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What changed in Loar Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Loar Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+153 added−174 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-31)

Top changes in Loar Holdings Inc.'s 2025 10-K

153 paragraphs added · 174 removed · 125 edited across 8 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+9 added−26 removed208 unchanged
Biggest changeIn addition, in certain cases, we must anticipate the future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with customers as to their anticipated future requirements, and this anticipated future volume of orders may not materialize, which could result in excess inventory, inventory write-downs, or lower margins. 13 We also have entered into multi-year, fixed-price contracts with some of our customers, pursuant to which we have agreed to perform the work for a fixed price and, accordingly, realize all the benefit or detriment resulting from any decreases or increases in the costs of making these products.
Biggest changeIn addition, in certain cases, we must anticipate the future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with customers as to their anticipated future requirements, and this anticipated future volume of orders may not materialize, which could result in excess inventory, inventory write-downs, or lower margins.
Our business may be adversely affected by changes in budgetary priorities of the U.S. Government. Because a significant percentage of our revenue is derived either directly or indirectly from contracts with the U.S. Government, changes in federal government budgetary priorities, such as those announced by President Trump since his inauguration in January 2025, could directly affect our financial performance.
Our business may be adversely affected by changes in government budgetary priorities. Because a significant percentage of our revenue is derived either directly or indirectly from contracts with the U.S. Government, changes in federal government budgetary priorities, such as those announced by President Trump since his inauguration in January 2025, could directly affect our financial performance.
Our future operating results and liquidity are expected to be impacted by changes in general economic and political conditions that may affect, among other things, the following: • The availability of credit and our ability to obtain additional or renewed bank financing, the lack of which could have a material adverse impact on our business, financial condition and results of operations and may limit our ability to invest in capital projects and planned expansions or to fully execute our business strategy; • Market rates of interest, any increase in which would increase the interest payable on some of our borrowings and adversely impact our cash flow; • Inflation, which has caused our suppliers to raise prices that we may not be able to pass on to our customers, which could adversely impact our business, including competitive position, market share and margins; • The relationship between the U.S. dollar and other currencies, any adverse changes in which could negatively impact our financial results; • The ability of our customers to pay for products and services on a timely basis, any adverse change in which could negatively impact sales and cash flows and require us to increase our bad debt reserves; • The volume of orders we receive from our customers, any adverse change in which could result in lower operating profits as well as less absorption of fixed costs due to a decreased business base; • The ability of our suppliers to meet our demand requirements, maintain the pricing of their products or continue operations, any of which may require us to find and qualify new suppliers; • The issuance and timely receipt of necessary export approvals, licenses and authorizations from the U.S.
Our future operating results and liquidity are expected to be impacted by changes in general economic and political conditions that may affect, among other things, the following: 21 Table of Contents • The availability of credit and our ability to obtain additional or renewed bank financing, the lack of which could have a material adverse impact on our business, financial condition and results of operations and may limit our ability to invest in capital projects and planned expansions or to fully execute our business strategy; • Market rates of interest, any increase in which would increase the interest payable on some of our borrowings and adversely impact our cash flow; • Inflation, which has caused our suppliers to raise prices that we may not be able to pass on to our customers, which could adversely impact our business, including competitive position, market share and margins; • The relationship between the U.S. dollar and other currencies, any adverse changes in which could negatively impact our financial results; • The ability of our customers to pay for products and services on a timely basis, any adverse change in which could negatively impact sales and cash flows and require us to increase our bad debt reserves; • The volume of orders we receive from our customers, any adverse change in which could result in lower operating profits as well as less absorption of fixed costs due to a decreased business base; • The ability of our suppliers to meet our demand requirements, maintain the pricing of their products or continue operations, any of which may require us to find and qualify new suppliers; • The issuance and timely receipt of necessary export approvals, licenses and authorizations from the U.S.
Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers, in which case, the costs of raw materials and component parts could increase. 18 Regulation that would have a material adverse impact on air travel could, in turn, have a material adverse impact on our business.
Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers, in which case, the costs of raw materials and component parts could increase. Regulation that would have a material adverse impact on air travel could, in turn, have a material adverse impact on our business.
We may be subject to risks relating to changes in our tax rates or exposure to additional income tax liabilities. We are subject to income taxes in the U.S., Germany and the United Kingdom. The Company’s domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.
We may be subject to risks relating to changes in our tax rates or exposure to additional income tax liabilities. We are subject to income taxes in the U.S., Germany, the United Kingdom, and France. The Company’s domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.
Government purchasing regulations, some of our costs, including most financing costs, amortization of intangible assets, portions of research and development costs, and certain marketing expenses may not be subject to reimbursement. 17 If a government inquiry or investigation uncovers improper or illegal activities, we could be subject to civil or criminal penalties or administrative sanctions, including contract termination, fines, forfeiture of fees, suspension of payment and suspension or debarment from doing business with U.S.
Government purchasing regulations, some of our costs, including most financing costs, amortization of intangible assets, portions of research and development costs, and certain marketing expenses may not be subject to reimbursement. 17 Table of Contents If a government inquiry or investigation uncovers improper or illegal activities, we could be subject to civil or criminal penalties or administrative sanctions, including contract termination, fines, forfeiture of fees, suspension of payment and suspension or debarment from doing business with U.S.
Should insurance or other risk transfer mechanisms, such as our existing disaster recovery and business continuity plans, be insufficient to recover all costs, we could experience a material adverse effect on our business, results of operations, financial position and cash flows. 14 Our business may be adversely affected if we were to lose our government or industry approvals, if more stringent government regulations were enacted or if industry oversight were to increase.
Should insurance or other risk transfer mechanisms, such as our existing disaster recovery and business continuity plans, be insufficient to recover all costs, we could experience a material adverse effect on our business, results of operations, financial position and cash flows. 14 Table of Contents Our business may be adversely affected if we were to lose our government or industry approvals, if more stringent government regulations were enacted or if industry oversight were to increase.
Additional potential risks include that we may lose key employees, customers or vendors of an acquired business, and we may become subject to pre-existing liabilities and obligations of the acquired businesses. 12 We depend on our executive officers, senior management team and highly trained employees, and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business.
Additional potential risks include that we may lose key employees, customers or vendors of an acquired business, and we may become subject to pre-existing liabilities and obligations of the acquired businesses. 12 Table of Contents We depend on our executive officers, senior management team and highly trained employees, and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business.
A material reduction in purchasing by one of our larger customers for any reason, including, but not limited to, general economic or aerospace market downturn, decreased production, strike, or resourcing, or the effects of global economic crises such as the COVID-19 pandemic could have a material adverse effect on results of operations, financial position and cash flows.
A material reduction in purchasing by one of our larger customers for any reason, including, but not limited to, general economic or aerospace market downturn, decreased production, strike, or resourcing, or the effects of global economic crises such as a pandemic could have a material adverse effect on results of operations, financial position and cash flows.
Litigation may be necessary to protect our intellectual property rights or defend against claims of infringement. This litigation could result in significant costs and divert our management’s focus away from operations. 16 Price inflation for labor and materials, further exacerbated by the Russian invasion of Ukraine, could adversely affect our business, results of operations and financial condition.
Litigation may be necessary to protect our intellectual property rights or defend against claims of infringement. This litigation could result in significant costs and divert our management’s focus away from operations. 16 Table of Contents Price inflation for labor and materials, further exacerbated by the Russian invasion of Ukraine, could adversely affect our business, results of operations and financial condition.
We generally experienced price inflation in our costs for labor and materials, such as aluminum, nickel, and titanium during the years 2023 and 2024, which adversely affected our business, results of operations and financial condition. We may not be able to pass through inflationary cost increases under our existing fixed-price contracts.
We generally experienced price inflation in our costs for labor and materials, such as aluminum, nickel, and titanium during the years 2025 and 2024, which adversely affected our business, results of operations and financial condition. We may not be able to pass through inflationary cost increases under our existing fixed-price contracts.
The Credit Agreement includes covenants restricting, among other things, our ability to: • incur or guarantee additional indebtedness or issue preferred stock; • pay distributions on, redeem or repurchase our capital stock or redeem or repurchase our subordinated debt; • make investments; • sell assets; • enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us; • incur or allow to exist liens; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; and • engage in certain business activities.
The Credit Agreement includes covenants restricting, among other things, our ability to: • incur or guarantee additional indebtedness or issue preferred stock; • pay distributions on, redeem or repurchase our capital stock or redeem or repurchase our subordinated debt; • make investments; 23 Table of Contents • sell assets; • enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us; • incur or allow to exist liens; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; and • engage in certain business activities.
By exercising their registration rights and selling a large number of shares, such existing stockholders could cause the prevailing market price of our common stock to decline. The shares covered by registration rights represent approximately 62% o f common stock outstanding.
By exercising their registration rights and selling a large number of shares, such existing stockholders could cause the prevailing market price of our common stock to decline. The shares covered by registration rights represent approximately 53% o f common stock outstanding.
If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. Anti-takeover provisions in our organizational documents and under Delaware law could delay or prevent a change of control.
If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. 25 Table of Contents Anti-takeover provisions in our organizational documents and under Delaware law could delay or prevent a change of control.
The commercial aerospace industry, in particular, has been significantly disrupted, both domestically and internationally, by the COVID-19 pandemic, which resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments and other measures.
The commercial aerospace industry, in particular, was significantly disrupted, both domestically and internationally, by the COVID-19 pandemic, which resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments and other measures.
