership. We still think we are the best buyer for the asset, given our plans to grow the business, to keep it where it is currently located, and to support the employees, all benefiting the French economy and the French military.

Speaker #5: We are waiting for regulatory approval, which we're still optimistic about. We have had a lot of contact over the last several weeks with a number of the French authorities, answering some follow-up questions.

Speaker #5: Having them speak to some of the management, at LMB. As you may remember, we overwhelmingly had approval by the work council there, for the acquisition.

Speaker #5: The management team's excited about our upcoming ownership. We still think we are the best buyer for the asset, given our plans to grow the business, to keep it where it's currently located, and to support the employees.

Speaker #5: All benefiting the French economy and the French military. That being said, as you know, most folks, particularly those in the government, go on holiday in August.

Brett Milgrim: That being said, as you know, most folks, particularly those in the government, go on holiday in August. I think the earliest we will hear something is September. Hopefully, we can get that in before the end of the third quarter. It has obviously taken a bit more time than we had hoped. No promises, but we are still optimistic.

Speaker #5: So I think the earliest we will hear something is September. So hopefully we can get that in before the end of the third quarter, but it's obviously taken a bit more time than we had hoped, so no promises, but we're still optimistic.

Speaker #3: And Sheila, I'll take the other part of your question in regards to Beadlight. As I said earlier, Beadlight is roughly mid-single-digit millions of top-line sales.

Dirkson Charles: Sheila, I will take the other part of your question in regard to Beadlight. As I said earlier, Beadlight is roughly mid-single-digit millions of top-line sales. It is a business that started recently, so much younger than most of the businesses that we own, but is run by a dynamic team with a great leader, Gina Ames. Hopefully, you will get to meet her one day, who has created a pipeline of opportunities that is, I would use this word to describe it, incredible. That is without having the support of what we will bring in terms of the breadth of the additional customers that we will get to put Beadlight in front of. As we think about the guide, given we are only going to own them for five months or so and they are new for us, we thought about it thinking about Heather.

Speaker #3: And it's a business that started recently, so much younger than most of the businesses that we own. But is run by a dynamic team, with a great leader, Gina Ames.

Speaker #3: Hopefully you'll get to meet her one day. Who has created a pipeline of opportunities that is, I would use this word to describe it, incredible.

Speaker #3: And that's without having the support of what we will bring in terms of the breadth of the additional customers that we'll get to put Beadlight in front of.

Speaker #3: As we think about the guide, given we're only going to own them for five months or so, and they're new for us, we thought about it, thinking about Heather.

Speaker #3: Okay, she appreciates what that means now. We have included sales of approximately $2 million and, you know, barely any profit in the guide that we have there.

Dirkson Charles: You appreciate what that means now. We have included sales of approximately $2 million and barely any profit in the guide that we have there. The way to think about the improvement in our guide, it is all, I am going to use this term, organic. We are hopeful that by the time we meet again in 13 weeks or so, and we have gotten our hands around Beadlight, which we just closed two weeks ago, that we will be able to share even more progress around Beadlight. We are excited to include them in the guide.

Speaker #3: So the way to think about the improvement in our guide, it's all going to use this term, "organic." And we're hopeful that by the time we meet again, in 13 weeks or so, and we've gotten our hands around Beadlight, which we just closed two weeks ago, that we'll be able to share even more progress around Beadlight.

Speaker #3: So, we're excited to include them in the guide.

Speaker #5: Yeah, welcome. What we can say is, 2026 is going to be a very exciting year where I can set the expectation that the price that we paid for Beadlight will look very, very attractive relative to the 2026 earnings, given what we know is in the pipeline and given what we know are some of the new program wins that they’ve had, which, again, to Dirkson’s point, are not inconsequential given this is a relatively new entrant into the lighting marketplace.

Brett Milgrim: What we can say is 2026 is going to be a very exciting year. I can set the expectation that the price that we paid for Beadlight will look very, very attractive relative to the 2026 earnings, given what we know is in the pipeline and given what we know are some of the new program wins that they have had. Again, to Dirkson Charles's point, these are not inconsequential given this is a relatively new entrant into the lighting marketplace. They have done a great job. They have gotten and developed great customer relationships that have some real synergy, particularly with our short business because they both have seating customers as well as airline customers that overlap. So this is a really good strategic fit for us as well as one that will, starting, I think, next year, have real significant financial performance.

