Teleconferência de Resultados do 3T 2026 da Loar Holdings: Crescimento Orgânico de 16%, Perspectivas para 2027

Principais destaques

• A Loar Holdings registrou crescimento orgânico de vendas de 16% no 3T26, sustentado pela demanda de OEMs comerciais, melhora na cadeia de suprimentos e receitas de novos contratos conquistados.
• O EBITDA ajustado aumentou US$ 23 milhões na comparação anual, enquanto a margem EBITDA ajustada expandiu 210 pontos-base, para 40,8%. O trimestre marcou o 17º trimestre consecutivo de EBITDA ajustado recorde para a Loar.
• O fluxo de caixa livre, definido pela administração como o fluxo de caixa operacional menos despesas de capital, cresceu 46% em relação ao 3T25. A conversão de caixa no acumulado do ano foi de aproximadamente 200% do lucro líquido.
• As vendas para OEMs comerciais aumentaram 20%, a receita de pós-venda comercial cresceu na faixa de dois dígitos baixos e o segmento de defesa registrou seu maior crescimento trimestral de 2026.
• A administração elevou o guidance para 2026 para vendas líquidas de US$ 669 milhões a US$ 679 milhões e EBITDA ajustado de US$ 270 milhões a US$ 275 milhões, mantendo a meta de margem EBITDA ajustada em cerca de 40%.
• O guidance inicial para 2027 projeta vendas de US$ 745 milhões a US$ 755 milhões e EBITDA ajustado de US$ 312 milhões a US$ 317 milhões, com margem de aproximadamente 42%. As perspectivas excluem aquisições adicionais.

Principais dados financeiros

Desempenho comercial e operacional

O segmento de OEMs comerciais foi o mercado final de mais rápido crescimento da Loar pelo terceiro trimestre consecutivo, com vendas em alta de 20% na comparação anual. A administração atribuiu o desempenho à demanda mais forte, à melhoria na cadeia de suprimentos aeroespacial e a remessas vinculadas a novos contratos conquistados. Dois terços dos novos contratos conquistados recentemente convertidos foram para equipamentos originais.

A receita de pós-venda comercial voltou a crescer na faixa de dois dígitos baixos. A administração citou o portfólio de produtos proprietários da Loar, a elevada utilização de aeronaves, o envelhecimento das frotas e a atividade sustentada de manutenção como pilares da demanda.

O segmento de defesa registrou sua maior taxa de crescimento trimestral de 2026. A Loar atribuiu a melhora ao aumento nos orçamentos militares, às prioridades de defesa europeias e à reposição de estoques dos EUA, embora a administração tenha alertado que as vendas trimestrais de defesa devem continuar irregulares.

A Loar comercializa mais de 25.000 peças exclusivas, sem que nenhuma peça isolada contribua com mais de 3% da receita anual. A companhia também reiterou a visibilidade de geração de cerca de US$ 200 milhões em receitas nos próximos cinco anos a partir de seu pipeline de novos negócios. Uma nova atualização do pipeline está planejada para a divulgação dos resultados do 1T27.

A administração afirmou que a expansão de margem continua a ser impulsionada pela alavancagem operacional, novos negócios lucrativos, iniciativas de produtividade e precificação baseada em valor. As margens dos novos negócios estão superando atualmente as expectativas anteriores da companhia, segundo a administração.

Guidance da administração

Perspectivas revisadas para 2026

Para 2026, a administração agora espera um crescimento em OEMs comerciais de aproximadamente 19% a 22%, em comparação com a faixa anterior de 17% a 20%. O crescimento do pós-venda comercial deve permanecer na faixa de dois dígitos baixos, enquanto o crescimento em defesa é projetado na faixa de um dígito médio.

Perspectivas iniciais para 2027

A administração espera um crescimento de dois dígitos baixos em OEMs comerciais, pós-venda comercial e defesa durante 2027. Para o mercado de pós-venda, a companhia projeta uma variação no crescimento de assentos-milha disponíveis (ASM) entre praticamente estável e cerca de 2%, com a expectativa de que novos negócios e preços contribuam mais para o crescimento do que o volume.

