November 13, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________, ____ to _______________, ____

Commission File Number: 001-42030

Loar Holdings Inc.

(Exact name of registrant as specified in its charter)


Delaware	82-2665180
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20 New King Street White Plains, New York	10604
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (914) 909-1311

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $0.01 per share

     LOAR

     New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2024, the registrant had 89,703,571 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Equity for the three and nine months ended Septembe r 30, 2024	6
	Condensed Consolidated Statements of Member's Equity for the three and nine months ended September 30, 2023	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signatures		48

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Loar Holdings Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands except share amounts)


	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	55,179		$	21,489
Accounts receivable, net		66,329			59,002
Inventories		97,887			77,962
Other current assets		12,152			11,830
Income taxes receivable		408			393
Total current assets		231,955			170,676
Property, plant and equipment		76,955			72,174
Finance lease assets		2,240			2,448
Operating lease assets		5,916			6,297
Other long-term assets		16,200			11,420
Intangible assets, net		447,123			316,542
Goodwill		691,658			470,888
Total assets	$	1,472,047		$	1,050,445

Liabilities and equity
Current liabilities:
Accounts payable	$	16,224		$	12,876
Current portion of long-term debt		6,028			6,896
Current portion of finance lease liabilities		221			190
Current portion of operating lease liabilities		612			609
Income taxes payable		6,265			6,133
Accrued expenses and other current liabilities		29,334			24,776
Total current liabilities		58,684			51,480
Deferred income taxes		36,820			36,785
Long-term debt, net		596,074			528,582
Finance lease liabilities		3,234			3,401
Operating lease liabilities		5,464			5,802
Environmental liabilities		-			1,145
Other long-term liabilities		1,957			5,109
Total liabilities		702,233			632,304

Commitments and contingencies

Equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, and no shares issued or outstanding		—			—
Common stock, $0.01 par value, 485,000,000 shares authorized; 89,703,571 issued and outstanding at September 30, 2024		897			—
Additional paid-in capital		793,167			—
Accumulated deficit		(24,245	)		—
Accumulated other comprehensive loss		(5	)		—
Member's equity		—			418,141
Total equity		769,814			418,141
Total liabilities and equity	$	1,472,047		$	1,050,445

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands except per common share and per common unit amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net sales	$	103,519		$	82,807		$	292,378		$	231,042
Cost of sales		50,615			42,176			147,515			116,904
Gross profit		52,904			40,631			144,863			114,138
Selling, general and administrative expenses		30,186			21,863			80,362			60,210
Transaction expenses		1,444			2,022			2,549			2,626
Other income, net		1,574			356			4,441			483
Operating income		22,848			17,102			66,393			51,785
Interest expense, net		9,962			17,155			38,332			49,125
Refinancing costs		-			-			1,645			—
Income (loss) before income taxes		12,886			(53	)		26,416			2,660
Income tax (provision) benefit		(4,230	)		2,907			(7,870	)		(6,702	)
Net income (loss)	$	8,656		$	2,854		$	18,546		$	(4,042	)
Net income per common share:
Basic	$	0.10		n/a			$	0.21		n/a
Diluted	$	0.09		n/a			$	0.20		n/a
Weighted average common shares outstanding:
Basic		89,704		n/a				88,722		n/a
Diluted		91,931		n/a				90,755		n/a

Net income (loss) per common unit	n/a			$	14,000.14		n/a			$	(19,799.55	)
Weighted average common units outstanding - basic and diluted	n/a				204		n/a				204

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024			2023		2024		2023
Net income (loss)	$	8,656		$	2,854	$	18,546	$	(4,042	)
Cumulative translation adjustments, net of tax		(52	)		185		152		475
Comprehensive income (loss)	$	8,604		$	3,039	$	18,698	$	(3,567	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Condensed Consolidated Statements of Equity

(Unaudited, in thousands)