Speaker #5: They've done a great job. They've developed great customer relationships that have some real synergy, particularly with our short business, because they both have seating customers as well as airline customers that overlap.

Speaker #5: So, this is a really good strategic fit for us, and one that will, starting next year, have real significant financial performance.

Speaker #7: Okay, that's really helpful color. Can I ask one more if that's possible?

Sheila Kayalou: Okay. That's really helpful, Carter. Can I ask one more if that's possible?

Speaker #5: Go for it.

Speaker #3: Absolutely.

Brett Milgrim: Go for it.

Sheila Kayalou: Sure.

Brett Milgrim: Absolutely.

Speaker #7: Okay. Commercial aftermarket, I think, grew 12 and a half percent organically or on a pro forma basis. We've heard a lot of folks talk about the differences between engine and airframe.

Sheila Kayalou: Commercial aftermarket, I think, grew 12.5% organically on a pro forma basis. We have heard a lot of folks talk about the differences between engine and airframe. Any thoughts you have there on what you are seeing in your business? I know the portfolio is well-rounded, but any exposure you have to engine in your commercial aftermarket? Thanks.

Speaker #7: Any thoughts you have there on what you're seeing in your business? I know it's, you know, the portfolio is well-rounded, but any exposure you have to engines in your commercial aftermarket?

Speaker #7: Thanks.

Speaker #4: Yeah, I'll say this. So, just to give a little bit more information in detail, and this is Ian, by the way. Engines are roughly 7% of our overall revenue.

Ian Mckillop: I will say this. Just to give a little bit more information in the detail, this is Ian McKillop by the way. Engines are roughly 7% of our overall revenue, and they grew in line with our commercial aftermarket and OE growth rates, so low double digits. So no big degradation or deviation between engines and the broader aftermarket in our portfolio.

Speaker #4: And they grew in line with our commercial aftermarket and OE growth rates, so low double digits. There was no significant degradation or deviation between engines and the broader aftermarket.

Speaker #4: In our portfolio.

Speaker #5: And I'll take a little step beyond. We haven't seen any changes in terms of the demand dynamics relative to, you know, commercial aftermarket.

Dirkson Charles: I'll take a little step beyond. We haven't seen any changes in terms of the demand dynamics relative to commercial aftermarket, so still consistently strong. We're still taking, I'll use this term, market share with our new product introductions, and the pricing dynamics have been pretty good.

Speaker #5: So, still consistently strong. We're still taking, I'll use this term, market share with our new product introductions. And the pricing dynamics have been pretty good.

Speaker #7: Great. Thank you.

Sheila Kayalou: Great. Thank you.

Speaker #3: Thank you. Our next question comes from the line of Ken Herbert with RBC Capital Markets. Please proceed with your question.

Operator: Thank you. Our next question has come from the line of Ken Herbert with RBC Capital Markets. Please proceed with your question.

Speaker #8: Yeah, hey, good morning, everybody. Thanks for squeezing me in here. Hey, Dirkson, I wanted to follow up on your last commentary on the new business opportunities in the pipeline.

Ken Herbert: Yeah. Hey, good morning, everybody. Thanks for squeezing me in here.

Brett Milgrim: Good morning.

Ken Herbert: Dirkson, I wanted to follow up on your last commentary on the new business opportunities in the pipeline. How do we think about that from a timing standpoint? I can appreciate the 5% to 15% gets you to the 1% to 3%. Are you seeing more than that maybe in 2025, or is that more 2026, 2027 as you convert some of the new opportunities in the pipeline into actual revenues?

Speaker #8: How do we think about that from a timing standpoint? I can appreciate sort of the 5 to 15 get you to the 1 to 3 percent.

Speaker #8: Are you seeing more than that, maybe in this in 2025, or is that more Q2 2026-2027 as you convert some of the new opportunities in the pipeline into actual revenues?

