Q2 2026 Loar Holdings Inc Earnings Call
Speaker #1: Greetings and welcome to the Lore Holdings, Q2 2026 earnings call. At this time, I'll participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
Speaker #1: If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded.
Speaker #1: It is now my pleasure to introduce Ian McKillop, Director of Investor Relations. Thank you. You may begin.
Speaker #2: Thank you, Diego. Good morning, everyone, and welcome to the Lore Holdings Q2 2026 earnings conference call. Presenting on the call this morning are Lore's Chief Executive Officer and Executive Co-Chairman, Derkson Charles.
Speaker #1: Ladies and gentlemen, gentlemen, please continue to hold. The conference will begin shortly. Thank you for your patience. Ladies and gentlemen, please continue to hold.
Speaker #2: Executive Co-Chairman, Brett Milgrom. Treasurer and Chief Financial Officer, Glenn D'Alessandro, as well as myself, Ian McKillop, the Director of Investor Relations. Please visit our website at loregroup.com to obtain a slide deck and call replay information.
Speaker #1: The conference will begin shortly. Thank you for your Ladies and gentlemen, gentlemen, please continue to hold. The conference will begin shortly. Thank you for your patience.
Speaker #2: Before we begin, we'd like to remind you that statements made during this call, which are not historical 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.
Speaker #1: Ladies and gentlemen, please continue to hold. The conference will begin shortly. Thank you for your patience. Greetings and welcome to the Loar Holdings Q2, 2026 earnings call.
Speaker #1: patience.
Speaker #2: We'd also like to advise you that during 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.
Speaker #2: Please see the tables and related footnotes in the earnings release for our presentation of the most directly comparable GAAP measures and applicable reconciliations. To begin today, I'll now turn the call over to Derkson.
Speaker #3: Thanks, Ian. Good morning to my mates and all our partners participating on this call. I am Derkson, founder, CEO, and Executive Co-Chairman of Lore.
Speaker #3: As you all know, Lore's foundational mission and vision is to build an aerospace industrial cash compounder wrapped in a culture that all our mates can be proud of.
Speaker #3: So first and foremost, to my mates, I extend a huge thank you: Lore's continued success in executing on our mission and vision is the direct result of the efforts of every individual contributor.
Speaker #3: What we have accomplished this quarter is beyond remarkable on a collective accomplishment. I will start with the obvious: once again, we had a quarterly record for sales, adjusted EBITDA, and adjusted EBITDA margins.
Speaker #3: This quarter represents the 16th quarter in a row that we have sequentially achieved a new record for adjusted EBITDA. However, what really makes this quarter noteworthy is we demonstrated the strength of the collaboration across business units and functions.
Speaker #1: At this time, I'll 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.
Speaker #3: Our intentional emphasis on collaboration, combined with the strategic discipline that we live by, and ensuring our resources were focused on the correct opportunities, we converted approximately 25% of our new business pipeline into wins.
Speaker #1: As a reminder, this conference is being recorded. It is not my pleasure to introduce Ian McKillop, Director of Investor Relations. Thank you. You may begin.
Speaker #2: Greetings. Presenting on the call this morning are Loar Holdings' Chief Executive Officer and Co-Chairman, Dirkson Charles. Welcome to the Loar Holdings Q2 2026 earnings call.
Speaker #2: Thank you, Diego. Good morning, everyone, and welcome to the Loar Holdings Q2, 2026 earnings conference
Speaker #3: While we expected greater visibility in our new business pipeline, would result in favorable data and use of our resources; we did not anticipate the significant success achieved.
Speaker #2: At this Executive Co-Chairman, Brett time, all participants are in a Milgram, Treasurer and Chief Financial Officer, listen-only mode. A question and answer session will follow the formal Glenn D'Alessandro, as well as myself, Ian McKillop, the Director of Investor presentation.
Speaker #2: If anyone should require Relations. Please visit our website at operator assistance during the loargroup.com to obtain a slide deck and call conference, please press star zero on your replay information.
Speaker #3: In a few minutes, Ian will remind folks how we think about developing our new business pipeline and where we have found success today. But let me, Derks, say we could not achieve these results without a collaborative and focused culture.
Speaker #2: It is not my pleasure to are forward-looking statements. For further introduce Ian information about important factors that could McKillop, Director of Investor Relations. Thank cause actual results to differ materially you, and good from those expressed or implied in the evening.
Speaker #2: Before we begin, telephone keypad. As a we'd like to remind you that statements made during reminder, this conference is being this call, which are not historical in fact, recorded.
Speaker #3: Thank you, Diego.
Speaker #3: Let me pause here for a minute and answer the question that is on everyone's mind: does this mean we lost 75% of the pipeline?
Speaker #3: Holdings Q2, 2026
Speaker #3: earnings conference call. Presenting on the call this
Speaker #3: morning are Loar's Chief Executive
Speaker #3: Officer and Executive Co-Chairman Dirkson
Speaker #3: The simple answer is no. We are currently still working on those opportunities. In addition to identifying new projects to add to the pipeline, with regards to our end markets, commercial oil growth is once again stellar.
Speaker #2: forward-looking statements, please refer to the company's latest filings with the
Speaker #3: Charles, Executive Co-Chairman
Speaker #3: Brett Milgrim, Treasurer and Chief
Speaker #2: SEC, available through the Investor Relations section.
Speaker #3: Financial Officer Glenn D'Alessandro, as well as
Speaker #2: of our website, or at
Speaker #3: myself, Ian McKillop, the Director of Investor
Speaker #2: sec.gov. We'd also like to
Speaker #3: Relations. Please visit our website
Speaker #3: at loargroup.com to obtain a
Speaker #2: Advise you that during the call, we will be referring...
Speaker #3: slide deck and call replay information.
Speaker #2: to adjusted EBITDA, adjusted
Speaker #3: Up 28% in the quarter versus last year's Q2. We have benefiting from an improved supply chain that has unlocked demand for our parts. While we do not expect this growth every quarter, we do expect continuing strength to support the 10-year-plus backlog of orders at Boeing and Airbus.
Speaker #2: EBITDA margin, and adjusted
Speaker #3: Before we begin, we'd like to remind you that
Speaker #2: earnings per share, each of which is a
Speaker #3: statements made during this call, which are not
Speaker #2: non-GAAP financial measure. Please see the
Speaker #3: historical in fact or forward-looking
Speaker #3: statements, for further information about important
Speaker #2: tables and related footnotes in the earnings
Speaker #2: release for our presentation of the most directly
Speaker #2: comparable GAAP measures
Speaker #2: and applicable
Speaker #2: reconciliations. To begin today, I'll now turn the
Speaker #2: call over to
Speaker #2: Dirkson.
Speaker #3: The platforms where we saw the greatest increase in sales in the quarter were the Boeing 787, the A320 family, and the 737 family of aircraft.
Speaker #3: Thanks, Ian. factors that could cause actual results to Good morning to my mates and all our partners differ materially from those expressed or participating on this implied in the forward-looking statements, please call.
Speaker #3: I am Dirkson, founder, CEO, and refer to the company's latest filing Executive Co-Chairman of CSEC available through the Investor Loar. As you all know, Loar's Relations section of our website, or foundational mission and vision is at sec.gov.
Speaker #3: This is the second quarter in a row where the commercial OEN market grew the fastest. Comparable to last quarter, we achieved 40-plus percent adjusted EBITDA margin.
Speaker #3: to build an aerospace industrial cash We'd also like to advise you that during the call, we compounder wrapped in a will be referring to adjusted culture that all our mates can be proud EBITDA, adjusted EBITDA margin, and of.
Speaker #3: So first and adjusted earnings per share, each of which foremost, to my mates, I extend a huge is a non-gas financial measure. thank you.
Speaker #3: This end market continued to provide strong financial returns for us on a consistent basis. Commercial aftermarket was up double-digit percentage, again this quarter. This is predictable and consistent with our long-term projections.
Speaker #3: Loar's Please see the tables and related footnotes in continued success in the earnings release for our presentation of the executing on our mission and vision is most directly comparable gap direct result of the efforts of measures and applicable every individual contributor.
Speaker #4: Thank
Speaker #4: you. Good morning to my mates and all
Speaker #4: our partners participating on this
Speaker #4: call. I am Dirkson, founder
Speaker #3: What reconciliation. To begin today, we have accomplished this quarter is I'll now turn the call over to beyond remarkable and a Dirkson.
Speaker #4: and CEO and Executive Co-Chairman of
Speaker #3: Given that our portfolio consists of proprietary products, we have tremendous visibility of the demand for our parts and a strong presence in the commercial aftermarket.
