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DATE

Thursday, Aug. 6, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and Executive Co-Chairman - Dirkson Charles
• Executive Co-Chairman - Brett Milgrim
• Treasurer and Chief Financial Officer - Glenn D'Alessandro
• Director of Investor Relations - Ian McKillop

TAKEAWAYS

• Net Sales -- $171.6 million, an increase of 39.4% driven by strong organic growth and contributions from the Harper Engineering acquisition.
• Adjusted EBITDA -- $69.4 million, representing a 47.4% increase due to operating leverage and productivity initiatives.
• Adjusted EBITDA Margin -- 40.5%, reflecting execution of strategic value drivers and value-based pricing.
• Net Organic Sales -- $138.3 million, growing 12.3% during the quarter.
• Commercial OEM Sales -- $57.5 million, up 28% behind higher delivery rates for Boeing 787 and Airbus A320 platforms.
• Commercial Aftermarket Sales -- $59.4 million, an increase of 12% driven by secular growth in global air passenger traffic.
• Defense Sales -- $45.0 million, up 8% reflecting geopolitical tailwinds despite periodic fluctuations in government ordering.
• New Business Pipeline -- $750 million in potential revenue, an expansion of $50 million following updated opportunity assessments.
• Organic Revenue Visibility -- $200 million of cumulative orders over five years, resulting from the conversion of approximately 25% of the new business pipeline.
• Adjusted Net Income -- $36.3 million, a 35% increase despite higher interest expenses associated with debt.
• GAAP Net Income -- $16.7 million, remaining flat year over year as higher revenue was offset by non-cash amortization and interest costs.
• Net Income Margin -- 9.8%, a decrease from 13.6% in the prior year quarter due to higher interest and non-cash amortization.
• Diluted EPS -- $0.18, compared to $0.17 in the prior year quarter.
• Free Cash Flow Conversion -- 1.9x relative to net income, driven by efficient working capital management.
• Full Year Revenue Guidance -- $665 million to $675 million, raised from previous estimates due to first-half outperformance.
• Full Year Adjusted EBITDA Guidance -- $265 million to $270 million, an upward revision reflecting sustained demand signals.
• Full Year Adjusted EPS Guidance -- $1.32 to $1.36, representing an increase from the prior range of $1.26 to $1.30.
• Full Year GAAP Net Income Guidance -- $56 million to $60 million, up from the previously guided range of $53 million to $57 million.
• Capital Expenditures -- approximately $20 million, maintained at roughly 3% of sales for the full year.
• Interest Expense Guidance -- approximately $80 million for the full year, reflecting the current debt structure.
• Amortization Expense -- projected at approximately $65 million for 2026, primarily from acquired intangible assets.
• M&A Deployment -- $1.1 billion in capital invested since going public to acquire niche proprietary aerospace components.

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RISKS

• Charles stated, "We have areas in our business where we know we need to invest to support the demand that we're seeing," specifically identifying a need for capacity catch-up in fans, motors, restraints, and brakes.

SUMMARY

Loar Holdings Inc. (LOAR +1.22%) reported record quarterly sales and Adjusted EBITDA during the second quarter. Management attributed the 12.3% organic revenue growth to sustained demand in commercial aerospace and the impact of recent acquisitions. The company raised its full year 2026 financial guidance for sales, net income, and Adjusted EPS based on first-half performance and visibility into its new business pipeline. Management stated that the company remains focused on capital compounding through proprietary component manufacturing and disciplined M&A execution.

• CEO Charles highlighted that Q2 2026 marked the 16th consecutive quarter of sequential Adjusted EBITDA growth.
• Management noted that commercial OEM platforms including the Boeing 787 and Airbus A320 family were primary drivers of the 28% segment growth.
• CFO D'Alessandro stated that Adjusted EBITDA margins increased by 910 basis points since 2020 through productivity initiatives and pricing strategies.
• CEO Charles reported that the company's free cash flow remains a primary metric, stating, "We're just going to continue to print money."
• Management reported visibility to $200 million of cumulative organic revenue, with Director McKillop noting, "that revenue won't come in a straight line."
• CEO Charles noted that current inventory levels in the supply chain have normalized to three to five months, down from five to seven months earlier in the year.
• The company plans to increase capital investment in 2027 for the Fans and Motors and brakes segments to address demand that exceeded internal expectations.

