Loar (LOAR) 14 May 242024 Q1 Earnings call transcript

Greetings. Welcome to Loar Holdings First Quarter 2024 Results Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Ian Mckillop, Director of Investor Relations. Thank you.

begin. may You

welcome Call. and XXXX Quarter First Thank to Conference Earnings you, Loar's

Presenting Loar's Brett morning Officer this D'Alessandro; on call the are Chief Officer, Co-Chairman, Charles; and myself. and and Dirkson Founder, Executive Treasurer Co-Chairman, Milgrim; Financial Glenn Executive Executive Chief

replay website call visit deck our a slide loargroup.com at Please obtain to supplemental and information.

begin, statements in call, this not historical made fact, the forward-looking which would to like company we during Before remind that statements. are you are

actual to about results expressed the information For latest Investor important of website the from the could cause Relations filings through differ factors those our to further or or forward-looking that materially statements, the with in sec.gov. implied at available section please SEC refer company's

the to call, will financial the per a earnings presentation The of related company would and measure. the EBITDA, also measures adjusted share, for is footnotes see a in like reconciliations. and during of be directly each we GAAP course to adjusted comparable referring non-GAAP EBITDA most Please that advise margin adjusted which earnings release and of the applicable tables the you

quiet today's note, and be have given that a public will a for we weeks, call. after also our are taking in been questions X not analysts Please company we period,

turn call I'll now the over Dirkson. to

I'm going #X. And remark let on Ian. to Thanks, Slide brief start me make here. one

we're story, up with to can we'll people future, end walk is that. what do cetera, are so little the along here different bit analysts you still which do best be going questions a in call, something but As really we've Ian our on period, the their et we'll the just But today's wanted mentioned, know that been we'd portfolio, to quiet you to. because through our doing follow in at not take our to

you those story So new first analysts, hearing especially of good to our time. and partners, the our morning, for

Loar. the Founder, Charles. of CEO Ian and Co-Chairman I'm I'm Dirkson mentioned, As

companies with approach to of shareholder family the value. a simple creating is Loar very

compound advance First, sales by across practices we inception we generate as of EBITDA growth units to above-market it and each their brands, our best grown growth collaborative environment other XX% we and We units well our business a adjusted providing believe will annual comes have Since and that rate to business collaborate sharing in as XXXX, entrepreneurial and respectively. ideas XX%, at assisting of when execution. rates.

and the create We of those along industry new streams. We pain X the will execute growth problems organically identified products, annually. value long X look term, points to percentage solve over believe, X we within through line launching points to aerospace which top

We allow will our to words, competitive a the think on margin in focus our optimizing us we'll output input. is of year, each major the X and In year that or X simple advantage. improvement initiatives improve identify on will improve Each focus to ratio terms, initiatives enhancing continually which, productivity ratio. with that other

of rate adjusted us also, XX% simple term. growth improvement. each will aerospace achieve over than along of these we our X achieve margin XX% EBITDA defense growth to price year, the in believe, again, and inflation, and sales industry, drivers, the the with companies, more Executing long organically growth allows value We portfolio in across on secular

why of are them mates. call commitment. committed success our we Most employees solely That's improving of is importantly, and of I'm because their to our to dedication proud and the result talent developing all a my

under our our and driver important we to most our to walls continue talent the customers support growth. and roof value our to achieve four So have making sure is above-market within

portfolio. to you walk call our I turn the will Brett now over to through

morning, Dirkson. everybody. Good Thanks,

on those have represents will a probably the we of It look or familiar you, road X on the certainly, met show chart those S-X. way lot the of Loar you read to who you date. Page constructed we This to even who of

are but want here, to I all charts two and to don't I points in the belabor So do things want there highlight.