Speaker #4: Loar. As you all
Speaker #4: know, Loar's foundational mission and
Speaker #3: collective accomplishment.
Speaker #4: vision is to build an aerospace
Speaker #3: I will start with the obvious. Once
Speaker #4: industrial cash compounder
Speaker #3: again, we had a quarterly
Speaker #4: wrapped in a culture that all our mates can be
Speaker #3: record for sales, adjusted
Speaker #3: EBITDA, and adjusted EBITDA
Speaker #3: In the second quarter, as expected, our customers for our defense end market products returned to their habitual ordering and delivery patterns. We saw sales improve 8% over last year's Q2.
Speaker #3: margins. This quarter represents
Speaker #4: foremost, to my mates, I
Speaker #3: the 16th quarter in a row
Speaker #4: extend a huge thank
Speaker #4: you both to the team's success and
Speaker #3: that we have sequentially
Speaker #3: achieved a new record for adjusted
Speaker #4: to executing on our mission and
Speaker #4: Vision is the direct result of the
Speaker #3: EBITDA. However, what really makes this quarter
Speaker #4: efforts of every individual
Speaker #3: noteworthy is we demonstrated the strength of the
Speaker #4: contributor. What we have accomplished this
Speaker #3: We expect increased demand for our military end market products moving forward, as the geopolitical uncertainty in the world has resulted in increased military funding across the globe.
Speaker #4: quarter is beyond
Speaker #3: collaboration across business
Speaker #4: remarkable for the kind of collective
Speaker #3: units and functions. Our
Speaker #4: accomplishment. I will start with the
Speaker #3: intentional emphasis on
Speaker #3: collaboration, combined with the
Speaker #4: obvious. Once again, we had
Speaker #3: strategic discipline that we live by,
Speaker #4: a quarterly record for sales,
Speaker #3: To be clear, however, we continue to anticipate quarterly sales to this end market to be choppy. Consistent execution of our value drivers, continues to stimulate Lore's growth and create shareholder value.
Speaker #4: adjusted EBITDA, and adjusted
Speaker #3: and ensuring our resources were focused
Speaker #4: EBITDA margins. This quarter
Speaker #3: on the correct
Speaker #3: opportunities, we converted approximately
Speaker #4: represents the 16th quarter in a
Speaker #3: 25% of our new business
Speaker #4: row that we have
Speaker #3: pipeline into wins. While we
Speaker #4: adjusted EBITDA. However, what really makes this
Speaker #3: expected greater visibility in our
Speaker #3: new business pipeline, would
Speaker #4: quarter noteworthy is we demonstrated
Speaker #3: result in favorable data and use
Speaker #3: We continue to emphasize collaboration, entrepreneurship, and enabling above-market growth rates. Solving problems through launching new products, optimizing manufacturing and productivity to increase performance, and achieving price-over-inflation to improve margins annually.
Speaker #3: of our resources, we did not
Speaker #4: the strength of the collaboration
Speaker #4: across business units and
Speaker #3: anticipate the significant success achieved. In a few minutes, Ian will remind folks how we
Speaker #4: functions. Our intentional emphasis
Speaker #4: on collaboration combined
Speaker #3: think about developing our new business
Speaker #4: with the strategic discipline that we
Speaker #4: live by and ensuring our
Speaker #3: pipeline and where we have found
Speaker #4: resources were focused on the correct
Speaker #3: success today. But let
Speaker #3: me just say we do not achieve
Speaker #4: approximately 25% of our new business pipeline into
Speaker #3: these results without a
Speaker #3: collaborative and focused culture. Let
Speaker #3: I only have two words to describe our success implementing these value drivers: onward and upward. In 2026, we are poised to grow sales and adjusted EBITDA at a higher rate than our historical average.
Speaker #4: wins. While we expected greater
Speaker #3: me pause here for a
Speaker #4: visibility in our new business
Speaker #3: minute and answer the question that is on
Speaker #4: pipeline, we resulted in favorable
Speaker #3: everyone's minds. Does this mean we lost 75% of the pipeline? The simple
Speaker #4: data and use of our
Speaker #4: resources; we did not anticipate the pipeline, with regards to our
Speaker #4: significant success achieved. In a
Speaker #3: answer is no. We are
Speaker #3: currently still working on those opportunities.
Speaker #4: few minutes, Ian will remind
Speaker #3: In the first two quarters of 2026, we have grown sales and adjusted EBITDA at approximately 38% and 47% respectively. To state a fact once again: Q2 of 2026 is the 16th consecutive quarter of sequential growth in adjusted EBITDA at Lore.
Speaker #4: folks how we think about developing
Speaker #3: In addition to identifying
Speaker #4: our new business pipeline and where
Speaker #3: new projects to add to the
Speaker #4: we account for success today.
Speaker #4: But let me just say we do
Speaker #3: end markets, commercial OE
Speaker #3: growth is once again stellar. Up
Speaker #4: not achieve these results
Speaker #4: without a collaborative and focused
Speaker #3: 28% in the quarter versus
Speaker #4: culture. Let me pause here
Speaker #3: last year's Q2. We are
Speaker #3: benefiting from an improved supply chain.
Speaker #4: for a minute and answer the question
Speaker #4: that is on everyone's
Speaker #3: that has unlocked demand for
Speaker #4: mind. Does this mean we lost
Speaker #3: our parts. While we do not
Speaker #3: While our focus is not on quarterly results, but the long-term benefit of compounding our financial success over many years, this does demonstrate the consistency and performance from a clear focus on executing our value drivers.
Speaker #4: 75% of the
Speaker #3: expect this growth every quarter, we do
Speaker #4: pipeline? were the Boeing The simple answer is no.
Speaker #3: expect continuing strength to support
Speaker #3: the 10-year plus backlog
Speaker #4: We are currently still working on those
Speaker #3: of orders at Boeing and
Speaker #4: opportunities. In addition to
Speaker #3: Airbus. The platforms where we saw the
Speaker #4: identifying new projects to add to aircraft.
Speaker #3: greatest increase in sales in the quarter
Speaker #4: the pipeline, with
Speaker #4: regards to our end markets, commercial
Speaker #3: While the growth in sales and adjusted EBITDA is something we are proud of, what we take special pride in is the fact that we continue to generate cash flow at an impressive rate.
Speaker #3: 787, the A320 family, and the
Speaker #4: early growth was once again
Speaker #4: stellar, up 28% in the
Speaker #3: 737 family of
Speaker #4: quarter versus last year's
Speaker #3: This is the second quarter in a row where the commercial
Speaker #4: Q2. We are benefiting from an improved
Speaker #4: supply chain that has unlocked
Speaker #3: OE end market grew the
Speaker #3: In fact, year to date, operating cash flow minus capital expenditures divided by net income is $1.9 times. To be clear, our free cash flow is close to $200% of our reported net income.
Speaker #3: fastest. Comparable to last
Speaker #4: demand far apart. While we
Speaker #3: This quarter, we achieved over 40 percent.
Speaker #4: do not expect that growth every
Speaker #4: quarter, we do expect continuing
Speaker #3: adjusted EBITDA
Speaker #3: margins. This end market continued to
Speaker #4: strength to support the 10-year plus
Speaker #4: backlog of quarters that Boeing and
Speaker #3: provide strong financial returns
Speaker #4: Airbus. The platforms
Speaker #3: for us on a consistent
Speaker #3: basis. Commercial
Speaker #4: where we saw the greatest increase in sales in the
Speaker #3: aftermarket was up double-digit percentage. Again,
Speaker #4: quarter were the Boeing
Speaker #3: We focus on generating cash flow above all else. This consistent performance we have demonstrated since we founded Lore in 2012. We have also updated our calendar year 2026 adjusted EBITDA guidance range to $265 to $270 million.
Speaker #4: 787, the A320
Speaker #3: this quarter. This is predictable and
Speaker #4: family, and the 737 family of
Speaker #3: consistent with our long-term
Speaker #3: projections. Given that our portfolio
Speaker #4: aircraft. This is the
Speaker #4: second quarter in a row where
Speaker #3: consists of proprietary
Speaker #3: products, we have tremendous
Speaker #4: the commercial only end market grew
Speaker #3: visibility of the demand for our parts
Speaker #4: the fastest. Comparable
Speaker #4: to last quarter, we achieved
Speaker #3: and a strong presence in the
Speaker #3: commercial
Speaker #4: 40-plus percent adjusted EBITDA
Speaker #3: aftermarket. In the second quarter, as
Speaker #4: margin. This end market
Speaker #3: The strong tailwinds from each end market, plus the execution of our strategic value drivers, gives us confidence that we will meet or exceed our updated guidance.
