TransDigm : Q2 2026 TransDigm Group Inc Earnings Presentation

Published: 2026-05-05 07:29:12 ET TDG

Published on 05/05/2026 at 07:29 am EDT

‌FY 2026 Q2

Earnings Call

May 5, 2026

‌TransDigm Overview, Highlights and Outlook Mike Lisman

CEO

Market Review Joel Reiss

Co-COO

Operating Performance and Financial Results Sarah Wynne

CFO

Q&A

Agenda

‌FORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including information regarding our guidance for future periods. These forward-looking statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events, many of which are outside of our control. Consequently, such forward looking statements should be regarded solely as our current plans, estimates and beliefs. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statement. The Company does not undertake, and specifically declines, any obligation, to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. These risks and uncertainties include but are not limited to: the sensitivity of our business to the number of flight hours that our customers' planes spend aloft and our customers' profitability, both of which are affected by general economic conditions; supply chain constraints; increases in raw material costs, taxes and labor costs that cannot be recovered in product pricing; failure to complete or successfully integrate acquisitions; our indebtedness; current and future geopolitical or other worldwide events, including, without limitation, wars or conflicts and public health crises; cybersecurity threats; risks related to the transition or physical impacts of climate change and other natural disasters or meeting regulatory requirements; our reliance on certain customers; the United States ("U.S.") defense budget and risks associated with being a government supplier including government audits and investigations; failure to maintain government or industry approvals; risks related to changes in laws and regulations, including increases in compliance costs and potential changes in trade policies and tariffs; potential environmental liabilities; liabilities arising in connection with litigation; risks and costs associated with our international sales and operations; and other factors. Further information regarding the important factors that could cause actual results to differ materially from projected results can be found in TransDigm Group's most recent Annual Report on Form 10-K and other reports that TransDigm Group or its subsidiaries have filed with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on our forward-looking statements. TransDigm Group Incorporated assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SPECIAL NOTICE REGARDING PRO FORMA AND NON-GAAP INFORMATION

This presentation sets forth certain pro forma financial information. This pro forma financial information gives effect to certain recently completed acquisitions and divestitures. Such pro forma information is based on certain assumptions and adjustments and does not purport to present TransDigm's actual results of operations or financial condition had the transactions reflected in such pro forma financial information occurred at the beginning of the relevant period, in the case of income statement information, or at the end of such period, in the case of balance sheet information, nor is it necessarily indicative of the results of operations that may be achieved in the future.

This presentation also sets forth certain non-GAAP financial measures. A presentation of the most directly comparable GAAP measures and a reconciliation to such measures are set forth in the appendix.

Forward Looking Statements & Special Notice Regarding Pro Forma and Non-GAAP Information

‌Distinguishing Characteristics

Highly engineered aerospace components

Proprietary products

Significant aftermarket content

High free cash flow

Non-Proprietary

Proprietary

Defense 43%

Comm OEM 25%

Comm Aftermarket

32%

OEM

Aftermarket

TransDigm Overview

‌ Highlights Q2 Review - Pro Forma Revenues⁽¹⁾

Commercial OEM:

35% Biz Jet/Heli

65% Com Transport

Q2 '26 Commercial Transport Revenue Up 19%

Q2 '26 Business Jet/Helicopter Revenue Up 1%

Commercial OEM: Up 12% Up 14%

Commercial Aftermarket:

20% Biz Jet/Heli

80% Com Transport

Commercial

Up 14% Up 11%

Q2 '26 Commercial Transport Revenue Up 16%

Q2 '26 Business Jet/Helicopter Revenue Up 6%

Defense:

Q2 '26 Defense Aftermarket Growth Outpaced Defense OEM

Revenue Growth Well Distributed Across Businesses

Aftermarket:

Defense: Up 11% Up 10%

2026 Q2 Financial Performance by Markets - Pro Forma

‌Second Quarter 2026 Select Financial Results

($ in millions, except per share amounts)