In the event a court finds any such exclusive forum provision contained in our certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
In the event a court finds any such exclusive forum provision contained in our 26 Table of Contents certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
The interest rate on the SOFR rate loans accrue interest at the SOFR rate plus a margin of 4.75% or at the base rate plus a margin of 3.75% as long as the Company maintains a leverage ratio of less than 5.5 to 1.
The interest rate on the SOFR rate loans accrue interest at the SOFR rate plus a margin of 4.25% or at the base rate plus a margin of 3.25% as long as the Company maintains a leverage ratio of less than 5.5 to 1.
Given the political significance and uncertainty around these issues, we cannot predict how legislation, regulation, and increased awareness of these issues will affect our operations and financial condition. Failure to maintain a level of corporate social responsibility could damage our reputation and could adversely affect our business, financial condition or results of operations.
Given the political significance and uncertainty around these issues, we cannot predict how legislation, regulation, and increased awareness of these issues will affect our operations and financial condition. 18 Table of Contents Failure to maintain a level of corporate social responsibility could damage our reputation and could adversely affect our business, financial condition or results of operations.
The amounts of any such adjustments could have a material adverse effect on the Company’s results of operations or cash flows in a given period. We may be subject to periodic litigation and regulatory proceedings, which may adversely affect our business and financial performance.
The amounts of any such adjustments could have a material adverse effect on the Company’s results of operations or cash flows in a given period. 19 Table of Contents We may be subject to periodic litigation and regulatory proceedings, which may adversely affect our business and financial performance.
Because such 15 techniques change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient control measures to defend against these techniques.
Because such techniques change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate 15 Table of Contents these techniques or implement sufficient control measures to defend against these techniques.
Although we have long-term contracts with many of our OEM customers, many of those customers may terminate the contracts on short notice and, in most cases, our customers have not committed to buy any minimum quantity of our products.
Although we have long-term contracts with many of our OEM customers, many of those customers may terminate the contracts on short notice and, in most cases, our customers have not committed to buy any minimum quantity of our 13 Table of Contents products.
Global health crises such as the COVID-19 pandemic could also cause significant volatility in the market price. Our future operating results will be impacted by changes in global economic and political conditions.
Global health crises such as a global pandemic could also cause significant volatility in the market price. Our future operating results will be impacted by changes in global economic and political conditions.
If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations. General Risks We face risks related to health pandemics, epidemics, outbreaks and other public health crises, such as the COVID-19 pandemic.
If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations. General Risks We face risks related to health pandemics, epidemics, outbreaks and other public health crises.
In addition, we may be able to incur substantial additional indebtedness in the future. As of December 31, 2024, there remained available under our Credit Agreement $100 million in a Delayed Draw Term Loans Commitment and a $50 million Revolving Line of Credit .
In addition, we may be able to incur substantial additional indebtedness in the future. As of December 31, 2025, there remained available under our Credit Agreement $275 million in a Delayed Draw Term Loans Commitment and a $50 million Revolving Line of Credit .
A significant public health crisis, such as the COVID-19 pandemic, could cause an adverse impact on our employees, operations, supply chain and distribution system, and have a long-term impact on our business.
A significant public health crisis, such as a pandemic, could cause an adverse impact on our employees, operations, supply chain and distribution system, and have a long-term impact on our business.
To the extent the war in Ukraine and the conflict between Israel and Hamas adversely affect our business as discussed above, it may also have the effect of heightening many of the other risks described herein, such as those relating to cybersecurity, supply chain, volatility in prices and market conditions, any of which could negatively affect our business and financial condition.
To the extent the war in Ukraine adversely affects our business as discussed above, it may also have the effect of heightening many of the other risks described herein, such as those relating to cybersecurity, supply chain, volatility in prices and market conditions, any of which could negatively affect our business and financial condition.
We have incurred significant increased costs and became subject to additional regulations and requirements as a result of becoming a public company, and our management is now required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.
Risks Related to Ownership of Our Common Stock We have incurred significant increased costs and became subject to additional regulations and requirements as a result of becoming a public company, and our management is now required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.
We are monitoring the ongoing conflict between Russia and Ukraine and the related export controls and financial and economic sanctions imposed on certain industry sectors, including the aviation sector, and parties in Russia by the U.S., the UK, the European Union and others, as well as the conflict between Israel and Hamas.
We are monitoring the ongoing conflict between Russia and Ukraine and the related export controls and financial and economic sanctions imposed on certain industry sectors, including the aviation sector, and parties in Russia by the U.S., the UK, the European Union and others.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. 26 We have a total of 93,556,071 shares of our common stock outstanding.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We have a total of 93,622,471 shares of our common stock outstanding.
Our ability to raise prices to reflect increased costs may be limited by competitive conditions in the market for our products and services. Russia’s invasion of Ukraine, and prolonged conflict there, as well as the conflict between Israel and Hamas may result in increased inflation, escalating energy and commodity prices and increasing costs of materials.
Our ability to raise prices to reflect increased costs may be limited by competitive conditions in the market for our products and services. Russia’s invasion of Ukraine, and prolonged conflict there, may result in increased inflation, escalating energy and commodity prices and increasing costs of materials.
We will continue to evaluate the nature and extent to which a public health crisis, such as the COVID-19 pandemic, would impact our business, supply chain, consolidated results of operations, financial condition, and liquidity. 21 Our stock price may be volatile, and an investment in our common stock could suffer a decline in value.
We will continue to evaluate the nature and extent to which a public health crisis would impact our business, supply chain, consolidated results of operations, financial condition, and liquidity. Our stock price may be volatile, and an investment in our common stock could suffer a decline in value.
Additionally, in connection with our global operations, we, from time to time, transmit data across national borders to conduct our business and, consequently, are subject to a variety of laws and regulations regarding privacy, data protection, and data security, including those related to the collection, processing, storage, handling, use, disclosure, transfer, and security of personal data, including the European Union General Data Protection Regulation, Personal Information Protection Law in China and similar regulations in states within the United States and in countries around the world.
Additionally, in connection with our global operations, we, from time to time, transmit data across national borders to conduct our business and, consequently, are subject to a variety of laws and regulations regarding privacy, data protection, and data security, including those related to the collection, processing, storage, handling, use, disclosure, transfer, and security of personal data, including the GDPR, Personal Information Protection Law in China and similar regulations in states within the United States, such as the CCPA, and in countries around the world.
In addition, pursuant to th e registration rights agreement, certain of our existing stockholders have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act.
In addition, pursuant to th e registration rights agreement, certain of our existing stockholders have the right, subject to certain conditions, to require us to facilitate the public offering of their shares of our common stock under the Securities Act.
Although these conflicts have not resulted in a direct material adverse impact on our business to date, the implications of the Russia and Ukraine conflict and the Israel and Hamas conflict in the short-term and long-term are difficult to predict at this time.
Although this conflict has not resulted in a direct material adverse impact on our business to date, the implications of the Russia and Ukraine conflict in the short-term and long-term are difficult to predict at this time.
Our two largest customers accounted for approximately 21% of net sales during the year ended December 31, 2024.
Our two largest customers accounted for approximately 19% of net sales during the year ended December 31, 2025.
Dirkson Charles is our President, Chief Executive Officer, Executive Co-Chairman and Director and Brett Milgrim is our Executive Co-Chairman and Director. 22 Under the NYSE rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and need not comply with certain requirements, including the requirement that a majority of the board of directors consist of independent directors and the requirements that our compensation and nominating and governance committees be composed entirely of independent directors.
Under the NYSE rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and need not comply with certain requirements, including the requirement that a majority of the board of directors consist of independent directors and the requirements that our compensation and nominating and governance committees be composed entirely of independent directors.
Our net sales to foreign customers were approximately $125 million for the year ended December 31, 2024, which represent approximately 31% of our total net sales.
Our net sales to foreign customers were approximately $142 million for the year ended December 31, 2025, which represent approximately 29% of our total net sales.
Our sales to manufacturers of large commercial aircraft, as well as manufacturers of business jets have historically experienced periodic downturns. In the past, these sales have been affected by airline profitability, which is impacted by, among other things, fuel and labor costs, price competition, interest rates, downturns in the global economy and national and international events.
In the past, these sales have been affected by airline profitability, which is impacted by, among other things, fuel and labor costs, price competition, interest rates, downturns in the global economy and national and international events. In addition, sales of our products to manufacturers of business jets are impacted by, among other things, downturns in the global economy.
Estimates of the Company’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, including changes in law and regulation, imprecise engineering evaluations and cost estimates, the extent of corrective actions that may be required and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation. 19 Accordingly, as investigations and remediations proceed, it is likely that adjustments in the Company’s accruals will be necessary to reflect new information.
Estimates of the Company’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, including changes in law and regulation, imprecise engineering evaluations and cost estimates, the extent of corrective actions that may be required and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation.
These provisions also may have the effect of preventing changes in our Board and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
These provisions also may have the effect of preventing changes in our Board and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
Abrams Capital, GPV Loar LLC, Dirkson Charles and Brett Milgrim directly control a majority of our voting power for election of directors pursuant to the Voting Agreement.
Abrams Capital, GPV Loar LLC, Dirkson Charles and Brett Milgrim directly control a majority of our voting power for election of directors pursuant to the Voting Agreement. Dirkson Charles is our President, Chief Executive Officer, Executive Co-Chairman and Director and Brett Milgrim is our Executive Co-Chairman and Director.