Speaker #3: expected, our customers for our defense end
Speaker #4: continues to provide strong
Speaker #4: financial returns for us in a
Speaker #3: market products returned to their
Speaker #4: consistent basis.
Speaker #3: habitual ordering and
Speaker #3: delivery patterns. We saw sales
Speaker #4: Commercial aftermarket was up double digits.
Speaker #3: improve 8% over last year's
Speaker #4: percentage again this quarter. This is
Speaker #3: I will now turn it over to Brett to walk you through the key characteristics of our portfolio and the current state of our M&A pipeline.
Speaker #3: Q2. We
Speaker #4: predictable and consistent with our
Speaker #4: long-term projections. Given that our
Speaker #3: expect increased demand for our military end
Speaker #4: portfolio consists of proprietary products, we have
Speaker #3: market products moving forward as
Speaker #3: All right.
Speaker #2: Thanks, Derkson. In order to drive consistent and predictable performance, we have created a diverse portfolio of products that covers essentially all end markets, platforms, and customers, with an uncompromising emphasis on proprietary offerings and high service levels for both OEM and aftermarket customers as they continue to look for reliable supply chain partners like Lore.
Speaker #3: the geopolitical uncertainty in the
Speaker #4: tremendous visibility of the demand for our
Speaker #3: world has resulted in
Speaker #3: increased military funding across the globe.
Speaker #4: parts and a strong
Speaker #4: presence in the commercial aftermarket. In the second quarter, as expected, our customers for our defense end market products received.
Speaker #3: To be clear, however,
Speaker #3: we continue to anticipate quarterly sales to this end market to
Speaker #3: be
Speaker #3: choppy. Consistent
Speaker #3: execution of our value
Speaker #3: drivers, continues to stimulate Loar's growth and create shareholder value. We continue to emphasize—
Speaker #2: We have purposely created this model in order to position Lore to benefit from the long-term secular growth nature of the industry. Without some of the short-term market fluctuations that can arise when a company is overweight to a particular technology end market or product category.
Speaker #2: This disciplined and balanced strategy has served us well by, as Derkson highlighted earlier, resulting in exceptional financial performance as it relates to growth, margins, and a new business pipeline that we fully expect will yield consistent organic growth in subsequent years.
Continues to stimulate laws growth and create shareholder value. We continue to emphasize collaboration.
Speaker #2: Our portfolio is designed to be balanced, resilient, and have wide exposure across a very large and overall growing aerospace and defense market. The same disciplined and consistent approach to market also applies to our M&A strategy.
Entrepreneurship and naming above market growth rates, solving problems through launching new products, optimizing manufacturing and productivity to increase performance and achieving price over inflation to improve margins annually.
Speaker #2: Our demonstrated track record of acquiring 1 to 2 new brands per year over the last 14-plus years is still our best indicator of future activity, with the key ingredient being that we maintain our rigor in evaluating and acquiring businesses that have similar characteristics to our existing portfolio.
Speaker #2: Proprietary offerings within niche categories of aerospace and defense, that have high barriers to entry, and then OEM aftermarket balance. Since going public approximately 2 years ago, we have announced 4 new acquisitions, including 1 new member to our family this calendar year, Harper Engineering, and have invested over $1.1 billion of capital in M&A.
Speaker #2: Our most recent 2 deals—LMB and Harper—continue to perform well, with both businesses performing ahead of expectations and providing us with a plethora of new opportunities and cross-selling activities across the group.
Speaker #2: So while M&A will always be unpredictable, we continue with the M&A cadence we have now had for over 14 years, and the current, very active M&A market certainly doesn't suggest that is stopping in the short term.
Speaker #2: That said, I will repeat something I have mentioned for a few quarters now, which is that we continue to have a large pipeline of opportunities.
Speaker #2: But it's still an M&A market that requires an appropriate amount of discipline to ensure we continue adding the same high-quality businesses that meet the return thresholds we seek.
Speaker #2: I remain excited about the new opportunities we are currently evaluating, in M&A, and, coupled with our organic growth opportunities and current portfolio, feel confident that our ability to generate outsized and consistent long-term returns is still in the early innings of Lore's history.
Speaker #1: Moving over to our products, we include this slide each quarter because it captures the breadth of Lore's product portfolio: more than 25,000 unique part numbers across the group.
Speaker #1: But the real takeaway isn't any single product. It's the set of capabilities behind those products. We are not simply a collection of businesses that manufacture a wide range of components.
Speaker #1: We are an integrated platform that combines engineering, design, qualification, and production expertise across disciplines to deliver tailored, customer-specific solutions and adapt quickly as our customers' requirements evolve.
Speaker #1: Our diverse set of capabilities serves as the foundation from which we capture organic new business opportunities. These opportunities come from 2 forms: first, new products or technologies for new or existing customers, ranging from clean sheet designs to meaningful product enhancements.
Speaker #1: Second, existing products expanded to new customers, driven by share gains and new platform wins. Across the group, our organic pipeline now totals approximately 750 million of revenue potential expected to convert over the next 5 years, up roughly $50 million from what we shared in May.
Speaker #1: As you can see, the opportunity set comes from all the end markets we've participated in and covers the diverse set of products we manufacture.
Speaker #1: As Derkson mentioned earlier in the call, our teams have been working diligently to secure initial orders for these opportunities. To date, they have exceeded our expectations, capturing initial orders and providing visibility to approximately 200 million of cumulative organic revenue over the next 5 years.
Speaker #1: So what does it really mean to move this revenue out of the opportunity category, and into the base business? Simply put, we now have a certified or qualified product for an OEM or aftermarket application that will generate revenue over the next 5 years.
Speaker #1: Think: a new break certification for an in-service platform. The replacement of an incumbent supplier of fluid, sensors, or switches. Or a new restraint for a bespoke seating configuration.
Speaker #1: All of these are examples of how we have been able to leverage our capabilities, partner with our customers, and bring new products to market.
Speaker #1: Over the next 5 years, we have visibility to approximately 200 million of revenue, like anything else in manufacturing that revenue won't come in a straight line.
Speaker #1: That said, given our view of fleet dynamics and the OEM build rates, we feel confident in our ability to deliver on our estimates. While these organic revenue growth opportunities are extremely exciting for us, I also want to highlight what we think should be the other takeaway from this slide.
Speaker #1: Which is that our unique business model and differentiated approach to market, we believe, creates a very powerful and consistent long-term growth compounder. The proprietary nature of our products affords us many benefits unique to other industries.
Speaker #1: We benefit from the circular growth nature of the industry by being the specced-in provider of parts on aircraft. We benefit from the ability to value price.
Have now had for over 14 years and the current very active m&a. Markets certainly doesn't suggest that is stopping in the short term that said I will repeat, something I mentioned for a few quarters now which is that we continue to have a large pipeline of opportunities. But it's still an m&a Market, that requires an appropriate amount of discipline to ensure we continue adding the same high-quality businesses that meet the return thresholds. We seek, I remain excited about the new opportunities. We are currently evaluating in m&a and coupled with our organic growth opportunities. And current portfolio feel confident that our ability to generate outsized and consistent long-term returns is still in the early Innings of Wars history.
Speaker #1: And we benefit from being a supplier for all stages of an aircraft's life, from in-production periods all the way through the decades of aftermarket sales.
Speaker #1: We capture all these benefits, but our proprietary positions also allow us to form embedded customer relationships that foster cross-selling opportunities and other revenue synergies that ultimately create organic new business pipeline that we just spoke about, as well as create opportunities for new businesses to be acquired.
Speaker #1: Moreover, we do this across thousands of product SKUs covering virtually every end market: customer and platform in the industry. And this diversity results in consistent and predictable aggregate performance irrespective of the macro environment, whether OEM production rates are high or aftermarket is active, whether military budgets have short-term increases or not, or whether consumers prefer to fly commercial aircraft or utilize private aviation, our model of capturing 30, 40, or even 50-year annuities generated from a widely diversified set of customers and platforms that is consistently growing and enhancing our new business pipeline is the reason we are so confident that Lore will generate double-digit organic growth rates for the long term.
Moving over to our products, we include this slide each quarter because it captures the breadth of Lord's product portfolio. More than 25,000 unique. Part numbers across the group, but the real takeaway isn't any single product. It's the set of capabilities behind those products. We are not simply a collection of businesses that manufacture a wide range of components. We are an integrated platform that combines engineering design qualification and product production expertise, across disciplines to deliver, tailored customer specific Solutions and adapt quickly as our customers requirements of all.