	Loar Holdings, LLC and Subsidiaries (Prior to Corporate Conversion)			Loar Holdings Inc. Stockholders' Equity
				Common Stock
	Member's Equity			Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balance, January 1, 2024	$	418,141			—	$	—	$	—		$	—		$	—		$	418,141
Net income		2,249			—		—		—			—			—			2,249
Stock-based compensation		87			—		—		—			—			—			87
Cumulative translation adjustments, net of tax		168			—		—		—			—			—			168
Balance, March 31, 2024		420,645			—		—		—			—			—			420,645
Stock-based compensation prior to Corporate Conversion		1,111			—		—		—			—			—			1,111
Reclassification of members equity upon Corporate Conversion		40,531			—		—		—			(40,542	)		11			—
Effect of the Corporate Conversion		(462,287	)		77,000		770		461,517			—			—			—
Issuance of common stock sold in initial public offering, net of offering costs		—			12,650		126		325,605			—			—			325,731
Issuance of common stock to Directors under the 2024 Equity Incentive Plan		—			54		1		1,349			—			—			1,350
Net income		—			—		—		—			7,641			—			7,641
Stock-based compensation		—			—		—		1,926			—			—			1,926
Cumulative translation adjustments, net of tax		—			—		—		—			—			36			36
Balance, June 30, 2024		—			89,704		897		790,397			(32,901	)		47			758,440
Common stock offering costs		—			—		—		(324	)		—			—			(324	)
Net income		—			—		—		—			8,656			—			8,656
Stock-based compensation		—			—		—		3,094			—			—			3,094
Cumulative translation adjustments, net of tax		—			—		—		—			—			(52	)		(52	)
Balance, September 30, 2024	$	—			89,704	$	897	$	793,167		$	(24,245	)	$	(5	)	$	769,814

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Condensed Consolidated Statements of Member's Equity

(Unaudited, in thousands)


	Member's Equity
Balance, January 1, 2023	$	421,974
Net loss		(7,519	)
Stock-based compensation		92
Cumulative translation adjustments, net of tax		409
Balance, March 31, 2023		414,956
Net income		623
Stock-based compensation		94
Cumulative translation adjustments, net of tax		(119	)
Balance, June 30, 2023		415,554
Net income		2,854
Stock-based compensation		92
Cumulative translation adjustments, net of tax		185
Balance, September 30, 2023	$	418,685

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Nine Months Ended September 30,
	2024			2023
Operating Activities
Net income (loss)	$	18,546		$	(4,042	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		8,183			7,297
Amortization of intangibles and other long-term assets		22,249			20,869
Amortization of debt issuance costs		931			2,132
Amortization of inventory step-up		276			201
Stock-based compensation		7,568			278
Deferred income taxes		(141	)		622
Non-cash lease expense		438			668
Refinancing costs		1,645			—
Other income, net		(2,856	)		—
Changes in assets and liabilities:
Accounts receivable		(4,331	)		(11,462	)
Inventories		(13,694	)		(12,643	)
Other assets		(4,455	)		(3,565	)
Accounts payable		2,825			3,531
Other liabilities		(1,404	)		(2,384	)
Environmental liabilities		(1,145	)		(46	)
Operating lease liabilities		(392	)		(656	)
Net cash provided by operating activities		34,243			800

Investing Activities
Capital expenditures		(6,084	)		(7,824	)
Payment for acquisitions, net of cash acquired		(383,222	)		(60,289	)
Net cash used in investing activities		(389,306	)		(68,113	)

Financing Activities
Net proceeds from issuance of common stock		325,408			—
Payments of long-term debt		(287,881	)		(4,333	)
Proceeds from issuance of long-term debt		360,000			53,000
Financing costs and other, net		(8,876	)		(1,060	)
Payments of finance lease liabilities		(137	)		(95	)
Net cash provided by financing activities		388,514			47,512

Effect of translation adjustments on cash and cash equivalents		239			(137	)
Net increase (decrease) in cash and cash equivalents		33,690			(19,938	)

Cash and cash equivalents, beginning of period		21,489			35,497
Cash and cash equivalents, end of period	$	55,179		$	15,559

Supplemental information
Interest paid during the period, net of capitalized amounts	$	37,495		$	47,246
Income taxes paid during the period, net	$	7,925		$	4,942

The accompanying notes are an integral part of these condensed consolidated financial statements.

Loar Holdings Inc.