We could incur substantial costs as a result of data protection concerns. The interpretation and application of data protection laws in the U.S. and Europe, including, but not limited to, the General Data Protection Regulation (the “GDPR”) and the California Consumer Privacy Act (the “CCPA”), and elsewhere are uncertain and evolving.
We could incur substantial costs as a result of data protection concerns. The interpretation and application of data protection laws in the U.S. and Europe, including, but not limited to, the GDPR and the CCPA, and elsewhere are uncertain and evolving.
Changes in our estimates and assumptions could adversely impact projected cash flows and the fair value of reporting units. Fair value is generally determined using a combination of the discounted cashflow, market multiple and market capitalization valuation approaches. Absent any impairment indicators, we generally perform our evaluations annually in the fourth quarter, using available forecast information.
Changes in our estimates and assumptions could adversely impact projected cash flows and the fair value of reporting units. Fair value is generally determined using a combination of the discounted cashflow, market multiple and market capitalization valuation approaches.
Our directors and executive officers and their affiliates beneficially own shares representing approximately 68% of our outstanding common stock. As a result, these stockholders, if they act together, are able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
As a result, these stockholders, if they act together, are able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
As a result, demand for travel declined at a rapid pace beginning in the second half of 2020. If another public health crisis were to arise in the future, it may cause similar disruptions. The recent COVID-19 pandemic has also disrupted the global supply chain and availability of raw materials, particularly electronic parts.
As a result, demand for travel declined at a rapid pace beginning in the second half of 2020. If another public health crisis were to arise in the future, it may cause similar disruptions.
The disruption in the supply chain has resulted in increased freight costs, raw material costs and labor costs from the ongoing inflationary environment. Our business has been adversely affected and could continue to be adversely affected by disruptions in our ability to timely obtain raw materials and components from our suppliers in the quantities we require or on favorable terms.
Our business could be adversely affected by disruptions in our ability to timely obtain raw materials and components from our suppliers in the quantities we require or on favorable terms.
Our ability to make payments on and to refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. 23 Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us under our Credit Agreement or otherwise in amounts sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
Our ability to make payments on and to refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation. Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation.
When we acquire a business, we record goodwill equal to the excess of the amount we pay for the business, including liabilities assumed, over the fair value of the tangible and identifiable intangible assets of the business we acquire. Goodwill and other intangible assets that have indefinite useful lives must be evaluated at least annually for impairment.
Our financial results of operations could be adversely affected by impairment of our goodwill or other intangible assets. When we acquire a business, we record goodwill equal to the excess of the amount we pay for the business, including liabilities assumed, over the fair value of the tangible and identifiable intangible assets of the business we acquire.
Mergers and acquisitions have resulted in significant increases in identifiable intangible assets and goodwill. Identifiable intangible assets, which primarily include customer relationships, contract backlog, tradename, technology and favorable leases, were approximately $435 million as of December 31, 2024, net of accumulated amortization. Goodwill recognized in accounting for the mergers and acquisitions was approximately $694 million as of December 31, 2024.
Identifiable intangible assets, which primarily include customer relationships, tradename, technology and favorable leases, were approximately $606 million as of December 31, 2025, net of accumulated amortization. Goodwill recognized in accounting for the mergers and acquisitions was approximately $1.0 billion as of December 31, 2025. We may never realize the full value of our identifiable intangible assets and goodwill.
This risk is greater in a high inflationary environment. Sometimes we accept a fixed-price contract for a product that we have not yet produced, and this increases the risk of cost overruns or delays in the completion of the design and manufacturing of the product.
Sometimes we accept a fixed-price contract for a product that we have not yet produced, and this increases the risk of cost overruns or delays in the completion of the design and manufacturing of the product. Some of our contracts do not permit us to recover increases in raw material prices, taxes or labor costs.
As a result, our stockholders may be limited in their ability to obtain a premium for their shares. 27 Our Board is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
Our Board is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations. 20 Our financial results of operations could be adversely affected by impairment of our goodwill or other intangible assets.
This would result in decreased sales, which could have a negative impact on our net income and financial condition. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations.
If we were to become involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
If we were to become involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. 24 Table of Contents Your percentage ownership in our Company may be diluted by future issuances of our common stock, which could reduce your influence over matters on which stockholders vote.
During a prolonged period of significant market disruption in the aerospace and defense industry, such as the adverse impact the COVID-19 pandemic had on the commercial aerospace market, and other macroeconomic factors such as when recessions occur, our business may be disproportionately impacted compared to companies that are more diversified in the industries they serve.
Risks Related to Our Strategy Our business focuses almost exclusively on the aerospace and defense industry. If unexpected global events, such as pandemics, cause a prolonged period of significant market disruption in the aerospace and defense industry, our business may be disproportionately impacted compared to companies that are more diversified in the industries they serve.
The concentration of voting power could deprive you of an opportunity to receive a premium for your shares of common stock as part of the sale of us and ultimately might affect the market price of our common stock. 28 Insiders have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control.
In particular, Abrams Capital, GPV Loar LLC, Dirkson Charles and Brett Milgrim could effectively preclude any unsolicited acquisition of us. The concentration of voting power could deprive you of an opportunity to receive a premium for your shares of common stock as part of the sale of us and ultimately might affect the market price of our common stock.
Some of our contracts do not permit us to recover increases in raw material prices, taxes or labor costs. Risks Related to Our Operations Our sales to manufacturers of aircraft are cyclical, and a downturn in sales to these manufacturers may adversely affect us.
Risks Related to Our Operations Our sales to manufacturers of aircraft are cyclical, and a downturn in sales to these manufacturers may adversely affect us. Our sales to manufacturers of large commercial aircraft, as well as manufacturers of business jets have historically experienced periodic downturns.
As of December 31, 2024, after using $637.0 million of proceeds from the IPO and Follow-On Offerings to paydown indebtedness, and the borrowing of $360 million to consummate the acquisition of AAI, the outstanding principal under the Credit Agreement was approximately $281.4 million. Our indebtedness could have important consequences.
As of December 31, 2025, the outstanding principal under the Credit Agreement was approximately $726 million. 22 Table of Contents Our indebtedness could have important consequences.
Your percentage ownership in our Company may be diluted by future issuances of our common stock, which could reduce your influence over matters on which stockholders vote. We have approximat ely 391 m illion shares of common stock authorized but unissued.
We have approximat ely 391 m illion shares of common stock authorized but unissued.
Removed
Risks Related to Our Strategy Our business focuses almost exclusively on the aerospace and defense industry.
Added
Similarly, we derive revenue either directly or indirectly from contracts with foreign governments (including, without limitation, the United Kingdom, Germany, and France). As a result, changes in such government’s budgetary priorities could directly affect our financial performance.
Removed
In addition, sales of our products to manufacturers of business jets are impacted by, among other things, downturns in the global economy.
Added
A significant decline in foreign government expenditures, a shift of expenditures away from programs that we support or a change in foreign government contracting policies could cause foreign government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products.
Removed
This would result in decreased sales, which could have a negative impact on our net income and financial condition.
Added
We also have entered into multi-year, fixed-price contracts with some of our customers, pursuant to which we have agreed to perform the work for a fixed price and, accordingly, realize all the benefit or detriment resulting from any decreases or increases in the costs of making these products. This risk is greater in a high inflationary environment.
Removed
We may never realize the full value of our identifiable intangible assets and goodwill.
Added
Accordingly, as investigations and remediations proceed, it is likely that adjustments in the Company’s accruals will be necessary to reflect new information.
Removed
Risks Related to Ownership of Our Common Stock We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.
Added
Goodwill and other intangible assets that have indefinite useful lives must be evaluated at least annually for impairment.
Removed
We are an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company,” among other exemptions, we will: • not be required to engage an independent registered public accounting firm to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; • not be required to comply with the requirement in Public Company Accounting Oversight Board Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, to communicate critical audit matters in the auditor’s report; • be permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports and registration statements, including in this Annual Report on Form 10-K; 24 • not be required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation; or • not be required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes.” In addition, the JOBS Act also permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies, meaning that we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Added
Absent any impairment indicators, we generally perform our evaluations annually in the fourth quarter, using available forecast information. 20 Table of Contents Mergers and acquisitions have resulted in significant increases in identifiable intangible assets and goodwill.
Removed
We have elected to use this extended transition period and, as a result, our financial statements may not be comparable with similarly situated public companies.
Added
Similar as to what was experienced with the COVID-19 pandemic, a future global pandemic could disrupt the global supply chain and availability of raw materials, particularly electronic parts. A disruption in the supply chain could result in increased freight costs, raw material costs and labor costs from an inflationary environment.
Removed
We will remain an “emerging growth company” until the earliest to occur of (1) our reporting of $1.235 billion or more in annual gross revenue; (2) our becoming a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (3) our issuance, in any three-year period, of more than $1.0 billion in non-convertible debt; and (4) the fiscal year-end following the fifth anniversary of the completion of our IPO, which closed on April 29, 2024.
Added
Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us under our Credit Agreement or otherwise in amounts sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
Removed
We cannot predict if investors may find our common stock less attractive if we rely on the exemptions and relief granted by the JOBS Act.
Added
Insiders have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control. Our directors and executive officers and their affiliates beneficially own shares representing approximately 54% of our outstanding common stock.
Removed
For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of operations of certain other companies in our industry that adopted such standards.
Removed
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline and/or become more volatile.