to construct we business business the First and model. extremely the to I our foremost, want extremely, and disciplined how highlight approach

foremost, at there company. those Maybe diseconomic barriers there's businesses large entry sell, not have certification space. a to to a product minute. content, are the the market customer due intellectual an defense-focused typically most the across the entry, is and and/or those aircraft Ian only we we in who recertifying property, product where also markets aerospace which costs participate, positions into in are want created, importantly, we and to niche the typically categories price the about enter that that products we like of to competitors particularly and the for or are to market spec-ed for First talk in part, is true own but are points where barriers Those which is proprietary fact going our requalifying we and where leading true in we categories

in we the that business Lastly, to of a need that cash flows If see in product capture currently that business we it's and that aircraft aftermarket. have provides. that to which a balance can minimum, doesn't we we the annuity the path that acquire of into that something so XX-year every that, sell a and acquire, at can have we, enter, aftermarket, a life the need businesses the we OE the

end we the I of we're because or the we're we that to have you you see thing scope platform, or platforms virtually which highlight the it's The here the on be diverse our changing is think the any that We we may have with. no end but market or and diversity to platform capture macroeconomic any XX-year not that to on to to customers affect meaningful that serve annuity, aircraft of other with or only markets all want broad whether customer. platform which platform opportunity a any don't conditions want can want broad because also want concentration one any we concentration significant exposed and

that during financial in consistent are I performance think we our we the diversity. COVID, and testament sector, that can continue you've to to a if we spectrums And across from all the seen us then everybody the saw generate of how diverse past. was performed

you, Brett. Thank

diversity focus end As the was platforms notably, Brett products. markets, those a diversity presentation, and our common Loar; viewing across in for mentioned, building

of we parts our brands one go market XX proprietary up at than XX,XXX the more average And sales. no our annual have Across over selling making with Loar, part of net $X,XXX. with to unique than and X% an price less parts, overall

embedded of many subsystems other the that landing today's we galleys, call. and and found included part are products across and safety systems, actuation, cover and not the systems will able in to deicing systems, engines Our restraint in aircraft systems within hydraulic be as avionics on gear,

us ties the nature the overall products proprietary of of our life our The aircraft. them end customer mission-critical for makes to and

allows As nature know, design you products of the The many our its the of not and original through operators. over to aircraft many the also only an life aircraft sees lifetime. aftermarket of multiple but of the aircraft spec-in operators exceed serve over can years us the XX manufacturer

in We capabilities believe unique more of nature Loar. importantly, is that us opportunity our the diversity serve provides and the offering to way customers that a the our to proprietary and, product

Glenn. Now call over the to I'll hand

Good Ian. morning, you, everyone. Thank

as a comparison Let me period as the of end of This first markets. presented. each on start be by earliest were of by forma the will our if pro basis sales owned day our discussing businesses

defense the of and million, OEM, In to to as commercial year increased our performances driven had a sales. in We increase was period. increase sales 'XX. the aftermarket quarter XX.X% commercial record total, during compared sales first prior strong This $XX by

Our increase us total commercial OEM higher in deliver because chain improving our bottlenecks parts sales that XX% year. aircraft, supply, as QX sales of driven This general was their primarily by were in allowed supply and platforms increased we other compared aviation, customers to significant held across were has of wide-body as a narrow-body 'XX prior by chain. areas portion experiencing the including to an supply previously the

increase and total to a air recovery aftermarket commercial was The partially distributors the due offset of of in demand, our commercial destocking end sales by customers. handful travel continuing at in X% primarily

support strong, digits. growth were double commercial year-over-year Our The for our commercial and March and low 'XX. backlog outlook backlog aftermarket versus full 'XX sales QX is aircraft 'XX strong our bookings XX% up XX commercial of at aftermarket bookings year

of our new of primarily platforms strong increase to due demand an across our a aftermarket launches. as in X% and multiple was result increase share product defense sales in The the market

let for recap financial me the These So actuals. are highlights our first of 'XX. quarter

our net sales So organic period. over prior the increased XX.X%

was with offset This related operating margin 'XX prior period. Our margin mix slightly as by moving OEM sales flat our as items leverage. charges manufacturing and for sales facilities. due year gross of profit one These of to to with was the well the were pricing QX lower

