Loar Raises 2026 Outlook as Q3 Sales and Adjusted EBITDA Reach Records

Loar Holdings Inc. (LOAR) raised its full-year 2026 outlook after reporting record third-quarter sales and adjusted EBITDA, supported by 15.8% organic growth, acquisitions and stronger profitability. The aerospace and defense components manufacturer now expects 2026 net sales of $669 million to $679 million, compared with its previous range of $665 million to $675 million.

Third-quarter net sales increased 39.0% to $176.2 million from $126.8 million a year earlier. Adjusted EBITDA rose 46.5% to $71.9 million, marking the company’s 17th consecutive quarter of record adjusted EBITDA, while adjusted EBITDA margin expanded to 40.8% from 38.7%.

Gross profit climbed 42.9% to $95.4 million, and gross margin improved to 54.2% from 52.7%. Loar attributed the operating performance to higher sales, operating leverage and continued execution across productivity, pricing and new-business initiatives. The company also reported record quarterly free cash flow, up 46%, though the presentation did not provide an absolute figure.

GAAP net income moved in the opposite direction, falling 29.1% to $19.6 million, or $0.20 per diluted share, from $27.6 million, or $0.29 per diluted share, a year earlier. Higher operating income was offset by increased interest expense, income tax expense and amortization of acquired intangible assets. Net interest expense rose to $20.0 million from $6.0 million, while amortization increased to $16.6 million from $9.9 million.

Adjusted net income declined 8.2% to $37.7 million, and adjusted diluted earnings per share decreased to $0.39 from $0.43. Loar’s non-GAAP adjustments included stock-based compensation, transaction expenses and amortization of acquired intangible assets.

Commercial OEM Leads End-Market Growth

On a pro forma basis, which assumes full-period ownership of Beadlight, LMB Fans & Motors and Harper Engineering, total sales increased 16.6% from the prior-year quarter. Commercial original-equipment manufacturer sales rose 21.1%, commercial aftermarket sales grew 10.2%, and defense sales advanced 14.2%.

The company linked commercial OEM demand to an improving production environment and aftermarket activity to higher utilization of an aging aircraft fleet. It said defense demand was supported by global conflicts and asset-readiness requirements.

For the first nine months of 2026, reported net sales rose 38.2% to $503.8 million, including organic growth of 13.2%. Adjusted EBITDA increased 46.8% to $204.6 million, with margin expanding to 40.6% from 38.2%. Adjusted net income grew 4.5% to $106.3 million, while GAAP net income declined 20.4% to $47.5 million because higher operating income was offset by interest, tax and acquired-intangible amortization expenses.

Higher 2026 Forecast, Initial 2027 Outlook

Loar raised its 2026 adjusted EBITDA forecast to between $270 million and $275 million from $265 million to $270 million, while maintaining an expected adjusted EBITDA margin of about 40%. The company now projects GAAP net income of $60 million to $64 million, diluted earnings per share of $0.62 to $0.66, and adjusted earnings per share of $1.36 to $1.40.

The revised forecast assumes commercial OEM market growth of 19% to 22%, compared with the previous assumption of 17% to 20%. Loar continues to expect low-double-digit commercial aftermarket growth and mid-single-digit defense growth in 2026. Other assumptions include approximately $20 million of capital expenditures, $80 million of interest expense and a 25% effective tax rate.

For 2027, management expects net sales of $745 million to $755 million and adjusted EBITDA of $312 million to $317 million, implying an adjusted EBITDA margin of about 42%. GAAP net income is forecast at $91 million to $95 million, with diluted earnings per share of $0.93 to $0.97 and adjusted earnings per share of $1.64 to $1.68.

The 2027 outlook assumes low-double-digit growth across commercial OEM, commercial aftermarket and defense markets. It also incorporates approximately $30 million of capital expenditures, $83 million of interest expense and a 25% effective tax rate.

Loar’s strategy includes adding one or two brands to its group each year, making acquisition execution and integration an important part of its growth model. The company identified its concentration in aerospace and defense, reliance on certain major customers, the availability of acquisitions on acceptable terms and its ability to integrate acquired operations as key risks. Management also cautioned that its outlook is subject to economic, competitive, regulatory and market uncertainties.