Removed
As a privately held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act (“Section 404”). As a public company, we are subject to significant requirements for enhanced financial reporting and internal controls.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe conduct regular incident response tabletop exercises to test and validate awareness of roles and responsibilities of incident responders across the organization and to educate individuals as to real world security incident scenarios. 29 Security Awareness All employees are required to undertake security awareness training on a number of topics to include phishing awareness, importance of cybersecurity and proper cyber hygiene, insider threat awareness and roles and responsibilities.
Biggest changeWe conduct regular incident response tabletop exercises to test and validate awareness of roles and responsibilities of incident responders across the organization and to educate individuals as to real world security incident scenarios.
We have retained a trusted and experienced thir d-party investigator/negotiator , and also maintain cybersecurity insurance to help mitigate the risk of a catastrophic cyber event. Technical Controls We have implemented a technical security architecture consisting of a multitude of controls to identify, protect, detect, and respond to cybersecurity events.
We have retained a trusted and experienced thir d-party investigator/negotiator , and also maintain cybersecurity insurance to help mitigate the potential effects of a catastrophic cyber event. 27 Table of Contents Technical Controls We have implemented a technical security architecture consisting of a multitude of controls to identify, protect, detect, and respond to cybersecurity events.
Added
Security Awareness All employees are required to undertake security awareness training on a number of topics including phishing awareness, importance of cybersecurity and proper cyber hygiene, insider threat awareness and roles and responsibilities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur headquarters is located at our manufacturing facility in White Plains, New York, which is a facility we own that is approximately 42,500 square feet in size. We believe that our existing facilities are sufficient to meet our operational needs for the foreseeable future.
Biggest changeMost of our manufacturing facilities contain manufacturing, distribution and engineering functions, and most facilities have certain administrative functions, including management, sales and finance. Our headquarters is located at our manufacturing facility in White 28 Table of Contents Plains, New York, which is a facility we own that is approximately 42,500 square feet in size.
Item 2. Pro perties. We maintain 19 properties, of which 13 are manufacturing facilities and six are office, warehousing, processing and/or other types of facilities.
Item 2. Pro perties. We maintain 19 properties, of which fifteen are manufacturing facilities and four are office, warehousing, processing and/or other types of facilities.
Of the 13 manufacturing facilities, (i) we maintain 11 facilities in the United States, of which we own eight and lease three, (ii) we lease a facility in the United Kingdom and (iii) we lease a facility in Germany. Of the remaining six facilities, all of which are in the United States, we own one facility and lease five facilities.
Of the fifteen manufacturing facilities, (i) we maintain eleven facilities in the United States, of which we own eight and lease three, (ii) we own one facility and lease one facility in the United Kingdom, (iii) we lease a facility in Germany, and (iv) we own a facility in France.
Removed
See Note 6, Property, Plant and Equipment and Note 14, Leases of the Notes to Consolidated Financial Statements. Most of our manufacturing facilities contain manufacturing, distribution and engineering functions, and most facilities have certain administrative functions, including management, sales and finance.
Added
Of the remaining four facilities, all of which are in the United States, we own one facility and lease three facilities. See Note 6, Property, Plant and Equipment and Note 13, Leases, of the Notes to Consolidated Financial Statements.
Added
We believe that our existing facilities are sufficient to meet our operational needs for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Safety Disclosures. Not applicable. 30 PART II
Biggest changeItem 4. Mine Safety Disclosures. Not applicable. 29 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. [Reserved] 30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following performance graph and related information shall not be deemed “soliciting material” nor to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent we specifically incorporate it by reference into such filing.
Biggest changeThe following performance graph and related information shall not be deemed “soliciting material” nor to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent we specifically incorporate it by reference into such filing.
An investment of $100 is assumed to have been made in our common stock and in each of the indexes on April 25, 2024, and its relative performance is tracked through December 31, 2024.
An investment of $100 is assumed to have been made in our common stock and in each of the indexes on April 25, 2024, and its relative performance is tracked through December 31, 2025.
Item 5. Market for R egistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “LOAR.” Holders As of March 25, 2025, there were 42 stockholders of record of our common stock.
Item 5. Market for R egistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “LOAR.” Holders As of February 16, 2026, there were 9 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe loans under the Incremental Loan Facility will mature on the same date, will amortize, and will bear the same interest rate as the existing term loans outstanding under the Credit Agreement Results of Operations The following table sets forth, for the years ended December 31, 2024 and 2023, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (in thousands unless otherwise indicated): Years Ended December 31, 2024 2023 Dollars % of Net Sales Dollars % of Net Sales Net sales $ 402,819 100.0 % $ 317,477 100.0 % Cost of sales 203,994 50.6 % 163,213 51.4 % Gross profit 198,825 49.4 % 154,264 48.6 % Selling, general and administrative expenses 112,255 27.9 % 82,141 25.9 % Transaction expenses 3,390 0.9 % 3,394 1.1 % Other income 4,452 1.1 % 762 0.2 % Operating income 87,632 21.7 % 69,491 21.9 % Interest expense, net 52,112 12.9 % 67,054 21.1 % Refinancing costs 6,459 1.6 % — — % Income before income taxes 29,061 7.2 % 2,437 0.8 % Income tax provision (6,830 ) (1.7 )% (7,052 ) (2.2 )% Net income (loss) 22,231 5.5 % (4,615 ) (1.4 )% Cumulative translation adjustments, net of tax (96 ) — % 410 0.1 % Comprehensive income (loss) $ 22,135 5.5 % $ (4,205 ) (1.3 )% Other Data: EBITDA (1) $ 130,702 $ 107,515 Adjusted EBITDA (1) 146,336 112,743 Net income (loss) margin 5.5 % (1.4 )% Adjusted EBITDA Margin (1) 36.3 % 35.5 % (1) Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable GAAP financial measure. 33 Year ended December 31, 2024 compared with year ended December 31, 2023 Net Sales Net sales for the year ended December 31, 2024 increased $85.3 million, or 26.9%, to $402.8 million as compared to $317.5 million for the year ended December 31, 2023.
Biggest changeResults of Operations The following table sets forth, for the years ended December 31, 2025, 2024, and 2023, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (in thousands unless otherwise indicated): Years Ended December 31, 2025 2024 2023 Dollars % of Net Sales Dollars % of Net Sales Dollars % of Net Sales Net sales $ 496,283 100.0 % $ 402,819 100.0 % $ 317,477 100.0 % Cost of sales 234,958 47.3 % 203,994 50.6 % 163,213 51.4 % Gross profit 261,325 52.7 % 198,825 49.4 % 154,264 48.6 % Selling, general and administrative expenses 143,642 28.9 % 112,255 27.9 % 82,141 25.9 % Transaction expenses 11,281 2.4 % 3,390 0.9 % 3,394 1.1 % Other (expense) income (159 ) — 4,452 1.1 % 762 0.2 % Operating income 106,243 21.4 % 87,632 21.7 % 69,491 21.9 % Interest expense, net 25,665 5.2 % 52,112 12.9 % 67,054 21.1 % Refinancing costs — — 6,459 1.6 % — — % Income before income taxes 80,578 16.2 % 29,061 7.2 % 2,437 0.8 % Income tax provision (8,432 ) (1.7 )% (6,830 ) (1.7 )% (7,052 ) (2.2 )% Net income (loss) 72,146 14.5 % 22,231 5.5 % (4,615 ) (1.4 )% Cumulative translation adjustments, net of tax (2,688 ) (0.5 )% (96 ) — % 410 0.1 % Comprehensive income (loss) $ 69,458 14.0 % $ 22,135 5.5 % $ (4,205 ) (1.3 )% Other Data: EBITDA (1) $ 157,243 $ 130,702 $ 107,515 Adjusted EBITDA (1) 189,124 146,336 112,743 Net income (loss) margin 14.5 % 5.5 % (1.4 )% Adjusted EBITDA Margin (1) 38.1 % 36.3 % 35.5 % (1) Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable GAAP financial measure. 32 Table of Contents Year ended December 31, 2025 compared with year ended December 31, 2024 Net Sales Net sales for the year ended December 31, 2025 increased $93.5 million, or 23.2%, to $496.3 million as compared to $402.8 million for the year ended December 31, 2024.
Other Income Other income for the year ended December 31, 2024 was $4.5 million, and relates to a $2.9 million reduction in the estimated contingent purchase price for the CAV acquisition and $1.7 million of proceeds received from the settlement of buyer-side representations and warranties insurance covering the acquisition of DAC.
Other income for the year ended December 31, 2024 was $4.5 million and relates to a $2.9 million reduction in the estimated contingent purchase price for the CAV acquisition and $1.7 million of proceeds received from the settlement of buyer-side representations and warranties insurance covering the acquisition of DAC.
Financing Activities Net cash provided by financing activities in the year ended December 31, 2024 of $370.0 million was principally related to the net proceeds received from our IPO and Follow-on Offering of $637.0 million and proceeds from the August 26, 2024 borrowing of $360.0 million incremental term loan for the acquisition of AAI, partially offset by payments on our Credit Agreement of $617.9 million.
Net cash provided by financing activities in the year ended December 31, 2024 of $370.0 million was principally related to the net proceeds received from our IPO and Follow-on Offering of $637.0 million and proceeds from the August 26, 2024 borrowing of $360.0 million incremental term loan for the acquisition of AAI, partially offset by payments on our Credit Agreement of $617.9 million.