INDUSTRY GLOSSARY

• Beadlight: A Loar Holdings subsidiary specializing in LED lighting for aircraft cabins.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization.
• GAAP: Generally Accepted Accounting Principles.
• LTA: Long-Term Agreement, a contract governing pricing and supply over multiple years.
• PMA: Parts Manufacturer Approval, an FAA certification allowing a company to produce replacement aircraft parts.
• Proprietary Products: Components for which the company owns the design rights, typically resulting in sole-source supplier positions.
• SCHROTH: A Loar Holdings brand focused on safety restraints and occupant protection systems.
• SEC: Securities and Exchange Commission.
• SOX: Sarbanes-Oxley Act, a regulation establishing financial reporting and auditing standards for public companies.
• Step-up: An accounting adjustment to increase the carrying value of acquired inventory to its fair market value at the time of purchase.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Loar Holdings Q2 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 Q2 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, Ian McKillop, the Director of Investor Relations. Please visit our website at loargroup.com to obtain a slide deck and call replay information. Before we begin, we'd like to remind you that statements made during this 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 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. 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'll now turn the call over to Dirkson.

Dirkson Charles: Thanks, Ian. Good morning to my mates and all our partners participating on this call. I am Dirkson, Founder, CEO and Executive Co-Chairman of Loar. As you all know, Loar'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. So first and foremost, to my mates, I extend a huge thank you. Loar's continued success in executing on our mission and vision is the direct result of the efforts of every individual contributor. What we have accomplished this quarter is beyond remarkable and a collective accomplishment. I will start with the obvious.

Once again, we had a quarterly record for sales, adjusted EBITDA and adjusted EBITDA margins. 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. 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. 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.

In a few minutes, Ian will remind folks how we think about developing our new business pipeline and where we have found success to date. But let me just say we do not achieve these results without a collaborative and focused culture. 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? 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 OE growth was once again stellar, up 28% in the quarter versus last year's Q2.

We are 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. 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. This is the second quarter in a row where the commercial OE end market grew the fastest. Comparable to last quarter, we achieved 40-plus percent adjusted EBITDA margins. This end market continues 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. 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. 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. 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. 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 Loar's growth and create shareholder value. We continue to emphasize collaboration, entrepreneurship, 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. I only have 2 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. In the first 2 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 Loar. 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. 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. In fact, year-to-date, operating cash flow minus capital expenditures divided by net income is 1.9x.

To be clear, our free cash flow is close to 200% of our reported net income. We focus on generating cash flow above all else. This consistent performance we have demonstrated since we founded Loar in 2012. We have also updated our calendar year 2026 adjusted EBITDA guidance range to $265 million to $270 million. 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. 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. 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 like Loar. 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 technology, end market or product category.

This disciplined and balanced strategy has served us well by, as Dirkson 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. 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.

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, proprietary offerings within niche categories of aerospace and defense that have high barriers to entry and an 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.

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. 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.

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, 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 Loar's history.

Ian McKillop: Moving over to our products. We include this slide each quarter because it captures the breadth of Loar'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 production expertise across disciplines to deliver tailored customer-specific solutions and adapt quickly as our customers' requirements evolve. 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 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. 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. As Dirkson 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. 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. Think a new brake 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.

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. 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 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, 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 others in our industry. We benefit from the secular growth nature of the industry by being the spec-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.

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. 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 Loar will generate double-digit organic growth rates for the long term 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.

Glenn D'Alessandro: Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro forma basis as if each of our businesses were owned as of the first day of the earliest period presented. This market discussion includes the acquisition of Beadlight in Q3 '25, LMB Fans & Motors in Q4 '25 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.

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. 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. 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.

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. This decrease was primarily due to the higher noncash amortization of acquired intangible assets related to LMB and Harper Engineering. Excluding the impact of this noncash adjustment, 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.