O guidance para 2027 pressupõe que não haverá aquisições adicionais. A Loar continua mirando uma média de longo prazo de uma a duas aquisições por ano, mas a administração enfatizou que o cronograma das transações é imprevisível.

Riscos e pontos de atenção

A administração apontou a incerteza geopolítica, os preços elevados do petróleo, as taxas de juros crescentes e a disciplina de capacidade das companhias aéreas como os principais fatores macroeconômicos. Suas premissas para o mercado de pós-venda em 2027 incorporam um crescimento limitado na capacidade das companhias aéreas.

A demanda no segmento de defesa segue saudável, mas as vendas trimestrais podem apresentar volatilidade. O desempenho no setor aeroespacial comercial também depende da recuperação contínua da cadeia de suprimentos e do ritmo de produção dos clientes.

Inicialmente, as aquisições podem apresentar margens abaixo da meta da Loar, antes que os benefícios de integração sejam capturados. A administração também destacou que a atividade de M&A é inerentemente irregular e que a disciplina de valuation pode atrasar ou inviabilizar transações.

Destaques da sessão de perguntas e respostas com analistas

A administração manifestou forte confiança nas projeções para 2027, citando backlog recorde, entrada consistente de novos pedidos (bookings) e contratos proprietários conquistados. Quanto às premissas para OEMs comerciais, a Loar afirmou aplicar um desconto de 10% a 15% sobre as estimativas de taxas de produção das principais fabricantes de aeronaves.

A companhia destacou que seu conjunto de oportunidades de novos negócios segue se expandindo à medida que os clientes têm acesso a um escopo mais amplo de soluções da Loar. O cross-selling entre unidades de negócios frequentemente gera oportunidades que não haviam sido identificadas antes das reuniões com clientes.

Em relação a M&A, a administração afirmou que a oferta de empresas aeroespaciais e de defesa que atendem aos critérios da Loar permanece ampla. O pipeline agora engloba mais oportunidades em mercados comerciais, após uma concentração anterior em defesa. A Loar descreveu as perspectivas de conversão no curto prazo como encorajadoras, mas não detalhou prazos para as operações.

A Loar também está investindo em capacidades no segmento de freios, incluindo oportunidades ligadas a PMA (Parts Manufacturer Approval). A administração disse que a disposição dos clientes em considerar produtos PMA é evidente nessa categoria, embora não espere que a adesão por parte das companhias aéreas cresça exponencialmente em relação aos patamares históricos.

Transcrição completa da teleconferência de resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Greetings, and welcome to the Loar Holdings Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Ian McKillop, Director of Investor Relations. Thank you. You may begin.

Ian McKillop

Thank you, Diego. Good morning, everyone, and welcome to the Loar Holdings Q3 2026 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, 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 the call, which are not historical in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements please refer to the company's latest filings with the SEC available through the Investor Relations section of our website or at sec.gov. We'd like to also advise you that during the call, we may 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 reconciliations. To begin today, I will now turn the call over to Dirkson.

Dirkson Charles

Thanks, Ian. Good morning to my mates, all our partners participating on this call. Let's all turn to Slide 4. Now I've said this before, and I'll say it again, Loar's billing and aerospace, industrial cash compounder, fueled by culture growth, respect, collaboration and entrepreneurialship. Each day, 1,800 of my mates and I show up ready to create a significantly larger cash compounded, all while preserving our foundational principles and culture. We know that we will wake up 5 years from now as a much larger company with even stronger cash compounding characteristics.

Today, nothing, nothing at all has changed in the macro that suggests that the deviation from historical growth expectations and the bread crumbs we leave each quarter prove we are right on the road to achieving our goals. This quarter, we achieved record sales, adjusted EBITDA, adjusted EBITDA margins and more notably, generated record free cash flow at a growth rate of 46% over the prior year's third quarter. We grew sales organically by approximately 16% during the quarter driven by excellent execution across all our value drivers, combined with the benefits realized from our latest new business wins. In fact, this quarter is the 17th sequential quarter of record adjusted EBITDA, demonstrating our consistent performance.