Speaker #5: So I'll answer it this way, Ken, and thanks for the question, by the way. In 2025, new product introduction is probably closer to the lower end of that one to three guide.

Dirkson Charles: I will answer it this way, Ken. Thanks for the question, by the way. In 2025, new product introduction is probably closer to the lower end of that 1% to 3% guide. I will say it that way. That is due to a number of things, including a number of certifications that we have seen delayed that we see growing nicely in 2026 and 2027. Some of our new entrants into the market have been most recent. We will see the benefit of that in 2026 and 2027.

Speaker #5: Okay, I'll say it this way: this is due to a number of factors, including several certifications that we've seen delayed. We expect to see growth in 2026 and 2027.

Speaker #5: And 2027. Some of our new entrants into the market have been most recent. So we'll see the benefit of that in 2026 and 2027.

Speaker #5: So as I think about 2026 and 2027, I would expect we'll be closer to the higher end of the guide that we typically give: one to three percent.

Dirkson Charles: As I think about 2026 and 2027, I would expect we will be closer to the higher end of the guide that we typically get 1% to 3% in those years in terms of the growth rate because we are actually seeing a lot of improvement in terms of the FAA actually moving now on some of our certifications that we have talked about in the past. We are going through flight tests and pretty close to getting a lot of the platforms certified that we have been focused on. Great question, greater rates in 2026 and 2027 than 2025 in terms of growth.

Speaker #5: In those years in terms of the growth rate, because we're actually seeing a lot of improvement in terms of the FAA actually moving now on some of our certifications that we've talked about in the past.

Speaker #5: And we're going through flight tests, and pretty close to getting a lot of the platforms certified that we've been focused on. So great question.

Speaker #5: Greater rate in '26 and '27 than 2025. In terms of growth.

Speaker #8: Perfect. Thanks, Dirkson. And if I could, as a follow-up, you know, there's a growing narrative that aftermarket sales could see incremental pressure as a lot of the airlines are able to sort of ring more savings out of either their maintenance spending or maybe more particularly new parts inventory.

Ken Herbert: Perfect. Thanks, Dirkson. If I could, as a follow-up, there is a growing narrative that commercial aftermarket sales could see incremental pressure as a lot of the airlines are able to wring more savings out of either their maintenance spending or maybe more particular new parts inventory. I think we can all appreciate airlines have built up significant buffer stocks as a result of supply chain disruptions over the last few years. How much of a headwind do you think better efficiency out of the airlines could be to your commercial aftermarket business, not so much in 2025, but maybe in 2026 and 2027? Is that a longer-term thematic risk you view to the end market, or where do you think we stand from that standpoint?

Speaker #8: And I think we can all appreciate, you know, airlines have built up significant buffer stocks as a result of just supply chain disruptions over the last few years.

Speaker #8: How much of a headwind do you think better efficiency out of the airlines could be to your aftermarket business? Not so much in 2025, but maybe in 2026 and 2027?

Speaker #8: And is that a longer-term thematic risk you view to the end market? Or where do you think we stand from that standpoint?

Speaker #5: So I think that the portfolio that we have, is likely a lot different than some of the other companies that you're probably thinking about this question for.

Dirkson Charles: I think that the portfolio that we have is likely a lot different than some of the other companies that you are probably thinking about this question for. I hate using those words because the lawyers will tell me, "You know, keep it to a minimum," but I will use it this one time. Sole source, proprietary. It is very difficult for an airline to manage the way you describe it without having an alternative, right? We are seeing consistent demand, right? I do not want to give quarterly guides, and I do not want to give guides beyond what we have done, but I really, really have not seen any change on the commercial aftermarket in terms of the strength of demand.

Speaker #5: And I hate using this word because the lawyers are telling me, you know, keep it to a minimum. But I'll use it this one time.

Speaker #5: Sole source, proprietary—it's very difficult for an airline to manage the way you describe it without having an alternative, right? So what we're seeing is consistent demand.

Speaker #5: Right? I don't want to give quarterly guides, and I don't want to give guides beyond what we've done; but I really, really have not seen any change in the commercial aftermarket in terms of the strength of demand.

