A Member of Pat McKeough’s Inner Circle recently asked for his advice on Loar Holdings Inc., a specialized aerospace and defense components company that grows through high‑profit-margin proprietary products and disciplined bolt‑on acquisitions.
Pat likes the firm’s combination of structural growth and high profitability. The company’s end‑market exposure is diversified across commercial OEM, commercial aftermarkets, and defense. That reduces reliance on any single program while still benefiting from the global recovery in air traffic and sustained defense spending. However, Pat notes the shares trade at a high valuation and the growth story now leans heavily on integrating recent acquisitions.
Loar Holdings Inc. (Symbol LOAR on New York; www.loargroup.com) designs, makes, and sells aerospace and defense components.
Those products include autothrottles (automatic power controls), lap-belt airbags, two- and three-point seat belts, water purification systems, fire barriers, and fluid sensors and switches.
Founded in 2012, Loar became a public company on April 24, 2024, through the sale of stock at $28 a share. That price was above the proposed IPO pricing of between $24 and $26 a share. Loar shares are now up 109% from the IPO price.
The company has four core end markets: commercial (43% of revenue), business jet and general aviation (27%), defence (22%), and non-aviation (8%).
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Loar’s growth strategy includes making acquisitions. Since its founding in 2012, the company has made 18 strategic purchases to expand its operations.
Most recently, on March 7, 2025, Loar acquired LMB SAS for 365 million euros ($433.4 million U.S.) plus it has taken responsibility for about 44.3 million euros of its debt. French-based LMB is a global specialty manufacturer of high-performance fans and motors. Many aerospace and defence platforms rely on its products.
Loar’s strong quarter underscores portfolio strength
In the quarter ended December 31, 2025, Loar reported revenue of $131.8 million, up 19.3% from $110.4 million a year earlier. Revenue rose due to strong performance in the commercial aftermarket segment, which grew 34% year-over-year, alongside 14% growth in defense sales and an 8% increase in commercial OEM sales.
Excluding one-time items, Loar earned $24.9 million, or $0.26 a share, in the quarter. That was up 136.4% from $10.3 million, or $0.11 a share.
Earnings rose due to higher sales volume, improved profit margins, and a favourable sales mix of higher-margin proprietary products. Performance was further bolstered by lower interest expenses.
Loar’s outlook is sound. It focuses on highly engineered systems and generates 85% of its sales from its own market-leading products. Furthermore, it enjoys strong aftermarket demand for its parts—about 53% of overall sales. That generates predictable and recurring revenue.
Recommendation in Pat’s Inner Circle: Loar Holdings Inc. is okay to hold.