If you turn to Slide 5, you'll see that we have grown each quarter in 2026 at rates higher than our growth rate since our founding in 2012. As a reminder, we have grown law since our founding at 30-plus percent and 40-plus percent for sales and adjusted EBITDA, respectively. While we have [Indiscernible] such results, we know that we're really just getting started. But again, what clearly makes this quarter noteworthy is the strength of our cash flows. In fact, year-to-date 2026, we have converted operating cash flows minus capital expenditures at approximately 200% of net income.

Turning to our end markets. Please turn to Slide 6. Commercial OE growth continued to climb and is up 20% in the quarter versus last year's Q3. We continue to benefit from an improved supply chain and increased demand for our parts. In addition, we've also realized additional value from the shipment of products related to our new business wins. As we noted last quarter, 2/3 of the business we converted to wins were for original equipment. This is now the third quarter in a row where the commercial OE end market grew to faster. Once again, that did not stop us from achieving record results. Commercial aftermarket was up low double-digit percentage again this quarter, in line with our expectations.

Given our portfolio consists of proprietary products, we have tremendous visibility of the demand for our parts and a strong presence in the commercial aftermarket. We expect to be able to deliver such performance for the foreseeable future at the age of the active fleet during 2026 is still 17% or -- but in this way, 2 years older than what it was pre-covid despite airlines attempting to manage their capacity in light of higher fuel costs. Last quarter, we said that we expected to see increasing demand for our defense end market products. We were not surprised that in Q3, we had the highest growth in any quarter this year within this end market. The geopolitical uncertainty in the world, the increasing goals of European nations to increase their military arsenal and technology as a percentage of the GDP and the U.S. needing to replenish their stockpiles has resulted in increased military funding across the globe.

With that said, we continue to anticipate quarterly sales for this end market to be choppy. As always, consistent execution of our value drivers continues to stimulate loss growth and create shareholder value. We continue to emphasize collaboration entrepreneurship, enabling above-market growth rates. Being an engineered solutions provider to our customers through launching new products, optimizing manufacturing and productivity to increase performance and achieving price over inflation to improve margins annually. This consistent performance we have demonstrated since we founded [Indiscernible]. We have also initiated guidance in 2027 above our organic growth rates and expect sales at the high end of $755 million and adjusted EBITDA of $317 million in 2027. I'll address that later.

At this moment, I'll now turn the call over to Brett to walk you through our key characteristics of our portfolio and the current state of our M&A pipeline. Brett?

Brett Milgrim

Thanks, Dirkson. 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. We have purposely created this model in order to position Loar 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 end market, technology or product category. This disciplined and balanced strategy has served us well and resulted in an exceptional and consistent financial performance.

In fact, despite varying conditions in each of our end markets since becoming a public entity, we have posted double-digit organic growth and improving margins each and every quarter. Furthermore, and as an example to this specific point, look no further than the last 2 years or more. In 2025, our military business was our fastest-growing segment and overall margins for Loar went up. In 2026, commercial OEM was our fastest-growing segment and our overall margins went up. While no one can definitively predict how each of our end markets may grow in the future, I can confidently say we fully expect overall margins to continue improving and expect continued consistent organic growth, irrespective of what end market leads the way.

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 the market also applies to our M&A strategy. 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 rear in evaluating and acquiring businesses that have similar characteristics as our existing portfolio. Proprietary offerings within niche categories of aerospace and defense, that have high barriers to entry and an OEM aftermarket balance.

While this continues to be an M&A market that requires an appropriate amount of discipline, I am very encouraged about some of the new opportunities we are currently evaluating as there remains a breadth and depth to the different types of businesses we are seeing across all our end markets. coupled with our organic growth opportunities and current portfolio of businesses, we feel confident that our ability to generate outsized and consistent long-term returns is still in the early innings of Loar's history.

Ian McKillop

Turning to our expansive product portfolio. As a reminder, we go to market with more than 25,000 unique parts. No single part accounts for more than 3% of our annual revenue. More importantly than the sheer size of our portfolio is our integrated platform that combines engineering, design, qualification and production expertise across disciplines to deliver tailored solutions, and to adapt quickly as our customers' requirements evolve. We continue to expand our capabilities and product portfolio through organic new product development.

