Loar (LOAR -2.42%), an aerospace and defense supplier known for its proprietary components and strong aftermarket presence, released its second quarter earnings on August 13, 2025. The standout news: Non-GAAP earnings per share and GAAP revenue both topped estimates, with adjusted (Non-GAAP) diluted earnings per share (EPS) at $0.23 compared to the analyst expectation of $0.18 (non-GAAP), and GAAP revenue at $123.1 million versus $120.9 million (GAAP) expected. This marks a period of strong growth, as the company raised its full-year forecasts on better-than-expected demand and continued margin improvements.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (Non-GAAP) | $0.23 | $0.18 | $0.13 | 76.9% |
| EPS – Diluted (GAAP) | $0.17 | $0.09 | 88.9% | |
| Revenue (GAAP) | $123.1 million | $120.9 million | $97.0 million | 26.9% |
| Adjusted EBITDA (Non-GAAP) | $47.1 million | $35.0 million | 34.5% | |
| Net Income (GAAP) | $16.7 million | $7.6 million | 118.7% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Loar: What It Does and How It Succeeds
Loar supplies a wide range of proprietary components and engineered assemblies for commercial aerospace, business and general aviation, and defense markets. Its business is built on proprietary products supported by intellectual property and in-house expertise, which means fewer rivals and more pricing power. The bulk of its sales—around 85% based on 2024 net sales—come from proprietary products.
A major driver for Loar is its aftermarket business, which refers to sales of replacement parts and services once an aircraft is in use. Aftermarket products accounted for 53% of total revenue in 2024, offering steady, recurring income through long-term contracts that often last decades. Loar’s financial success depends on a mix of organic growth from existing operations, acquisitions that add to its product lineup, and a customer base spread across many markets and platforms.
Quarter in Detail: Growth Drivers, Segment Performance, and Cost Picture
This quarter brought broad-based strength across all end markets. GAAP net sales increased by 26.9% year over year, beating consensus by $2.2 million (GAAP). Revenue growth was driven by both strong demand for existing products, with 11.3% organic growth and contributions from newly acquired businesses.
Commercial aerospace led the way, with sales reaching $54.3 million, up more than 30% compared to Q2 2024. Commercial aftermarket sales—which include replacement and repair components—rose 29% compared to Q2 2024.
Loar’s emphasis on proprietary, higher-margin products helped expand profits faster than sales. Gross margin improved to 53.8%, up from 49.0% in Q2 2024. Operating income (GAAP) also grew, supported by more sales of proprietary products and a favorable shift toward aftermarket and defense segments, both traditionally higher-margin businesses.
Expenses did rise, particularly selling, general, and administrative costs, reaching $36.9 million compared to $27.3 million a year ago. This uptick reflected the cost of running a newly public company, as well as expenses linked to integrating recent acquisitions like Beadlight. Notably, Loar successfully lowered interest costs after amending its credit facility, and ended the quarter with $103.3 million in cash, supporting further investment and acquisitions.
Focus on Product Lines and Competitive Position
Loar’s strength lies in its proprietary components—parts covered by patents or unique technology. These include motion and actuation devices as well as lighting solutions. Many of these parts are embedded from the start in new aircraft and, because of lengthy certification processes and operational requirements, remain standard for the life of a platform.
In the past quarter, the Beadlight acquisition brought new lighting products, deepening Loar’s reach in commercial aerospace, especially the higher-margin aftermarket. This fits with Loar’s long-running strategy of acquiring businesses that add to its portfolio of high-value, hard-to-replace parts underpinned by strong intellectual property rights. The company now operates with 18 acquisitions since 2012, each strengthening its recurring revenue streams and diversifying its customer base. No single customer represents more than 13% of revenue.
Looking Ahead: Guidance and Priorities
On the back of strong results, Loar leadership raised its outlook for full-year 2025. The company now expects net sales of $486 million to $494 million, up from the prior range of $482 million to $490 million. Net income guidance was lifted to $65 million to $70 million, from $59 million to $64 million previously. Adjusted EBITDA—a measure of cash profits—is expected to reach $184 million to $187 million for FY2025, with adjusted EPS (non-GAAP) in a range of $0.83 to $0.88.
Management cited continued robust demand in commercial aerospace, steady growth in business jet and general aviation, and accelerating strength in defense as drivers for its positive outlook. Margins are expected to remain high, with the adjusted EBITDA margin forecast to increase to approximately 38%. Guidance does not yet include any contribution from the pending LMB acquisition, which, if completed, could add to results later.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