Notes to Condensed Consolidated Financial Statements

1. Organization

Prior to April 16, 2024, Loar Holdings Inc. (the Company) operated as a Delaware limited liability company under the name Loar Holdings, LLC. On April 16, 2024, the Company converted to a Delaware corporation and changed its name to Loar Holdings Inc. (the Corporate Conversion). In the Corporate Conversion, all of the equity interests of the Company outstanding as of the date thereof were converted into shares of common stock. Specifically, holders of Loar Holdings, LLC units received 377,450.980392157 shares of common stock of Loar Holdings Inc. for each unit of Loar Holdings, LLC. The purpose of the Corporate Conversion was to reorganize the Company’s structure in advance of the public offering of common stock so that the entity offering the common stock to the public in the offering was a corporation rather than a limited liability company, so that the existing investors and new investors in the offering would own the Company’s common stock rather than equity interests in a limited liability company.

The registration statement related to the Company’s initial public offering (IPO) was declared effective on April 24, 2024, and the
Company’s common stock began trading on the New York Stock Exchange on April 25, 2024. On April 29, 2024, the Company
completed its IPO for the sale of 12.6 million shares of common stock, $0.01 par value per share, at a public offering price of $28.00
per share. The Company received net proceeds from the IPO of approximately $325.4 million after deducting underwriting discounts, commissions and other offering costs of $28.8 million.

2. Basis of Presentation

As used in this Quarterly Report on Form 10-Q, unless expressly stated otherwise or the context otherwise requires, the terms “Loar,” the “Company,” “we,” “us” and “our” refer to Loar Holdings Inc. and its subsidiaries, collectively.

Principles of Consolidation

The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes for the year ended December 31, 2023 included in Loar Holdings Inc. Amendment No. 2 to Form S-1 filed on April 23, 2024. As disclosed therein, the Company’s annual consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (GAAP). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC). The December 31, 2023 condensed consolidated balance sheet was derived from Loar Holdings, LLC’s audited financial statements for the year then-ended. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about reportable segments, and provides requirements for more detailed reporting of a segment’s expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of a segment’s profit or loss. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning one year later. Early adoption is permitted, and the amendments must be applied retrospectively to all prior periods presented. The adoption of this guidance will not affect the Company’s consolidated results of operations, financial position or cash flows, and the Company is currently evaluating the standard to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and provide disaggregated information about significant reconciling items by jurisdiction and by nature. The ASU also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. The standard makes several other changes to income tax disclosure requirements. This standard is effective for annual periods beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. The adoption of this guidance will not affect the Company’s consolidated results of operations, financial position or cash flows, and the Company is currently evaluating the standard to determine its impact on the Company’s disclosures.

3. Acquisitions

Applied Avionics, Inc.

On August 26, 2024, the Company 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 $383.5 million in cash. 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.

The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):


Assets acquired:
Current assets	$	9,357
Property, plant and equipment		6,996
Intangible assets		152,100
Goodwill		220,927
Total assets acquired		389,380
Liabilities assumed:
Current liabilities		5,869
Net assets acquired	$	383,511

Inventory was recorded at its estimated fair value, which represented an amount equivalent to estimated selling price less fulfillment costs and a normative selling profit. The increase in fair value of inventory from the acquisition was approximately $1.0 million, of which $0.3 million was recognized in cost of goods sold for the three and nine months ended September 30, 2024.

Goodwill is primarily attributable to the assembled workforce and expected synergies with other acquired companies, combined with the industry operating expertise of management. These are among the factors that contributed to a purchase price that resulted in the recognition of goodwill. Goodwill is deductible for tax purposes.

The results of operations of AAI are included in the Company’s consolidated financial statements for the period subsequent to the completion of the acquisition. AAI contributed $3.8 million of net sales and $0.6 million of operating income for the three and nine months ended September 30, 2024.

Pro forma financial information

The pro forma information below gives effect to the AAI acquisition as if it had been completed on January 1, 2023. The table below presents unaudited pro forma consolidated income statement information as if the AAI acquisition had been included in the Company’s consolidated results for the entire period reflected. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2023, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the historical financial results of the Company and the acquired business adjusted for certain items. In the pro forma information presented, each of the three months ended September 30, 2024 and 2023 includes $2.4 million and each of the nine months ended September 30, 2024 and 2023 includes $7.3 million of amortization of acquired intangible assets resulting from the preliminary purchase price allocation. The $1.0 million of inventory step-up amortization resulting from the preliminary purchase price allocation has been included in the pro forma results for the nine months ended September 30, 2023 to reflect the pro forma transaction date of January 1, 2023, and the inventory step-up amortization expense of $0.3 million recorded for the three and nine months ended September 30, 2024 has been excluded. Interest expense has been adjusted as though the debt incurred to finance the AAI acquisition had been outstanding at January 1, 2023. The pro forma interest expense adjustments for the three and nine months ended September 30, 2024 and 2023 are $9.2 million, $6.2 million, $27.7 million, and $24.6 million respectively. The pro forma information does not include the effects of any synergies, cost reduction initiatives or anticipated integration costs related to the acquisitions.