The higher operating income that we saw from the increased revenues was offset by higher interest expense and higher noncash amortization of acquired intangible assets. 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 quarter, 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. 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%. 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. 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 SOX and additional organizational expenses to support being a public company. Let me now turn the call back over to Dirkson to share our revised outlook for '26.

Dirkson Charles: Thanks, Glenn. We operate with the 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. 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, Loar will continue to grow at above-average industry rates. The building blocks of our organic growth model are stronger today than when we went public 2 years ago. We have expanded our portfolio through 4 acquisitions and the success of our new business pipeline conversion to our base business.

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. Just to name a few of the improvements we have made since we became a public company. These continuous improvements at Loar are what will drive us to growth rates into the foreseeable future that looks like the historical records that we have delivered.

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 calendar year 2026. As always, this view is pro forma -- on a pro forma basis, assuming we have owned all of our business units since the beginning of 2025.

This results in us increasing our guidance for calendar year 2026 as follows: our increased range for net sales is now between $665 million and $675 million, adjusted EBITDA between $265 million and $270 million with margins of approximately 40%. GAAP net income will be in the range of $56 million to $60 million, while adjusted EPS will be between $1.32 and $1.36, which is up from $1.26 and $1.30 per share from our last guide. 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.

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 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.

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

John Godyn: 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. 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, it feels like there might be some room to run.

Dirkson Charles: John, 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 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. I know we've talked about brakes. We have a number of certified platforms, engaged with customers around those. We intend to continue to increase the certification 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.

On top of that, we spend, I don't know, somewhere between $30 million 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. We are seeing the benefit of that. That's a switch we made about 4 or 5 years ago. And I think as we've shared with you previously, we actually compensate folks for that correct focus. We are seeing a lot of wins in a number of products. I think Ian mentioned some switches and sensors, safety restraints, et cetera. We are doing a tremendous job. 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? Well, 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. 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 sure that we have a customer, we are sure that we can do it profitably, all the things that check the box to get on to the new business pipeline. 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. So yes, we are at an inflection point. Thanks for the question, John.

John Godyn: That was fantastic. I 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 flagged to people kind of in the back half that's on your mind? It does seem like given the performance in the first half, the raise could have been a little bit bigger.

Dirkson Charles: Yes. Great way to ask the question, John. Look, is there anything in our mind, the things that are on our mind, we removed from our guidance, 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. 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 is there upside to that?

Look, the increase is related to the success that we're seeing in new business. 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. 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, 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. Fans & Motors, we got to invest some more there.

Restraints, we got to invest some more there, and brakes, 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.

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

Kenneth Herbert: 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 general aviation side that you'd call out?

Dirkson Charles: Nothing that -- thanks for the question, Ken, by the way. Nothing that I can think of that I would call out. I will share this, right? We see our customers in the commercial aftermarket being prudent, being pragmatic, being safe in terms of their ordering. So where one may have ordered 8 before, they may order 6, right? Just the way -- in terms of behavior. For us, what that typically means is, okay, they will order it later because they'll need it and they'll order it at a higher price. But other than that, nothing I can call out, Ken.

Kenneth Herbert: 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, overprovisioning considering supply chain challenges and being more risk averse. But could that materialize in either destocking pressure or perhaps greater pricing pressure beyond 2026?

Dirkson Charles: No, I'm not concerned there. I would say this, where we are in terms of inventory in the supply chain for our parts, I would describe it this way. March of this year, if folks were holding somewhere between 5 and 7 months' worth of inventory on their shelf to support their production, it's probably now 3 to 5 in terms of the ordering pattern, going back to people ordering 6 instead of 8. That's what I've seen. So I think we have seen whatever destocking, to use your terminology risk, is really sitting behind us. 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, last year, we were up 19%. I believe that was the number. So we're lapping really, really strong numbers in the previous year. So we're really proud, given everything I just said, of the 12%, 13% growth that we have this year.

Operator: Your next question comes from Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu: Maybe if we could talk about your revenue guidance. You raised it on the commercial OE side for commercial OEM, biz jet 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? 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?

Ian McKillop: Yes. 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. 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. 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. And then there's obviously some pricing as we value price appropriately across all of our products.