Over the past 2 quarters, we've shared exciting news about our new business pipeline, including visibility into $200 million in revenue generation over the next 5 years. I'm happy to report that the team remains focused on bringing home wins and expanding our overall opportunity set. We continue to share -- we will continue to share updates on these efforts and similar cadence. You can expect an update on our pipeline when we announced Q1 2027 earnings, followed by updates on our wins in the following quarter.

I'll now pass the call to Glenn to go through the financials.

Glenn D'Alessandro

Thank you, Ian. Good morning, everyone. Let me recap our financial highlights for the third quarter of '26. Our net organic sales increased 16% over the prior year quarter. Our gross profit margin increased 150 basis points as compared to the prior year quarter. This increase was due to the execution of our strategic value drivers as well as operating leverage. This was partially offset by higher noncash amortization of acquired intangible assets related to the LNB and Harper engineering acquisitions. Net income decreased $8 million versus Q3 '25. The higher operating income generated by the increased revenues was offset by higher interest higher amortization of acquired intangible assets and higher income tax expense in '26 because of a tax benefit recognized in Q3 '25, related to tax law changes.

Adjusted net income decreased $3 million versus Q3 '25. This primarily relates to higher interest expense and a higher income tax expense because of the tax benefit recognized in Q3 '25. Adjusted EBITDA was up $23 million versus Q3 '25. Adjusted EBITDA margins were 40.8% during Q3 '26 compared to 38.7% for Q3 '25. This increase is primarily due to our operating leverage and the execution of our strategic value drivers.

This slide highlights the consistent margin improvement we have delivered over the past several years. Since 2020, our margins have increased from 30.9% to an estimated 42% for 2027 or 1,100 basis points. Our margin expansion strategy is built on 4 primary levers: first, operating leverage. As we continue to grow revenue, we benefit from leveraging our fixed cost base across a larger business, allowing more of each incremental dollar of revenue to flow to the bottom line. Second, winning profitable new business by converting our organic new business pipeline into sales that continue to increase margins. This is true even though a majority of the new business sales will start out as original equipment.

Third, executing on productivity initiatives. Across the organization, we're driving operational efficiencies through automation, process improvements and using technology that help reduce costs while supporting scale. Fourth, value-based pricing. We continue to align pricing with the value we provide, enabling margin improvement while maintaining strong customer relationships. These benefits are partially offset by 2 factors, the first is the initial margin profile of acquisitions where a newly acquired business may begin below our target adjusted EBITDA margin before integration synergies are realized. The second is ongoing cost associated with maintaining a public company infrastructure.

If you recall back to our IPO, we expected to achieve 39% adjusted EBITDA margins by 2026, we will have exceeded that forecast for '26, and we'll continue to increase margins into the foreseeable future as can be seen by the 42% adjusted EBITDA margin we expect to achieve in '27. Our outlook continues to be supported by healthy demand across each of our end markets, starting with commercial OEM. We're assuming growth in the high double-digit range approximately 19% to 22%, which represents an acceleration from the 17% to 20% growth we previously anticipated. This reflects continued strength in [Indiscernible] and ongoing recovery across commercial aerospace supply chain.

In commercial aftermarket, we're expecting low double-digit growth. We continue to see strong demand driven by elevated aircraft utilization, aging fleets and sustained maintenance activity across the global aviation market. In defense, we're assuming mid-single-digit growth. We continue to benefit from healthy program activity and long-term spending priorities across key platforms.

This slide compares our previous 2026 outlook with our revised expectations. Beginning with net sales, we've increased our revenue outlook to a range of $669 million to $679 million, up from the prior range of $665 million to $675 million. Adjusted EBITDA has also increased to a range of $270 million to $275 million compared to our prior outlook of $265 million to $270 million. Importantly, we're maintaining our expectation of approximately 40% adjusted EBITDA margin, demonstrating our ability to convert revenue growth into earnings while sustaining strong profitability.