Our diverse set of capabilities serves as a foundation from which we capture organic, new business opportunities, these opportunities come from 2 forms. First new products, or Technologies for new, or existing customers, ranging from clean sheet designs to meaningful product enhancements.
Second existing products, expanded to new customers driven by shared gains.
Speaker #1: And do that with ever-increasing margins, cash flow, and predictability. I'll now pass the call over to Glenn, who will take you through the financials.
Our organic pipeline. Now, totals approximately, 750 million of Revenue potential, expected to convert over the next 5 years, a roughly 50 million from what we shared in May. As you can see the opportunity set comes from all the end markets, we participate in and covers the diverse set of products, we manufacture
Speaker #3: Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a proforma basis as if each of our businesses were owned as if the first day of the earliest period presented.
As Dirksen mentioned earlier in the call, our teams have been working diligently to secure initial orders for these opportunities to date. They have exceeded our expectations, capturing initial orders, and providing visibility to approximately 200 million of cumulative, organic Revenue over the next 5 years.
Speaker #3: This market discussion includes the acquisition of Beadlight in Q3 '25, L&B Fans and Motors in Q4 '25, and Harper Engineering in Q1 '26. We achieved record sales during the second quarter of 2026.
So, what does it really mean to move this Revenue out of the opportunity category and into the base business?
Simply put, we now have a certified or qualified product for an oem or aftermarket application that will generate Revenue over the next 5 years.
Speaker #3: In total, our sales increased to $172 million which is a 17% increase as compared to the prior year. This increase was driven by strong performances in commercial OEM, commercial aftermarket, and defense sales.
Think a new brake certification for an in-service platform. The replacement of an incumbent supplier of fluid sensors or switches.
Speaker #3: Our commercial aftermarket sales saw an increase of 12% in Q2 '26 versus Q2 '25. This is primarily driven by the continued secular increases in air travel.
Or a new restraint, for a bespoke seating configuration. All of these are examples of how we have been able to leverage our capabilities partner, with our customers, and bring new products to Market.
Speaker #3: Our total commercial OEM sales saw an increase of 28% in Q2 '26 versus the prior year. This increase was driven by higher sales across a significant portion of the platforms we supply along with the continuing improvement in the production environment for commercial OEMs.
Over the next 5 years, we have visibility to approximately 200 million of Revenue, like anything else in manufacturing, that Revenue won't come in. A straight line that said, given our view of Fleet Dynamics and the OEM build rate. We feel confident in our ability to deliver on our estimates.
Speaker #3: Defense sales increased 8% in Q2 '26 as compared to the prior year. Our defense sales will fluctuate quarter to quarter and will continue to be lumpy given the nature of the ordering patterns of our end customers for our products.
While these organic Revenue growth opportunities are extremely exciting for us. I also want to highlight what we think should be the other takeaway from this slide, which is that our unique business model and differentiated approach to Market, We Believe creates a very powerful and consistent long-term growth. Compounder
Speaker #3: Let me recap our financial highlights for the second quarter of '26. Our net organic sales increased 12% over the prior year quarter. Our gross profit margin for Q2 '26 decreased slightly by 60 basis points as compared to the prior year quarter.
The proprietary nature of our products. Affords us, many benefits unique to others. In our industry we benefit from the secular growth nature of the industry by being the speck in provider of Parts. On aircraft we benefit from the ability to value price and we benefit from being a supplier for all stages of an aircraft's life from in production periods all the way through the decades of aftermarket sales.
Speaker #3: This decrease was primarily due to the higher non-cash amortization of acquired intangible assets related to L&B and Harper Engineering, excluding the impact of this non-cash adjustment.
We capture all these benefits, but our proprietary positions. Also allow us to form embedded, customer relationships that Foster cross-selling opportunities and other Revenue synergies that ultimately create organic new business pipeline, that we just spoke about, as well as create opportunities for new businesses to be acquired.
Speaker #3: Our gross profit margins would have been higher by $100 basis points versus the prior year quarter. Net income was flat in Q2 '26 versus '25.
Speaker #3: The higher operating income that we saw from the increased revenues was offset by higher interest expense and higher non-cash amortization of acquired intangible assets.
Speaker #3: Adjusted net income increased $9 million or 35% in Q2 '26 versus Q2 '25. This increase is due to our strong financial performance during the corona.
Ified, set of customers and platforms.
Speaker #3: Partially offset by higher interest expense. Adjusted EBITDA was up $20 million in Q2 '26 versus the prior year. Adjusted EBITDA margins were 40.5% during Q2 '26 compared to 38.3% for Q2 '25.
Is consistently growing and enhancing our new business pipeline. Is the reason we are. So confident that lure will generate double digits, organic growth rates for the long term.
And do that with ever-increasing margins, cash flow, and predictability.
Speaker #3: This increase is primarily due to our operating leverage and the execution of our strategic value drivers. In Q2 '26, our EBITDA margins were 40.5%.
I'll now pass the call over to Glenn, who will take you through the financials.
Thank you, Ian.
Speaker #3: This is an increase of 220 basis points from Q2 '25. From 2020 through 2026, we will have increased our EBITDA margins by $910 basis points.
Speaker #3: We have achieved this growth through operating leverage, winning new profitable business, executing on our productivity initiatives, and value-based pricing. All this while fully absorbing the negative impact of costs related to stocks, and additional organizational expenses to support being a public company.
Good morning everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro forma basis. As of each of our businesses were owned as the, the first day of the earliest period presented this Market discussion includes the acquisition of bead light in Q3 255, lmb fans and Motors in Q4 255 and Harper, Engineering in q1, 26. We achieved record sales during the second quarter of 2026 in total our sales, increased to 172 million, which is a 17% increase as compared to the prior year.
This increase was driven by strong performances in commercial OEM commercial aftermarket and defense sales.
Speaker #3: Let me now turn the call back over to Derekson to share our revised outlook for '26.
A commercial, aftermarket sales for an increase of 12% in Q2, 26, versus Q2 255.
Speaker #1: Thanks, Glenn. We operate with a tailwinds of a secular growth industry which captures the increasing human need to travel, move products from point A to point B, and to defend our American liberties that drives secular demand.
Yes, this is primarily driven by the continued secular increases in air travel.
Speaker #1: These things have been proven to be true since the beginning of aviation, and will continue to be so for the foreseeable future. As a result, Lore will continue to grow at above average industry rates.
Our total commercial OEM sales, saw an increase of 28% in Q2. 26 versus the prior year. This increase was driven by higher sales across our significant portion of the platforms, we Supply along with the continuing Improvement, in the production environment for commercial oems.
Speaker #1: The building blocks of our organic growth model are stronger today than when we went public two years ago. We have expanded our portfolio through four acquisitions and the success of our new business pipeline conversion to our base business.
The fence sales increased 8% in Q2 2056 as compared to the prior year.
Our defense sales will fluctuate quarter to quarter and will continue to be lumpy given the nature of the ordering patterns of our end customers through our products.
Speaker #1: We have put in place an internal team led by our chief talent officer to enhance the capabilities of our mates while continually improving our talent acquisition and communication across the group.
Let me recap our financial highlights for the second quarter of 2026.
Speaker #1: Just to name a few of the improvements we have made since we became a public company. These continuous improvements at Lore are what will drive us to growth rates into the foreseeable future that looks like the historical records that we have delivered.
Our net organic sales increased 12% over the prior-year quarter. Our gross profit margin for Q2 2026 decreased slightly by 60 basis points as compared to the prior-year quarter. This decrease was primarily due to the higher non-cash amortization of acquired intangible assets related to LNB and Harper Engineering.
Speaker #1: Given the demand signals, our record backlog, the improvements in the supply chain, the success of our new business conversion, and the diverse and proprietary nature of our portfolio, we expect commercial OE, commercial aftermarket, and defense sales to be up high double-digit percentage, low double-digit percentage, and mid-single-digit percentage.
Excluding the impact of this non-cash adjustment. Our gross profit margins would have been Higher by 100 100 basis points. Versus the prior year quarter.
Net income was flattened, Q2 26 versus 25.
Speaker #1: Respectively, in calendar year 2026. As always, this view is proforma on a proforma basis, assuming we have owned all of our business units since the beginning of 2025.
The higher operating income that we saw from the increased revenues was offset by higher interest expense and higher non-cash amortization of acquired intangible assets.
Adjusted net income increased $9 million, or 35%, in Q2 2026 versus Q2 2025.
Speaker #1: This results in us increasing our guidance for calendar year 2026 as follows. Our increased range for net sales is now between $665 and $675 million.