	Three Months Ended September 30,					Nine Months Ended September 30, 2024
	2024		2023			2024		2023
Net sales	$	109,745	$	91,213		$	320,459	$	258,505
Income (loss) before income taxes		7,050		(8,563	)		6,869		(22,444	)

DAC Engineered Products, LLC

On July 3, 2023, the Company acquired Desser Aerospace’s Proprietary Solutions businesses from VSE Corporation (NASDAQ:VSEC; VSE) for $31.1 million in cash. The Company received $0.3 million during the three and six months ended June 30, 2024 related to an adjustment to the working capital calculation used to arrive at the final purchase price.

The acquired entities operate as DAC Engineered Products, LLC (DAC). Under the purchase agreement, there is a potential future payout of up to $7.0 million to the seller related to achieving certain financial targets for 2024 and 2025. The fair value of the liability in connection with this contingent payout is de minimis. DAC’s products include, but are not limited to, carbon brake discs, steel brake discs, starter generators and vacuum generators, primarily for general aviation and regional jets.

The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with ASC 805, Business Combinations. The following table summarizes the final purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):


Assets acquired:
Current assets	$	3,768
Property, plant and equipment		763
Intangible assets		10,500
Goodwill		17,240
Deferred taxes		448
Total assets acquired		32,719
Liabilities assumed:
Current liabilities		1,341
Long-term liabilities		249
Total liabilities assumed		1,590
Net assets acquired	$	31,129

The results of operations of DAC are included in the Company’s condensed consolidated financial statements for the period subsequent to the completion of the acquisition.

Had the acquisition of DAC occurred as of January 1, 2023, net sales and income before income taxes on a pro forma basis for the three and nine months ended September 30, 2023 would not have been materially different than the reported amounts.

During the three months ended September 30, 2024, the Company received proceeds of approximately $1.7 million from the settlement of buyer-side representations and warranties insurance covering the acquisition of DAC. The insurance policy covered the Company for certain balance sheet items that were not correctly reflected in accordance with GAAP. This amount was recorded as other income on the condensed consolidated statements of operations during the three and nine months ended September 30, 2024.

CAV Systems Group Limited

On September 1, 2023, the Company, through its newly formed UK subsidiary, Change Acquisition Limited, acquired 100% of the stock of CAV Systems Group Limited (CAV), a leading provider of highly engineered ice protection and drag reduction systems for $29.0 million in cash. The Company recorded an additional $3.1 million in purchase price consideration that may be paid to the seller if CAV achieves certain financial targets for the years 2023 through 2026. During the three months ended June 30, 2024, the Company determined the estimated fair value of the contingent purchase price consideration should be reduced by $2.9 million and recorded this impact as other income on the condensed consolidated statements of operations. The maximum payout to the seller related to achieving these financial targets is $18.4 million

The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with ASC 805, Business Combinations. The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):


Assets acquired:
Current assets	$	7,922
Property, plant and equipment		6,555
Intangible assets		9,884
Goodwill		12,809
Deferred taxes		100
Total assets acquired		37,270
Liabilities assumed:
Current liabilities		7,245
Long-term liabilities		1,019
Total liabilities assumed		8,264
Net assets acquired	$	29,006

The results of operations of CAV are included in the Company’s condensed consolidated financial statements for the period subsequent to the completion of the acquisition.

Had the acquisition of CAV occurred as of January 1, 2023, net sales and income before income taxes on a pro forma basis for the three and nine months ended September 30, 2023 would not have been materially different than the reported amounts.

4. Revenue Recognition

All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers.

Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services when control of the promised good or service is transferred to the customer. Substantially all of the Company’s revenue from contracts with customers is recognized at a point in time, which is generally upon shipment of goods to the customer.

The Company sells specialty aerospace components based on a customer purchase order, which generally includes a fixed price per unit. The Company satisfies the single performance obligation generally upon shipment of the goods, as this is when contractual control transfers to the customer and recognizes revenue at that point in time. Total revenues do not include taxes, such as sales tax or value-added tax, which are assessed by governmental authorities and collected by the Company.