Speaker #5: Where we're seeing the choppiness is on the OE side, which is why we wanted to spend some time in this call sharing that information.

Dirkson Charles: Where we are seeing the choppiness is on the OE side, which is why I wanted to spend some time on this call sharing that information. We are seeing companies do the following: truly, truly manage hard their stock of inventory on the commercial OE side because as they now convince themselves that Boeing has gotten their act together, Airbus is going to continue to get better, they do not need to keep the extra stock around, the supply chain is getting a little bit better, and all of those things. There may be some choppiness on the commercial OE side, but I do not see it on the commercial aftermarket at this point.

Speaker #5: We are seeing companies truly, truly manage hard their stock of inventory on the commercial OE side, because they're now convinced that Boeing has gotten their act together, Airbus is going to continue to get better, and they don't need to keep the extra stock around. The supply chain is getting a little bit better.

Speaker #5: And all of those things. So there may be some choppiness on the commercial OE side, but I don't see it on the commercial aftermarket at this point.

Speaker #8: Great. Thank you very much, Dirkson. Have a good result.

Ken Herbert: Great. Thank you very much, Dirkson. Have a good results.

Speaker #5: Thank you, sir.

Dirkson Charles: Thank you, sir.

Speaker #8: Thanks.

Brett Milgrim: Thanks.

Speaker #3: Thank you. Our next questions come from the line of Christine Lewag with Morgan Stanley. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Christine Lehwegh with Morgan Stanley. Please proceed with your question.

Speaker #7: Hey, good morning, everyone. Just a few questions on Beadlight. It looks like you paid $25 million or $33 million for this. So, with mid-single-digit revenue and almost break-even EBITDA, it does seem a little steep on valuation.

Sheila Kayalou: Good morning, everyone. Just a few questions on Beadlight. It looks like you paid £25 million or $33 million for this. With mid-single-digit revenue and almost break-even EBITDA, it does seem a little steep on valuation. Can you provide more color on how much of the accretion on 2026 is from orders that you already received that you alluded to versus from the Loar toolbox? Also, as a follow-up on that, on Beadlight, is this BFE, SFE, and how much of the portfolio is sole source and proprietary?

Speaker #7: Can you provide more color on how much of the accretion in 2026 is from orders that you already received, that you alluded to, versus from the Loar toolbox?

Speaker #7: And also as a follow-up on that, on Beadlight, is this BFE, SFE, and how much of the portfolio is sole source and proprietary?

Speaker #5: 100% proprietary. And the way to think about sole source, once your light is on, you're on. Okay? I'll say it that way. In terms of accretion, without our help, without us doing anything, Beadlight would be accretive.

Dirkson Charles: 100% proprietary. The way to think about sole source, once your light is on, you are on. I will say it that way. In terms of accretion, without our help, without us doing anything, Beadlight would be accretive, which is why I said it in the way I did. With us putting our value drivers around Beadlight and supporting the team that is there, we believe it will be, Ian told me not to use this word, but I am going to use it anyway, significantly accretive. This will go to one thing I said, Christine. We look at businesses that we acquire, not in terms of what is in the rearview mirror, but what we can do with it.

Speaker #5: Which is why I said it in the way I did. Right? With us putting our value drivers around Beadlight and supporting the team that's there, we believe it will be— you know, Ian told me not to use this word, but I'm going to use it anyway.

Speaker #5: Significantly accretive. No, and this will go to one thing you said, Christine. Look, we look at businesses that we acquire not in terms of what's in the revenue mirror, but what we can do with it, right?

Speaker #5: And I will tell you, the $25 million and you are correct, that's what we paid. We'll look back two years, three years from now and go, my God, we got that cheap.

Dirkson Charles: I will tell you, the £25 million, and you are correct, that is what we paid, we will look back two years, three years from now and go, "My God, we got that cheap." That is how we look at businesses when we acquire them. No difference than Applied Avionics. Applied Avionics, when we bought it, was doing $40 million in revenues. Everybody knows that. I can say it. If you look at this quarter, you go through the 10-Q, they did over $15 million this quarter alone, and we have owned that business for 11 months. For us, price is future-driven, not in the rearview mirror. Beadlight, I can say this now because we already purchased the business, and the former owners are probably listening, but we bought it cheap.