Below the EBITDA line, we're also raising in our expectations for net income, diluted EPS and adjusted EPS. Net income is now expected to be between $60 million and $64 million, while adjusted EPS is expected to range from $1.36 to $1.40 per share. Overall, the revised outlook reflects better-than-anticipated operating performance, favorable market conditions and continued execution against our strategic value drivers.

This slide outlines the primary assumptions embedded in our 2026 guidance. For capital expenditures, we expect to invest approximately $20 million, supporting both growth initiatives and ongoing operational improvements. We anticipate full year interest expense of approximately $80 million. Our effective tax rate is expected to be approximately 25% for the year. Depreciation is expected to be approximately $15 million, while amortization is expected to be $65 million. We also anticipate approximately $18 million of noncash stock-based compensation expense.

Finally, our diluted share count is expected to be approximately 97 million shares, which serves as the basis for our earnings per share calculations. Overall, our outlook reflects continued strength across our end markets, improving financial expectations and disciplined execution.

Let me now turn the call back over to Dirkson to share our outlook for 2027.

Dirkson Charles

Thanks, Glenn. We are currently living in an environment with geopolitical challenges across the globe, rising interest rates, and airlines carefully managing the capacity given sustained high oil prices. We have taken all of these macro dynamics into consideration for our 2027 guidance. We, therefore, have planned for a flat to up 2%-ish increase in available seat miles with regards to commercial aftermarket volume growth in 2027. But as you all know, we have multiple levels of organic growth.

In 2027, the drivers of our growth algorithm are ranked in disorder. New business, price and then volume. Given our new business wins and the proprietary characteristics of our portfolio, we enter 2027 with an extremely high conviction that will have at least low double-digit percentage commercial aftermarket growth. With regards to our other end markets, given the demand signals, our record backlog, the improvements in the supply chain, the success of our new business conversion and is diverse and proprietary nature of our portfolio, we expect commercial OEM and our defense end markets to also be up low double-digit percentage in 2027.

As always, this year was on a pro forma basis, assuming we have owned all our business units since the beginning of 2026. This results in initial guidance for calendar 2027 as follows: sales between $745 million and $755 million, adjusted EBITDA between $312 million and $317 million, with adjusted EBITDA margin of approximately 42%. GAAP net income in the range of $91 million to $95 million, adjusted EPS between $1.64 and $1.68. Capital expenditures will be slightly above our historical rate of 3% at around 4% of sales or approximately $30 million. This is driven by investment to meet the increased demand, the robust demand we're seeing for our products with most [Indiscernible] seatbelt restraints, fans and motors, carbon brakes, and [Indiscernible].

Interest expense will be approximately $83 million with an effective tax rate of 25%, depreciation $15 million and amortization of approximately $67 million, while noncash stock comp of $18 million, diluted share count, 98 million. So please note that all the amounts I've just outlined to you relating to calendar 2027 performance assume no additional acquisitions. However, However, however, as we have noted previously, our drumbeat is to complete 1 or 2 acquisitions each year, but we cannot predict the timing of such acquisitions.

With that, operator, let's open the line for questions.

Operator

[Operator Instructions] And your first question comes from John Godyn with Citi.

Perguntas e respostas

John Godyn

I wanted to just start with the 2027 outlook. You guys gave a lot of detail, Dirkson, there's a lot of commentary there. I think that to sort of state the obvious on the market, people feel like they're lacking visibility. And you're expressing a view on commercial aftermarket and defense that has a lot of visibility, and you have a great sort of track record and you've offered some bridge. But I was just hoping maybe you could just dialogue with us a bit more about the conviction on aftermarket and defense specifically. I think we get the drivers on commercial OEM, but on aftermarket and defense, specifically in a complex macro and geopolitical backdrop.

Dirkson Charles

John, and thanks for the question. Look, -- we start -- when we look at looking out 12 months, 18 months, 24 months, we start with the metrics that's in front of us, right? So let's start with a few of those. Our book-to-bill across all our end markets was [Indiscernible] of 1.4%. I'll leave it at that. In some cases, significantly north. So let's start with that. That's the robust demand we're seeing. We're starting with metrics that tell us that our backlog across all our end markets are at record highs.

