LOAR HOLDINGS INC. First Quarter 2024
- Net sales of
$91.8 million up 23.7% versus prior year's quarter. -
Net income for Q1 2024 was
$2.2 million , up$9.8 million as compared to Q1 of 2023. -
Adjusted EBITDA of
$33.0 million , up 23.0% over prior year's quarter. - Net income margin in the quarter improved to 2.4% from the prior year's net (loss) margin of (10.1)%.
- Adjusted EBITDA Margin in the quarter was in line with the prior year at 36.0%.
"We began the year with solid momentum, reporting a quarterly record in net sales and Adjusted EBITDA, stated
Loar reported net sales for the quarter of
Net income for the quarter increased
Adjusted EBITDA for the quarter was
(1) Net organic sales represent net sales from our existing businesses for comparable periods and exclude net sales from acquisitions. We include net sales from new acquisitions in net organic sales from the 13th month after the acquisition on a comparative basis with the prior period.
Capital Structure Update
Under our revised credit agreement, we have extended the maturity of our existing indebtedness to 2030. The interest rate charged under the revised agreement is SOFR+4.75% as long as we maintain a leverage ratio of less than 5.5 to 1. This represents a 250-basis point reduction from our previous interest rate under the credit agreement. In addition, availability under our delayed draw term loan commitment included in the revised credit agreement increased to
Full Year 2024 Outlook
- Net sales - between
$370 million and$374 million -
Net income - between
$25.7 million and$27.1 million -
Adjusted EBITDA - between
$132 million and$134 million - Net income margin - approximately 7%
-
Adjusted Earnings Per Share - between
$0.41 and$0.43 - Adjusted EBITDA Margin - approximately 36%
-
Interest expense - approximately
$42 million -
Market Assumptions - Our full year outlook is based on the following assumptions:
- Commercial, Business Jet, and General Aviation OEM growth of low double digits
-
Commercial, Business Jet, and
General Aviation aftermarket growth of low double digits - Defense growth of low double digits
"Across our end-markets we see strong demand for our proprietary components. For the balance of 2024 we expect increasing demand for products we supply to the commercial aftermarket," stated
Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share are non-GAAP financial measures provided in this "Full Year 2024 Outlook" section on a forward-looking basis. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.
Earnings Conference Call
A conference call for investors and security analysts is scheduled on
The webcast will be archived and available for replay later in the day.
About
Non-GAAP Supplemental Information
We present in this press release certain financial information based on our EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share. References to "EBITDA" mean earnings before interest, taxes, depreciation and amortization, references to "Adjusted EBITDA" mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income (loss) to EBITDA and Adjusted EBITDA, and references to "Adjusted EBITDA Margin" refer to Adjusted EBITDA divided by net sales. References to "Adjusted Earnings Per Share" mean net income plus certain adjustments as set forth in the reconciliations below to derive Adjusted EBITDA from EBITDA, less the tax effect of these adjustments. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share are not measurements of financial performance under
Although we use EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share as measures to assess the performance of our business and for the other purposes set forth above, the use of non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with
- EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements necessary to service interest payments on our indebtedness.
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the cash requirements for such replacements are not reflected in EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin.
- EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share exclude the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.
- The omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; and
- EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not include the payment of taxes, which is a necessary element of our operations.
Because of these limitations, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share should not be considered as measures of cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share in isolation and specifically by using other
Future Looking Statements
This press release includes express or implied forward-looking statements. Forward-looking statements include all statements that are not historical facts including those that reflect our current views with respect to, among other things, our operations and financial performance. The words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek," "foreseeable," the negative version of these words or similar terms and phrases may identify forward-looking statements in this press release, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this press release, including, but not limited to, the statements under the heading "Full Year 2024 Outlook," are based on management's current expectations and are not guarantees of future performance. Our expectations and beliefs are expressed in management's good faith, and we believe there is a reasonable basis for them, however, the forward-looking statements are subject to various known and unknown risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to the following: the almost exclusive focus of our business on the aerospace and defense industry; our heavy reliance on certain customers for a significant portion of our sales; the fact that we have in the past consummated acquisitions and our intention to continue to pursue acquisitions, and that our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations; and the other risks and uncertainties described under "Risk Factors" of the Company's Prospectus dated
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in the forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date of this press release and is expressly qualified in its entirety by the cautionary statements included in this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments, or other strategic transactions we may make. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable law.