Some of these limitations are: • 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; 39 • 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, and Adjusted EBITDA Margin 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.
Some of these limitations are: • 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, and Adjusted EBITDA Margin 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.
The determination of fair value requires management to make a number of estimates, assumptions and judgments of underlying factors such as projected revenues and related earnings. Based upon the annual goodwill impairment test, we determined that there was no impairment of our goodwill as of December 31, 2024 and 2023.
The determination of fair value requires management to make a number of estimates, assumptions and judgments of underlying factors such as projected revenues and related earnings. Based upon the annual goodwill impairment test, we determined that there was no impairment of our goodwill as of December 31, 2025, 2024 and 2023.
The determination of fair value requires management to make a number of estimates, assumptions and judgments of underlying factors such as projected revenues and related earnings. We did not recognize any impairment losses in the years ended December 31, 2024 and 2023.
The determination of fair value requires management to make a number of estimates, assumptions and judgments of underlying factors such as projected revenues and related earnings. We did not recognize any impairment losses in the years ended December 31, 2025, 2024, and 2023.
Department of Transportation under the Aviation Manufacturing Jobs Protection Program. (3) 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. (4) Represents the non-cash compensation expense recognized by the Company for equity awards.
Department of Transportation under the Aviation Manufacturing Jobs Protection Program. (3) Represents third party transaction-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses, valuation costs that are required to be expensed as incurred, and post-IPO transaction related costs. (4) Represents the non-cash compensation expense recognized by the Company for equity awards.
Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows. Critical Accounting Estimates Our consolidated financial statements have been prepared in conformity with U.S.
Off-Balance Sheet Arrangements As of December 31, 2025, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows. Critical Accounting Estimates Our consolidated financial statements have been prepared in conformity with U.S.
Outlook As we look to 2025, we anticipate net sales growth to be driven by organic growth, in particular the conversion of high levels of backlog of our existing products, and the impact from strategic acquisitions. Backlog primarily consists of firm orders for products that have not yet shipped.
Outlook As we look to 2026, we anticipate net sales growth to be driven by organic growth, in particular the conversion of high levels of backlog of our existing products, and the impact from strategic acquisitions. Backlog primarily consists of firm orders for products that have not yet shipped.
During 2025, we plan to continue our commitment to develop new products and services, further market penetration, and pursue an aggressive acquisition strategy while seeking to maintain our financial strength and flexibility. Seasonality We do not believe our net sales are subject to significant seasonal variations.
During 2026, we plan to continue our commitment to develop new products and services, further market penetration, and pursue an aggressive acquisition strategy while seeking to maintain our financial strength and flexibility. Seasonality We do not believe our net sales are subject to significant seasonal variations.
The interest rate on the base rate loans accrue interest at the base rate plus a margin of 3.75%. Interest is paid every one, two, three or six months at the option of the Company. The unused portion of the Revolving Line of Credit carries a commitment fee of 0.375%.
The interest rate on the base rate loans accrue interest at the base rate plus a margin of 3.25%. Interest is paid every one, two, three or six months at the option of the Company. The unused portion of the Revolving Line of Credit carries a commitment fee of 0.375%.
We were in compliance with all financial and nonfinancial covenants of the Credit Agreement as of December 31, 2024. The Credit Agreement requires mandatory prepayments of the principal amount if there is excess cash flow, as defined, during a calendar year.
We were in compliance with all financial and nonfinancial covenants of the Credit Agreement as of December 31, 2025. The Credit Agreement requires mandatory prepayments of the principal amount if there is excess cash flow, as defined, during a calendar year.
Net acquisition sales for the year ended December 31, 2024 represent net sales from businesses acquired either during the year ended 2024 or net sales from acquisitions that were completed in 2023 for which there are no comparable net sales during the prior year.
Net acquisition sales for the year ended December 31, 2025 represent net sales from businesses acquired either during the year ended 2025 or net sales from acquisitions that were completed in 2024 for which there are no comparable net sales during the prior year.
GAAP measures, such as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net loss or cash flow from operations determined in accordance with U.S. GAAP.
GAAP measures, such as net sales and 38 Table of Contents operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net loss or cash flow from operations determined in accordance with U.S. GAAP.
Goodwill and identifiable intangible assets are recorded at their estimated fair value on the date of acquisition and are reviewed at least annually for impairment based on cash flow projections and fair value estimates. We do not amortize goodwill and other intangible assets that are deemed to have indefinite lives.
Goodwill and identifiable intangible assets are recorded at their estimated fair value on the date of acquisition and are reviewed at least annually for impairment based on cash flow projections and fair value estimates. 37 Table of Contents We do not amortize goodwill and other intangible assets that are deemed to have indefinite lives.
See Note 14, Leases, of the Notes to Consolidated Financial Statements for information pertaining to future minimum lease payments relating to our operating and finance lease obligations.
See Note 13, Leases, of the Notes to Consolidated Financial Statements for information pertaining to future minimum lease payments relating to our operating and finance lease obligations.
We focus on mission-critical highly engineered solutions with high intellectual property content. Furthermore, our products have significant aftermarket exposure, which has historically generated predictable and recurring revenue. We estimate that approximately 53% of our 2024 net sales were derived from aftermarket products.
We focus on mission-critical highly engineered solutions with high intellectual property content. Furthermore, our products have significant aftermarket exposure, which has historically generated predictable and recurring revenue. We estimate that approximately 55% of our 2025 net sales were derived from aftermarket products.
Leases We lease certain facilities and equipment under financing and operating leases that expire at various dates through the year 2044.
Leases We lease certain facilities and equipment under financing and operating leases that expire at various dates through the year 2043.
The Company received net proceeds from the offering of approximately $311.5 million after deducting underwriting discounts, commissions and other offering costs of $16.0 million. 32 AAI Acquisition On August 26, 2024, we acquired 100% of the membership interests of Applied Avionics, LLC, a Delaware LLC (AAI), which was formerly known as Applied Avionics, Inc., from AAI Holdings, Inc., a Delaware corporation (AAI Parent), for approximately $383.5 million in cash.
The Company received net proceeds from the offering of approximately $311.5 million after deducting underwriting discounts, commissions and other offering costs of $16.0 million. 31 Table of Contents Acquisitions On August 26, 2024, we acquired 100% of the membership interests of Applied Avionics, LLC, a Delaware LLC (AAI), which was formerly known as Applied Avionics, Inc., from AAI Holdings, Inc., a Delaware corporation (AAI Parent), for approximately $383.5 million in cash.
We fund our investing activities primarily from cash provided by our operating and financing activities. As of December 31, 2024, we had availability of $100 million of a Delayed Draw Term Loans Commitment and a $50 million Revolving Line of Credit.
We fund our investing activities primarily from cash provided by our operating and financing activities. As of December 31, 2025, we had availability of $275 million of a Delayed Draw Term Loans Commitment and a $50 million Revolving Line of Credit.
The products we manufacture cover a diverse range of applications supporting nearly every major aircraft platform in use today and include auto throttles, lap-belt airbags, two- and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions and motion and actuation devices, customized edge-lighted panels and knobs and annunciators for incandescent and LED illuminated pushbutton switches, among others.
The products we manufacture cover a diverse range of applications supporting nearly every major aircraft platform in use today and include auto throttles, lap-belt airbags, two- and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, interior securing devices, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions and motion and actuation devices, customized edge-lighted panels and knobs and annunciators for incandescent and LED illuminated pushbutton switches, high-performance fans and cooling devices, lighting, Human-Machine Interface products, and bespoke lighting systems, among others.
Borrowings under the term loans, the Delayed Draw Term Loans and the Revolving Line of Credit may be designated as a SOFR loan or base rate loan at the option of the borrower. The interest rate on the SOFR rate loans accrued interest at the SOFR rate plus a margin of 4.75%.
Borrowings under the term loans, the Delayed Draw Term Loans and the Revolving Line of Credit may be designated as a SOFR loan or base rate loan at the option of the borrower. The interest rate on the SOFR rate loans accrued interest at the SOFR rate plus a margin of 36 Table of Contents 4.25%.
As we continue to expand our business, including by any acquisitions we may make, we may in the future require additional working capital for increased costs. Operating Activities Net cash provided by operating activities was $55.0 million in the year ended December 31, 2024 compared to $12.8 million in the year ended December 31, 2023.
As we continue to expand our business, including by acquisitions we may make, we may in the future require additional working capital for increased costs. Operating Activities Net cash provided by operating activities was $112.3 million in the year ended December 31, 2025 compared to $55.0 million in the year ended December 31, 2024.
The following table sets forth a reconciliation of net loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the years ended December 31, 2024 and 2023 (in thousands unless otherwise indicated): Year Ended December 31, 2024 2023 Net income (loss) $ 22,231 $ (4,615 ) Adjustments: Interest expense, net 52,112 67,054 Refinancing costs 6,459 — Income tax provision 6,830 7,052 Operating income 87,632 69,491 Depreciation 11,244 9,938 Amortization 31,826 28,086 EBITDA 130,702 107,515 Adjustments: Recognition of inventory step-up (1) 1,102 603 Other income (2) (4,452 ) (762 ) Transaction expenses (3) 3,390 3,394 Stock-based compensation (4) 11,103 372 Acquisition and facility integration costs (5) 4,491 1,621 Adjusted EBITDA $ 146,336 $ 112,743 Net sales $ 402,819 $ 317,477 Net income (loss) margin 5.5 % (1.4 )% Adjusted EBITDA Margin 36.3 % 35.5 % (1) Represents accounting adjustments to inventory associated with acquisitions of businesses that were charged to cost of sales when inventory was sold.
