TransDigm Group (TDG) Q3 2025 earnings summary

Executive summary

• Q3 2025 net sales rose 9.3% year-over-year to $2,237M, with organic growth of 6.3% and net income up 7% to $493M; EBITDA As Defined margin improved to 54.4% from 53.3% year-over-year.

• Adjusted EPS grew 7% to $9.60, and EBITDA As Defined rose 12% to $1,217M; year-to-date net sales reached $6,394M, net income $1,465M, and EBITDA As Defined $3,441M.

• Aftermarket and defense segments drove growth, offsetting declines in commercial OEM, which was impacted by supply chain and labor challenges.

• Leadership transition announced: CEO Kevin Stein retiring September 30, with Mike Lisman to succeed him; several internal promotions to key executive roles.

• Strategy remains focused on proprietary aerospace businesses, high aftermarket content, disciplined M&A, and capital allocation for private equity-like returns.

Financial highlights

• Q3 EBITDA As Defined margin reached 54.4%, driven by strong aftermarket growth and operational discipline; gross margin was 59.5%, and operating margin 46.4%.

• Operating cash flow exceeded $630M in Q3; quarter-end cash balance was nearly $2.8B.

• Free cash flow for Q3 was $715M; year-to-date $1.9B; full-year guidance remains $2.3B.

• Net interest expense increased to $397M in Q3 due to higher borrowings.

• SG&A as a percentage of sales decreased to 10.8% from 12.1% year-over-year.

Outlook and guidance

• Fiscal 2025 sales guidance midpoint lowered to $8,790M–$8,820M (up ~11% YoY); EBITDA As Defined guidance raised to $4,725M (up ~13% YoY, margin ~53.8%).

• Adjusted EPS midpoint now $36.74, up ~8% YoY; net income guidance raised to $1,932M–$1,980M.

• Commercial OEM revenue growth now expected to be flat to low single digits; aftermarket and defense guidance unchanged at high single to low double-digit growth.

• Guidance excludes pending Siemens/Simmonds Precision acquisition.

• Effective tax rate projected at 22–24%.