Organic growth 11%

Driven by double-digit growth in all 3 major market channels

Offset by lower Non-Aero growth

Q2 FY 2026

Q2 FY 2025

Revenue

$2,544

$2,150

18.3%

Increase

Gross Profit

$1,511

$1,274

Application of our value-driven operating strategy

59.4%

59.3%

0.1%

Acquisition dilution

SG&A

$273

$236

% to Sales

10.7%

11.0%

-0.3%

Interest Expense - Net

$484

$378

28.0%

Increase

Interest on the additional debt raised in Q4 fiscal 2025

EBITDA As Defined

$1,337

$1,162

15.1%

Increase

Margin %

52.6%

54.0%

Adjusted EPS

$9.85

$9.11

8.1%

Increase

GAAP Tax Rate

23.4%

23.0%

Adjusted Tax Rate

24.1%

‌ Market Growth Assumptions

FY 2025 Pro Forma

Revenue Mix (1)

Market

FY 2026 Expected Growth

25%

Commercial OEM

Low Double-Digit to Mid-Teens % Range

32%

Commercial Aftermarket

High Single-Digit to Low Double-Digit % Range

43%

Defense

High Single-Digit % Range

Guidance Summary

($ in millions, except per share amounts)

FY 26 Guidance FY 26 Guidance Midpoint Change

Low

High

Current

Prior

∆

Revenues

$ 10,300

$ 10,420

Revenues

$ 10,360

$ 9,940

$ 420

Net Income

$ 2,026

$ 2,106

GAAP EPS

$ 33.91

$ 35.29

EBITDA As Defined

$ 5,370

$ 5,470

EBITDA As Defined

$ 5,420

$ 5,210

$ 210

% of sales

52.1%

52.5%

% of sales

52.3%

52.4%

Adj. EPS

$ 38.83

$ 40.21

Adj. EPS

$ 39.52

$ 38.38

$ 1.14

(1) Pro forma revenue is for the fiscal year ended 9/30/2025. Includes full year impact of the Simmonds Precision Products, Inc. acquisition completed October 2025 and Servotronics, Inc.

acquisition completed July 2025. Excludes Jet Parts Engineering and Victor Sierra Aviation Holdings acquisition completed April 2026. Please see the Special Notice Regarding Pro Forma and 6

Non-GAAP Information.

Fiscal 2026 Outlook

‌Select Financial Assumptions for Fiscal 2026

Prior Assumptions (Issued February 2026)

Updated Assumptions

Capital Expenditures

$280 to $310 million

No change

Full Year Net Interest Expense

≈ $1.90 billion (includes $60 million of interest

income)

≈ $2.02 billion (includes $60 million of

interest income)

Full Year Effective Tax Rate

≈ 22% to 24% for GAAP EPS, Adjusted EPS and

Cash Taxes

No change

Depreciation & Amortization Expense (ex backlog)

$375 to $385 million

$395 to $405 million

Backlog Amortization

$35 to $40 million

No change

Non-Cash Stock Compensation and Deferred Compensation Expense

$180 to $200 million

$160 to $180 million

Other EBITDA As Defined Add-Backs (1)

$75 to $85 million

$85 to $95 million

Weighted Average Shares

58.3 million

58.0 million

(1) Other EBITDA As Defined Add-Backs primarily include estimates for refinancing costs, foreign currency gains or losses, employer withholding taxes on stock option exercises,

Fiscal 2026 Select Financial Assumptions

‌($ in millions, except per share amounts)

FY 2026

Includes approx. $38m of backlog amortization

Guidance

Midpoint

Net income

$ 2,066

Adjustments:

Depreciation and amortization expense

438

Interest expense - net

2,020

Income tax provision

635

EBITDA

5,159

Adjustments:

Acquisition transaction and integration-related expenses (1)

Non-cash stock and deferred compensation expense (1)

170

Other, net (1)