The following table sets forth a reconciliation of net loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the years ended December 31, 2025, 2024, and 2023 (in thousands unless otherwise indicated): Year Ended December 31, 2025 2024 2023 Net income (loss) $ 72,146 $ 22,231 $ (4,615 ) Adjustments: Interest expense, net 25,665 52,112 67,054 Refinancing costs — 6,459 — Income tax provision 8,432 6,830 7,052 Operating income 106,243 87,632 69,491 Depreciation 11,935 11,244 9,938 Amortization 39,065 31,826 28,086 EBITDA 157,243 130,702 107,515 Adjustments: Recognition of inventory step-up (1) 45 1,102 603 Other expense (income) (2) 159 (4,452 ) (762 ) Transaction expenses (3) 11,281 3,390 3,394 Stock-based compensation (4) 14,931 11,103 372 Acquisition and facility integration costs (5) 5,465 4,491 1,621 Adjusted EBITDA $ 189,124 $ 146,336 $ 112,743 Net sales $ 496,283 $ 402,819 $ 317,477 Net income (loss) margin 14.5 % 5.5 % (1.4 )% Adjusted EBITDA Margin 38.1 % 36.3 % 35.5 % (1) Represents accounting adjustments to inventory associated with acquisitions of businesses that were charged to cost of sales when inventory was sold.
Future aggregate rental payments under non-cancelable financing and operating leases as of December 31, 2024 were as follows: $1.7 million in 2025, $1.6 million in 2026, $1.5 million in 2027, $1.4 million in 2028, $1.3 million in 2029 and $7.3 million thereafter.
Future aggregate rental payments under non-cancelable financing and operating leases as of December 31, 2025 were as follows: $2.0 million in 2026, $1.9 million in 2027, $1.7 million in 2028, $1.6 million in 2029, $1.4 million in 2030, and $6.0 million thereafter.
The weighted average interest rate for all outstanding loans under the Credit Agreement was 9.1% at December 31, 2024, and the annual effective interest rate under the Credit Agreement was 11.1% at December 31, 2024. 37 The Credit Agreement requires the maintenance of a quarterly leverage ratio.
The weighted average interest rate for all outstanding loans under the Credit Agreement was 8.0% at December 31, 2025, and the annual effective interest rate under the Credit Agreement was 9.0% at December 31, 2025. The Credit Agreement requires the maintenance of a quarterly leverage ratio.
We believe that the following are our most critical accounting policies that require management to make judgments about matters that are inherently uncertain. For additional significant accounting policies, see Note 3, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements. Inventories Inventories are stated at the lower of cost or net realizable value.
We believe that the following are our most critical accounting policies that require management to make judgments about matters that are inherently uncertain. For additional significant accounting policies, see Note 3, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements.
Operating Income Operating income for the year ended December 31, 2024, was $87.6 million, or 21.8% as a percentage of net sales, compared to $69.5 million, or 21.9% as a percentage of net sales for the year ended December 31, 2023. The increase in operating income is due to the factors discussed above.
Operating Income Operating income for the year ended December 31, 2025, was $106.2 million, or 21.4% as a percentage of net sales, compared to $87.6 million, or 21.7% as a percentage of net sales for the year ended December 31, 2024. The increase in operating income is due to the factors discussed above.
The decrease was primarily due to the establishment of a valuation allowance on the Company’s deferred tax asset for its disallowed interest carryforward during the year ended December 31, 2023, partially offset by the effect of an increase in 35 pretax income of $26.6 million to $29.0 million for the year ended December 31, 2024 from $2.4 million for the year ended December 31, 2023.
The increase was primarily due to the effect of an increase in pretax income of $51.5 million to $80.6 million for the year ended December 31, 2025 from $29.1 million for the year ended December 31, 2024 partially offset by the release of a valuation allowance on the Company’s deferred tax asset for its disallowed interest carryforward during the year ended December 31, 2025.
The increase in OEM commercial sales is driven by the increased production rates and deliveries for both narrow-body and wide-body aircraft. The increase in aftermarket commercial sales is primarily attributable to the ongoing recovery of commercial air travel demand and prolonged supply chain issues suppressing further increases in OEM build rates.
The increase in aftermarket commercial sales is primarily attributable to increases in global commercial air travel demand. The increase in OEM commercial sales is driven by the increased production rates and deliveries for both narrow-body and wide-body aircraft.
Investing Activities Net cash used in investing activities totaled $392.1 million in the year ended December 31, 2024 and was principally attributable to the acquisition of AAI for $383.3 million, as well as capital expenditures of $8.9 million.
Investing Activities Net cash used in investing activities totaled $520.9 million in the year ended December 31, 2025 and was principally attributable to the acquisitions of LMB for $474.8 million and Beadlight for $33.1 million, as well as capital expenditures of $13.0 million. 35 Table of Contents Net cash used in investing activities totaled $392.1 million in the year ended December 31, 2024 and was principally attributable to the acquisition of AAI for $383.5 million, as well as capital expenditures of $8.9 million.
Liquidity and Capital Resources The following table summarizes our capitalization as of December 31, 2024 and 2023 (in thousands unless otherwise indicated): As of December 31, 2024 2023 Cash and cash equivalents $ 54,066 $ 21,489 Debt: Credit Agreement debt (including current portion) 281,366 539,247 Less: unamortized debt issuance costs (4,073 ) (3,769 ) Finance lease liabilities (including current portion) 3,402 3,591 Total debt 280,695 539,069 Stockholders' equity 1,088,505 — Member’s equity — 418,141 Total capitalization (debt plus equity) 1,369,200 957,210 Total debt to total capitalization 21 % 56 % Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs.
Liquidity and Capital Resources The following table summarizes our capitalization as of December 31, 2025 and 2024 (in thousands unless otherwise indicated): As of December 31, 2025 2024 Cash and cash equivalents $ 84,827 $ 54,066 Debt: Credit Agreement debt (including current portion) 726,366 281,366 Other 1,500 — 727,866 281,366 Less: unamortized debt issuance costs (12,166 ) (4,073 ) Finance lease liabilities (including current portion) 3,170 3,402 Total debt 718,870 280,695 Stockholders' equity 1,174,753 1,088,505 Total capitalization (debt plus equity) 1,893,623 1,369,200 Total debt to total capitalization 38 % 21 % Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs.
This increase in net organic sales is primarily related to increases in OEM commercial sales ($19.1 million, an increase of 18.8%), aftermarket commercial sales ($15.8 million, an increase of 13.4%), and aftermarket defense sales ($15.5 million, an increase of 53.8%), partially offset by a reduction in non-aviation sales of ($7.9 million or 20.6%).
This increase in net organic sales is primarily related to increases in aftermarket commercial sales ($27.4 million, an increase of 18.5%), OEM commercial sales ($12.5 million, an increase of 9.3%), and defense sales ($14.4 million, an increase of 16.2%), partially offset by a reduction in non-aviation sales of ($3.1 million or 10.1%).
However, actual results may differ materially from the estimates and additional provisions may be required in the future. 38 Acquisitions and Investments, and Goodwill and Other Indefinite-Lived Intangible Assets We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, with any excess recorded as goodwill.
Acquisitions, and Goodwill and Other Indefinite-Lived Intangible Assets We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, with any excess recorded as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results.
Cost of sales and the related percentage of net sales for the years ended December 31, 2024 and 2023 were as follows (in thousands except for percentages); Years Ended December 31, 2024 2023 Change % Change Cost of sales - excluding costs below $ 196,450 $ 159,402 $ 37,048 23.2 % % of net sales 48.8 % 50.2 % Amortization of intangible and other long-term assets 3,532 3,208 324 10.1 % % of net sales 0.9 % 1.0 % Acquisition and facility integration costs 2,910 — 2,910 — % of net sales 0.7 % 0.0 % Recognition of inventory step-up 1,102 603 499 82.8 % % of net sales 0.2 % 0.2 % Total cost of sales $ 203,994 $ 163,213 $ 40,781 25.0 % % of net sales 50.6 % 51.4 % Gross profit (Net sales less Total cost of sales) $ 198,825 $ 154,264 $ 44,561 28.9 % Gross profit percentage (Gross profit / Net sales) 49.4 % 48.6 % Cost of sales for the year ended December 31, 2024 decreased as a percentage of net sales principally due to the effect of our fixed overhead costs supporting higher production and sales levels, partially offset by higher acquisition and facility integration costs.
Cost of sales and the related percentage of net sales for the years ended December 31, 2025 and 2024 were as follows (in thousands except for percentages): Years Ended December 31, 2025 2024 Change % Change Cost of sales - excluding costs below $ 226,257 $ 196,450 $ 29,807 15.2 % % of net sales 45.6 % 48.8 % Amortization of intangible and other long-term assets 4,921 3,532 1,389 39.3 % % of net sales 1.0 % 0.9 % Acquisition and facility integration costs 3,735 2,910 825 28.4 % % of net sales 0.7 % 0.7 % Recognition of inventory step-up 45 1,102 (1,057 ) (95.9 )% % of net sales — % 0.2 % Total cost of sales $ 234,958 $ 203,994 $ 30,964 15.2 % % of net sales 47.3 % 50.6 % Gross profit (Net sales less Total cost of sales) $ 261,325 $ 198,825 $ 62,500 31.4 % Gross profit percentage (Gross profit / Net sales) 52.7 % 49.4 % Cost of sales for the year ended December 31, 2025 decreased as a percentage of net sales principally due to the effect of our fixed overhead costs supporting higher production and sales levels.