This increases due to our strong financial performance during the corner quarter, partially offset by higher interest expense.
Speaker #1: Adjusted EBITDA between $265 and $270 million. With margins of approximately 40%. Gap net income will be in a range of $56 to $60 million, while adjusted EPS will be between above $32 and $1.36, which is up from $1.26 and $1.30 per share, from our last guide.
Adjusted EBITDA was up $20 million in Q2—$226 million versus the prior year. Adjusted EBITDA margins were 40.5% during Q2 2026, compared to 38.3% for Q2 2022. This increase is primarily due to our operating leverage and the execution of our strategic value drivers.
Speaker #1: Capital expenditures will be in line with our historical rate of 3% of sales, at approximately $20 million. With no change to any of our other assumptions.
In Q2 26, our ibida. Margins were 40.5% this is an increase of 220 basis points from q25.
From 2020 through 2026, we will have increased even our margins by 910 basis points.
Speaker #1: Please note, all the amounts I've just outlined for you relating to calendar year 2026 performance assumes no additional acquisitions; however, as we have noted previously, our drumbeat is to complete one or two acquisitions each year; we just cannot predict the timing of such acquisitions.
We have achieved achieved this growth through operating Leverage.
Winning new profitable business.
Executing on our productivity initiatives and value-based prices.
Speaker #1: With that, operator, let's open the line for questions.
All this well fully absorbing the any negative impact, of course related to stocks and additional organizational expenses to support being a public company.
Speaker #2: Thank you. And at this time, we'll conduct the Q&A session to ask a question, press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.
Let me now turn the call back over to derks and the share our revised outlook for 26.
Thanks Glenn.
We operate with a Tailwind of a secular growth industry which captures the increasing human need to travel.
Speaker #2: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Move products from point A to point B, and to defend our American Liberties that drives secular demand.
Speaker #2: And your first question comes from John Godden. Which city, please state your question.
These things have been proven to be true since the beginning of Aviation and will continue to be. So for the foreseeable future, as a result law will continue to grow at above average industry rates.
Speaker #4: Hey, guys. Thanks for taking my question. In the prepared remarks, you spent quite a lot of time a little bit more than usual on new product innovation, expanding share within existing customers, and you gave some additional detailed numbers around that.
Speaker #4: At a high level, it sounds like you guys think that that part of the growth engine is inflecting here. And I don't know if I'm sort of reading that right, but if it is, maybe you can kind of shed some light on that and why the stars are aligning for an inflection now.
We have expanded our portfolio through full Acquisitions and the success of our new business pipeline conversion to our base business. We have put in place an internal team led by Chief Talent officer to enhance the capabilities of our mates. While continually improving our talent acquisition and communication across the group, just to name, a few of the improvements we have made since we became a public company.
Speaker #4: It feels like there might be some room to run.
Speaker #1: Hi, John. And thanks for the question. You are correct. We have been at an inflection point, which is why we've started sharing the new business pipeline.
These continuous improvements at law are what will drive us to growth rates into the foreseeable future. That looks like the historical records that we have delivered.
Speaker #1: The last, I don't know, year or so. What we have actually seen is a lot of progress in terms of certification around some of the parts we have been chasing here for a few years.
Speaker #1: I know we've talked about breaks. We have a number of certified platforms. Engage with customers around those. We intend to continue to increase the certification.
Given the demand signals our record backlog. The improvements in the supply chain, the success of our new business conversion, and the diverse, and proprietary nature of our portfolio. We expect commercial OE commercial, aftermarket, and defense sales to be up, high double digit percentage low double digit percentage and mid single digit percentage respectively, in county of 2026.
Speaker #1: Success there. Over the next six to nine months, and we'll continue to have what I would describe as even more wins as we move forward.
As always, this view is on a performer-on-a-performer basis, assuming we have owned all of our business units since the beginning of 2025.
Speaker #1: On top of that, we spend, I don't know, somewhere between $30 and $40 million a year on engineering costs. We've allocated those engineers to the projects where we believe we have the best chance of winning as opposed to working on what I would call blue-sky projects.
This results in Us, increasing our guidance for calendar year 2026 as follows. I increase range for net sales is now between 665 and 675 million.
Adjusted ibida between 265 and 270 million with margins of approximately 40%.
Speaker #1: We are seeing the benefit of that. That's a switch we made about four or five years ago, and I think as we've shared with you previously, we actually compensate folks so that correct focus.
gaap, net income will be in a range of 56 to 60 million while adjusted EPS will be between above 32 and a dollar 36 which is up from 126 and a dollar 30 per share, um, from our last guide
Speaker #1: We are seeing a lot of wins in a number of products. I think Ian mentioned some switches in senses. Safety, restraints, etc. We are doing a tremendous job.
Capital expenditures will be in line with the house. Our historical rate of 3% of sales at approximately 20 million with no change to any of our other assumptions.
Speaker #1: It is an inflection point. So now, I'm going to share something we haven't shared previously about the new business pipeline. Because we keep getting the question since we've been talking about it, well, what's your win rate?
Please note, all the amounts I’ve just outlined for you relating to calendar year 2026 performance assume no additional acquisitions.
however,
Speaker #1: How do you think about that? And now I can honestly tell you we never think about win rate. All we think about is converting our efforts into base business sales.
as we have noted previously, our drum beat is to complete 1 or 2 Acquisitions each year.
We just cannot predict the timing of such acquisitions.
With that, operator, let's open the line for questions.
Speaker #1: So I would say to you this way, when you get when we put something on a new business pipeline, we expect to win. We have a list of blue-sky projects, which we allow some of our engineers to work on, and they don't get to move to the new business pipeline until we are assured we have a solution we are assured that we have a customer we are assured that we can do it profitably, all the things that check the box to get onto the new business pipeline.
Thank you.
You may press star 2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker #1: So as I said in my remarks, we haven't lost $550 million. We have a renewed focus to go convert those to the base business.
and your first question comes from,
John, gotten with Citi. Please state your question.
Speaker #1: So yes, we are at an inflection point. Thanks for the question, John.
Speaker #4: That was fantastic. Appreciate the color. Maybe I could ask a little bit about the guidance in the back half. Of course, it's good policy to kind of have some conservatism in the number, but is there any risk factor or anything that you've flagged to people kind of in the back half that's on your mind?
Hey guys. Um, thanks for taking my question. Uh, you know, in the prepared remarks you spent quite a lot of time a little bit more than usual on new product, Innovation expanding share within existing customers. And you gave some some, some additional detail numbers around that at at a high level,
Speaker #4: It does seem like given the performance in the first half, the raise could have been a little bit bigger.
Um, it it sounds like you guys think that that part of the growth engine is inflecting here, um, and and I don't know if I'm sort of reading that right, but but if it is maybe you can kind of shed some light on that and and why the stars are aligning for an inflection? Now it feels like there might be some some room to run.
Speaker #1: Yeah. Great way to ask the question, John. Look, is there anything on our mind? The things that are on our mind, we will move from our guidance.
Uh, hi John and and thanks for. Thanks for the question. You are correct.
Speaker #1: Okay? That's the way to think about it. So when we guide, we expect to meet or beat. Right? And when I say that, I'm talking about the high end.
Speaker #1: I mean, people talk about the ranges. We share the range because that's what lawyers tell us we should do. Okay? But our expectation is that we will meet or beat the guidance that we're sharing.
Speaker #1: And I would say this relative to your question about is there upside to that. Look, the increase is related to the success that we're seeing in new business.
Speaker #1: That usually has a learning curve. Should be cautious, right, in terms of how that ramps. And how you perform in your first set of parts that you produce.
Speaker #1: It's coming from the strong demand we're seeing across all the end markets. I would say this. Oh, you asked about the risk. Here's one thing that I do think about.
We have been at an inflection point, which is why we've started sharing the new business pipeline. The last, I don't know, year or so. Um, what we've actually seen is a lot. A lot of progress in terms of certification around some of the parts we've been chasing here for a few years. Um, I know we've talked about breaks, we have a number of certified platforms. Uh, engage with customers around those, uh, we intend to continue to increase the certification, um, success there, over the next 6, to 9 months, and we'll continue to have what I would describe as even more wins as we move forward. Um, on top of that, uh, we spend, I don't know somewhere between 30 and 40 million dollars a year, uh, on engineering costs. We've allocated those Engineers. So the projects where we believe we have the best chance of winning as opposed to working on what I would call Blue Sky.
Uh project.
Speaker #1: Keeping up with the demand. We have areas in our business where we know we need to invest to support the demand that we're seeing.
