Latest quarter
TransDigm reported Q3 FY2026 revenue of $2.7 billion, up 22.5% from Q3 FY2025, and revenue as the consensus counts it exceeded the consensus by 2.56%. The company reported adjusted EPS, as the consensus counts it, of $10.87, compared with the $10.29 consensus, exceeding it by 5.64%.
The filing attributes the quarter’s $284 million increase in organic sales to higher commercial aftermarket, commercial OEM and defense sales. The filing says Power & Control sales rose $370 million and Airframe sales rose $128 million, primarily from growth across those three markets. TransDigm reported diluted EPS of $9.39, up 10.9% from $8.47 a year earlier.
The company reported a 59.4% gross margin, versus 59.5% in Q3 FY2025, and a 44.8% operating margin, versus 46.4% a year earlier. The filing attributed higher costs as a share of sales partly to the dilutive effects of fiscal 2026 and 2025 acquisitions. TransDigm reported free cash flow of $650.0 million, up 13.4% from $573.0 million a year earlier.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $2.7 billion | $2.2 billion | 22.5% |
| Diluted EPS | $9.39 | $8.47 | 10.9% |
| Gross margin | 59.4% | 59.5% | −0.1 percentage points |
| Operating margin | 44.8% | 46.4% | −1.7 percentage points |
| Free cash flow | $650.0 million | $573.0 million | 13.4% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $10.87 | $10.29 | Beat by 5.64% |
| Revenue | $2.7 billion | $2.7 billion | Beat by 2.56% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
President and Chief Executive Officer Mike Lisman said revenue grew sequentially and from a year earlier in commercial OEM, commercial aftermarket and defense. Lisman said commercial transport commercial-aftermarket revenue grew 18% from the prior-year period, and that the company had not yet seen a material effect from lower RPMs associated with the Middle East conflict. He said commercial OEM sales increased well into the double digits as Boeing and Airbus production rates continued to rise, while defense revenue increased at a double-digit rate and backlog was building.
Lisman said Q3 EBITDA As Defined margin was 52.8%, including more than two percentage points of dilution from recent acquisitions. He said newly acquired JetParts and Victor Sierra created about a half-percentage-point margin headwind in the quarter, while higher volumes and performance across the market channels supported sequential improvement. When asked about the implied fourth-quarter margin, Chief Financial Officer Sarah Wynne said the company hoped its guidance was conservative, citing a full quarter of JetParts and Victor Sierra ownership and commercial OEM growth.
Lisman said the company agreed to acquire Princeton IZANT for approximately $1.1 billion in cash, and said it was expected to generate approximately $360.0 million of revenue in CY2026. He said TransDigm withdrew from the Stellent acquisition after the Department of Justice notified it of an intended challenge, but said the outcome would not change its M&A approach. Lisman said the company was pursuing mostly small- and mid-sized targets and would not provide more detail on its active acquisition funnel because acquisitions are hard to predict.
Wynne said TransDigm repurchased $980.0 million of common stock in Q3 FY2026, bringing year-to-date repurchases to $1.8 billion. Asked about buybacks versus dividends, Wynne said the company continued to assess both options and would evaluate what made sense as it closed the fiscal and calendar year. Lisman said proposed defense right-to-repair legislation was changing too much for TransDigm to assess its final effects.
Guidance
TransDigm raised its fiscal 2026 net-sales outlook by $150 million at the midpoint and now expects $10.5 billion to $10.6 billion. The company raised EBITDA As Defined guidance by $100 million at the midpoint to $5.5 billion to $5.6 billion, with an approximately 52.5% margin. TransDigm raised its adjusted EPS outlook to $40.62 to $41.46 and its GAAP EPS outlook to $35.38 to $36.21. The company raised expected net income to $2.1 billion to $2.2 billion and free-cash-flow guidance to $2.6 billion. TransDigm expects commercial OEM growth in the mid-teens percentage range, commercial aftermarket growth in the low-double-digit percentage range, and defense growth in the high-single-digit to low-double-digit percentage range.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Revenue, Defense | FY2026 | TransDigm expects defense revenue growth in the high single-digit to low double-digit percentage range for fiscal 2026. | — | — |
| Revenue, Commercial Aftermarket | FY2026 | TransDigm expects commercial aftermarket revenue growth in the low double-digit percentage range for fiscal 2026. | — | — |
| Revenue, Commercial Oem | FY2026 | TransDigm expects commercial OEM revenue growth in the mid-teens percentage range for fiscal 2026. | — | — |
| EPS, non-GAAP | FY2026 | $40.62–$41.46 | — | New |
| EBITDA growth, Non Gaap Margin | FY2026 | 52.5% | — | New |
| EBITDA, non-GAAP | FY2026 | $5.5 billion–$5.6 billion | — | New |
| EPS, GAAP | FY2026 | $35.38–$36.21 | — | New |
| Net income, GAAP | FY2026 | $2.1 billion–$2.2 billion | — | New |
| Revenue | FY2026 | $10.5 billion–$10.6 billion | — | New |
| Free cash flow | FY2026 | $2.6 billion | — | New |
| EPS | FY2026 | $41.04 | — | — |
| Operating margin | FY2026 | 52.5% | — | New |
| EBITDA | FY2026 | $5.5 billion | — | New |