Gross Adjustments to EBITDA

261

EBITDA As Defined

$5,420

EBITDA As Defined Margin (1)

52.3%

GAAP earnings per share

$34.60

Adjustments to earnings per share:

Inclusion of the dividend equivalent payments

1.02

Acquisition transaction and integration-related expenses

1.42

Non-cash stock and deferred compensation expense

2.23

Other, net

0.25

Adjusted earnings per share

$39.52

Weighted-average shares outstanding

58.0

GAAP & Adj Tax Rate

22% - 24%

Reconciliation of Fiscal 2026 Outlook

‌Thirteen Week Periods Ended Twenty-Six Week Periods Ended

Full Year Guidance Mid-Point

March 28, 2026

March 29, 2025

March 28, 2026

March 29, 2025

September 30, 2026

GAAP earnings per share

$ 9.20 $

8.24 $

15.82 $

15.86 $

34.60

Adjustments to earnings per share:

1.02

0.83

1.02

0.36

0.14

0.62

0.40

1.42

0.34

0.62

0.69

0.95

2.23

(0.08)

(0.11)

(0.23)

(0.48)

0.03

0.22

0.17

(0.62)

0.25

9.85

9.11

18.09

16.94

39.52

Dividend equivalent payments

Acquisition transaction and integration-related expenses

Non-cash stock and deferred compensation expense

Tax adjustment on income from continuing operations before taxes

Other, net

Adjusted earnings per share

Reconciliation of GAAP EPS to Adjusted EPS - Guidance

‌ Capital Structure

($ in millions)

Actual 3/28/26

Adj.

Pro forma (1) 3/28/26

Rate

Cash

$3,884

$1,500

$5,384

$910mm revolver

S + 2.250%

$725mm AR securitization facility

725

S + 1.350%

First lien term loan J due 2031

3,587

S + 2.500%

First lien term loan K due 2030

3,535

S + 2.250%

First lien term loan L due 2032

1,481

S + 2.500%

First lien term loan M due 2032

2,494

S + 2.500%

First lien term loan N due 2033

800

1,000

1,800

S + 2.500%

Senior secured notes due 2028

2,100

6.750%

Senior secured notes due 2029

2,750

6.375%

Senior secured notes due 2030

1,450

6.875%

Senior secured notes due 2031

1,000

7.125%

Senior secured notes due 2032

2,200

6.625%

Senior secured notes due 2033

1,500

6.000%

Senior secured notes due 2034

500

6.250%

Total secured debt

$24,122

4.8x

$25,122

5.0x

Total net secured debt

$20,238

4.0x

$19,738

3.9x

Senior subordinated notes due 2029

1,200

4.625%

Senior subordinated notes due 2029

750

4.875%

Senior subordinated notes due 2033

2,650

6.375%

Senior subordinated notes due 2034

2,000

6.750%

Senior subordinated notes due 2034

1,200

500

1,700

6.125%

Finance Lease Obligations

302

Total debt

$32,224

6.4x

$33,724

6.7x

Total net debt

$28,340

5.6x

$28,340

5.6x

FY26 Forecasted Weighted Average Interest Rate

6.2%

Capital Structure

‌Interest rates on TDG's $33.7Bn of gross Debt is ~ 75% hedged/fixed rate through fiscal year 2029

Achieved via a combination of interest rate caps, swaps and collars

Significantly reduces near-term exposure to any variable rate increases

FY 26 Weighted Average Variable rate is the average Term SOFR for TDG's 2026 fiscal year based on current consensus and management estimates.

