Loar Holdings Inc.

Notes to Condensed Cons olidated Financial Statements

(Unaudited)

1. 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, 2025 included in Loar Holdings Inc.'s Annual Report on Form 10-K filed on March 2, 2026. 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, 2025 condensed consolidated balance sheet was derived from Loar Holdings Inc.’s audited financial statements for the year then ended. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

A reclassification has been made to the prior year's condensed consolidated statement of cash flows to conform with the current year's

presentation. This reclassification has resulted in no changes to the Company's condensed consolidated results of operations, financial

position or total cash flows.

Recent Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires disaggregated information about certain income statement costs and expenses for public entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories within the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities. The ASU establishes guidance on the recognition, measurement, presentation and disclosure of a government grant received by a business entity. The guidance is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

2. Acquisitions

Harper Engineering Company

On January 21, 2026, the Company acquired Harper Engineering Company (Harper Engineering) for$249.8 million in cash. The Company recorded an additional $15.3 million in purchase consideration that may be paid to the sellers if Harper Engineering achieves certain financial targets for the years 2026 to 2031. The maximum payout to the seller related to achieving these financial targets is $55.0 million. Based on management's revaluation of the estimated contingent consideration liability the Company recorded an increase in contingent consideration of $0.7 million and $2.0 million during thethree and nine months ended September 30, 2026, respectively. These amounts were recorded as other expense on the condensed consolidated statements of income. The additional purchase consideration totaling $17.3 million is recorded in other long-term liabilities on the accompanying condensed consolidated balance sheets. 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 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. Thefollowing table summarizesthe preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):

Inventory, which is included in current assets in the table above, 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 $0.4 million, which was recognized in cost of sales during thenine months ended September 30, 2026.

Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing 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.

LMB Fans & Motors

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. Leveraging its many decades of expertise and proprietary designs, LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines.

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. 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):

The initial accounting has been adjusted, including the measurement of the acquired tangible and intangible assets and liabilities, as well as the associated income tax considerations. The adjustments include a decrease to goodwill of $19.7 million, an increase to intangible assets of $18.7 million, an increase to deferred income taxes of $6.7 million, an increase to property, plant and equipment of $3.3 million, a decrease of $3.3 million in current liabilities, and an increase of $1.2 million in current assets. Any further adjustments during the one-year measurement period from the acquisition date are not expected to be material to the consolidated financial statements.

Inventory, which is included in current assets in the table above, 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$4.5 million, which was recognized in cost of sales during the nine months ended September 30, 2026.

Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing 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 not deductible for tax purposes.

The results of operations of the acquired entities are included in the Company’s consolidated financial statements for the period subsequent to the completion of the acquisitions.

Pro forma financial information (Unaudited)

The pro forma information below gives effect to the LMB acquisition as if it had been completed on January 1, 2024, and the Harper Engineering acquisition as if it had been completed on January 1, 2025.

Had the acquisitions of LMB and Harper Engineering occurred on those dates, net sales on a pro forma basis for the three and nine months ended September 30, 2025 would have been $150.6 million and $436.8 million, respectively. Additionally, income before income taxes on a pro forma basis would have been $13.2 million and $31.6 million, for the three and nine months ended September 30, 2025, respectively. Pro forma net sales and pretax income for the nine months ended September 30, 2026 are not materially different from actual results and accordingly, have not been provided. The underlying pro forma information for the three and nine months ended September 30, 2025 includes $6.7 million and $20.2 million, respectively, of amortization of acquired intangible assets resulting from the preliminary purchase price allocation. Interest expense has been adjusted as though the debt incurred to finance the LMB acquisition had been outstanding at January 1, 2024 and the debt incurred to finance the Harper Engineering acquisition had been outstanding at January 1, 2025. The pro forma interest expense adjustments for the three and nine months ended September 30, 2025 are $14.2 million, and $42.6 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.

3. Revenue Recognition

All revenue recognized in the condensed consolidated statements of income 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, Guaranteesand 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):

Contract Liabilities

Contract liabilities, or deferred revenue, represent payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on established terms. The Company's contract liabilities consisted of the following (in thousands):

(1) Included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

During the three and nine months ended September 30, 2026, the Company recognized revenue of appro ximately $0.1 million and $3.6 million, respectively, that was included in the contract liability balance at December 31, 2025. The Company had no material contract assets at September 30, 2026 and December 31, 2025.

4. Inventories

Inventories consisted of the following (in thousands):

5. Property, Plant and Equipment

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

There wereno sales of property, plant and equipment during thenine months ended September 30, 2026 and 2025.

6. Accrued Expenses and Other Current Liabilities

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

7. Long-Term Debt

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

The Company’s long-term debt at September 30, 2026 consi sted principally of borrowings under its Nineteenth Amendment to Credit Agreement, dated as of December 23, 2025, as amended from time to time (Credit Agreement) and West Virginia Economic Development Authority notes. The Credit Agreement is secured by substantially all of the assets of the Company.

On August 1, 2025, the Credit Agreement was amended to reduce the applicable margin by 0.5%. 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.

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.

On December 23, 2025, the Credit Agreement was amended to make available to the Company an incremental term loan in an aggregate principal amount equal to $445 million for purposes of (i) paying a portion of the consideration for the LMB acquisition, (ii) financing the payment of LMB debt, (iii) paying fees and expenses incurred in connection with the foregoing, and (iv) otherwise funding working capital and general corporate purposes.

On January 21, 2026, the Company drew down $240 million of the available Delayed Draw Term Loans commitment to fund a portion of the Harper Engineering acquisition.

