Loar takes flight with US$286m NYSE IPO
Loar took flight early on Wednesday by launching a US$286m all-primary NYSE IPO to help fortify its balance sheet.
A syndicate led by Jefferies, Morgan Stanley and Moelis is marketing 11m shares in the acquisitive aerospace and defence components maker and contractor at US$24–$26 for pricing on Thursday April 25.
At the top of the range, the terms value Loar at roughly US$2.5bn in enterprise value.
The IPO proceeds will be used to repay a portion of the US$539.2m drawn on Loar’s credit facility, paring its debt load to just US$275m. That would reduce net leverage to 2.3 times.
Founded in 2012, Loar has grown rapidly through acquisitions.
“We think the next step in our life cycle is to take the company public,” CFO Glenn D’Alessandro said in the online roadshow presentation. “We have a very long runway in front of us. We want to be able to use stock, in the right circumstances, as currency to continue our M&A activity.”
Loar has made 16 acquisitions with very little outside funding, aside from a small equity raising in 2017 that provided impetus for larger purchases, including three since the beginning of 2022.
Addressing another motivation of going public, Loar has reserved 660,000 shares in the IPO for employees and expects stock options to help as a recruiting tool.
Loar is the latest in a series of IPOs of industry consolidators, including nursing home operator PACS (up 13.3% since its debut last week), Mexican grocer BBB Foods (up 12.9% since February), and last week’s IPO of utility services firm Centuri.
According to preliminary numbers in the IPO filing, Loar grew first-quarter adjusted Ebitda to US$32.5m on revenues of US$90.8m, the latter up 22.4%.
These results included contributions from the purchases last year of de-icing provider CAV Systems (for US$29m) and aftermarket aerospace parts provider DAC Engineered Products (US$31.4m), and the 2022 acquisition of German aircraft components maker Schroth Safety Products (US$173.9m).
Within defence and aerospace, the success of a growth through acquisition strategies is well established by the likes of the much larger Curtiss-Wright, Heico and Transdigm. Those stocks trade at between 17 times to 32 times EV-to-trailing Ebitda, according to LSEG data.
Loar is valued towards the bottom of that comp group at 21.5 times.