Speaker #1: Fans and motors. We got to invest some more there. Restraints. We got to invest some more there. And breaks. The demand is stronger than we thought, and we've now got to catch up to make sure that we're prepared to meet the demand.
Speaker #4: All right. Thank you so much.
Speaker #1: Thanks, John.
Products I think, uh, Ian mentioned some switches and sensors, uh, safety restraints. Etc. We we are doing a tremendous job. It is an action point. So now I'm going to share something we haven't shared previously about the new business pipeline because we keep getting the question since we've been talking about it. Well, what what's your win rate? Well, how do how do you think about that?
Speaker #4: Your next question comes from Ken Herbert with RBC Capital Markets. Please state your question.
Speaker #5: Yeah. Hi, Dirksen. Nice results. I wanted to maybe just ask in the aftermarket, in the second quarter, and with the updated expectations for the aftermarket in the back half of the year, are you seeing any specific trends on the commercial transport relative to the business jet generally aviation side that you'd call out?
And now I can honestly tell you we never think about win rate or we think about is converting our efforts into base business sales.
So, I would say to you this way,
When we put something in the new business pipeline, we expect to win.
We have a list of Blue Sky projects which we allow some of our engineers to work on, and they don't get to move to the new business pipeline until we are assured. We have a solution.
Speaker #1: Nothing that oh, thanks for the question, Ken, by the way. Good morning. Nothing that I can think of that I would call out. I will share this, right?
We are sure that we have a customer. We assure you that we can do it, profitably—all the things that check the box to get onto the new business pipeline. So,
as I said, in my in my remarks,
Speaker #1: We see our customers in the commercial aftermarket being prudent. Being pragmatic. Being safe in terms of their ordering. So we're one may have ordered eight before.
We haven't lost 550 million.
We have a renewed, Focus to go convert those to the base business. So yes we we are at an inflection point. Thanks for the question, John.
Speaker #1: They may order six, right? Just the way they just in terms of behavior. For us, what that usually typically means is, okay, they will order it later because they'll need it, and they'll order it at a higher price.
Speaker #1: But other than that, nothing I can call out, Ken.
Speaker #5: Okay. Well, based on that, are you at all concerned that there's an inventory or sort of destocking risk as we think about 27 on the aftermarket as airlines have been and operators have been I think over-provisioning considering supply chain challenges and being more risk-averse.
That was, um, that was fantastic. Um, appreciate the color. Maybe I could ask a little bit about the guidance in the back half. Um, you know, I of course, it's good policy to kind of have some conservatism in the number. But is, is there any, is there any risk factor or anything that that you've flagged to to people kind of in the back half that's on your mind? Um, you know it does seem like given the performance in the first half the race could have been a little bit bigger.
yeah um great way to ask the question, John uh
Look. Is there anything in my mind the things that are on our mind?
We we move from our guidance.
Speaker #5: But could that materialize in either destocking pressure or perhaps greater pricing pressure beyond 2026?
Okay, that's the way to think about it. So when we got, we expect to meet
Speaker #1: No, I'm not concerned there. I would say this. Where we are in terms of inventory and the supply chain for our parts, I would describe it this way.
Speaker #1: March of this year, if folks were holding somewhere between five and seven months' worth of inventory on their shelf to support their production, it's probably now three to five.
Or beat, right? And when I say that, I'm talking about the high end. I mean, people talk about the ranges—we share the range because that's what lawyers tell us we should do, okay? But our expectation is that we will meet or beat the guidance that we're sharing. And I would say this relative to your question about whether there is upside to that.
um look um the increase is related to the success that we're seeing in new business that usually has a learning curve
Speaker #1: In terms of the ordering pattern. Going back to people ordering six instead of eight. That's what I've seen. So I think we have seen whatever destocking, to use your terminology, risk is really sitting behind us.
Should be cautious, right? In terms of how that ramps and how you perform in your first first set of parts that you produce.
Um, it's coming from the strong demand we're seeing across all the end markets. I would say this: you asked about the risk, here's one thing that I do think about.
Speaker #1: And we would expect, as we get into 2027, we would see stronger growth in the commercial aftermarket than we see this year. Plus, I would say this.
Keeping up with the demand. We have areas in our business. Where we know we need to invest
Speaker #1: Last year, we were up 19%. I believe that was the number. So we're lapping really strong numbers in the previous year. So we're really proud, given everything I just said, of the 13% COVID gap this year.
to support the demand that we're seeing,
Speaker #5: Perfect. Thanks, Dirksen. I'll pass it back there.
More fans and Motors, we got to invest some more there. Uh, uh restraints, we got to invest some more there and breaks we we the demand is stronger than we thought and we now got to catch up to make sure that uh we're prepared to meet the demand.
Speaker #1: Thanks, Ken.
All right, thank you so much.
Thanks John.
Speaker #4: Your next question comes from Sheila Kayoglu with Jefferies. Please state your question.
Speaker #6: Thanks. Good morning, guys. And thank you for the time. Maybe if we could talk about your revenue guidance. You raised it on the commercial OE side.
Your next question comes from Ken Herbert. With RBC Capital markets, please State your questions.
Speaker #6: For commercial OEM business and general aviation as well. I guess, how do you think about the growth rate for that sector in terms of rank order by subsector?
Speaker #6: And then specifically for business aviation and GA, that's significantly above market growth. What's sort of driving that in terms of new products or share gains or price?
Yeah, hi Dirksen. Nice results. Um, I wanted to maybe just ask in the aftermarket in the second quarter and with the updated expectations for the aftermarket in the back half of the year, are you seeing any specific Trends on the commercial transport relative to the business generally deviation side that that you'd call out?
Nothing that uh, can, oh, thanks for the question Ken, by the way, and good morning. Um,
Speaker #3: Yeah. So Sheila, it's a great question. When you think about ranking, obviously, I think the health of Boeing and Airbus would probably put the large commercial aircraft at the top of that ranking in terms of growth.
Nothing that I can think of that I would call out. Um, I will share this, right.
Speaker #3: Second to that would be GA and slightly behind that would be business jets. I think we haven't seen super huge rate increases there for our business jet folks.
We, we see our customers in the commercial aftermarket, uh, being put in being pragmatic, uh, being safe in terms of their ordering. So, where 1 may have ordered 8,
Speaker #3: But all that said, I think that comes across all of our value drivers, right? There is new business in that. There is rate and volume growth there.
Speaker #3: And then there's obviously some pricing as we value price appropriately across all of our products. So I wouldn't say that anyone outweighs the other.
Before they may order 6, right? Just just, just the way they just in terms of behavior. Um, for us what that usually typically means is okay, they will order it later because they'll need it and they'll order it at a higher price, um, but other than that, um, nothing nothing I can call out. I can
Speaker #3: It's pretty evenly spread across the group.
Speaker #6: Okay. Got it. And then maybe can you talk about what's going on within your defense markets? Is it just the tougher comps creating that organic headwind in the first half of the year, or just lumpiness of the business?
Okay. Well, well, based on that. Are you at all concerned that? There's
Speaker #6: Any color you could give on specific defense and markets as well.
Speaker #3: Yeah. It's definitely a choppy end market for us, for sure. Last year was stellar. I think we were somewhere in the north of 20% range through the first half of the year in growth.
And operators have been, you know, I think, over-provisioning considering supply chain challenges and being more risk averse. But could that materialize in either—
Destocking pressure, or perhaps greater pricing pressure, you know, beyond 2026.
Speaker #3: So it's a tough comp, for sure. But we experienced this, and I think we've talked about this before, where the government orders in such choppy ways, they provision for a large order, and then they'll show up a certain amount of time later to replenish.
Uh, no, I'm not concerned there. Uh, I I would say this. Um,
Where we are in terms of inventory and the supply chain for our parts, uh, I I would describe it this way.
Um, March of this year.
Speaker #3: So no change in the underlying strength of the business, just the timing of orders as they come in.
If folks were holding somewhere between 5 and 7 months worth of inventory, on their shelf, to support their production,
Speaker #6: Okay. Great. Thank you.
It's probably now 3 to 5.
Speaker #4: Next question comes from Christine Lee Wag with Morgan Stanley. Please state your question.
Speaker #6: Hey, good morning, everyone. I wanted to dive a little bit deeper in terms of organic growth. You had 12% in the quarter. Which is pretty good.
Um, in terms of the order impact, going back to people ordering 6, instead of 8, that's what I've seen. So, I think we've seen whatever, uh, these stockings, you have terminology risk is really sitting behind us,
Speaker #6: But when we kind of look at some of your peers, some are printing organic growth in the quarter that are in the mid to high teens, even north of 20%.