On August 30, 2023, the Company borrowed $33.0 million of available Delayed Draw Term Loans to finance the acquisition of CAV. On March 26, 2024, the Credit Agreement was amended to extend the termination date of the Delayed Draw Term Loans Commitment by approximately nine months, extending it from April 1, 2024 to December 31, 2024.
Credit Agreement Our long-term debt consists primarily of borrowings under our Credit Agreement. On March 26, 2024, the Credit Agreement was amended to extend the termination date of the Delayed Draw Term Loans Commitment by approximately nine months, extending it from April 1, 2024 to December 31, 2024.
Selling, general and administrative expenses and the related percentage of net sales for the years ended December 31, 2024 and 2023 were as follows (amounts in thousands except for percentages): Years Ended December 31, 2024 2023 Change % Change Selling, general and administrative expenses - excluding costs below $ 62,498 $ 48,991 $ 13,507 27.6 % % of net sales 15.5 % 15.4 % Amortization of intangible and other long-term assets 28,295 24,878 3,417 13.7 % % of net sales 7.0 % 7.9 % Stock based compensation expense 11,103 372 10,731 2884.7 % % of net sales 2.8 % 0.1 % Acquisition and facility integration costs 1,581 1,621 (40 ) (2.5 )% % of net sales 0.4 % 0.5 % Research and development expenses 8,778 6,279 2,499 39.8 % % of net sales 2.2 % 2.0 % Total selling, general and administrative expenses $ 112,255 $ 82,141 $ 30,114 36.7 % % of net sales 27.9 % 25.9 % Selling, general and administrative expenses increased by 36.7% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Selling, general and administrative expenses and the related percentage of net sales for the years ended December 31, 2025 and 2024 were as follows (amounts in thousands except for percentages): Years Ended December 31, 2025 2024 Change % Change Selling, general and administrative expenses - excluding costs below $ 79,785 $ 62,498 $ 17,287 27.7 % % of net sales 16.1 % 15.5 % Amortization of intangible assets 34,144 28,295 5,849 20.7 % % of net sales 6.9 % 7.0 % Stock based compensation expense 14,931 11,103 3,828 34.5 % % of net sales 3.0 % 2.8 % Acquisition and facility integration costs 1,730 1,581 149 9.4 % % of net sales 0.3 % 0.4 % Research and development expenses 13,052 8,778 4,274 48.7 % % of net sales 2.6 % 2.2 % Total selling, general and administrative expenses $ 143,642 $ 112,255 $ 31,387 28.0 % % of net sales 28.9 % 27.9 % Selling, general and administrative expenses increased by 1.0% as a percentage of net sales for the year ended December 31, 2025 when compared to the year ended December 31, 2024.
This represents 11.9% of the increase in total net sales for the year ended December 31, 2024 compared to the year ended December 31, 2023. Gross Profit and Cost of Sales Cost of sales for the year ended December 31, 2024 increased $40.8 million or, 25.0%, to $204.0 million compared to $163.2 million for the year ended December 31, 2023.
Gross Profit and Cost of Sales Cost of sales for the year ended December 31, 2025 increased $31.0 million or, 15.2%, to $235.0 million compared to $204.0 million for the year ended December 31, 2024.
Net acquisition sales of $37.9 million for the year ended December 31, 2024 is made up of, DAC, CAV and AAI which were acquired on July 3, 2023, September 1, 2023, and August 26, 2024, respectively.
Net acquisition sales of $42.1 million for the year ended December 31, 2025 is made up of AAI and Beadlight which were acquired on August 26, 2024 and July 28, 2025, respectively. This represents 10.5% of the increase in total net sales for the year ended December 31, 2025 compared to the year ended December 31, 2024.
(5) Represents costs incurred to integrate acquired businesses and product lines into our operations, facility relocation costs and other acquisition-related costs. JOBS Act Election We are currently an “emerging growth company,” as defined in the JOBS Act.
(5) Represents costs incurred to integrate acquired businesses and product lines into our operations, facility relocation costs and other acquisition-related costs.
AAI Parent is owned by certain individual shareholders thereof, including certain members of AAI’s management team. Incorporated in 1968, AAI designs, develops and manufactures highly engineered avionics interface solutions. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for further information.
AAI Parent is owned by certain individual shareholders thereof, including certain members of AAI’s management team. Incorporated in 1968, AAI designs, develops and manufactures highly engineered avionics interface solutions. On July 28, 2025, the Company completed the acquisition of Beadlight Ltd. (Beadlight) for £24.6 million ($33.1 million).
Organic Sales Net organic sales for the year ended December 31, 2024 increased $47.4 million, or 15.0%, to $364.9 million as compared to $317.5 million for the year ended December 31, 2023.
Organic Sales Net organic sales for the year ended December 31, 2025 increased $51.4 million, or 12.7%, to $454.2 million as compared to $402.8 million for the year ended December 31, 2024.
Net Income (Loss) Net income for the year ended December 31, 2024 was $22.2 million, or 5.5% as a percentage of net sales, compared to the net loss for the year ended December 31, 2023 of $4.6 million, or 1.4% as a percentage of net sales. The increase in net income is primarily due the factors discussed above.
The release of the valuation allowance was due to a change in tax law from the OBBBA. 34 Table of Contents Net Income Net income for the year ended December 31, 2025 was $72.1 million, or 14.5% as a percentage of net sales, compared to net income for the year ended December 31, 2024 of $22.2 million, or 5.5% as a percentage of net sales.
The increase in aftermarket defense sales is primarily attributable to strong demand for lighted indicators and military restraint devices. The reduction in non-aviation sales is primarily attributable to reduced demand for auto brakes and restraints.
The increase in defense sales is primarily driven by increased market share due to new product launches and an increased demand for defense products globally. The reduction in non-aviation sales is primarily attributable to reduced demand for auto brakes and restraints.
Interest rates under our Credit Agreement are subject to variability based on market conditions. Income Tax Provision The income tax provision was $6.8 million for the year ended December 31, 2024 compared $7.1 million for the year ended December 31, 2023.
Income Tax Provision The income tax provision was $8.4 million for the year ended December 31, 2025 compared to $6.8 million for the year ended December 31, 2024.
Net cash used in investing activities totaled $72.6 million in the year ended December 31, 2023 and was principally attributable to the acquisitions of DAC for $31.4 million and CAV for $29.0 million, as well as capital expenditures of $12.1 million. 36 Further details regarding our acquisition activities may be found in Note 2, Acquisitions, of the Notes to Consolidated Financial Statements.
Further details regarding our acquisition activities may be found in Note 2, Acquisitions, of the Notes to Consolidated Financial Statements. Financing Activities Net cash provided by financing activities in the year ended December 31, 2025 totaled $439.2 million. We borrowed $445.0 million under our Credit Agreement for the acquisition of LMB and paid $8.9 million for debt issuance costs.
There were no voluntary prepayments during the year ended December 31, 2023. At December 31, 2024, there was $281.4 million outstanding under the Credit Agreement, and there remained available $100.0 million in Delayed Draw Term Loans Commitment and a $50.0 million Revolving Line of Credit.
At December 31, 2025, there was $726.4 million outstanding under the Credit Agreement, and there remained available $275 million in Delayed Draw Term Loans Commitment and a $50 million Revolving Line of Credit. Other Obligations and Commitments See Note 8, Long-Term Debt, of the Notes to Consolidated Financial Statements for information regarding our long-term debt obligations.
Transaction Expenses Transaction expenses were $3.4 million in each of the years ended December 31, 2024 and 2023. Transaction costs can fluctuate from year to year depending on the size and number of acquisitions in each year.
This increase is primarily related to the acquisition of LMB that was consummated in December 2025 and Harper Engineering that was consummated in January 2026. Transaction costs can fluctuate from year to year depending on the size and number of acquisitions in each year. Other (Expense) Income Other expense for the year ended December 31, 2025 was $0.2 million.
Interest Expense Interest expense for the year ended December 31, 2024 decreased $15.0 million, or 22.3%, to $52.1 million compared to $67.1 million for the year ended December 31, 2023.
Interest Expense Interest expense for the year ended December 31, 2025 decreased $26.4 million, or 50.8%, to $25.7 million compared to $52.1 million for the year ended December 31, 2024. This decrease was attributable to lower average outstanding debt and lower interest rates.
Voluntary prepayments totaling $614.6 million were made under the Credit Agreement during the year ended December 31, 2024. These voluntary prepayments exceeded the total amount of quarterly mandatory principal payments for the remainder of the Term Loan. Accordingly, the next term loan principal payment is due on May 10, 2030.
Voluntary prepayments totaling $614.6 million were made under the Credit Agreement during the year ended December 31, 2024. There were no voluntary prepayments during the years ended December 31, 2025 and 2023.
Gross profit as a percentage of net sales increased 0.8% to 49.4% for the year ended December 31, 2024 from 48.6% for the year ended December 31, 2023 because of favorable pricing strategy, despite having a higher mix of defense sales than in 2023, which typically have lower gross profit margin than commercial sales. 34 Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $30.1 million to $112.3 million, or 27.9% as a percentage of net sales, for the year ended December 31, 2024 from $82.1 million, or 25.9% as a percentage of net sales, for the year ended December 31, 2023.
