TransDigm Group (TDG) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 net sales reached $2,285 million, up 13.9%–14% year-over-year, with organic growth of 7.4% and EBITDA As Defined of $1,197 million (52.4% margin).

• Adjusted EPS rose 5% to $8.23, while GAAP EPS was $6.62, both impacted by dividend equivalent payments.

• Growth was driven by strong demand across commercial OEM, aftermarket, and defense, with record passenger load factors and increased aircraft production.

• Three major acquisitions announced: Stellant Systems, Jet Parts Engineering, and Victor Sierra Aviation, totaling $3.16 billion in cash; Simmonds and Servotronics acquisitions completed.

• Focus remains on proprietary aerospace businesses, disciplined capital allocation, and operational excellence.

Financial highlights

• Gross profit was $1,352 million (59.2% margin), with EBITDA As Defined margin at 52.4% and operating cash flow exceeding $830 million.

• Net income attributable to common stockholders was $445 million, down from $493 million year-over-year due to higher interest expense.

• Free cash flow for Q1 was just under $900 million; quarter-end cash balance over $2.5 billion.

• Net debt to EBITDA ratio at quarter-end was 5.7x; EBITDA to interest expense coverage ratio was 3.1x.

• Weighted average interest rate on borrowings was 6.3%; net interest expense increased to $475 million.

Outlook and guidance

• FY2026 sales guidance midpoint raised to $9.94 billion, up 13% year-over-year; EBITDA As Defined guidance midpoint raised to $5.21 billion (52.4% margin).

• Adjusted EPS guidance midpoint raised to $38.38; free cash flow guidance unchanged at $2.4 billion.

• FY2026 net income projected at $1,952–$2,064 million, slightly below FY2025 due to higher interest expense.

• Guidance excludes pending acquisitions until closing.

• Capital expenditures expected at $280–$310 million; net interest expense ~$1.90 billion.