Speaker #6: So when we think about the roughly 207 sorry, the 200 million dollars of orders that you have the baseline for of that 750 million dollar pipeline, I guess I would have thought that you can convert this into higher organic growth.
And and we would expect as we got into 2027, we would see stronger uh growth in the commercial in the commercial after market and we see this here plus I would say this. Last year we were up 19%, I believe that was the number. So we're lapping really, really strong numbers from the previous year.
So you know, so we're really proud giving everything I just said of the uh, you know, the 123% uh growth that we have this year.
Speaker #6: Can we talk about can you talk about where your portfolio is versus others? How do we think about that gap? And as we see more of these conversions, would you expect that to narrow over time and maybe get you towards more of that higher end of the peer set?
Perfect. Thanks Dirksen. I'll pass it back there.
Thanks Ken.
Your next question comes from Sheila CAO, Yao glue with Jeffrey's. Please take your question.
Thanks. Good morning guys, and thank you for the time. Um,
Speaker #1: Morning, Christine. So I have nothing but respect for all of my peers in the industry. And I've seen the results that they've reported. Quite impressive, truly proud of them.
Maybe if we could talk about your Revenue guidance, you raised it on the commercial OE side for, uh, commercial OEM business that and generally Aviation as well. I guess, how do you think about the growth rate for that sector? Uh, in terms of rank order by sub sector?
Speaker #1: I'll start with that. Like I've said before, 13 is my favorite number in the whole wide world. But 13 weeks does not make the answer to the question that you're asking.
And then specifically for business Aviation and GA that's significantly above market growth, what's sort of driving that in terms of new products, or share gains or price.
Yeah. So
Sheila, it's a great question. Uh, when you think about
Speaker #1: So yes, I've seen some of the results that they have. Great job. The way we think about law, not looking at how they perform, is that we will have consistent performance over the long term.
I would probably put the large commercial aircraft at the top of that ranking in terms of growth. Second to that would be GA, and...
Speaker #1: We've said this just now, but we are lapping significant organic growth. And if we went back and looked at some of the results or prior quarters and prior years, you will note that our organic growth was much stronger than the folks that you're referring to.
Slightly behind that would be business Jets. I think we haven't seen, you know, super huge rate increases there for our our business yet folks. Um, but all that said, I I think that comes across all of our value drivers. Right there is new business in that. Um, there is rate and volume growth there. Uh, and then there's obviously some pricing as we we value price appropriately across
All of our products. So, um, I, I wouldn't say that anyone outweighs the others it's pretty evenly spread across the group.
Speaker #1: So we're lapping big numbers. Now, with all that said, I am super, super happy with our organic growth so far this year. One. Two, in terms of the new business, the new business is future state, right?
Speaker #1: The way we think about it is we have been building for this over the last four or five years. And I think I've said this before.
Okay, got it and then maybe can you talk about what's going on within your defense markets? Is it just the tougher comps creating uh that organic headwind uh in the first half of the year for uh just lumpiness of the business. Any any color you could give on specific defense and markets as well?
Speaker #1: Historically, we went back to the time of just 14 years we I would rank it in this order in terms of our organic growth.
Speaker #1: Secular growth being the biggest one, then price, then new business in that order. As we look forward, given the efforts and the relationships we've built with our customers, going forward, we believe new business will be the highest ranked in terms of driving growth.
Yeah, it's definitely a choppy and market for us, for sure. Uh, last year was Stellar. I, I think we were somewhere in the north of 20% range, but through the first half of the Year growth. Um, so it is a, it's a tough comp for sure. But, you know, we experienced this, and I think we've talked about this before, where the order, the government orders in such choppy ways they provision for a large order. And then they'll show up, you know, a certain amount of time later to to replenish. Um, so you know, no no change in the underlying strength of the business, just the, the timing of orders that they come in.
Speaker #1: Then it would be secular growth and then price in that order, going forward. So let's just look at the 200 million that we just won.
Okay, great. Thank you.
Speaker #1: Which is the first cut at that 750 million, which is growing. I would expect that to continue to accrete up as we move forward.
Your next question comes from. Christine Lee. Wag with Morgan Stanley, please State your question.
Speaker #1: So we've said 1 to 3 percent of organic growth for new business. And as we've said in the last few calls, and I think hopefully it resonates with folks now, that we believe we'll be closer to the 3 than the 1.
Speaker #1: And as I also said, 4%, 5%, whatever that number is, we'll be closer to 3 than 1. So yeah, no, we're really proud of what we've created.
Speaker #1: We're really proud of the results with Q2. And I said at the beginning of our remarks, truly, truly proud of my team in terms of what they have delivered we have gone from a company 10 years ago that was doing 20 million in revenues to doing 675 million this year.
Hey, uh, good morning. Uh, everyone. I wanted to dive a little bit deeper in terms of organic growth. Um, you had 12% in the quarter which is, you know, pretty good. But when we kind of look at, um, some of your peers, you know, some are printing organic growth in the quarter that are in the mid to high teens even uh north of 20%. So when we think about the roughly 2007, sorry the the the 200 million dollars of orders that you have the Baseline for of that 750 million pipeline, I guess I would have thought that um, you can convert this into higher organic growth. Can we talk about, uh, can you talk about where
Speaker #1: And I would not be surprised if we woke up three years from now and it's double that, right? Because that's the engine that we have built.
You know, your portfolio is versus others. How how do we think about that Gap? And um, as we see more of these conversions, would you expect that to to uh, to narrow over time and maybe get you towards more of that that higher end of the, uh, the per set?
um,
Speaker #1: So I'm really proud. So I don't look to just the 13 weeks. But applauds to all my mates in the industry who have done well.
so, so
Speaker #1: Good for them.
Speaker #6: Great. Super helpful, Dirkson. And just following up that 200 million that you have visibility into, I just want to confirm, are these now in long-term agreements, or were you able to win the initial contracts you know will have follow-ons?
I have nothing but respect for all of my peers in the industry and I've seen the results that they've reported quite impressive. Truly proud of.
Them, I'll start with that.
Um,
Like, like I've said before, 13 is my favorite number in the whole world.
But 13 weeks that's not make.
Speaker #1: Yeah. So actually, none of them are under LTA. It's PO to PO, which is what we want. Right? Which is what we want. It's we're certified.
um, the answer to the question that that, that, that you're asking,
Speaker #1: We're sole source. Unless it's break, where we are the second source in terms of carbon breaks, where we have PMA. But how that works is that customer is going to convert all of their needs to us, right?
So, yes, I've seen some of the results that they have—great. Great job. The way we think about Loar, um, not looking at how they perform, is that we will have consistent performance over the long term.
Speaker #1: That's in writing. That's agreed to with delivering all new products. So when we say 200 million, it's like saying that we're going to meet or exceed our guidance.
We we've said this previous now, but we are lapping, significant organic growth. Um, and and if you went back and and looked at some of the results, sir prior quarters and prior years, you will know that our organic growth was much stronger than the than the folks that you that you're referring to. Um,
Speaker #1: We are 99.9999% assured, right? Unless there's a black swan event that we will achieve that.
So, we're lapping, we're lapping, big numbers. Now, with all that said, I am super super happy with our our organic growth. Um, so far this year
1, 2, in terms of the new business,
Speaker #6: Great. Super helpful, guys. Thank you.
Speaker #1: Thank you.
Speaker #4: Your next question comes from Connor Dessert with Goldman Sachs. Please state your question.
Um the new business is all its future state, right? The way we think about about it is we have been building for this over the last 4 or 5 years and I think I've said this before,
Speaker #5: Hey, good morning, guys. You've got Connor on for note today. Thanks for taking my question. I wanted to ask a quick one about free cash conversion.
Historically, if you look back in time, our first 14 years, I would rank it in this order in terms of organic growth:
Speaker #5: It's trending just below 200% of net income year to date. Is there a framework we should be thinking about for free cash conversion for the rest of the year?
Secular growth being the biggest one, then price and new business in that order.
Speaker #5: Or if you're not willing to speak to that specifically, just longer-term free cash conversion in general, given the focus on it?
As we look forward, giving the efforts and the relationships we built with our customers going forward. We believe new business will be the highest rank in terms of driving growth.
Speaker #1: So great question, Connor. The way I would think about it, sitting in your seat, is that first half looks like the second half. That's what I say.
Um then then it would be cyclical growth and then price in that order going forward.
So let's just look at the $200 million that we just won, um, which is...
