Q3 2025 Sets a New High: Earnings and Margins Break Out as Aerospace Demand Rises
Loar Holdings (NYSE: LOAR) has posted its strongest quarter to date, with third-quarter net sales up 22.4% year-over-year to $126.75 million and net income jumping 218.9% to $27.61 million. Fueled by booming commercial air traffic, rising defense orders, and hefty manufacturer backlogs, Loar also notched an impressive expansion in profit margins, pointing to operational discipline and robust demand for its aerospace and defense products.
| Metric | Q3 2025 | Q3 2024 | % Change |
|---|---|---|---|
| Net Sales | $126.75M | $103.52M | +22.4% |
| Net Income | $27.61M | $8.66M | +218.9% |
| Diluted EPS | $0.29 | $0.09 | +222.2% |
| Adjusted EBITDA | $49.11M | $38.10M | +28.9% |
| Net Income Margin | 21.8% | 8.4% | +13.4 pts |
| Adjusted EBITDA Margin | 38.7% | 36.8% | +1.9 pts |
Profit Margins and Cash Flow Reach Multi-Year Highs
The standout number: net income margin surged to 21.8%, compared to just 8.4% a year ago. This improvement was driven by an income tax benefit, higher operating income, and reduced interest expense. On an adjusted basis, EBITDA hit $49.11 million (38.7% margin), highlighting improved operational efficiency and stronger pricing from higher-margin product sales.
For the first nine months of 2025, operating cash flow nearly doubled to $81.86 million from $34.24 million in the year-ago period—another clear indicator that earnings strength is translating into real cash generation.
Full-Year Outlook Raised: Strong Growth Momentum Persists Into 2026
Building on these results, Loar's management revised 2025 guidance upward, now forecasting net sales between $487–$495 million and net income between $70–$75 million. Adjusted EBITDA is expected to land between $185–$188 million (about 38% margin), while diluted EPS guidance rises to $0.73–$0.78. For 2026, net sales are projected at $540–$550 million, with margins continuing to edge higher.
| Outlook | 2025 (Revised) | 2026 |
|---|---|---|
| Net Sales | $487–$495M | $540–$550M |
| Net Income | $70–$75M | $80–$85M |
| Adj. EBITDA | $185–$188M | $209–$214M |
| Adj. EBITDA Margin | ~38% | ~39% |
| Diluted EPS | $0.73–$0.78 | $0.82–$0.88 |
| Net Income Margin | ~14% | ~15% |
Commercial Aerospace and Defense Demand Propel Growth
The growth was broad-based: Commercial aerospace sales rose to $58.83 million in Q3 (up 31.1%), and defense net sales climbed to $28.78 million (up 31.1%). For the year-to-date, commercial segments account for over 70% of total sales, showing Loar’s successful alignment with sector tailwinds. Market assumptions guiding the outlook include low double-digit growth for aviation OEM and aftermarket and strong single-digit growth for defense, reinforcing Loar’s expectation of robust sectoral demand through 2026.
| Segment | Q3 2025 Sales | Q3 2024 Sales | % Change |
|---|---|---|---|
| Commercial Aerospace | $58.83M | $44.88M | +31.1% |
| Business Jet/Gen Aviation | $32.60M | $30.03M | +8.6% |
| Defense | $28.78M | $21.96M | +31.1% |
Balance Sheet Strengthens as Cash Grows and Leverage Holds Steady
Cash and equivalents stood at $98.96 million as of September 30, 2025, almost doubling since the start of the year. Net debt remains manageable relative to Adjusted EBITDA, providing room for future investments, including pending acquisitions such as LMB.
Key Takeaways for Investors: Upbeat Management, Margin Expansion, and Industry Momentum
Loar’s latest results highlight an attractive mix of surging sector demand, improving profitability, and strengthening balance sheet quality. With management guiding for further growth and improved margins, the company looks set to ride aerospace and defense trends well into 2026. While any forward-looking projections come with uncertainty—especially regarding pending acquisitions and sector cycles—the data underscores strong execution and optimism from the C-suite.
For those tracking aerospace suppliers, Loar’s margin expansion, cash generation, and bullish guidance could warrant further attention—especially as commercial travel and defense spending show few signs of slowing down.
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