Products are covered by a standard assurance warranty, generally extended for a period of 25 days to two years depending on the customer, which promises that delivered products conform to contract specifications. The Company does not offer refunds or accept returns, unless related to a defect or warranty related matter. The Company does not sell extended warranties and does not provide warranties outside of fixing defects that existed at the time of sale. As such, warranties are accounted for under ASC 460, Guarantees and not as a separate performance obligation.

Customers generally have payment terms between 30 and 90 days from the satisfaction of the performance obligations. As a practical expedient, the Company does not adjust the amount of consideration for a financing component, as the period between the transfer of goods or services and the customer’s payment is, at contract inception, expected to be one year or less.

Net sales by end market were as follows (in thousands):


	Three Months Ended September 30,
	2024						2023
	OEM Net Sales		Aftermarket Net Sales		Total Net Sales		OEM Net Sales		Aftermarket Net Sales		Total Net Sales
Commercial Aerospace	$	15,824	$	29,058	$	44,882	$	14,574	$	23,886	$	38,460
Business Jet and General Aviation		19,911		10,121		30,032		11,701		7,729		19,430
Total Commercial		35,735		39,179		74,914		26,275		31,615		57,890
Defense		10,152		11,810		21,962		8,004		7,218		15,222
Other		2,976		3,667		6,643		5,667		4,028		9,695
Total	$	48,863	$	54,656	$	103,519	$	39,946	$	42,861	$	82,807


	Nine Months Ended September 30,
	2024						2023
	OEM Net Sales		Aftermarket Net Sales		Total Net Sales		OEM Net Sales		Aftermarket Net Sales		Total Net Sales
Commercial Aerospace	$	46,316	$	81,101	$	127,417	$	40,487	$	67,016	$	107,503
Business Jet and General Aviation		53,556		29,253		82,809		31,391		20,516		51,907
Total Commercial		99,872		110,354		210,226		71,878		87,532		159,410
Defense		26,793		32,681		59,474		22,546		21,056		43,602
Other		10,727		11,951		22,678		15,323		12,707		28,030
Total	$	137,392	$	154,986	$	292,378	$	109,747	$	121,295	$	231,042

5. Inventories

Inventories consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Raw materials	$	41,920	$	30,834
Work-in-process		30,872		25,394
Finished goods		25,095		21,734
Total	$	97,887	$	77,962

6. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):


	September 30, 2024			December 31, 2023
Land	$	15,414		$	12,312
Buildings and improvements		35,592			29,763
Machinery, equipment, furniture and fixtures		83,729			80,062
Total		134,735			122,137
Less: accumulated depreciation and amortization		(57,780	)		(49,963	)
Total	$	76,955		$	72,174

For the three and nine months ended September 30, 2024 there were sales of property, plant and equipment of $0.3 million which is included in capital expenditures. There were no sales of property, plant and equipment during the three and nine months ended September 30, 2023.

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Compensation and related benefits	$	15,077	$	12,926
Other		14,257		11,850
Total accrued expenses and other current liabilities	$	29,334	$	24,776

8. Long-Term Debt

The Company’s debt consisted of the following (in thousands):


	September 30, 2024			December 31, 2023
Term loans		611,366		$	539,247
Less: unamortized debt issuance costs		(9,264	)		(3,769	)
Total net debt		602,102			535,478
Less: current portion		(6,028	)		(6,896	)
Long-term debt	$	596,074		$	528,582

The Company’s long-term debt at September 30, 2024 consisted of borrowings under its Credit Agreement, dated as of October 2, 2017, as amended from time to time (the Credit Agreement).

On May 3, 2024, the Company used a portion of the net proceeds from its IPO to voluntarily repay $284.6 million of aggregate principal amount of term loans under its Credit Agreement plus accrued interest of $0.3 million. The Company wrote off $0.8 million in unamortized debt issuance costs and expensed $0.8 million in refinancing costs associated with the amendment of the Credit Agreement. These charges are included in refinancing costs in the Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2024.

On May 10, 2024, the Credit Agreement was amended to extend the maturity date to May 10, 2030 from April 2, 2026 and reduce the applicable margin by between 2.0

Form: 10-Q

Documents