Speaker #5: That's how we look at businesses when we acquire them. No difference in applied avionics, right? Applied avionics, when we bought it, was doing $40 million in revenues.

Speaker #5: Right? Everybody knows that, I can tell you. And if you look at this quarter, you go through the 10-Q, they did over $15 million this quarter alone, and we've owned that business for 11 months.

Speaker #5: Right? So for us, price is future-driven, not in the revenue mirror. So Beadlight, I can say this now, because we already purchased the business and the former owners are probably listening, but we bought it cheap.

Speaker #7: No, that's great to know. Significant accretion is the name of the game. So Dirkson, I guess a follow-up on that broadly on M&A. So can you talk about the bidding process of this?

Sheila Kayalou: That's great to know. Significant accretion is the name of the game. Dirkson, I guess a follow-up on that broadly on M&A. Can you talk about the bidding process of this? How competitive was this? How many more assets like this is there in your pipeline?

Speaker #7: How competitive was this? How many more assets like this is there in your pipeline?

Speaker #5: Christine, this is Brett, hi. I can tell you this was a proprietary process for us. We were introduced to the owner a while ago, had a bunch of discussions, and actually at the air show, we're able to kind of shake hands, to go through our proprietary diligence process.

Brett Milgrim: Christine, this is Brett. Hi. I can tell you this was a proprietary process for us. We were introduced to the owner a while ago, had a bunch of discussions. Actually, at the air show, we were able to kind of shake hands to go through our proprietary diligence process and understand the business better and get to the deal that we did. Those are the kinds of deals we like to do. I can tell you that the list of opportunities remains very robust, some of which are just like that, meaning proprietary discussions that we are having with owners.

Speaker #5: And understand the business better and get to the deal that we did. So those are the kinds of deals we'd like to do. I can tell you that the list of opportunities remains very robust.

Speaker #5: Some of which are just like that, meaning proprietary, discussions that we're having with owners. And as I think we've talked about oftentimes, the gestation period for a lot of these opportunities, particularly given the nature of the owners, who are oftentimes owner-operators or it's a family-owned business, and legacy and how you're going to treat their employees and what they want to do in the future matters to their decision-making.

Brett Milgrim: As I think we have talked about oftentimes, the gestation period for a lot of these opportunities, particularly given the nature of the owners who are oftentimes owner-operators, or it is a family-owned business, and legacy and how you are going to treat their employees and what they want to do in the future matters to their decision-making. It often takes a while for them to either get comfortable or come to the reconciliation that they are ready to sell. Those lists are ever-increasing for us because there are hundreds and hundreds and hundreds of companies who fit that description that also fit our business model. We will, as I have often said, we will never get to all the opportunities that we have in any reasonable investment period. The harder thing to forecast is when are they executable?

Speaker #5: That often takes a while for them to either get comfortable or come to the reconciliation that they're ready to sell. Those lists are ever-increasing for us because there are hundreds and hundreds of companies that fit that description, that also fit our business model.

Speaker #5: So we will, as I've often said, we will never get to all the opportunities that we have in any reasonable investment period. The harder thing to forecast is: when are they executable?

Speaker #7: Yeah, super helpful. Well, I'll keep it to those two. Thank you very much.

Sheila Kayalou: Well, I will keep it to those two. Thank you very much.

Speaker #4: Thank you.

Ian Mckillop: Thank you.

Speaker #3: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to management for any closing comments.

Operator: Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to management for any closing comments.

Speaker #5: A big thank you to everyone that has taken the time to hear our story today. Believe me when I say we continue to be excited about building our aerospace and defense cash compounder.

Dirkson Charles: A big thank you to everyone that has taken the time to hear our story today. Believe me when I say we continue to be excited about building our aerospace and defense cash compounder that we call Loar. Looking forward to speaking to you all in 13 weeks. Please call in on time. Thank you.

Speaker #5: That we call Loar. Looking forward to speaking to you all in 13 weeks. Please call in on time. Thank you.

Operator: Thank you. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.