Loar (LOAR) Financials

Loar Holdings (NYSE: LOAR) has delivered strong top-line growth and consistently positive operating cash flow, but the company’s acquisition-driven balance sheet has become substantially more leveraged. The latest quarter showed continued revenue momentum, although higher interest expense limited the conversion of operating gains into net income.

In Q2 2026, revenue increased to $171.6 million, up 39.4% from $123.1 million in Q2 2025 and 9.9% from Q1 2026. Gross profit rose 37.8% year over year to $91.2 million, while the gross margin was approximately 53.1%, modestly below the 53.8% reported in Q2 2025. Operating income grew 53.9% year over year to $41.9 million, lifting the operating margin to approximately 24.4% from 22.2%.

Net income was $16.7 million in Q2 2026, essentially unchanged from Q2 2025 despite the much higher operating income. Interest expense increased to $20.0 million from $6.5 million a year earlier, absorbing much of the operating improvement. Diluted EPS was $0.18, compared with $0.17 in Q2 2025. The data also includes several historical EPS anomalies and restated periods, so investors should focus more on reported net income and operating trends than on the older per-share figures.

Cash generation remains a key strength. Operating cash flow was $30.3 million in Q2 2026, compared with $23.8 million in Q2 2025, and totaled $61.2 million during the first half of 2026. Operating cash flow has remained positive in every quarter provided, although cash tied up in operating assets and liabilities was a $12.3 million use in Q2 2026. Accounts receivable and inventory increased to $107.0 million and $127.6 million, respectively, which could pressure future cash conversion if growth in working capital continues to outpace sales.

Loar’s balance sheet has changed materially as the company has pursued acquisitions. Long-term debt stood at $942.6 million at June 30, 2026, compared with $277.7 million at June 30, 2025 and $248.2 million at June 30, 2024. Cash increased to $122.4 million, but debt less cash was still approximately $827.0 million. Goodwill and intangible assets totaled approximately $1.83 billion, representing nearly 79% of total assets, highlighting the importance of successful integration and future acquisition performance.

• Revenue has grown in every comparable quarter shown, rising from $74.2 million in Q1 2023 to $171.6 million in Q2 2026.
• Q2 2026 operating income increased 53.9% year over year, and the operating margin improved to approximately 24.4%.
• Operating cash flow has remained positive across all provided quarters, reaching $30.3 million in Q2 2026.
• Cash and equivalents increased to $122.4 million at June 30, 2026, up from $94.9 million at the end of Q1 2026.
• Current assets of $375.1 million substantially exceeded current liabilities of $76.5 million, indicating strong near-term balance-sheet liquidity.
• Acquisition spending has slowed substantially, from $475.0 million in Q4 2025 and $249.9 million in Q1 2026 to only $27,000 in Q2 2026; this may give management time to integrate prior purchases.
• Accounts receivable and inventory have increased alongside revenue, but the resulting working-capital investment bears watching for signs of slower collections or excess inventory.
• Long-term debt has risen sharply to $942.6 million, creating meaningful leverage relative to the company’s current earnings and cash flow.
• Q2 2026 interest expense reached $20.0 million, while cash interest paid was $19.3 million, limiting net-income growth despite strong operating performance.
• Goodwill and intangible assets now account for the majority of total assets, increasing exposure to acquisition integration problems or future impairment charges.