TransDigm Group Incorporated

Q3 organic growth was approximately 13%. Commercial OEM revenue increased approximately 17% year over year, commercial aftermarket revenue increased approximately 17%, and defense revenue grew approximately 11%. EBITDA As Defined margin was 52.8% in the quarter, and management said this included more than 2 full percentage points of dilution from recent acquisitions. Free cash flow was approximately $870 million in Q3 and $2.1 billion year to date. The company ended the quarter with nearly $2.8 billion in cash and net debt-to-EBITDA of 5.8x. For fiscal 2026, TransDigm raised midpoint revenue guidance by $150 million to $10.51 billion, raised EBITDA As Defined guidance by $100 million to $5.52 billion with an expected margin of around 52.5%, raised adjusted EPS guidance to $41.04, and increased free cash flow guidance to about $2.6 billion from $2.5 billion. Management expects commercial OEM growth in the mid-teens, commercial aftermarket growth in the low-double-digit range, and defense growth in the high-single-digit to low-double-digit range.

Mike Lisman framed the quarter as evidence that TransDigm’s long-term model is working: proprietary products, aftermarket exposure, decentralized operations, and disciplined capital allocation. He said the company is seeing healthy growth across commercial OEM, commercial aftermarket, and defense, and emphasized that the business is performing well even with recent Middle East-related RPM declines and the withdrawal from Stellant. His tone was confident and steady, with repeated emphasis on discipline, flexibility, and continued M&A activity within aerospace and defense.

Sarah Wynne highlighted that free cash flow was approximately $870 million in Q3 and $2.1 billion year to date, with full-year free cash flow now expected to be closer to $2.6 billion. She noted net working capital used about $160 million of cash in the quarter, the quarter-end cash balance was $2.8 billion, and net debt-to-EBITDA was 5.8x, which she said leaves ample liquidity for the pending Prince & Izant acquisition. She also pointed to about $980 million of Q3 share repurchases at an average price of approximately $1,208 per share, bringing year-to-date repurchases to $1.8 billion, and said roughly 75% of the $33.7 billion gross debt balance is fixed through fiscal 2029.

Analysts focused on the Stellant withdrawal, the potential impact of right-to-repair legislation on defense, the durability of aftermarket strength versus flight activity, and whether the company may broaden its acquisition focus beyond aerospace and defense. Management said the DOJ challenge to Stellant was a one-off and does not change its appetite for defense M&A, and they reiterated that the pipeline remains active in both commercial and defense. On aftermarket, they said current bookings and backlog support the year, but it is hard to predict several quarters out; on right-to-repair, they said it is too early to comment because the bill is still evolving. Management also said the core focus remains aerospace and defense, though broader industrial targets are not impossible over time.