The Credit Agreement requires the maintenance of a quarterly leverage ratio. There are also certain non-financial covenants in place limiting us from, among other things, incurring other indebtedness, creating any liens on our properties, entering into merger or consolidation transactions, disposing of all or substantially all of our assets and payment of certain dividends and distributions. The Company was in compliance with all financial and non-financial covenants of the Credit Agreement as of September 30, 2026.

The Credit Agreement requires mandatory prepayments of the principal amount if there is excess cash flow, as defined, during a calendar year.

The Credit Agreement permits voluntary principal prepayments, in whole or in part, with no premium for any prepayments made. Any voluntary loan prepayments are applied to reduce future scheduled installments of principal in the order specified by the Company, or if the Company does not specify, the prepayment is applied to reduce the scheduled installments of principal in direct order of maturity.

At September 30, 2026, there was$961.2 million outstanding under the Credit Agreement, and there was $50.0 million available under the revolving line of credit.

8. Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, finance leases and debt. The carrying amounts of all financial instruments reported on the condensed consolidated balance sheets at September 30, 2026 and December 31, 2025 are considered to approximate fair value either due to the relatively short period of time between the origination of these financial instruments and their expected realization, or the interest rates associated with the debt obligations approximate current market rates.

9. Commitments and Contingencies

There are various lawsuits and claims pending against the Company incidental to its business. Although the final results of such suits and proceedings cannot be predicted with certainty, in the opinion of management, the ultimate liability, if any, will not have a material impact on the condensed consolidated financial statements.

10. Earnings per Share

Earnings per share was computed as follows (in thousands, except per share amounts):

11. Income Taxes

At the end of each quarter, the Company makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods.

During the three months ended September 30, 2026 and 2025 effective income tax rate was 25.2% and(20.0)%, respectively. The 2026 effective income tax rate increased when compared to 2025, primarily due to the impact from enactment of the One Big Beautiful Bill Act ("OBBBA") which resulted in a one-time tax benefit during the three months ended September 30, 2025.

During the nine months ended September 30, 2026 and 2025 the effective income tax rate was 24.4% and 6.1%, respectively. The 2026 effective income tax rate increased when compared to 2025, primarily due to the impact from enactment of the OBBBA which resulted in a one-time tax benefit during the nine months ended September 30, 2025.

The Company's effective income tax rate for the nine months ended September 30, 2026 was higher than the federal statutory tax rate of 21% primarily due to the geographical mix of projected profits and non-deductible expenses. These impacts were partially offset by foreign-derived deduction eligible income and research and development tax credits.

12. Segment Reporting

The Company reports the results of its continuing operations inone reportable segment. The Company's Chief Operating Decision Maker (CODM), our Chief Executive Officer, monitorsnet income, net sales, and Adjusted EBITDA to evaluate performance and make operating decisions. The measures of segment profit or loss are consolidated net income and Adjusted EBITDA. EBITDA means earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA, adjusted for other items within a relevant period which are not reflective of the segment's operating performance in the period.

The CODM reviews consolidated net income together with the underlying revenues, costs and expenses reflected in the Condensed Consolidated Statements of Income. Because the Company has a single reportable segment, the significant segment expenses and other segment items are the same as those reported in the consolidated financial statements as they relate to net income.

The following table provides a reconciliation of the Company's segment Adjusted EBITDA to net income for thethree and nine months ended September 30, 2026 and 2025 (in thousands):

(1)

Represents cost of sales adjusted to exclude the recognition of inventory step-up of$45 thousand during the three months ended September 30, 2025 and$4.9 million and$45 thousand during the nine months ended September 30, 2026 and 2025; the amortization of intangible and other long-lived assets of$4.1 million and$1.3 million during the three months ended September 30, 2026 and 2025 and$11.8 million and$3.6 million during the nine months ended September 30, 2026 and 2025, respectively; depreciation of$3.2 million and$2.7 million during the three months ended September 30, 2026 and 2025 and$9.0 million and$8.0 million during the nine months ended September 30, 2026 and 2025, respectively; and acquisition and facility integration costs of$0.9 million and$2.4 million during the three and nine months ended September 30, 2025.

(2)

Represents selling, general and administrative expenses adjusted to exclude the amortization of intangible and other long-lived assets of$12.5 million and$8.6 million during the three months ended September 30, 2026 and 2025 and$37.0 million and$25.5 million during the nine months ended September 30, 2026 and 2025, respectively; depreciation of$0.2 million and$0.3 million during the three months ended September 30, 2026 and 2025 and$1.0 million and$0.9 million during the nine months ended September 30, 2026 and 2025, respectively; stock based compensation of$4.4 million and$3.9 million during the three months ended September 30, 2026 and 2025 and$13.4 million and$10.6 million during the nine months ended September 30, 2026 and 2025, respectively; acquisition and facility integration costs of$0.4 million during the three months ended September 30, 2025 and$0.5 million and$1.4 million during the nine months ended September 30, 2026 and 2025, respectively; and research and development costs of$3.4 million and$2.9 million during the three months ended September 30, 2026 and 2025 and$12.5 million and$9.5 million during the nine months ended September 30, 2026 and 2025, respectively.

(3)

Represents research and development costs adjusted to exclude depreciation and stock compensation totaling $0.2 million and $0.5 million during thethree and nine months ended September 30, 2026, respectively. Research and development costs are incurred to investigate, examine, design and test new or significantly enhance existing products, services or processes.

(4)

Represents accounting adjustments to inventory associated with acquisitions of businesses that were charged to cost of sales when inventory was sold.

(5)

Primarily representsan adjustment to the contingent purchase price for the Harper Engineering acquisition during the three and nine months ended September 30, 2026.

(6)

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.

(7)

Representsthe non-cash compensation expense recognized by the Company for equity awards.

(8)

Represents costs incurred to integrate acquired businesses and product lines into our operations, facility relocation costs and other acquisition-related costs.