Interest Rate Sensitivity

($MM)

$7,000

Secured Term Loans

Secured Notes

Sr Sub Notes

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

Calendar Year

2026 2027 2028 2029 2030 2031 2032 2033 2034

Note 1: Includes $1.5B incremental debt raised in April 2026

Note 2: $910M Revolver matures in February 2029 12

Debt Maturity Profile

‌($ in millions)

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025

Net Income

536

479

981

972

Adjustments:

Depreciation and amortization expense

105

205

179

Interest expense - net

484

378

959

756

Income tax provision

164

143

291 269

EBITDA

1,289

1,089

2,436

2,176

Adjustments:

Acquisition transaction and integration-related expenses (1)

Non-cash stock and deferred compensation expense (2)

Other, net (3)

14 (47)

Gross Adjustments to EBITDA

98 48

EBITDA As Defined

$ 1,337

$ 1,162

$ 2,534 $ 2,224

EBITDA As Defined, Margin (4)

52.6%

54.0%

52.5%

53.5%

(1) Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the

purchase accounting of acquired businesses.

(2) Represents the compensation expense recognized under our stock option plans and deferred compensation plans.

(3) Primarily represents foreign currency transaction gains or losses, pa yroll withholding taxes related to di vi dend equi va lent pa yments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

(4) The EBITDA As Defined Margin represents the amount of EBITDA As Defined as a percentage of net sales.

Appendix: Reconciliation of Net Income to EBITDA and EBITDA As Defined

‌($ in millions, except per share amounts)

Thirteen Week Periods Ended

Twenty-Six Week Periods Ended

Reported Earnings Per Share

March 28, 2026 March 29, 2025

Net income

536

479

981

972

Less: Net income attributable to noncontrolling interests

(1)

Net income attributable to TD Group

535

479

980

972

Less: Dividends paid on participating securities

(59)

(49)

Net income applicable to TD Group common stockholders -

basic and diluted

$ 535

$ 479

$ 921

$ 923

Weighted-average shares outstanding under the two-class method:

Weighted-average common shares outstanding

56.4

56.1

56.4

56.2

Vested options deemed participating securities

1.8

2.0

1.8

2.0

Total shares for basic and diluted earnings per share

58.2

58.1

58.2

Earnings per share -- basic and diluted

9.20

8.24

15.82

15.86

Adjusted Earnings Per Share

Net income

536

479

981

972

Gross adjustments to EBITDA

Purchase accounting backlog amortization

Tax adjustment (1)

(18)

(25)

(42)

Adjusted net income

$ 574

$ 529

$ 1,053

$ 986

Adjusted diluted earnings per share under the two-class method

$ 9.85

$ 9.11

$ 18.09

$ 16.94

(1) For the thirteen and twenty-six week periods ended March 28, 2026 and March 29, 2025, the Tax adjustment represents the tax effect of the adjustments at the applicable effective tax rate, as well as the impact on the effective tax rate when excluding the excess tax benefits on stock option exercises. Stock compensation expense is excluded from adjusted net income and therefore we have excluded the impact that the excess tax benefits on stock option exercises have on the effective tax rate for determining adjusted net income.

Appendix: Reconciliation of Reported EPS to Adjusted EPS

‌($ in millions)

Twenty-Six Week Periods Ended

March 28, 2026 March 29, 2025

Net cash provided by operating activities

967

900

Adjustments:

Changes in assets and liabilities, net of effects from acquisitions and sales of businesses

294

322

Interest expense - net (1)

936

737

Income tax provision - current

292

271

Gain on sale of businesses, net

Non-cash stock and deferred compensation expense (2)

(53)

(73)

EBITDA

Adjustments:

Acquisition transaction and integration-related expenses (3)

2,436

2,176

Non-cash stock and deferred compensation expense (2)

Other, net (4)

(47)

EBITDA As Defined

$ 2,534

$ 2,224

(1) Represents interest expense, net of interest income, excluding the amortization of debt issuance costs and discount on debt.

(2) Represents the compensation expense recognized under our stock option plans and deferred compensation plans.

(3) Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.

(4) Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

Appendix: Reconciliation of Net Cash Provided by Operating Activities to EBITDA and EBITDA As Defined

Disclaimer

Transdigm Group Incorporated published this content on May 05, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 05, 2026 at 11:28 UTC.