Speaker #1: I would say. Maybe a little bit stronger in the back half because I think as we've said previously, first half of the year, we're usually paying bonuses and taxes at a higher rate than we do in the back half.
The first cut at that 750 million which is growing, I would expect that to continue to create up as we move forward.
Speaker #1: But no, we're going to continue to print money. I guess that should be the answer to my question. To your question. We're just going to continue to print money.
So we've said, 1 to 3 percentage of organic growth for new business and as we've said in the last few calls and I think hopefully it resonates with folks now
Speaker #5: Okay. Noted. And then if I could ask one more on the recent acquisitions of Beadlight, LMB, and Harper. How are the integration processes going for all of those?
Speaker #5: And then are the expected revenue contributions of those businesses for 2026 now higher than when you first acquired them? I think the one you called out and specifically was that LMB was expected to contribute.
Speaker #5: Just wondering how that has shaping up for the year, if you're able to talk about it.
Speaker #1: So the answer to your question on all three is yes. All higher. All doing extremely well. I will answer the question in this way.
That we believe will be closer to 3 than 1. And I just also said, 4% 5%, whatever that number is, will be closer to 3 than 1. So, yeah, no, we're really proud of what, what we've created. We're really proud of the results of Q2 and, and I said at the beginning of our remarks, truly, truly proud of my team, uh, in terms of what they, um, they have delivered, we have gone from a company 10 years ago, that was doing 20 million of revenues to doing 675 million this year. And I would not be surprised if we woke up 3 years from now and it's double that, right? Because that's the engine that we have built so I'm really proud so I don't I don't look to the just the 13 weeks. Um but you know applaud to all my mates in the industry who have done well good for them.
Speaker #1: We bought Beadlight with the goal of finding synergies across the group. Check. That's going really, really well. We actually have them working hand in hand with Schroth, our seatbelt business, where the share similar customers, etc.
Great super helpful derkson, and just following up uh that 200 million that you you have visibility into. I just want to confirm are these now in long term agreements, or were you able to win the initial contracts that you know will have follow-ons?
Speaker #1: And that's going really, really well. LMB, in spite of the drama to get the deal done, it's been great. The demand there is such that that's one of the that's one of the places where we're going to see investing some capital going into 2027 as we expand our footprint beyond the borders.
Yeah, so, um, actually none of them are under LTA. It's P to P, which is what we want, right? Which is what we want. Um, we're certified, we're sole source unless it's brake, where we're the second source. In terms of carbon brakes, we have PMA, but how that works is that...
Customers going to convert all of their uh needs to us, right? That's uh, that's in writing, that's agreed to which delivering, um, all new products. So, when we say 200 million,
Speaker #1: So that's going really, really well. And in terms of Harper, Harper will probably achieve you know how we say we want to double EBITDA in three to five years?
It's like saying that we're going to meet or exceed our guidance. We are 99.999% assured.
Right? Unless there's a, a black swan event, we will, we will achieve that.
Speaker #1: Harper will probably achieve it faster than all of those businesses I just described. So that's going really, really well.
Great. Super helpful, guys. Thank you.
Thank you.
Speaker #5: Okay. That's all really helpful. Thank you.
Your next question comes from Connor Desert with Goldman Sachs. Please state your question.
Speaker #1: Thanks, Connor.
Speaker #4: Thank you. And there are no further questions at this time. So I'll hand the floor back over to actually, we do have one that just came up.
Speaker #4: One moment. Our question comes from Sheila Kayawoglu with Jefferies. Please state your question.
Speaker #6: Sorry, Dirkson. You gave me an idea with the Harper doubling faster than the others. So I wanted to ask because I did realize the acquisition contribution came in a lot better.
Longer term free cash conversion in general given the focus on it.
Speaker #6: What's kind of driving that doubling of the EBITDA faster given how good of a supplier it is? Are you seeing other revenue synergy opportunities?
so, um, great question Connor, uh,
The way I would think.
Is that uh, first half looks like the second half.
Speaker #6: If you could just expand on that.
Speaker #1: Yes. And you're hitting on all the right things, right? Because we do focus on top-line synergies. We're seeing the benefits of having put Harper aside for a second.
That's what I would say. I would say maybe a little bit stronger in the back half, because I think—as in every upset previously—in the first half of the year we're usually paying bonuses and taxes at a higher rate than we do in the back half.
Speaker #1: All our other business units having a different kind of relationships with Boeing. I've asked we actually seeing growth with our customer, Boeing, probably faster than any other customer at this point in time across the group.
Um but no, we're going to continue to print money.
I guess that should be the answer to my question. Do you have a question? We're just gonna
Okay, uh, noted. Um, and then if I could ask one more on the recent acquisition of Beadlight,
Speaker #1: So synergies there in spades. In terms of Harper, we're just seeing increasing demand for their project, products. I mean, 787, perfect example, one of the drivers of our OEM outperformance this year.
Speaker #1: Those guys are sole source. On a number of our products to on the 787. As you know, bill rates have gone up. The supply chain is unlocking, helping them.
Lmb and Harper. Um how are the integration processes going for all of those? And then are the expected Revenue contributions of those businesses for 2026. Now higher than when you first acquired them, I think the 1 you called out in specifically was that lmbb
Was expected to contribute, uh, $60 million or so to 2026 results. Just just wondering how that is shaping up for the year if you're, if you're able to talk about it.
um,
Speaker #1: And it's just going really, really well. Sheila. Thanks for asking.
So the answer to your question on all 3 is, yes.
Speaker #6: Thank you. Thank you for answering.
All higher, all doing extremely well. Um, I I will answer the question in this way.
Speaker #1: Absolutely.
Speaker #4: Thank you. And now I'll hand it over to Dirkson Charles, co-chairman and chief executive officer for closing remarks.
Um, we bought a bead light, um, with the goal of finding synergies across the group.
Speaker #1: So look, a big thank you to everyone that has taken the time to hear our story today. We continue to be really excited about building our aerospace and defense cash compounder.
Speaker #1: That's a business we call law. And we're really looking forward to speaking to you all in November, where we'll take a look at what 2027 looks like and answer some of the questions that I cannot answer today.
That's going really, really well. We actually have them working hand in hand, with growth, uh, our seat belts business, where they share similar customers, etc., and that's going really, really well.
Um, lmb.
Uh in spite of the drama to get the deal done, it's been great. Um
Speaker #1: So speak to you guys in November.
The demand there is such that that's 1 of the, that's 1 of the places where we're going to see investing some Capital going into 2027 as we expand our footprint, uh, beyond the borders, uh, of, of Europe, because the demand is is so good. So that's, that's going really, really well.
Um, and in terms of Hopper,
Hopper will probably achieve, you know, how we say we want to, uh, double EBITDA in three to five years?
Pop-Up will probably achieve it faster than, um, all of those businesses I just described. So that's going really, really well.
Okay, that's all really helpful. Thank you.
Thanks Connor, Connor.
Thank you. And there are no further questions at this time. So I'll hand the floor back over to
Actually, we do have one that just came up. One moment.
Our question comes from Sheila Kayo Glue. Jeff, please take your question.
All right, then.
Uh, you gave me an idea with Harper doubling faster than the others. So I wanted to ask, because I did realize the acquisition contribution came in a lot better. What's kind of driving that doubling, or at least that faster growth? Given how good of a supplier it is, are you seeing other revenue or synergy opportunities?
Um, if you could just expand on that.
Uh, yes. Um, with with, yeah, and, and you're hitting on all the right things, right? Um, because we do focus on Topline synergies, uh, we're seeing the benefits of having let's put Hopper aside for a second. All the other business units, having a different kind of relationships, um, with uh, with Boeing, um, I've actually, we actually seeing growth, um, with our customer Boeing.
Probably faster than any other customer at this point in time across the group. So, synergies, they're in space.
Um, and in terms of uh uh Hopper, we just seen increasing demand um, for their project. Um, products I mean 787 perfect example, 1 of the drivers of a OEM outperformance this year, those guys are are so Source on a number of, uh, products to, uh, on the 787.
As you know, uh, uh, bill rates have gone up. Um, the supply chain is unlocking helping them and it's, it's just going really, really well.
Sheila, thanks for asking.
Thank you. Thank you for answering.
Absolutely absolutely.
Thank you. And now I'll hand it over to Dirkson Charles, Co-Chairman and Chief Executive Officer, for closing remarks.
So look a big thank you to everyone that is taking the time to hear our story today.
This uh, speaking to you all in November, where we'll take a look at what 2027 looks like in the answer, some of the questions that uh, I cannot answer today.
so,
Uh, speak to you guys in November.
Thank you. And this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.