Now I appreciate the question, given the -- what I would call the noise in the macro, but I appreciate this because we've been saying this since kind of the last 14 years, we've built law to be a solutions provider. We -- and the reason that we share so much detail over the last few quarters about new business is because we're winning, converting to wins really good content, proprietary business for us that's driving some of that backlog and some of that wins that's above and beyond the macro that everybody is focused on.

So the conviction I'll say to you in this way, you guys have noticed now for 3 years. We know this of ourselves, I'll say this, that when we give an initial guidance for the upcoming year, we're doing that with a conviction level where I sleep very comfortably at night. We expect to meet or beat and mostly beat what we're sharing with folks. So across all those end markets today, given the metrics that I've just shared with you, we see low double-digit growth, as I said, with commercial aftermarket, we're looking at seeing available seat miles continue to grow as it has this year, which is flattish. That's what we're projecting. Will we do better? Hopefully. In commercial OE. You didn't ask about commercial because I think folks hear us there.

Given bill rates at the Boeing and Airbus and et cetera of the world that forecasted, we always take a 10% to 15% discount to that. So that's what's in the guide. So high conviction, John. Hopefully, I answered your question.

John Godyn

That was great color. And if I can ask one more for Brett. Brett, when you were talking about the M&A pipeline, I recall specific comment about how the breadth and depth of different types of businesses what was interesting to you. Maybe you could just kind of expand on what that meant.

Brett Milgrim

Yes. I guess I'd say it this way. Certainly, in the earlier part of the year going back into last year, lot of focus on defense, a lot of businesses available for sale or for a discussion on the defense sector. And I'd say more recently over the last quarter or 2 seeing more and more opportunities across all the other end markets. And so I'm very encouraged by that.

I'm very encouraged by a lot of the discussions we are having and the types of businesses that we may have the opportunity to make part of the family, so to speak. So stay tuned.

Operator

Your next question comes from Ken Herbert with RBC Capital Markets.

Kenneth Herbert

Maybe again, just to stick on the 2027 outlook. As we look at the roughly 200 basis point improvement in EBITDA margins implied in the outlook, as you talk about operating leverage, the new business productivity, some of the key initiatives you've outlined, how do you think the margin progression and the key drivers change in 2027 relative to what you've seen over the past few years? Or is it largely consistent as we think about the relative importance of what's behind the margin expansion?

Dirkson Charles

Thanks for the question, Ken. It's fairly consistent to what we have seen over the last few years. I mean, our DNA is to wake up every day and get more price and inflation checked to be a little bit more productive tomorrow and today and so on and so on. I would say the one standout this -- in 2027 and probably 2028 is, again, the new business we have shared with folks that we don't enter into a new business, you don't win new business, if it's not going to make money for us, if I can say it that way. Margins on the new business because we are shipping some of those now is actually exceeding what we were thinking. So really feel comfortable about that. So that's the one little difference because the new business ramp is a lot faster than it has been in the prior. But so far, so good.

Kenneth Herbert

Thanks, Dirk. And if I could just drill down a little bit. Obviously, you've increased sort of the opportunity or the revenue contribution from the new business over the last few years. Where are you seeing sort of increased opportunity today on new business? I know you focus more on OE as you think about the flywheel and getting in on the ground floor, so to speak. But are you seeing greater opportunities present themselves today on new business? I mean how much could this backlog expand over the next to 12 months as we think about just continued supply chain disruptions and challenges across the industry.

Dirkson Charles

I'll give you a short answer, and I'm going to give you a long answer. The short answer to your question, are we seeing more? Absolutely. Every day, we see more, met a customer 2 weeks ago, having dinner at one of the conferences we frequent, Ken. And that has now turned out to be an opportunity, I didn't even dream about. All because we have capabilities today that we didn't have 3 or 4 years ago, right? So every day, the opportunity set is growing.

