Executive Summary

Record Q1 results: Net sales $91.84M (+23.7% y/y) and Adjusted EBITDA $33.03M (+23.0% y/y), with Adjusted EBITDA margin at 36.0% and net income of $2.25M vs a $(7.52)M loss in Q1’23 .
Capital structure significantly improved post-IPO: $330M net proceeds; $285M debt repaid; amended credit agreement cut rate to SOFR+4.75% (<5.5x leverage), added $50M revolver and $100M delayed-draw capacity . CFO also said pro forma annual interest expense would be ~$26M after the paydown and rate cut, while the Q1 press release outlook still assumed ~$42M for 2024 (management later revised guidance) .
Initial FY24 outlook introduced: revenue $370–$374M, Adjusted EBITDA $132–$134M (~36% margin), net income $25.7–$27.1M, Adjusted EPS $0.41–$0.43, interest expense ~$42M; management cited broad demand and strong aftermarket momentum .
Demand setup strong: commercial aftermarket backlog up 25% y/y exiting Q1; management called it the strongest backlog in company history, supporting confidence in double-digit organic growth across end-markets in 2024 .

What Went Well and What Went Wrong

What Went Well

Record top-line and EBITDA: “quarterly record in net sales and Adjusted EBITDA... Adjusted EBITDA margins were strong at 36%,” despite temporary dilution from late-2023 acquisitions and public company infrastructure build-out .
Broad-based demand/backlog: Commercial aftermarket backlog +25% y/y at March 31, 2024; “strongest backlog we have seen in our history,” underpinning confidence in FY24 outlook and double-digit growth across all end-markets .
Balance sheet/interest burden improved: IPO proceeds reduced leverage to ~1.6x TTM EBITDA and cut borrowing costs; amended facility lowered rate by 250 bps and extended maturity to 2030, adding a $50M revolver and $100M delayed draw .

What Went Wrong

Margins stable, not expanding: Adjusted EBITDA margin 36.0% vs 36.2% in Q1’23 as mix (lower-margin OEM) and integration/public company costs offset pricing/operating leverage .
Gross margin flat y/y due to sales mix and facility move charges; “offset by pricing and operating leverage” (limits immediate drop-through of strong demand into margin expansion) .
Aftermarket destocking: Management cited destocking at a handful of distributors/end customers, partially offsetting travel recovery tailwinds (watch normalization timing) .

Financial Results

Metric	Q1 2023	Q1 2024	Q2 2024	Q3 2024
Net Sales ($USD Millions)	$74.25	$91.84	$97.02	$103.52
Net Income ($USD Millions)	$(7.52)	$2.25	$7.64	$8.66
Net Income Margin (%)	(10.1)%	2.4%	7.9%	8.4%
Adjusted EBITDA ($USD Millions)	$26.85	$33.03	$35.03	$38.10
Adjusted EBITDA Margin (%)	36.2%	36.0%	36.1%	36.8%
Diluted EPS ($)	n/a (pre-IPO units)	n/a (pre-IPO units)	$0.09	$0.09
Adjusted Diluted EPS ($)	n/a	n/a	$0.13	$0.15

Notes: Q1 2023 and Q1 2024 per-share metrics are not comparable due to pre-IPO capital structure (company reported per-unit metrics) .

KPIs and Cash Flow (Q1 2024)

Net organic sales growth: 11.1% y/y (to $82.5M)
Commercial aftermarket backlog: +25% y/y at 3/31/24
Pro forma net leverage (post-IPO): ~1.6x TTM EBITDA through March ’24
Cash from Operations: $10.81M
Capital Expenditures: $2.40M
Interest Paid (Q1): $17.10M

Segment/End-Market: Numeric end-market sales tables were not provided in the Q1 release; management highlighted strength across Commercial OEM, Commercial aftermarket, and Defense, with supply chain improvements enabling deliveries; destocking impacted a handful of aftermarket channels . For context, end-market tables appear starting in Q2 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	FY 2024	n/a (initial)	$370–$374	Initial
Net Income ($M)	FY 2024	n/a	$25.7–$27.1	Initial
Adjusted EBITDA ($M)	FY 2024	n/a	$132–$134	Initial
Adjusted EBITDA Margin (%)	FY 2024	n/a	~36%	Initial
Adjusted EPS ($)	FY 2024	n/a	$0.41–$0.43	Initial
Interest Expense ($M)	FY 2024	n/a	~42	Initial
Net Sales ($M)	FY 2024 (Q2 update)	$370–$374	$374–$378	Raised
Net Income ($M)	FY 2024 (Q2 update)	$25.7–$27.1	$28.4–$29.6	Raised
Adjusted EBITDA ($M)	FY 2024 (Q2 update)	$132–$134	$134–$136	Raised
Adjusted EPS ($)	FY 2024 (Q2 update)	$0.41–$0.43	$0.44–$0.46	Raised
Net Income Margin (%)	FY 2024 (Q2 update)	~7%	~8%	Raised
Interest Expense ($M)	FY 2024 (Q2 update)	~42	~42	Maintained
Net Sales ($M)	FY 2024 (Q3 update)	$374–$378	$390–$394	Raised
Net Income ($M)	FY 2024 (Q3 update)	$28.4–$29.6	$19.0–$20.0	Lowered (acquisition interest/amortization)
Adjusted EBITDA ($M)	FY 2024 (Q3 update)	$134–$136	$141–$143	Raised
Adjusted EPS ($)	FY 2024 (Q3 update)	$0.44–$0.46	$0.35–$0.37	Lowered
Net Income Margin (%)	FY 2024 (Q3 update)	~8%	~5%	Lowered
Interest Expense ($M)	FY 2024 (Q3 update)	~42	~54	Raised

