Loar Holdings Inc. Completes Acquisition of Applied Avionics, Inc.

Rhea-AI Summary

Loar Holdings Inc. (NYSE:LOAR) has completed the acquisition of Applied Avionics, Inc. for $385 million in cash. Applied Avionics specializes in designing and manufacturing highly engineered interface solutions for avionics and aerospace/defense electronics. Their brands, VIVISUN® and NEXSYS®, are preferred by leading aircraft retrofit providers and military contractors.

Key financial highlights:

• Applied Avionics' projected 2024 net sales: ~$40 million
• Projected 2024 Adjusted EBITDA: ~$21 million
• Expected tax benefits: ~$45 million
• Loar's projected net-debt-to-EBITDA ratio post-acquisition: <4.0x

This strategic acquisition is expected to strengthen Loar's position in the aerospace and defense electronics market.

Positive

• Acquisition of Applied Avionics for $385 million, expanding Loar's market presence
• Applied Avionics' projected 2024 net sales of $40 million and Adjusted EBITDA of $21 million
• Expected tax benefits of approximately $45 million from the transaction
• Projected net-debt-to-EBITDA ratio of less than 4.0x post-acquisition

Negative

• Significant cash outlay of $385 million for the acquisition
• Potential integration challenges and costs associated with merging operations

Financial Analyst

The acquisition of Applied Avionics by Loar Holdings for $385 million in cash is a significant move in the aerospace and defense sector. With projected 2024 net sales of $40 million and Adjusted EBITDA of $21 million, Applied Avionics boasts an impressive EBITDA margin of 52.5%, indicating strong profitability. The $45 million in expected tax benefits further enhances the deal's value.

Post-acquisition, Loar's projected net-debt-to-EBITDA ratio of less than 4.0x suggests a manageable leverage position. However, investors should monitor how quickly Loar can integrate Applied Avionics and realize synergies to justify the premium paid, which is nearly 10 times Applied Avionics' projected sales. The acquisition's success will hinge on Loar's ability to leverage Applied Avionics' strong market position and innovative products to drive growth in the competitive aerospace and defense electronics market.

Aerospace Industry Expert

Loar Holdings' acquisition of Applied Avionics is a strategic move to strengthen its position in the avionics and aerospace electronics market. Applied Avionics' VIVISUN® and NEXSYS® brands are well-regarded in the industry, particularly for aircraft retrofits and military applications. This acquisition gives Loar access to:

• Advanced interface solutions for avionics
• A strong customer base including OEMs and Tier 1 suppliers
• Innovative product development capabilities

The deal aligns with the trend of consolidation in the aerospace supply chain, as larger companies seek to offer more comprehensive solutions. Loar can now provide a wider range of products to its existing customers while potentially expanding into new market segments. The challenge will be maintaining Applied Avionics' reputation for innovation and customer service while integrating it into Loar's larger corporate structure.

WHITE PLAINS, NY / ACCESSWIRE / August 26, 2024 / Loar Holdings Inc. (NYSE:LOAR) ("Loar," "we" and "our"), today announced that it has completed the previously announced acquisition of Applied Avionics, Inc. ("Applied Avionics") for approximately $385 million in cash.

Applied Avionics designs, develops, and manufactures highly engineered interface solutions for avionics and other aerospace and defense electronics. Applied Avionics' brands, VIVISUN® and NEXSYS®, are the preferred choices of leading aircraft retrofit providers, military prime contractors, Tier 1 suppliers, and OEMs, among others, reflecting Applied Avionics' passion for exceptional customer service, world-class quality and reputation as an innovative solutions provider. Applied Avionics maintains headquarters and manufacturing operations at its facility in Fort Worth, Texas.

As previously announced, Loar expects that Applied Avionics' net sales and Adjusted EBITDA for the year ending December 31, 2024, will be approximately $40 million and $21 million, respectively. Loar also expects to receive tax benefits of approximately $45 million as a result of the transaction. Following the acquisition's completion, Loar projects its net-debt-to-EBITDA ratio to be less than 4.0x.

About Loar Holdings Inc.

Loar Holdings Inc. is a diversified manufacturer and supplier of niche aerospace and defense components that are essential for today's aircraft and aerospace and defense systems. Loar has established relationships across leading aerospace and defense original equipment manufacturers and Tier Ones worldwide.

Forward Looking Statements

This press release includes express or implied forward-looking statements. Forward-looking statements include all statements that are not historical facts including those that reflect our current views with respect to, among other things, Loar's ability to timely close on the acquisition of Applied Avionics, Loar's ability to finance such acquisition and the expected financial performance of Applied Avionics. The words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek," "foreseeable," the negative version of these words or similar terms and phrases may identify forward-looking statements in this press release, but the absence of these words does not mean that a statement is not forward-looking.

Actual results may differ materially from our expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to the following: the almost exclusive focus of our business on the aerospace and defense industry; our heavy reliance on certain customers for a significant portion of our sales; the fact that we have in the past consummated acquisitions and our intention to continue to pursue acquisitions, and that our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations; and the other risks and uncertainties described under "Risk Factors" of Loar's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed with the Securities and Exchange Commission ("SEC") on August 13, 2024, and other periodic reports filed by Loar from time to time with the SEC.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release. Any forward-looking statement made by us in this press release speaks only as of the date of this press release and is expressly qualified in its entirety by the cautionary statements included in this press release. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise, except as may be required by any applicable law.

Contact

Ian McKillop
Loar Group Investor Relations
IR@loargroup.com

SOURCE: Loar Group Inc.

View the original press release on accesswire.com

FAQ

What company did Loar Holdings Inc. (NYSE:LOAR) acquire on August 26, 2024?

Loar Holdings Inc. (NYSE:LOAR) acquired Applied Avionics, Inc. on August 26, 2024.

How much did Loar Holdings Inc. (NYSE:LOAR) pay for Applied Avionics?

Loar Holdings Inc. (NYSE:LOAR) paid approximately $385 million in cash for Applied Avionics.

What are Applied Avionics' projected net sales and Adjusted EBITDA for 2024?

Applied Avionics' projected net sales for 2024 are approximately $40 million, and its projected Adjusted EBITDA is approximately $21 million.

What tax benefits does Loar Holdings Inc. (NYSE:LOAR) expect from the Applied Avionics acquisition?

Loar Holdings Inc. (NYSE:LOAR) expects to receive tax benefits of approximately $45 million as a result of the Applied Avionics acquisition.

What is Loar Holdings Inc.'s (NYSE:LOAR) projected net-debt-to-EBITDA ratio after the Applied Avionics acquisition?

Loar Holdings Inc. (NYSE:LOAR) projects its net-debt-to-EBITDA ratio to be less than 4.0x following the completion of the Applied Avionics acquisition.