Now my mates have convinced me that we shouldn't share the new business pipeline every quarter. But I will say this [Indiscernible]. It's higher this quarter than it was last -- and that's just something we've seen naturally going because every time we have one of our makes get in front of a customer, they're sharing the capabilities across the total group, not just what they're sitting there in front of them for. And I will tell you, in more than half of those meetings, we walk away opportunity that we didn't know previously exist. That's just the collaboration that we have across the group that we think is actually one of our superpowers.

So, yes. It's building. It's getting better, it's getting stronger and looking forward to sharing what did we commit to Q1. In Q1, what that looks like. So no, it's growing, and it's more and more opportunities, Ken. Thanks for that question.

Operator

Your next question comes from Kristine Liwag with Morgan Stanley.

Kristine Liwag

Congrats on a great strong operating quarter. Dirkson, Brett, you guys have completely pointed to a cadence of 1 to 2 acquisitions per year. You've been very clear that this environment could be lumpy. But can you give us more color on the supply of the businesses that meet your criteria and how the competition for those assets have been evolving? And also, I guess, when you look at the apparent disconnect between public market valuations and private seller expectations, how are you assessing pricing? And what's the likelihood of converting your pipeline into deals?

Brett Milgrim

Yes. There's a few questions in that. I guess I've said for a while now, Kristine, that -- to your first part of the question, the supply of available assets and businesses that make up the supply chain, that potentially fit our business model is from practical purposes, larger than we'll ever get to. So these -- the opportunity set is enormous. And as it relates to the competitive dynamic, quite candidly, and it may be a little counterintuitive, we have not seen a change all that much even in the last several years, as there's been more activity in the capital markets, more public names out there, et cetera, et cetera.

Part of the reason is -- there is an enormous amount of nuanced understanding truly what is proprietary, truly what opportunities lie within a business and how you make it better both from a growth perspective and an operational and execution perspective. And there's only a handful of folks who can, we think, do that effectively. We are one of them. I think a lot of you out there know the usual suspects. So we won't go through all of them specifically.

And so we see a very consistent set of competitors, if you will, for those assets that come to an auction or some type of competitive process with more than one better. Now that being said, a lot of our transactions are proprietary in nature, after relationships that we've built over months or even years or in several cases, decades. So our mix of M&A opportunities comes from competitive auctions, comes from intermediaries like your bank or banks like you, comes from proprietary relationships on a whole array of other sources, not the least of which is the 1,800 teammates we have at Loar, all of whom think about M&A, help in the M&A process, help evaluate not only assets but strategies that we want to go after and make the opportunity set even greater for us.

And so for all those reasons, we are really encouraged about what's in the pipeline. And I guess I'll say it this way, as it relates to what opportunities we can convert and presumably what you mean is the relatively near term? I will use these 2 words, stay tuned. We are optimistic.

Kristine Liwag

Well, it sounds great. It sounds like great news. We will stay tuned indeed. And if I could squeeze another question in, with airline profitability under pressure, are you seeing greater customer willingness to adopt more PMA parts today? And then also, when you look at the company's ability to convert some of your PMA opportunities into certified parts. Are you accelerating some of that investment in how so you can convert more of that $750 million new business pipeline, which I know is not all PMA, but could be converted to revenue sooner. Not to want to leave with this, but it sounds like there's an opportunity for you guys.

Ian McKillop

Yes. Kristine, it's a great question. This is Ian. Where I would say you'll find us investing and Dirkson alluded to this when he was going over our CapEx spending for next year, we're investing heavily on our capabilities on the brake side, which, as you know, is a PMA leg to the stool, if you will. So we are seeing a lot of willingness to adopt PMA in that side of the house.

I don't know that it's going to be exponentially more than what we've seen historically across airlines, given lessors and the different things that are at play in commercial aerospace. But I definitely can say we are investing in that area. And where we can get and capitalize on opportunities, we're going to add to that group.