Management explained the FY24 Q3 changes reflected the acquisition of Applied Avionics, increasing interest and amortization while raising revenue and Adjusted EBITDA outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2, Q-1)	Current Period (Q1 2024)	Trend
Supply chain	N/A (pre-IPO; not public)	Improvement enabled delivery of parts previously held at customers due to earlier bottlenecks	Improving
Aftermarket dynamics	N/A	Destocking at some distributors even as travel demand recovered; backlog +25% y/y	Destock easing; backlog robust
Pricing/operating leverage	N/A	Pricing and operating leverage offset mix/facility charges; EBITDA margin steady at 36%	Stable to improving
M&A/integration	N/A	Temporary margin dilution from two H2’23 acquisitions; integration ongoing	Near-term dilutive, improving over time
Capital structure	N/A	IPO closed; $285M debt repaid; rate reduced 250 bps; extended maturities; added liquidity	Deleveraging, added flexibility
End-market demand	N/A	Commercial OEM up; aftermarket strong; defense up; broad demand across platforms	Broad-based strength

Management Commentary

CEO: “We began the year with solid momentum, reporting a quarterly record in net sales and Adjusted EBITDA… Adjusted EBITDA margins were strong at 36%, even after… temporary margin dilution from the two acquisitions… and the continued build out of our infrastructure to meet our… public company [needs].”
CEO on demand/backlog: “We have seen a 25% increase in our commercial aftermarket backlog… It's the strongest backlog we have seen in our history… gives us a high degree of confidence that we will achieve organically double-digit… sales across all our end markets in 2024.”
CFO on capital structure: “On April 29th we closed on our initial public offering… raised $330 million… We have used the proceeds to repay $285 million of debt… [amended] our credit agreement… interest rate… SOFR+4.75%… increased… delayed draw term loan… to $100 million… new $50 million revolver.”
CFO on interest expense post-transactions: “With the paydown… and the reduction of the interest rate, our pro forma annual interest expense would be $26 million.”
CEO on FY24 outlook: “Sales between $370 million to $374 million… Adjusted EBITDA between $132 million and $134 million… Adjusted EBITDA margin of approximately 36%… net income between $25.7 million and $27.1 million, and adjusted EPS between $0.41 and $0.43.”

Q&A Highlights

No Q&A was taken on the Q1 call because analysts were still in a quiet period given the company had been public for ~2 weeks .

Estimates Context

S&P Global consensus estimates for Q1 2024 were not retrievable at the time of analysis due to an S&P Global API limit, so comparisons vs Wall Street consensus are not included. If needed, we can refresh and provide a supplement once S&P Global data access is restored.

Key Takeaways for Investors

Strong start as a new public company: record Q1 revenue and EBITDA with stable 36% Adjusted EBITDA margin despite mix and integration/public company costs; margin resilience is notable .
Demand backdrop robust: commercial aftermarket backlog +25% y/y and broad-based strength across Commercial OEM and Defense support sustained double-digit organic growth targets in 2024 .
Capital structure reset: IPO and amended facilities reduced leverage and borrowing costs, extended maturities, and increased liquidity—supporting M&A and organic investments; watch interest guidance vs pro forma commentary .
Margin path: mix/integration costs limited expansion in Q1; management expects integration to improve acquired margins, offering medium-term margin upside as public company costs normalize .
Guidance foundation: Initial FY24 guide called for ~$370–$374M revenue and ~36% margins; subsequent quarters (Q2/Q3) raised revenue/Adjusted EBITDA but increased interest from Applied Avionics tempered GAAP EPS—model sensitivity to financing terms remains high .
Near-term watch items: pace of aftermarket destocking normalization, integration progress of late-2023 acquisitions, and execution on price/operating leverage to expand margins .
M&A cadence: management’s “drumbeat” of 1–2 acquisitions per year could be a catalyst but brings integration and financing considerations (not included in initial FY24 outlook) .

Citations:

Q1 2024 8-K and press release, including financial tables and outlook
Q1 2024 earnings call transcript
Q2 2024 8-K and press release (trend and guidance revision)
Q3 2024 8-K and press release (trend and guidance revision)

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