'XX company's QX tax net in as during a QX the million well valuation to increase is operating due interest of $X.X deferred related versus income income higher disallowed as 'XX QX of primarily 'XX against carryforward. our the to establishment in allowance asset Our

Adjusted of governance build-out newly to control completed EBITDA a temporary our remained our infrastructure strong half the continued X the XX% and as margins acquisitions the in dilution from 'XX despite of at public and support reporting, second needs company.

businesses to we them of continue the X expect newly integrate acquired to increase into our as EBITDA Loar. We margins

$XXX XX? of these with paid April what borrowings. on up million of XX was through months and our transactions, the pro closed the which have both million down our So 'XX of proceeds Well, those we leverage exercise raised March net we trailing used $XXX EBITDA We since been March IPO to X.Xx. With XX, the of forma greenshoe.

done extended also the the and restated through May amendment, We May this loans on incremental maturity 'XX. no agreement credit our XXXX. With This fees. was of we XX, term amended with

long a XXX was X.X:X. Our basis less by maintain interest reduced leverage as we ratio than of as points rate

$XXX expense the interest our the be With million annual pro paydown would of indebtedness the rate, forma interest the of and $XX of reduction million.

growth unused under revolving our term $XXX the credit million million increased a establishing facility. draw inorganic $XX loan new by reinvestment to and also delayed increasing and our to liquidity We support commitment

our quarter a the results. With that said, guys expectation remember, first range gave if the in of of S-X, we you

as in levels, the start by range. on That, be and why here. above tailwinds. of the the you the XXXX, globally of high to came record feel to year. very, which we levels projected strong a our above IATA quarter in outlook high at The seat so This very, are we strong, miles, domestically is XXXX confidence sales in top strong This and strongly, we've have EBITDA end is achieving put available XXXX and adjusted right very front plus in in of strength

market. end that addition, have history. in our backlog In gets end in with at will the also across our gives achieve all value in our And aftermarket that all us defense want our have for we end a commercial we as our It's our and sales this, quarter we drivers, products markets Add percentage everyone that seen in seen of Glenn backlog to services XXXX improvement we've up, this high in make strongest I of and seen organically our sure it a a year-over-year. forma double-digit pro basis. XX% on mentioned, increase backlog strong continued degree execution combined confidence

to all as continue recent needs. XX%. we the margin calendar year; $XXX of So between for our expect? improve we That's CAV year what company that infrastructure EBITDA acquisitions, our DAC $XXX Sales said, we XX%. $XXX $XXX million public into million meet adjusted adjusted are EBITDA million approximately And to for results between XXXX; of we and to and developing baked do calendar and million

million, net $X.XX income for expect adjusted and year. between the EPS and $XX.X We share million between $XX.X per and $X.XX

expect noncash $X to around million of million; rate will expense expenditures stock-based $XX of be with diluted $XX year full be approximately million; XX effective approximately share of interest shares. million; an capital approximately addition, $XX XX%; million, and fully In our P&A, comp tax we approximately count

$XXX we year, in if since XXXX formation included on outlook the X to business which With this cash of end our approximately for we not businesses here. XXXX. importantly, year, not will that do you said, hand acquire Most is each at is that a of have see drumbeat acquire our our or million X

predict, value timing such the driver acquisitions, know, that guys on you also. but we we As are cannot focused of

as questions. X that the been we've at a that, and cannot with are little our of call, So over Ian beginning analysts of quiet in period public stated ask company their the for weeks, given a a version only

quarterly So future take but they dig forward questions when calls we can not in. the will today, to look

hope and Thank that, first XX for guys Loar's to you you. call With thank you in earnings joining quarterly see weeks.

Thank you. today's will conference. This conclude

You you may disconnect at and your lines participation. for time, thank this your