Brett Milgrim

And what we do see, and it isn't necessarily specific to PMA, but more and more as our relationships grow as our business continues to have transparency by being a public entity, and we become a valued supplier to our customers, the more open-minded they are to us bringing opportunities to make their business better, be it PMA, be it a new product introduction, be it a new category that we can service them, et cetera, et cetera, et cetera. Those opportunities are continuing to grow and while we always come back to -- we're just at the early innings of our new business pipeline opportunity set and overall place in the supply chain. So we're very, very optimistic about that.

Operator

[Operator Instructions] Your next question comes from Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu

Appreciate just putting yourself out there with the 0% to 2% capacity growth assumption for perhaps if you could just add some detail around what you're assuming on that outcome as it relates to oil price and just thoughts on auto macro, and if you could perhaps comment on your platform exposure and whether you're expecting any bifurcation between any of your new gen aircraft versus content on your old gen, please?

Dirkson Charles

Let me take [Indiscernible]. Well, let's start with what I said about ASM growth, right? What we've seen this year, and I know you know the statistic is probably better than I do, is flat to down ASM growth as airlines have managed to take out unprofitable routes, et cetera. So the way we kind of think about forecasting into the future, given where oil prices is today, as we assume more of the same, right? That's the assumption. That's not the expectation, but the assumption.

And more of the same to us would be flattish. And if you want to give a range down 1%, up 2%, somewhere within there. That's how we've built our forecast. Now with that said, and hopefully, you already answered some of my questions before, I'm not seeing that in our demand right? I'm not seeing that in the bookings that we have. I'm not seeing that when I sit down with a customer, and we're talking about capacity and with the capacity expectations [Indiscernible] side of the table has to be to meet their goals over the next year or 2 or 3 years that I'm not seeing. But what we do when we build a forecast, we want to make sure we get in front of our partners, everybody on this call, all the investors in law and make sure that when we say we're going to hit a number, we're going to hit a number. So keep that in mind.

Now with regards to our product offering, we don't see any -- I'll say it this way, any changes between new aircraft, old aircraft, old engine, new engine for the parts that we're making today, did carry ports from legacy right through to the future. We're not, as you know, making engines, we're not making wins, the things that actually move the needle when it comes to fuel efficiency and those things we're making switches and push buttons and latching mechanisms, right? And what -- where the opportunity set is a little bit of improvement, showing up on time with a [Indiscernible] product, and you get to stay on that platform and the new gen. So that's kind of how we think about the products that we offer to our customers.

So hopefully, in there somewhere, [Indiscernible] answered the question.

Sheila Kahyaoglu

Maybe can I ask another one. I guess, to part on M&A. What's holding you back the most, I guess? Is it just -- I know you stick to your knitting when it comes to M&A, the margin profile, the valuation. So what's holding you back? And as you think about the past year, you had LMB in December, Harper in January. How has perhaps like no new M&A coming in here this year changed the way you run the business for the better, whether it's the new pipeline or focus on productivity?

Dirkson Charles

Well, there's no change in how we run the business. That's for sure. And for those of us who have actually done M&A, you would know that it's lumpy, and it's unpredictable. And I could give you several examples, which I won't on this public forum, but several examples of things that we are very close doing for the intricacies and personalities and nuances that go into M&A, which is not as simple as buying a public stock or not. Sometimes things work out, sometimes things don't. And to your point earlier, we remain very, very disciplined. So what you're going to see is never a linear straight line of a pace or cadence of M&A when you're measuring things in quarters as opposed to years or multi-years.

And so you'll wake up at some point in the future and say, "Wait a minute, you did a flurry deals. Are you doing too many? How can you do that?" And the point I'm trying to make is it's unpredictable and it's lumpy. And that's the nature of the M&A business for those people who are disciplined about and will only execute on transactions that will increase the equity value of the company. That's the best way I can answer it.

Operator

Thank you. There are no further questions at this time. I'll now turn it back to Dirkson Charles for closing remarks.

Dirkson Charles

Thank you. So look, first of all, a big thank you to all my mates who are the heart and soul of Loar and to everyone that has taken the time to hear our story today. We continue to be excited about building our aerospace and defense cash compounded that we call at Loar and looking forward to speaking to you all in February. Thank you very much.

Operator

Thank you. This concludes today's conference. All parties may disconnect.