Contact
Loar Group Investor Relations
IR@loargroup.com
Table 1: - Condensed Consolidated Balance Sheets
(Amounts in thousands) (Unaudited)
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 28,152 | $ | 21,489 | ||||
Accounts receivable, net | 55,844 | 59,002 | ||||||
Inventories | 82,570 | 77,962 | ||||||
Other current assets | 14,654 | 11,830 | ||||||
Income taxes receivable | 411 | 393 | ||||||
Total current assets | 181,631 | 170,676 | ||||||
Property, plant and equipment | 71,560 | 72,174 | ||||||
Finance lease assets | 2,379 | 2,448 | ||||||
Operating lease assets | 6,127 | 6,297 | ||||||
Other long-term assets | 12,074 | 11,420 | ||||||
Intangible assets, net | 308,397 | 316,542 | ||||||
| 471,792 | 470,888 | |||||||
Total Assets | $ | 1,053,960 | $ | 1,050,445 | ||||
Liabilities and member's equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 13,884 | $ | 12,876 | ||||
Current portion of long-term debt | 6,896 | 6,896 | ||||||
Current portion of finance lease liabilities | 200 | 190 | ||||||
Current portion of operating lease liabilities | 616 | 609 | ||||||
Income taxes payable | 8,526 | 6,133 | ||||||
Accrued expenses and other current liabilities | 28,701 | 24,776 | ||||||
Total current liabilities | 58,823 | 51,480 | ||||||
Deferred income taxes | 35,163 | 36,785 | ||||||
Long-term debt, net | 527,298 | 528,582 | ||||||
Finance lease liabilities | 3,347 | 3,401 | ||||||
Operating lease liabilities | 5,637 | 5,802 | ||||||
Environmental liabilities | 1,111 | 1,145 | ||||||
Other long-term liabilities | 1,936 | 5,109 | ||||||
Commitments and contingencies | ||||||||
Member's equity | 420,645 | 418,141 | ||||||
Total liabilities and member's equity | $ | 1,053,960 | $ | 1,050,445 | ||||
Table - 2: Condensed Consolidated Statements of Operations
(Amounts in thousands except per common unit amounts) (Unaudited)
| Three Months Ended | ||||||||
| 2024 | 2023 | |||||||
Net sales | $ | 91,844 | $ | 74,246 | ||||
Cost of sales | 47,411 | 38,211 | ||||||
Gross profit | 44,433 | 36,035 | ||||||
Selling, general and administrative expenses | 22,900 | 18,845 | ||||||
Transaction expenses | 176 | 183 | ||||||
Other income | - | 48 | ||||||
Operating income | 21,357 | 17,055 | ||||||
Interest expense, net | 17,734 | 15,402 | ||||||
Income before income taxes | 3,623 | 1,653 | ||||||
Income tax provision | (1,374 | ) | (9,172 | ) | ||||
Net income (loss) | $ | 2,249 | $ | (7,519 | ) | |||
Net income (loss) per common unit | $ | 11,023.54 | $ | (36,860.94 | ) | |||
Weighted average common units outstanding - basic and diluted | 204 | 204 | ||||||
Table 3: - Condensed Consolidated Statements of Cash Flows
(Amounts in thousands) (Unaudited)
| Three Months Ended | ||||||||
| 2024 | 2023 | |||||||
Operating Activities | ||||||||
Net income (loss) | $ | 2,249 | $ | (7,519 | ) | |||
Adjustments: | ||||||||
Depreciation | 2,678 | 2,446 | ||||||
Amortization of intangibles and other long-term assets | 7,265 | 6,880 | ||||||
Amortization of debt issuance costs | 452 | 835 | ||||||
Stock-based compensation | 87 | 92 | ||||||
Deferred income taxes | (1,334 | ) | 7,939 | |||||
Non-cash lease expense | 151 | 167 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 3,095 | (5,916 | ) | |||||
Inventories | (4,755 | ) | (3,893 | ) | ||||
Other assets | (3,544 | ) | (530 | ) | ||||
Accounts payable | 1,400 | 1,103 | ||||||
Other liabilities | 3,241 | 1,706 | ||||||
Environmental liabilities | (34 | ) | (29 | ) | ||||
Operating lease liabilities | (138 | ) | (187 | ) | ||||
Net cash provided by operating activities | 10,813 | 3,094 | ||||||
Investing Activities | ||||||||
Capital expenditures | (2,401 | ) | (1,910 | ) | ||||
Net cash used in investing activities | (2,401 | ) | (1,910 | ) | ||||
Financing Activities | ||||||||
Payments of long-term debt | (1,736 | ) | (1,273 | ) | ||||
Payments of finance lease liabilities | (45 | ) | (36 | ) | ||||
Net cash used in financing activities | (1,781 | ) | (1,309 | ) | ||||
Effect of translation adjustments on cash and cash equivalents | 32 | (107 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 6,663 | (232 | ) | |||||
Cash and cash equivalents, beginning of period | 21,489 | 35,497 | ||||||
Cash and cash equivalents, end of period | $ | 28,152 | $ | 35,265 | ||||
Supplemental information | ||||||||
Interest paid during the period, net of capitalized amounts | $ | 17,095 | $ | 14,775 | ||||
Income taxes paid (refunds received) during the period, net | $ | 240 | $ | (185 | ) | |||
Table - 4: Reconciliation of Net income (Loss) to EBITDA and Adjusted EBITDA
(Amounts in thousands) (Unaudited)
| Three Months Ended | ||||||||
| 2024 | 2023 | |||||||
Net income (loss) | $ | 2,249 | $ | (7,519 | ) | |||
Adjustments: | ||||||||
Interest expense, net | 17,734 | 15,402 | ||||||
Income tax provision | 1,374 | 9,172 | ||||||
Operating income | 21,357 | 17,055 | ||||||
Depreciation | 2,678 | 2,446 | ||||||
Amortization | 7,265 | 6,880 | ||||||
EBITDA | 31,300 | 26,381 | ||||||
Adjustments: | ||||||||
Other income (1) | - | (48 | ) | |||||
Transaction expenses (2) | 176 | 183 | ||||||
Stock-based compensation (3) | 87 | 92 | ||||||
Acquisition integration costs (4) | 1,467 | 238 | ||||||
Adjusted EBITDA | $ | 33,030 | $ | 26,846 | ||||
Net sales | $ | 91,844 | $ | 74,246 | ||||
Net income (loss) margin | 2.4 | % | (10.1) | % | ||||
Adjusted EBITDA Margin | 36.0 | % | 36.2 | % | ||||
- Represents a grant from the
U.S. Department of Transportation under the Aviation Manufacturing Jobs Protection Program. - Represents third party transaction-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses, and valuation costs that are required to be expensed as incurred.
- Represents the non-cash compensation expense recognized by the Company for our restricted equity unit awards.
- Represents costs incurred to integrate acquired businesses and product lines into our operations, facility relocation costs and other acquisition-related costs.
SOURCE:
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