So I wouldn't say that any one outweighs the other. It's pretty evenly spread across the group.

Sheila Kahyaoglu: 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? Any color you could give on specific defense end markets as well?

Ian McKillop: Yes, it's definitely a choppy end market for us for sure. Last year, it was stellar. I think we were somewhere in the north of 20% range through the first half of the year in growth. 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 way. They provision for a large order and then they'll show up a certain amount of time later to replenish. So no change in the underlying strength of the business, just the timing of orders as they come in.

Operator: Your next question comes from Kristine Liwag with Morgan Stanley.

Kristine Liwag: I wanted to dive a little bit deeper in terms of organic growth. You had 12% in the quarter, which is pretty good. 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%. So when we think about the roughly 207 -- sorry, the $200 million of orders that you have the baseline for of that $750 million pipeline, I guess I would have thought that you can convert this into higher organic growth. 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?

Dirkson Charles: 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. 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. So yes, I've seen some of the results that they have, great job. The way we think about Loar, not looking at how they perform is that we will have consistent performance over the long term. We have said this just now, but we are lapping significant organic growth.

And if you went back and looked at some of the results prior quarters and prior years, you will note that our organic growth was much stronger than the folks that you're referring to. 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? The way we think about it is we have been building for this over the last 4 or 5 years. And I think I've said this before.

Historically, if you look back in time, our first 14 years, we -- I would rank it in this order in terms of our organic growth, 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. 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, 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. So we have said 1% to 3% 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%. And as I also said, 4%, 5%, whatever that number is, we'll be closer to 3% than 1%. So yes, no, we're really proud of what we've created. We're really proud of the results of 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 of revenues to doing $675 million this year. And I would not be surprised if we walk 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 look to just the 13 weeks, but applaud to all my mates in the industry who have done well, good for them.

Kristine Liwag: Great. Super helpful, Dirkson. And just following up on 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 that you know will have follow-ons?

Dirkson Charles: Yes. So actually, none of them are under LTA. It's PO to PO, right?

Unknown Executive: Which is what we want.

Dirkson Charles: Which is what we want. It's -- we're certified. We're sole source unless it's brake where we are the second source in terms of carbon brakes, where we have PMA. But how that works is that customer is going to convert all of their needs to us, right? 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 are 99.9999% assured, right, unless it's a black swan event that we will achieve that.

Operator: Your next question comes from Connor Dessert with Goldman Sachs.

Connor Dessert: You've got Connor on for Noah today. I wanted to ask a quick one about free cash conversion. 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? Or if you're not willing to speak to that specifically just longer-term free cash conversion in general, given the focus on it?

Dirkson Charles: 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 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. 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.

Connor Dessert: 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? 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 in specifically was that LMB was expected to contribute $60 million or so to 2026 results. Just wondering how that is shaping up for the year, if you're able to talk about it.

Dirkson Charles: So the answer to your question on all 3 is yes. All higher, all doing extremely well. I will answer the question in this way. 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 they share similar customers, et cetera, 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'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 of Europe because the demand is so good.

So that's going really, really well. And in terms of Harper, Harper will probably achieve -- how we say we want to double EBITDA in 3 to 5 years. Harper will probably achieve it faster than all of those businesses I just described. So that's going really, really well.

Operator: 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 Kahyaoglu with Jefferies.

Sheila Kahyaoglu: 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. 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? If you could just expand on that.

Dirkson Charles: 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, all our other business units having a different kind of relationships with Boeing. We're actually seeing growth with our customer, Boeing, probably faster than any other customer at this point in time across the group. So synergies there in spades. And in terms of Harper, we're just seeing increasing demand for their products. I mean 787, perfect example, one of the drivers of our OEM outperformance this year. Those guys are sole source on a number of products to -- on the 787.

As you know, build rates have gone up. The supply chain is unlocking, helping them. And it's just going really, really well, Sheila. Thanks for asking.

Operator: And now I'll hand it over to Dirkson Charles, Co-Chairman and Chief Executive Officer, for closing remarks.

Dirkson Charles: 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. That's a business we call Loar. 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. So speak to you guys in November.

Operator: Thank you. And this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.