This decrease is primarily attributable to our operating leverage, execution of strategic value drivers, favorable sales mix, and lower inventory step-up amortization costs, partially offset by slightly higher amortization expense for intangible and other long-term assets. 33 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $31.4 million to $143.6 million, or 28.9% as a percentage of net sales, for the year ended December 31, 2025 from $112.2 million, or 27.9% as a percentage of net sales, for the year ended December 31, 2024.
Removed
Recent Developments On March 7, 2025, following completion of the works council consultation process required under French Law, we entered into a purchase agreement to acquire 100% of the shares of LMB for €365 million plus the assumption of net debt, payable in cash at closing (estimated to be €44.3 million).
Added
Beadlight designs, develops, and manufactures illumination solutions, air filtration systems, and Human-Machine Interface products from its facility in Witney, England. The purchase price was paid by the Company with cash on hand.
Removed
LMB is a global specialty player in the design and production of customized high-performance fans and motors. The transaction is expected to close in the third quarter of 2025 shortly after receiving requisite regulatory approvals and is subject to customary closing conditions. The acquisition will be financed through additional borrowings under our existing Credit Agreement and cash on hand.
Added
On December 23, 2025, the Company acquired 100% of the issued and outstanding equity interests and paid the outstanding debt of LMB Fans & Motors (LMB) for $474.8 million in cash and $0.9 million of deferred purchase obligation. Founded over 60 years ago, LMB is a global specialty player in the design and production of tailor-made high-performance fans and motors.
Removed
In connection with the acquisition, we entered into an incremental term facility commitment letter with Blackstone Credit (the “Commitment Letter”), pursuant to which Blackstone Credit has committed, subject to the satisfaction of customary conditions, to provide us with an incremental term loan facility in an amount equal to the U.S. dollar equivalent of €400.0 million (the “Incremental Loan Facility”).
Added
Leveraging its many decades of expertise and proprietary designs, LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for further information. Recent Developments On January 21, 2026, the Company acquired Harper Engineering for $250 million in cash.
Removed
The increase was primarily driven by stock-based compensation expense, a full year of selling, general and administrative expenses of DAC and CAV which were acquired in 2023, the impact of the AAI acquisition in September 2024, research and development costs, and infrastructure costs related to being a public company, partially offset by the leveraging of fixed costs.
Added
Founded in 1968, Harper Engineering is a leading manufacturer of mechanically engineered devices for aircraft interiors and holds a proprietary portfolio of latching and securing mechanisms used across multiple leading commercial aerospace platforms. The acquisition was financed through the drawdown of $240 million of Delayed Draw Term Loans available under the Company's existing Credit Agreement and cash on hand.
Removed
Other income for the year ended December 31, 2023 of $0.8 million was principally related to a grant from the U.S. Department of Transportation under the AMJP.
Added
The Delayed Draw Term Loans will mature on the same date, will amortize, and will bear the same interest rate as the existing term loans outstanding under the Credit Agreement .
Removed
This decrease was attributable to the repayment of $284.6 million aggregate principal amount of the Company's debt in May 2024 with a portion of the proceeds from our IPO and lower interest rates, partially offset by interest on the August 26, 2024 borrowing of the $360.0 million incremental term loan for the acquisition of AAI, of which $330.0 million of the outstanding term loans were repaid on December 15, 2024 with the proceeds from our Follow-on Offering and our cash from operations.
Added
Gross profit as a percentage of net sales increased 3.3% to 52.7% for the year ended December 31, 2025 from 49.4% for the year ended December 31, 2024.
Removed
The $42.2 million increase was primarily driven by an increase in net income of $26.8 million as well as the impact of increases in non-cash expenses, primarily stock-based compensation and amortization of intangible and other long-term assets, partially offset by higher income tax payments during the year ended December 31, 2024.
Added
This was due to additional costs associated with being a public company, including compliance with the Sarbanes-Oxley Act and additional organizational costs, research and development expenses, and stock-based compensation expense, partially offset by lower amortization of intangible assets. Transaction Expenses Transaction expenses were $11.3 million and $3.4 million, in the years ended December 31, 2025 and 2024, respectively.
Removed
Net cash provided by financing activities in the year ended December 31, 2023 totaled $45.7 million. We borrowed $53.0 million under our Credit Agreement for the acquisitions of DAC and CAV and made payments of $6.1 million on our Credit Agreement and $1.1 million for debt issuance costs. Credit Agreement Our long-term debt consists of borrowings under our Credit Agreement.
Added
The increase in net income is primarily due the factors discussed above. Year ended December 31, 2024 compared with year ended December 31, 2023 Refer to the discussion in Item 7.
Removed
On April 28, 2023, we borrowed $20.0 million of available Delayed Draw Term Loans to finance the acquisition of DAC. On June 30, 2023, the Credit Agreement was amended to extend the maturity date by eighteen months, extending it from October 2, 2024 to April 2, 2026.
Added
“Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025 for our results of operations for year ended December 31, 2024 compared with the year ended December 31, 2023.
Removed
In addition, the London Interbank Offered Rate (LIBOR) Rate was replaced with Adjusted Term Secured Overnight Financing Rate (SOFR) as an election in which borrowings under the Credit Agreement accrue interest at the SOFR rate plus a margin of 7.25%.
Added
The $57.3 million increase was primarily driven by an increase in net income of $49.9 million adjusted for noncash items, partially offset by an increase in working capital.
Removed
In connection with the pending LMB acquisition expected to close in the third quarter of 2025, we entered into the Commitment Letter. See above under “—Recent Developments.” Other Obligations and Commitments See Note 8, Long-Term Debt, of the Notes to Consolidated Financial Statements for information regarding our long-term debt obligations.
Added
There were no principal payments made on our Credit Agreement.
Removed
Cost of inventories is determined primarily using the weighted-average cost method of inventory accounting. Write-downs for slow-moving and obsolete inventories are provided based on current assessments about future product demand, production requirements for the next 12 months and usage for the last 12 months.
Added
On August 1, 2025, the Credit Agreement was amended to reduce the applicable margin by 0.5%.
Removed
Where we estimate that the net realizable value is below cost or have determined that future demand is lower than current inventory levels based on historical experience, current and projected market demand, current and projected volume trends and other relevant current and projected factors associated with the current economic conditions, a reduction in inventory cost to estimated net realizable value is recorded as a charge included in cost of sales.
Added
At the Company's election, interest on loans will accrue at the SOFR rate plus the applicable margin of 4.25% or at the base rate plus the applicable margin of 3.25% as long as the Company maintains a leverage ratio of less than 5.5 to 1.
Removed
Management believes that our estimates of excess and obsolete inventory are reasonable and material changes in future estimates or assumptions used to calculate our estimates are unlikely.
Added
On November 25, 2025, the Credit Agreement was amended to increase the Delayed Draw Term Loans commitment by an aggregate principal amount of $175 million for a total Delayed Draw Term Loans commitment in an aggregate principal amount equal to $275 million. In addition, the availability period of the Delayed Draw Term Loans commitment was extended to September 30, 2026.
Removed
The valuations of the acquired assets and liabilities will impact the determination of future operating results.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed6 unchanged
Biggest changeForeign Currency Risk Our reporting currency is the U.S. dollar. The functional currency of our wholly-owned foreign subsidiaries is a combination of local currency and the U.S. dollar. Our sales and operating expenses are generally denominated in the currencies of the countries in which our operations are located, which are primarily in the United States, the United Kingdom, and Germany.
Biggest changeOur sales and operating expenses are generally denominated in the currencies of the countries in which our operations are located, which are primarily in the United States, Germany, the United Kingdom, and France.
However, continued cost inflation and supply chain disruptions during 2025 may require similar efforts to mitigate the impact of continued cost inflation, tariffs, and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.
However, continued cost inflation and supply chain disruptions during 2026 may require similar efforts to mitigate the impact of continued cost inflation, tariffs, and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.
We estimate that a 1.0% increase in the applicable average interest rates for the year ended December 31, 2024 would have resulted in an estimated $2.8 million increase in interest expense. See “—Liquidity and Capital Resources—Credit Agreement” above. We had cash of $54.1 million as of December 31, 2024 which is held for working capital and general corporate purposes.
We estimate that a 1.0% increase in the applicable average interest rates for the year ended December 31, 2025 would have resulted in an estimated $7.3 million increase in interest expense. See “—Liquidity and Capital Resources—Credit Agreement” above. We had cash of $84.8 million as of December 31, 2025 which is held for working capital and general corporate purposes.
We expect the impact of such increases will be mitigated by efforts to lower costs through manufacturing efficiencies, looking for alternative sourcing and reevaluating pricing, as we did in the year ended December 31, 2024.
We expect the impact of such increases will be mitigated by efforts to lower costs through manufacturing efficiencies, looking for alternative sourcing and 39 Table of Contents reevaluating pricing, as we did in the year ended December 31, 2025.
A 10% increase or decrease in the relative value of the U.S. dollar for the year ended December 31, 2024 would not have resulted in a material impact on our operating results. 41
A 10% increase or decrease in the relative value of the U.S. dollar for the year ended December 31, 2025 would not have resulted in a material impact on our operating results. 40 Table of Contents
Added
Foreign Currency Risk Our reporting currency is the U.S. dollar. The functional currency of our wholly-owned foreign subsidiaries is a combination of local currency and the U.S. dollar.